Argentina wins appeal on inflated US$2.24 bln award

A U.S. federal appeals court threw out a US$2.24 billion damage award to tens of thousands of investors who held defaulted Argentine bonds, saying a lower court erred in calculating an "inflated" sum.

The U.S. 2nd Circuit Court of Appeals in Manhattan ordered U.S. District Judge Thomas Griesa to consider alternative means to calculate payouts that "more closely reflect the losses class members experienced."

Argentina countered that this approach was inappropriate because it could result in bloated awards, and urged that investor claims be assessed individually.

Writing for the appeals court, Judge Barrington Parker rejected Griesa's approach for setting awards ranging from US$95.3 million to US$543.9 million for the eight classes.

"The court reasoned that granting inflated judgments was justifiable because, given Argentina's general refusal to pay any judgment against it, plaintiffs were unlikely to recover," Parker wrote.

"However practical this approach might have been, it was improper" because it created a "disconnect" that could result in "astronomical" damages relative to the harm suffered, according to Parker.