A lawyer for Argentina vowed that the country would not pay holdouts from its 2001 debt default, including an affiliate of hedge fund Elliott Associates, no matter what the U.S. courts say.
The explosive statement came during an appeals court hearing; Argentina has asked the U.S. Second Circuit Court of Appeals to indefinitely stay a lower-court order that requiring Argentina to pay the holdouts before it pays bondholders who accepted debt exchanges in 2005 and 2010. The country has long said it would not pay the holdouts, but has also said it would obey U.S. court rulings.
"We are representing a government, and governments will not be told to do things that fundamentally violate their principles," Jonathan Blackman, a lawyer for Argentina, said.
"So the answer is you will not obey any order but the one you propose?" U.S. Circuit Judge Reena Raggi pushed.
"We would not voluntarily obey such an order," Blackman said, any more than the U.S. would obey an Iranian court order.
The defaulted Argentina bonds were issued in New York under U.S. law.
The three-judge panel seemed to indicate that Argentina will, in fact, face the order it fears, which could force it to default on its exchanged debt. Raggi said the court's role was to enforce contracts, "not to rewrite them."
"This is not the end," Blackman said in front of Argentine Economics Minister Hernan Lorenzo and Vice President Amado Boudou, who were in the court. "The order you affirm will not end it."
Argentina has vowed to take the case to the U.S. Supreme Court, if necessary.