(MENAFN- Arab Times) THE HAGUE Aug 7 (Agencies): Argentina on Thursday sought to haul the United States before the UN's highest court accusing Washington of breaching its sovereignty after a US judge blocked the country from servicing its restructured debt. 'The Argentine Republic filed today ... a document dated 7 August 2014 against the United States of America' the Hague-based International Court of Justice (ICJ) said in a statement. The dispute concerned 'judicial decisions of the United States relating to the restructuring of the Argentine sovereign debt' the court added. However 'no action will be taken in the proceedings unless and until the United States of America consents to the Court's jurisdiction in the case' the ICJ said. Buenos Aires on Wednesday called on the US to rein in a judge who granted two hedge funds a ruling blocking the South American country from servicing its restructured debt. It wants the US government to intervene in an ongoing court battle which has seen New York District Judge Thomas Griesa bar Buenos Aires from making payments to bondholders who accepted a 70-percent write-down without also paying the hedge funds the full $1.3 billion it owes them. Argentina accuses the US of having 'committed violations of Argentine sovereignty and immunities and other related violations as a result of judicial decisions adopted by US tribunals concerning the restructuring of the Argentine public debt' the ICJ said. Argentina went into its second default in 13 years on July 30 when the grace period expired on a payment due to creditors who had agreed to restructure the country's debt after its 2001 economic crisis. The two US hedge funds which Argentina calls 'vulture funds' refuse to accept less than the full value of their bonds. But Argentina says paying them in full could trigger legal claims for equal treatment by the 92 percent of creditors who agreed to a write-down putting the recession-hit country on the hook for up to $100 billion. Meanwhile the US judge in charge of Argentina's debt default case on Wednesday ordered Bank of New York Mellon to hold on to money deposited by the government rather than disburse the funds to holders of the country's restructured bonds. The move by US District Judge Thomas Griesa came after Argentina earlier in the day demanded the intermediary bank deliver $539 million in bond payments that were due in June but blocked by previous court rulings. Argentina defaulted on its sovereign bonds last week after losing a long legal battle with hedge funds that rejected the terms of debt restructurings in 2005 and 2010. The government has kept up pressure on Bank of New York Mellon to make payouts to the holders of restructured bonds despite Griesa's order saying it has to pay the holdout hedge funds at the same time. The holdouts are asking for repayment of 100 cents on the dollar rather than accept steep discounts offered in Argentina's two restructurings. 'The Republic will seek to hold BNY Mellon liable for any damages the Republic has suffered and may suffer as a result of BNY Mellon's acts and omissions' the government said in a letter to the bank on Wednesday. 'BNY Mellon has placed its interests and those of the plaintiffs ... over those of the Exchange Bondholders in violation of BNY's duties as Trustee' the letter said. Griesa disagreed saying it was illegal for Argentina to deposit money intended for the exchange bondholders and ordered the bank to hold the funds. 'Argentina will take no steps to interfere with BNY's retention of the funds' Griesa's order said. The inflation-racked South American country defaulted on about $100 billion on sovereign bonds in 2002. Most holders of those bonds accepted less than 30 cents on the dollar in the 2005 and 2010 restructurings while the holdouts opted to sue in the US courts for full repayment. The case has turned into a bitter legal feud between the populist government of Argentina and the holdouts derided by Buenos Aires as vultures circling the carcass of Argentina's traumatic 2002 debt crisis. Griesa stepped in on Monday to defend the mediator he appointed to help settle the dispute after Argentina accused the go-between of bias. The country's gross domestic product meanwhile is expected to shrink this year according to the United Nation's body for Latin America as fallout from the debt crisis keeps the region's No. 3 economy out of foreign debt markets.
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