US court asked to enforce $320m claim against Argentina
A long-standing legal dispute over the renationalisation of Aerolineas Argentinas (AR, Buenos Aires Ezeiza) and its then sister airline, Austral (AU, Buenos Aires Aeroparque), has resurfaced in the United States, with a Washington DC court being asked to enforce a USD325 million award issued against Argentina.
Titan Consortium 1 LLC, on August 24, filed a 700-page petition against the Argentine Republic in the US District Court for the District of Columbia to enforce the award arising from the Argentine government’s seizure of the two airlines in 2008.
The Titan Consortium has been assigned the award via Burford Capital Ltd from three subsidiaries of the Spanish travel group Grupo Marsans: Teinver SA, Transportes de Cercanías SA, and Autobuses Urbanos del Sur SA. As reported, the latter two had acquired a shareholding in the two Argentine airlines in 2001 through Air Comet (A7, Madrid Barajas), while Teinver had acquired an indirect shareholding in 2006. This had been in line with an agreement between the governments of Argentina and Spain on the promotion of investments entered into in 1992.
The companies had agreed to sell their shares to the Argentine government in 2008, but Buenos Aires reneged on the pact, seized the companies’ shares without notice, and paid a symbolic sum of one Argentine peso in compensation.
The current case dates back to 2009 when the Spanish companies filed damages claims against Argentina for seizing their shareholding. As reported, they collectively sought a total of USD1.59 billion for both airlines calculated with interest to July 31, 2013.
The World Bank’s international arbitration division, the International Centre for Settlement of Investment Disputes (ICSID), in 2017 awarded the companies USD320 million in compensation, plus costs and fees totalling nearly USD3.5 million, and additional post-award interest. The tribunal found the companies had had legitimate expectations that Argentina would purchase the shares after inking the initial deal. Moreover, Argentina’s decision to instead expropriate the shares had lacked transparency and was arbitrary, the tribunal had found.
Argentina tried to have the 2017 order annulled, but the ICSID in 2019 upheld its ruling after an ad hoc committee rejected claims of fraud relating to an underlying USD25 million funding agreement between the claimants and Burford Capital Ltd which allowed the financier to assert the claim. Burford, in turn, sold the rights of the lawsuit to Titan for a reported USD94 million, with that consortium now looking to assert the claim.
Neither the New York-based lawyers for the Titan Consortium, Gibson, Dunn & Crutcher, nor Argentina’s National Directorate for International Affairs and Controversies, which represents the country in all international arbitration cases, were immediately available for comment.