BG Group PLC v. Republic of Argentina

Summarized by:

  • Court: U.S. Supreme Court Certiorari Granted
  • Area(s) of Law: Arbitration
  • Date Filed: June 10, 2013
  • Case #: 12-138
  • Judge(s)/Court Below: 665 F.3d 1363 (D.C. Cir. 2012)
  • Full Text Opinion

Whether an arbitrator or court has power to determine whether a prerequisite to arbitration has occurred.

Respondent entered into a treaty to encourage a healthy investment environment. The treaty provides that disputes between an investor and a host state will be resolved in the host state's courts. However, if no ruling is made or the dispute is not resolved within eighteen months, the investor may seek arbitration. Petitioner invoked the arbitration clause without first filing a claim in the Argentine courts. Regardless, the arbitral panel found it had jurisdiction, Respondent had violated the treaty, and awarded Petitioner damages.

Under the Federal Arbitration Act (FAA), Respondent filed a petition in district court to vacate or modify the award. The district court denied vacatur and enforced the award. Respondent appealed and the D.C. Circuit vacated the award.

Petitioner argues that both Supreme Court precedent in John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 and in Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 and the FAA require arbitrators, not courts to determine whether preconditions to arbitration have been met. Further, if courts are allowed this determination, it would grant an unnecessary avenue for parties unhappy with arbitration results to seek further litigation. The Supreme Court granted certiorari to determine whether an arbitrator or court has the power to determine if a prerequisite to arbitration is met.

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