Republic of Argentina v. BG GROUP PLC
2011 U.S. Dist. LEXIS 5975
| D.D.C. | 2011Background
- BG Group sought enforcement of an arbitral Award against Argentina under the FAA and New York Convention after an UNCITRAL arbitration related to Argentina's 2002 emergency measures affecting MetroGAS.
- The arbitral panel awarded BG Group damages of $185,285,485.85 plus interest, costs, and fees, deeming Argentina liable for Article 2(2) breach of the Investment Treaty.
- Argentina moved to vacate or modify the Award under FAA sections 10-11 and New York Convention Article V(1)(e); BG Group cross-moved to confirm under 9 U.S.C. § 9 and Article IV of the Convention.
- This Court had previously denied vacation, holding the panel’s interpretations of the Investment Treaty were not in excess of powers, and allowed consideration of confirmation arguments.
- Argentina challenged the Award on grounds of arbitrability, derivative claims, and the damages methodology, including the use of 1998 transactions to value losses tied to the 2002 emergency measures.
- The Court held that Article V(1)(c) does not independently authorize denial for powers issues, but ultimately rejected Argentina’s public-policy objections and confirmed the Award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Article V(1)(c) permits denial for excess powers | Argentina contends panel exceeded authority. | BG Group argues panel acted within mandate. | Article V(1)(c) not broad enough; court rejects denial on powers grounds. |
| Whether BG Group may pursue a derivative claim under the Investment Treaty | Argentina argues no direct action; treatment to harms to MetroGAS. | BG Group is a third-party beneficiary with a direct action rights. | Derivative claim upheld; BG Group can pursue direct action under treaty. |
| Whether the damages calculation complies with US public policy | Argentina argues the panel impermissibly tied damages to 1998 value, not 2002 loss. | Panel relied on objective transactions and starting point of 2002, not pure 1998 figures. | Damages calculation not contrary to public policy; panel’s methodology preserved. |
| Whether enforcement would violate US public policy under the New York Convention | Argentina asserts policy against expropriation and takings concerns. | No expropriation or takings violation; award does not offend fundamental morality and justice. | Enforcement would not be contrary to US public policy; award confirmed. |
Key Cases Cited
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (courts show deference to arbitrators on arbitrability questions)
- Hall Street Assocs. LLC v. Mattel, Inc., 552 U.S. 576 (2008) (exclusive grounds for vacatur/modification in FAA; potential limits on non-statutory review)
- Parsons & Whittemore Overseas Co. v. Societe Generale de L'Industrie du Papier, 508 F.2d 969 (2d Cir.1974) (NY Convention grounds track FAA powers; arbitrability review limited)
- United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29 (1987) (statutory grounds for enforcement refusals under NY Convention; narrow public policy carve-out)
- TermoRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928 (D.C.Cir.2007) (narrow public-policy review under NY Convention; explicit standards)