By Ryan Dubé

A U.S. federal appeals court ruled Friday that Argentina doesn't have to pay shareholders $16 billion for its takeover of the country's biggest oil company, handing President Javier Milei a victory that will help his free-market overhaul.

Milei's cash-strapped government would have struggled to pay the judgment as it undertakes a painful austerity program to overhaul Argentina's economy. The ruling allows the Milei government to continue building its reserves of U.S. dollars, which is crucial to stabilize the economy and attract investments.

"We won the YPF lawsuit," said Milei, a close ally of the Trump administration, on X. He called the ruling "historic, unthinkable, the greatest legal achievement in national history."

Shares of Burford Capital, the litigation financier which had taken on a lawsuit on behalf of the investors, were down 36% on Friday in New York. Burford didn't immediately respond to requests for comment.

The decision by the U.S. Court of Appeals for the Second Circuit reverses a 2023 ruling by U.S. District Judge Loretta Preska, who determined that two YPF shareholders were owed compensation for the 2012 expropriation. The court of appeals said that Preska incorrectly interpreted Argentine law and that the shareholders' claims are without merit.

The legal victory was rare for Argentina, which has for years faced and lost lawsuits after breaching contracts, from expropriating companies to defaulting on bonds. The ruling comes as Milei's government has seen its approval slide since a major victory in October's congressional election amid growing scandals involving top officials and a sluggish economy.

While the shareholders could still challenge the ruling at the Supreme Court, Argentina can now "see the light at the end of the tunnel" on a lawsuit that would have undercut its public finances, said Sebastian Maril, an Argentine legal expert who has been closely tracking the YPF case.

"In a country with fragile international reserves, lack of access to capital markets, raising that kind of money would be very difficult for Argentina," said Maril. "This was the big decision that everybody was waiting for."

YPF was expropriated in 2012 under then-president Cristina Kirchner, a left-wing firebrand who is currently under house arrest after corruption charges. The government ended up paying $5 billion in bonds as compensation to YPF's former top shareholder, Spain's Repsol. But smaller shareholders, including now closed U.S. hedge fund Eton Park Capital Management, said they were left out by the Argentine government and sued in federal court in New York. Burford provided the financing and would have taken part of the award.

The Kirchner administration had said that underinvestment by private oil companies justified a state takeover, which Argentina's Congress approved. Opponents of the government said the YPF expropriation was a brazen attempt to take control of promising new oil and gas developments in the country's Vaca Muerta basin.

Write to Ryan Dubé at ryan.dube@wsj.com

(END) Dow Jones Newswires

March 27, 2026 13:19 ET (17:19 GMT)

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