Burford given all clear to sue Argentina in oil case
A London-listed litigation finance provider has won permission to pursue legal action against Argentina over a nationalised energy company in a case that could net it hundreds of millions of dollars.
A court in the United States ruled that the case, which is being funded by Burford Capital, can be heard in America, delivering a blow to Argentina, whose lawyers had tried to get it struck out.
The timing comes at a bad time for Argentina, which is fighting to restore confidence in its economy after it asked for its latest bailout by the International Monetary Fund to be speeded up, prompting a sell-off of the peso.
Burford provides funds for commercial legal actions and takes a share of the payout in successful claims. It is backing Petersen, a conglomerate, in its fight over the nationalisation of YPF, Argentina’s biggest oil producer, by the former government of President Kirchner in 2012. Petersen owned about a quarter of YPF, with Repsol, of Spain, having majority control. The Kirchner administration justified the swoop by saying that YPF’s earnings would be invested to reverse declining oil and gas production that had turned Argentina into a net energy importer.
Repsol sued Argentina over the expropriation of YPF. The case was settled in 2014, with the country paying Repsol $5 billion.
Petersen, controlled by Argentina’s Eskenazi family, went bankrupt after YPF was taken over, with its liquidators pursuing the state through the courts.
Burford, the world’s largest litigation funder, was hired to finance the case. If it succeeds, analysts believe the total payout could be as much as $2.5 billion, based on the settlement with Repsol, of which Burford would take a slice.
That could be above $1 billion, based onthe fact that Burford sold a small part of its interest in the case. That transaction valued the opportunity at $800 million, on which the new investors would want to make a profit.
With the US Court of Appeal striking out Argentina’s objection, the case will be heard, most likely in several months’ time, in a federal district court in New York.
Burford has been involved before in legal wrangles over nationalised assets in Argentina. It backed Teinver, a Spanish investment group, over its claim against Argentina in connection with its alleged appropriation of two of the country’s airlines in 2008.
Burford listed on the stock market in 2009 and has backing from investors including Neil Woodford, the fund manager, and Mark Barnett, who replaced him at Invesco Perpetual. Burford’s chairman is Sir Peter Middleton, former chairman of Barclays. It did not comment yesterday.