Substantive and Procedural Arbitrability in Ad Hoc Investor-State Arbitration — BG Group v. Argentina
CONTEMPORARY ISSUES IN INTERNATIONAL ARBITRATION AND MEDIATION --The Fordham Papers 2014 (2015 Forthcoming)
13 Pages Posted: 28 Aug 2014
Date Written: August 25, 2014
The U.S. Supreme Court has developed a conceptual framework for deciding how much deference an award-enforcing U.S. court must give to the arbitral tribunal’s conclusion that the dispute was properly arbitrable, that is, that the award was based on an existing and valid arbitration agreement and that the claim was admissible. In BG Group v. Argentina, the Court has now developed that framework further and has applied it for the first time to an ad hoc investor state arbitration case seated in the U.S. In BG Group the British investor failed to litigate its claim first in an Argentinian court, as required in the U.K.-Argentina Bilateral Investment Treaty [BIT], but the arbitral tribunal found the local litigation requirement inapplicable and ruled for the investor on the merits. The U.S. Supreme Court concluded that the local litigation requirement was a “procedural arbitrability” question, concerning which an enforcing U.S. court must give deference to the tribunal’s ruling that the claim was admissible. This piece explains and analyzes the Supreme Court’s “substantive” and “procedural” arbitrability concepts and the significance for ad hoc investor-state arbitration, and more broadly for international commercial arbitration in general, of this new Supreme Court decision.
Keywords: arbitration, bilateral investment treaty, procedural arbitrability, Supreme Court
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