• United States Supreme Court Gives Deference to Arbitrators in Investment Treaty Cases
  • March 12, 2014 | Authors: Melissa S. Gorsline; Charles T. Kotuby; Michael C. Rooney; Baiju S. Vasani
  • Law Firms: Jones Day - Washington Office ; Jones Day - London Office
  • On March 5, the U.S. Supreme Court, in a 7 to 2 decision, ruled that an appellate court erred in setting aside a US$185 million arbitral award rendered under the UNCITRAL rules and pursuant to the United Kingdom¿Argentina Bilateral Investment Treaty, and reinstated that award for UK investor, BG Group PLC. The majority opinion, authored by Justice Breyer, held that U.S. courts should review local litigation requirements in international investment treaties “with the deference that courts ordinarily owe arbitration decisions.” Justice Breyer’s holding viewed the local litigation rule as a procedural requirement rather than a substantive precondition to arbitration, thus allowing the arbitrators, rather than a national court, to decide its meaning and application. The Court’s decision affects the role of U.S. courts in interpreting and enforcing arbitral awards rendered pursuant to investment treaties, and it extends a more general pro-arbitration trend in U.S. jurisprudence to cases filed against sovereign states.