BG Group plc v. Argentina

Summarized by:

  • Court: United States Supreme Court
  • Area(s) of Law: Arbitration
  • Date Filed: March 5, 2014
  • Case #: 12-138
  • Judge(s)/Court Below: Breyer, J., delivered the opinion of the Court, in which Scalia, Thomas, Ginsburg, Alito, and Kagan, JJ., joined, and in which Sotomayor, J., joined except for Part IV-A-1. Sotomayor, J., filed an opinion concurring in part. Roberts, C.J., filed a dissenting opinion, in which Kennedy, J., joined.
  • Full Text Opinion

When a United States court reviews an arbitration award under the Treaty, the provisions of the arbitration and award should be examined under the principles of contract law.

Argentina law calculated gas tariffs in U.S. dollars, but the law was changed to calculate tariffs in pesos. This caused Petitioner to incur losses. A dispute-resolution provision requires local court litigation and disputes must be settled in the nation where the investments lie. Only after seeking relief in court and not receiving a decision within eighteen months can either party seek arbitration.

Petitioner sought arbitration in Washington D.C., but Respondent argued that the arbitrators lacked jurisdiction based on the treaty’s requirement. The arbitration panel issued a final decision in favor of Petitioner holding that it had jurisdiction and found that Respondent’s actions excused the lack of jurisdiction. The District Court upheld the arbitration award. The Court of Appeals for the District of Columbia, however, reversed, deciding that interpretation and application of the requirement was for the courts to decide de novo, without deference to the arbitrators.

The Supreme Court reversed and held that the requirement was a procedural precondition to arbitration, to be interpreted by arbitrators. Appellate courts are to review those interpretations with deference. In deciding, the Court reasoned that, despite being an agreement between nations, a treaty is interpreted in the same manner as are contracts, by determining the intent of the parties.

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