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Whose Fault Is the Argentina Debacle?

posted by Adam Levitin

I name names and point fingers in the Wall Street Journal.  NML gets some blame for overplaying its hand, but the fault primarily lies with the federal courts for letting the case go forward. I understand the courts being angered by an unrepentant debtor thumbing its nose at them, but the federal courts should know better than to get into a pissing match with a foreign sovereign. Federal judges are possessed of awesome powers, but not that awesome. It's not at all clear to me how Judge Griesa's going to get this case out of the hole he dug, and the recent reporting on the case indicates that he doesn't have any idea either. "We're in the soup."  Indeed. 


In my view, the key fault lies with the 2nd Circuit in going along with the rationalization that Griesa's injunction's naming of all sorts of foreign parties outside of the court's personal jurisdiction is just fine because the injunction only legally applies to Argentina while merely giving “notice” to the additional foreign parties. NML Capital, Ltd. v. Republic of Arg., 727 F.3d 230, 243 (2d Cir. 2013).

That is, per the acrobatic reasoning of the 2nd Circuit, the naming of the additional parties in the injunction was in effect surplusage. Id.

It is one thing for a district judge to be overwhelmed and in over his head, but for a 2nd Circuit panel to bend over backward to affirm in this contorted manner is the height of sloppiness and laziness.

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