The Litigation Daily | November 3, 2014
Argentina strikes out in bid to undo $185M BG Group award
Argentina’s showdown with bond investors wasn’t the country’s only high-stakes legal battle to wind up at U.S. Supreme Court this year. And thanks to an order on Monday denying cert in Republic of Argentina v. BG Group, the bondholder case won’t go down as the only big high court loss for Argentina and its lawyers at Cleary Gottlieb Steen & Hamilton.
The Supreme Court on Monday shunned the republic’s latest appeal in a decade-long battle with BG Group plc, a British energy company that won a $185 million arbitration ruling against Argentina under a bilateral investment treaty. The order comes just eight months after the justices ruled 7-2 to reinstate the arbitration award.
The case dates back to the economic crisis that gripped Argentina more than a decade ago, when the country enacted a series of measures that included new controls on gas prices. BG Group claimed Argentina’s actions harmed its investments and breached the 1993 treaty, and in 2007 the company won a $185.3 million award from a panel of the International Chamber of Commerce International Court of Arbitration.
Argentina sued in federal court to undo the award, arguing in part that the arbitrators had improperly allowed BG Group to bypass treaty provisions requiring the company to first seek resolution in the Argentine courts. A judge in Washington, D.C., rejected those arguments, but in 2011 the U.S. Court of Appeals for the D.C. Circuit vacated the award, ruling that the courts, not arbitrators, should decide whether the preconditions for arbitration had been met.
BG Group, represented by Freshfields Bruckhaus Deringer and by Thomas Goldstein of Goldstein & Russell, persuaded the Supreme Court to reinstate the award in March. In an opinion authored by Justice Stephen Breyer, the court held that it’s generally up to arbitrators to determine whether threshold requirements for arbitrating disputes have been met.
Argentina filed the latest cert petition in August, urging the court to consider "whether a federal court with jurisdiction to vacate an arbitral award under the Federal Arbitration Act may do so on the grounds that the arbitrators acted with manifest disregard of the law." BG Group countered that the lower courts never disputed that "manifest disregard of the law" by the arbitrators would warrant vacating the award—they simply didn’t find that the law was disregarded in the first place.
The Supreme Court denied Argentina’s petition on Monday without explanation.
BG Group was represented in the most recent Supreme Court briefing by Alexander Yanos of Hughes Hubbard & Reed, who joined the firm from Freshfields early this fall, and also by Freshfields partner Elliot Friedman and associate Bonnie Doyle. Argentina, which has long been represented by Cleary Gottlieb’s Carmine Boccuzzi Jr., tapped Cleary Gottlieb partner Matthew Slater as counsel of record at the high court.