Ape Group SPA v. Republic of Argentina

Background

Ape Group SPA, Romano Consulting SPA, Icaro SRL, and Elazar Romano sued the Republic of Argentina. The plaintiffs held GDP-linked securities issued by Argentina and principally alleged that Argentina breached the securities agreement by failing to pay amounts that became due in December 2014 for reference year 2013.

The agreement generally included a five-year “Prescription” clause stating that claims against Argentina for amounts due under the agreement would be prescribed unless made within five years after the payment first became due, or within a shorter period if provided by law. New York law otherwise generally provided a six-year limitations period for breach-of-contract actions.

Argentina argued that the clause shortened the time to five years for filing a lawsuit. Because the plaintiffs’ claim allegedly accrued on December 15, 2014, Argentina argued that the lawsuit, filed on December 10, 2020, was too late under the contractual period. The plaintiffs argued that the clause required only timely notice or assertion of a right to payment, which they said they had provided.

Court’s analysis

The court held that the agreement did not clearly and unambiguously shorten New York’s six-year statute of limitations. It focused on the clause’s wording, which referred to making a “claim,” and concluded that “claim” ordinarily meant asserting a right to payment rather than filing a complaint in court.

The court also read the prescription clause together with another agreement provision concerning money deposited with the trustee. That provision stated that money remaining unclaimed for five years could be returned to Argentina, after which the security holder could look only to Argentina for payment. The court found that this structure supported treating a “claim” as an assertion of a right to payment, rather than as a lawsuit.

The court found that an email sent by counsel for Elazar Romano on November 4, 2019, asserted rights to payment under the securities. The email identified Romano’s dollar- and euro-denominated GDP-linked securities, referred to related litigation, stated that Romano wished to preserve his rights without filing suit against Argentina, and asked about a tolling agreement. The court found that these communications were sent within five years of accrual and were sufficient to satisfy the prescription clause under the circumstances.

Disposition

Judge Loretta A. Preska denied the Republic of Argentina’s motion to dismiss. The Clerk was directed to mark the motion closed, and the parties were ordered to confer and inform the court by February 23, 2022, how they wished to proceed. The opinion addressed the contractual time-limit issue on the motion to dismiss; it did not decide whether Argentina ultimately breached the securities agreement or whether the plaintiffs were entitled to payment.