Stock photo of the ARA Libertad
BUENOS AIRES–An Argentine Navy cadet training ship will remain in Ghana after a court in the West African country rejected Argentina’s appeal of an order detaining the vessel in a dispute with creditors.
Argentina argued that the three-masted sailing ship ARA Libertad sailed to Ghana to perform military functions and United Nations conventions protect it from seizure.
Ghana commercial court judge Richard Adjei-Frimpong disagreed with that argument Thursday, saying in his ruling that Ghanaian law doesn’t protect military assets.
On Oct. 2, the judge ordered the 130-meter long ARA Libertad held at the Port of Tema until Argentina honors U.S. judicial rulings that awarded about $1.6 billion to Elliott Management Corp.’s NML Capital Ltd.
The dispute stems from Argentina’s $100 billion sovereign default in 2001. The South American nation managed to restructure about 93% of its defaulted bonds in debt exchanges in 2005 and 2010 that offered investors about 33 cents on the dollar.
Some $4.5 billion of defaulted bonds are in the hands of so-called holdouts like Kenneth Dart’s EM Ltd. and NML Capital Ltd. funds.
NML’s attorney in Ghana, Ace Anan Ankomah, said Argentina has the option of depositing $20 million with the court and taking away the ship. The fact that the ship has a crew on board that needs to get home may shape the negotiations going forward, Mr. Ankomah said.
There are 320 men and women on board, including 15 Chilean sailors and a handful of Uruguayans who joined the ill-fated voyage as guests.
Argentine Navy spokeswoman Mabel Perelli said the ship remains in port with the crew going about their normal duties.
“The security and well being of the personnel are assured…[but] we don’t know when we’ll be able to untie,” a crew member said.
The crew is whiling away the days shopping at a nearby mall, surfing the Internet and keeping in touch with family and friends, sailor Luis Suarez told Argentine radio station Cadena 3. But there’s a sense of uncertainty as they wait for news, said Mr. Suarez, who works in the ship’s kitchen.
The ARA Libertad left Argentina in June to visit ports in the South Atlantic, Caribbean, Europe and Africa. It is scheduled to return to Buenos Aires on Dec. 8.
While the ARA Libertad’s crew have taken the ship’s predicament in stride, Argentine government officials are livid and have compared the investment funds to carrion-eaters.
“The vulture funds have crossed a new line in their attacks against the Republic of Argentina,” the Foreign Ministry said in a statement last week.
An NML spokesman declined to comment.
NML’s parent, Elliot Management, was founded by billionaire hedge-fund manager Paul Singer, one of the U.S.’s top Republican political donors.
More than a decade after the default, Singer and other holdouts continue to hound the Argentine government in courts across the globe. In 2002, the ARA Libertad was targeted by German creditors who unsuccessfully tried to seize it when it visited the seaport city of Bremerhaven.
There have been various foiled attempts by creditors to impound the presidential plane, Tango 01, during overseas trips. They’ve also targeted planes belonging to state-run airline Aerolineas Argentinas and money the Central Bank of Argentina deposited in the U.S. and Europe.
Meanwhile, Argentina is waiting for a ruling from a Federal Appeals court in New York on whether the country can pay creditors who accepted the bond swap deal without paying the holdouts first. Arguments were heard in July.
While litigation has dragged on for years, Argentina has enjoyed a string of wins lately.
In June, the U.S. Supreme Court declined to consider an appeal from the holdouts trying to seize about $105 million held by Argentina’s central bank in the U.S.
That left standing the appellate court ruling that the Foreign Sovereign Immunities Act blocks creditors from seizing money that foreign central banks deposit in the U.S. under most circumstances.
The administration of U.S. President Barack Obama filed a brief with the Supreme Court urging the justices to rule that Argentina’s funds are indeed out of the reach of creditors.
The lawsuits continue to complicate Argentina’s ability to return to global debt markets, which have been closed to the country ever since the default.
President Cristina Kirchner has made it clear that she has no plans to settle up with the holdouts.
Argentina “will not give in to the international and local extortion from the vulture funds,” the foreign ministry said in the statement.
-By Shane Romig. (c) 2012 Dow Jones & Company, Inc.
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