CASE STUDY 6-1

Case Study 6-1

Case Study 6-1

A Statement of the Relevant Facts in the Case

Facts

The case provided provides some facts which we will discuss in this section of the paper. Republic of Argentina was sued for breaching the contract with Weltover, Inc. et al. The case includes a Swiss bank and these two Panamanian corporations.

In order, to understand the facts in this case we will discuss background of this case. Among the international market currencies, Argentine is not the currency which is accepted. Businesses running in Argentina must make foreign transactions in U.S dollars or other currencies which are internationally accepted (“Republic of Argentina v. Weltover, 2011).

Because of the instability present in currency rates there was difficulty present to acquire funds for Argentines borrowers. In 1981, the Republic of Argentina and its central bank instituted a contract program under which government of Argentina takes for granted the risk present in currency due to depreciation in transactions done internationally. This also involved Argentine borrowers.

In 1982, the contracted program instituted by the republic of Argentina became due because of some reason. At that time the Government of Argentina did not have enough reserves to cover the loss on the contracts. Some emergency steps were taken by the government of Argentina in order to back the loss. They issued government bonds to creditors to have a sufficient amount of cash flow.

The bonds issued by the government were taken by the Swiss bank and other creditors. When the bonds issued started to reach their maturity date in 1986, the government of Argentina denied retiring them as they were still not is a position to return the money back to the creditors. They asked creditors to get a substitute instrument known as rescheduling of debts.

The respondent, receivers of money mainly constitutes one Swiss bank and ...