Treaty versus Contract: Comments on US Supreme Court's Opinion on BG Group Plc. Petitioner v. Republic of Argentina
12 Pages Posted: 21 Mar 2014
Date Written: March 20, 2014
In BG Group Petitioner v. Republic of Argentina, the Majority Opinion of US Supreme Court held that local litigation requirement stipulated in Article 8 (2) of pertinent BIT was a procedural condition precedent to arbitration, rather than the consent of arbitration, and therefore the interpretation and application thereof was primarily for the arbitrators. Reviewing courts must give considerable deference to tribunal instead of reviewing their decision de novo. However, the Dissenting Opinion rightly pointed out local litigation requirement was the part of the very consent of Contracting States to arbitrate and the compliance of investors to such requirement was the acceptance to Contracting State’s standing offer in BIT until which a completed arbitration agreement was constituted. Local litigation requirement was a condition on consent to arbitrate and therefore whether an investor has complied with that requirement was a question a court must decide de novo, rather than an issue for the arbitrator to decide subject only to the most deferential judicial review. The Majority Opinion is legally inaccurate and political unsustainable. The Majority Opinion may in the present dispute protect US investor’s interest in the Award but on cost of unnecessary systematic disturbance to the evolution of whole international investment law system as well the risk of future exposure of US to wrong arbitral decisions and enforcement scenarios. On the contrary, the Dissenting Opinion is conducive to avoid the unnecessary systematic disturbance and save the troublesome subsequent maneuvers of pertinent states, and contributes to the coherence and consistency of international investment law.
Keywords: BG Group v. Argentina, Contract, BIT, Local Litigation requirement, Competence of Competence, Condition on Consent to Arbitrate, Procedural Condition Precedent to Arbitration, Lotus principle
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