Case 1:08-cv TPG Document 544 Filed 06/29/14 Page 1 of 16. Defendant. Plaintiffs, Defendant. Plaintiffs, Defendant.

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(1)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

NML CAPITAL, LTD.

Plaintiff,

-against-

THE REPUBLIC OF ARGENTINA,

Defendant.

08 Civ. 6978 (TPG)

09 Civ. 1707 (TPG)

09 Civ. 1708 (TPG)

AURELIUS CAPITAL MASTER, LTD. And

ACP MASTER, LTD.,

Plaintiffs,

-against-

THE REPUBLIC OF ARGENTINA,

Defendant.

09 Civ. 8757 (TPG)

09 Civ. 10620 (TPG)

AURELIUS OPPORTUNITIES FUND II, LLC

and AURELIUS CAPITAL MASTER, LTD.,

Plaintiffs,

-against-

THE REPUBLIC OF ARGENTINA,

Defendant.

10 Civ. 1602 (TPG)

10 Civ. 3507 (TPG)

10 Civ. 3970 (TPG)

10 Civ. 8339 (TPG)

(captions continue on following

page)

(2)

BLUE ANGEL CAPITAL I LLC,

Plaintiff,

-against-

THE REPUBLIC OF ARGENTINA,

Defendant.

10 Civ. 4101 (TPG)

10 Civ. 4782 (TPG)

OLIFANT FUND, LTD.,

Plaintiff,

-against-

THE REPUBLIC OF ARGENTINA,

Defendant.

10 Civ. 9587 (TPG)

PABLO ALBERTO VARELA, et al.,

Plaintiff,

-against-

THE REPUBLIC OF ARGENTINA,

Defendant.

10 Civ. 5338 (TPG)

(3)

I, Christopher J. Clark, am a partner at Latham & Watkins LLP, attorneys for

interested non-parties Euro Bondholders. I am admitted to the Bar of the State of New York and

of this Court. I am submitting this declaration in support of the Euro Bondholders’ Motion for

Clarification.

1. Attached as Exhibit A is a true and correct copy of the November 16, 2012

Declaration of Kevin F. Binnie of the Bank of New York Mellon Regarding the Payment

Processes for Global Bonds Issued Pursuant to That Certain Trust Indenture Dated as of June 2,

2005, and the First Supplemental Indenture Dated as of April 30, 2010.

2. Attached as Exhibit B is a true and correct copy of the January 3, 2013 brief

filed by Euroclear Bank S.A. N.V. in the United States Court of Appeals for the Second Circuit.

I declare under penalty of perjury that the foregoing is true and correct, pursuant

to 28 U.S.C. § 1746.

Dated: June 29, 2014

New York, New York

By /s/ Christopher J. Clark

Christopher J. Clark

(4)

EXHIBIT A

(5)

UNITED STA'mS DISTRICT COURT

SOUTHERN DISTRICT OF

NEW

YORK

---~---)(

NML CAPITAL, LTD.

Plaintiff,

v.

THE REPUBLIC OF ARGENTINA.

Defendant.

---~---~---X

AURELIUS

C~ITAL

MASTER, LTD. and

ACP

MASTER,

LT_D.

Plaintiffs,

v.

THE REPUBLIC OF ARGENTINA,

Defendant.

---~---x

AURELIUS OPPORTUNITIES FUND

IT,

LLC

and AURELIUS CAPITAL MASTER,

LTD.,

Plaintiffs,

v.

THE REPUBLIC OF ARGENTINA,

Defendant.

---X

08 Civ. 6978 (TPG)

0.9 Civ. 1707 (TPG)

09'Civ. 1708 (TPG)

09 Civ. 8757 (TPG)

09 Civ. 10620

(TPG)

10 Civ. 1602

(TPG)

10 Civ. 3507 (TPG)

(captions

continue

on following pages)

DECLARATION OF KEVIN F. BINNIE OF THE BANK OF NEW YORK MELLON

REGARDING THE PAYMENT PROCESSES FOR GLOBAL BONDS ISSUED

PURSUANT TO THAT CERTAIN TRUST INDENTURE DATED AS OF

JUNE

2, 2005,

(6)

---~---}(

AURELIUS CAPITAL MAS1ER, LTD. and

AURELTI.JS OPPORTUNITIES FUND U,

LLC,

.

Plaintiffs,

v.

REPUBLIC OF

ARG~NTINA,

Defendant

---~---}(

BLUE ANGEL

CAPIT~

I LLC,

Plaintiff,

v.

THE

REPUBLIC OF ARGENTINA,

Defendant.

---·---}(

PABLO ALBERTO V AAELA, et

al.,

.

v.

THE REPUBLIC OF ARGENTINA,

Defendant

---}(

OLIFANT FUND, LID.,

Plaintiff,

v.

THE REPUBLIC OF ARGENTINA,

Defendant.

---}(

-u.:

10 Civ. 3970 (TPG)

10 Civ. 8339 (TPG)

10 Civ. 4101 (TPG)

10 Civ. 4782' (TPG)

10 Civ. 5338

(TPG)

10

Civ. 9587 (TPG)

Case 1:08-cv-06978-TPG Document 397 Filed 11/16/12 Page 2 of 7

Case 1:08-cv-06978-TPG Document 544 Filed 06/29/14 Page 6 of 16

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·1.

I

am a

Vice President of The Bank of New York Mellon in its Corporate Trust

Division.

2.

The statements in

·

this Declaration are based

upo~

my personal

knowledg~

and

review of certain business records of The Bank of New York Mellon.

A.

·

THE INDENTURE

3.

The Bank of New York Mellon is the indenture trustee (the

"Trus~")

under

{i)

a Trust:

Indentme~

dated

as of Jline 2, 2005, between the Republic of Argentina (the

"Republic"), as issuer, and the Trustee and

(ii)

the First Supplemental Indenture, dated as of

April30, 2010, between the Republic, as issuer, and the

Trustee

(together, the ''Indenture").

4.

A true and correct copy of the Indenture

is

attached as Exhibit A.

B.

THE BONDS

USD-Denominafed Bonds

5.

Pursuant

to

the Indenture, the Republic issued U.S. Dollar-denominated bonds

("USD-Denominated Bonds") as follows:

8.75% USn-Denominated Global Bonds due 2017 (ISIN

1-

XS0501195480)

in the original principal amount _of $965,783,702

USD-nf?nominated GDP-Linked Security (ISJN -

·

US040114GM64) in the

original notional amount of$14,386,489,309

USD-Denominated GDP-Linked Security (ISIN- XS0501197262)

in

the

original notional amount of $2,833,038,181

• · 8.28% USD-Denomir!..ated Discount Bonds due 2033 (ISIN- XS0501195050)

in the original principal amount of$5,656,672

8.28% USn-Denominated Discount Bonds due 2033 (!SIN- XS0501194756)

in the original principal amount of$924,239,217

1 ''iSIN" is the acronym for International Security Identification Number. It is the international fmance equivaleqt to

a "CUSIP number," which is a number provided by the Committee on Uniform Securities Identification Procedures to identify most U.S. and Canadian securities, including stocks of all registered U.S. and Canadian pompanies, and

(8)

•· 8.28% USDwDenominated Discount Bonds due 2033 (ISIN- US040114GL81)

in the origj.nal prilicipal amount of$3,048,488,277

~ USD~Deriominated

Par Bonds due 2038 (ISlN- US040114GK09) in the

original principal amount

of$5,296~689

1

195

'

.

• USD-Denominated Par Bonds due 2038 (ISlN- XS0501195720)

in

the

originalprincipai·amount of$1,634,359

.

·

• USD-Denominated.Par Bonds due· 2038 (ISIN- XS0501195647) in the

original principal amount of$95,304,820

Euro-Deno:oiinated Bonds

6.

Pursuant to the Indenture, the Republic issued Eur<rDenominated bonds

(''Euro-Denominated Bonds" .and, together

with

the USD-Denominated Bonds,

~e

"Bonds,) as follows:

• 7.82% Burow Denominated Discount Bonds due 2033 (IS IN- XS0501195308)

in the original principal amount of€3,417,881

• 7.82% Euro-Denomir).ated Disc

.

ount Bonds due 2033 (!SIN- XS0501195134)

in the original prilicipal amount of€1,930,645,982

• 7.82% Euro ... Denominated Discount Bonds due 2033 (ISIN w XS020554:5840)

in the original principal amount of€2,263,500,622

• Euro-Denominated

GDP~Linked

Security (ISIN - XS0209139244)

in

the

origin.al notional amount of€18,947,454,209

• Euro-Denominated Par Bonds due 2038 (ISIN-

XS0~05537581)

in

the

original principal amount of€5,034,912,168

.

• Euro-Denominated Par Bonds due 2038"(IS1N- XS0501196025)

in

the

original principal amount of€11,183,124

• Euro-Denominated Par Bonds due 2038 (ISlN w XS0501195993) in the

original principal amount of€1,427,127,806

-2-Case 1:08-cv-06978-TPG Document 397 Filed 11/16/12 Page 4 of 7

Case 1:08-cv-06978-TPG Document 544 Filed 06/29/14 Page 8 of 16

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C.

THE BANK OF NEW YORK MELLON AS PAYING AGENT FOR THE

BONDHOLDERS

7.

The Bank

~~.~ew

York Mellon serves as the paying agent (the ''Paying Agenf')

for the

exclusiv~ benefit of the holders' of the Bonds.

2 ·

D.

'UIE

PAYMENT

PROCESSES

8.

The Bonds

with

an ISIN beginning

with

''XS" (which include

both

USD-Denominated Bonds and Euro-USD-Denominated Bonds) are cleared through Euroclear Bank S.A.

N.V. ("Eurocleru-") . and Clearstream Banking S.A.

.

("Clearstream"), which are foreign

clearinghouses. The Bank of New York Depositary (Nominees) Limited in London, England, is

the registered owner of, and serves as the foreign clearinghouses' common depesitary for, such

Bonds.

9.

The Bonds with an ISIN beginning with

"t.Js~·

are cleared through

th~

Depositpry

Trust Company ("DTC"), which

is

a subsidiary of the Depository Trust

&

Clearing Corporation,

a domestic clearinghouse. Cede

&

Co .• the nominee of

DTC,

is the registered owner of such

Bonds.

Euro-Denominated Bonds

10.

The Euro-Denominated Bonds are

all

cleared by Euroclear or Clearstream..

The payments are processed as follows:

Step One:

The Republic transfers funds to a Euro deposit account in the name

of the Paying Agent at Banco Central de la Republica de Afgentina

(the "Banco Central").

2 As required by the fudenture (and the Luxembourg Stock Exchange), the Trustee appointed The Bank of New

York (Luxembourg) S.A. as the nominal ''trustee paying agent" with respect to the Euro-Denominated Bonds.

(10)

-3-Step Two:

.

The

:fundS

in

the Paying Agent's account at Central Bank are

transferred to a Deutsche Bank account

in

Frankfurt,

Germany,

in

the name of The Bank ofNe)V York Mellon S.A. N.V. ("BNYM

.

Brussels"), which is tp.e

p~

European cash distribution center

for the Paying

Ag~t.

Deutsche Bank is BNYM Brussels's

correspondent bank for the receipt ofEuros.

Step Three:

At the direftion of the Paying Agent, BNYM

·

Brussels transfers the

funds

·

to Euroclear or Clearstream for distnbution to its

participants, who thep distribute the

.

funds

to beneficial holders.

USD-Denominated Bonds Cleared

by

Foreign Clearilighouses

11.

With

resp~ct

to the USD-Denominated Bonds that

~e

cleared by Euroclear or

Clears"tream, payments are processed as follows:

Step One:

Step Two:

The Republic transfers funds to a US Dollar deposit ac-count

in

the

name of the Trustee at Banco Central.

The

funds in

the Trustee's account at Banco Central are transfer:z-ed

to an account at The Bank ofNew York Mellon

(in

New York,

New York) in the name of BNYM Brussels. BNYM Brussels then

makes a book entry on its records in Brussels to reflect the

payment and credits the Paying Agent's account.

Step Three:

The Paying Agent instructs BNYM Brussels to pay the funds to

Euroclear and Clearstream

.

BNYM Erussels instructs The Bank of

.

New York Mellon

(as

the correspondent bank for BNYM Brussels

with

respect

to

the receipt of US Dollars) to pay the funds to

-4-Case 1:08-cv-06978-TPG Document 397 Filed 11/16/12 Page 6 of 7

Case 1:08-cv-06978-TPG Document 544 Filed 06/29/14 Page 10 of 16

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Step

Four:

Euroclear and Clearstream. The Bank of New York Mellon then

transfers the

·

funds (a) to

Eun~clear by internal book entry to

Euroclear's account at The Bank of New York Mellon (which is a

Euroclear correspondent bank for the receipt of US Dollars} and

(b)

to Clearstream by Fedwire or Clearing House Interbank

Payments System (CHIPS) payment.

3

'

Euroclear and Clearstream distribute the funds

to

their

r~pective

·

participants. who then distribute the funds to beneficial holders.

USD-Denominated Bonds Cleared by DTC

. '

12.

With

respect to the USD-Denominated Bonds cleared by

:

DTC, payments are

processed as follows:

Step One:

Step Two:

The Republic transfers funds

to

a

U~

Dollar deposit account in the

name of the Trustee at Banco Central.

The funds in

the Trustee's account at Banco Central are transferred

to

an account at The Bank ofNew York Mellon

in

New York, New

York,

in

the name of the Paying Agent.

Step Three:

The Paying Agent

~fers

the funds to DTC for distribution to its

participants, who distribute the

funds

to beneficial holders.

I declare that the foregoing is true and correct under penalty of peijury.

Executed on: November

16,2012

·~1~

~innie

Vice President

For The Bank ofNew York Mellon

3

The Bank of New York Mellon is not a Clearstream correspondent bank for the receipt of US Dollars.

(12)

-EXHIBIT B

(13)

Post-trade made easy

Eurodear Bank SA/NV 1 Boulevard du Rei Albert II 1210 Brussels, Belgium RPM Brussels 0429 875591 Tel. +32 (0)2 326 1211 www.euroclear.com January 3, 2013 BY E-FILING

Second Circuit Court of Appeals

Daniel Patrick Moynihan U.S. Courthouse 500 Pearl Street

New York, NY 10007

Subject: NML CaoltaL ltd, et al v Republic of Argentina, Docket Nos. 105(L), 109(Con), 111(Con),157(Con), 158(Con), 12-163(Con), 12-164(Con), 12-170(Con), 12-176(Con), 12-185(Con),

12-189(Con), 12-214(Con), 12-909(Con), 12-914(Con),

12-916(Con), 12-919(Con), 12-920(Con), 12-923(Con), 12-924(Con),

12-926(Con), 12-939(Con), 12-943(Con), 12-951(Con),

12-968(Con), 12-971(Con)

We write to you to express our deep concern regarding the Amended February 23, 2012 order issued by the District Court on November 21, 2012 (the "Order"). We are concerned that the District Court has misunderstood the role

of Euroclear Bank in the payment flows We are further concerned that giving effect to the Order will impair the smooth functioning of the international bond markets.

I. Introduction

Euroclear Bank SA/NV ("Euroclear Bank") Is a user-owned and user-governed

commercial bank and securities settlement system incorporated in Belgium. It

Is regulated by the National Bank of Belgium and has its registered office at 1 Boulevard du Rol Albert II, B-1210 Brussels, Belgium.

Euroclear Bank is a member of the Euroclear Group, which Is the world's

largest provider of domestic and cross-border settlement and related services.

The EurocJear Group includesr inter alial Euroclear Belgiumt Euroclear Finlandl

Euroclear France, Euroclear Nederland, Eurodear Sweden! Euroclear UK &

Ireland and Xtrakter limited.

Euroctear Bank provides settlement and related securities services for

cross-border transactions involving domestic and international bonds, eqUities,

investment funds and derivatives. Its clients are major financial institutions

located in more than 90 countries. Euroclear Bank holds securities and book-entry interests in securities for participating organizations and facilitates the

clearance and settlement of securities transactions between Euroclear

accounts and between Euroclear account holders and participants of other

securities settlement systems through electronic book-entry changes in

accounts of such participants or through other securities intermediaries.

Euroclear Bank has been assigned an AA+ rating by Fitch Ratings and an AA

rating by Standard & Poor's. Euroclear Bank has been a highly rated firm for

10 consecutive years.

(14)

PtJst-traJe maJe ea.;r

Euroclear Bank SA/NV 1Boulevard du Rai AlbertII 1210 Brussels, Belgium RPM Brussels 0429 875 591

Tel. +32 (0)2 3261211 www.euroclear.com

The value of securities held for Eurociear Bank clients at the end of 2011 was a record of Cl0.8 trillion. The vaiue of securities transactions settled was 028.5 trillion in 2011.

As a custodian of securities for its clients, Euroclear Bank receives income and

redemption payments from paying agents appointed by issuers and then

credits such amounts to its account holders. Euroclear Bank does not act on

behalf of securities issuers. Its contractual obligations are soleiy to its

clients/account hoiders.

Euroc!ear Bank has no operations in the United States. It maintains a small

representative office in New York for client relationship and support purposes,

II. Our concerns

A. The Order is overly broad

The Order purports to cover "Participants" defined by the Court as "those

persons and entities who aet in active concert or participation with the

Republic, to assist the Republic in fulfilling its payment obligations under the Exchange Bonds." The Order then goes on to list the Participants to include

Euroclear Bank under "the clearing corporations and systems, depositaries, operators of clearing systems! and settlement agents for the Exchange Bonds."

This is a misunderstanding of the roie of Euroclear Bank. Euroclear Bank does

not act in "active concert or participation" with Argentina. It has no

contractual relationship with Argentina as the issuer of the Exchange Bonds and does not act as its agent. It merely receives payments on the Exchange

Bonds on behalf of its clients. Euroclear Bank should not be considered a

Participant under the definition used in the Court Order and Federal Rule of Civil Procedure 65(d)(2).

B. Euroc!ear Bank is an "intermediary bank" under Article 48 of the vee

The District Court in issuing the Order recognized that it couid not enjoin the activity of any "intermediary bank" as defined in Article 4A of the Uniform

Commercial Code (UCC).l The UCC defines "intermediary bank" as "a

receiving bank other than the originator's bank or the beneficiary's bank." Euroclear Bank's roie is that of an intermediary bank in respect of payments

on Exchange Bonds. It receives the funds from the bank of the issuer

Argentina and then credits the accounts of its clients which either are the direct beneficiaries or act on behalf of the beneficiaries.

Accordingiy, per the terms of the Order itseif. Eurociear Bank should be

exempt from its effect. However, the Order specifically identifies Euroclear

Bank as a Participant covered under the Order. Thus, there is an inherent

contradiction within the terms of the Order. Clearly, the District Court has not

understood the role of Euroclear Bank in the payment flows between Argentina

and the owners of the Exchange Bonds.

1N.Y.C.L.S. U.C.C.§ 4-A-104

Page 2 of 4

Case: 12-105 Document: 780 Page: 2 01/10/2013 813381 4

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By the express inclusion of the European securities settlement systems as

Participants in the Order, the District Court has extended its reach weli beyond Its jurisdiction.' It asserts authority over Institutions and activities with little or no connection to the United States.

Post-trade made easy

C.

The Order would have an extra-territorial effect

Euroclear Bank SA/NV 1 Boulevard du Roi Albert II 1210 Brussels, Belgium RPM Brussels 0429 875 591

Tel. +32 (0)2 3261211 www.euroclear.com

The Exchange Bonds for which the Order attempts to constrain the payments

include a number of Eure-denominated instruments. These bonds are held

entirely outside the United States and are governed by English law. The

payments made on such bonds occur outside the United States.

The injunction Issued by the District Court purports to enjoin payments made within the European System of Central Banks TARGET2 real-time gross cash settlement system. Giving effect of the Order wili expand the authority of the US courts beyond the borders of the United States to activities carried out by

governmental institutions in Europe. In the interest of comity we would

expect that the Court would strive to avoid such a result.

D, The Order is in direct conflict with Belgian law

In Juiy 2003, an interest payment on bonds issued by Nicaragua was stopped

by a Belgian lower court order served on Euroclear Bank at the request of LNC

Investments which claimed that such interest payment was a breach of the pari passu provision in the governing documentation for such bonds. That

court order prevented Euroclear to accept or make any payments in respect of

Nicaragua bonds.

On appeal, the Brussels Court of Appeal reversed the court order in March 2004 and reieased Euroclear Bank from the biocking measures. The Court of Appeal found that Euroclear Bank was a third party to the ioan agreement

between Nicaragua RepUblic and Its ienders (including the pari passu

provision) and that in such capacity, Euroclear Bank could not be forced to

compiy with any contractuai obligation to treat debtors equally.

Following the Nicaragua case, Beigian law was amended to prevent any future Court orders similar to the Juiy 2003 order. Article 9 of the Belgian Act of April 28, 1999 impiementing the EU Settlement Finality Directive as amended by article 15 of the Law of November 19, 2004 and by subsequent legisiation

prOVides:

Any cash settlement account maintained with the operator of a system or with a cash settlement agent, as well as any cash transfer, through a Belgian or foreign credit institution, to be credited to such cash settlement account, can not be attached,

put under sequestration or otherwise blocked by any means by a participant (other than the operator or the settiement agent), a counterpart or a third party. [Euroclear Transiation]

, See Restatement (Third) of Foreign Relations Law of the United States, Section 403 (the jurisdiction of a state with respect to prescribing iaw with respect to matters taking place outside of Its own territory is limited to:

conduct that has or is intended to have substantial effect within its territory; the actiVities, etc., of its own nationals; and conduct that is directed against

the security of the state or against a limited class of other state interests).

(16)

Post-trade made easy

According to the legislative history of Article 9 and its subsequent amendment, the purpose of this prohibition to attach or otherwise biock a cash settlement

account or any cash transfer to be credited to such account is to avoid any

impediment to the proper functioning of payment or settlement systems and hence to safeguard the credibility and the liquidity of national and international

financial markets.

Considering this objective, the prohibition contained in Article 9 of the Belgian

Act of April 28, 1999 implementing the EU Settlement Finality Directive should be regarded as a rule of Belgian international public policy.

The implementation of the Order on the terms set by the District Court would likely lead to a direct violation of this ruie of Belgian law to the extent it wouid be interpreted in such a way that Euroclear Bank would be prohibited from

receiving cash payments In relation to the Exchange Bonds from its

correspondents and from crediting the cash so received to its clients' cash

settlement accounts.

A conflict of laws of this nature will impact the legal certainty underpinning the internationai bond markets and could cause a loss of confidence in the role of

key market infrastructure providers. In the interest of comity, we trust that

the Court wouid not wish to permit any action which wouid interrupt or Impair

the smooth functioning of the bond markets upon which so many governments

and investors over the world reiy so heavily.'

*

*

*

*

*

For the above reasons, we submit to the Court that the Order should not be given effect under the terms written by the District Court.

We are available to respond to any questions of the Court or to provide a

formal submission If requested by the Court. Respectfully submitted on behalf of Euroclear Bank,

icer

Eurodear Bank SA/NV 1 Boulevard du Rei Albert II 1210 Brussels, Belgium RPM Brussels 0429 875 591 Tel. +32 (0)2 3261211 www.euroc1ear.com

cc:

counsei of re ord for the above-captioned action (by email)

3

See, e.g.,

Federal Trade Commission v. Compagnie de

Saint-Gobain-Pont-a-Mousson, 636 F.2d 1300, 1327 n. 150 (D.C. Cir. 1980) (principles of

international comity require that domestic courts not take action that may cause the violation of another nation's laws).

Page 4 of 4

Case: 12-105 Document: 780 Page: 4 01/10/2013 813381 4

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