A US appeals court has granted Argentina a temporary reprieve by putting on hold a judge's order to turn over its 51% stake in oil and gas company YPF.

This decision temporarily relieves Argentina from partially satisfying a $16.1bn judgment won by two investors, reported Reuters.

The 2nd US Circuit Court of Appeals in Manhattan stayed the turnover order from US District Judge Loretta Preska while Argentina appeals.

The Argentine Government, led by President Javier Milei, had warned of irreparable harm and economic instability if it were forced to relinquish its stake in YPF, the country's largest energy company.

The $16.1bn judgment, awarded in September 2023 to Petersen Energia Inversora and Eton Park Capital Management, is also under appeal by Argentina.

Litigation funder Burford Capital, which would share in the damages, represents the investors.

The court's order did not specify the reasons for the stay, which is expected to last at least a few months.

Argentina's next legal filing concerning the YPF matter is scheduled for 25 September, according to court records.

This legal dispute traces back to Argentina's 2012 expropriation of the YPF stake from Spanish company Repsol, without extending a tender offer to minority shareholders.

Argentina had argued that the YPF shares were protected under the federal Foreign Sovereign Immunities Act.

The US Government supported Argentina's position, suggesting that a hasty resolution could potentially disrupt diplomatic relations.

However, the investors' lawyers argued that an exception to immunity for commercial activity, coupled with Argentina's prolonged evasion, warranted the turnover.

Judge Preska, in her 30 June order, had ruled that Argentina's control over the YPF shares activated the exception, dismissing the country's invocation of its own laws to prevent the turnover.

An Argentine Government spokesperson expressed confidence that the stay order was a positive development and that the $16.1bn damages award would ultimately be overturned.

In July, Argentina also sought to suspend the enforcement of the judgment at London’s High Court related to the nationalisation of YPF.