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1 UNI TED STATES DI STRI CT COURT
SOUTHERN DI STRI CT OF NEWYORK
2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

3 NML CAPI TAL, LTD. , et al . ,

4 Pl ai nt i f f s,

5 v. 08 CV 6978 ( TPG)

6 THE REPUBLI C OF ARGENTI NA,

7 Def endant .

8 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

9 New Yor k, N. Y.
Sept ember 29, 2014
10 3: 12 p. m.

11 Bef or e:

12 HON. THOMAS P. GRI ESA,

13 Di st r i ct J udge

14 A P P E A R A N C E S

15 DECHERT LLP
At t or neys f or Pl ai nt i f f NML Capi t al , Lt d.
16 BY: ROBERT A. COHEN

17 FRI EDMAN KAPLAN SEI LER & ADELMAN LLP
At t or neys f or I nt er est ed Par t i es Aur el i us Capi t al Par t ner s
18 and Bl ue Angel
BY: EDWARD A. FRI EDMAN
19 DANI EL B. RAPPORT

20 GI BSON DUNN & CRUTCHER
At t or neys f or Pl ai nt i f f NML Capi t al , Lt d.
21 BY: J ASON J . MENDRO

22 GOODWI N PROCTER
At t or ney f or Pl ai nt i f f Ol i f ant Fund
23 BY: ROBERT D. CARROLL

24 CLEARY GOTTLI EB STEEN & HAMI LTON
At t or neys f or Def endant
25 BY: CARMI NE BOCCUZZI
J ONATHAN I . BLACKMAN

SOUTHERN DI STRI CT REPORTERS, P. C.
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1 ( I n open cour t ; case cal l ed)

2 THE COURT: Mr . Cohen, I t hi nk i t ' s your mot i on.

3 Woul d you l i ke t o speak t o t he mot i on.

4 MR. COHEN: Thank you, your Honor .

5 Rober t Cohen f r omDecher t speaki ng t oday on behal f of

6 NML Capi t al and t he ot her movant s. Your Honor , we' r e her e t hi s

7 af t er noon on a mot i on br ought on by or der t o show cause seeki ng

8 t hat Ar gent i na be hel d i n cont empt f or i t s

9 cont i nui ng vi ol at i ons of t hi s Cour t ' s or der s and t hat

10 appr opr i at e sanct i ons be i mposed t o coer ce Ar gent i na t o come

11 i nt o compl i ance wi t h t hose or der s.

12 Your Honor , t hi s mot i on i s not seeki ng sanct i ons t o

13 compel Ar gent i na t o pay t he money t hat i s owed and t hat i s

14 subj ect t o your Honor ' s amended Febr uar y 23 or der as Ar gent i na

15 has suggest ed i t i n i t s opposi t i on paper s. Thi s mot i on i s

16 desi gned t o addr ess t he concer ns t hat t he pl ai nt i f f s have t hat

17 Ar gent i na i s and wi l l cont i nue t o act i n vi ol at i on of what we

18 cal l t he ant i evasi on por t i on of t he amended Febr uar y 23 or der

19 by cont i nui ng t o t ake st eps t o f i nd ways t o get ar ound t hat

20 or der .

21 I f I may, your Honor , I ' d l i ke t o r ecount f or you t he

22 st eps we t hi nk Ar gent i na has t aken t hr ough as r ecent l y as l ast

23 week and r emi nd your Honor of t he di r ect i ons and or der s t hat

24 you have gi ven i n an at t empt t o addr ess t hose vi ol at i ons and t o

25 r emi nd your Honor t hat you have, i n f act , al r eady f ound t hat


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1 al l of t he t hi ngs t hat I amgoi ng t o descr i be wer e i n vi ol at i on

2 of your Honor ' s or der s. We' r e not aski ng f or new f i ndi ngs.

3 Your Honor has al r eady f ound t hat .

4 I al so woul d l i ke t o addr ess, your Honor , t he concer n

5 t hat you have expr essed i n t he past and t hat we t ake ver y

6 ser i ousl y; t hat an or der of cont empt mi ght have t he ef f ect of

7 dr i vi ng Ar gent i na away f r omt he set t l ement t abl e. I t ' s our

8 f ond hope t hat we wi l l event ual l y be abl e t o negot i at e a

9 set t l ement of t hi s di sput e. But we know f r omt he past t hr ee

10 mont hs, si nce Speci al Mast er Pol l ack was appoi nt ed, t hat t hose

11 ef f or t s have been unavai l i ng and, i n f act , your f or bear ance has

12 r esul t ed onl y i n Ar gent i na r epeat edl y t aki ng st eps t o vi ol at e

13 your or der s.

14 Your Honor , t he most r ecent vi ol at i on, t he one t hat

15 happened l ast week, was a " l egal not i ce" publ i shed i n t he New

16 Yor k Ti mes, i n t he Wal l St r eet J our nal and ot her paper s t hat

17 announced t hat Ar gent i na had st r i pped Bank of New Yor k of i t s

18 abi l i t y t o conduct busi ness i n Ar gent i na and i nvi t ed exchange

19 bondhol der s t o t ake st eps t o r emove Bank of New Yor k as t he

20 t r ust ee f or t he exchange bonds. That , we cont end, your Honor ,

21 was a di r ect vi ol at i on of your or der whi ch pr event s Ar gent i na

22 f r omt aki ng st eps t o vi ol at e t he ant i evasi on pr ovi si on.

23 Your Honor , Ar gent i na' s vi ol at i ons go back wel l mor e

24 t han a year . What happened r i ght af t er t he Second Ci r cui t

25 af f i r med your Honor ' s or der , t he amended Febr uar y 23 or der , i n


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1 August of l ast year , was t hat t he Pr esi dent of Ar gent i na went

2 on t el evi si on i n Ar gent i na and announced t hat a pl an was goi ng

3 t o be devel oped t o evade t hi s Cour t ' s or der , t o al l ow exchange

4 bondhol der s t o r ecei ve payment on t hei r bonds i n Ar gent i na.

5 THE COURT: To do what ?

6 MR. COHEN: To r ecei ve payment , i nt er est payment s on

7 t hei r bonds r at her t han t hr ough Bank of New Yor k and New Yor k

8 but r at her i n Ar gent i na, t o avoi d t he j ur i sdi ct i on of t hi s

9 Cour t .

10 You r esponded pr ompt l y, your Honor , and i ssued a

11 di r ect i on t hat sai d any such st eps woul d be an evasi on of t hi s

12 Cour t ' s or der and must not happen.

13 I n J une of 2014 when t he Supr eme Cour t deni ed

14 cer t i or ar i on Ar gent i na' s pet i t i on seeki ng r evi ew of t he

15 amended Febr uar y 23 or der , Ar gent i na' s economy mi ni st er agai n

16 decl ar ed a near l y i dent i cal pl an: Come t o Ar gent i na, get new

17 bonds, and we' l l pay you i n Ar gent i na. He sai d t o t he exchange

18 bondhol der s: We must avoi d t he or der s of t he Di st r i ct Cour t i n

19 New Yor k.

20 Then at t he end of J une, your Honor - - I ' msor r y.

21 Your Honor , you i ssued an or der r i ght af t er t hat st at ement t hat

22 sai d any such pl an woul d be a vi ol at i on of t he amended

23 Febr uar y 23 or der . Of cour se, your Honor , t he keyst one of t he

24 amended Febr uar y 23 or der i s t hat i f Ar gent i na chooses t o pay

25 t he exchange bondhol der s - - doesn' t have t o but i f i t chooses


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1 t o - - i t must pay t he pl ai nt i f f s i n t hi s case r at eabl y, at t he

2 same t i me or bef or e.

3 Not wi t hst andi ng t hat ver y cl ear or der , your Honor , at

4 t he end of J une Ar gent i na pur por t ed t o make a payment on t he

5 exchange bonds wi t hout payi ng t he pl ai nt i f f s i n t hi s case.

6 For t unat el y, Bank of New Yor k, who was t he t r ust ee, act ed

7 appr opr i at el y, obeyed t hi s Cour t ' s or der s and r ef used t o pass

8 al ong t hat money t o t he exchange bondhol der s.

9 But Ar gent i na, i n def i ance of t hi s Cour t ' s or der s and

10 i n def i ne of r epr esent at i ons made t o t he Supr eme Cour t t hat i t

11 woul d obey t hi s Cour t ' s or der s i f cer t i or ar i was gr ant ed,

12 i mmedi at el y vi ol at ed t hat or der by at t empt i ng t o make t he

13 payment wi t hout payi ng t he pl ai nt i f f s i n t hi s case.

14 Si nce t hen, Ar gent i na has i nst r uct ed Bank of New Yor k

15 t o pass al ong t he money t hat t hi s Cour t has or der ed t hat Bank

16 of New Yor k hol d. They want ed Bank of New Yor k t o pass t hat

17 money al ong t o t he exchange bondhol der s. And i t ' s t aken out

18 f ul l - page ads i nst r uct i ng Bank of New Yor k t o act i n such a

19 f ashi on.

20 On August 19 of t hi s year , agai n, t he Pr esi dent

21 announced t hat i t was goi ng t o enact l egi sl at i on t o al l ow t he

22 exchange bondhol der s t o come t o Ar gent i na and get t hei r money

23 and def y t hi s Cour t ' s or der s.

24 Emer gency hear i ng was hel d t wo days l at er and your

25 Honor sai d t hat must not happen.


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1 Despi t e t hat i nst r uct i on, on Sept ember 12 - - I bel i eve

2 i t was - - Sept ember 12 of t hi s year , l egi sl at i on was enact ed i n

3 Ar gent i na t hat had t he ef f ect of r emovi ng Bank of New Yor k or

4 pur por t i ng t o r emove Bank of New Yor k and t o pr ovi de a

5 mechani smf or exchange bondhol der s t o get pai d.

6 I f I may, your Honor , j ust r ead a smal l por t i on of t he

7 l egi sl at i on t hat was enact ed. I ' mr eadi ng f r omt he publ i cat i on

8 of t he l aw t hat was i n t he Of f i ci al Gazet t e of t he Ar gent i ne

9 Republ i c. I t ' s Exhi bi t 38 t o my decl ar at i on i n suppor t of t hi s

10 mot i on.

11 I t ' s a l aw capt i oned " Sover ei gn Payment Debt

12 Rest r uct ur i ng. " Chapt er 1 i s capt i oned " Local Sover ei gn

13 Payment of t he For ei gn Debt of t he Ar gent i ne Republ i c. And

14 Chapt er 2 says, " The means t o saf eguar d r ecei pt of payment by

15 t he hol der s who j oi ned t he 2005 2010 sover ei gn debt

16 r est r uct ur i ng. " And i t says i n par t , " The i mpl ement i ng

17 aut hor i t y f or t hi s l aw shal l be aut hor i zed t o adopt t he

18 necessar y measur es t o r emove t he Bank of New Yor k Mel l on as

19 t r ust ee and appoi nt Naci on Fi dei comi sos SA i n i t s st ead. "

20 Your Honor , what t hi s l aw says i s t hey' r e goi ng t o

21 r emove Bank of New Yor k and appoi nt an ent i t y t hat i s an

22 af f i l i at e of a bank t hat i s a hundr ed per cent owned by

23 Ar gent i na, i n Ar gent i na t o act i n ef f ect as t r ust ee on t he

24 bonds.

25 Your Honor , i t ' s our submi ssi on t hat t he cumul at i ve


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1 ef f ect of t hese act i ons i s i ndi sput abl y a cont empt uous and

2 puni shabl e - -

3 THE COURT: Can I i nt er r upt you.

4 What i s pr oposed, as I under st and i t , i s t o r emove

5 Bank of New Yor k Mel l on as t he i ndent ur e t r ust ee and appoi nt

6 somebody el se i n Buenos Ai r es - - I don' t know what t hey woul d

7 cal l t hem- - but anyway t o do t he necessar y, l et ' s say, i n

8 Buenos Ai r es.

9 MR. COHEN: Yes, your Honor .

10 THE COURT: I f ur t her under st and t hat t hi s i s r eal l y

11 cont ai ned i n one of t hese l egal not i ces t hat t he new

12 of f i ci al - - t hi s i s i n t he not i ce - - has obl i gat i ons t o

13 di st r i but e t he amount s pai d; i n ot her wor ds, t he i nt er est woul d

14 t hen be pai d i n Ar gent i na.

15 Now, i t ' s al so my under st andi ng - - and maybe t hi s goes

16 t oo f ar - - t hat r eal l y t he pr oposal i s t o move t he oper at i on - -

17 l et ' s cal l i t t he oper at i on of t he - - what i s necessar y about

18 t he bonds f r omNew Yor k t o Ar gent i na.

19 I s t hat somet hi ng you - - amI sayi ng somet hi ng cor r ect

20 or what do you - -

21 MR. COHEN: I t hi nk t hat i s t he obj ect i ve of t he new

22 l aw, t o f i nd a mechani smby whi ch exchange bondhol der s coul d

23 come and get - - come t o Ar gent i na and get pai d. They al so

24 woul d be abl e t o exchange t hei r bonds f or new bonds, i ssued i n

25 Ar gent i na and payabl e i n Ar gent i na. That i s what t he l aw


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1 cont empl at es.

2 THE COURT: You go ahead wi t h what you wer e speaki ng

3 of . Thank you.

4 MR. COHEN: Your Honor , I ' d l i ke t o addr ess t he l egal

5 st andar d t hat your Honor needs t o consi der i n deci di ng whet her

6 i t ' s appr opr i at e at t hi s poi nt t o hol d Ar gent i na i n cont empt .

7 The st andar d i s, I t hi nk, easi l y met her e. I f t her e' s

8 an or der t hat ' s been vi ol at ed and i t ' s cl ear and unambi guous,

9 and t he pr oof of noncompl i ance i s cl ear and convi nci ng, and t he

10 vi ol at or was not r easonabl y di l i gent i n at t empt i ng t o compl y,

11 t hen t he st andar d f or cont empt i s met . I don' t t hi nk t her e' s

12 much ar gument her e t hat al l of t hose st andar ds ar e easi l y met .

13 But t her e i s an i ssue, I t hi nk, t hat l i nger s her e and

14 t hat i s whet her t her e i s anyt hi ng i n t he For ei gn Sover ei gn

15 I mmuni t i es Act t hat coul d r est r i ct your Honor ' s abi l i t y t o

16 i ssue a cont empt or der and i mpose a sanct i on.

17 I t hi nk t he answer i s no. Ther e i s - - t he wei ght of

18 aut hor i t y, cases t hat have consi der ed whet her or not di st r i ct

19 cour t s have t he aut hor i t y, t he i nher ent aut hor i t y t o i ssue

20 sanct i ons, f i nd f i ndi ngs of cont empt and i ssue sanct i ons

21 agai nst sover ei gns i s t hat t hey do. Our br i ef l i st s I t hi nk

22 f i f t een or so cases, di st r i ct cour t , cour t of appeal s cases

23 wher e sover ei gns have been hel d i n cont empt and sanct i ons have

24 been i mposed on t hem.

25 Ar gent i na i n i t s opposi t i on ar gues t hat t her e' s an


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1 i nt er nat i onal l aw pr ecept t hat appl i es her e. They ci t e - -

2 THE COURT: A what ?

3 MR. COHEN: An i nt er nat i onal l aw concept , a

4 convent i on. I t ' s a convent i on t hat i s not enf or ceabl e. I t ' s a

5 convent i on t hat t he U. S. i s not a par t y t o. And i t has no

6 bear i ng on t hi s case.

7 They ar gue t hat t he Uni t ed St at es gover nment has

8 suppor t ed t he posi t i on t hat di st r i ct cour t s do not have t he

9 aut hor i t y. We ci t e f i ve cases i n whi ch t he U. S. Gover nment has

10 appear ed as ami cus, expr essed t hose vi ews, and t he cour t s have

11 sai d t hey need t o - - t hey need not consi der t hem. The di st r i ct

12 cour t - - I ' msor r y. The Cour t of Appeal s f or t he Di st r i ct of

13 Col umbi a speci f i cal l y sai d t hose vi ews can be di sr egar ded.

14 Your Honor , t he Supr eme Cour t r ecent l y i n t hi s case

15 advi sed - - hel d t hat t he For ei gn Sover ei gn I mmuni t i es Act goes

16 no f ur t her t han t he wor ds i t cont ai ns.

17 You may r emember , your Honor , you f ound t hat you had

18 t he aut hor i t y t o or der di scover y wi t h r espect t o a sover ei gn' s

19 asset s anywher e i n t he wor l d. Ar gent i na ar gued t hat t hat was

20 beyond t he scope of t he FSI A and t he gover nment suppor t ed t hat

21 ar gument .

22 The Supr eme Cour t i n a deci si on by J ust i ce Scal i a sai d

23 you l ook t o t he st at ut e. I f i t doesn' t r est r i ct t he di st r i ct

24 cour t ' s aut hor i t y, t her e i s no r est r i ct i on. And went on t o say

25 t hat t he FSI A r epl aced t he pr i or way i n whi ch f or ei gn sover ei gn


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1 i mmuni t i es deci si ons wer e made; t hat i s, t he execut i ve coul d

2 wei gh i n and def er ence was gi ven t o t he sover ei gn' s vi ews.

3 J ust i ce Scal i a sai d t hat ended 40 year s ago. The st at ut e' s t he

4 st at ut e. And t he vi ews of t he execut i ve br anch don' t car r y any

5 wei ght .

6 The Second Ci r cui t has t aci t l y appr oved t he i ssuance

7 of sanct i ons, monet ar y sanct i ons agai nst t he sover ei gn i n t he

8 Raf adai n case i n whi ch a sanct i on had been i mposed. The

9 sover ei gn sought t o have t hat sanct i on vacat ed and t he Second

10 Ci r cui t af f i r med.

11 But t her e ar e many di st r i ct cour t j udges i n t hi s cour t

12 who have i mposed monet ar y sanct i ons agai nst sover ei gns, and not

13 j ust i n t he di scover y cont ext . For some r eason Ar gent i na

14 t hi nks t hat t he di scover y cont ext cases don' t car r y much

15 wei ght . We' r e not sur e why t hat shoul d be t he case. When a

16 par t y def i es t he cour t ' s or der s wi t h r espect t o di scover y, i t ' s

17 ever y bi t as def i ant as a f ai l ur e t o f ol l ow a cour t ' s or der s i n

18 some ot her cont ext .

19 Ther e ar e sanct i ons i mposed, f or exampl e, when a par t y

20 r ei nst at ed boar d member s of a company when t he cour t had

21 r emoved t hem; i ssued an i nj unct i on r emovi ng boar d member s and

22 i t i ssued sanct i ons unt i l t hose boar d member s wer e r emoved.

23 I n a case cal l ed Chabad, i n t he Di st r i ct Cour t i n t he

24 Di st r i ct of Col umbi a, t he sanct i on was i mposed because t he

25 Russi an Feder at i on f ai l ed t o t ur n over some ar t i f act s t hat wer e


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1 t he subj ect of an i nj unct i on t o be del i ver ed t o t he pl ai nt i f f

2 i n t hat case and i mposed monet ar y sanct i ons.

3 I n t hose cases, your Honor , t he sanct i on was $50, 000 a

4 day, whi ch i s what we suggest i s t he appr opr i at e sanct i on her e.

5 The quest i on your Honor may be aski ng i s: I f I do t hi s amI

6 r eal l y goi ng t o advance t he bal l much? AmI goi ng t o

7 j eopar di ze any set t l ement di scussi ons? I s i t t he r i ght t hi ng

8 t o do at t hi s t i me?

9 And our vi ew i s t hat i t ' s t he r i ght t hi ng because

10 havi ng r ef r ai ned f r omi ssui ng sanct i ons hasn' t r eal l y wor ked.

11 We don' t t hi nk i t ' s goi ng t o get wor se i f you i ssue sanct i ons

12 because i t ' s har d t o i magi ne how i t coul d get wor se.

13 Common sense suggest s t hat i f t he Cour t exer ci ses i t s

14 aut hor i t y, hol ds a par t y t o i t s commi t ment t o have i t s di sput es

15 r esol ved i n t hi s cour t , par t i ci pat es i n t he l i t i gat i on, l oses,

16 has or der s i mposed, t he Cour t needs t o t ake st eps, what ever

17 t hose st eps may be, t o assur e t hat t hose par t i es r espect t he

18 or der s of t he cour t .

19 Ar gent i na may or may not pay t he sanct i ons. We hope

20 t hey wi l l . But i f t hey don' t , your Honor , we may have t o

21 suggest ot her nonmonet ar y sanct i ons t hat may coer ce Ar gent i na

22 i nt o act i ng appr opr i at el y.

23 We al so t hi nk i t ' s i mpor t ant , your Honor , t hat you

24 t ake t hese st eps now because t her e ar e a whol e number of t hi r d

25 par t i es who ar e i nvol ved i n t he payment st r eamwho ar e wat chi ng


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1 what ' s happeni ng. We t hi nk i t ' s ver y i mpor t ant t hat t hi s Cour t

2 show t hat peopl e may not i gnor e t hi s Cour t ' s or der s wi t h

3 i mpuni t y. And i t woul d be an i mpor t ant st ep.

4 THE COURT: Let me ask you t hi s. We al l know t hat

5 t her e can be or der s i ssued by a cour t and t he par t y agai nst

6 whomt he or der i s i ssued doesn' t compl y and t hen t he Cour t

7 di r ect s compl i ance or what ever . I t i s ver y sel domt hat you get

8 any i ssue about cont empt of cour t , al t hough t her e' s cer t ai nl y

9 many i nst ances t hat any j udge has wher e t her e can be f ai l ur e of

10 compl i ance and a need t o have some r emedy.

11 Why does t hi s si t uat i on now, i n your vi ew, j ust i f y

12 r ai si ng t he l evel of what ever you cal l i t t o a cont empt of

13 cour t ?

14 MR. COHEN: Your Honor , because t he r epeat ed

15 vi ol at i ons of expl i ci t di r ect i ons t o act or not t o act i n a

16 par t i cul ar way have been i gnor ed. Repeat edl y.

17 You may not pay t he exchange bondhol der s wi t hout

18 payi ng t he pl ai nt i f f s. They di d t hat .

19 You may not enact l egi sl at i on. You may not t ake st eps

20 t o evade t hi s Cour t ' s or der s. They' ve done t hat .

21 The i dea t hat mer el y doi ng as you have done wi t h gr eat

22 pat i ence i n t he hope t hat t hey wi l l r espect t hi s Cour t ' s or der s

23 and t hat set t l ement wi l l happen has si mpl y not occur r ed.

24 And t he Cour t , we bel i eve, shoul d use i t s power and

25 aut hor i t y t o t ake st eps t o t el l Ar gent i na t hat i t can no l onger


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1 act t hat way. And t he way t hat cour t s do t hat when t hey get t o

2 t he poi nt wher e you have a par t y who si mpl y r ef used t o obey i s

3 t o i mpose sanct i ons; f i nd t hemi n cont empt and hol d sanct i ons.

4 We t hi nk we have been mor e t han pat i ent wi t h

5 Ar gent i na. We have r epr esent at i ons f r omcounsel t hat t her e ar e

6 no such pl ans, not hi ng wi l l happen, t hey' r e comi ng next week t o

7 negot i at e, al l of whi ch has, i n f act , t ur ned out not t o be

8 t r ue.

9 I t hi nk i t ' s t i me f or t he Cour t t o exer ci se i t s

10 aut hor i t y and t o t el l Ar gent i na t hat i t r eal l y needs t o change

11 i t s behavi or .

12 THE COURT: Thank you ver y much.

13 MR. BOCCUZZI : Good af t er noon, your Honor . Car mi ne

14 Boccuzzi , Cl ear y Got t l i eb, f or t he Republ i c of Ar gent i na.

15 As your Honor ment i oned, cont empt sanct i ons ar e ver y

16 sel dom, i n t he ext r eme si t uat i on. And we do not bel i eve t hat

17 t hey' r e war r ant ed her e ei t her as a mat t er of l aw or t he r ecor d

18 t hat your Honor has bef or e you.

19 J ust t o t ake a st ep back and t al k about wher e we ar e

20 i n t er ms of t he f act s. The i nj unct i ons have, i n f act , oper at ed

21 and cont i nue t o oper at e as t he pl ai nt i f f s i nt ended t hemt o

22 oper at e. The exchange bondhol der s have not r ecei ved t hei r

23 payment . And so t he equal t r eat ment t hat t he pl ai nt i f f s want ed

24 i s, i n f act , t he r ul e of t he day.

25 And t o answer some of Mr . Cohen sai d, t her e have been


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1 at t empt s - - your Honor i s awar e of t hem- - t o r esol ve t hem.

2 But i t ' s, as we' ve di scussed i n t he past , a huge and di f f i cul t

3 pr obl em. The par i passu i nj unct i on, obvi ousl y t hei r l ogi c

4 appl i es acr oss t he boar d. And your Honor has been seei ng t he

5 me- t oo appl i cat i ons comi ng i n, t he bi l l i ons of dol l ar s of

6 cl ai ms and j udgment s t hat ar e bei ng asser t ed by f ol ks hol di ng

7 t hose cl ai ms and j udgment s sayi ng me t oo, I get t hat t oo. You

8 coupl e t hat wi t h t he exi st ence of t he so- cal l ed RUFO cl ause,

9 whi ch doesn' t sunset unt i l t he end of t he year , and we have

10 qui t e an i nt r act abl e pr obl emf aci ng us.

11 Cont empt i s meant i n t hi s cont ext , i n t he ci vi l

12 cont ext , t o coer ce or t o compensat e. I t ' s not meant t o puni sh.

13 And her e t he poi nt i s you' r e supposed t o ent er a sanct i on of

14 t he ki nd t hat pl ai nt i f f s ar e demandi ng i f , i n f act , t hat coul d

15 coer ce some r esul t .

16 I don' t see t hat as happeni ng her e. And what I t hi nk

17 what ' s goi ng on i s pl ai nt i f f s want t o puni sh Ar gent i na. But

18 t hat ' s not appr opr i at e.

19 The way you see t he puni shment i s t hat most of t he

20 i t ems on t hei r l i st t hat Mr . Cohen r ecount ed f or you of

21 t r ansgr essi ons or al l eged t r ansgr essi ons ar e t hi ngs t hat

22 happened i n t he past . And t hey ar e t hi ngs t hat ar e speeches by

23 t he pr esi dent of Ar gent i na or member s of her cabi net .

24 Obvi ousl y, agai n, I t hi nk i t ' s common gr ound. Thi s i s a huge

25 si t uat i on f or t he Republ i c t hat i t has t o deal wi t h as a


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1 sover ei gn st at e. I t has macr oeconomi c r ami f i cat i ons. And so

2 j ust a pol i t i co or a speech or a bi l l or a l aw or an at t empt by

3 a sover ei gn t o deal wi t h t hat can' t be seen as somet hi ng t hat

4 cont empt s can be or der ed f or .

5 Agai n, get t i ng back t o wher e t hi ngs st and, t he

6 exchange bondhol der s have not obt ai ned t hei r money. And so

7 Mr . Cohen, I t hi nk, i s i gnor i ng. We' ve sai d t hat as a mat t er

8 of l aw t hi s i s an ext r eme sanct i on when you t hi nk about i t i n

9 t he cont ext of i nt er nat i onal l aw and pr act i ce, when you t hi nk

10 about i t i n t he cont ext of t he FSI A. Because i t ' s r eal l y

11 t ar get ed at t hose qui nt essent i al sover ei gn act s: Speeches,

12 l egi sl at i on, as opposed t o an act ual evasi on by t he Republ i c of

13 Ar gent i na.

14 THE COURT: Wel l , you know, I don' t t hi nk t hat cover s

15 t he whol e gr ound. I ' mr eal l y gl ad t o have t hi s oppor t uni t y t o

16 di scuss t hi s wi t h you because we have not had such an

17 oppor t uni t y bef or e. But what you - - as I under st and i t what i s

18 pr oposed i s t o di spl ace t he i ndent ur e t r ust ee and appoi nt

19 somebody i n Buenos Ai r es and t hat t hat par t y, t hat of f i ci al

20 wi l l t hen pay t he i nt er est due t o t he exchanges of 2005 and

21 2010 wi t hout any r ecogni t i on of t he nonexchanges and so f or t h.

22 That ' s t he pr obl em.

23 I t i sn' t r het or i c. I t seems t o me t her e' s a ver y

24 concr et e pr oposal t o - - t hat woul d cl ear l y vi ol at e t he

25 i nj unct i on. So what I ' mf aced wi t h i s, unl ess you cor r ect me,


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1 i s a vi ol at i on of t he i nj unct i on i n ver y concr et e t er ms.

2 I ' mnot wor r i ed about r het or i c. But I ' mwor r i ed about

3 vi ol at i ons.

4 Go ahead.

5 MR. BOCCUZZI : Thank you, your Honor .

6 As t o t hat , agai n, we have t o t al k about cl ear and

7 convi nci ng evi dence of a vi ol at i on t hat has occur r ed. Bank of

8 New Yor k, i n r esponse t o t he l egal not i ce, has i nf or med t he

9 Republ i c t hat i t r emai ns as t r ust ee and wi l l not cease bei ng

10 t he t r ust ee unt i l t her e' s an or der f r omt hi s cour t sayi ng i t i s

11 no l onger t he t r ust ee.

12 Your Honor speci f i cal l y ent er ed par agr aph f our of t he

13 amended i nj unct i ons, t he so- cal l ed ant i evasi on pr ovi si on, t o

14 have somet hi ng i n pl ace t hat t hi r d par t i es woul d l ook t o i f

15 t her e was an at t empt t o change t he payment mechani smor do

16 ot her t hi ngs. And we' ve seen agai n and agai n over t he cour se

17 of t he summer t he t hi r d par t i es who have been i n t hi s cour t r oom

18 because t hey' r e not maki ng a move unl ess t hey get a gr een l i ght

19 f r omyour Honor .

20 And so i f you l ook at what t hey' r e aski ng f or , t hey' r e

21 sayi ng ent er t hi s or der , f i nd t he Republ i c i n cont empt , or der

22 hundr eds of t housands of dol l ar s, mi l l i ons of dol l ar s per year

23 i n penal t i es, even t hough t hi s case i s al l about t he i nabi l i t y

24 of t he Republ i c t o pay t hei r cl ai ms.

25 And so what t hey' r e aski ng your Honor i s t o add mor e


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1 money on t op of t hat f or somet hi ng t hat ' s sayi ng - - has not yet

2 happened but t hat t hey' r e af r ai d i s goi ng t o happen.

3 Your Honor has sai d i f t he payment mechani smchanged,

4 i f t her e ar e di f f er ent bonds t he par i passu i nj unct i ons woul d

5 bi t e i n ef f ect any addi t i onal payment . So we' r e t al ki ng about

6 a l ot of t hi ngs i n f ut ur o.

7 And r eal l y f or t he cont empt sanct i on t hey' ve got t o

8 hone i n on a vi ol at i on t hat can be pur ged. And her e t her e i s

9 not hi ng t hat I can see t hat t hey have i dent i f i ed t hat can be

10 pur ged subj ect t o t he cont empt sanct i on.

11 I r eal l y t hi nk what ' s goi ng on her e - - because t hi s i s

12 not t he f i r st t i me t hey' ve come i n. Now t hey' ve made an act ual

13 mot i on. They have a decl ar at i on. I n t he past t hey sent your

14 Honor l et t er s, whi ch i s an i mpr oper pr ocedur e, sayi ng gi ve us

15 cont empt . And t hey want ed t o do t hat si nce t he Supr eme Cour t

16 deni ed cer t back i n J une. And t her e was no basi s f or i t t hen

17 and t her e i s no basi s f or i t now.

18 Obvi ousl y, t hey t hi nk i t wi l l be somet hi ng good f or

19 t hemt o t r ump i t and t o put i n t hei r own adver t i sement s and

20 t hei r own r het or i c agai nst t he Republ i c, but I don' t t hi nk t hat

21 i s a pr oper exer ci se of t he cont empt power , put t i ng asi de t he

22 t hr eshol d l egal ar gument s t hat we' ve r ai sed. I t wi l l onl y make

23 t he si t uat i on wor se. I t wi l l not hel p t he si t uat i on at al l i n

24 t er ms of , hopef ul l y, a r esol ut i on. Agai n, i t doesn' t hel p when

25 t he st at e of pl ay - - st at e of pl ay i s t hat t he i nj unct i ons have


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1 been f unct i oni ng.

2 So, I r eal l y want t o t ake a st ep back. We' ve got t en

3 wher e we' ve got t en. Obvi ousl y, we have a l ar ge pr obl em. We' r e

4 r eal l y i n t he l and of an unpr ecedent ed si t uat i on. Thi s has not

5 happened bef or e i n t he cont ext of a sover ei gn debt

6 r est r uct ur i ng.

7 These i nj unct i ons af f ect not j ust t he Republ i c of

8 Ar gent i na and i t s ci t i zenr y but i t goes beyond t o hol der s of

9 t he per f or mi ng debt , t o t he f i nanci al i nst i t ut i ons, we' ve seen

10 ar e caught i n t he mi ddl e of t hi s.

11 THE COURT: Let me i nt er r upt .

12 When t he Republ i c made t he exchange of f er s i n 2005 and

13 2010 most peopl e accept ed. So you have a l ot of exchange bonds

14 and i nt er est due on t hose bonds.

15 Now, i t wasn' t compul sor y. Ever ybody di d not accept .

16 And so what you wer e l ef t wi t h i s a si t uat i on wher e a l ot of

17 peopl e have new bonds and t hey have cer t ai n assur ances t hat

18 accompany t hose new bonds and so f or t h.

19 Then you have t he peopl e who di d not accept . The

20 pr obl emt hat has exi st ed f or a l ong t i me i s t hi s. I t seems t o

21 me t hat i f t he Republ i c had been r esponsi bl e, t he Republ i c

22 woul d have r ecogni zed t hat t her e was a pr obl emher e, and t her e

23 was a pr obl em: How t o deal wi t h t he peopl e who di d an

24 exchange. Not easy.

25 But t he pr obl emwas exacer bat ed because what shoul d


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1 have been done i s t hat t he Republ i c goes t o r epr esent at i ves of

2 t hose peopl e who di d an exchange and t r i es t o st ar t wor ki ng

3 somet hi ng out . Pr obl ems have exi st ed har der t han t hat . And

4 i nst ead of doi ng t hat , t he Republ i c, i n al l ki nds of r het or i c

5 and so f or t h si mpl y sai d: We' r e not goi ng t o r ecogni ze. We' r e

6 not goi ng t o pay. We' r e not goi ng t o deal wi t h t hat . That ' s

7 what has cr eat ed t he pr obl em; t o t ake a ver y i mpor t ant and

8 subst ant i al amount of debt and t r y t o say i t doesn' t exi st and

9 we won' t pay i t and we cal l i t vul t ur es and al l of t hat .

10 Why di dn' t t he Republ i c say we have somet hi ng t o wor k

11 out ? Why di dn' t t hey do t hat i nst ead of doi ng ever yt hi ng

12 opposi t e t o t hat t hat t hey coul d t hi nk of ? That ' s t he t hi ng

13 t hat i s bot her some.

14 MR. BOCCUZZI : The Republ i c, your Honor , I bel i eve di d

15 act r esponsi bl y. Let ' s not f or get i t t ook t wo debt

16 r est r uct ur i ngs. They got 92 per cent . The pr obl emwas t her e

17 was so much def aul t ed debt . That st i l l l eaves t he cl ai ms of

18 t hese f ol ks. And i t ' s a l ot . I t ' s si x bi l l i on i n pr i nci pal

19 onl y.

20 But t hat ' s not t he r esul t of t he Republ i c act i ng

21 i r r esponsi bl y. That ' s t he r esul t of havi ng a t r agi c f i nanci al

22 and economi c col l apse i n 2001.

23 THE COURT: You' r e not addr essi ng my quest i on.

24 MR. BOCCUZZI : But t o get t o t hat any need now t o deal

25 wi t h t hi s pr obl emi s - - we' r e t al ki ng about $20 bi l l i on i n


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1 def aul t ed pr i nci pal and i nt er est . And we' r e t al ki ng about t he

2 RUFO cl ause t hat pr event s any of f er t o t hat gr oup unt i l i t s sun

3 set s.

4 And so when we asked t he Cour t back i n J une f or mor e

5 t i me and t hese f ol ks who t ol d you a f ew year s ago t hat t i me was

6 on t hei r si de, t hey' d be her e f or decades, al l of a sudden si x

7 mont hs was t oo l ong. And so we' r e hamst r ung.

8 THE COURT: I do not under st and what you' r e sayi ng

9 now.

10 MR. BOCCUZZI : The poi nt i s - - t he poi nt i s, your

11 Honor , I ' mj ust t r yi ng t o r ef ocus a l i t t l e bi t . Your Honor had

12 ment i oned t he Republ i c, how i t had act ed. And I was t r yi ng t o

13 expl ai n how i t has been act i ng r esponsi bl y i n t he wake and as a

14 r esul t of t hi s f i nanci al col l apse and a l ot of def aul t ed debt

15 and t he const r ai nt s on i t . And t he const r ai nt s on i t ar e t he

16 number of f ol ks out t her e who ar e or who wi l l demand par i passu

17 r i ght s, t he exi st ence of i t s cont r act ual r est r i ct i ons on t he

18 per f or mi ng debt and j ust t he t i mi ng si t uat i on we f i nd our sel ves

19 i n.

20 Thi s pr obl em- - I j ust don' t want i t t o be seen as, as

21 your Honor had sai d, act i ng r esponsi bl y or i r r esponsi bl y. The

22 Republ i c has act ed as a r esponsi bl e sover ei gn i n t r yi ng t o deal

23 wi t h t hi s si t uat i on and cont i nues t o t r y t o act t hat way.

24 Thi s case has obvi ousl y at t r act ed t he at t ent i on of

25 bodi es t hr oughout t he wor l d. Ther e' s a U. N. r esol ut i on


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1 concer ni ng t he need t o come up wi t h or der l y debt r esol ut i on

2 pr ocesses. We ment i oned t hat .

3 The r eason why we ment i oned t hat i s t o show t he keen

4 sover ei gn i nt er est s at st ake her e and what i t i s we' r e deal i ng

5 wi t h i n t he cont ext . Because t he cont ext of t oday' s mot i on i s

6 t hat t hese f ol ks want a f i ndi ng of cont empt , whi ch i s a ver y

7 ser i ous t hi ng. They want i t f ound agai nst a sover ei gn. And

8 t hey want dai l y f i nes i mposed, a huge amount of money when

9 we' r e al r eady t al ki ng about a huge amount of money t hat t he

10 Republ i c has been t r yi ng t o deal wi t h.

11 And so i n t er ms of t he i ssue on t he t abl e t oday, I

12 woul d say t hat i n t he past your Honor has managed t he

13 si t uat i on. When t he J une payment was made t o Bank of New Yor k,

14 your Honor sai d Bank of New Yor k hol d on t o t he money i n your

15 account i n Buenos Ai r es and t her e t he money st ays. So your

16 Honor ' s i nj unct i ons have f unct i oned t he way t hey wer e set up t o

17 f unct i on. And t hey' r e so - - so I don' t t hi nk t he pur gi ng

18 mechani sm, t o i mpose a f i ne on t he Republ i c, f i nd i t i n

19 cont empt unt i l somet hi ng changes doesn' t make sense her e

20 because t he i nj unct i ons have, i n f act , bi t and t hese f ol ks ar e

21 not get t i ng t hei r money whi l e t hese f ol ks don' t get t hei r

22 money.

23 So wi t h t hat , your Honor , unl ess you have quest i ons I

24 woul d end wi t h t hat poi nt . But I j ust t hi nk at t he end of t he

25 day cont empt on t hi s r ecor d, apar t f r ombei ng l egal l y


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1 i nappr opr i at e, i s j ust goi ng t o make mat t er s wor se. And your

2 Honor has kept an even keel t o dat e and I woul d r espect f ul l y

3 ask t hat we cont i nue i n t hat f r ame and not make mat t er s wor se.

4 THE COURT: Thank you.

5 MR. COHEN: May I br i ef l y r espond?

6 THE COURT: Yes.

7 MR. COHEN: Your Honor , Mr . Boccuzzi suggest s t hat t he

8 sanct i ons we' r e aski ng f or ar e desi gned t o compel Ar gent i na t o

9 pay amount s t hat i t si mpl y can' t pay. That ' s t aki ng t he eye

10 of f of t he bal l t hat we ar e aski ng your Honor t o consi der . We

11 want Ar gent i na t o st op t aki ng st eps t o evade t he or der . I t ' s a

12 l i t t l e i r oni c f or counsel t o ar gue t hat t he i nj unct i on i s

13 wor ki ng not wi t hst andi ng hi s cl i ent ' s at t empt s t o evade i t .

14 We' r e l ucky t hat we have Bank of New Yor k who has r ef used t o

15 compl y. They have vi ol at ed t he or der s. They j ust di dn' t get

16 away wi t h i t .

17 Your Honor , wi t h r espect t o Bank of New Yor k - - I

18 don' t know i f counsel has r ead t he Sept ember 22 not i ce t hat was

19 i n t he Ti mes, but i t makes i t cl ear t hat Ar gent i na has t aken

20 st eps t o make i t i mpossi bl e f or Bank of New Yor k t o act as

21 t r ust ee.

22 I f I coul d j ust t ake a mi nut e t o r ead i t . I t says,

23 " I ndeed by means of Resol ut i on No. 437 of t he Cent r al Bank of

24 Ar gent i na on August 25, t he aut hor i zat i ons gr ant ed t o t he t wo

25 i ndi vi dual s who unt i l t hen act ed as sol e r epr esent at i ves of


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1 Bank of New Yor k Mel l on i n Ar gent i na wer e r evoked. Ther ef or e,

2 si nce Bank of New Yor k Mel l on i s nei t her l i censed by t he

3 Cent r al Bank t o oper at e as a f i nanci al i nst i t ut i on i n

4 Ar gent i na, nor i s i t ot her wi se r egi st er ed t o r ender ser vi ces as

5 t r ust ee, nor i s i t dul y aut hor i zed t o act t hr ough l ocal

6 r epr esent at i ves, sai d bank does not have a t r ust ee or

7 r epr esent at i ve of f i ce i n Ar gent i na as r equi r ed under Sect i on

8 5. 8 of t he t r ust i ndent ur e and accor di ngl y i t has ceased t o be

9 el i gi bl e t o ser ve as t r ust ee. "

10 They have t aken st eps t o make i t i mpossi bl e f or Bank

11 of New Yor k t o act as t r ust ee.

12 What we woul d l i ke as a sanct i on, t hat i s what we

13 woul d l i ke t o see as a way t o cur e t he cont empt , i s t o

14 r ei nst at e Bank of New Yor k as t he t r ust ee.

15 Now, t hat has not hi ng t o do wi t h payi ng us t he money

16 t hat ' s owed t o us. I t goes t o t he cor e of t he i nj unct i on, and

17 i t wi l l el i mi nat e t he abi l i t y, at l east i n one way, t o evade

18 t hat i f Bank of New Yor k i s back i n pl ace.

19 Ther e' s a payment due t omor r ow, your Honor .

20 Sept ember 30 t her e' s a payment due. Ar e t hey goi ng t o pay Bank

21 of New Yor k Mel l on as t r ust ee? Ar e t hey goi ng t o pay t hi s

22 ent i t y i n Ar gent i na even t hough t hey don' t pay us?

23 Your Honor , t hi s i s a ver y ser i ous mat t er . We t hi nk

24 sanct i ons ar e absol ut el y r equi r ed t o pr event t he cont i nued act s

25 of cont empt t hat we ar e seei ng f r omAr gent i na.


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1 THE COURT: Thank you al l ver y much. Any ot her

2 at t or ney wi sh t o - -

3 MR. BOCCUZZI : May I j ust addr ess t hat poi nt , your

4 Honor ?

5 THE COURT: Pl ease do.

6 MR. BOCCUZZI : The Bank of New Yor k has r esponded

7 t o - - t wo poi nt s.

8 One. To be cl ear , t he r epr esent at i ve of f i ce of t he

9 Bank of New Yor k i n Ar gent i na i s not t he ent i t y t hat per f or ms

10 t he t r ust ee f unct i ons. That ' s per f or med out of New Yor k, as I

11 under st and i t .

12 Number t wo. The Bank of New Yor k has r esponded t o t he

13 l egal not i ce and t hey' ve i nf or med t he Republ i c of Ar gent i na

14 t hat t hey, i n t hei r vi ew, ar e st i l l t he t r ust ee and t hey wi l l

15 cont i nue t o per f or mal l of i t s obl i gat i ons under t he i ndent ur e

16 and gover ni ng l aw. And so i n doi ng so cannot r i sk cont empt by

17 def yi ng t he pl ai n i mpor t of t he i nj unct i ons.

18 So, what Mr . Cohen j ust sai d i s ver y much di sput ed by

19 t he Bank of New Yor k. And, agai n, I t hi nk t he sanct i on he' s

20 aski ng f or doesn' t wor k t her e.

21 THE COURT: Al l r i ght . Let me put my r ul i ng on t he

22 r ecor d.

23 Pl ai nt i f f s have moved t o hol d t he Republ i c of

24 Ar gent i na i n ci vi l cont empt of cour t and has moved al so f or t he

25 Cour t t o i mpose sanct i ons.


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1 The Cour t hol ds t hat t he Republ i c of Ar gent i na i s i n

2 ci vi l cont empt of cour t . As f ar as t he sanct i ons, t he Cour t

3 wi l l r eser ve deci si on on t hat f or f ur t her pr oceedi ngs.

4 What i s t he r eason f or t he r ul i ng I have made?

5 The l egal f r amewor k set t i ng out t he obl i gat i ons of t he

6 var i ous par t i es i n t hi s mat t er i s cont ai ned i n t he Febr uar y 23,

7 2012 i nj unct i on. I wi l l not t ake t i me t o go over t he t er ms of

8 t hat . I wi l l assume knowl edge on t he par t of t he l awyer s her e

9 and access t o t he i nf or mat i on by ot her s.

10 The pr obl emi s t hat t he Republ i c of Ar gent i na has been

11 and i s now t aki ng st eps i n an at t empt t o evade cr i t i cal par t s

12 of t hat Febr uar y 23 or der . That or der i s cl ear beyond quest i on

13 t hat t he Republ i c can onl y make payment s of i nt er est t o i t s

14 exchange bondhol der s i f i t makes an appr opr i at e payment t o

15 t hose who di d not exchange. That i s t he t er ms of t hat

16 i nj unct i on or or der , what ever you cal l i t .

17 Under t he t er ms of what i s i n pl ace, t her e i s an

18 i ndent ur e t r ust ee, Bank of New Yor k Mel l on. Al so t he

19 pr oceedi ngs about t he bond i ssue and t he exchange bonds ar e

20 essent i al l y t o be i n New Yor k. And when t he bonds wer e

21 or i gi nal l y i ssued i t was, of cour se, hel d out t hat i f t her e

22 wer e def aul t s, i f t her e wer e pr obl ems, mat t er s coul d come

23 bef or e a cour t i n New Yor k. Thi s was a sel l i ng poi nt . Peopl e

24 knew t hat t hey woul d not have t o go t o Buenos Ai r es i f t her e

25 was a pr obl em.


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1 What t he Republ i c of Ar gent i na i s at t empt i ng t o do now

2 i s essent i al l y move t he pr oceedi ngs about t he bonds t o Buenos

3 Ai r es. And t he pur pose i s t o act i n cer t ai n ways t hat ar e a

4 vi ol at i on of t he Febr uar y 23 i nj unct i on. But t he at t empt i s t o

5 get a new t r ust ee, a new l ocat i on, so t hat t he Republ i c can

6 make payment s t hat ar e not aut hor i zed by t he i nj unct i on. That

7 i s what i s goi ng on. Document s, st at ement s, al l show exact l y

8 what I amt al ki ng about .

9 I shoul d be a l i t t l e mor e speci f i c about one poi nt .

10 Maybe I ' ve cover ed i t , but I ' l l r epeat . A ver y i mpor t ant

11 aspect of t he Febr uar y 23 i nj unct i on i s t hat i f and when t he

12 Republ i c seeks t o pay i nt er est t o t he peopl e have exchanged

13 bonds, t hen an appr opr i at e payment must be made under what i s

14 cal l ed t he par i passu cl ause t o t hose who di d not exchange.

15 So t he Republ i c has t wo basi c obl i gat i ons: One, t o

16 t he exchanger s and one t o t he peopl e who di d not exchange. And

17 bot h have t o be deal t wi t h. One cannot be i gnor ed or deni ed as

18 t o deal i ng wi t h i t .

19 But what has happened i s t he Republ i c i n var i ous ways

20 has sought t o avoi d t o not at t end t o, al most t o i gnor e t hi s

21 basi c par t of i t s f i nanci al obl i gat i ons; t hat i s, obl i gat i ons

22 t o t he peopl e who di d not exchange.

23 What i s now pr oposed by t he Republ i c i s t o di spl ace

24 t he i ndent ur e t r ust ee. What i s pr oposed i s t o di spl ace t he

25 i ndent ur e t r ust ee so t hat a new of f i ci al wi l l make t he payment s


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1 t hat ar e not al l owed under t he i nj unct i on of t hi s Cour t and of

2 t he Second Ci r cui t .

3 I r epeat . The pur pose of di spl aci ng t he i ndent ur e

4 t r ust ee and havi ng a new of f i ci al l ocat ed i n Buenos Ai r es i s so

5 t hat payment s can be made of i nt er est t o t he exchanger s wi t hout

6 any payment s or any r ecogni t i on at al l bei ng made of t he ot her

7 phase of t he obl i gat i ons; t hat i s, t he obl i gat i ons t o t he

8 peopl e who di d not exchange and who have t hei r bonds, bonds

9 i ssued by t he Republ i c.

10 What I ' mt al ki ng about i s r ef l ect ed i n var i ous publ i c

11 document s. I t ' s r ef l ect ed i n t he pr oposed - - act ual l y t he

12 act ual l egi sl at i on. But l et me say t hi s. The l egi sl at i on i s

13 not somet hi ng t hat spr ung f r omt he nat i onal congr ess. What

14 we' r e t al ki ng about i s pr oposal s and changes and act i ons t hat

15 come f r omt he execut i ve br anch of t he Republ i c of Ar gent i na.

16 Two t hi ngs ar e necessar y t hi s af t er noon. One i s t hi s

17 Cour t t o make a ver y cl ear hol di ng t hat t he pr oposal s ar e

18 i l l egal : The pr oposal t o di spl ace t he i ndent ur e t r ust ee, t he

19 pr oposal t o move t he af f ai r s about t hese bonds t o Ar gent i na,

20 move t hemaway f r omt he Uni t ed St at es; and t he pr oposal t o make

21 i nt er est payment s t o t he exchange bondhol der s wi t hout

22 r ecogni zi ng t he ot her ver y i mpor t ant par t of t he obl i gat i ons of

23 t he Republ i c and t hat i s obl i gat i ons t o t he peopl e who di d not

24 exchange and who have t he bonds st i l l . The Cour t hol ds and

25 r ul es t hat t hose st eps, t hose pr oposed st eps ar e i l l egal and


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1 cannot be car r i ed out .

2 Thi s br i ngs me t o t he r equest made by pl ai nt i f f s t o

3 hol d t he Republ i c i n cont empt of Cour t , ci vi l cont empt of

4 cour t .

5 We al l know, t he l awyer s her e and I know t hat t o hol d

6 a par t y i n cont empt of cour t i s a r ar e t hi ng. I was r equest ed

7 t o do so at an ear l i er st age and decl i ned. But , t he Cour t i s

8 compel l ed t o r ecogni ze t hat what i s r eal l y t he i l l egal conduct

9 of t he Republ i c i nvol vi ng t he at t empt t o unl awf ul l y change and

10 depar t f r omt he pr ovi si ons of t he gover ni ng i nj unct i on, t hat

11 conduct and t hose i nt ent i ons and pur poses ar e - - t hey dat e back

12 a bi t but t hey ar e goi ng on. And of cour se t he Cour t

13 cont empl at es t hat t he Republ i c wi l l obey t he pr ohi bi t i ons t hat

14 have j ust been announced. But as of t he cur r ent pr esent t i me

15 t he Republ i c has been at t hi s, at t hese at t empt s t o make

16 i l l egal changes i n our st r uct ur e. The Republ i c has been

17 engaged i n i t t o t he ext ent t hat I do bel i eve t hat i t i s

18 appr opr i at e t o hol d t he Republ i c i n ci vi l cont empt of cour t and

19 I so hol d. The r easons I t hi nk ar e evi dent f r omwhat I have

20 sai d.

21 Now, on t he i ssue of sanct i ons. I do not bel i eve t hat

22 i t i s appr opr i at e t o deal wi t h sanct i ons t hi s af t er noon. I t i s

23 per f ect l y appr opr i at e f or a cour t t o hol d a par t y i n ci vi l

24 cont empt and r eser ve on sanct i ons and t hat i s what I amdoi ng.

25 We wi l l wor k out a means f or deal i ng wi t h sanct i ons. And t hat


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1 I ' msur e can be done by some schedul i ng wor k among t he par t i es

2 and t he cour t . But I amr eser vi ng on t he i ssue of sanct i ons.

3 That concl udes our pr oceedi ng of t hi s af t er noon.

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