arbitrability

BG Group, PLC v. Republic of Argentina

Issues: 
  1. Does an arbitrator or a court decide whether a precondition to arbitration has been satisfied?
  2. To what extent can federal courts review such decisions?

The United Kingdom and Argentina signed the Bilateral Investment Treaty in 1990 to promote international investment in Argentina. The Treaty requires that disputes first be submitted to Argentine courts for a certain period before being arbitrated. After the Argentine economic crisis in 2001 and 2002, Argentina enacted several measures that restrained investors from litigating effectively. BG Group filed for arbitration in the United States against Argentina without first submitting the dispute to Argentine courts. After the arbitral tribunal issued an award, Argentina argued that the tribunal had no jurisdiction over the parties. The issue here is whether the arbitrators or the courts should determine whether a precondition for arbitration has been satisfied. BG Group argues that the purpose of international arbitration is to allow experienced arbitrators to decide issues in a neutral forum, not governed by a particular country. Argentina argues that the purpose of arbitration is to give the parties what they agreed to and that judicial review is necessary for securing international treaties. The Supreme Court will determine whether courts or arbitrators decide these threshold questions of arbitrability. This decision will impact the substance of international arbitration agreements and how the United States is perceived as a seat for international arbitration.

Questions as Framed for the Court by the Parties: 
  1. 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?
  2.  Whether a federal court with jurisdiction over an application to vacate an arbitral award may independently decide whether a valid and binding agreement to arbitrate has been created under the terms of a bilateral investment treaty?

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Facts

On December 11, 1990, the United Kingdom and Respondent Argentina signed the Bilateral Investment Treaty (“BIT”). See Republic of Arg. v. BG Group PLC, 665 F.3d 1363, 1366 (D.C. Cir.

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