Who decides arbitration requirements
BG Group v. Republic of Argentina
In brief
The Supreme Court overturned the appeals court, concluding that the arbitrators lawfully excused BG Group’s failure to first pursue its claim in Argentine courts.
- Where it stands
- Decided
Decided 7-2 · March 5, 2014 · Opinion by Justice Breyer
- What it’s about
- BG Group challenged Argentina’s refusal to honor an arbitration award after the arbitrators excused the company’s failure to first pursue its claim in Argentine courts.
- Who it affects
- Argentina’s challenge to the arbitrators’ decision failed under court review that gave the arbitrators room to interpret the treaty.
Summary: written with AI from the case record.
What it's about
The Supreme Court overturned the appeals court, concluding that the arbitrators could interpret and excuse that treaty requirement, and that their decision was lawful under deferential court review.
BG Group faced a treaty requirement to pursue its claim in Argentine courts before arbitration. The arbitrators excused that step after finding that Argentina had passed laws hindering similar firms’ access to those courts; Argentina did not dispute that finding.
The dispute arose under an investment treaty between Argentina and the United Kingdom that contained a local-court requirement before arbitration.
Question presented
Is it the role of a court to decide whether a precondition to arbitration has been satisfied?
What the Court decided
Holding
While Argentina is entitled to court review (under a properly deferential standard) of the arbitrators’ decision to excuse BG Group’s noncompliance with the litigation requirement, that review shows that the arbitrators’ determinations were lawful. Their conclusion that the litigation provision cannot be construed as an absolute impediment to arbitration, in all cases, lies well within their interpretative authority. Their factual findings that Argentina passed laws hindering recourse to the local judiciary by firms similar to BG Group are undisputed by Argentina and are accepted as valid. 665 F. 3d 1363, reversed.
- Result
- Reversed
The Court's reasoning
The Court said Argentina could seek court review, but that review had to give the arbitrators room to interpret the requirement. The arbitrators could read it as not an absolute bar in every case, and Argentina did not dispute their finding about barriers to local courts.
The vote
From the opinions
“It should come as no surprise that, after starting down the wrong road, the majority ends up at the wrong place.”
What's next
The Supreme Court has finished its review; no further Supreme Court action is listed.
Documents
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AI analysis generated: Decision Record
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Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.