This paper provides an in-depth critique of how the US courts have interpreted the law and exercised their wide discretion in the disputes between NML and Argentina. Partially, the courts got it right when they decided that Argentina was in breach of the bonds’ “pari passu” clause, which said that Argentina’s “payment obligations shall at all times rank at least equally” with all its other present and future external debt. By enacting laws which precluded the government from paying anything on the original bonds, Argentina had legally ranked NML’s bonds below later ones. But the paper argues that the US courts went wrong in also claiming that “rank” was not limited to legal ranking, as previously understood, but also covered different treatment of
creditors in practice. And above all, the way the US courts exercised their discretion was partial, i.e. the opposite of impartial. They wholly subordinated the general public interest in orderly post-crisis debt restructuring processes to the narrow financial interests of NML. The paper proposes that a fair remedy would have been to order Argentina to pay NML on the identical basis to the exchange bond-holders.