By Lawrence Hurley
WASHINGTON, March 5 The U.S. Supreme Court on
Wednesday reinstated a $185.3 million arbitration award British
company BG Group Plc won against Argentina before an
appeals court threw it out.
On a 7-2 vote, the high court said the federal appeals court
in Washington, D.C., should not have thrown out the award.
Argentina had argued the case should have been litigated in its
courts first before it could go to arbitration.
The dispute concerned whether BG should recover the money on
the grounds that a decision by the Argentine government during
its 2001 economic crisis to freeze gas prices breached a 1993
treaty between Britain and Argentina. Both BG, via its lawyer,
and Argentina declined to comment on the ruling.
In the majority opinion, Justice Stephen Breyer said a
decision on whether the dispute was subject to arbitration was
up to arbitrators.
"In our view, the matter is for the arbitrators, and courts
must review their determinations with deference," he wrote.
Chief Justice John Roberts, joined by Justice Anthony
Kennedy, wrote a dissenting opinion saying that the investment
treaty called for disputes to go to arbitration only if both
parties agreed to it.
The treaty was meant to encourage investment by foreign
companies such as Reading, England-based BG. Argentina imposed
the price freeze shortly after it announced in December 2001 a
sovereign debt default of roughly $100 billion.
BG challenged the freeze, saying it reduced the value of its
roughly 45 percent stake in Argentina's Metrogas SA. BG
sold its stake in Metrogas earlier this year to YPF SA
and Integra Gas Distribution LLC.
The International Chamber of Commerce International Court of
Arbitration, based in Washington, D.C., concluded in 2007 that
because Argentina had by emergency decree restricted access to
its courts, BG could go straight to arbitration.
A federal district court judge in Washington upheld the
award in a 2011 decision. But the federal appeals court ruled
for Argentina a year later, saying that BG should have first
tried to sue in Argentina.
The U.S. Supreme Court already has agreed to hear another
case prompted by Argentina's economic problems in the early
2000s. On Jan. 10 the court said it would consider a dispute
over subpoenas in a case stemming from long-running litigation
over Argentina's obligations to bond investors in the wake of
its default on sovereign debt. In a separate case, which the
high court has yet to decide whether to hear, Argentina is
seeking to reverse lower court decisions ordering the country to
pay $1.33 billion to the bondholders.
The case decided on Wednesday is BG Group v. Argentina, U.S.
Supreme Court, No. 12-138.