The US Supreme Court considered its first investment treaty-related claim today. The issue: how much should US courts help ensure that countries are not sued by investors against countries’ consent? I describe some of the background, and do a bit of a deferred liveblog below.
SCOTUSBlog has a pretty good preview of what is at issue in this case. In a nutshell, a UK investor (BG Group) successfully challenged Argentina in investor-state arbitration. In the arbitral award handed down in 2007, a trio of arbitrators deemed that Argentina had breached its obligations under the UK-Argentina bilateral investment treaty by changing the payment regime for privatized utility providers following a national crisis.*
The case was heard under rules established by the UN agency UNCITRAL under the New York Convention treaty, but the tribunal was “seated” in Washington, DC. In arbitration-ese, this means that either BG or Argentina could have asked a US court to set aside the arbitral award.
In this particular case, it was Argentina that asked in 2008 for US courts to vacate or modify the 2007 award, on the grounds that the tribunal lacked jurisdiction. Specifically, the UK-Argentina BIT requires investors to submit their disputes to Argentine courts for 18 months before resorting to transnational arbitration – something that BG Group did not do. As a consequence, Argentina argued that the tribunal should have found that the country had not given its consent to be sued. In 2010, the US District Court for the District of Columbia denied Argentina’s petition, and confirmed the award a year later. In 2012, the appeals court for the district overturned these decisions and vacated the arbitral award.
This is extremely rare, as US courts (and other national courts) have evolved a policy over the last few decades to defer almost completely to arbitral decisions. Still, there has been controversy about whether US courts should defer to arbitrators as much in investor-state cases as in cases involving only private parties (which has accounted for all of the arbitration-related precedents previously before the Court). This complex of issues are probably among the reasons why the US Supreme Court granted certiorari. And this decision garnered a lot of interest, with the Obama administration and Ecuador’s Correa administration agreeing with parts of Argentina’s arguments, and a variety of international business interests siding with BG Group.
So how did the justices weigh in on this historic case? What follows is a delayed liveblogging of the oral arguments, since space did not suffice for members of the public (including yours truly) to get into hear the whole case.