Argentina’s nationalization of local oil company YPF S.A. has forced former majority shareholder Repsol to join the club of oil companies that have watched their South American operations get yanked out from under them like a magician removing a tablecloth from a smorgasbord. On April 16, after three months of sparring with Repsol, Argentine President Cristina Fernández de Kirchner announced that her government planned to take a 51 percent stake in YPF from Repsol. The Argentine Congress passed a bill authorizing the seizure on May 3.
Using a formula that a previous Argentine administration wrote into statutes for YPF, Repsol has said that it should be paid $10.5 billion for the expropriated holding. But Kirchner’s government has scoffed at that figure and has asked its Tribunal de Tasaciones to determine the value of the stake. As a result, Repsol has announced that it plans to file a complaint for damages with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C. Freshfields Bruckhaus Deringer, which has a long history of advising clients in ICSID battles against Argentina, is representing Repsol. (The firm declined to comment.)
