Arbitration Prerequisites In Bilateral Treaties Are Presumptively Procedural Issues For Arbitrators

On March 5, 2014, the US Supreme Court reinstated a $185.3 million arbitration award for British firm BG Group PLC against the Republic of Argentina. In a 7-2 decision, the high court upheld the arbitrators' decision about the meaning and application of a local litigation clause in a bilateral investment treaty between the United Kingdom and Argentina.

The main issue before the court was what standard of review should be applied to the arbitration panel's decision. The Supreme Court reasoned that a bilateral investment treaty should be interpreted like a contract, procedural questions are for the arbitrators to decide and their decisions given deference, while substantive questions are for the courts to review de novo. The Court concluded that, given the absence of clear language to the contrary, the compliance with the local litigation requirement at issue was a procedural issue for the arbitrators to decide, and not a substantive one tied to Argentina's consent to