The opinion of the court was delivered by: THOMAS GRIESA, Senior District Judge
Plaintiff Latinburg S.A., a corporation organized under the laws of
Uruguay, with its principal place of business in Montevideo,
("Latinburg") is the owner of certain bonds issued by the defendant, The
Republic of Argentina ("The Republic"). The Republic has defaulted on the
bonds. Latinburg is suing to recover amounts due to it by virtue of the
default and has moved for summary judgment.
The Republic opposes the motion asserting various defenses. In addition
the Republic moves to dismiss for failure to state a claim.
Latinburg's motion for summary judgment on its bond obligations is
granted. The Republic's motion is denied. Facts
Latinburg acquired certain bonds issued by The Republic of Argentina
with principal amounts as follows:
(1) $342,000 in face value in 9 3/4% Bonds issued
September 19, 1997, maturing on September 19, 2007,
identified by ISIN US040114AV28, with interest paid
semi-annually on March 19 and September 19;
(2) $500,000 in face value in Bonds issued June 19,
2001, maturing on December 19, 2008, identified by
ISIN US040114GF14, bearing an interest rate of 7% to
be paid semi-annually on June 19 and December 19, but
excluding June 19, 2004, and bearing an interest rate
of 15 1/2% thereafter; and,
(3) $595,000 in face value in 11 3/8% Bonds issued
January 30, 1997, maturing on January 30, 2017,
identified by ISIN US040114AR16, with interest paid
semi-annually on January 30 and July 30.
As proof of ownership Latinburg provides an affidavit by its President,
Nelson Carlos Greca Peña, stating that Latinburg purchased the
above listed bonds in the aggregate principal value of $1,437,000.00. Pe
ñ a further states that the bonds are held in the name of Wachovia
SECS LLC, RICH, c/o Prudential-Bache Securities (UK) Inc., 9 Devonshire Square,
4th floor, FC2M 4HP, London, United Kingdom ("Wachovia"), and allocated
on its books to Latinburg.
Latinburg has provided notarized statements from the depositary or
nominee Euroclear, stating that the above listed bonds, in the above
stated amounts, are being held on account for Wachovia in Euroclear
Securities Clearance Account 92124, and that the bonds were blocked for
the purpose of filing a claim. The statements also indicate, but do not
verify, that Wachovia has allocated the above listed securities in the
above amounts to Latinburg S.A., Rincon 531 of 502 Montevideo Uruguay, on
Latinburg has provided account statements from its account with
Wachovia showing the above listed bonds, in the above stated amounts.
The bonds are all governed by the same Fiscal Agency Agreement between
The Republic of Argentina and Bankers Trust Company, dated October 19,
1994. This is the same FAA as the one governing the bonds concerning
which this court granted summary judgment to the plaintiffs in Lightwater
Corporation Ltd, v. The Republic of Argentina, Nos. 02 Civ. 3804, 3808,
& 5832, 2003 WL 1878420 (S.D.N.Y. April 14, 2003). Section 22 of the FAA
states that the Republic of Argentina waives sovereign immunity and
consents to jurisdiction in any state or federal court in the borough of
Manhattan in the City of New York.
The FAA provides that failure to make any payment of principal or
interest for 30 days after the applicable payment date constitutes an
event of default. A declaration of a moratorium on the payment of
principal or interest on its public external indebtedness is an event of
default as well. Upon an event of default, a bondholder is entitled to
give notice declaring the principal amount of the bonds held by it
immediately due and payable.
On December 24, 2001, the Republic declared a moratorium on payments of
principal and interest on the external debt of the Republic. This
moratorium is still in effect. The court refers to its previous opinions
for a more complete description of the circumstances of the default.
See, e.g., Lightwater, 2003 WL 1878420, at *2.
Latinburg sent notices of acceleration to The Republic and has
subsequently filed suit.
The Republic moves to dismiss for lack of standing to sue under the
contract governing the bonds. It claims that the plaintiffs are owners of
beneficial interests rather than registered holders, and that the
contract confers the right to sue on the registered holder ...