On March 5, 2014, the US Supreme Court in BG Group PLC v. Republic of Argentina reinstated a $185 million arbitration award against the Republic of Argentina. The Court held that a local litigation requirement in the arbitration clause of a bilateral investment treaty is a matter for arbitrators to interpret and apply, and courts should review their interpretation with deference. (134 S.Ct. 1198 (2014).)

The petitioner, BG Group PLC, a British firm, invested in an Argentine gas distribution company called MetroGAS. The government of Argentina awarded MetroGAS an exclusive license to distribute natural gas in Buenos Aires and the right to calculate tariffs that would provide investors a reasonable return. Argentina later passed new laws that, among other things, changed the basis for calculating gas tariffs from dollars to pesos, turning MetroGAS' profits into losses. In 2003, BG Group sought arbitration under Article 8 of the bilateral investment treaty between the United Kingdom and Argentina (the Treaty). The parties appointed arbitrators and agreed to arbitrate in Washington, D.C.

In December 2007, the arbitration panel reached a final decision. The panel found that BG Group was denied "fair and equitable treatment" in violation of the Treaty and awarded BG Group $185 million in damages. The panel rejected Argentina's argument that the panel lacked jurisdiction because BG Group initiated arbitration despite Article 8's local litigation clause, which required litigation in the Argentine courts for 18 months as a condition precedent to arbitration.

On review, the US District Court for the District of Columbia confirmed the arbitration award. The US Court of Appeals for the DC Circuit then reversed and vacated the arbitration award. The DC Circuit found that the interpretation and application of Article 8's local litigation requirement was a matter for the courts to decide de novo, without deference to the arbitrators, and that the circumstances did not excuse BG Group's failure to comply with the litigation requirement. BG Group filed a petition for certiorari.

The Supreme Court reversed the DC Circuit and reinstated the arbitration award. In its analysis, the Court approached the investment treaty as if it were a commercial contract between private parties rather than a treaty between sovereign nations, determining that doing so did not make a critical difference in its decision. The Court held that the local litigation requirement was a condition precedent to arbitration, the interpretation and application of which is for the arbitrators to decide and not the courts. In reaching its decision, the Court explained that:

In international commercial disputes, including those involving bilateral investment treaties, US courts will give deference to the arbitrators' interpretation and application of an agreement's procedural conditions precedent to arbitration.