FORBES – A bitter legal battle is under way in Latin America. At the beginning of June, the hedge fund Gramercy filed a case against Peru over the valuation of “land reform bonds” dating back to the 1960s and 70s. The case will be heard not in Peru, where the Constitutional Tribunal has already ruled that the Peruvian government’s treatment of the bonds is legal under Peruvian law, but by an international tribunal under Peru’s Trade Promotion Agreement (TPA) with the US.

Gramercy argues that the Peruvian government’s use of a controversial revaluation approach amounts to expropriation. And it says that Peru has discriminated against it in setting the priority sequence for paying the bonds: Gramercy’s claim is now effectively junior to that of all other land bond holders, violating the principle of pari passu. Now where have we heard something like this before?…

Read Full Article