Argentina has filed suit against the U.S. at the International Court of Justice in a high-stakes debt dispute between the South American nation and some of its creditors, the Wall Street Journal reported today. Argentina's lawsuit contends that decisions by U.S. courts in the dispute have violated its sovereignty, The Hague-based court said today. Argentina defaulted on some of its restructured debt July 30 after marathon talks with hedge funds suing to collect on bonds the country stopped paying in 2001 ended without a deal.

The U.S. judge overseeing a court battle that led Argentina to default on a $539 million interest payment last week ordered the nation and a group of U.S. hedge funds to keep talking in a bid to resolve the crisis, Bloomberg News reported on Friday. U.S. District Judge Thomas Griesa also said on Friday that he won’t replace a court-appointed mediator, after a lawyer for Argentina said it “no longer has confidence” in the negotiation process led by McCarter & English LLP partner Daniel Pollack.

Argentina’s debt saga has been dragging on for more than 12 years and, with the country slipping back into default on Wednesday, it is far from over. Hopes remain that a deal with the private sector can still be reached, the Financial Times reported. A last-minute proposal by a group of Argentine banks collapsed behind the scenes shortly after economy minister Axel Kicillof announced that the “vulture funds” had rejected the government’s offer. But other proposals are in the works, according to local media.

Talks aimed at a last-minute settlement between Argentina and holdout creditors collapsed late Wednesday, and a court-appointed mediator said the country would "imminently" be in default, The Wall Street Journal reported. At a news conference after talks with the mediator ended, Argentine Economy Minister Axel Kicillof, who had led the country's delegation to New York, said "we won´t sign an agreement that would compromise Argentina´s future." A spokeswoman later said negotiations would continue, without giving a timetable. The likely default would be Argentina's second in 13 years.

Barring a last-minute deal, Argentina will default on billions of dollars of bonds on Wednesday, the International New York Times reported. It would be Argentina’s second default in 13 years. But unlike the last time, when scores of unhappy Argentines took to the street as unemployment rose to 25 percent and inflation soared, this default would look decidedly different. Argentina’s equity, bond and currency markets, which have been volatile in recent days, would certainly feel a jolt.

Argentines are poised for a default on Wednesday – their third in just over three decades. The trigger would be a missed $539m interest payment after mediated talks between the government and a group of “holdout” creditors made no apparent progress last week. The growing prospect of default has begun to focus minds on what would come next. Economists broadly expect a recession in the country would deepen, inflation to rise and capital flight – possibly triggering a second devaluation of the peso this year.

Settlement talks set for Wednesday between Argentina and bondholders who did not participate in the country's past debt restructuring have been rescheduled for Thursday, the court-appointed mediator said. Daniel Pollack, a New York lawyer appointed to oversee the settlement discussions, had scheduled a meeting for 10 a.m. EDT (1400 GMT) after a U.S. judge ordered the parties to meet "continuously" until a deal is reached. Pollack in a statement said he was advised by the Argentina delegation they could not get to New York for the Wednesday meeting.

A U.S. judge ordered Argentina and investors who did not participate in the country's past debt restructurings to meet "continuously" with a court-appointed mediator until a settlement is reached, warning of the threat of a new default, Reuters reported. U.S. District Judge Thomas Griesa in New York told Argentina and lawyers for investors who declined to restructure their bonds after the country defaulted on about $100 billion in 2002 that time was running out to reach a deal and avert a fresh default. "That is about the worst thing I can envision.

As Argentina’s multi-billion dollar showdown with its hedge fund creditors nears its finale, global organisations are trying to hammer out a plan that will prevent such a stand-off from being repeated, the Financial Times reported. For the past six months, debt issuers, market intermediaries and investors have been discussing a new idea that would make it more difficult for small numbers of recalcitrant creditors to “hold out” against a critically indebted country that restructures its debt.

Less than three weeks before Argentina risks a default, government officials still haven’t met with hedge funds who won a court ruling forbidding the country to make bond interest payments before they get $1.5 billion, Bloomberg News reported. “We have not seen any indication that Argentina is serious about even beginning a negotiation,” NML Capital, one of the holders of bonds from Argentina’s 2001 default that sued for full repayment, said in a statement July 11.