Turnover
Petersen Energia Inversora S.A.U. v. Argentine Republic
Date: Oct. 2, 2025
Issue: Whether the district court erred in issuing a Turnover Order that compelled a nonparty bank to execute and transfer foreign assets.
Case Summary: ABA filed a coalition amicus brief urging the Second Circuit to reverse a New York court order requiring nonparty Bank of New York Mellon to open a custody account and transfer Argentina’s YPF shares from Argentina to the U.S. for turnover to Petersen Energia. YPF S.A. is a majority state-owned Argentine energy company.
In 2015, Petersen Energía sued the Argentine government, claiming it violated YPF’s bylaws when it nationalized the oil company. Argentina expropriated 51% of YPF’s shares from Repsol S.A. in 2012 without making a tender offer for the remaining 49% held by other shareholders. Those shares were recorded in book-entry form at Caja de Valores, Argentina’s central securities depository. Petersen alleged Argentina’s failure to purchase the remaining shares violated YPF’s shareholder agreement and bylaws.
In September 2023, Judge Loretta Preska of the Southern District of New York dismissed Petersen’s breach of contract claims against YPF and its good-faith and fair-dealing claims against the Republic. However, she found that Argentina itself had breached its contractual obligations. As a result, the court entered a $16.1 billion judgment in Petersen’s favor and ordered the turnover of Argentina’s YPF shares under New York Civil Practice Law and Rule Section (CPLR) 5225, which governs enforcement of money judgments against a debtor’s property.
The court directed Argentina to transfer its YPF shares into a global custody account at BNYM within 14 days, reasoning the transfer would move the assets into U.S. jurisdiction and make them attachable under the Foreign Sovereign Immunities Act. The court also required BNYM to complete the transfer of Argentina’s ownership interests to Petersen or its designees.
In its brief, ABA argued the Turnover Order unlawfully binds an uninvolved, nonparty bank, as a court lacks authority to impose obligations on entities not properly before it. The court’s order effectively required BNY Mellon, a nonparty, to establish a global custody account for Argentina, enter into an agreement with a sub-custodian in Argentina, and transfer YPF shares from Argentina to the United States at Argentina’s direction. ABA cautioned the clear message underlying the Turnover Order is that BNY must open such an account — whether the engagement aligns with its commercial or risk appetite — or risk being at odds with the court. As explained in the brief, this places the bank in an untenable position: it is not a party to the case, is being forced into a new business relationship with Argentina and had no opportunity to be heard.
Next, ABA argued the Turnover Order allows judgment creditors to sidestep New York’s well-established separate entity rule. Under the separate entity rule, “when a bank garnishee with a New York branch is subject to personal jurisdiction, its other branches are to be treated as separate entities for certain purposes, particularly with respect to post-judgment restraining notices and turnover orders.” ABA explained that the separate entity rule prevents U.S. courts from forcing foreign bank branches to comply with domestic orders and to respect the sovereign authority of foreign nations over banks operating within their borders.
ABA also argued the Turnover Order flouts comity considerations. Comity is the principle that one nation shows mutual respect by honoring the legal acts and decisions of another nation’s government within its own jurisdiction. ABA explained that U.S. courts have long applied this principle to avoid enforcing orders that interfere with foreign law or compel international banks to violate another country’s legal requirements. The District Court, however, rejected Argentina’s comity arguments and reasoned that no conflict existed because Argentina could simply obtain congressional approval or amend its own laws to comply with the Turnover Order. ABA countered that such reasoning undermines the very purpose of comity — respecting the sovereignty and laws of other nations — and is especially misplaced when non-sovereign entities like BNYM and its sub-custodian must carry out actions that would violate Argentine law.
Finally, ABA argued that affirmance of the Turnover Order would present a serious threat to New York’s role as the epicenter of global banking. ABA emphasized that both New York and the United States have a vital interest in maintaining New York’s status as a leading financial center, and that the District Court’s ruling endangers that position. The Turnover Order would invite courts to conscript banks with New York branches into retrieving foreign assets of judgment debtors.
Bottom Line: Allowing the Turnover Order to stand could violate established limits on judicial authority, undermine international comity and New York banking law, and risk destabilizing New York’s position as the world’s leading financial center.
Document: Brief
