YPF nationalization
Argentina's 2012 expropriation of the 51 percent of oil company YPF held by Repsol, compensated two years later in government bonds: the textbook case of direct expropriation.
On April 16, 2012, Argentina's president announced the expropriation of 51 percent of YPF, the country's leading oil company, nearly all of Spain's Repsol stake. The state cited insufficient investment and energy sovereignty, and took control of the company before any agreement on compensation. Repsol launched an investment arbitration, then accepted in 2014 compensation paid in Argentine sovereign bonds, whose value depended on the credit of the very state that had expropriated. The case shows the three stages of an expropriation loss: the taking, the compensation offered, and the real value of what is paid. For the underwriter, it is a reminder that compensation in the expropriating state's own paper transfers sovereign default risk to the insured, and that a policy must state whether it guarantees fair compensation or only against no compensation at all.
The February 2014 agreement set Repsol's compensation at 5 billion dollars in Argentine bonds. In September 2023, a New York federal court also ordered Argentina to pay 16.1 billion dollars to former minority shareholders, for failing to launch the tender offer that YPF's bylaws required.
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