Arbitration

Pages:16-22
16 Volume 21, January–March 2015 international law update
© 2015 International Law Group, LLC. All rights reserved. ISSN 1089-5450, ISSN 1943-1287 (on-line) | www.internationallawupdate.com
law committed by United States citizens while on
United States soil. Certainly, these extraterritorial
claims ‘touch and concern the territory of the
United States’ with great force. By failing to enforce
the ATS under these circumstances, I fear we
disarm innocents against American corporations
that engage in human rights violations abroad.
I understand the ATS to have been deliberately
crafted to avoid this regrettable result.”
citation: Cardona v. Chiquita Brands International,
Inc., 760 F.3d 1185 (11th Cir. 2014)
ARBITRATION
U.S. Supreme Court reviews U.S.-UK
investment treaty’s arbitration clause
which allows either party to submit
a dispute to a competent tribunal of
the Contracting Party under certain
conditions; issue is whether a court or
the arbitrator has primary responsibility
for interpreting and applying the local
litigation requirement to an underlying
controversy
In the early 1990s, BG Group PLC (BG),
a British company, made a major investment in
Argentina’s natural gas industry. On December 11,
1990, the United Kingdom and Argentina signed
the Bilateral Investment Treaty (BIT). e purpose
of the treaty was to promote foreign investment in
the Argentine market to reduce ination and public
debt in Argentina.
Later, in the midst of an economic crisis,
Argentina enacted an emergency law that required
investors to collect tari revenues in Argentinian
pesos at a rate of one peso per dollar. Due to the weak
international peso-to-dollar exchange rate, these
changes made it dicult for BG to see a return on
its investment. Simultaneously, Argentina adopted
legislation that stayed all lawsuits arising from the
emergency measures. BG sought recourse under the
BIT between the United Kingdom and Argentina.
e Treaty required that BG rst attempt to
resolve its dispute before a “competent tribunal” in
Argentina for at least eighteen months. Instead, BG
bypassed the Argentinian courts and submitted its
dispute directly to an arbitral tribunal. e arbitral
panel, seated in Washington, D.C., held that
Argentina’s changes to its judicial system excused
the eighteen-month precondition to arbitration
and awarded BG over US $185 million in damages.
Argentina petitioned the district court to vacate
the award under the Federal Arbitration Act by
arguing that the arbitral panel exceeded its powers.
e court denied the petition. e U.S. Court of
Appeals, District of Columbia Circuit reversed and
held that the determination of whether BG could
submit its dispute directly to arbitration must be
made by a court, not the arbitral tribunal.
e District of Columbia District Court upheld
the arbitration award, stating that the tribunal
could decide its own jurisdiction. Accordingly,
the court denied Argentina’s motion to vacate
the award and granted BG’s motion to recognize
and enforce the award. e Court overturned the
district court decision and found that the tribunal
did not have jurisdiction because the parties did not
meet the preconditions for Article 8(2). BG led
a petition for a writ of certiorari with the United
States Supreme Court, which granted the petition
on June 10, 2013.
e key issue here is whether the arbitrators or
the courts should determine whether a precondition
for arbitration has been satised. In answering the
question, the court treats the document before it
as if it were an ordinary contract between private
parties. Were that so, the court concludes, the
matter would be for the arbitrators. However, the
court then asks whether the fact that the document
in question is a treaty makes a critical dierence.
e court concluded that it does not.
“Where ordinary contracts are at issue, it is up
to the parties to determine whether a particular
matter is primarily for arbitrators or for courts to
decide. Steelworkers v. Warrior & Gulf Nav. Co.,
363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409
(1960) (‘Arbitration is a matter of contract and a
party cannot be required to submit to arbitration

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