Federal District Court Opinions

ARGENTINA, Defendant. 05 Civ. 4466 (TPG). United States
District Court, S.D. New York. August 22, 2006


THOMAS GRIESA, Senior District Judge

Plaintiffs are the beneficial owners of certain bond
indebtedness issued by defendants The Republic of Argentina.
The Republic defaulted on such indebtedness in December
2001 during a profound fiscal crisis. Plaintiffs are suing
to recover amounts due to them as a result of the default
and have moved for summary judgment. Plaintiffs also move
to strike the Republic’s discovery requests.

The motions are granted.


The bond indebtedness at issue is governed by Fiscal
Agency Agreements dated December 10, 1993 (the “1993 FAA”)
and October 19, 1994 (the “1994 FAA”). The 1994 FAA is the
same agreement that governed the bond indebtedness on which
this court granted summary judgment to the plaintiffs in
Lightwater Corporation Ltd. v. Republic of Argentina, No.
02 Civ. 3804, 2003 WL 1878420 (S.D.N.Y. Apr. 14, 2003).
Section 22 of the 1994 FAA and Section Page 2 20 of the
1993 FAA state that the Republic waives sovereign immunity
and consents to jurisdiction in any state or federal court
in the borough of Manhattan in the City of New York. Both
FAAs provide that the Republic’s obligations on the bonds
are unconditional and that failure to make any payment of
principal or interest for 30 days after the applicable
payment date constitutes an event of default. A declaration
by the Republic of a moratorium on the payment of principal
or interest on its public external indebtedness is an event
of default as well. Paragraph 12 of the 1994 FAA provides
for acceleration of principal if there is a failure to pay
interest or a moratorium. If either of these events occurs,

each holder of Securities and such Series may by such
notice in writing declare the principal amount of
Securities of such Series held by it to be due and payable
immediately. . . .

The 1993 FAA contains similar language.

On December 24, 2001 the Republic declared a moratorium on
payments of principal and interest on the external debt of
the Republic. The court refers to its previous opinions for
a description of the circumstances of these defaults.
Lightwater, 2003 WL 1878420, at *2; Applestein v. Republic
of Argentina, No. 02 Civ. 1773, 2003 WL 1990206, at *1
(S.D.N.Y. Apr. 29, 2003). On April 29, 2005, plaintiffs
sent notices to Bankers Trust Company, the Fiscal Agent of
The Republic of Argentina, declaring the principal amounts
of the debt securities held by plaintiffs to be immediately
due and payable. Page 3

The bonds that are the subject of this action are listed
hereafter. Also listed are the amounts of the beneficial
interests owned by each plaintiff.[fn1]


This Court has already granted summary judgment in other
cases to plaintiffs seeking to collect on the Republic’s
defaulted bonds issued under the FAAs. See Mazzini v.
Republic of Argentina, No. 03 Civ. 8120, 2005 U.S. Dist.
LEXIS 5692 (S.D.N.Y. Mar. 31, 2005). Only certain specific
issues need to be discussed in connection with the present

Standing and Proof of Ownership

In the two opinions in Fontana v. Republic of Argentina,
415 F.3d 238 (2d Cir. 2005), and Applestein v. Province of
Buenos Aires, 415 F.3d 242 (2d Cir. 2005), the Second
Circuit has held that an owner of a beneficial interest,
such as plaintiffs here, must receive authorization from
the registered holder of the bond before it may sue, but
that such authorization may be granted subsequent to the
filing of a lawsuit. Alternatively, the Republic may waive
the authorization requirement.

The Republic has agreed to waive objections based on lack
of authorization where the court makes a finding of
current ownership. See Transcript, March 28, 2006, Cilli v.
Republic of Argentina (04 Civ. 6594).

Here, plaintiffs have adequately demonstrated through
their account statements that owned the beneficial
interests as of various dates in February and March 2006.
There is no evidence of any change of ownership
thereafter. Page 18


The motion to strike defendants’ discovery requests is

The motions for summary judgment are granted. Judgment will
be entered for the principal amount of the bonds plus
accrued interest.

The parties shall consult with one another concerning the
form of the judgment and the amounts of interest that
should be awarded in the judgment. If the parties are able
to reach agreement on those subjects, they shall jointly
submit an agreed proposed judgment to the court. If the
Republic and any plaintiff are unable to reach agreement on
those subjects, that plaintiff shall submit a proposed
judgment to the court, and the Republic shall submit any
objections to that plaintiff’s proposed judgment within
five business days thereafter. The court will then resolve
any remaining disagreements.


[fn1] The court notes the distinction between bonds and
beneficial interests. In some previous opinions, the court
has simply referred to the plaintiffs as owners of “bonds,”
when in fact plaintiffs are technically owners of
“beneficial interests in bonds.” The Republic actually
issues “a bond” to a depository. The depository, in some
form, issues “participations” to brokers, who sell
“beneficial interests” to purchasers. These beneficial
interests are identified by reference to the underlying
bond (CUSIP or ISIN number or both; date of issuance and
maturity; rate of interest) and the principal amount of the
beneficial interest. This distinction is discussed more
fully in Million Air Corp. v. Republic of Argentina, No. 04
Civ. 1048, 2005 U.S. Dist. LEXIS 23904 (S.D.N.Y. Oct. 17,
2005). Page 1