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BG Group’s $185 Million Arbitration Award Reinstated by U.S. Supreme Court

Thursday, March, 6, 2014


 

The United States Supreme Court has overturned a lower court’s ruling that threw out the $185 million award granted by an arbitration panel to BG Group against the country of Argentina.  The Supreme Court’s 7-2 decision ruled that the lower court did not give sufficient “deference” to the arbitrator’s decision.

 

The conflict dates back to a 2002 decision by the government of Argentina to freeze gas prices as part of an effort to deal with an economic crisis.  BG Group argued that this price freeze violated a 1993 treaty between Britain and Argentina and cost the company millions of dollars in lost revenue because they could not price the gas they pumped from Argentina’s reserves to adequately cover their drilling and discovery costs.  BG Group sued in American courts because it professed to doubt the ability of Argentinian courts to be objective.  Argentina rejected the U.S. court system’s decision because it claimed BG should have sued in Argentina first.

 

The International Chamber of Commerce International Court of Arbitration in Washington, D.C. found that because Argentina restricted access to the courts in that country, the award won by BG in American courts should stand.  This decision survived one appeal but was rejected by the second appeal.  The U.S. Supreme Court has now settled the issue: The award stands.