Second Circuit Limits Tender-Offer Damages After Sovereign Expropriation: YPF Bylaws Are Not a Bilateral Shareholder Contract and GEL Art. 28 Bars Third-Party Impeding Actions

1) Introduction

These consolidated appeals arose from Argentina’s 2012 renationalization of YPF S.A., an Argentine oil-and-gas company whose shares (including NYSE-traded ADRs) were widely held by private investors after a 1993 privatization IPO. Petersen (Spanish entities tied to an Argentine family) and Eton Park (a New York hedge fund) held minority interests in YPF’s common stock (Class D, via ADRs).

The key investor-protection feature of YPF’s amended bylaws (the “Bylaws”) was a mandatory tender offer regime: when an acquirer crossed certain ownership thresholds it had to make a public tender offer for the remaining shares at specified, above-market pricing formulas. Critically, § 28(A) extended that tender obligation to acquisitions by the Argentine National Government once it became owner of or exercised control over a cumulative 49% of shares.

In 2012, Argentina expropriated 51% of YPF shares from Repsol without conducting the tender offer. Minority shareholders sued in the Southern District of New York asserting (among other claims) breach of contract (Bylaws) and promissory estoppel under Argentine civil law. After years of litigation, the district court entered a combined award exceeding $16.1 billion against the Republic and granted summary judgment to YPF.

On appeal, the Second Circuit held that—as a matter of Argentine law—the minority shareholders’ contract damages theory against the Republic was not cognizable, and that the remaining claims against the Republic and YPF lacked merit. The court affirmed in part, reversed in part, and remanded.

2) Summary of the Opinion

3) Analysis

3.1 Precedents Cited

A) Foreign-law determination and appellate review

• Animal Sci. Prods., Inc. v Hebei Welcome Pharm. Co.: The court applied the rule that foreign law is reviewed de novo, while giving “respectful consideration” to a foreign sovereign’s view without treating it as conclusive, and permitting consideration of “any relevant material or source” under Fed. R. Civ. P. 44.1. This underwrote the panel’s willingness to reject the district court’s Argentine-law analysis despite extensive expert submissions.
• Curley v. AMR Corp.: Cited to emphasize that appellate courts may “find and apply foreign law” in the first instance, shaping the majority’s refusal to remand simply because Argentine law is complex.
• Bugliotti v. Republic of Argentina: Cited for the idea that judicial economy can sometimes justify remand on foreign-law issues where district courts have not fully engaged—here invoked to distinguish why the panel felt comfortable deciding Argentine law directly.

B) Forum non conveniens and comity as discretionary (and post-trial) doctrines

• Gulf Oil Corp. v. Gilbert: Serves as foundational federal authority for forum non conveniens, framing the doctrine as a federal common-law tool rather than a jurisdictional bar.
• Colo. River Water Conservation Dist. v. United States: Quoted for the “virtually unflagging obligation” to exercise jurisdiction, against which forum non conveniens is an exception.
• Iragorri v. United Techs. Corp. and Scottish Air Int'l, Inc. v. British Caledonian Group, PLC: Used to underscore broad district court discretion and the structured approach to deference and private/public interest factors; the panel used this to justify not revisiting the district court’s discretionary choices after a full merits adjudication.
• Esso Expl. & Prod. Nigeria Ltd. v. Nigerian Nat'l Petroleum Corp.: Cited for abuse-of-discretion review of forum non conveniens determinations.
• Indasu Int'l, C.A. v. Citibank, N.A.: Important procedural gloss: after a full trial, reversal of a forum non conveniens denial requires “substantial prejudice.” That elevated standard supported the panel’s decision to bypass forum issues and decide the merits.
• Figueiredo Ferraz E Engenharia de Projecto Ltda. v. Republic of Peru: Cited for the observation (in a dissent there) that reversing a denial of forum non conveniens is rare in the Second Circuit, reinforcing the majority’s reluctance to disturb the district court on that ground.
• Royal & Sun All. Ins. Co. of Canada v. Century Int'l Arms, Inc.: Provided the court’s framework for international comity abstention, including the “exceptional circumstances” lens and the more rigorous appellate review. The panel, however, again declined to reach the issue.

C) Choice of law and corporate “internal affairs” framing

• Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, Thea v. Kleinhandler, and Eccles v. Shamrock Cap. Advisors: These cases anchored the principle that matters involving the relationship between a corporation and its shareholders are typically governed by the law of the place of incorporation—here, Argentine law—making the Argentine-law merits dispositive.

D) Earlier procedural waypoint in the same litigation

• Petersen Energía Inversora S.A.U. v. Argentine Republic (Petersen II): Previously held that “under the bylaws, Argentina’s expropriation triggered an obligation to make a tender offer,” and affirmed FSIA jurisdiction. In this 2026 merits decision, the panel carefully limited that earlier holding’s scope: a tender obligation for FSIA/commercial-activity purposes did not equate to a cognizable Argentine-law damages claim by minority shareholders.
• Petersen Energía Inversora, S.A.U. v. Argentine Republic (Petersen I, Petersen III, Petersen IV): The panel used these district court decisions primarily as procedural and analytical background; it then rejected Petersen IV’s Argentine-law contract theory on appeal.

E) Argentine authorities (as translated) deployed as “foreign law sources”

• "Motta v. Abraxas Construcciones": Used for Argentine contract interpretation: unambiguous text cannot be modified by “spirit” or presumed intentions.
• "Lipnik, Alberto Teodoro v. Constructora San José the Republic S.A." and "Lezcano, Juan C. v. Arismendi S.C.S.": Cited to show the typical bilateral-contract setting where reciprocal promises support specific performance and damages under Civil/Commercial Code provisions.
• "Gatti, Ernesto Ignacio and other v. Bulad, Alfredo Ragueb s/ summary": Central to the panel’s corporate-law characterization: shareholder rights and obligations “revolve” around relations with the company (the juridical person), not as bilateral duties owed to each other individually.
• "De San Martín, José et al. v. EN - PEN": Cited as Argentine Supreme Court recognition that administrative/expropriation law is of “primary relevance” to disputes about enforcing the tender obligation after expropriation (even though De San Martín was jurisdictional and sought specific performance).
• "Sociedad de Electricidad de Rosario," and "Ferrocaril Central Argentino v. L. de Fusse,": Used to support the reading of GEL art. 28 as overriding or displacing private contractual conditions that would condition, delay, or otherwise interfere with a lawfully declared expropriation; compensation is instead channeled through expropriation valuation/compensation mechanisms.

3.2 Legal Reasoning

A) Standing: “control” can be enough, even without formal title

The Republic argued the tender obligation was not triggered until it formally received title to Repsol’s shares in 2014 (after Plaintiffs had lost/foreclosed their shares), defeating standing. The panel rejected that formalism. It focused on the Bylaws’ trigger—ownership or “exercise the control of”—and on the YPF Expropriation Law’s grant of political rights over the shares pending completion of compensation, plus the Republic’s actual exercise of those rights (voting, canceling dividends, depriving Repsol of control). That placed the trigger in 2012, preserving Plaintiffs’ standing.

B) The core merits move: “Bylaws as contract” does not necessarily mean “bilateral damages claim”

The district court treated § 28(A) as a straightforward promise to minority holders enforceable in damages, and treated Argentine contract principles as broadly analogous to common-law breach. The Second Circuit agreed that bylaws may be colloquially “contract-like” for interpretive purposes, but drew a remedial boundary: bylaws are chiefly governance rules, and (as framed by the Republic’s expert and the Argentine authority "Gatti, Ernesto Ignacio and other v. Bulad, Alfredo Ragueb s/ summary") they are a “plurilateral organizational contract” that generally does not create a network of bilateral, reciprocal obligations among shareholders.

The panel then read § 28(A) not as creating a shareholder-to-shareholder bilateral exchange, but as a governance rule that extends the tender-offer regime to the State once it crosses a higher control threshold. The court found it “difficult to identify” any “mutual promise” owed by minority holders to the Republic in exchange for the alleged Republic-to-minority duty—highlighting the mismatch between a bilateral-contract model and corporate charter/bylaw structure.

C) The independent bar: expropriation public law (GEL) channels and precludes “impeding” actions

Even if one assumed a bilateral obligation, the panel held the claims were precluded by Argentina’s public expropriation framework, particularly GEL art. 28: “No action by third parties may impede the expropriation or its effects.” The court reasoned that a massive damages claim functionally seeking to extract additional payment “to the tune of $16.1 billion” for the expropriation interferes with (i.e., “impedes”) the expropriation’s effects, even if it did not physically prevent the takeover.

To give content to “impede,” the panel leaned on "Sociedad de Electricidad de Rosario," (invalidating contractual notice conditions that would “condition” the State’s discretion on timing of public-utility expropriation) and "Ferrocaril Central Argentino v. L. de Fusse," (invalidating an obligation to build crossings, channeling such burdens into compensation valuation). Those authorities supported the principle that, once expropriation is declared in the public interest, private-law encumbrances that interfere with its execution/effects are displaced in favor of compensation mechanisms.

D) Promissory estoppel: no free-standing “equity” workaround under Argentine law as pleaded

The panel affirmed the dismissal of promissory estoppel, describing it (as the district court had) as not an “autonomous source of an obligation” and as precluded where a written contractual relationship governs the field. The court also rejected the attempt to reframe estoppel as an alternative once the damages contract theory failed: the problem was not the absence of a written relationship (the Bylaws existed), but the non-cognizability of the particular bilateral-damages enforcement theory and the lack of a pleaded independent obligation apart from the Bylaws.

E) Claims against YPF: no affirmative enforcement duty in the text

The panel performed a close textual reading of §§ 7(d)–(f), 7(h), and 28 and found duties placed on the “bidder/purchaser,” not on the company. YPF’s only explicit role was administrative mailing of notices. Disabling voting/dividend rights in § 7(h) stripped rights from noncompliant shares by operation of the bylaw; it did not create an enforcement mandate requiring the corporation to police a sovereign’s compliance.

3.3 Impact

A) Substantive constraint on “bylaw tender-offer” damages theories in U.S. courts applying foreign law

The most consequential doctrinal output is the court’s insistence that, under Argentine law, YPF’s Bylaws could not be used as a springboard for minority shareholders to recover contract damages from a sovereign for failing to conduct a tender offer triggered by expropriation. The opinion signals a broader caution for transnational securities disputes: even where a tender obligation is clear and even where an issuer marketed that protection in U.S. securities channels, the enforceability of a damages remedy depends on the foreign system’s characterization of bylaws, corporate remedies, and public-law overrides.

B) Expropriation-law “channeling” effect may blunt private-law end-runs

By giving real bite to GEL art. 28, the court’s reasoning suggests that in Argentine expropriation settings, third-party claims framed in private-law terms (contract/tort-like) may be vulnerable if they effectively interfere with the expropriation’s implementation or its economic settlement. Future litigants will likely have to grapple with whether their requested relief “impedes” expropriation “or its effects”—a phrase the panel treated as broad enough to capture immense follow-on damages awards.

C) Procedural takeaway: appellate courts may decide foreign law de novo despite deep district-court engagement

The dissent highlights a practical countercurrent: district courts are often better situated for “fact-like procedures” in foreign-law determination, especially in civil-law systems. The majority nonetheless reaffirms that Rule 44.1 makes foreign law a question of law and that appellate courts can decisively recharacterize foreign corporate and public-law interactions on a cold record, even after years of litigation.

D) Limited effect on FSIA jurisdiction, but major effect on outcome

The decision does not retract Petersen II’s FSIA/commercial-activity analysis. Instead, it demonstrates a recurring split between: (i) jurisdictional characterization (“commercial activity” and “direct effect”), and (ii) merits enforceability under foreign substantive law. The practical impact is enormous: jurisdiction can exist while the core theory fails on foreign-law merits.

4) Complex Concepts Simplified

American Depositary Receipts (ADRs)

ADRs are U.S.-traded certificates issued by a U.S. bank that represent interests in shares of a foreign company. They let investors buy/sell foreign equities on U.S. exchanges (here, YPF ADRs on the NYSE) without directly trading on the foreign market.

Tender offer requirement in corporate bylaws

A tender offer requirement forces an acquirer who reaches a control threshold to offer to buy the remaining shareholders’ shares, typically on standardized terms and sometimes at an above-market price. It is designed to protect minority holders during a control change.

“Bylaws as a contract” vs. “bilateral contract enforceable in damages”

Courts often say bylaws are “contract-like” because they are written commitments that can be interpreted using contract tools. But that does not mean every bylaw provision creates a pairwise promise between any two shareholders that can be enforced via a classic damages lawsuit. This opinion treats bylaws primarily as organizational rules governing the corporation’s internal affairs.

Expropriation and the General Expropriation Law (GEL)

Expropriation is the State’s taking of private property for public use, with compensation—akin to eminent domain. Argentina’s GEL sets procedures and limits; the key provision here, GEL art. 28, aims to prevent third-party lawsuits from interfering with the expropriation process and channels claims toward compensation mechanisms.

Promissory estoppel (as addressed here)

Promissory estoppel is an equitable doctrine sometimes used when there is no enforceable contract but a party reasonably relied on a promise. The court held that, under the Argentine-law framing presented, it was not a free-standing substitute for an unsuccessful contract-damages theory rooted in written bylaws.

5) Conclusion

The Second Circuit’s decision sharply limits the availability of U.S.-litigated, Argentine-law contract damages remedies for minority shareholders based on corporate bylaws when the triggering event is a sovereign expropriation. The court articulated two mutually reinforcing barriers: (1) bylaws generally do not create bilateral, reciprocal shareholder-to-shareholder obligations enforceable through a classic damages action; and (2) Argentina’s General Expropriation Law, especially GEL art. 28, prevents third-party actions that “impede the expropriation or its effects,” channeling disputes toward the expropriation compensation framework.

The ruling underscores a broader transnational lesson: even when investor protections are prominently marketed and plainly violated, the decisive question may be whether the chosen cause of action and remedy are recognized within the foreign sovereign’s integrated corporate-and-public-law remedial architecture.