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Published online by Cambridge University Press: 20 January 2017
On March 5, 2014, the Supreme Court of the United States (the Court or Supreme Court) rendered its decision in BG Group PLC v. Republic of Argentina (BG Group). Applying principles from judicial review of commercial arbitration awards to the investment treaty context, the Court overturned a decision of the United States Court of Appeals that vacated an investment treaty arbitral award. BG Group is significant because it is the first time that the Supreme Court has reviewed an investment treaty arbitration.
* The views expressed in this piece do not reflect the views of Curtis, Mallet-Prevost, Colt & Mosle LLP or its clients.
* This text was reproduced and reformatted from the text available at the United States Supreme Court website (visited January 7, 2015), http://www.supremecourt.gov/opinions/13pdf/12-138_97be.pdf.
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
1 BG Grp. PLC v. Republic of Argentina, 134 S. Ct. 1198 (2014).
2 Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Argentina for the Promotion and Protection of Investments, art. 8, Dec. 11, 1990, 175 U.N.T.S. 38.
3 Id.
4 BG Grp. Plc. v. Rep. of Arg., Final Award, ¶¶ 147, 155–57, 467 (Dec. 24, 2007).
5 9 U.S.C. §§ 9–10, 12 (2012). The Federal Arbitration Act sets out the grounds on which an arbitral award can be modified or vacated. It also incorporates the Convention on the Recognition and Enforcement of Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3 in the U.S. Code at 9 U.S.C. §§ 201–208 (2012).
6 Republic of Argentina v. BG Grp. PLC, 715 F. Supp. 2d 108 (D.D.C. 2010); Republic of Argentina v. BG Grp. PLC, 764 F. Supp. 2d 21 (D.D.C. 2011).
7 Republic of Argentina v. BG Grp. PLC, 665 F.3d 1363 (D.C. Cir. 2012).
8 BG Grp. PLC, 134 S. Ct. at 1204, 1212.
9 Id. at 1206.
10 Questions of “arbitrability” include “whether the parties are bound by a given arbitration clause” or “whether an arbitration clause in a . . . binding contract applies to a particular type of controversy.” Id. at 1207 (internal citations omitted).
11 Id. at 1207.
12 Id. at 1207–08.
13 Id.
14 Brief for the U.S. as Amicus Curiae in Support of Vacatur and Remand at 25, BG Grp. PLC v. Republic of Argentina, 134 S. Ct. 1198 (2014) (No. 12-138).
15 BG Grp. PLC, 134 S. Ct. at 1208.
16 Id. at 1210.
17 Id. at 1212–13 (internal quotations and citations omitted).
18 Id.
19 Id. at 1214.
20 Id. at 1213.
21 Id. at 1213–14.
22 Id. at 1215.
23 Id. at 1216, 1217, 1221.
24 Id. at 1221.
25 Id. at 1216–19.
26 Id. at 1216.
27 Id. at 1219–20.
28 Vienna Convention on the Law of Treaties, May 23, 1969, 1155 U.N.T.S. 331, 8 ILM 679 (1969). This is consistent with past Supreme Court practice relating to treaty interpretation.
29 Convention on the Settlement of Investment Disputes between States and Nationals of Other States, art. 52, March 18, 1965, 17 U.S.T. 1290, 575 U.N.T.S. 159.
30 Within national court review, a non-ICSID Convention arbitral award can be reviewed pursuant to a motion to set aside an award (like in BG Group) or a motion to recognize and enforce the award pursuant to the New York Convention.
1 To be clear, the only question is whether BG Group formed an arbitration agreement with Argentina. To say that BG Group never formed such an agreement is not to call into question the validity of its various commercial agreements with Argentina.
2 Justice Sotomayor contends that “Argentina’s conduct confirms that the local litigation requirement is not a condition on consent, for rather than objecting to arbitration on the ground that there was no binding arbitration agreement to begin with, Argentina actively partic ipated in the constitution of the arbitral panel and in the proceedings that followed.” Ante, at 4 (opinion concurring in part). But as the arbitral tribunal itself recognized, Argentina did object to the tribunal’s jurisdiction to hear the dispute. App. to Pet. for Cert. 99a, 134a, 143a, 161a–163a. And we have held that “merely arguing the arbitrability issue to an arbitrator”—say, by “filing with the arbitrators a written memorandum objecting to the arbitrators’ jurisdiction”—“does not indicate a clear willingness to arbitrate that issue, i.e., a willingness to be effectively bound by the arbitrator’s decision on that point.” First Options of Chicago, Inc. v. Kaplan, 514 U. S. 938, 946 (1995). The concurrence contends that Argentina “apparently” argued its jurisdic tional objection in terms of procedure rather than consent, ante, at 4, n., but the one piece of evidence cited—a negative inference from the arbitrator’s characterization of Argentina’s argument on a subsidiary issue—hardly suffices to distinguish First Options.