Second Circuit – Statute of limitations: Bainbridge Fund Ltd. v. The Republic of Argentina

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United States Court of Appeals for the Second Circuit

Statute of limitations

Defaulted bonds – Acknowledgement of debt

Bainbridge Fund Ltd. v. The Republic of Argentina

21-37-cv(L)

Judges Walker, Leval, and Park

Background: The plaintiff is the beneficiary of bonds issued by the defendant who defaulted on the bonds in 2001. The plaintiff did not commence an action on them until 2016. On appeal from the dismissal of its action, the plaintiff argues that the 20-year statute of limitations for recovery on certain bonds under the New York State Civil Practice Law and Rules section 211(a) applies; and, even if the six-year limitations period for contract actions applies, it was tolled under the New York State General Obligations Law section 17-101 because the defendant acknowledged this debt when it publicly listed the bonds in quarterly financial statements.

Ruling: The Second Circuit affirmed. The court held that the 20-year statute of limitations does not apply to the defendant’s bonds because a foreign sovereign is not a person under the New York statute. Secondly, tolling under the General Obligations Law is inapplicable because the quarterly reports did not acknowledge the debt at issue in a way that reflected an intention to pay or seek to influence the bondholders’ behavior. Rather, the defendant repeatedly stated that the bonds may remain in default indefinitely.

Anthony J. Constantini, of Duane Morris, for the plaintiff-appellant; Carmine D. Boccuzzi Jr., of Cleary Gottlieb Steen & Hamilton.