Bugliotti et al v. The Republic of Argentina

Filing 48

MEMORANDUM & ORDER granting 31 Motion to Dismiss. Accordingly, the Republic's renewed motion to dismiss (dkt. no. 31) is GRANTED. The Clerk of the Court shall mark the action closed and all pending motions denied as moot. SO ORDERED. (Signed by Judge Loretta A. Preska on 3/31/2021) (va) Transmission to Orders and Judgments Clerk for processing.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
EUCLIDES BARTOLOME BUGLIOTTI
and MARIA CRISTINE DE BIASI;
and ROXANA INES ROJAS as
Executor of the Estate of Hugo
Miguel Lauret,
Plaintiffs,

17 Civ. 9934 (LAP)
MEMORANDUM & ORDER

-againstTHE REPUBLIC OF ARGENTINA
Defendant.
LORETTA A. PRESKA, Senior United States District Judge:
Before the Court is the motion to dismiss, pursuant to
Federal Rules of Civil Procedure 12(b)(1), (2), and (5), filed
by Defendant the Republic of Argentina (“the Republic”).1
Plaintiffs Euclides Bartolome Bugliotti, Maria Cristine De
Biasi, and Roxana Ines Rojas as Executor of the Estate of Hugo
Miguel Lauret, oppose the motion.2
For the reasons stated below, the motion to dismiss is
GRANTED.

1

(See Defendant’s Notice of Motion to Dismiss Plaintiffs’
Complaint, dated July 10, 2020 [dkt. no. 31]; see also
Memorandum of Law in Support of Defendant’s Motion to Dismiss
(“Mot.”), dated July 10, 2020 [dkt. no. 32]; Reply Memorandum of
Law in Support of Defendant’s Motion to Dismiss (“Reply”), dated
Oct. 5, 2020 [dkt. no. 43].)
2 (See Plaintiffs’ Memorandum in Opposition to Defendant’s Motion
to Dismiss (“Opp.”), dated Aug. 24, 2020 [dkt. no. 39].)

I.

Background

The Court assumes familiarity with this dispute’s general
background, which the Court set out in its Order granting the
Republic’s first motion to dismiss, (see Order, dated Jan. 15,
2019 [dkt. no. 19]), and which the Court of Appeals further
described, see Bugliotti v. Republic of Argentina, 952 F.3d 410,
411 (2d Cir. 2020).

The Court briefly recounts the facts here.

a. Facts
Like many cases before this Court, this lawsuit involves
the Republic’s 1994 bond issuance and its subsequent default on
that debt.

Plaintiffs, who are owners of bonds issued by the

Republic pursuant to the 1994 Fiscal Agency Agreement (“FAA”),
enrolled their bonds in an Argentine program called the Tax
Credit Certificate program (“Program”), just before Argentina’s
default in 2001.

(See Complaint (“Compl.”), dated Dec. 20, 2017

[dkt. no. 1], ¶¶ 6-7, 12-13.)

This tax-credit program, which

allowed individual bondholders to credit unpaid interest on
their bonds to local tax liabilities, has given rise to the
disputed issues in this case.

(Id. at ¶ 12.)

Pursuant to the Program, in November 2021, Plaintiffs
deposited their bonds into trust with Caja de Valores.

(Id.)

In exchange, they received tax-credit certificates and custody
certificates (“CCs”), which matched the bonds’ outstanding
principal.

(Id. ¶¶ 12, 15.)

It is not alleged that the Tax
2

Credit Certificate program or the instruments issued in
conjunction with this program included any waiver of sovereign
immunity by the Republic or any submission to this Court’s
jurisdiction.

Instead, Plaintiffs allege that the FAA contains

a provision whereby the Republic waives its sovereign immunity,
submits to this Court’s jurisdiction, and appoints an agent for
service of process.

(Id. ¶ 10.)

In December 2001, the Republic defaulted on its FAA bonds.
(Id. ¶¶ 13-14.)

While Plaintiffs were able to redeem their tax-

credit certificates as the interest payments came due, they have
yet to receive payment for the principal due at maturity,
despite the bonds’ reaching (and passing) their maturity dates.
(Id. ¶ 15.)

In 2012, Plaintiffs initiated an amparo proceeding

in Argentine court seeking a declaration that Argentina’s
postponement of its payment obligations was unconstitutional.
(Id. ¶ 16.)

That proceeding remains ongoing.

(Id.)

After their remaining bonds matured in 2017 and Argentina
again failed to repay the principal due, Plaintiffs filed this
lawsuit seeking damages in the amount of unpaid principal and
post-maturity interest.3

(Id. ¶ 43(a).)

3

Plaintiffs also sought injunctive relief based on a violation
of the FAA’s pari passu clause, (id. at ¶ 43(b)), which this
Court denied and the Court of Appeals affirmed. Bugliotti v.
Republic of Argentina, 952 F.3d 410, 415 (2d Cir. 2020).
3

b. Procedural History
On January 15, 2019, this Court granted the Republic’s
motion to dismiss Plaintiffs’ claims.

Bugliotti v. Republic of

Argentina, No. 17 CIV 9934 (LAP), 2019 WL 586091, at *4
(S.D.N.Y. Jan. 15, 2019).

Reasoning that Plaintiffs’

participation in the Tax Credit Certificate program had effected
an exchange of their bonds for tax-credit certificates and CCs,
this Court held that “Plaintiffs no longer have legal ownership”
of the bonds under Argentine trust law.

Id. at *2.

Because

Plaintiffs no longer owned the bonds, they could no longer avail
themselves of Argentina’s sovereign-immunity waiver and consents
to service of process and personal jurisdiction.

See id. at *3.

Therefore, this Court found it lacked jurisdiction over
Plaintiffs’ action.

Id.

Alternatively, this Court held that dismissal was
appropriate under the doctrine of international comity because
of the pending amparo proceeding in Argentina and “the
importance of the Tax Credit Program to the Republic[’s]”
sovereign interests.

Id.

Plaintiffs appealed, arguing that this Court’s focus on
“ownership” of the bonds was misplaced.

Bugliotti v. Republic

of Argentina, 952 F.3d 410, 413 (2d Cir. 2020).

The Court of

Appeals agreed and determined that the relevant “question is not
whether Plaintiffs ‘own’ the bonds but whether they may sue to
4

enforce them.”

Id. at 411.

Finding that this Court is “better

situated in these circumstances to implement Rule 44.1’s
flexible procedures for determining foreign law,” the Court of
Appeals remanded the case with instructions to determine whether
Plaintiffs retain the right to sue on the bonds under Argentine
law.

Id.
As to adjudicative international comity, the Court of

Appeals reversed this Court’s finding that the Republic’s
interests in its Tax Credit program were “categorically
sufficient to trigger comity-based abstention.”

Id. at 415.

However, the Court of Appeals left open the question on remand
as to whether abstention might be appropriate on international
comity grounds “based upon other considerations, or on a more
developed record.”

Id. at 415 n.4.

Following the Court of Appeals’ remand, the Republic filed
a renewed motion to dismiss Plaintiffs’ claims for lack of
standing, insufficient service of process, lack of subject
matter jurisdiction, lack of personal jurisdiction, and reasons
of international comity pursuant to Federal Rules of Civil
Procedure 12(b)(1), (2), and (5).

(See Mot. at 1.)

The

Republic contends that this Court lacks jurisdiction because the
plain text of Argentine trust law provides the trustee with an
“exclusive” right to enforce the bonds.

(See id. at 10-11, 13-

15; see also Declaration of Gabriel Bottini in Support of
5

Defendant’s Motion (“Bottini Decl.”), dated July 10, 2020 [dkt.
no. 33], ¶ 10.)

Alternatively, the Republic justifies dismissal

on international comity grounds, claiming that the amparo
proceedings are parallel to this litigation and present
“exceptional circumstances” warranting abstention. (See Mot. at
16-20.)
In response, Plaintiffs argue that this Court should deny
the Republic’s renewed motion because they are authorized to sue
as trust beneficiaries in place of the trustee under Argentine
trust and contract law, which allows trustees and beneficiaries
to enter freely into alternative agreements concerning
enforcement rights.

(See Opp. at 10-12.)

Plaintiffs also argue

that the international comity issue is beyond the scope of
remand and that exceptional circumstances do not justify
abstention on such grounds because the amparo proceedings are
not parallel to this litigation.

(Id. at 18-20.)

On reply, the

Republic avers that Plaintiffs’ arguments run contrary to both
Argentine law and a plain reading of the Trust Agreement upon
which they rely.

(See Reply at 2-6.)

As to the international

comity issue, the Republic argues that the Court of Appeals
“explicitly contemplated” that comity-based abstention might be
appropriate on remand “based upon other considerations” or “a
more developed record” and that foreign proceedings need not be

6

identical to be considered parallel for abstention purposes.
(Id. at 8-9.)
II.

Legal Standard

a. Fed. R. Civ. P. 12(b)(1)
The Court of Appeals has designated Rule 12(b)(1) as the
“proper procedural route” for a challenge to standing.

All. For

Env't Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d 82, 88
n.2 (2d Cir. 2006).

“When reviewing a Rule 12(b)(1) motion to

dismiss, a court ‘must accept as true all material factual
allegations in the complaint, but [may] not [ ] draw inferences
from the complaint favorable to plaintiffs.’”

Waxman v. Cliffs

Nat. Res. Inc., 222 F. Supp. 3d 281, 286 (S.D.N.Y. 2016) (citing
J.S. v. Attica Cent. Sch., 386 F.3d 107, 110 (2d Cir. 2004).
“In defending against a motion to dismiss under Rule 12(b)(1),
the non-moving party bears the burden of proving the court's
subject matter jurisdiction by a preponderance of the evidence.”
Sloan v. Michel, No. 15 CIV. 6963 (LGS), 2016 WL 1312769, at *3
(S.D.N.Y. Apr. 4, 2016); see also Makarova v. United States, 201
F.3d 110, 113 (2d Cir. 2000); see also Davis v. Kosinksy, 217
F.Supp.3d at 706, 707 (S.D.N.Y. 2016).

Under Rule 12(b)(1), a

court “may refer to evidence outside the pleadings.” Makarova,
201 F.3d at 113; see Davis, 217 F.Supp.3d at 708, 2016 WL
6581300, at *1.

A court “may not rely on conclusory or hearsay

statements contained in the affidavits,” however, in considering
7

evidence outside the pleadings.

Attica Cent. Sch., 386 F.3d at

110.
b. Fed. R. Civ. P. 12(b)(2)
“A plaintiff bears the burden of demonstrating personal
jurisdiction over a person or entity against whom it seeks to
bring suit.”

Troma Entm’t, Inc. v. Centennial Pictures Inc.,

729 F.3d 215, 217 (2d Cir. 2013).

“In order to survive a motion

to dismiss for lack of personal jurisdiction, a plaintiff must
make a prima facie showing that jurisdiction exists.”

Eades v.

Kennedy, PC Law Offices, 799 F.3d 161, 167-68 (2d Cir. 2015).
“Th[at] prima facie showing must include an averment of facts
that, if credited by the ultimate trier of fact, would suffice
to establish jurisdiction over the defendant.”

O’Neill v. Asat

Tr. Reg. (In re Terrorist Attacks on Sept. 11, 2001), 714 F.3d
659, 673 (2d Cir. 2013) (quotation marks omitted).
c. Fed. R. Civ. P. 12(b)(5)
Rule 12(b)(5) provides for dismissal of a claim for
improper service of process.

Fed. R. Civ. P. 12(b)(5).

Under

Rule 12(b)(5), “the plaintiff bears the burden of proving [the]
adequacy” of service.

Mende v. Milestone Tech., Inc., 269 F.

Supp. 2d 246, 251 (S.D.N.Y. 2003) (internal quotation marks and
citation omitted).

In evaluating whether service of process was

proper under a Rule 12(b)(5) motion to dismiss, the Court must
look to Rule 4 of the Federal Rules of Civil Procedure.
8

The

Court is required to dismiss an action if service was improper
or incomplete “unless it appears that proper service may still
be obtained.” Garcia v. City of N.Y., No. 15 CIV 7470 (ER), 2017
WL 1169640, at *4 (S.D.N.Y. Mar. 28, 2017) (quoting Romandette
v. Weetabix Co., 807 F.2d 309, 311 (2d Cir. 1986)).

In

analyzing a motion to dismiss pursuant to Rule 12(b)(5) for
insufficient service of process, the Court is entitled to look
outside the four corners of the complaint to determine whether
it has jurisdiction. Garcia, 2017 WL 1169640, at *4.
III.

Discussion

The Court first evaluates whether international comity
compels dismissal before assessing whether Plaintiffs retain a
right under Argentine law to bring a lawsuit to recover the
bonds’ unpaid principal.
a. Abstention
1. Legal Standard
Under the doctrine of international comity, courts have
“the inherent power to dismiss or stay an action based on the
pendency of a related proceeding in a foreign jurisdiction.”
Ole Media Mgmt, L.P. v. EMI Apr. Music, Inc. No. 12 CIV. 7249
(PAE), 2013 WL 2531277, at *2 (S.D.N.Y. June 10, 2013).
However, because federal courts have a “virtually unflagging
obligation to exercise [their] jurisdiction,” “only the clearest
of justifications will warrant dismissal.”
9

Royal & Sun All.

Ins. Co. of Can. v. Century Int’l Arms, Inc., 466 F.3d 88, 93
(2d Cir. 2006) (citation omitted).

As the Court of Appeals

instructs, “[t]he task of a district court evaluating a request
for dismissal based on a parallel foreign proceeding is not to
articulate a justification for the exercise of jurisdiction, but
rather to determine whether exceptional circumstances exist that
justify the surrender of that jurisdiction.”

Id.

Such

exceptional circumstances “must, of course, raise considerations
which are not generally present as a result of parallel
litigation, otherwise . . . a district court’s unflagging
obligation to exercise its jurisdiction would become merely a
polite request.”

Leopard Marine & Trading, Ltd. v. Easy St.

Ltd., 896 F.3d 174, 190 (2d Cir. 2018) (quoting Royal & Sun, 466
F.3d at 93).
In Royal & Sun, the Court of Appeals provided the following
list of nonexclusive factors for courts to consider when
examining the “totality of the circumstances” in weighing
abstention:
[1] the similarity of the parties, [2] the similarity of
the issues, [3] the order in which the actions were
filed, [4] the adequacy of the alternate forum, [5] the
potential prejudice to either party, [6] the convenience
of the parties, [7] the connection between the
litigation and the United
States,
and
[8]
the
connection between the litigation and
the
foreign
jurisdiction.
Royal & Sun, 466, F.3d at 94.

10

2. Application
The Republic argues that international comity precludes
adjudication of the instant proceeding in New York in deference
to the Argentine action.

Although there may be parallel

litigation ongoing in Argentina, the Republic has failed to
establish sufficiently exceptional circumstances to overcome the
Court’s heavy obligation to exercise jurisdiction, upon
application of the Royal & Sun factors.
i.

Similarity of Parties and Issues

It is not entirely clear to the Court whether the actions
here and in Argentina are “parallel proceedings in which
‘substantially the same parties are litigating substantially the
same issues simultaneously in two fora.’”

C.D.S., Inc. v.

Zetler, 198 F. Supp. 3d 323, 331 (S.D.N.Y. 2016) (quoting Tarazi
v. Truehope Inc., 958 F. Supp. 2d 428, 433 (S.D.N.Y. 2013)).
While the parties to the two actions are clearly
sufficiently similar, the Court has some doubt as to whether the
issues are substantially similar.

Plaintiffs contend the

actions are not parallel because the 2004 amparo proceedings
involved different bonds, and the 2012 amparo proceedings did
not concern CCs issued with respect to the 2017 bonds.
Opp. at 19-20.)

(See

On the other hand, the Republic avers that

these contentions are distractions from the fact that the 2012
amparo proceedings will resolve the question of Plaintiffs’
11

right to payment on the CCs, despite the involvement of
different bonds.

(See Reply at 9-10.)

Even assuming that the issues are substantially similar to
render the actions parallel, an analysis of the remaining
factors confirms that exceptional circumstances do not exist to
compel dismissal.
ii.

Order of Filing

The order in which the actions were filed weighs in favor
of abstention.

While abstention is favored if the foreign suit

was filed first, “[t]his factor does not turn exclusively on the
sequence in which the cases were filed.”

Accent Delight Int'l

Ltd. v. Sotheby's, 394 F. Supp. 3d 399, 413 (S.D.N.Y. 2019).
Courts must also consider “how much progress has been made in
the two actions.”

Id.

Here, the parties have been litigating the CCs issue in the
amparo actions for more than 15 years.

(See Mot. at 18; see

also Declaration of Cristián Leopoldo Dellepiane (“Dellepiane
Decl.”), dated July 10, 2020 [dkt. no. 34], ¶ 5.)

Because the

Argentine courts have developed the record significantly,
judicial economy would be undermined by asking this Court to
perform a duplicative analysis.

See Mot. at 18; see also Accent

Delight, 394 F. Supp. 3d at 413.

Despite these findings, the

Court is hesitant to afford heavy weight to this factor because
it is not clear how long it will take for the Argentine court to
12

issue a judgment.

See Schenker A.G. v. Société Air France, No.

14 CIV. 4711 (BMC) (PK), 2016 WL 1465353, at *3 (E.D.N.Y. Apr.
14, 2016) (finding no exceptional circumstance where the foreign
litigation was not about to conclude and the parties could not
estimate with any reasonable certainty how long it would take
before the court issued a judgment).
iii.

Adequacy of the Alternative Forum

The adequacy of the alternative forum weighs in favor of
abstention.

“To establish that an alternative forum is

adequate,” the Defendant must show that it is “‘amenable to
service of process there, and [that] it permits litigation of
the subject matter of the dispute.’”

Mex. Infrastructure Fin.,

LLC v. Corp. of Hamilton, No. 17 CIV 6424 (VSB), 2019 WL
1206690, at *5 (S.D.N.Y. Mar. 14, 2019) (quoting Pollux Holding
Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 75 (2d Cir. 2003)).
Neither party disputes that full and adequate relief is
available in the Argentine court.

The Trust Agreement itself

contemplates disputes being adjudicated in Argentina.

(See Mot.

at 19; see also Trust Agreement (“Tr. Agree.”), dated Mar. 5,
2018 [dkt. no. 33-3], at §16 (Ex. 3).)

Moreover, Plaintiffs

themselves elected to adjudicate their disputes in Argentina by
filing the amparo proceedings.

(Mot. at 19.)

13

iv.

Potential Prejudice

The potential prejudice to either party counsels against
abstention.

Courts have found that “the ‘burden of litigating

simultaneously in two forums is not sufficient prejudice to
weigh in favor of [a] stay.’”

C.D.S., 198 F. Supp. 3d at 333

(quoting Tarazi, 958 F. Supp. 2d at 438).

Additionally, little

weight is given to the risk of inconsistent rulings because
parties are free to present a res judicata argument if the
foreign action becomes final first.

See NovaSparks SA v.

EnyxFPGA, 344 F. Supp. 3d 666, 679 (S.D.N.Y. 2018).
Accordingly, the Court is not persuaded by the Republic’s
arguments that it would suffer unfair prejudice from the burden
of litigating simultaneously in Argentina and New York and from
the potential double liability and inconsistent rulings.

(See

Mot. at 19.)
v.

Convenience

The convenience of the parties does not weigh in favor of
abstention.

“Although it can be expensive and time consuming

for parties to have to litigate similar conduct in different
forums, th[is] Court does not find this factor gives rise to
exceptional circumstances.”

NovaSparks, 344 F. Supp. 3d at 679.

Neither party disputes this factor.

14

vi.

Litigation’s Connection to the United States
and Argentina

The litigation’s connection to Argentina outweighs the
interest of the New York forum, weighing in favor of abstention.
It is undisputed that Argentina has a uniquely strong interest
in this litigation, which involves a complex “Argentine tax
program governed by Argentine law between Argentine parties.”
(Mot. at 20.)

A significant connection to the foreign forum

like the one present here “is one of the ‘exceptional
circumstances’ that must exist to ‘outweigh the district court’s
general obligation to exercise its jurisdiction.’”

C.D.S., 198

F. Supp. 3d at 335 (quoting Tarazi, 958 F. Supp. 2d at 436).
vii.

Balance of Factors

Evaluating these factors through a “careful balancing”
rather than a “mechanical checklist,” the Court is not persuaded
that exceptional circumstances exist to warrant dismissal.
Royal & Sun, 466 F.3d at 94.

The Court of Appeals has made

clear that “[t]he general rule is that ‘concurrent proceedings’
regarding the same question are ‘tolerat[ed].’”

Leopard Marine

& Trading, 896 F.3d at 191 (quoting China Trade & Dev. Corp. v.
M.V. Choong Yong, 837 F.2d 33, 36 (2d Cir. 1987)).

To date, the

Court of Appeals has recognized only one context where
exceptional circumstances are generally present: foreign

15

bankruptcy proceedings.4

The sovereign interests in a breach of

contract action, like the one currently before the Court, are
inferior to those present in bankruptcy proceedings and are,
accordingly, less deserving of deference.

In light of the high

hurdles to abstention, the Court will not exercise its
discretion to dismiss this action on the basis of international
comity and will instead assess this case on the merits.
b. Argument on the Merits
Because international comity concerns do not require
abstention, the Court turns to the parties’ substantive dispute.
1. Federal Rule of Civil Procedure 44.1
In determining questions of foreign law, Federal Rule of
Civil Procedure 44.1 provides that “the court may consider any
relevant material or source, including testimony, whether or not
submitted by a party or admissible under the Federal Rules of
Evidence.”

Fed. R. Civ. P. 44.1.

However, the rule “does not

require a court to undertake its own analysis to determine the

4

Foreign bankruptcy issues generally require dismissal because
“[a] foreign nation’s interest in the equitable and orderly
distribution of a debtor’s property is an interest deserving of
particular respect and deference.” Royal & Sun, 466 F.3d at 93
(internal quotation marks omitted). In contrast, the Court of
Appeals has determined that parallel proceedings concerning the
same in personam claim “should ordinarily be allowed to proceed
simultaneously, at least until a judgment is reached in one
which can be pled as res judicata in the other.” Id. at 92
(citing China Trade, 837 F.2d at 36).

16

content of foreign law.”

SHLD, LLC v. Hall, No. 15 CIV. 6225

(LLS), 2017 WL 1428864, at *4 (S.D.N.Y. Apr. 20, 2017) (internal
quotation marks omitted).

The Court of Appeals has observed

that Rule 44.1 “has two purposes: (1) to make a court's
determination of foreign law a matter of law rather than fact,
and (2) to relax the evidentiary standard and to create a
uniform procedure for interpreting foreign law.”

In re Vitamin

C Antitrust Litig., 837 F.3d 175, 187 (2d Cir. 2016).
2. Rule 44.1 Analysis
Pursuant to Rule 44.1, the parties provided testimony from
Argentine law experts on the question of whether Plaintiffs are
entitled to bring suit to enforce the bonds.

Plaintiffs’

experts are Messrs. Mario A. Carregal and Roberto E. Silva, Jr.,
senior trust law practitioners at the largest law firm in
Argentina, who speak on the subject as professors and lecturers.
(See Joint Declaration of Mario A. Carregal & Roberto E. Silva,
Jr. in Support of Plaintiffs’ Opposition to Defendant’s Motion
(“Carregal-Silva Decl.”), dated Aug. 24, 2020 [dkt. no. 38],
¶¶ 2-13.)

The Republic has retained Mr. Gabriel Bottini, an

experienced Argentine lawyer in both the public and private
sectors who is currently a partner at a Spanish law firm based
in Madrid.

(See Bottini Decl. ¶¶ 1-4.)

The parties’ experts agree that the operative provision of
Argentine law in this case is Article 18 of Law 24,441, which
17

provides that “[t]he trustee has standing to exercise all
actions necessary to defend the trust assets, both against third
parties and against the beneficiary.”5

(See Bottini Decl. ¶ 15;

see also Carregal-Silva Decl. ¶¶ 38-42.)

The experts also agree

that under Article 18, the trustee is the party who generally
takes actions enforcing the trust assets.

(See Reply

Declaration of Gabriel Bottini (“Bottini Reply Decl.”), dated
Oct. 5, 2020 [dkt. no. 44], ¶ 26; see also Carregal-Silva Decl.
¶ 38.)

The parties dispute (1) whether Argentine public law

provides the trustee with an exclusive right to enforce the
bonds; (2) whether an alternative agreement delegated to
Plaintiffs the ability to bring suit; and (3) whether
reaggregation of the bonds is necessary in order for the
Plaintiffs to bring suit.

After examining the experts’

declarations, the Court concludes that Argentine law does not
provide Plaintiffs with a right to bring this lawsuit to enforce
the bond obligations.

5

As the experts point out, even though new provisions on trusts
entered into force in August 2015, Law 24,441 still applies
because “it is the governing law according to the Trust
Agreement and was the applicable trust law in place at the time
the Trust Agreement was entered into in 2001.” Bottini Decl.
¶ 9. See also Carregal-Silva Decl. ¶ 38. Even if the new
provisions controlled, “the answer to the Standing Question is
the same under either regime.” Bottini Decl. ¶ 4.
18

i.

Argentine Law Provides the Trustee with the
Exclusive Right to Bring Suit

Article 18 of Law 24,441 unambiguously provides as follows:
“The trustee has standing to exercise all actions necessary to
defend the trust assets, both against third parties and against
the beneficiary.

The judge may authorize the trustor or the

beneficiary to exercise actions instead of the trustee, when the
latter fails to do so without sufficient cause.”

(Law No.

24,441, dated July 10, 2020 [dkt. no. 33-4], Art. 18 (Ex. 4).)
Although Plaintiffs’ experts correctly observe that Article
18 does not state specifically that “only” the trustee may sue,
(Carregal-Silva Decl. ¶ B; Opp. at 2), the Court finds the
Republic’s submission on the interpretation of Argentine law on
this point more persuasive.
Of particular importance is Article 18’s second sentence:
“The judge may authorize the trustor or the beneficiary to
exercise actions instead of the trustee, when the latter fails
to do so without sufficient cause.”

(Law No. 24,441, dated July

10, 2020 [dkt. no. 33-4], Art. 18 (Ex. 4).)

If Plaintiffs were

correct and the trustee’s standing was non-exclusive, “there
would be no need to provide for a process for another party to
bring suit.”

(Reply at 2.)

Such a reading would violate the

familiar statutory interpretation maxim in the United States,
that is also a fundamental principle of Argentine law, “that

19

courts should avoid rendering statutory language superfluous.”
(Bottini Reply Decl. ¶ 28 n.50 (“This principle of statutory
interpretation has been affirmed by the Argentine Supreme Court
in many cases”) (citing Corte Suprema de Justicia de la Nación,
“Bolaño, Miguel Angel c/ Benito Roggio e Hijos S.A. - Ormas S.A.
- Joint Venture - Hidra Project,” May 16, 1995 (Ex. 45)).)
The Court also declines to adopt Messrs. Carregal and
Silva’s view that Article 18’s exception “does not come into
play where there is no dispute or disagreement that the other
party will exercise such action.”

(Carregal-Silva Decl. ¶ 41.)

Citing no case law or even a secondary source, Plaintiffs’
experts fail to provide any support for this proposition.
id.; see also Bottini Reply Decl. ¶¶ 37-38.)

(See

Plaintiffs

similarly fail to cite any Argentine statute, case law, or
treatise for their contention that “the parties establishing the
trust can[] make further agreements about their respective roles
in appropriate circumstances.”

(Carregal-Silva Decl. ¶ 24.)

On

the contrary, Mr. Bottini persuasively explains how such an
agreement “would be inconsistent with the public law provisions
underpinning the Trust Agreement,” which cannot be “readily
alter[ed] or modif[ied]” by subsequent private contracts.
(Bottini Reply Decl. ¶¶ 33, 20.)

Accordingly, the Court finds

Plaintiffs’ unsupported contentions inconsistent with Article

20

18’s statutory structure and therefore adopts the Republic’s
view of the law.
ii.

The Caja Certification Did Not Confer a
Right to Bring Suit

Even if Argentine law permitted Plaintiffs to enter into an
alternative agreement with Caja concerning the bonds’
enforcement, the Caja Certification did not delegate to
Plaintiffs the ability to bring suit.
First, Plaintiffs’ experts point to Clause 6 of the Trust
Agreement as reason why the arrangement was effective under
Argentine law.

(Carregal-Silva Decl. ¶ 23.)

However, Clause 6

simply states that “the Trustee is not obliged to initiate any
court proceedings.”

(Tr. Agree. § 6.)

It in no way suggests

that the Plaintiffs retain the right to enforce the bonds, which
become “unavailable to their holder” once tendered to the trust.
(See Tr. Agree. § 2; see also Bottini Reply Decl. ¶¶ 21, 33.)
In fact, no provision in the Trust Agreement delegates this
right to the Plaintiffs.
Next, Plaintiffs’ experts rely on Paragraph 5 of the Caja
Certification.

(Carregal-Silva Decl. ¶ 27.)

That language,

however, only states that “the Trustee is not responsible for
the pursuit of legal action . . . and accordingly looks to
Bugliotti to take such action.”

(Caja Certification, dated Nov.

22, 2017 [dkt. no. 38-2], ¶ 5 (Ex. 2).)

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It lacks any indication

that the Plaintiffs and trustee intended to modify the terms of
the Trust Agreement.

(Bottini Reply Decl. ¶ 31.)

The Court

finds this unsurprising because, “as its name suggests, the
Certification was merely intended to certify the trustee’s
position at that time . . . not confer on plaintiffs, or
relinquish, any rights with respect to the trust assets.”
(Reply at 5 (citing Caja Decl. ¶ 17).)
Even if the Court were to accept Plaintiffs’ contention
that the Caja Certification constituted an alternative agreement
conferring on them the ability to bring suit, the 2018 Caja
Declaration would have revoked any such delegation.6

Thus,

Plaintiffs remain unable to enforce the bonds.
iii.

Reaggregation is Needed Before Bringing Suit
on the Bonds

Lastly, the Court considers whether Argentine law requires
the bonds to be reassembled before being enforced.

Citing two

Argentine Supreme Court cases, Mr. Bottini advances the argument
that Plaintiffs must return the tax-credit certificates and CCs
to reassemble the bonds so that they can bring suit.
Decl. ¶¶ 25-26.)

(Bottini

Plaintiffs’ experts attempt to distinguish the

6

“With respect to Paragraph 5 of the Certification . . . Caja
was only stating that Caja itself would not exercise any rights
to initiate court proceedings on behalf of plaintiffs (or any
participants), consistent with the terms of the Tax Credit
Program and the Trust Agreements.” (Declaration of Alejandro
Santiago Berney (Caja De Valores, S.A.) (“Caja Decl.”), dated
May 16, 2018 [dkt. no. 46], ¶ 17.)
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two cases as involving bondholders who wished to participate in
Argentina’s debt exchanges rather than bondholders bringing suit
to enforce their rights.

(Carregal-Silva Decl. ¶ 59.)

However,

Plaintiffs cite to no authority in their attempt to oppose the
precedent indicating that bondholders must reassemble their
bonds before exercising any rights related to their bonds.
id. ¶¶ 56-60.)

(See

The Court concludes that Argentine law requires

Plaintiffs to return the tax-credit certificates and CCs to
reassemble the bonds to bring suit on the bonds.
The Court acknowledges that it may be cumbersome for
Plaintiffs to return their CCs and the economic value of the
tax-credit certificates and terminate the trust.
are not left without additional recourse.

But Plaintiffs

As discussed above,

Article 18 also provides as an alternative remedy—obtaining
authorization from the judge to exercise an action instead of
the trustee.
IV.

(See Law No. 24,441, Art. 18.)

Conclusion

Because Plaintiffs lack standing to bring suit to enforce
the 1994 FAA Bonds under the terms of the Tax Credit Program and
Trust Agreement under Argentine trust law as set forth above,
Plaintiffs’ complaint must be dismissed.

Moreover, Plaintiffs

may not invoke the 1994 FAA Bonds’ service of process and
jurisdictional provisions under the FSIA.

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Accordingly, the Republic’s renewed motion to dismiss (dkt.
no. 31) is GRANTED.

The Clerk of the Court shall mark the

action closed and all pending motions denied as moot.
SO ORDERED.
Dated:

New York, New York
March 31, 2021
____________________________
LORETTA A. PRESKA
Senior United States District Judge

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