In a ruling with important ramifications for global investment, the U.S. Supreme Court on March 5 ruled that arbitrators, as opposed to local courts, have authority to resolve jurisdictional disputes under bilateral investment treaties (BITs). USCIB had submitted a friend-of-the-court brief urging the court to rule in favor of arbitrator authority in such matters.
In a 7-2 decision, the justices upheld a $185 million award of an UNCITRAL (UN Commission on International Trade Law) tribunal in a dispute brought by BG Group of the UK under the UK-Argentina BIT, reversing an earlier circuit court ruling. Although the dispute was between British and Argentine parties, the appeal was filed in U.S. courts since the arbitration was conducted in Washington.
The outcome was in line with earlier Supreme Court rulings in commercial arbitration cases, under which arbitral tribunals have enjoyed broad discretion to determine whether contractual preconditions to arbitration have been satisfied.
Specifically, the Court noted that a treaty is a contract “between nations” and that, as a result, arbitral tribunals interpreting procedural provisions in treaties should be afforded the same level of deference as arbitral tribunals interpreting procedural provisions in contracts.
In its brief, USCIB argued: “This Court has consistently emphasized the central importance of protecting the decision of parties to a contract to resolve their disputes through arbitration. Applying that basic principle, federal courts have repeatedly held that where parties agree that a dispute should be submitted to arbitration pursuant to one of certain sets of arbitral rules – rules that include provisions delegating to the arbitral tribunal the authority to determine questions as to its own jurisdiction over the dispute – then the parties have agreed that the arbitral tribunal has the authority to resolve disputes as to arbitrability.”
By virtue of our affiliation with the International Chamber of Commerce, USCIB works closely with the ICC International Court of Arbitration®, the world’s leading forum for the settlement of cross-border commercial disputes. To learn more about ICC arbitration and ADR services on ICC’s website, please click here.
Staff contacts: Josefa Sicard-Mirabal