A US appeals court supported Argentina's appeal Monday against an earlier ruling that could have permitted a group of creditors to seize assets of Argentina's central bank.

The US Court of Appeals in Manhattan said the September 2013 ruling by District Judge Thomas Griesa that allowed exceptions to the sovereign immunity claims of the Central Bank of Argentina were in error.

Griesa, who has consistently backed New York hedge funds in their 10-year campaign to claim payment on long-defaulted Argentine bonds, had opened the door for them to seize funds of the central bank held in US banks in lieu of payment.

Argentina has refused to pay the hedge funds, maintaining that their decision to not join most of the country's creditors in a restructuring of its debt gave up their rights for payment.

The appeals court said the hedge funds' claim of exceptions to sovereign immunity in the case, and Griesa's support of their arguments, were not supported under law.

However, it added, "we do not condone or excuse Argentina's continuing failure to pay the judgments duly entered against it by the District Court."

The decision "is not intended to allow the Republic to avoid its bargained-for obligations, or to continue shirking the debts it has the ability to pay," the appeals court said.

"We suspect that this will be a predictable and unfortunate outcome of our decision."

In Buenos Aires, central bank chief Alejandro Vanoli welcomed the decision, saying that it sets an important international precedent.