BG Group, PLC v. Republic of Argentina , 134 S. Ct. 1198 ( 2014 )

(Slip Opinion) OCTOBER TERM, 2013 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
BG GROUP PLC v. REPUBLIC OF ARGENTINA
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE DISTRICT OF COLUMBIA CIRCUIT
No. 12–138. Argued December 2, 2013—Decided March 5, 2014
An investment treaty (Treaty) between the United Kingdom and Ar-
gentina authorizes a party to submit a dispute “to the decision of the
competent tribunal of the Contracting Party in whose territory the
investment was made,” i.e., a local court, Art. 8(1); and permits arbi-
tration, as relevant here, “where, after a period of eighteen months
has elapsed from the moment when the dispute was submitted to
[that] tribunal . . . , the said tribunal has not given its final decision,”
Art. 8(2)(a)(i).
Petitioner BG Group plc, a British firm, belonged to a consortium
with a majority interest in MetroGAS, an Argentine entity awarded
an exclusive license to distribute natural gas in Buenos Aires. At the
time of BG Group’s investment, Argentine law provided that gas “tar-
iffs” would be calculated in U. S. dollars and would be set at levels
sufficient to assure gas distribution firms a reasonable return. But
Argentina later amended the law, changing (among other things) the
calculation basis to pesos. MetroGAS’ profits soon became losses.
Invoking Article 8, BG Group sought arbitration, which the parties
sited in Washington, D. C. BG Group claimed that Argentina’s new
laws and practices violated the Treaty, which forbids the “expropria-
tion” of investments and requires each nation to give “fair and equi-
table treatment” to investors from the other. Argentina denied those
claims, but also argued that the arbitrators lacked “jurisdiction” to
hear the dispute because, as relevant here, BG Group had not com-
plied with Article 8’s local litigation requirement. The arbitration
panel concluded that it had jurisdiction, finding, among other things,
that Argentina’s conduct (such as also enacting new laws that hin-
dered recourse to its judiciary by firms in BG Group’s situation) had
excused BG Group’s failure to comply with Article 8’s requirement.
2 BG GROUP PLC v. REPUBLIC OF ARGENTINA
Syllabus
On the merits, the panel found that Argentina had not expropriated
BG Group’s investment but had denied BG Group “fair and equitable
treatment.” It awarded damages to BG Group. Both sides sought re-
view in federal district court: BG Group to confirm the award under
the New York Convention and the Federal Arbitration Act (FAA),
and Argentina to vacate the award, in part on the ground that the
arbitrators lacked jurisdiction under the FAA. The District Court
confirmed the award, but the Court of Appeals for the District of Co-
lumbia Circuit vacated. It found that the interpretation and applica-
tion of Article 8’s requirement were matters for courts to decide de
novo, i.e., without deference to the arbitrators’ views; that the cir-
cumstances did not excuse BG Group’s failure to comply with the re-
quirement; and that BG Group had to commence a lawsuit in Argen-
tina’s courts and wait 18 months before seeking arbitration. Thus,
the court held, the arbitrators lacked authority to decide the dispute.
Held:
1. A court of the United States, in reviewing an arbitration award
made under the Treaty, should interpret and apply “threshold” provi-
sions concerning arbitration using the framework developed for in-
terpreting similar provisions in ordinary contracts. Under that
framework, the local litigation requirement is a matter for arbitra-
tors primarily to interpret and apply. Courts should review their in-
terpretation with deference. Pp. 6–17.
(a) Were the Treaty an ordinary contract, it would call for arbi-
trators primarily to interpret and to apply the local litigation provi-
sion. In an ordinary contract, the parties determine whether a par-
ticular matter is primarily for arbitrators or for courts to decide. See,
e.g., Steelworkers v. Warrior & Gulf Nav. Co., 363 U. S. 574, 582. If
the contract is silent on the matter of who is to decide a “threshold”
question about arbitration, courts determine the parties’ intent using
presumptions. That is, courts presume that the parties intended
courts to decide disputes about “arbitrability,” e.g., Howsam v. Dean
Witter Reynolds, Inc., 537 U. S. 79, 84, and arbitrators to decide dis-
putes about the meaning and application of procedural preconditions
for the use of arbitration, see id., at 86, including, e.g., claims of
“waiver, delay, or a like defense to arbitrability,” Moses H. Cone Me-
morial Hospital v. Mercury Constr. Corp., 460 U. S. 1, 25, and the
satisfaction of, e.g., “ ‘time limits, notice, laches, [or] estoppel,’ ” How-
sam, 537 U. S., at 85. The provision at issue is of the procedural va-
riety. As its text and structure make clear, it determines when the
contractual duty to arbitrate arises, not whether there is a contractu-
al duty to arbitrate at all. Neither its language nor other language in
Article 8 gives substantive weight to the local court’s determinations
on the matters at issue between the parties. The litigation provision
Cite as: 572 U. S. ____ (2014) 3
Syllabus
is thus a claims-processing rule. It is analogous to other procedural
provisions found to be for arbitrators primarily to interpret and ap-
ply, see, e.g., ibid., and there is nothing in Article 8 or the Treaty to
overcome the ordinary assumption. Pp. 7–9.
(b) The fact that the document at issue is a treaty does not make
a critical difference to this analysis. A treaty is a contract between
nations, and its interpretation normally is a matter of determining
the parties’ intent. Air France v. Saks, 470 U. S. 392, 399. Where, as
here, a federal court is asked to interpret that intent pursuant to a
motion to vacate or confirm an award made under the Federal Arbi-
tration Act, it should normally apply the presumptions supplied by
American law. The presence of a condition of “consent” to arbitration
in a treaty likely does not warrant abandoning, or increasing the
complexity of, the ordinary intent-determining framework. See, e.g.,
Howsam, supra, at 83–85. But because this Treaty does not state
that the local litigation requirement is a condition of consent, the
Court need not resolve what the effect of any such language would be.
The Court need not go beyond holding that in the absence of lan-
guage in a treaty demonstrating that the parties intended a different
delegation of authority, the ordinary interpretive framework applies.
Pp. 10–13.
(c) The Treaty contains no evidence showing that the parties had
an intent contrary to the ordinary presumptions about who should
decide threshold arbitration issues. The text and structure of Article
8’s litigation requirement make clear that it is a procedural condition
precedent to arbitration. Because the ordinary presumption applies
and is not overcome, the interpretation and application of the provi-
sion are primarily for the arbitrators, and courts must review their
decision with considerable deference. Pp. 13–17.
2. While Argentina is entitled to court review (under a properly
deferential standard) of the arbitrators’ decision to excuse BG
Group’s noncompliance with the litigation requirement, that review
shows that the arbitrators’ determinations were lawful. Their con-
clusion that the litigation provision cannot be construed as an abso-
lute impediment to arbitration, in all cases, lies well within their in-
terpretative authority. Their factual findings that Argentina passed
laws hindering recourse to the local judiciary by firms similar to BG
Group are undisputed by Argentina and are accepted as valid. And
their conclusion that Argentina’s actions made it “absurd and unrea-
sonable” to read Article 8 to require an investor in BG Group’s posi-
tion to bring its grievance in a domestic court, before arbitrating, is
not barred by the Treaty. Pp. 17–19.
665 F. 3d 1363, reversed.
4 BG GROUP PLC v. REPUBLIC OF ARGENTINA
Syllabus
BREYER, J., delivered the opinion of the Court, in which SCALIA,
THOMAS, GINSBURG, ALITO, and KAGAN, JJ., joined, and in which SO-
TOMAYOR, J., joined except for Part IV–A–1. SOTOMAYOR, J., filed an
opinion concurring in part. ROBERTS, C. J., filed a dissenting opinion, in
which KENNEDY, J., joined.
Cite as: 572 U. S. ____ (2014) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash­
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 12–138
_________________
BG GROUP PLC, PETITIONER v. REPUBLIC OF
ARGENTINA
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
[March 5, 2014]
JUSTICE BREYER delivered the opinion of the Court.
Article 8 of an investment treaty between the United
Kingdom and Argentina contains a dispute-resolution pro­
vision, applicable to disputes between one of those na­
tions and an investor from the other. See Agreement
for the Promotion and Protection of Investments, Art. 8(2),
Dec. 11, 1990, 1765 U. N. T. S. 38 (hereinafter Treaty).
The provision authorizes either party to submit a dispute
“to the decision of the competent tribunal of the Contract­
ing Party in whose territory the investment was made,”
i.e., a local court. Art. 8(1). And it provides for arbitration
“(i) where, after a period of eighteen months has
elapsed from the moment when the dispute was sub­
mitted to the competent tribunal . . . , the said tribu­
nal has not given its final decision; [or]
“(ii) where the final decision of the aforementioned
tribunal has been made but the Parties are still in
dispute.” Art. 8(2)(a).
The Treaty also entitles the parties to agree to proceed
directly to arbitration. Art. 8(2)(b).
This case concerns the Treaty’s arbitration clause, and
2 BG GROUP PLC v. REPUBLIC OF ARGENTINA
Opinion of the Court
specifically the local court litigation requirement set forth
in Article 8(2)(a). The question before us is whether a
court of the United States, in reviewing an arbitration
award made under the Treaty, should interpret and apply
the local litigation requirement de novo, or with the defer­
ence that courts ordinarily owe arbitration decisions. That
is to say, who—court or arbitrator—bears primary respon­
sibility for interpreting and applying the local litigation
requirement to an underlying controversy? In our view,
the matter is for the arbitrators, and courts must review
their determinations with deference.
I
A
In the early 1990’s, the petitioner, BG Group plc, a
British firm, belonged to a consortium that bought a ma­
jority interest in an Argentine entity called MetroGAS.
MetroGAS was a gas distribution company created by
Argentine law in 1992, as a result of the government’s
privatization of its state-owned gas utility. Argentina
distributed the utility’s assets to new, private companies,
one of which was MetroGAS. It awarded MetroGAS a 35­
year exclusive license to distribute natural gas in Buenos
Aires, and it submitted a controlling interest in the com­
pany to international public tender. BG Group’s consor­
tium was the successful bidder.
At about the same time, Argentina enacted statutes
providing that its regulators would calculate gas “tariffs”
in U. S. dollars, and that those tariffs would be set at
levels sufficient to assure gas distribution firms, such as
MetroGAS, a reasonable return.
In 2001 and 2002, Argentina, faced with an economic
crisis, enacted new laws. Those laws changed the basis for
calculating gas tariffs from dollars to pesos, at a rate of
one peso per dollar. The exchange rate at the time was
roughly three pesos to the dollar. The result was that
Cite as: 572 U. S. ____ (2014) 3
Opinion of the Court
MetroGAS’ profits were quickly transformed into losses.
BG Group believed that these changes (and several others)
violated the Treaty; Argentina believed the contrary.
B
In 2003, BG Group, invoking Article 8 of the Treaty,
sought arbitration. The parties appointed arbitrators;
they agreed to site the arbitration in Washington, D. C.;
and between 2004 and 2006, the arbitrators decided mo­
tions, received evidence, and conducted hearings. BG
Group essentially claimed that Argentina’s new laws and
regulatory practices violated provisions in the Treaty
forbidding the “expropriation” of investments and requir­
ing that each nation give “fair and equitable treatment” to
investors from the other. Argentina denied these claims,
while also arguing that the arbitration tribunal lacked
“jurisdiction” to hear the dispute. App. to Pet. for Cert.
143a–144a, 214a–218a, 224a–232a. According to Argen­
tina, the arbitrators lacked jurisdiction because: (1) BG
Group was not a Treaty-protected “investor”; (2) BG
Group’s interest in MetroGAS was not a Treaty-protected
“investment”; and (3) BG Group initiated arbitration
without first litigating its claims in Argentina’s courts,
despite Article 8’s requirement. Id., at 143a–171a. In
Argentina’s view, “failure by BG to bring its grievance to
Argentine courts for 18 months renders its claims in this
arbitration inadmissible.” Id., at 162a.
In late December 2007, the arbitration panel reached a
final decision. It began by determining that it had “juris­
diction” to consider the merits of the dispute. In support
of that determination, the tribunal concluded that BG
Group was an “investor,” that its interest in MetroGAS
amounted to a Treaty-protected “investment,” and that
Argentina’s own conduct had waived, or excused, BG
Group’s failure to comply with Article 8’s local litigation
requirement. Id., at 99a, 145a, 161a, 171a. The panel
4 BG GROUP PLC v. REPUBLIC OF ARGENTINA
Opinion of the Court
pointed out that in 2002, the President of Argentina had
issued a decree staying for 180 days the execution of its
courts’ final judgments (and injunctions) in suits claiming
harm as a result of the new economic measures. Id., at
166a–167a. In addition, Argentina had established a
“renegotiation process” for public service contracts, such
as its contract with MetroGAS, to alleviate the negative
impact of the new economic measures. Id., at 129a, 131a.
But Argentina had simultaneously barred from participa­
tion in that “process” firms that were litigating against
Argentina in court or in arbitration. Id., at 168a–171a.
These measures, while not making litigation in Argenti­
na’s courts literally impossible, nonetheless “hindered”
recourse “to the domestic judiciary” to the point where the
Treaty implicitly excused compliance with the local litiga­
tion requirement. Id., at 165. Requiring a private party
in such circumstances to seek relief in Argentina’s courts
for 18 months, the panel concluded, would lead to “absurd
and unreasonable result[s].” Id., at 166a.
On the merits, the arbitration panel agreed with Argen­
tina that it had not “expropriate[d]” BG Group’s invest­
ment, but also found that Argentina had denied BG Group
“fair and equitable treatment.” Id., at 222a–223a, 240a–
242a. It awarded BG Group $185 million in damages. Id.,
at 297a.
C
In March 2008, both sides filed petitions for review in
the District Court for the District of Columbia. BG Group
sought to confirm the award under the New York Conven­
tion and the Federal Arbitration Act. See Convention on
the Recognition and Enforcement of Foreign Arbitral
Awards, Art. IV, June 10, 1958, 21 U. S. T. 2519, T. I. A. S.
No. 6997 (New York Convention) (providing that a party
may apply “for recognition and enforcement” of an arbitral
award subject to the Convention); 9 U. S. C. §§204, 207
Cite as: 572 U. S. ____ (2014) 5
Opinion of the Court
(providing that a party may move “for an order confirming
[an arbitral] award” in a federal court of the “place desig­
nated in the agreement as the place of arbitration if such
place is within the United States”). Argentina sought to
vacate the award in part on the ground that the arbitra­
tors lacked jurisdiction. See §10(a)(4) (a federal court may
vacate an arbitral award “where the arbitrators exceeded
their powers”).
The District Court denied Argentina’s claims and con­
firmed the award. 764 F. Supp. 2d 21 (DC 2011); 715 F.
Supp. 2d 108 (DC 2010). But the Court of Appeals for the
District of Columbia Circuit reversed. 665 F. 3d 1363(2012). In the appeals court’s view, the interpretation and
application of Article 8’s local litigation requirement was a
matter for courts to decide de novo, i.e., without deference
to the views of the arbitrators. The Court of Appeals then
went on to hold that the circumstances did not excuse BG
Group’s failure to comply with the requirement. Rather,
BG Group must “commence a lawsuit in Argentina’s
courts and wait eighteen months before filing for arbitra­
tion.” Id., at 1373. Because BG Group had not done so,
the arbitrators lacked authority to decide the dispute.
And the appeals court ordered the award vacated. Ibid.BG Group filed a petition for certiorari. Given the
importance of the matter for international commercial ar­
bitration, we granted the petition. See, e.g., K. Van­
develde, Bilateral Investment Treaties: History, Policy
& Interpretation 430–432 (2010) (explaining that dispute­
resolution mechanisms allowing for arbitration are a
“critical element” of modern day bilateral investment
treaties); C. Dugan, D. Wallace, N. Rubins, & B. Sabahi,
Investor-State Arbitration 51–52, 117–120 (2008) (refer­
ring to the large number of investment treaties that pro­
vide for arbitration, and explaining that some also impose
prearbitration requirements such as waiting periods,
amicable negotiations, or exhaustion of local remedies).
6 BG GROUP PLC v. REPUBLIC OF ARGENTINA
Opinion of the Court
II
As we have said, the question before us is who—court or
arbitrator—bears primary responsibility for interpreting
and applying Article 8’s local court litigation provision.
Put in terms of standards of judicial review, should a
United States court review the arbitrators’ interpretation
and application of the provision de novo, or with the defer­
ence that courts ordinarily show arbitral decisions on
matters the parties have committed to arbitration? Com­
pare, e.g., First Options of Chicago, Inc. v. Kaplan, 514
U. S. 938, 942 (1995) (example where a “court makes up
its mind about [an issue] independently” because the
parties did not agree it should be arbitrated), with Oxford
Health Plans LLC v. Sutter, 569 U. S. ___, ___ (2013) (slip
op., at 4) (example where a court defers to arbitrators
because the parties “ ‘bargained for’ ” arbitral resolution of
the question (quoting Eastern Associated Coal Corp. v.
Mine Workers, 531 U. S. 57, 62 (2000))). See also Hall
Street Associates, L. L. C. v. Mattel, Inc., 552 U. S. 576,
588 (2008) (on matters committed to arbitration, the Fed­
eral Arbitration Act provides for “just the limited review
needed to maintain arbitration’s essential virtue of resolv­
ing disputes straightaway” and to prevent it from be­
coming “merely a prelude to a more cumbersome and
time-consuming judicial review process” (internal quotation
marks omitted)); Eastern Associated Coal Corp., supra, at
62 (where parties send a matter to arbitration, a court will
set aside the “arbitrator’s interpretation of what their
agreement means only in rare instances”).
In answering the question, we shall initially treat the
document before us as if it were an ordinary contract
between private parties. Were that so, we conclude, the
matter would be for the arbitrators. We then ask whether
the fact that the document in question is a treaty makes a
critical difference. We conclude that it does not.
Cite as: 572 U. S. ____ (2014) 7
Opinion of the Court
III
Where ordinary contracts are at issue, it is up to the
parties to determine whether a particular matter is pri­
marily for arbitrators or for courts to decide. See, e.g.,
Steelworkers v. Warrior & Gulf Nav. Co., 363 U. S. 574,
582 (1960) (“[A]rbitration is a matter of contract and a
party cannot be required to submit to arbitration any
dispute which he has not agreed so to submit”). If
the contract is silent on the matter of who primarily
is to decide “threshold” questions about arbitration,
courts determine the parties’ intent with the help of
presumptions.
On the one hand, courts presume that the parties intend
courts, not arbitrators, to decide what we have called
disputes about “arbitrability.” These include questions
such as “whether the parties are bound by a given arbitra­
tion clause,” or “whether an arbitration clause in a con­
cededly binding contract applies to a particular type of
controversy.” Howsam v. Dean Witter Reynolds, Inc., 537
U. S. 79, 84 (2002); accord, Granite Rock Co. v. Teamsters,
561 U. S. 287, 299–300 (2010) (disputes over “formation of
the parties’ arbitration agreement” and “its enforceability
or applicability to the dispute” at issue are “matters . . .
the court must resolve” (internal quotation marks omit­
ted)). See First Options, supra, at 941, 943–947 (court
should decide whether an arbitration clause applied to a
party who “had not personally signed” the document con­
taining it); AT&T Technologies, Inc. v. Communications
Workers, 475 U. S. 643, 651 (1986) (court should decide
whether a particular labor-management layoff dispute fell
within the arbitration clause of a collective-bargaining
contract); John Wiley & Sons, Inc. v. Livingston, 376 U. S.
543, 546–548 (1964) (court should decide whether an
arbitration provision survived a corporate merger). See
generally AT&T Technologies, supra, at 649 (“Unless the
parties clearly and unmistakably provide otherwise, the
8 BG GROUP PLC v. REPUBLIC OF ARGENTINA
Opinion of the Court
question of whether the parties agreed to arbitrate is to be
decided by the court, not the arbitrator”).
On the other hand, courts presume that the parties
intend arbitrators, not courts, to decide disputes about the
meaning and application of particular procedural precon­
ditions for the use of arbitration. See Howsam, supra, at
86 (courts assume parties “normally expect a forum-based
decisionmaker to decide forum-specific procedural gateway
matters” (emphasis added)). These procedural matters
include claims of “waiver, delay, or a like defense to arbi­
trability.” Moses H. Cone Memorial Hospital v. Mercury
Constr. Corp., 460 U. S. 1, 25 (1983). And they include the
satisfaction of “ ‘prerequisites such as time limits, notice,
laches, estoppel, and other conditions precedent to an
obligation to arbitrate.’ ” Howsam, supra, at 85 (quoting
the Revised Uniform Arbitration Act of 2000 §6, Comment
2, 7 U. L. A. 13 (Supp. 2002); emphasis deleted). See also
§6(c) (“An arbitrator shall decide whether a condition
precedent to arbitrability has been fulfilled”); §6, Com­
ment 2 (explaining that this rule reflects “the holdings of
the vast majority of state courts” and collecting cases).
The provision before us is of the latter, procedural,
variety. The text and structure of the provision make
clear that it operates as a procedural condition precedent
to arbitration. It says that a dispute “shall be submitted
to international arbitration” if “one of the Parties so re­
quests,” as long as “a period of eighteen months has
elapsed” since the dispute was “submitted” to a local tri­
bunal and the tribunal “has not given its final decision.”
Art. 8(2). It determines when the contractual duty to
arbitrate arises, not whether there is a contractual duty to
arbitrate at all. Cf. 13 R. Lord, Williston on Contracts
§38:7, pp. 435, 437; §38:4, p. 422 (4th ed. 2013) (a “condi­
tion precedent” determines what must happen before “a
contractual duty arises” but does not “make the validity of
the contract depend on its happening” (emphasis added)).
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Opinion of the Court
Neither does this language or other language in Article 8
give substantive weight to the local court’s determinations
on the matters at issue between the parties. To the con­
trary, Article 8 provides that only the “arbitration decision
shall be final and binding on both Parties.” Art. 8(4). The
litigation provision is consequently a purely procedural
requirement—a claims-processing rule that governs when
the arbitration may begin, but not whether it may occur or
what its substantive outcome will be on the issues in
dispute.
Moreover, the local litigation requirement is highly
analogous to procedural provisions that both this Court
and others have found are for arbitrators, not courts,
primarily to interpret and to apply. See Howsam, supra,
at 85 (whether a party filed a notice of arbitration within
the time limit provided by the rules of the chosen arbitral
forum “is a matter presumptively for the arbitrator, not
for the judge”); John Wiley, supra, at 555–557 (same, in
respect to a mandatory prearbitration grievance procedure
that involved holding two conferences). See also Dialysis
Access Center, LLC v. RMS Lifeline, Inc., 638 F. 3d 367,
383 (CA1 2011) (same, in respect to a prearbitration “good
faith negotiations” requirement); Lumbermens Mut. Cas.
Co. v. Broadspire Management Servs., Inc., 623 F. 3d 476,
481 (CA7 2010) (same, in respect to a prearbitration filing
of a “Disagreement Notice”).
Finally, as we later discuss in more detail, see infra,
at 13–14, we can find nothing in Article 8 or elsewhere in
the Treaty that might overcome the ordinary assumption.
It nowhere demonstrates a contrary intent as to the dele­
gation of decisional authority between judges and arbitra­
tors. Thus, were the document an ordinary contract, it
would call for arbitrators primarily to interpret and to
apply the local litigation provision.
10 BG GROUP PLC v. REPUBLIC OF ARGENTINA
Opinion of the Court
IV
A
We now relax our ordinary contract assumption and ask
whether the fact that the document before us is a treaty
makes a critical difference to our analysis. The Solicitor
General argues that it should. He says that the local
litigation provision may be “a condition on the State’s
consent to enter into an arbitration agreement.” Brief for
United States as Amicus Curiae 25. He adds that courts
should “review de novo the arbitral tribunal’s resolution of
objections based on an investor’s non-compliance” with
such a condition. Ibid. And he recommends that we
remand this case to the Court of Appeals to determine
whether the court-exhaustion provision is such a condi­
tion. Id., at 31–33.
1
We do not accept the Solicitor General’s view as applied
to the treaty before us. As a general matter, a treaty is
a contract, though between nations. Its interpretation
normally is, like a contract’s interpretation, a matter of
determining the parties’ intent. Air France v. Saks, 470
U. S. 392, 399 (1985) (courts must give “the specific words
of the treaty a meaning consistent with the shared expec­
tations of the contracting parties”); Sullivan v. Kidd, 254
U. S. 433, 439 (1921) (“[T]reaties are to be interpreted
upon the principles which govern the interpretation of
contracts in writing between individuals, and are to be
executed in the utmost good faith, with a view to making
effective the purposes of the high contracting parties”);
Wright v. Henkel, 190 U. S. 40, 57 (1903) (“Treaties must
receive a fair interpretation, according to the intention of
the contracting parties”). And where, as here, a federal
court is asked to interpret that intent pursuant to a mo­
tion to vacate or confirm an award made in the United
States under the Federal Arbitration Act, it should nor­
Cite as: 572 U. S. ____ (2014) 11
Opinion of the Court
mally apply the presumptions supplied by American law.
See New York Convention, Art. V(1)(e) (award may be “set
aside or suspended by a competent authority of the coun­
try in which, or under the law of which, that award was
made”); Vandevelde, Bilateral Investment Treaties, at 446
(arbitral awards pursuant to treaties are “subject to re­
view under the arbitration law of the state where the
arbitration takes place”); Dugan, Investor-State Arbitra­
tion, at 636 (“[T]he national courts and the law of the legal
situs of arbitration control a losing party’s attempt to set
aside [an] award”).
The Solicitor General does not deny that the presump­
tion discussed in Part III, supra (namely, the presumption
that parties intend procedural preconditions to arbitration
to be resolved primarily by arbitrators), applies both to
ordinary contracts and to similar provisions in treaties
when those provisions are not also “conditions of consent.”
Brief for United States as Amicus Curiae 25–27. And,
while we respect the Government’s views about the proper
interpretation of treaties, e.g., Abbott v. Abbott, 560 U. S.
1, 15 (2010), we have been unable to find any other au­
thority or precedent suggesting that the use of the “con­
sent” label in a treaty should make a critical difference
in discerning the parties’ intent about whether courts
or arbitrators should interpret and apply the relevant
provision.
We are willing to assume with the Solicitor General that
the appearance of this label in a treaty can show that the
parties, or one of them, thought the designated matter
quite important. But that is unlikely to be conclusive. For
parties often submit important matters to arbitration.
And the word “consent” could be attached to a highly
procedural precondition to arbitration, such as a waiting
period of several months, which the parties are unlikely to
have intended that courts apply without saying so. See,
e.g., Agreement on Encouragement and Reciprocal Protec­
12 BG GROUP PLC v. REPUBLIC OF ARGENTINA
Opinion of the Court
tion of Investments, Art. 9, Netherlands-Slovenia, Sept.
24, 1996, Netherlands T. S. No. 296 (“Each Contracting
Party hereby consents to submit any dispute . . . which
they can not [sic] solve amicably within three months . . .
to the International Center for Settlement of Disputes
for settlement by conciliation or arbitration”), online at
www.rijksoverheid.nl/documenten-en-publicaties/besluiten/
2006/10/17/slovenia.html (all Internet materials as visited
on Feb. 28, 2014, and available in Clerk of Court’s case
file); Agreement for the Promotion and Protection of
Investments, Art. 8(1), United Kingdom-Egypt, June 11,
1975, 14 I. L. M. 1472 (“Each Contracting Party hereby
consents to submit” a dispute to arbitration if “agreement
cannot be reached within three months between the par­
ties”). While we leave the matter open for future argu­
ment, we do not now see why the presence of the term
“consent” in a treaty warrants abandoning, or increasing
the complexity of, our ordinary intent-determining frame­
work. See Howsam, 537 U. S., at 83–85; First Options,
514 U. S., at 942–945; John Wiley, 376 U. S., at 546–549,
555–559.
2
In any event, the treaty before us does not state that the
local litigation requirement is a “condition of consent” to
arbitration. Thus, we need not, and do not, go beyond
holding that, in the absence of explicit language in a
treaty demonstrating that the parties intended a different
delegation of authority, our ordinary interpretive frame­
work applies. We leave for another day the question of
interpreting treaties that refer to “conditions of consent”
explicitly. See, e.g., United States-Korea Free Trade
Agreement, Art. 11.18, Feb. 10, 2011 (provision entitled
“Conditions and Limitations on Consent of Each Party”
and providing that “[n]o claim may be submitted to
arbitration under this Section” unless the claimant
waives in writing “any right” to press his claim before
Cite as: 572 U. S. ____ (2014) 13
Opinion of the Court
an “administrative tribunal or court”), online at www.
ustr.gov/trade-agreements/free-trade-agreements/korus-fta/
final-text; North American Free Trade Agreement, Arts.
1121–1122, Dec. 17, 1992, 32 I. L. M. 643–644 (pro-
viding that each party’s “[c]onsent to [a]rbitration” is
conditioned on fulfillment of certain “procedures,” one of
which is a waiver by an investor of his right to litigate the
claim being arbitrated). See also 2012 U. S. Model Bilat­
eral Investment Treaty, Art. 26 (entitled “Conditions and
limitations on Consent of Each Party”), online at
www.ustr.gov / sites / default / files / BIT % 20text%20for%
20ACIEP%20Meeting.pdf. And we apply our ordinary
presumption that the interpretation and application of
procedural provisions such as the provision before us are
primarily for the arbitrators.
B
A treaty may contain evidence that shows the parties
had an intent contrary to our ordinary presumptions
about who should decide threshold issues related to arbi­
tration. But the treaty before us does not sho w any such
contrary intention. We concede that the local litigation
requirement appears in ¶(1) of Article 8, while the Article
does not mention arbitration until the subsequent para­
graph, ¶(2). Moreover, a requirement that a party ex­
haust its remedies in a country’s domestic courts before
seeking to arbitrate may seem particularly important to a
country offering protections to foreign investors. And the
placing of an important matter prior to any mention of
arbitration at least arguably suggests an intent by Argen­
tina, the United Kingdom, or both, to have courts rather
than arbitrators apply the litigation requirement.
These considerations, however, are outweighed by oth­
ers. As discussed supra, at 8–9, the text and structure of
the litigation requirement set forth in Article 8 make clear
that it is a procedural condition precedent to arbitration—
14 BG GROUP PLC v. REPUBLIC OF ARGENTINA
Opinion of the Court
a sequential step that a party must follow before giving
notice of arbitration. The Treaty nowhere says that the
provision is to operate as a substantive condition on the
formation of the arbitration contract, or that it is a matter
of such elevated importance that it is to be decided by
courts. International arbitrators are likely more familiar
than are judges with the expectations of foreign investors
and recipient nations regarding the operation of the provi­
sion. See Howsam, supra, at 85 (comparative institutional
expertise a factor in determining parties’ likely intent).
And the Treaty itself authorizes the use of international
arbitration associations, the rules of which provide that
arbitrators shall have the authority to interpret provisions
of this kind. Art. 8(3) (providing that the parties may
refer a dispute to the International Centre for the Settle­
ment of Investment Disputes (ICSID) or to arbitrators
appointed pursuant to the arbitration rules of the United
Nations Commission on International Trade Law
(UNCITRAL)); accord, UNCITRAL Arbitration Rules, Art.
23(1) (rev. 2010 ed.) (“[A]rbitral tribunal shall have the
power to rule on its own jurisdiction”); ICSID Convention,
Regulations and Rules, Art. 41(1) (2006 ed.) (“Tribunal
shall be the judge of its own competence”). Cf. Howsam,
supra, at 85 (giving weight to the parties’ incorporation of
the National Association of Securities Dealers’ Code of
Arbitration into their contract, which provided for similar
arbitral authority, as evidence that they intended arbitra­
tors to “interpret and apply the NASD time limit rule”).
The upshot is that our ordinary presumption applies
and it is not overcome. The interpretation and application
of the local litigation provision is primarily for the arbi­
trators. Reviewing courts cannot review their decision
de novo. Rather, they must do so with considerable
deference.
C
The dissent interprets Article 8’s local litigation provi­
Cite as: 572 U. S. ____ (2014) 15
Opinion of the Court
sion differently. In its view, the provision sets forth not a
condition precedent to arbitration in an already-binding
arbitration contract (normally a matter for arbitrators to
interpret), but a substantive condition on Argentina’s con­
sent to arbitration and thus on the contract’s formation
in the first place (normally something for courts to inter­
pret). It reads the whole of Article 8 as a “unilateral
standing offer” to arbitrate that Argentina and the United
Kingdom each extends to investors of the other country.
Post, at 9 (opinion of ROBERTS, C. J.). And it says that the
local litigation requirement is one of the essential “ ‘terms
in which the offer was made.’ ” Post, at 6 (quoting Eliason
v. Henshaw, 4 Wheat. 225, 228 (1819); emphasis deleted).
While it is possible to read the provision in this way,
doing so is not consistent with our case law interpreting
similar provisions appearing in ordinary arbitration con­
tracts. See Part III, supra. Consequently, interpreting
the provision in such a manner would require us to treat
treaties as warranting a different kind of analysis. And
the dissent does so without supplying any different set of
general principles that might guide that analysis. That is
a matter of some concern in a world where foreign invest­
ment and related arbitration treaties increasingly matter.
Even were we to ignore our ordinary contract princi­
ples, however, we would not take the dissent’s view. As
we have explained, the local litigation provision on its face
concerns arbitration’s timing, not the Treaty’s effective
date; or whom its arbitration clause binds; or whether that
arbitration clause covers a certain kind of dispute. Cf.
Granite Rock, 561 U. S., at 296–303 (ratification date);
First Options, 514 U. S., at 941, 943–947 (parties); AT&T
Technologies, 475 U. S., at 651 (kind of dispute). The
dissent points out that Article 8(2)(a) “does not simply
require the parties to wait for 18 months before proceeding
to arbitration,” but instructs them to do something—to
“submit their claims for adjudication.” Post, at 8. That is
16 BG GROUP PLC v. REPUBLIC OF ARGENTINA
Opinion of the Court
correct. But the something they must do has no direct
impact on the resolution of their dispute, for as we previ­
ously pointed out, Article 8 provides that only the decision
of the arbitrators (who need not give weight to the local
court’s decision) will be “final and binding.” Art. 8(4). The
provision, at base, is a claims-processing rule. And the
dissent’s efforts to imbue it with greater significance fall
short.
The treatises to which the dissent refers also fail to
support its position. Post, at 3, 6. Those authorities pri­
marily describe how an offer to arbitrate in an investment
treaty can be accepted, such as through an investor’s filing
of a notice of arbitration. See J. Salacuse, The Law of
Investment Treaties 381 (2010); Schreuer, Consent to
Arbitration, in The Oxford Handbook of International
Investment Law 830, 836–837 (P. Muchlinski, F. Ortino, &
C. Schreuer eds. 2008); Dugan, Investor-State Arbitration,
at 221–222. They do not endorse the dissent’s reading of
the local litigation provision or of provisions like it.
To the contrary, the bulk of international authority
supports our view that the provision functions as a purely
procedural precondition to arbitrate. See 1 G. Born, In­
ternational Commercial Arbitration 842 (2009) (“A sub­
stantial body of arbitral authority from investor-state
disputes concludes that compliance with procedural mecha­
nisms in an arbitration agreement (or bilateral investment
treaty) is not ordinarily a jurisdictional prerequisite”);
Brief for Professors and Practitioners of Arbitration Law
as Amici Curiae 12–16 (to assume the parties intended
de novo review of the provision by a court “is likely to
set United States courts on a collision course with the
international regime embodied in thousands of [bilateral
investment treaties]”). See also Schreuer, Consent to
Arbitration, supra, at 846–848 (“clauses of this kind . . .
creat[e] a considerable burden to the party seeking arbi­
tration with little chance of advancing the settlement of
Cite as: 572 U. S. ____ (2014) 17
Opinion of the Court
the dispute,” and “the most likely effect of a clause of this
kind is delay and additional cost”).
In sum, we agree with the dissent that a sovereign’s
consent to arbitration is important. We also agree that
sovereigns can condition their consent to arbitrate by
writing various terms into their bilateral investment
treaties. Post, at 9–10. But that is not the issue. The
question is whether the parties intended to give courts or
arbitrators primary authority to interpret and apply a
threshold provision in an arbitration contract—when the
contract is silent as to the delegation of authority. We
have already explained why we believe that where, as
here, the provision resembles a claims-processing re­
quirement and is not a requirement that affects the arbi­
tration contract’s validity or scope, we presume that the
parties (even if they are sovereigns) intended to give that
authority to the arbitrators. See Parts III, IV–A and
IV–B, supra.
V
Argentina correctly argues that it is nonetheless en­
titled to court review of the arbitrators’ decision to excuse
BG Group’s noncompliance with the litigation require­
ment, and to take jurisdiction over the dispute. It asks us
to provide that review, and it argues that even if the proper
standard is “a [h]ighly [d]eferential” one, it should still
prevail. Brief for Respondent 50. Having the relevant
materials before us, we shall provide that review. But we
cannot agree with Argentina that the arbitrators “ ‘exceed­
ed their powers’ ” in concluding they had jurisdiction. Ibid.
(quoting 9 U. S. C. §10(a)(4)).
The arbitration panel made three relevant determinations:
(1) “As a matter of treaty interpretation,” the local
litigation provision “cannot be construed as an absolute
impediment to arbitration,” App. to Pet. for Cert. 165a;
18 BG GROUP PLC v. REPUBLIC OF ARGENTINA
Opinion of the Court
(2) Argentina enacted laws that “hindered” “recourse to
the domestic judiciary” by those “whose rights were alleg­
edly affected by the emergency measures,” id., at 165a–
166a; that sought “to prevent any judicial interference
with the emergency legislation,” id., at 169a; and that
“excluded from the renegotiation process” for public ser­
vice contracts “any licensee seeking judicial redress,” ibid.;
(3) under these circumstances, it would be “absurd and
unreasonable” to read Article 8 as requiring an investor to
bring its grievance to a domestic court before arbitrating.
Id., at 166a.
The first determination lies well within the arbitrators’
interpretive authority. Construing the local litigation
provision as an “absolute” requirement would mean Ar­
gentina could avoid arbitration by, say, passing a law that
closed down its court system indefinitely or that prohibit­
ed investors from using its courts. Such an interpretation
runs contrary to a basic objective of the investment treaty.
Nor does Argentina argue for an absolute interpretation.
As to the second determination, Argentina does not
argue that the facts set forth by the arbitrators are incor­
rect. Thus, we accept them as valid.
The third determination is more controversial. Argen­
tina argues that neither the 180-day suspension of courts’
issuances of final judgments nor its refusal to allow liti­
gants (and those in arbitration) to use its contract renego­
tiation process, taken separately or together, warrants
suspending or waiving the local litigation requirement.
We would not necessarily characterize these actions as
rendering a domestic court-exhaustion requirement “ab­
surd and unreasonable,” but at the same time we cannot
say that the arbitrators’ conclusions are barred by the
Treaty. The arbitrators did not “ ‘stra[y] from interpreta­
tion and application of the agreement’ ” or otherwise “ ‘ef­
fectively “dispens[e]” ’ ” their “ ‘own brand of . . . justice.’ ”
Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S.
Cite as: 572 U. S. ____ (2014) 19
Opinion of the Court
662, 671 (2010) (providing that it is only when an arbitra­
tor engages in such activity that “ ‘his decision may be
unenforceable’ ” (quoting Major League Baseball Players
Assn. v. Garvey, 532 U. S. 504, 509 (2001) (per curiam)).
Consequently, we conclude that the arbitrators’ jurisdic­
tional determinations are lawful. The judgment of the
Court of Appeals to the contrary is reversed.
It is so ordered.
Cite as: 572 U. S. ____ (2014) 1
SOTOMAYOR, J., concurring in part
SUPREME COURT OF THE UNITED STATES
_________________
No. 12–138
_________________
BG GROUP PLC, PETITIONER v. REPUBLIC OF
ARGENTINA
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
[March 5, 2014]
JUSTICE SOTOMAYOR, concurring in part.
I agree with the Court that the local litigation require-
ment at issue in this case is a procedural precondition to
arbitration (which the arbitrators are to interpret), not a
condition on Argentina’s consent to arbitrate (which a
court would review de novo). Ante, at 8, 14. Importantly,
in reaching this conclusion, the Court acknowledges that
“the treaty before us does not state that the local litiga-
tion requirement is a ‘condition of consent’ to arbitration.”
Ante, at 12. The Court thus wisely “leave[s] for another
day the question of interpreting treaties that refer to
‘conditions of consent’ explicitly.” Ibid. I join the Court’s
opinion on the understanding that it does not, in fact, de-
cide this issue.
I write separately because, in the absence of this express
reservation, the opinion might be construed otherwise.
The Court appears to suggest in dictum that a decision by
treaty parties to describe a condition as one on their con-
sent to arbitrate “is unlikely to be conclusive” in deciding
whether the parties intended for the condition to be re-
solved by a court. Ante, at 11. Because this suggestion is
unnecessary to decide the case and is in tension with the
Court’s explicit reservation of the issue, I join the opinion
of the Court with the exception of Part IV–A–1.
The Court’s dictum on this point is not only unneces-
2 BG GROUP PLC v. REPUBLIC OF ARGENTINA
SOTOMAYOR, J., concurring in part
sary; it may also be incorrect. It is far from clear that a
treaty’s express use of the term “consent” to describe a
precondition to arbitration should not be conclusive in the
analysis. We have held, for instance, that “a gateway
dispute about whether the parties are bound by a given
arbitration clause raises a ‘question of arbitrability’ for a
court to decide.” Howsam v. Dean Witter Reynolds, Inc.,
537 U. S. 79, 84 (2002). And a party plainly cannot be
bound by an arbitration clause to which it does not con-
sent. See Granite Rock Co. v. Teamsters, 561 U. S. 287,
299 (2010) (“Arbitration is strictly ‘a matter of consent’ ”
(quoting Volt Information Sciences, Inc. v. Board of Trust-
ees of Leland Stanford Junior Univ., 489 U. S. 468, 479
(1989)).
Consent is especially salient in the context of a bilateral
investment treaty, where the treaty is not an already
agreed-upon arbitration provision between known parties,
but rather a nation state’s standing offer to arbitrate with
an amorphous class of private investors. In this setting, a
nation-state might reasonably wish to condition its con-
sent to arbitrate with a previously unspecified investor
counterparty on the investor’s compliance with a require-
ment that might be deemed “purely procedural” in the
ordinary commercial context, ante, at 9. Moreover, as THE
CHIEF JUSTICE notes, “[i]t is no trifling matter” for a sov-
ereign nation to “subject itself to international arbitration”
proceedings, so we should “not presume that any country
. . . takes that step lightly.” Post, at 9 (dissenting opinion).
Consider, for example, the United States-Korea Free
Trade Agreement, which as the Court recognizes, ante, at
12–13, includes a provision explicitly entitled “Conditions
and Limitations on Consent of Each Party.” Art. 11.18,
Feb. 10, 2011. That provision declares that “[n]o claim
may be submitted to arbitration” unless a claimant first
waives its “right to initiate or continue before any admin-
istrative tribunal or court . . . any proceeding with respect
Cite as: 572 U. S. ____ (2014) 3
SOTOMAYOR, J., concurring in part
to any measure alleged to constitute a breach” under
another provision of the treaty. Ibid. If this waiver con-
dition were to appear without the “consent” label in a
binding arbitration agreement between two commercial
parties, one might characterize it as the kind of procedural
“ ‘condition precedent to arbitrability’ ” that we presume
parties intend for arbitrators to decide. Howsam, 537
U. S., at 85. But where the waiver requirement is ex-
pressly denominated a “condition on consent” in an interna-
tional investment treaty, the label could well be critical in
determining whether the states party to the treaty in-
tended the condition to be reviewed by a court. After all, a
dispute as to consent is “the starkest form of the question
whether the parties have agreed to arbitrate.” Post, at 13.
And we ordinarily presume that parties intend for courts
to decide such questions because otherwise arbitrators
might “force unwilling parties to arbitrate a matter they
reasonably would have thought a judge . . . would decide.”
First Options of Chicago, Inc. v. Kaplan, 514 U. S. 938,
945 (1995).
Accordingly, if the local litigation requirement at issue
here were labeled a condition on the treaty parties’ “con-
sent” to arbitrate, that would in my view change the anal-
ysis as to whether the parties intended the requirement to
be interpreted by a court or an arbitrator. As it is, how-
ever, all parties agree that the local litigation requirement
is not so denominated. See Agreement for the Promotion
and Protection of Investments, Art. 8(2), Dec. 11, 1990,
1765 U. N. T. S. 38. Nor is there compelling reason to
suppose the parties silently intended to make it a condi-
tion on their consent to arbitrate, given that a local court’s
decision is of no legal significance under the treaty, ante,
at 8–9, and given that the entire purpose of bilateral
investment agreements is to “reliev[e] investors of any
concern that the courts of host countries will be unable or
unwilling to provide justice in a dispute between a for-
4 BG GROUP PLC v. REPUBLIC OF ARGENTINA
SOTOMAYOR, J., concurring in part
eigner and their own government,” Brief for Professors
and Practitioners of Arbitration Law as Amici Curiae 6.
Moreover, Argentina’s conduct confirms that the local
litigation requirement is not a condition on consent, for
rather than objecting to arbitration on the ground that
there was no binding arbitration agreement to begin with,
Argentina actively participated in the constitution of the
arbitral panel and in the proceedings that followed. See
Eastern Airlines, Inc. v. Floyd, 499 U. S. 530, 546 (1991)
(treaty interpretation can be informed by parties’ posten-
actment conduct).*
In light of these many indicators that Argentina and the
United Kingdom did not intend the local litigation re-
quirement to be a condition on their consent to arbitrate,
and on the understanding that the Court does not pass on
——————
*The dissent discounts the significance of Argentina’s conduct on the
ground that Argentina “object[ed] to the [arbitral] tribunal’s jurisdic-
tion to hear the dispute.” Post, at 16, n. 2. But there is a difference
between arguing that a party has failed to comply with a procedural
condition in a binding arbitration agreement and arguing that noncom-
pliance with the condition negates the existence of consent to arbitrate
in the first place. Argentina points to no evidence that its objection was
of the consent variety. This omission is notable because Argentina
knew how to phrase its arguments before the arbitrators in terms of
consent; it argued separately that it had not consented to arbitration
with BG Group on the ground that BG was not a party to the license
underlying the dispute. See App. to Pet. for Cert. 182a–186a. First
Options of Chicago, Inc. v. Kaplan, 514 U. S. 938 (1995), is not to the
contrary, as that case held that “arguing the arbitrability issue to an
arbitrator” did not constitute “clea[r] and unmistakabl[e]” evidence
sufficient to override an indisputably applicable presumption that a
court was to decide whether the parties had agreed to arbitration. Id.,
at 944, 946. The question here, by contrast, is whether that presump-
tion attaches to begin with—that is, whether the local litigation re-
quirement was a condition on Argentina’s consent to arbitrate (which
would trigger the presumption) or a procedural condition in an already
binding arbitration agreement (which would not). That Argentina ap-
parently took the latter position in arbitration is surely relevant evi-
dence that the condition was, in fact, not one on its consent.
Cite as: 572 U. S. ____ (2014) 5
SOTOMAYOR, J., concurring in part
the weight courts should attach to a treaty’s use of the
term “consent,” I concur in the Court’s opinion.
Cite as: 572 U. S. ____ (2014) 1
ROBERTS, C. J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 12–138
_________________
BG GROUP PLC, PETITIONER v. REPUBLIC OF
ARGENTINA
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
[March 5, 2014]
CHIEF JUSTICE ROBERTS, with whom JUSTICE KENNEDY
joins, dissenting.
The Court begins by deciding a different case, “initially
treat[ing] the document before us as if it were an ordinary
contract between private parties.” Ante, at 6. The “docu­
ment before us,” of course, is nothing of the sort. It is
instead a treaty between two sovereign nations: the United
Kingdom and Argentina. No investor is a party to the
agreement. Having elided this rather important fact for
much of its analysis, the majority finally “relax[es] [its]
ordinary contract assumption and ask[s] whether the fact
that the document before us is a treaty makes a critical
difference to [its] analysis.” Ante, at 10. It should come as
no surprise that, after starting down the wrong road, the
majority ends up at the wrong place.
I would start with the document that is before us and
take it on its own terms. That document is a bilateral
investment treaty between the United Kingdom and Ar­
gentina, in which Argentina agreed to take steps to en­
courage U. K. investors to invest within its borders (and
the United Kingdom agreed to do the same with respect to
Argentine investors). Agreement for the Promotion and
Protection of Investments, Dec. 11, 1990, 1765 U. N. T. S.
33 (Treaty). The Treaty does indeed contain a completed
agreement for arbitration—between the signatory coun­
2 BG GROUP PLC v. REPUBLIC OF ARGENTINA
ROBERTS, C. J., dissenting
tries. Art. 9. The Treaty also includes, in Article 8, cer­
tain provisions for resolving any disputes that might arise
between a signatory country and an investor, who is not a
party to the agreement.
One such provision—completely ignored by the Court in
its analysis—specifies that disputes may be resolved by
arbitration when the host country and an investor “have
so agreed.” Art. 8(2)(b), 1765 U. N. T. S. 38. No one
doubts that, as is the normal rule, whether there was such
an agreement is for a court, not an arbitrator, to decide.
See First Options of Chicago, Inc. v. Kaplan, 514 U. S. 938,
943–945 (1995).
When there is no express agreement between the host
country and an investor, they must form an agreement in
another way, before an obligation to arbitrate arises. The
Treaty by itself cannot constitute an agreement to arbi­
trate with an investor. How could it? No investor is a
party to that Treaty. Something else must happen to
create an agreement where there was none before. Article
8(2)(a) makes clear what that something is: An investor
must submit his dispute to the courts of the host country.
After 18 months, or an unsatisfactory decision, the inves­
tor may then request arbitration.
Submitting the dispute to the courts is thus a condition
to the formation of an agreement, not simply a matter of
performing an existing agreement. Article 8(2)(a) consti­
tutes in effect a unilateral offer to arbitrate, which an
investor may accept by complying with its terms. To be
sure, the local litigation requirement might not be abso­
lute. In particular, an investor might argue that it was an
implicit aspect of the unilateral offer that he be afforded a
reasonable opportunity to submit his dispute to the local
courts. Even then, however, the question would remain
whether the investor has managed to form an arbitration
agreement with the host country pursuant to Article
8(2)(a). That question under Article 8(2)(a) is—like the
Cite as: 572 U. S. ____ (2014) 3
ROBERTS, C. J., dissenting
same question under Article 8(2)(b)—for a court, not an
arbitrator, to decide. I respectfully dissent from the
Court’s contrary conclusion.
I
The majority acknowledges—but fails to heed—“the first
principle that underscores all of our arbitration decisions:
Arbitration is strictly ‘a matter of consent.’ ” Granite Rock
Co. v. Teamsters, 561 U. S. 287, 299 (2010) (quoting Volt
Information Sciences, Inc. v. Board of Trustees of Leland
Stanford Junior Univ., 489 U. S. 468, 479 (1989)); see
ante, at 7. We have accordingly held that arbitration “is a
way to resolve those disputes—but only those disputes—
that the parties have agreed to submit to arbitration.”
First Options of Chicago, Inc., supra, at 943. The same
“first principle” underlies arbitration pursuant to bilateral
investment treaties. See C. Dugan, D. Wallace, N. Rubins,
& B. Sabahi, Investor-State Arbitration 219 (2008)
(Dugan); J. Salacuse, The Law of Investment Treaties 385
(2010); K. Vandevelde, Bilateral Investment Treaties:
History, Policy, and Interpretation 433 (2010). So only if
Argentina agreed with BG Group to have an arbitrator
resolve their dispute did the arbitrator in this case have
any authority over the parties.
The majority opinion nowhere explains when and how
Argentina agreed with BG Group to submit to arbitration.
Instead, the majority seems to assume that, in agreeing
with the United Kingdom to adopt Article 8 along with the
rest of the Treaty, Argentina thereby formed an agree­
ment with all potential U. K. investors (including BG
Group) to submit all investment-related disputes to arbi­
tration. That misunderstands Article 8 and trivializes the
significance to a sovereign nation of subjecting itself to
arbitration anywhere in the world, solely at the option of
private parties.
4 BG GROUP PLC v. REPUBLIC OF ARGENTINA
ROBERTS, C. J., dissenting
A
The majority focuses throughout its opinion on what it
calls the Treaty’s “arbitration clause,” ante, at 1, but that
provision does not stand alone. Rather, it is only part—
and a subordinate part at that—of a broader dispute
resolution provision. Article 8 is thus entitled “Settlement
of Disputes Between an Investor and the Host State,” and
it opens without so much as mentioning arbitration. 1765
U. N. T. S. 37. Instead it initially directs any disputing
investor and signatory country (what the Treaty calls a
“Contracting Party”) to court. When “an investor of one
Contracting Party and the other Contracting Party” have
an investment-related dispute that has “not been amicably
settled,” the Treaty commands that the dispute “shall be
submitted, at the request of one of the Parties to the dis­
pute, to the decision of the competent tribunal of the
Contracting Party in whose territory the investment was
made.” Art. 8(1), id., at 37–38. (emphasis added). This
provision could not be clearer: Before taking any other
steps, an aggrieved investor must submit its dispute with
a Contracting Party to that Contracting Party’s own
courts.
There are two routes to arbitration in Article 8(2)(a),
and each passes through a Contracting Party’s domestic
courts. That is, the Treaty’s arbitration provisions in
Article 8(2)(a) presuppose that the parties have complied
with the local litigation provision in Article 8(1). Specifi­
cally, a party may request arbitration only (1) “after a
period of eighteen months has elapsed from the moment
when the dispute was submitted to the competent tribunal
of the Contracting Party in whose territory the investment
was made” and “the said tribunal has not given its final
decision,” Art. 8(2)(a)(i), id., at 38, or (2) “where the final
decision of the aforementioned tribunal has been made but
the Parties are still in dispute,” Art. 8(2)(a)(ii), ibid. Ei­
ther way, the obligation to arbitrate does not arise until
Cite as: 572 U. S. ____ (2014) 5
ROBERTS, C. J., dissenting
the Contracting Party’s courts have had a first crack at
the dispute.
Article 8 provides a third route to arbitration in para­
graph 8(2)(b)—namely, “where the Contracting Party and
the investor of the other Contracting Party have so
agreed.” Ibid. In contrast to the two routes in Article
8(2)(a), this one does not refer to the local litigation provi­
sion. That omission is significant. It makes clear that an
investor can bypass local litigation only by obtaining the
Contracting Party’s explicit agreement to proceed directly
to arbitration. Short of that, an investor has no choice but
to litigate in the Contracting Party’s courts for at least
some period.
The structure of Article 8 confirms that the routes to
arbitration in paragraph (2)(a) are just as much about
eliciting a Contracting Party’s consent to arbitrate as the
route in paragraph 8(2)(b). Under Article 8(2)(b), the
requisite consent is demonstrated by a specific agreement.
Under Article 8(2)(a), the requisite consent is demonstrated
by compliance with the requirement to resort to a coun­
try’s local courts.
Whereas Article 8(2)(a) is part of a completed agreement
between Argentina and the United Kingdom, it constitutes
only a unilateral standing offer by Argentina with respect
to U. K. investors—an offer to submit to arbitration where
certain conditions are met. That is how scholars under­
stand arbitration provisions in bilateral investment trea­
ties in general. See Dugan 221; Salacuse 381; Brief for
Practitioners and Professors of International Arbitration
Law as Amici Curiae 4. And it is how BG Group itself
describes this investment treaty in particular. See Brief
for Petitioner 43 (the Treaty is a “standing offer” by Ar­
gentina “to arbitrate”); Reply Brief 9 (same).
An offer must be accepted for a legally binding contract
to be formed. And it is an “undeniable principle of the law
of contracts, that an offer . . . by one person to another,
6 BG GROUP PLC v. REPUBLIC OF ARGENTINA
ROBERTS, C. J., dissenting
imposes no obligation upon the former, until it is accepted
by the latter, according to the terms in which the offer
was made. Any qualification of, or departure from, those
terms, invalidates the offer.” Eliason v. Henshaw, 4
Wheat. 225, 228 (1819) (emphasis added). This principle
applies to international arbitration agreements just as it
does to domestic commercial contracts. See Dugan 221–
222; Salacuse 381; Schreuer, Consent to Arbitration, in
The Oxford Handbook of International Investment Law
830, 836–837 (P. Muchlinski, F. Ortino, & C. Schreuer eds.
2008).
By incorporating the local litigation provision in Article
8(1), paragraph 8(2)(a) establishes that provision as a
term of Argentina’s unilateral offer to arbitrate. To accept
Argentina’s offer, an investor must therefore first litigate
its dispute in Argentina’s courts—either to a “final deci­
sion” or for 18 months, whichever comes first. Unless the
investor does so (or, perhaps, establishes a valid excuse for
failing to do so, as discussed below, see infra, at 17), it has
not accepted the terms of Argentina’s offer to arbitrate,
and thus has not formed an arbitration agreement with
Argentina.1
Although the majority suggests that the local litigation
requirement would not be a “condition of consent” even if
the Treaty explicitly called it one, the Court’s holding is
limited to treaties that contain no such clear statement.
See ante, at 11–13. But there is no reason to think that
such a clear statement should be required, for we generally
do not require “talismanic words” in treaties. Medellín
v. Texas, 552 U. S. 491, 521 (2008). Indeed, another arbi-
tral tribunal concluded that the local litigation require­
——————
1 To
be clear, the only question is whether BG Group formed an arbi­
tration agreement with Argentina. To say that BG Group never formed
such an agreement is not to call into question the validity of its various
commercial agreements with Argentina.
Cite as: 572 U. S. ____ (2014) 7
ROBERTS, C. J., dissenting
ment was a condition on Argentina’s consent to arbitrate
despite the absence of the sort of clear statement appar­
ently contemplated by the majority. See ICS Inspection &
Control Servs. Ltd. v. Argentine Republic, PCA Case No.
2010–9, Award on Jurisdiction, ¶262 (Feb. 10, 2012). Still
other tribunals have reached the same conclusion with
regard to similar litigation requirements in other Argen­
tine bilateral investment treaties. See Daimler Financial
Servs. AG v. Argentine Republic, ICSID Case No. ARB/
05/1, Award, ¶¶193, 194 (Aug. 22, 2012); Wintershall
Aktiengesellschaft v. Argentine Republic, ICSID Case No.
ARB/04/14, Award, ¶116 (Dec. 8, 2008).
In the face of this authority, the majority quotes a trea­
tise for the proposition that “ ‘[a] substantial body of arbi­
tral authority from investor-state disputes concludes that
compliance with procedural mechanisms in an arbitration
agreement (or bilateral investment treaty) is not ordinarily
a jurisdictional prerequisite.’ ” Ante, at 16 (quoting 1 G.
Born, International Commercial Arbitration 842 (2009)).
But that simply restates the question. The whole issue is
whether the local litigation requirement is a mere “proce­
dural mechanism” or instead a condition on Argentina’s
consent to arbitrate.
BG Group concedes that other terms of Article 8(1)
constitute conditions on Argentina’s consent to arbitrate,
even though they are not expressly labeled as such. See
Tr. of Oral Arg. 57 (“You have to be a U. K. investor, you
have to have a treaty claim, you have to be suing another
party to the treaty. And if those aren’t true, then there is
no arbitration agreement” (emphasis added)). The Court
does not explain why the only other term—the litigation
requirement—should be viewed differently.
Nor does the majority’s reading accord with ordinary
contract law, which treats language such as the word
“after” in Article 8(2)(a)(i) as creating conditions, even
though such language may not constitute a “clear state­
8 BG GROUP PLC v. REPUBLIC OF ARGENTINA
ROBERTS, C. J., dissenting
ment.” See 13 R. Lord, Williston on Contracts §38:16 (4th
ed. 2013). The majority seems to regard the local litiga­
tion requirement as a condition precedent to performance
of the contract, rather than a condition precedent to for­
mation of the contract. Ante, at 8–9; see 13 Lord §§38:4,
38:7. But that cannot be. Prior to the fulfillment of
the local litigation requirement, there was no contract be­
tween Argentina and BG Group to be performed. The
Treaty is not such an agreement, since BG Group is of
course not a party to the Treaty. Neither the majority nor
BG Group contends that the agreement is under Article
8(2)(b), the provision that applies “where the Contracting
Party and the investor of the other Contracting Party have
so agreed.” An arbitration agreement must be formed, and
Article 8(2)(a) spells out how an investor may do that: by
submitting the dispute to local courts for 18 months or
until a decision is rendered.
Moreover, the Treaty’s local litigation requirement
certainly does not resemble “time limits, notice, laches,
estoppel,” or the other kinds of provisions that are typically
treated as conditions on the performance of an arbitra-
tion agreement, rather than prerequisites to formation.
Revised Uniform Arbitration Act of 2000 §6(c), Comment
2, 7 U. L. A. 26 (2009). Unlike a time limit for submitting
a claim to arbitration, see Howsam v. Dean Witter Rey­
nolds, Inc., 537 U. S. 79, 85 (2002), the litigation require­
ment does not simply regulate the timing of arbitration.
As the majority recognizes, ante, at 15–16, the provision
does not simply require the parties to wait for 18 months
before proceeding to arbitration, but instead requires them
to submit their claims for adjudication during that period.
And unlike a mandatory pre-arbitration grievance proce­
dure, see John Wiley & Sons, Inc. v. Livingston, 376 U. S.
543, 556–559 (1964), the litigation requirement sends the
parties to court—and not just any court, but a court of the
host country.
Cite as: 572 U. S. ____ (2014) 9
ROBERTS, C. J., dissenting
The law of international arbitration and domestic con­
tract law lead to the same conclusion: Because paragraph
(2)(a) of Article 8 constitutes only a unilateral standing
offer by the Contracting Parties to each other’s investors
to submit to arbitration under certain conditions, an in­
vestor cannot form an arbitration agreement with a Con­
tracting Party under the Treaty until the investor accepts
the actual terms of the Contracting Party’s offer. Absent a
valid excuse, that means litigating its dispute in the Con­
tracting Party’s courts to a “final decision” or, barring
that, for at least 18 months.
B
The nature of the obligations a sovereign incurs in
agreeing to arbitrate with a private party confirms that
the local litigation requirement is a condition on a signatory
country’s consent to arbitrate, and not merely a condi-
tion on performance of a pre-existing arbitration agree­
ment. There are good reasons for any sovereign to condi­
tion its consent to arbitrate disputes on investors’ first
litigating their claims in the country’s own courts for a
specified period. It is no trifling matter for a sovereign
nation to subject itself to suit by private parties; we do not
presume that any country—including our own—takes that
step lightly. Cf. United States v. Bormes, 568 U. S. ___,
___ (2012) (slip op., at 4) (Congress must “unequivocally
express[ ]” its intent to waive the sovereign immunity of
the United States (quoting United States v. Nordic Village,
Inc., 503 U. S. 30, 33 (1992); internal quotation marks
omitted)). But even where a sovereign nation has subjected
itself to suit in its own courts, it is quite another thing
for it to subject itself to international arbitration. Indeed,
“[g]ranting a private party the right to bring an action
against a sovereign state in an international tribunal
regarding an investment dispute is a revolutionary inno­
vation” whose “uniqueness and power should not be over­
10 BG GROUP PLC v. REPUBLIC OF ARGENTINA
ROBERTS, C. J., dissenting
looked.” Salacuse 137. That is so because of both the
procedure and substance of investor-state arbitration.
Procedurally, paragraph (3) of Article 8 designates the
Arbitration Rules of the United Nations Commission on
International Trade Law (UNCITRAL) as the default rules
governing the arbitration. Those rules authorize the
Secretary-General of the Permanent Court of Arbitration
at The Hague to designate an “appointing authority”
who—absent agreement by the parties—can select the sole
arbitrator (or, in the case of a three-member tribunal, the
presiding arbitrator, where the arbitrators nominated by
each of the parties cannot agree on a presiding arbitrator).
UNCITRAL Arbitration Rules, Arts. 6, 8–9 (rev. 2010 ed.).
The arbitrators, in turn, select the site of the arbitration
(again, absent an agreement by the parties) and enjoy
broad discretion in conducting the proceedings. Arts. 18,
17(1).
Substantively, by acquiescing to arbitration, a state
permits private adjudicators to review its public policies
and effectively annul the authoritative acts of its legisla­
ture, executive, and judiciary. See Salacuse 355; G. Van
Harten, Investment Treaty Arbitration and Public Law
65–67 (2007). Consider the dispute that gave rise to this
case: Before the arbitral tribunal, BG Group challenged
multiple sovereign acts of the Argentine Government
taken after the Argentine economy collapsed in 2001—in
particular, Emergency Law 25,561, which converted dollar­
denominated tariffs into peso-denominated tariffs at a
rate of one Argentine peso to one U. S. dollar; Resolution
308/02 and Decree 1090/02, which established a renegotia­
tion process for public service contracts; and Decree
214/02, which stayed for 180 days injunctions and the
execution of final judgments in lawsuits challenging the
effects of the Emergency Law. Indeed, in awarding dam­
ages to BG Group, the tribunal held that the first three of
these enactments violated Article 2 of the Treaty. See
Cite as: 572 U. S. ____ (2014) 11
ROBERTS, C. J., dissenting
App. to Pet. for Cert. 241a–242a, 305a.
Perhaps they did, but that is not the issue. Under
Article 8, a Contracting Party grants to private adjudica­
tors not necessarily of its own choosing, who can meet
literally anywhere in the world, a power it typically re­
serves to its own courts, if it grants it at all: the power to
sit in judgment on its sovereign acts. Given these stakes,
one would expect the United Kingdom and Argentina to
have taken particular care in specifying the limited cir­
cumstances in which foreign investors can trigger the
Treaty’s arbitration process. And that is precisely what
they did in Article 8(2)(a), requiring investors to afford a
country’s own courts an initial opportunity to review the
country’s enactments and assess the country’s compliance
with its international obligations. Contrast this with
Article 9, which provides for arbitration between the
signatory countries of disputes under the Treaty without
any preconditions. Argentina and the United Kingdom
considered arbitration with particular foreign investors to
be different in kind and to require special limitations on
its use.
The majority regards the local litigation requirement as
toothless simply because the Treaty does not require an
arbitrator to “give substantive weight to the local court’s
determinations on the matters at issue between the par­
ties,” ante, at 9; see also ante, at 15–16, but instead pro­
vides that “[t]he arbitration decision shall be final and
binding on both Parties,” Art. 8(4), 1765 U. N. T. S. 38.
While it is true that an arbitrator need not defer to an
Argentine court’s judgment in an investor dispute, that
does not deprive the litigation requirement of practical
import. Most significant, the Treaty provides that an
“arbitral tribunal shall decide the dispute in accordance
with . . . the laws of the Contracting Party involved in the
dispute.” Art. 8(4), ibid. I doubt that a tribunal would
give no weight to an Argentine court’s authoritative con­
12 BG GROUP PLC v. REPUBLIC OF ARGENTINA
ROBERTS, C. J., dissenting
struction of Argentine law, rendered in the same dispute,
just because it might not be formally bound to adopt that
interpretation.
The local litigation requirement can also help to narrow
the range of issues that remain in controversy by the time
a dispute reaches arbitration. It might even induce the
parties to settle along the way. And of course the investor
might prevail, which could likewise obviate the need for
arbitration. Cf. McKart v. United States, 395 U. S. 185,
195 (1969).
None of this should be interpreted as defending Argen­
tina’s history when it comes to international investment.
That history may prompt doubt that requiring an investor
to resort to that country’s courts in the first instance will
be of any use. But that is not the question. Argentina and
the United Kingdom reached agreement on the term at
issue. The question can therefore be rephrased as whether
it makes sense for either Contracting Party to insist on
resort to its courts before being compelled to arbitrate
anywhere in the world before arbitrators not of its choos­
ing. The foregoing reasons may seem more compelling
when viewed apart from the particular episode before us.
II
Given that the Treaty’s local litigation requirement is a
condition on consent to arbitrate, it follows that whether
an investor has complied with that requirement is a ques­
tion a court must decide de novo, rather than an issue for
the arbitrator to decide subject only to the most deferen­
tial judicial review. See, e.g., Adams v. Suozzi, 433 F. 3d
220, 226–228 (CA2 2005) (holding that compliance with a
condition on formation of an arbitration agreement is for a
court, rather than an arbitrator, to determine). The logic
is simple: Because an arbitrator’s authority depends on
the consent of the parties, the arbitrator should not as a
rule be able to decide for himself whether the parties have
Cite as: 572 U. S. ____ (2014) 13
ROBERTS, C. J., dissenting
in fact consented. Where the consent of the parties is in
question, “reference of the gateway dispute to the court
avoids the risk of forcing parties to arbitrate a matter that
they may well not have agreed to arbitrate.” Howsam, 537
U. S., at 83–84.
This principle is at the core of our arbitration prece­
dents. See Granite Rock Co., 561 U. S., at 299 (questions
concerning “the formation of the parties’ arbitration
agreement” are for a court to decide de novo). The same
principle is also embedded in the law of international
commercial arbitration. 2 Born 2792 (“[W]here one party
denies ever having made an arbitration agreement or
challenges the validity of any such agreement, . . . the
possibility of de novo judicial review of any jurisdictional
award in an annulment action is logically necessary”). See
also Restatement (Third) of U. S. Law of International
Commercial Arbitration §4–12(d)(1) (Tent. Draft No. 2,
Apr. 16, 2012) (“a court determines de novo . . . the exist­
ence of the arbitration agreement”).
Indeed, the question in this case—whether BG Group
accepted the terms of Argentina’s offer to arbitrate—
presents an issue of contract formation, which is the
starkest form of the question whether the parties have
agreed to arbitrate. In Howsam v. Dean Witter Reynolds,
Inc., we gave two examples of questions going to consent,
which are for courts to decide: “whether the parties are
bound by a given arbitration clause” and “whether an
arbitration clause in a concededly binding contract applies
to a particular type of controversy.” 537 U. S., at 84. In
both examples, there is at least a putative arbitration
agreement between the parties to the dispute. The only
question is whether the agreement is truly binding or
whether it covers the specific dispute. Here, by contrast,
the question is whether the arbitration clause in the Treaty
between the United Kingdom and Argentina gives rise
to an arbitration agreement between Argentina and BG
14 BG GROUP PLC v. REPUBLIC OF ARGENTINA
ROBERTS, C. J., dissenting
Group at all. Cf. ante, at 2 (SOTOMAYOR, J., concurring in
part) (“Consent is especially salient in the context of a
bilateral investment treaty, where the treaty is not an
already agreed-upon arbitration provision between known
parties”).
The majority never even starts down this path. Instead,
it preempts the whole inquiry by concluding that the local
litigation requirement is the kind of “procedural precondi­
tion” that parties typically expect an arbitrator to enforce.
Ante, at 8–9. But as explained, the local litigation re­
quirement does not resemble the requirements we have
previously deemed presumptively procedural. See supra,
at 8. It does not merely regulate the timing of arbitration.
Nor does it send the parties to non-judicial forms of dis­
pute resolution.
More importantly, all of the cases cited by the majority
as examples of procedural provisions involve commercial
contracts between two private parties. See ante, at 9.
None of them—not a single one—involves an agreement
between sovereigns or an agreement to which the person
seeking to compel arbitration is not even a party. The
Treaty, of course, is both of those things.
The majority suggests that I am applying “a different
kind of analysis” from that governing private commercial
contracts, just because what is at issue is a treaty. Ante,
at 15. That is not so: The key point, which the majority
never addresses, is that there is no completed agreement
whatsoever between Argentina and BG Group. An agree­
ment must be formed, and whether that has happened
is—as it is in the private commercial contract context—an
issue for a court to decide. See supra, at 12–13.
The distinction between questions concerning consent to
arbitrate and mere procedural requirements under an
existing arbitration agreement can at times seem elusive.
Even the most mundane procedural requirement can be
recast as a condition on consent as a matter of technical
Cite as: 572 U. S. ____ (2014) 15
ROBERTS, C. J., dissenting
logic. But it should be clear by now that the Treaty’s local
litigation requirement is not a mere formality—not in
Buenos Aires, not in London. And while it is true that
“parties often submit important matters to arbitration,”
ante, at 11, our precedents presume that parties do not
submit to arbitration the most important matter of all:
whether they are subject to an agreement to arbitrate in
the first place.
Nor has the majority pointed to evidence that would
rebut this presumption by showing that Argentina “ ‘clearly
and unmistakably’ ” intended to have an arbitrator en­
force the litigation requirement. Howsam, supra, at 83
(quoting AT&T Technologies, Inc. v. Communications
Workers, 475 U. S. 643, 649 (1986)). As the majority
notes, ante, at 14, the Treaty incorporates certain arbitra­
tion rules that, in turn, authorize arbitrators to determine
their own jurisdiction over a dispute. See Art. 8(3). But
those rules do not operate until a dispute is properly
before an arbitral tribunal, and of course the whole ques­
tion in this case is whether the dispute between BG Group
and Argentina was before the arbitrators, given BG
Group’s failure to comply with the 18-month local litiga­
tion requirement. As a leading treatise has explained, “[i]f
the parties have not validly agreed to any arbitration
agreement at all, then they also have necessarily not
agreed to institutional arbitration rules.” 1 Born 870. “In
these circumstances, provisions in institutional rules
cannot confer any [such] authority upon an arbitral tribu­
nal.” Ibid.I also see no reason to think that arbitrators enjoy
comparative expertise in construing the local litigation
requirement. Ante, at 14. It would be one thing if that
provision involved the application of the arbitrators’ own
rules, cf. Howsam, supra, at 85, or if it were “intertwined”
with the merits of the underlying dispute, John Wiley &
Sons, 376 U. S., at 557. Neither is true of the litigation
16 BG GROUP PLC v. REPUBLIC OF ARGENTINA
ROBERTS, C. J., dissenting
requirement. A court can assess compliance with the
requirement at least as well as an arbitrator can. Given
the structure of Article 8 and the important interests that
the litigation requirement protects, it seems clear that the
United Kingdom and Argentina thought the same.2
III
Although the Court of Appeals got there by a slightly
different route, it correctly concluded that a court must
decide questions concerning the interpretation and appli­
cation of the local litigation requirement de novo. 665
F. 3d 1363, 1371–1373 (CADC 2012). At the same time,
however, the court seems to have simply taken it for
granted that, because BG Group did not submit its dispute
to the local courts, the arbitral award in BG Group’s favor
was invalid. Indeed, the court addressed the issue in a
perfunctory paragraph at the end of its opinion and saw
“ ‘only one possible outcome’ ”: “that BG Group was re­
quired to commence a lawsuit in Argentina’s courts and
——————
2 JUSTICE SOTOMAYOR contends that “Argentina’s conduct confirms
that the local litigation requirement is not a condition on consent, for
rather than objecting to arbitration on the ground that there was no
binding arbitration agreement to begin with, Argentina actively partic­
ipated in the constitution of the arbitral panel and in the proceedings
that followed.” Ante, at 4 (opinion concurring in part). But as the
arbitral tribunal itself recognized, Argentina did object to the tribunal’s
jurisdiction to hear the dispute. App. to Pet. for Cert. 99a, 134a, 143a,
161a–163a. And we have held that “merely arguing the arbitrability
issue to an arbitrator”—say, by “filing with the arbitrators a written
memorandum objecting to the arbitrators’ jurisdiction”—“does not
indicate a clear willingness to arbitrate that issue, i.e., a willingness to
be effectively bound by the arbitrator’s decision on that point.” First
Options of Chicago, Inc. v. Kaplan, 514 U. S. 938, 946 (1995). The
concurrence contends that Argentina “apparently” argued its jurisdic­
tional objection in terms of procedure rather than consent, ante, at 4, n.,
but the one piece of evidence cited—a negative inference from the
arbitrator’s characterization of Argentina’s argument on a subsidiary
issue—hardly suffices to distinguish First Options.
Cite as: 572 U. S. ____ (2014) 17
ROBERTS, C. J., dissenting
wait eighteen months before filing for arbitration.” Id.,
at 1373 (quoting Stolt-Nielsen S. A. v. AnimalFeeds Int’l
Corp., 559 U. S. 662, 677 (2010)).
That conclusion is not obvious. A leading treatise has
indicated that “[i]t is a necessary implication from [a uni­
lateral] offer that the offeror, in addition, makes a sub­
sidiary offer by which he or she promises to accept a
tender of performance.” 1 Lord §5:14, at 1005. On this
understanding, an offeree’s failure to comply with an
essential condition of the unilateral offer “will not bar an
action, if failure to comply with the condition is due to the
offeror’s own fault.” Id., at 1005–1006.
It would be open to BG Group to argue before the Court
of Appeals that this principle was incorporated into Article
8(2)(a) as an implicit aspect of Argentina’s unilateral offer
to arbitrate. Such an argument would find some support
in the background principle of customary international
law that a foreign individual injured by a host country
must ordinarily exhaust local remedies—unless doing so
would be “futile.” See Dugan 347–357. In any event, the
issue would be analyzed as one of contract formation, and
therefore would be for the court to decide. I would accord­
ingly vacate the decision of the Court of Appeals and
remand the case for such an inquiry.
I respectfully dissent.