Giles Elliott, who co-leads the firm’s banking, finance & securities practice, stated: “Adding Lee and Ewen, along with Ben and Michael,to our global team sends a very strong message that Jones Day remains committed to providing our clients access to experienced, effective talent in Europe.”

“Cross-border deals, particularly in the leveraged finance area, are becoming significantly larger and even more complex. All four of these new partners have demonstrated the ability to structure, manage, and close significant transactions on behalf of a client pool that crosses borders and industries. They will be great additions to what is already a very strong global team and I welcome them to Jones Day.” He added.

Federman comes with extensive experience in cross-border syndicated financing transactions with a particular focus on leveraged finance and corporate lending. He has represented bank lenders, alternate credit providers, corporate borrowers and financial sponsors across the credit spectrum in several key financial jurisdictions—including London, New York, Hong Kong, Amsterdam and Budapest – and covering a wide range of sectors that include healthcare, infrastructure, transport and telecommunications. He is recognized for his work in leveraged finance and syndicated lending by The Legal 500 – Europe, and is also a member of the Loan Market Association’s developing markets working party, and a regular speaker at LMA events across the globe.

Scott represents lenders –including credit and debt funds, borrowers and sponsors on a range of cross-border, bilateral and syndicated financings, refinancing and restructurings, on a national and international level, including in emerging markets. His portfolio of clients include major U.K. and international clearing banks, investment banks, credit and debt funds, and private equity clients, with a focus on leveraged finance. He has been heavily involved in the development and structuring of direct lending mechanisms in the leveraged middle market provided by funds including senior debt instruments, mezzanine financing, second lien and unitranche financing.

John Phillips, Partner-in-Charge of Jones Day’s London office, said: “The addition of Lee and Ewen add great transactions depth and skill to our strong London team. Their broad experience across numerous financing arrangements is a valuable resource for our clients. I look forward to working with them and welcome them to Jones Day.”

Fox has had experience working with clients on a broad range of financing matters including secured and unsecured syndicated lending, real estate finance, asset finance, and leveraged transactions. He has extensive experience in domestic and cross-border transactions. He represents both lenders and borrowers, and has counseled major international and Dutch financial institutions, alternative capital providers, and other non-bank lenders.

Dr. Fischer previously spent seven years as General Counsel at UBS Europe SE in Frankfurt. Prior to this, he held leading roles with the German financial market stabilization authority as well as with international hedge funds and asset management companies. He started his career as an M&A attorney-at-law with international law firms.

Jones Day is a global law firm with more than 2,500 lawyers in 43 offices across five continents. Its nearly 300 lawyers in banking, finance & securities department have helped clients navigate the globally transformed regulatory environment and close thousands of transactions totaling more than $6 trn over the past five years.

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March 15, 2017: The Islamic Finance Council UK (UKIFC) and international law firm CMS have announced an innovative partnership to help develop, support and optimise Islamic finance frameworks across the world. The aim is to offer a single, cohesive legal, advisory and capacity building service tailored to help government agencies, regulatory bodies and financial institutions to respond creatively and develop capacity for Islamic finance.

The partnership launches at a time when global Islamic finance assets are expected to rise from $2 trillion in 2015 to $3.5 trillion by 2021 — representing a 12% compound annual growth rate. Islamic banks are likely to be the main driver of this growth, with assets expected to reach $2.7 trillion by 2021 .

“With a growing Muslim population, the potential future demand for Islamic finance is huge,” says Shakeel Adli, Head of Islamic Finance at CMS. “By bringing together a unique blend of practitioners who are recognised leaders in the global Islamic finance market, we are able to draw on our collective knowledge and expertise to provide a one-stop shop offering a truly unique and holistic approach to Islamic finance.”

UKIFC and CMS have recognised that the availability and effectiveness of Islamic finance in any given jurisdiction depends on meeting a number of challenges; the two most significant of which are creating robust regulatory frameworks and developing human talent. To effectively engage in Islamic finance, investors, consumers and financial institutions require regulatory clarity. It is also of critical importance that human talent is developed to address the unique challenges which Islamic finance presents.

The UKIFC and CMS partnership will assist jurisdictions to meet these challenges.

“As leaders in our respective fields, we share a commitment to growing the Islamic finance industry,” says Omar Shaikh, Advisory Board Member at UKIFC. “By combining our capabilities, we have created a uniquely comprehensive, best in class government advisory providing support and guidance for government agencies, regulatory bodies and financial institutions as they look to build their capacity and create enabling legal and regulatory frameworks for Islamic finance.”

The UKIFC was established in 2005 as a specialist advisory and developmental body focused on promoting and enhancing the global Islamic and ethical finance industry. Having contributed substantively to the development of the UK government’s Islamic finance framework, the UKIFC has been appointed to advise several regulators and government ministries across Africa, Asia and Europe and has developed a proprietary methodology for government policy advisory within a secular context.

CMS has extensive experience of successfully delivering Islamic finance regulatory advisory projects in multiple jurisdictions, including Kazakhstan and Oman. Significantly, CMS has a geographic footprint which includes 65 offices spread across 38 jurisdictions. The firm has deep local roots with access to cross-border expertise and strong connections to governments and associated agency bodies in each of the conventional, Islamic and ethical finance sectors.

“The new partnership between UKIFC and CMS offers a team of passionate and committed Islamic finance experts that genuinely combines legal, finance and capacity building ability that is unlike any other advisory firm,” Omar Shaikh said.

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Such a change in ranking would lead to additional capital requirements for the banks in question as an insurance against failure and the subsequent ripple effects through the global economy. But, in this case, a Citigroup spokesperson commented that they are already subject to high capital requirements laid down by the Federal Reserve: “The GSIB measure announced this morning by the FSB does not have an impact on any of Citi’s binding regulatory metrics.”

Capital buffer
The Basel-based FSB will, from January 2018, require Citigroup Inc. to hold a 2.5 percent capital buffer in comparison to the 2 percent called for in the previous year while Bank of America is now required to keep 2 percent compared to last year’s 1.5 percent. Wells Fargo’s capital buffer level went up to 1.5 percent from 1 percent, which was the level required last year.

Morgan Stanley, Barclays and HSBC lie on the other side of the spectrum in this regard, having been adjudged to be less risky to global financial stability as compared to last year. These banks have managed to better their position largely by selling off part of their riskier businesses or reducing the size of some of them.

The case of Deutsche Bank too is of note as the entity had been named the greatest systemic risk to international financial stability last year. With a capital requirement of 2 percent, it remains in its middle-tier position.

The basis of FSB’s decision
The board’s decision was based on ‘data quality improvements, changes in underlying activity and the use of supervisory judgment’, going by a press release. According to the Financial Times, ‘people familiar with the move’ said the decision came on the back of a surge in the value of the US dollar, which then resulted in a heightening of American banks’ risk profile.

The Trump effect
It is also of note that the higher risk rankings came shortly after Donald’s Trump’s election victory. Trump has promised several times to do away with Dodd-Frank, a law that seeks to mitigate the systemic risks – those that set off the 2008 financial crisis – posed by America’s large banks.

A note on Trump’s website reads: “The Dodd-Frank economy does not work for working people. Bureaucratic red tape and Washington mandates are not the answer. The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.”

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Sophie Brackenbury

September 19, 2016: Our commercial dispute resolution team was recently instructed to advise on the enforcement of a debt owed to a German business (our client) by a UK company, as part of our debt recovery service.  The outcome was that we were able to enforce the debt effectively in the UK courts on behalf of our German client.

The process involved obtaining a European Order for Payment (EOP) in the creditor’s domestic court (in this case Germany), which could then be enforced in other European courts (in this case the English courts). This is possible owing to Regulation (EC) No 1896/2006 (‘the Regulation’), which provides a streamlined process for enforcing debts against parties in other EU member states where the amount is not disputed. In such circumstances, a creditor can file a standardised form with the courts in the relevant member state, wait for the courts to approve the application and issue the EOP, and then pursue enforcement of the debt. This means that the UK currently has favourable terms for enforcing debts compared with countries outside of the EU.

This process does, of course, now give rise to the question of whether – when Article 50 of the Lisbon Treaty has been triggered and the UK has left the EU at some point in a little over two years – it will still be possible – and if possible – whether it will be easy for (a) a business based in an EU member state to recover debts in the UK and (b) UK-based companies to recover debts in the EU.  The wider implications for UK businesses trading with European companies could be significant, including:

• A great deal more caution in terms of business dealings between UK and EU companies;
• The necessity to carry out more detailed and costly due diligence and credit risk assessment of new European customers;
• A fear – particularly among smaller organisations where significant unpaid levels of debt can affect cash flow to a catastrophic level – of doing business of any kind with European customers

Added to which, of course, is that this is just one example of what could be an incredibly nebulous set of circumstances and scenarios that UK businesses will be faced with once we trigger Article 50, and the myriad EU originating provisions that govern commercial life begin to unravel.

Perhaps, the most helpful parallel would be to look at the position in Denmark, which unlike other member states opted not to implement the Regulation and so falls outside of the EOP regime. If a party in Denmark wished to pursue recovery of a debt in another EU member state, it would need to pursue court proceedings in the relevant jurisdiction and rely on local enforcement laws in order to recover the debt. Likewise, parties in other EU member states will have to rely on Danish local enforcement laws, as would be the case if pursuing a debt in a non-EU member state. This includes EEA/EFTA member states, as the Regulation does not extend to these countries. As such, parties in the both the UK and the EU will likely have to follow the Danish example when pursuing debt recovery post-Brexit.

It’s not all doom and gloom, in that this is not necessarily a more difficult course of action, it’s just a different course of action to the one currently available. It does, however, require detailed consideration of the differences between each jurisdiction (which the current – ‘pre-Brexit’ – situation minimises by having a standardised application process). As such, while debt recovery proceedings in EU member states will still be possible following Brexit, it will be necessary for businesses to take different and often more complicated and costly processes into account when considering the risks of trading with European organisations.

So, where does this leave UK business?  Whilst the likely implications remain uncertain until we know what form Brexit will take, it will probably involve increased time and costs in pursuing debt recovery. Our advice is to plan your strategy carefully, not only in terms of debt recovery and enforcement, but also throughout your business, including your commercial agreements, relationship with employees etc.  This process should take into account the over-arching imperative to minimise risk to your business. Specifically, the following may be helpful as a starting point:

• As the UK has not yet triggered Article 50 and thereby the process to leave the EU (which itself will be a two-year process), there is still time to prepare.  The current position seems to be that the UK government will trigger Article 50 at some point early in 2017. However, you should start now, consult your professional advisers, and ensure you have a strategy in place.

• As a first step, businesses, particularly those that rely on trade with the EU or where loss of trade with EU would have a significant impact, should carry out analyses, including the extent to which their business relies on pan-EU trade and, therefore, the risk that Brexit presents. For example, what percentage of your income relies on trade with other European countries?  What do you need to do to ensure that this continues? How much of that income could you afford to lose before it has a significant effect on your business?

We have been part of the EU (and its predecessors) for more than 40 years. That’s a long time and in that time, we have built up a complex and binding set of trade rules and procedures. Extracting ourselves from these will be complicated and there will be some pain. The uncertainty (and therefore increased risk) means it is important for all businesses, who rely to any degree on EU trade, to minimise that pain by planning early and putting a risk strategy in place.

Sophie Brackenbury handles Dispute Resolution at Shulmans LLP

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Nigel Green

April 5, 2016: The allegations made in the Panama Papers case are not representative of the international financial services industry.

Regards the leak of confidential documents from Panamanian law firm Mossack Fonseca, like many people, I have found the details of the Panama Papers case, outlined in the BBC Panorama programme, very concerning as it suggests there might have been tax evasion on a grand scale. Clearly, tax evasion is illegal and punishable by law. It is a serious criminal global issue that needs to be tackled with more vigour.

However, I do not believe that the Panama Papers allegations are representative of today’s wider international financial services industry.

The overwhelming majority of the offshore sector only provides services that are fully compliant and legal and they are used by law-abiding clients, who are simply looking for typically better returns, more investment options and greater flexibility.

Many of the documents that have been revealed by the Panama Papers case date back decades and for the last several years, a new and totally unprecedented era of transparency and disclosure has been ushered in.

Indeed, the idea of a ‘tax haven’, in the traditional sense of the phrase, is now somewhat outdated.  In today’s world, in which financial information is being automatically exchanged with tax authorities globally, it is almost impossible to hide money. No longer can people stash assets on ‘treasure islands’ and not expect to be caught.”

The international financial services industry plays a vital and largely positive role in the global economy.  Yet, this is typically overlooked by the media.

As the press is quick to point out, there are many questionable reasons why people might want to keep money in an offshore account, which is simply an account in a jurisdiction different to the one in which the person currently lives.

However, in my experience of working with expatriates and international investors, who have generally more transient lifestyles, offshore accounts are preferable simply for convenience. They offer centralised, safe, flexible and international access to their funds no matter where they live and no matter to which country the individual moves to in the future. In addition, they offer a wide choice of multicurrency savings and investment solutions.

Offshore financial centres allow those who qualify to do so to use legal, bona fide international investment products to form part of a robust and sensible financial planning strategy.

Other major advantages of such centres include that they allow companies to avoid getting taxed twice on the same income and that they offer legitimate financial refuge for those in countries where there is economic and political turmoil, such as extremely volatile currency and confiscation of assets.

Whilst most international financial centres are now well regulated, transparent and cooperative, and provide a much needed and in-demand service for people and firms all over the world, the Panama Papers claims underscores that more can still be done.

Indeed, this should act as an opportunity to further enhance the effectiveness and credibility of these international financial centres and the sector. This is especially important as the industry is set to grow exponentially in the coming years as individuals and companies become ever more globalised.

Nigel Green is the founder and chief executive of deVere Group

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June 3, 2015: Institute of Finance & Management subsidiary of aafaq Islamic Finance, a leading provider of Islamic finance products and services in the UAE, has recently signed a memorandum of understanding (MoU) in London with the University of Bolton’s Centre for Islamic Finance, an initiative designed to facilitate research and promote the understanding of Islamic Finance through lectures, conferences and a joint professional certificate in Islamic Banking.

Under the terms of the MoU, both parties have expressed their full commitment in the continued advancement and growth of Islamic Finance—collaborating on a series of projects and initiatives that includes conducting and commissioning joint research in the field of Islamic Finance; develop and promote a new Islamic Banking Professional Certification program and host and organise an annual Islamic Finance-based event.

H H Sheikh Faisal Bin Saoud Al Qassimi, Board Member of aafaq Islamic Finance, shared that the signing of the new MoU proves to be both timely and strategic as global financial experts continue to laud Islamic Finance’s continuing growth. The new alliance between aafaq Islamic Finance and the University of Bolton’s Centre for Islamic Finance represent a cooperative framework that looks towards encouraging more development in Islamic Finance on regional and international levels, particularly in the fields of education, research, capacity building and consultancy.

Dr. Mahmoud Abdalaal, CEO, aafaq Islamic Finance, said, “We are extremely excited with this new partnership that we have forged with the University of Bolton’s Centre for Islamic Finance. aafaq Islamic Finance is confident that this strategic new alliance will successfully be able to drive in more awareness on the many benefits and advantages offered by Islamic Finance. Through our partnership with the University of Bolton’s Centre for Islamic Finance, we are looking towards commissioning more research and studies while also laying the foundation for an international certification program for Islamic banking professionals.”

The Chairman of the Centre for Islamic Finance and the first Chancellor of the University of Bolton, The Baroness Morris of Bolton said, “I am delighted we have signed this MoU and look forward to working with aafaq in encouraging more development in Islamic Finance. This collaboration will help to strengthen the University’s close ties to the UAE and builds on our core strength of working together with leading and innovative industry practitioners.”

The Centre for Islamic Finance was launched in 2012 at the University of Bolton to facilitate research and create a better understanding of Islamic Finance through the holding of key lectures, conferences and the offer of short course programs.

Professor Mohammed Abdel-Haq, Director of the Centre for Islamic Finance and former Global Head of private banking at HSBC Amanah, welcomed the enthusiasm and vision of aafaq and looked forward to working together with aafaq to help drive a better understanding of the benefits and advantages of Islamic Finance.

“We have students studying with us at Bolton for their PhDs in Islamic Finance from around the world and have established a reputation which attracts respected speakers and supporters such as Norman Lamont, the former Chancellor of the Exchequer. Our work with a Company of such quality as aafaq, a leader in Islamic Finance in the UAE, will help us to broaden our research and to reach and educate more people working within the sector,” concluded Professor Abdel-Haq.

Press Release

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Camille Paldi

April 28, 2015: Beximco Pharmaceuticals Ltd, Bangladesh Export Import Co. Ltd., Mr. Ahmad Solail Fasiuhur Rahman, Beximco (Holdings) Ltd. v. Shamil Bank of Bahrain E.C. [2004] EWCA Civ 19, the defendant Beximco Pharmaceuticals Ltd. and the other borrowers entered into a murabahah agreement with the plaintiff.  The defendants defaulted and after a series of various termination events under the agreements, the plaintiff finally brought the case to court and made an application for summary judgement. The defendants argued that the murabahahagreements were invalid and unenforceable because they were in actuality disguised loans charging interest (Asutay and Hasan, 2011: 56).

According to the appeal case, the court ruled that an Islamic finance contract could not be governed by shari’ah law in the UK. Even if so specified in the contract, the judge further ruled, in fact, that shari’ah law is not a recognisable form of law containing principles of law capable of governing a commercial dispute in the UK.

Lord Justice Potter stated in Paragraph 2 of the judgment, ‘It is not in dispute that the principles of the glorious shari’ah referred to are the principles described by the defendants’ expert, Mr. Justice (retd) Khalil-Ur-Rehman Khan as: “…the law laid down by the Qu’ran, which is the Holy Book of Islam and the Sunnah (the sayings, teachings and actions of Prophet Mohammad (pbuh). These are the principal sources of the shari’ah.  The Sunnah is the most important source of the Islamic faith after the Qu’ran and refers essentially to the Prophet’s example as indicated by the practice of the faith. The only way to know the Sunnah is through the collection of hadith, which consist of reports about the sayings, deeds, and reactions of the Prophet.”’

Lord Justice Potter, in this judgment, recognises the definition of shari’ah law stated by Mr. Justice Khalil-Ur-Rehman Khan. However, Lord Justice Potter stated that shari’ah law, which in his opinion is more of a religion than law, could not apply to a commercial banking transaction in the UK.

The judge declined to construe the wording of the clause as a choice of shari’ah law as the governing law for the following reasons. First, Article 3.1 of the Rome Convention (which by s.2 (1) of the Contracts (Applicable Law) Act 1990 has the force of law in the United Kingdom. It contemplates that a contract ‘…shall be governed by the law chosen by the parties’ and Article 1.1 of the Rome Convention makes it clear that the reference to the parties’ choice of law to govern a contract is a reference to the law of a country. Lord Justice Potter further argued that the reference to a choice of a ‘foreign law’ in Article 3.3 suggests that the Convention as a whole only contemplates and sanctions the choice of the law of a country: c.f. Dicey and Morris on The Conflict of Laws (13th ed.) vol. 2 at 32-079 (p.1223) and Briggs: The Conflict of Laws at p. 159.’

Lord Justice Potter stated that shari’ah law is not a national system of law and is classified as a non-national system of law such as ‘lex mercatoria’ or ‘general principles of law’ and therefore cannot apply to a commercial transaction in the UK.

Colon (2011:425) states that even though the Rome Convention has been replaced by Regulation (EC) No. 593/2008 of the European Parliament and the Council of June 17, 2008 on the Law Applicable to Contractual Obligations (Rome I), the conflict of law rules remain the same.

In this appeal case, English law was confirmed as the governing law and it was further confirmed that English law does not recognise shari’ah law as a valid source of law to govern a commercial contract. Furthermore, even if shari’ah law were recognised under English law, under the conflict of law rules applicable in England and Wales, according to this judgment and the new Rome I, English law would prevail as the governing law must be the law of a State.

Colon (2011:425) points out that according to Beximco, under English law a murabahah agreement may be treated the same as an interest-bearing loan, which ironically was part of the initial claim that based on the governing law clause, the murabahah agreements were invalid and unenforceable because they were in truth disguised loans charging interest (Asutay and Hasan, 2011: 56).

In fact, the adjudication of the dispute by an English court guarantees turning the murabahah agreements into loans charging interest.

Beximco interpreted the contract in light of the commercial goals that it served to accomplish, as English law requires (Colon 2011:426) and in line with the common law, interpretational approach as explained by Asutay and Hasan.  This strict approach decimated the Islamic finance transaction (2011:431).

Camille Paldi is CEO of Franco-American Alliance for Islamic Finance

Earlier Columns:

Islamic finance and the halal industry

Japan has Islamic finance in the pipeline

Islamic insurance: The next global trend

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Kamilia Lahrichi

April 14, 2015: The Argentine left-wing government is suing in local courts Citibank Argentina, the country’s 12^th largest bank by deposits and a subsidiary of Citigroup, for exiting its bond custody business, Economy Minister Axel Kicillof said on April 8, 2015, in the latest development in the South American nation’s debt saga.

Last month, Citibank decided to make two bond payments to pay out Argentina’s creditors and shut down its custody business in the country.

The Argentine government stopped the bank from conducting capital market operations in the country after Citibank, the New York-based parent company, inked a deal on March 20, 2015 with NML, a group of hedge funds that have taken legal action against Argentina since its $100 billion default in 2001.

It was the second time the country defaulted in 13 years.

NML, led by American hedge fund manager Paul Singer, did so because Argentina has paid only some creditors and not all of them.

New York District Judge Thomas Griesa – who presided over the Argentine debt restructuring after its 2001 default – ruled that the litigious nation could not pay its restructured debt without reimbursing holdout creditors.

Argentina’s securities regulator also said on March 27, 2015 that a local financial firm would assume Citibank’s responsibility as custodian of some bonds. Citibank Argentina was a custodian agent that channeled payments in Argentina’s restructured bonds when the country restructured its debt.

Citibank “signed a deal with the devil on March 20, with the vulture hedge funds, to abandon Argentina,” said Mr. Kicillof in a press conference in Buenos Aires.

The administration of President Cristina Fernández de Kirchner has coined the hedge funds “vulture funds” as they bought the country’s debt at a very cheap price and are now expecting to make exorbitant profits. The deal “violated and interfered with regulations governing our public debt,” said the minister.

In addition, Mr. Kicillof asked the federal court to rule the deal unconstitutional and immediately suspend it “and any legal act which emanates or has emanated from it.”

A long-running feud

As relations between the country and the bank are heating up, the Argentine central bank stripped authority from Citibank Argentina’s head, Gabriel Ribisich, on April 1, 2015. Regulators argued that he disregarded local laws by complying with orders from a US court.

Four Argentine central bank regulators then entered Citibank Argentina’s headquarter in the capital to make sure that the bank was operating as usual.

In response to Argentina’s actions, Citibank said in an official communiqué that it had informed the National Securities Commission and asked Judge Griesa’s special permission not to be trapped in its custody business, ahead of the judge’s verdict.

In March 2015, Judge Griesa prevented the bank from processing $2.3 billion interest payments by Argentina on some bonds issued under the country’s law to avoid favouring some bondholders. This thus has kept the South American nation out of global financial markets.

Mr. Kicillof said this ruling was “a shameful excess of jurisdiction”.

“If the bank does not transfer the funds, it will be breaking Argentine banking law. The [Argentine] Republic could revoke Citibank Argentina’s license to operate and even impose criminal responsibility upon its employees,” he said in a statement.

Citibank responded in a communiqué to stress that “even though Citibank Argentina regretted not to be able to continue to provide its custody services, the decision was taken voluntarily based on the legal and jurisdictional conflicts that arose from the March 12 decision of the District Court […] and as a result of the desire of Citi to comply at all times with all applicable legislation.”

The bank also stated “that at all times it has acted in accordance with the law in force and that it will continue to collaborate with the regulatory authority, as it has done consistently throughout more than 100 years.” Citibank Argentina opened offices in 1914.

A legal imbroglio

“Citibank Argentine is at a crossroads,” said an Argentine lawyer specialising in financial and capital markets law in Buenos Aires. He declined to be identified and use his law firm’s name due to the sensitivity of the topic and his company’s indirect involvement with the Argentine government.

“The problem of Citibank Argentina lies in the fact that, on the one hand, it is bound to the obligations of its parent company [Citibank] and Griesa’s judgment […] and, on the other hand, it is obliged to comply with Argentine laws, among which is law N°26.984 on Argentina’s Sovereign Payment Law.”

Argentina’s commercial law sets out that there is no legal difference between Citibank’s branch in Argentina and its New York-based parent company.

In other words, Citibank’s branch in Argentina has to comply with the March 20, 2015 deal reached between the bank and NML as both are the same legal entity, said the lawyer.

Yet, “in accordance to the law N° 26.984 […], any act meant to affect or hinder the collection of the debt securities issued as part of Argentina’s debt restructuring in 2005 and 2010, could be considered a violation of the national public order,” he explained.

Another key legal hurdle is whether a foreign court order – namely Judge Griesa’s ruling – can be enforced on Argentine soil.

Article 517 of Argentina’s Civil and Commercial Procedure Code stipulates that a foreign judgment ought not to impede the principles of public order in Argentine law, thereby complicating the matter.

The impact

Despite being an important part of Argentina’s financial landscape – Citibank operates 74 branches in the country – “I do not see a decisive impact in the short term,” said Walter Morales, President of Wise Management, an economic and financial consulting firm in Buenos Aires.

“It is not a complete suspension of activities, but the task of being paying agent; and second because in the minds of investors, […] we are facing the last eight months of Kirchner’s government,” he explains.

There is hope among foreign investors and the opposition that the October 2015 general election in Argentina will bring to power a more market-oriented president keen to solve the debt crisis.

“Now if the ruling party wins elections and economic policy is not changed, the effect will be very negative [with a] direct impact on the levels of direct investment,” added Mr. Morales.

Also Read:

Debt saga: An unhappy New Year for Argentina

Thousands of Argentines take to the streets

Don’t expect cheap birthday presents if you live in Argentina

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