The U.S. judge deciding how to force Argentina to obey court orders in a dispute over $1.5 billion in bond payments may want to take a look at TIG Insurance Co.’s debt-collection travails, Bloomberg News reported today. TIG sued an Argentine government-owned company in Chicago federal court in 2000 claiming about $4.2 million and won. The insurance company pursued that debt for more than a decade in court, arbitration, Congress and the New Hampshire legislature, through the administrations of Presidents George W. Bush and Barack Obama and with Argentina’s embassy in Washington, D.C. It hasn’t seen a dime of the money, now $29 million including interest, attorney fees and a $4,000-a-day sanction for violating a court order. TIG’s attempts to collect from what one court panel called “a uniquely recalcitrant debtor” illustrate the pitfalls U.S. District Judge Thomas Griesa faces in the bonds case in trying to force a sovereign nation to comply with his orders when it’s determined to resist. “There’s almost no effective means for the judge to enforce whatever fine he may impose,” said Mark Weidemaier, a professor at the University of North Carolina School of Law. “The practical effect of a fine would be very limited.” Judge Griesa, the Manhattan federal judge overseeing lawsuits tied to Argentina’s 2001 foreign debt default, barred the nation from paying its performing debt without also paying more than $1.5 billion owed to a group of investors led by NML Capital, a unit of Paul Singer’s Elliott Management Corp., and Aurelius Capital Management LP. Griesa found the nation in contempt of court Sept. 29 for trying to circumvent the ruling through a plan to pay bondholders locally, outside the reach of his court. The judge is considering the hedge funds’ request to fine Argentina $50,000 a day until it complies.
