Argentina’s Congress on Thursday passed a law to restructure the country’s debt to U.S. creditors, sidestepping a U.S. court ruling in favor of the bondholders. The judge who handed down the ruling in June declared the new law illegal.

Under Argentina’s new law, passed first by the Senate on Wednesday before getting final approval in the lower house of Congress on Thursday, the debt restructuring plan would let Argentina exchange bonds issued in New York for bonds issued within Argentina or elsewhere outside the jurisdiction of New York.  

Argentina has been in a drawn-out war with a group of U.S. bondholders stemming from the country’s default on $100 billion in debt in 2002. While it was able to renegotiate most of that debt with bondholders over the next decade, a group of New York-based hedge funds sued for full repayment. In June, U.S. District Court Thomas Griesa blocked Argentina from servicing any more of its debt until it began paying the holdouts the full amount of money owed, setting off Argentina’s second default.

Griesa said last month said the new debt restructuring plan violated his orders, although he stopped short of declaring Argentina in contempt of court. It remains to be seen whether Argentina’s new law will face a legal challenge in the coming weeks.

Meanwhile, the United Nations agreed this week to hammer out a multilateral legal framework for the process of sovereign debt restructuring in light of Argentina’s default. Argentina’s foreign minister said the move was crucial to creating a system that “respects the majority of creditors and allows countries to come out of crises in a sustainable manner.”