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Republic of Argentina v. BG Group PLC (D.C. Cir.)
Published online by Cambridge University Press: 20 January 2017
On January 17, 2012, the United States Court of Appeals for the District of Columbia (‘‘D.C. Circuit’’) issued its decision in Republic of Argentina v. B.G. Group PLC, overturning a final award of a United Nations Commission on International Trade Law (‘‘UNCITRAL’’) arbitral tribunal issued in favor of BG Group PLC (‘‘BG Group’’). According to the Court, the arbitral tribunal exceeded its authority by taking jurisdiction over the dispute when BG Group failed to first submit its claims to the courts of Argentina for a period of eighteen months, as required by the Agreement Between theGovernment of the UnitedKingdomof Great Britainand Northern Ireland andthe Government of the Republic of Argentina for the Promotion and Protection of Investments (the ‘‘U.K.-Argentina BIT’’).
* This text was reproduced and reformatted from the text available at the United States Court of Appeals District of Columbia Circuit website (visited June 5, 2012) http://www.cadc.uscourts.gov/internet/opinions.nsf/5D6C3A833731-DA72852579880056CC38/$file/11-7021-1352802.pdf.
1 Republic of Argentina v. B.G. Group PLC, 665 F.3d 1363 (D.C. Cir. 2012).
2 Id. at 1373.
3 In different contexts—for example, the application of 28 U.S.C. § 1782 to arbitral tribunals—some courts have drawn clear distinctions between commercial and investor-state arbitrations. See, e.g., Republic of Ecuador v. Bjorkman, 801 F. Supp. 2d 1121, 1124 (D. Colo. 2011); In re Application of Chevron Corp., 762 F. Supp. 2d 242, 250 (D. Mass 2010); Norfolk S. Corp. v. Gen. Sec. Ins. Co. (In re Arbitration), 626 F. Supp. 2d 882, 885 (N.D. Ill. 2009); In re Oxus Gold PLC, 2006 WL 2927615, *1 (D.N.J. Oct. 11, 2006).
4 BG Group, 665 F.3d at 1366.
5 Id.
6 Id. at 1387.
7 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(2)(b), U.K.-Arg., Dec. 11, 1990, available at http://www.official-documents.gov.uk/document/cm22/2278/2278.pdf.
8 Id. art. 8(2)(a)(i)-(ii).
9 BG Group, 665 F.3d at 1368; BG Group PLC v. Republic of Argentina, UNCITRAL Final Award, ¶ 147 (Dec. 24, 2007), available at http://italaw.com/documents/BG-award_000.pdf [hereinafter Final Award].
10 Final Award, ¶ 147.
11 Id. ¶ 307.
12 Convention on the Recognition of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38 [hereinafter New York Convention].
13 Republic of Argentina v. B.G. Group PLC, 715 F. Supp. 2d 108 (D.D.C. 2010). The FAA incorporates the requirements of the New York Convention and, pursuant to 9 U.S.C. § 203, is applicable to international arbitration awards.
14 Id. at 114-15.
15 Id. at 122.
16 Id. at 126.
17 First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995).
18 BG Group, 665 F.3d at 1371.
19 Id. at 1372.
20 Id. at 1373.
21 Id.
22 The jurisprudence on this point is unsettled with respect to a single treaty, let alone with regards to the existence of a general rule. See, e.g., Siemens AG v. Argentina, ICSID Case No. ARB/02/8, Decision on Jurisdiction (Aug. 3, 2004), available at http://italaw.com/documents/Siemens-Argentina-Award.pdf (holding that investor could invoke the Most Favored Nation (‘‘MFN’’) clause in the Germany-Argentina BIT to avoid the requirement to submit disputes to local courts for a period of eighteen months prior to initiating arbitration because the terms ‘‘treatment’’ and ‘‘activities related to the investments’’ in the MFN clause were sufficiently broad to include settlement of disputes); Wintershall Aktienge-sellschaft v. Argentina, ICSID Case No. ARB/04/14, Award (Dec. 8, 2008), available at http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc&docId=DC1492_En&caseId=C39 (holding that investor could not invoke the MFN clause in the Germany-Argentina BIT to avoid the requirement to submit disputes to local courts for a period of eighteen months prior to initiating arbitration because the MFN clause did not extend to all treaty articles and, in particular, did not apply to the dispute resolution clause); Hochtief AG v. Argentina, ICSID Case No. ARB/ 07/31, Decision on Jurisdiction (Oct. 24, 2011) (holding that investor could invoke the MFN clause in the Germany-Argentina BIT to avoid the requirement to submit disputes to local courts for a period of eighteen months prior to initiating arbitration because (a) the eighteen month litigation requirement related to the ‘‘management’’ of disputes and, thus, fell within the scope of the MFN provision; and (b) the eighteen month litigation provision went to the ‘‘admissibility’’ of a claim and not to the jurisdiction of the tribunal).
23 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States art. 53(1), 17 U.S.T. 1270, 575 U.N.T.S. 159 [hereinafter ICSID Convention]; see also id. arts. 50–52.
24 Albert Jan van den Berg, Some Recent Problems in the Practice of Enforcement Under the New York and ICSID Conventions, 2 ICSID REV. 439 (1987). A distinction has to be drawn between enforcement of an ICSID award and execution on assets. Courts have recognized this distinction in cases where a sovereign entity has challenged the ability of an award creditor to execute an ICSID award. While the ICSID Convention mandates that local courts recognize and enforce the award, execution on assets is controlled by principles of sovereign immunity and public policy. As such, while courts may be compelled to recognize an ICSID award, they are not required to automatically permit the award creditor to seize assets that are otherwise immune from attachment and execution. See, e.g., Liberian E. Timber Co. v. Republic of Liberia, 650 F. Supp 73 (S.D.N.Y. 1986); Liberian E. Timber Co. v. Republic of Liberia, 659 F. Supp. 606 (D.D.C. 1987); AIG Capital Partners Inc. v. Republic of Kazakhstan, [2005] EWHC (Comm) 2239 (Eng.).
1 Article 32 of the Vienna Convention on the Law of Treaties, May 23, 1969, 1155 U.N.T.S. 331 (‘‘Vienna Convention’’), provides that in interpreting a treaty:
Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31:
(a) leaves the meaning ambiguous or obscure; or
(b) leads to a result which is manifestly absurd or unreasonable.’’
Article 31 sets forth the ‘‘General rule of interpretation,’’ stating in paragraph 1 that ‘‘[a] treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.’’
2 Article 1(a)(ii) of the Treaty defines an ‘‘investment’’ to include ‘‘shares in and stock and debentures of a company and any other form of participation in a company, established in the territory of either of the Contracting Parties.’’
3 Article 2(2) of the Treaty provides that ‘‘[i]nvestments of investors of each Contracting Party shall at all times be accorded fair and equitable treatment . . . . Neither Contracting Party shall in any way impair by unreasonable . . . measures the management, maintenance, use, enjoyment or disposal of investments in its territory. . . . Each Contracting Party shall observe any obligation it may have entered into with regard to investments of investors of the other Contracting Party.’’
4 Section 10(a) of the FAA, 9 U.S.C. § 10(a), provides that anarbitration award may be vacated
(1) where the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or
(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
5 Article 21(1) of the UNCITRAL Arbitration Rules, G.A. Res. 31/98, art. 21, para. 1, U.N. Doc. A/RES/31/98 (Dec. 15, 1976), provides that ‘‘[t]he arbitral tribunal shall have the power to rule on objections that it has no jurisdiction’’ to hear the arbitration.
6 Howsam, 537 U.S. at 82, 85, is also distinguishable because the question of arbitrability arose from a rule, promulgated by the National Association of Securities Dealers (‘‘NASD’’), that functioned as a six year statute of limitations. Id. at 82. The question of arbitrability thus was intertwined with the facts underlying the substantive dispute. The Supreme Court reasoned that the NASD arbitrators were ‘‘comparatively more expert about the meaning of their own rule, . . . [and thus] better able to interpret and to apply it.’’ Id. at 85. Here, the question of arbitrability is separate from the underlying dispute, and the Treaty requirement to seek relief first in court was required by the contracting parties, not promulgated by the Arbitral Panel.