WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on
June 10 granted a petition for writ of certiorari filed by a U.K.
investor in a dispute with the Republic of Argentina over whether courts,
rather than arbitrators, should decide whether a precondition to arbitration
has been satisfied (BG Group PLC v. Republic of Argentina, No. 12-138,
U.S. Sup.; See May 2013, Page 5) (lexis.com subscribers may access Supreme Court briefs for this case).
In the 1980s and 1990s, Argentina experienced an economic
reformation, which included entering into bilateral investment treaties with
various countries. Argentina
entered into the Agreement for the Promotion and Protection of Investments
between Argentina and the United Kingdom
(referred to as BIT). As part of the reformation, Argentina
divided its gas transportation and distribution industries into two
transportation companies and eight distribution companies.
BG Group Plc, a U.K. company, invested in MetroGAS,
one of the distribution companies, through a consortium of investors. In
began to suffer an economic crisis and enacted an emergency law in 2002 that
negatively affected BG Group's investment. BG Group filed arbitration
proceedings against Argentina
pursuant to the United Nations Commission on International Trade Law (UNCITRAL)
arbitration rules. An arbitration panel issued an award of
$185,285,485.85 plus fees, costs and interest for the BG Group, finding that Argentina
breached the BIT.
Petition To Vacate
filed a petition to vacate or modify the award in the U.S. District Court for
the District of Columbia
pursuant to the Federal Arbitration Act (FAA) and the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, arguing that the
arbitrators exceeded their authority by not taking into consideration the terms
of the agreement between parties. BG Group cross-moved to confirm the
award. The District Court denied Argentina's
motion to vacate and confirmed the award on the merits, rejecting Argentina's
challenge to the arbitrators' jurisdiction. Argentina appealed to the District
of Columbia U.S. Circuit Court of Appeals. The appeals court reversed the
District Court's ruling and vacated the award, finding that the tribunal
exceeded its powers in permitting the arbitration to proceed.
In July 2012, BG Group filed a petition for writ of certiorari
in the U.S. Supreme Court. BG Group presents the question of whether
"in disputes involving a multi-staged dispute resolution process, does a
court or instead the arbitrator determine whether a precondition to arbitration
has been satisfied?" The United States filed an amicus
curiae brief in the case, arguing that certiorari should be
denied. On May 21, 2013, BG Group filed a supplemental brief in response
to the United States'
In addition to granting BG Group's petition for writ of certiorari,
the Supreme Court granted motions filed by the American Arbitration
Association, the Professors and Practitioners of Arbitration Law, AWG Group
Limited and the United States Council for International Business for leave to
file briefs as amici curiae.
BG Group is represented by Thomas C. Goldstein of
Goldstein & Russell in Washington.
Argentina is represented by
Matthew D. Slater of Cleary, Gottlieb, Steen & Hamilton in Washington.
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