US may back Argentina in debt verdict appeal

Court of Law

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The US government may file a friend-of-the-court brief in support of Argentina's motion for a rehearing of their case regarding their debt to holdout creditors. 

A previous ruling by the 2nd Circuit Court of Appeals found that Argentina, by defaulting on their debts in 2001 and refusing to pay holdout creditors, violated a bonds provision that required the country to treat all its' creditors equally. 

However, Argentina argued that the court's interpretation of this equal treatment, or pari passu, was incorrect. In addition, Argentina argued that the court was exceeding the permissible bounds of their judicial authority by ordering the South American country to pay back creditors a sum of $1.330 billion by mid-December 2012. 

The order to payback creditors was overruled, perhaps due to the fear that it would lead to another Argentine default. 

The US government has voiced its' agreement with Argentina's claim that the court's interpretation of equal treatment is incorrect. Government lawyers have stated that such an interpretation "may adversely affect future voluntary sovereign debt restructurings, the stability of international financial markets, and the repayment of loans extended by international financial institutions." 

Whether or not the US government is able to file the amicus brief depends on whether they receive authorization by the Solicitor General to the US before the date in which Argentina is due to file their request for a rehearing.