Argentina Wins Appeal in BG Group Metrogas Bankruptcy Case
January 18, 2012, 2:28 AM ESTBy Sara Forden
(Updates with details of ruling in second paragraph.)
Jan. 17 (Bloomberg) -- Argentina won a U.S. appeals court decision throwing out a $185 million dollar award to BG Group Plc, which claimed the country’s freeze on natural gas prices had caused the bankruptcy of a gas distributor it controlled.
The U.S. Court of Appeals in Washington today, overturning a lower court, ruled that the arbitration panel that made the award to BG Group exceeded its authority in even taking the dispute. BG Group should have sued first in Argentine courts and waited 18 months for a result as required by a commercial treaty governing the case, the court said.
BG Group initiated arbitration in the U.S. in 2003 over the gas-price freeze, which Argentina imposed following a sovereign debt default in December 2001. BG Group won the damages award in 2007 from a U.S. arbitration panel, which ruled that Argentina breached an investment treaty by enacting a law that hurt London-based BG Group’s investment in Argentina’s Metrogas SA.
BG Group argued that customary international law didn’t require exhaustion of local remedies, according to the opinion. Argentina sued BG in the U.S. seeking to vacate the arbitration award.
The case is Republic of Argentina v. BG Group Plc, 08- cv-00485, U.S. District Court, District of Columbia (Washington).
--Editors: Fred Strasser, Andrew Dunn
To contact the reporter on this story: Sara Forden in Washington at sforden@bloomberg.net.
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.
