SCOTUS Not Crying for Argentina

The US Supreme Court tilted for @BGGroup and against #Argentina in the historic arguments on investor-state disputes (see background and liveblog earlier).

As mentioned in the earlier blog, the dispute revolved around whether US courts can overturn an investor-state arbitration award if an investor did not comply with a requirement to go to national courts before turning to international arbitration.

The four liberal justices (Sotomayor, Ginsburg, Breyer and Kagan) made roughly 24 interventions (7, 7, 7 and 3). Almost all of these were skeptical of Argentina’s arguments, and appeared concerned that the US would be going against international law norms if it were to not defer to learned arbitrators.

Turning to the conservative justices, Justice Scalia asked six clarifying questions, while Alito asked three clarifying questions and five Argentina-skeptical questions. Justice Thomas did not speak (he never does), while swing vote Anthony Kennedy made 5 interventions that were skeptical of Argentina’s position.

Only Chief Justice Roberts made a series of interventions that appeared to favor Argentina. In addition to 3 clarifying questions, he posed 4 questions that suggested that sovereigns are special, that investors need to also play by the rules of treaties, and that there is a non-trivial role for pre-arbitration dispute resolution requirements.

Based purely on the tenor of the oral arguments, I would predict some type of BG Group victory. Only 4 of around 53 interventions seemed receptive to Argentina, and those four were really about Chief Justice Roberts contemplating a broader sovereignty argument that was not reflective of arguments that Argentina’s counsel actually made. It seems that Argentina’s counsel made a strategic decision (probably dictated in part by the limited legs they had to stand on given the lack of appeal options in investor-state arbitration) to focus on a very narrow aspect of the investor-state system related to consent. If there had been a way to get more of Argentina’s sovereign and policy concerns on the substance on the record, the tenor might have been different, particularly vis a vis the liberal justices.

That said, one benefit of Argentina’s legal strategy is that it seems to put the justices in a box. Would they be willing to go on the record as saying that the Argentine courts are completely futile – so futile that BG Group didn’t need to even formally register their grievances there despite explicit treaty language to the contrary? This would go against comity doctrines where national courts typically defer to one another.

The justices will have to decide whether they place greater value on comity or deference to international arbitrators. After today’s hearings, it is anyone’s guess how it will go.