In its first-ever case involving investor-state arbitration, the U.S. Supreme Court yesterday ruled against the state. The state at bar was the Republic of Argentina, which had sought to defend the reversal below of a 2007 decision in which a 3-member arbitral panel awarded $185 million in damages. But in its decision in BG Group plc v. Republic of Argentina, the high court overturned the appellate decision. A seven-member majority accepted the argument of petitioner, a British company that had suffered losses on a Buenos Aires investment as a result of emergency measures Argentina took during an early 2000s economic collapse. The private investor had sought arbitration without first fulfilling a requirement, found in Article 8(2)(a) of the 1990 Britain-Argentina BIT, the insiders’ shorthand for “bilateral investment treaty.” Arbitrators excused that nonfulfillment, and the Court majority deferred to the arbitrators. In so doing, it rejected the de novo review applied by the court below and urged by Argentina.
I‘ve had the honor of following this case for SCOTUSblog, via a pre-argument preview, a post-argument recap, and, just posted, an opinion analysis. After summarizing the opinion for the Court by Justice Stephen G. Breyer, the dissent by Chief Justice John G. Roberts, Jr., and the concurrence in part by Justice Sonia Sotomayor, the analysis views the decision as advancing a clear statement rule,
‘a rule that no less than a private party, a nation-state which wants to assure that courts rather than arbitrators have the last word on whether it consented to arbitration must say so explicitly.’
As for treaties that are explicit on this account, among them a number of BITs to which the United States is a party, the analysis, available in full here, concluded:
‘Whether in some future case the Supreme Court will enforce such express provisions remains an open question.’