District Court Orders Argentina to Transfer Shares to Satisfy Judgments
July 8, 2025
On June 30, 2025, Judge Loretta A. Preska (Southern District of New York) issued orders in two cases, directing Argentina to transfer shares in YPF S.A., a state-owned energy company, to a New York bank to satisfy two judgments. Bainbridge Fund Ltd. v. Republic of Argentina arose from Argentina’s default on certain bonds in 2001, leading to judgment for more than $95 million. Petersen Energia Inversora, S.A.U. v. Argentine Republic arose from Argentina’s breach of YPF’s bylaws during its renationalization of the company in 2012, resulting in judgment for a staggering $16.1 billion. (Disclosure: Maggie Gardner and I filed an amicus brief with the Second Circuit addressing other issues in the Petersen case.)
As explained further below, federal courts rely on state law to execute judgments. Under New York’s turnover statute, a court may order a judgment debtor to transfer property into the state from outside of it. But when the judgment debtor is a foreign state, its property, once transferred to the United States, may be entitled to immunity from execution under the Foreign Sovereign Immunities Act (FSIA). Judge Preska’s key holding in these two cases is that Argentina’s shares in YPF were not immune from execution because they fell within exceptions under § 1610(a) of the FSIA.
Renationalizing YPF
In 1993, Argentina decided to privatize state-owned YPF. It listed American Depository Receipts (ADRs) for YPF’s Class D shares on the New York Stock Exchange (NYSE), with Bank of New York Mellon (BNYM) as the depository, and it registered both YPF’s Class D shares and the ADRs with the U.S Securities and Exchange Commission (SEC). To encourage investors, Argentina amended YPF’s bylaws to require a tender offer for all outstanding shares if someone—including the government—subsequently acquired 15% or more of YPF’s shares. This provision ensured that investors would not be left as minority shareholders in a state-run company without being offered a compensated escape. After the initial public offering, Repsol S.A. emerged as YPF’s largest shareholder, while Argentina continued to participate in YPF’s governance as owner of its Class A shares.
In 2012, Argentina renationalized YPF by expropriating 51% of the Class D shares owned by Repsol. Argentina did not, however, hold the required tender offer. Investors sued for breach of contract. In 2018, the Second Circuit held that the district court had jurisdiction over Argentina under the FSIA’s commercial activity exception, 28 U.S.C. § 1605(a)(2), because breaching the bylaws was a commercial activity that had a direct effect in the United States. In 2023, the district court held that Argentina was liable for breach of contract and awarded the Petersen plaintiffs approximately $16.1 billion in damages.
The Petersen plaintiffs then asked the court to order Argentina to transfer its Class D shares in YPF to the United States to satisfy the judgment. Bainbridge had previously made a similar request with respect to YPF’s Class D shares and Class A shares.
New York’s Turnover Statute
Federal Rule of Civil Procedure 69 provides that executing a judgment must accord with the procedure of the state where the federal court is located (unless a federal statute provides measures for execution). New York’s turnover statute, CPLR 5225, authorizes a court to order a judgment debtor to transfer property sufficient to satisfy the judgment. The New York Court of Appeals held in Koehler v. Bank of Bermuda Ltd. (2009) that this provision applies extraterritorially, allowing a court to order the debtor to turn over property located outside New York.
To cut a long story short, Judge Preska held that Argentina was in possession of YPF’s shares for purposes of CPLR § 5225. This gave her authority under New York law to order Argentina to transfer the shares to BNYM and to order BNYM to transfer them to the plaintiffs.
The FSIA
Under the FSIA, “the property in the United States of a foreign state shall be immune from attachment, arrest, and execution” unless an exception to such immunity applies (emphasis added). In Peterson v. Islamic Republic of Iran (2017), the Second Circuit held that property of a foreign state outside the United States enjoys no immunity from execution under the FSIA but that such property would be entitled to immunity once transferred to the United States. Although the Second Circuit suggested that a court should first recall the property and then conduct the immunity analysis, Judge Preska suggested in an earlier decision in Bainbridge“that the more prudent course is to evaluate whether the assets are subject to execution immunity before ordering that they be brought to the United States.” That is what she did in her June 30 orders.
Section 1610(a) provides in relevant part:
(a) The property in the United States of a foreign state …, used for a commercial activity in the United States, shall not be immune from attachment in aid of execution, or from execution, upon a judgment entered by a court of the United States or of a State after the effective date of this Act, if—
(1) the foreign state has waived its immunity from attachment in aid of execution or from execution … or
(2) the property is or was used for the commercial activity upon which the claim is based ….
Property in the United States
Judge Preska held that, once transferred, Argentina’s shares in YPF would constitute “property of a foreign state in the United States.” Transferring the shares to a global custody account at BNYM, she reasoned, would give Argentina a security entitlement under New York law. And the situs of that entitlement would be New York because the global account would be held at BNYM’s New York office.
Used for a Commercial Activity in the United States
Judge Preska also held that the shares were “used for a commercial activity in the United States” because Argentina used the shares to direct the company’s commercial activities in the United States, which included running the ADR program for its Class D shares, listing its shares on the NYSE, registering its shares with the SEC, and selling more than $2.4 billion in debt to U.S. investors. In so holding, she followed the Third Circuit’s decision in Crystallex International Corp. v. Bolivarian Republic of Venezuela (2019), which similarly held that using shares to direct a company’s commercial activities in the United States satisfied this requirement.
Argentina argued that the shares themselves had to be used in the United States and that the commercial activity had to be performed by the foreign state itself, noting that it used the shares outside the United States to control YPF and that the commercial activities on which plaintiffs relied were conducted by YPF rather than by Argentina itself. But Judge Preska rejected both these arguments. “[T]he sovereign must use the property but may do so anywhere,” she wrote, “and the activity must occur in the United States but may be conducted by anyone.”
Used for the Commercial Activity Upon Which the Claim Is Based
In Petersen, the next question was whether, under § 1610(a)(2), “the property is or was used for the commercial activity upon which the claim is based.” Judge Preska reasoned that “based upon” has the same meaning in § 1610(a)(2) as in § 1605(a)(2), which is to say that it refers to the conduct that constitutes the “gravamen” of the claim. The Second Circuit had already held that the gravamen of the Petersen plaintiffs’ claim for purposes of § 1605(a)(2) was Argentina’s breach of the bylaws, conduct that it also held to be commercial. Judge Preska had little difficulty concluding that Argentina used its shares in YPF to breach the bylaws by avoiding the promised tender offer.
Waiver
In Bainbridge, the plaintiff relied not on § 1610(a)’s commercial activity exception but rather on its waiver exception, so Judge Preska had to decide whether Argentina had “waived its immunity from attachment in aid of execution or from execution.” The bonds in this case provided
[t]o the extend that the Republic or any of its revenues, assets or properties shall be entitled … to any immunity from suit … from execution of a judgment or from any other legal or judicial process or remedy … the Republic has irrevocably agreed not to claim and has irrevocably waived such immunity to the fullest extent permitted by the laws of such jurisdiction ….
This, the court concluded, was a waiver of immunity from execution.
This waiver may explain why Bainbridge requested the transfer of more assets. The Petersen plaintiffs asked only for Argentina’s Class D shares in YPF, presumably because it was those shares that Argentina used to exercise control to breach the bylaws and refuse to make a tender offer. Because of the waiver, however, Bainbridge was not limited to property used for the commercial activity on which the claim was based and so was also able to request transfer of Argentina’s Class A shares and other assets held by BNYM in New York as receipts from the ADR program. Of course, these assets would also have to satisfy § 1610(a)’s general requirement, discussed above, of being used for a commercial activity in the United States, a requirement that the court did not directly address.
International Comity
Argentina also argued against granting the orders on grounds of international comity. It claimed that the order would require violation of its own law, specifically a provision of the expropriation law requiring a two-thirds vote of the National Congress to transfer shares in YPF. Judge Preska noted that the “prescriptive comity” claim that Argentina was making required a “true conflict,” making it impossible to comply with the laws of two sovereigns. “There is no unavoidable conflict between Argentine law and Plaintiffs’ requested relief,” she reasoned. “The Republic has several choices it can legally pursue: (1) receive the permission of the National Congress by two-thirds vote, (2) take action to change the law, or (3) satisfy the judgment through a separate agreement with Plaintiffs.”
Even if there were a “true conflict,” comity considerations counseled in favor of granting the plaintiffs’ requested relief. “The United States has a strong interest in enforcing its judgments, and that interest outweighs any putative Argentine interest in avoiding execution on assets that are fully subject to execution under the FSIA.” “While the Republic demands that this Court extend comity,” she continued, “it simultaneously refuses to make any effort to honor the Court’s unstayed judgment…. Comity is not a one-way street.”
The district court did not address the parties’ comity arguments with respect to CPLR § 5225. As I discussed previously at TLB, the U.S. Attorney submitted a letter in November 2024 making some deeply-flawed comity arguments about § 5225. This may have been a lost opportunity to discredit those arguments before they are repeated in the appeal of these orders, which will surely follow.
Conclusion
Judge Preska’s orders in Petersen and Bainbridge suggest that New York’s turnover statute is becoming a powerful tool to enforce judgments against foreign states. To recap, CLPR § 5225 allows courts to order a foreign state to transfer assets from outside the United States to judgment-creditors inside the United States satisfy a judgment. Although the Second Circuit has held that assets outside the United States enjoy no immunity from execution under the FSIA, they may become immune once they are brought to the United States.
This means that a court must look to see if any of § 1610’s exceptions to immunity from execution apply. In cases involving sovereign bonds, the issuer often waives immunity from execution, as Argentina did in Bainbridge. Section 1610(a)(2)’s commercial activity exception may also be available, particularly if the court holds, as Judge Preska did in Petersen, that a foreign state’s use of assets outside the United States is sufficient so long as it leads to commercial activities inside the United States.