Petersen Energia Inversora, S.A.U. v. Argentine Republic

Background

The Petersen plaintiffs alleged that Argentina and YPF breached contractual obligations arising from YPF’s bylaws after Argentina expropriated outstanding YPF shares in 2012. They alleged that the defendants refused to honor an obligation to offer to purchase the remaining YPF shares after Argentina retook control of YPF. The Eton Park plaintiffs brought parallel claims, alleging that Argentina and YPF failed to initiate a tender offer for all outstanding YPF shares. The opinion states that the Petersen plaintiffs were organized under Spanish law and that Eton Park Capital Management maintained its principal place of business in New York.

The defendants had previously sought dismissal. The court had determined that it had subject-matter jurisdiction under the Foreign Sovereign Immunities Act, and the Court of Appeals later affirmed that determination. The defendants then filed the renewed motion addressed in this opinion, asking the court to dismiss under forum non conveniens, a doctrine that permits a court with jurisdiction to dismiss when another forum is substantially more appropriate. The defendants argued that Argentina was the proper forum because the dispute involved Argentine law, Argentine evidence and witnesses, and an alleged exclusive-jurisdiction provision in YPF’s initial public offering prospectus.

Procedural posture

The plaintiffs argued that the renewed motion was really a request for reconsideration of the court’s earlier forum decision and therefore should face a stricter standard. The court rejected that characterization, explaining that the defendants were presenting new circumstances and a new record rather than claiming that the court had overlooked existing law or evidence. The court also declined to apply the law-of-the-case doctrine rigidly because new factual developments supported reconsidering the forum issue.

Forum-selection argument

The court rejected the defendants’ argument that the prospectus required the case to be brought exclusively in Argentina. The prospectus described itself as an incomplete summary qualified by the YPF bylaws and Argentine law, while the bylaws themselves contained no forum-selection clause. The court also explained that the streamlined analysis for a valid contractual forum-selection clause was not appropriate because the defendants had not shown that the prospectus provision resulted from bargaining between the parties or controlled their rights and obligations.

Forum non conveniens analysis

The court applied the three-step framework from the Court of Appeals’ decision in Iragorri. First, it assessed the deference owed to the plaintiffs’ choice of forum. The court maintained its earlier view that the Petersen plaintiffs’ choice of New York received less deference because they were based in Spain. But it gave substantial deference to the Eton Park plaintiffs’ choice because Eton Park Capital Management operated from New York. The court also found a significant connection to New York because Eton Park traders there purchased YPF shares listed on the New York Stock Exchange, and Argentina and YPF had marketed YPF investments to United States investors.

Second, the court considered whether Argentina was an adequate alternative forum. It concluded that Argentina was adequate. The earlier concern about a criminal investigation involving Petersen’s counsel and Burford Capital had been reduced because that investigation had been dismissed. The court was not persuaded that a later investigation made Argentina inadequate, finding insufficient evidence of improper conduct and treating claims about future political interference as speculation. The court did not decide whether Argentine time limits would bar the claims because the issue had not been adequately briefed and would not affect the outcome.

Third, the court balanced private and public interests. It found that the location of YPF’s documents and witnesses favored Argentina, but that modern technology made those concerns close to neutral. The court found that public interests favored New York. It concluded that Argentine law did not require the case to be brought in Argentina, that the United States had a strong interest in ensuring that foreign states acting commercially in United States markets could be sued for violating commercial obligations, and that New York had a strong interest in disputes involving securities marketed to investors and traded on its exchanges.

The court also rejected dismissal based on international comity, which concerns respect for another sovereign’s courts and legal system. It found no exceptional circumstances warranting that relief and noted that the litigation had already been pending in New York for nearly five years.

Disposition

Judge Loretta A. Preska held that the plaintiffs’ choice of New York deserved substantial deference, Argentina was an adequate alternative forum, and the private and public interests strongly favored litigation in New York. The court therefore denied the defendants’ motion to dismiss under forum non conveniens. The ruling did not decide the merits of the plaintiffs’ contract claims. The parties were ordered to confer and report how they wished to proceed.