Mexico is supporting Argentina in its long-running legal dispute with "vulture funds" that hold the South American country's defaulted debt, filing an amicus curiae brief with the U.S. Supreme Court in support of Buenos Aires' motion to overturn lower-court decisions favoring the bond holdouts.

The decision to file the friend-of-the-court brief was "due to the implications the rulings questioned by Argentina could have for international sovereign debt markets," Mexico's finance ministry said.

"In particular, we consider that these decisions could hinder future sovereign debt restructurings, potentially increasing countries' financing costs," it added.

The decisions handed down by different courts in the United States "may violate the international convention on jurisdictional immunities of states and their property, potentially resulting in less favorable conditions on access to international financing," the ministry said.

Argentina requested in February that the U.S. Supreme Court review the case after two New York federal courts ordered the country to pay $1.3 billion to a group of hedge funds led by New York-based Elliott Management Corp.'s NML Capital Ltd unit.

The hedge funds, which Argentina terms "vulture funds," acquired risky Argentine bonds at high interest rates when Argentina defaulted on the debt in 2001, in hopes of making a lucrative return.

Those creditors have since refused to participate in restructurings in 2005 and 2010 in which the vast majority of holders of Argentine sovereign debt accepted a steep haircut on the bonds.

Argentina says bondholders who participated in the debt restructurings would suffer unequal treatment if the country were to make full payment on the defaulted bonds to NML.

The Mexican government's support for a U.S. Supreme Court review comes a few weeks after the U.S. government filed an amicus curiae measure with the high court in a related matter, supporting Argentina's position in a bank-subpoena dispute with those same hedge funds.

In the brief, U.S. Solicitor General Donald Verrilli Jr. argued that the U.S. government has a "substantial interest in the correct interpretation and application" of the Foreign Sovereign Immunities Act, or FSIA.

If the Supreme Court allows more examinations of the assets owned by a foreign country, it could hurt the intentions of the FSIA and have a number of adverse consequences for the United States, Verrilli wrote. EFE