France, Brazil and Mexico told the U.S. Supreme Court this week that the 2nd Circuit Court of Appeals has endangered sovereign debt markets with its ruling last year against the Republic of Argentina. In amicus briefs supporting Argentina’s petition for Supreme Court review, the foreign sovereigns argue that the 2nd Circuit gravely misinterpreted the so-called “pari passu” (or equal footing) clause of Argentina’s sovereign debt contracts. By ruling that Argentina may not pay bondholders who exchanged defaulted bonds for restructured debt before it pays hedge fund creditors that refused to exchange their defaulted bonds, the amicus briefs argue, the 2nd Circuit has undermined international debt restructurings, permitting vulture investors to hold entire foreign economies hostage.
The United States made quite similar arguments, as you may recall, when Argentina’s pari passu case was before the 2nd Circuit. But there’s no filing from the Justice Department among the 10 new amicus briefs urging the Supreme Court to take Argentina’s appeal. Does that mean Argentina has lost its most influential friend in the U.S. court system?
It does not, but it does mean that the administration is waiting for an invitation from the Supreme Court justices before it takes a position in the Argentina pari passu case. And there’s at least some chance the invitation will never come.
It has become rare in recent years for the Justice Department, via the solicitor general, to file an amicus brief on a cert petition without the justices asking to hear the government’s position, said Thomas Goldstein of Goldstein & Russell (and Scotusblog). Unless a government employee is a party in the case, Goldstein told me in an email, the SG “almost never” opines on cert petitions without a specific invitation from the Supreme Court.
Goldstein’s interpretation suggests that we shouldn’t infer anything from the Justice Department’s absence from this week’s amicus briefing for Argentina. The solicitor general may simply be waiting for the justices to invite a brief expressing the views of the Justice Department, which is the typical procedure. In a different Supreme Court case between Argentina and the hedge funds that hold billions of dollars in judgments against it – this one involving the extent of discovery the hedge funds can conduct on Argentine assets they hope to seize to satisfy those judgments – the solicitor general didn’t opine on Argentina’s cert petition until the Supreme Court asked for a brief. The Justice Department ended up agreeing with Argentina that the justices should take the case, then filed a brief supporting Argentina on the merits when the court granted cert. (That case is scheduled for argument next month.)