                       UNITED STATES DISTRICT COURT
                       FOR THE DISTRICT OF COLUMBIA
____________________________________
                                     )
REPUBLIC OF ARGENTINA,               )
                                     )
                  Plaintiff,         )
                                     )
      v.                             )  Civil Action No. 08-485 (RBW)
                                     )
BG GROUP PLC,                        )
                                     )
                  Defendant.         )
____________________________________)


                                MEMORANDUM OPINION

       Currently before the Court is a cross-motion filed by respondent BG Group PLC (“BG

Group”) to confirm an arbitral award (the “Award”) rendered in its favor and against petitioner

Republic of Argentina (“Argentina”) under the Federal Arbitration Act, 9 U.S.C. § 207 (2000)

(the “FAA”), and the Convention on the Recognition and Enforcement of Foreign Arbitral

Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38, available at 1970 WL 104417 (the

“New York Convention” or the “Convention”), which was ratified by Congress and codified at 9

U.S.C. §§ 201-08 (2000). Cross-Motion for Recognition and Enforcement of Arbitral Award

(the “Resp’t’s Cross-Mot.”) at 1. Argentina previously moved to vacate the Award under the

FAA and the New York Convention, but the Court denied that relief in a memorandum opinion

and order issued on June 7, 2010. Republic of Argentina v. BG Group, 715 F. Supp. 2d 108, 126

(D.D.C. 2010) (Walton, J.). The Court held a hearing on September 28, 2010, as to the merits of

the motion currently before the Court, at which time the Court issued an oral ruling granting the

cross-motion and informed the parties that it would memorialize its rationale and ruling




                                               1
thereafter. Hearing Transcript (“Tr.”) 48:17-21, Sept. 28, 2010. This memorandum opinion

represents the Court’s adherence to that promise.

                                               I. Background

        Many of the facts germane to the issues confronting the Court in this case have already

been set forth in the June 7, 2010 memorandum opinion, but in the interest of providing the

factual background necessary to understanding the Court’s legal analysis below, those facts will

be revisited here.1 On December 11, 1990, Argentina and the United Kingdom entered into the

Agreement for the Promotion and Protection of Investments, Arg.-U.K., Dec. 11, 1990, 1765

U.N.T.S. 33 (“Investment Treaty”), the purpose of which was to promote foreign investment

between these two nations. Resp’t’s Cross-Mot. at 1; Pet’r’s Pet. ¶ 13. Similar to other bilateral

investment treaties entered into around the same period, the Investment Treaty was designed to

ensure foreign investors that they would be treated fairly and equitably, to provide them with

“full protection and security,” and to restrict the host country “from expropriating the assets of

such investors without just compensation.” Respt’t’s Cross-Mot. at 1. To address any disputes

arising from these investments, Argentina and the United Kingdom agreed to a two-tiered system
1
  The Court considered the following documents in reaching its decision: (1) Argentina’s Petition to Vacate or
Modify Arbitration Award (the “Pet’r’s Pet.”); (2) the Memorandum of Points and Authorities of BG Group PLC in
Opposition to Motion to Vacate and in Support of Cross Motion for Recognition and Enforcement and for a Pre-
Judgment Bond (the “Resp’t’s Cross-Mot.”); (3) Argentina’s Memorandum of Points and Authorities in Reply to
Respondent’s Opposition to the Motion to Vacate or Modify Arbitration Award and in Opposition to Respondent’s
Cross-Motions for Confirmation of the Award and For a Pre-Judgment Bond (the “Pet’r’s Reply”); (4) BG Group’s
Memorandum of Points and Authorities in Reply to Petitioner’s Opposition to Respondent’s Cross-Motion for
Recognition and Enforcement and for a Pre-Judgment Bond (the “Resp’t’s Reply”); (5) BG Group’s Supplemental
Memorandum of Law in Support of Respondent’s Motion for Pre-Judgment Bond (the “Resp’t’s Supp. Mem.”); (6)
Argentina’s Supplemental Memorandum of Points with Regard to Posting a Bond (the “Pet’r’s Supp. Mem.”); (7)
Argentina’s Second Supplemental Memorandum of Points with Regard to Posting of Bond (the “Pet’r’s 2d Supp.
Mem.”); (8) BG Group’s Supplemental Memorandum of Law on the Applicability of the New York Convention (the
“Resp’t’s 2d Supp. Mem.”); (9) Argentina’s Supplemental Memorandum Refusing Respondent’s Request for a Pre-
Judgment Bond (the “Pet’r’s 3d Supp. Mem.”); (10) BG Group’s Supplemental Memorandum in Support of
Respondent’s Motion for a Pre-Judgment Bond (the “Resp’t’s 3d Supp. Mem.”); (11) Argentina’s June 30, 2010
Supplemental Memorandum (the “Pet’r’s 4th Supp. Mem.”); (12) BG Group’s Reply Supplemental Memorandum of
Points and Authorities of Petitioner (the “Resp’t’s 4th Supp. Mem.”); and (13) the Reply Supplemental
Memorandum of Points and Authorities of Petitioner.
 

                                                      2
of dispute resolution in which the dispute could be submitted to a “competent tribunal” of the

country “in whose territory the investment was made,” after which the matter could be referred

to arbitration under certain conditions, or the dispute could be submitted directly to international

arbitration.2 Investment Treaty, art. 8(2).

           Also as part of its economic reforms, Argentina enacted several measures in an effort “to

reduce inflation and the public deficit,” including “privatization of certain state[-]owned

companies in many sectors[,] including the gas transportation and distribution industry.” Pet’r’s

Pet. ¶ 15. As part of these efforts, Argentina divided its gas transportation and distribution

industry, Gas del Estado, Sociedad del Estado, into two transportation companies and eight

distribution companies. Id. ¶ 18. BG Group, a United Kingdom company, invested in one of the

eight gas distribution companies, MetroGAS, through a consortium of investors known as Gas

Argentino, S.A. Id. ¶ 20. Eventually, BG Group acquired a 54.67% interest in Gas Argentino,

S.A., which in turn owned 70% of MetroGAS. Id. ¶¶ 20-21.




2
    Article 8(2) of the Investment Treaty provides for recourse to arbitration under the following circumstances:

           (a) if one of the Parties so requests . . .:

                (i) where, after a period of eighteen months has elapsed from the moment when the dispute
                was submitted to [a] competent tribunal of the [country] in whose territory the investment was
                made;

                (ii) where the final decision of the aforementioned tribunal has been made but the Parties are
                still in dispute;

           (b) where the [Parties] have so agreed.

Furthermore, the Investment Treaty provides that “where the dispute is referred to international arbitration,” the
parties “may agree to refer the dispute either to: (a) the International Centre for the Settlement of Investment
Disputes [(the “ICSID”)] . . . or (b) an international arbitrator or ad hoc arbitration tribunal . . . under the Arbitration
Rules of the United Nations Commission on International Trade Law [(the “UNCITRAL Rules”)]. Award at 6
(citing Article 8(3)(a)-(b) of the Treaty). Here, “[b]ecause the [p]arties failed to agree on submission of the dispute
to [the ICSID], [BG Group] submitted the arbitration under [the UNCITRAL Rules].” Id. at 7.
 

                                                             3
         In 2001, after a period of exceptional economic growth, Argentina began to suffer an

economic crisis. Pet’r’s Pet. at 6-7. In its efforts to respond to this predicament, Argentina

enacted an emergency law that took effect on January 6, 2002, which consisted of several

measures that, according to BG Group, negatively impacted its investment in MetroGAS. Id.;

Respt’t’s Cross-Mot. at 2. As a result, BG Group initiated international arbitration proceedings

on April 25, 2003, under Article 8 of the Investment Treaty,3 Respt’t’s Cross-Mot. at 2; Pet’r’s

Pet. ¶ 6, arguing that Argentina’s promulgation of these emergency measures violated Article 5

of the Investment Treaty “by expropriating BG[ Group’s] . . . shareholding in GASA and

MetroGas and, alternatively, . . . [its] rights under or related to the MetroGAS License,” Award ¶

85(a), as well as Article 2(2) of Investment Treaty “by failing to provide BG[ Group] fair and

equitable treatment and protection and security, . . . by taking unreasonable and discriminatory

measures, [and] by failing to observe obligations entered into with regard to BG[ Group’s]

Investments,” id. ¶ 85(b).

         An arbitral panel commenced proceedings in New York and Washington, D.C. beginning

in July of 2006. Pet’r’s Pet. ¶ 4. On December 24, 2007, the arbitral panel issued a decision in

which it rejected BG Group’s contention that Argentina breached Section 5 of the Investment

Treaty, Award ¶ 269, concluding that there had been no expropriation of BG Group’s investment

in MetroGAS because “the impact of Argentina’s measures [was] not . . . permanent on the value

of BG[ Group’s] shareholding in MetroGAS,” and that “MetroGAS’[s] business never halted,

continues to operate, and has an asset base which is recovering,” id. ¶ 270. The panel concluded,

however, that Argentina breached Article 2(2) of the Investment Treaty by “fundamentally


3
 Over 25 foreign investors initiated arbitration against Argentina claiming violation of bilateral investment treaties
as a result of the emergency law’s impact. Respt’t’s Opp’n at 2.
 

                                                          4
modif[ying] the investment [r]egulatory [f]ramework,” id. ¶ 310, and “unilaterally

withdr[a]w[ing] commitments which induced BG [Group] to make its investment in Argentina,”

id. ¶ 343.

        With regards to assessing the amount of damages owed by Argentina for its breach of

Article 2(2), the arbitral panel applied the standard for reparations set forth in Case Concerning

the Factory at Charzow (Ger. v. Pol.), 1928 P.C.I.J. (ser. A) No. 17, see Award ¶ 429, which held

that a party injured by a “breach of engagement” was entitled to “reparation [that], as far as

possible, [would] wipe out all the consequences of the illegal act and reestablish the situation

which would, in all probability, have existed if the act had not been committed,” id. ¶ 425.

Applied to this case, the arbitral panel concluded that BG Group was entitled to damages

equivalent to the fair market value of its “investment in MetroGAS immediately before and after

promulgation of the [emergency measures],” id. ¶ 438; see also id. ¶ 443 (calculating damages

based on the difference between the fair market value of BG Group’s investment prior to

enactment of the emergency measures and the value of the investment while the measures were

in place). On this point, BG Group presented an expert witness, John Wood-Collins, who

concluded that the value of BG Group’s investment prior to the enactment of the emergency

measures was $239,400,000, while the value of the investment after the measures were

implemented was $1,300,000. Id. ¶ 438. Mr. Wood-Collins’s position, therefore, was that BG

Group was entitled to $238,100,000 in damages. Id.

        The arbitral panel rejected Mr. Wood-Collin’s figures, concluding that his findings led

“to a result [that] is uncertain and speculative.” Id. ¶ 439. The panel then calculated the

damages in this case by relying on two transactions involving the sale of shares in MetroGAS

and Gas Argentino, S.A. Id. ¶ 443. First, the panel reviewed a transaction that took place after



                                                5
the promulgation of the emergency measures, in which BG Group relinquished part of its interest

in MetroGAS (through Gas Argentino, S.A.) in exchange for a debt write-off, and concluded that

the value of BG Group’s investment at that time was $91,825.244.15. Id. ¶ 440. Second, the

panel analyzed a transaction in which the sale of a minority stake in Gas Argentino, S.A.,

reflected a value of $277,110,730 for BG Group’s shares in MetroGAS.                     Id. ¶¶ 441-42.

Considering the difference between these two values, the arbitral panel concluded that the

damage to BG Group’s investment as a result of Argentina’s breach of Article 2(2) was

$185,285,485.85. Id. ¶ 443. The arbitral panel also concluded that BG Group was entitled to

interest, id. ¶ 467(5), costs for the arbitration, id. ¶ 467(6), and attorneys’ fees, id. ¶ 467(7).

        On March 21, 2008, Argentina filed in this Court its petition to vacate or modify the

Award under 9 U.S.C. §§ 10-11 and Article V(1)(e) of the New York Convention, see Pet’r’s

Pet. ¶¶ 3-5 (relying on the FAA and New York Convention to vacate or modify the Award), to

which BG Group responded with its own motion to have the Award confirmed pursuant to 9

U.S.C. § 9 and Article IV of the Convention, Resp’t’s Cross-Mot. at 36. On June 7, 2010, this

Court issued a memorandum opinion and order denying Argentina’s petition to vacate the

Award. Republic of Argentina, 715 F. Supp. 2d at 126-27. Specifically, the Court rejected

Argentina’s arguments that “the arbitral panel exceeded its authority under the Investment

Treaty,” that “the arbitral panel acted ‘in manifest disregard of the law,’” that “there was ‘evident

partiality or corruption’ on the part of one of the arbitrators on the panel,” that “the Award was

procured through corruption, fraud, or undue means,” and that “the Award is disproportionate,

unfair, and irrational.” Id. at 121. As to BG Group’s cross-motion to confirm the Award, the

Court noted that Argentina did not set forth its reasons as to why confirmation should be denied;

rather, Argentina expressly reserved weighing in on the matter pending further briefing on the



                                                    6
issue “‘considering the serious violations of public policy’ allegedly committed by the arbitral

panel.” Id. at 126 (quoting Pet’r’s Reply at 22). Despite the fact “that Argentina could have

(and should have) set forth . . . the basis for [denying confirmation] on public policy grounds,”

the Court granted Argentina leave to file a supplemental memorandum on the issue of whether

the Court should deny confirmation of the Award under Article V(2)(b) of the New York

Convention.4 Id.

         Argentina then filed its supplemental memorandum in support of denying confirmation of

the Award on June 30, 2010, relying on Article V(1)(c) of the New York Convention, which

states that the Court may deny recognition of an arbitral award “when the award deals with a

difference . . . not falling within the terms of the submission to arbitration,” in addition to Article

V(2)(b). Specifically, Argentina asserts that (1) “[t]he [a]rbitral [t]ribunal exceeded its powers in

permitting BG [Group] to arbitrate its claims in blatant disregard of the [p]arties’ agreement to

arbitrate,” Pet’r’s 3d Supp. Mem. at 12; (2) the arbitral panel’s decision to allow BG Group to

bring a claim for “alleged damages suffered . . . by . . . MetroGAS [] in which BG [Group] held .

. . shares,” id. at 13, “is contrary to the public policy of the United States,” id. at 16; and (3) the

arbitral panel’s reliance on a 1998 transaction in determining the fair market value of MetroGAS


4 In its prior opinion, the Court imprecisely framed the present issue as “whether vacatur is appropriate under Article
V(b)(2) of the New York Convention,” Republic of Argentina, 715 F. Supp. 2d at 126, rather than whether the Court
should confirm the Award. A proceeding to vacate or modify an arbitral award is distinguishable from one to
confirm an award; in point of fact, the purpose of a proceeding to vacate an arbitral award, which can only be held in
“the country in which, or under the [arbitration] law of which, [an] award is made,” is to render the award
unenforceable in any other nation that is a party to the New York Convention, see TermoRio S.A. E.S.P. v.
Electranta S.P., 487 F.3d 928, 935-36 (D.C. Cir. 2007) (quoting New York Convention, art. V(1)(e)) (concluding
that a “principal precept of the New York Convention” is that “an arbitration award does not exist to be enforced in
other Contracting States if it has been lawfully ‘set aside’ by a competent authority in [the country in] which the
award was made”), while a proceeding to confirm an award, which can be held in any other signatory state to the
New York Convention, concerns whether an arbitral award—even one that has not been ‘set aside’ by a competent
authority—should nonetheless be enforced in that particular state, see Karaha Bodas Co. v. Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274, 287 (5th Cir. 2004) (observing that the issue
confronting countries “where recognition and enforcement are sought” is “whether that state should enforce the
arbitral award”). 


                                                          7
in 2001, see id. at 18, is an excessive use of its powers and, moreover, contravenes settled United

States public policy because the calculation of actual damages must take into account the injury

“suffered as of the time of the wrongful act or the taking []of property[],” id. at 22. Additionally,

Argentina argued at the September 28, 2010 hearing that the arbitral panel’s decision to arbitrate

BG Group’s claims also violated the public policy of the United States. See Tr. 8:20-21:15,

Sept. 28, 2010.

       Not surprisingly, BG Group urges the Court to reject all of these arguments. BG Group

asserts that Argentina’s attack on the Award as having been made in excess of the arbitral

panel’s authority “have already been dismissed by the Court,” Resp’t’s 4th Supp. Mem. at 3. As

for Argentina’s public policy arguments, BG Group contends that Argentina’s position is

unmeritorious because it has failed to identify any fundamental public policy that implicates

“this country’s ‘most basic notions of morality and justice.’” Id. at 7.

                                       II. Standard of Review

       Pursuant to 9 U.S.C. § 207, the Court is required to “confirm the award unless it finds

one of the grounds for refusal or deferral of recognition or enforcement of the award specified in

the [New York] Convention.” Those specified grounds can be found under Article V of the

Convention. Specifically, Article V(1) authorizes the Court to deny confirmation of the arbitral

award under the following circumstances:

       (a) The parties to the agreement . . . were, under the law applicable to them, under
           some incapacity, or the said agreement is not valid under the law to which the
           parties have subjected it or, failing any indication thereon, under the law of
           the country where the award was made; or

       (b) The party against whom the award is invoked was not given proper notice of
           the appointment of the arbitrator or of the arbitration proceedings or was
           otherwise unable to present his case; or




                                                 8
       (c) The award deals with a difference not contemplated by or not falling within
           the terms of the submission to arbitration, or it contains decisions on matters
           beyond the scope of the submission to arbitration, provided that, if the
           decisions on matters submitted to arbitration can be separated from those not
           so submitted, that part of the award which contains decisions on matters
           submitted to arbitration may be recognized and enforced; or

       (d) The composition of the arbitral authority or the arbitral procedure was not in
           accordance with the agreement of the parties, or, failing such agreement, was
           not in accordance with the law of the country where the arbitration took place;
           or

       (e) The award has not yet become binding on the parties, or has been set aside or
           suspended by a competent authority of the country in which, or under the law
           of which, that award was made.

Furthermore, Article V(2) of the Convention provides the Court with two additional grounds for

denying recognition of an arbitral award:

       (a) The subject matter of the difference is not capable of settlement by arbitration
           under [United States] law . . . ; or

       (b) The recognition or enforcement of the award would be contrary to the public
           policy of [the United States].

As one federal circuit court has observed, “[t]here is now considerable case[]law holding that . . .

the grounds for relief enumerated in Article V of the Convention are the only grounds available

for [denying recognition or enforcement] of a [foreign] arbitral award.” Yusef Ahmed Alghanim

& Sons v. Toys “R” Us, Inc., 126 F.3d 15, 20 (2d Cir. 1997) (emphasis added) (citing M & C

Corp. v. Erwin Behr GmbH & Co., KG, 87 F.3d 844, 851 (6th Cir. 1996); Int’l Standard Elec.

Corp. v. Bridas Sociedad Anonima Petrolera, Industrial Y Comercial, 745 F. Supp. 172, 181-82

(S.D.N.Y. 1990); Brandeis Intsel Ltd. v. Calabrian Chems Corp., 656 F. Supp. 160, 167

(S.D.N.Y. 1987); and Albert Jan van den Berg, The New York Arbitration Convention of 1958:

Towards a Uniform Judicial Interpretation 265 (1981)); see also TermoRio, 487 F.3d at 935

(D.C. Cir. 2007) (quoting Yusuf, 126 F.3d at 23) (concluding that where an enforcement action



                                                 9
is brought in a jurisdiction outside of where the arbitral award was rendered, “the state may

refuse to enforce the award only on the grounds explicitly set forth in Article V of the

Convention”).      Given that the New York Convention provides only several narrow

circumstances when a court may deny confirmation of an arbitral award, confirmation

proceedings are generally summary in nature. See, e.g., Zeiler v. Deitsch, 500 F.3d 157, 169 (2d

Cir. 2007) (“Confirmation under the Convention is a summary proceeding in nature, which is not

intended to involve complex factual determinations, other than a determination of the limited

statutory conditions for confirmation or grounds for refusal to confirm.”). “[T]he showing

required to avoid summary confirmation is high,” Ottley v. Schwartzberg, 819 F.2d 373, 376 (2d

Cir. 1987), and the burden of establishing the requisite factual predicate to deny confirmation of

an arbitral award rests with the party resisting confirmation, Imperial Ethiopian Gov’t v. Baruch-

Foster Corp., 535 F.2d 334, 336 (5th Cir. 1976); see also New York Convention, art. V

(“Recognition and enforcement of the award may be refused, at the request of the party against

whom it is invoked, only if that party furnishes [proof] to the competent authority where the

recognition and enforcement is sought . . . .”).

       The Court also must remain mindful of the principle that “judicial review of arbitral

awards is extremely limited,” and that this Court “do[es] not sit to hear claims of factual or legal

error by an arbitrator” in the same manner that an appeals court would review the decision of a

lower court. Teamsters Local Union No. 61 v. United Parcel Serv., Inc., 272 F.3d 600, 604

(D.C. Cir. 2001) (quoting Kanuth v. Prescott, Ball & Turben, Inc., 949 F.2d 1175, 1178 (D.C.

Cir. 1991)). In fact, careful scrutiny of an arbitrator’s decision would frustrate the FAA’s

“emphatic federal policy in favor of arbitral dispute resolution,” Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985) (internal citation omitted)—a policy



                                                   10
that “applies with special force in the field of international commerce,” id.—by “undermining

the goals of arbitration, namely, settling disputes efficiently and avoiding lengthy and expensive

litigation,” LaPrade v. Kidder, Peabody & Co., 94 F. Supp. 2d 2, 4-5 (D.D.C. 2000) (Sullivan,

J.), aff’d 246 F.3d 702 (D.C. Cir. 2001). Instead, “a court must confirm an arbitration award

where some colorable support for the award can be gleaned from the record.” Id.

                                          III. Legal Analysis

       As the Court noted in its prior memorandum opinion, “[t]he remaining question in this

matter . . . is whether the Court should grant BG Group’s cross-motion to confirm the Award.”

Republic of Argentina, 715 F. Supp. 2d at 126. Argentina argues that the Award should not be

confirmed by the Court because (1) the arbitral panel “completely disregard[ed] the terms of the

parties’ agreement to submit to arbitration,” Pet’r’s 3d Supp. Mem. at 6; (2) the arbitral panel

improperly allowed BG Group to present a “derivative” claim in contravention of United States

and international law, see id. at 13-14; and (3) the arbitral panel improperly held Argentina

“liable to pay compensation for the consequences of an economic crisis,” id. at 17. As to the

first and third issues, Argentina argues that the arbitral panel exceeded its powers in reaching the

conclusions that it did, see id. at 12, 22, and that as to all three issues, Argentina contends that

recognition of the Award, given these alleged errors, would be contrary to the well-settled public

policy of the United States, see id. at 16, 18; Tr. 8:20-21:15, Sept. 28, 2010.

       As an initial matter, the Court has serious doubts about whether Article V(1)(c) of the

New York Convention authorizes this Court to deny confirmation of the Award on the ground

that the arbitral panel exceeded its powers. Unlike Section 10(a)(4) of the FAA, which states

that an award may be vacated “where the arbitrators exceeded their powers,” Article V(1)(c) is

not so broad; rather, Article V(1)(c) authorizes the Court to deny confirmation of an award if



                                                 11
“[t]he award deals with a difference not contemplated by or not falling within the terms of the

submission to arbitration, or it contains decisions on matters beyond the scope of the submission

to arbitration.” See also Parsons & Whittemore Overseas Co. v. Societe Generale de L’Industrie

du Papier, 508 F.2d 969, 976 (2d Cir. 1974) (recognizing that Article V(1)(c) “tracks in more

detailed form [Section] 10(d) of the Federal Arbitration Act . . . which authorizes vacating an

award ‘where the arbitrators exceeded their powers’” (emphasis added));5 Mgmt. & Technical

Consultants S.A. v. Parsons-Jurden Int’l Corp., 820 F.2d 1531, 1534 (9th Cir. 1987) (“[I]t is

generally recognized that the [New York] Convention tracks the Federal Arbitration Act.”

(internal citation omitted)).         Put differently, a situation where an arbitrator “deals with a

difference not contemplated by or not falling within the terms of the submission to arbitration,”

New York Convention, art. V(1)(c), is just one “detailed” example of a broader category of acts

that can be considered an excessive use of power by an arbitrator under Section 10(a)(4) of the

FAA.      But arguably, it is only that specific scenario, not other actions that would be

encompassed under Section 10(a)(4), that is covered under the New York Convention. Indeed,

where an arbitral award is issued by an arbitrator who exceeds his powers by acting in “manifest

disregard of the law,” see Comedy Club, Inc. v. Improv West Assocs., 553 F.3d 1277, 1281 (9th

Cir. 2009) (“[A]n arbitrator’s manifest disregard of the law remains a valid ground for vacatur of

an arbitration award under [Section] 10(a)(4) of the [FAA].”),6 at least one other court has found


5
  Section 10(d) of the FAA was re-designated as Section 10(a)(4) in 1990. See, e.g., S. Rep. No. 101-543, at 24
(1990).
 
6
  In Hall Street Associates LLC v Mattel, Inc., 552 U.S. 576 (2008), the Supreme Court called into question the
continuing viability of the “manifest disregard of the law” standard as a non-statutory basis for vacatur of an arbitral
award. See id. at 584 (concluding that Sections 10(a) and 11 of the FAA “provide the . . . exclusive grounds for
expedited vacatur and modification” of an arbitral award); Stolt-Nielsen S.A. v. Animalfeeds Int’l Corp., ___ U.S.
___, ___, 130 S. Ct. 1758, 1768 n.3 (2010) (declining to decide whether the “manifest disregard of the law” standard
survived Hall Street Associates). While the Ninth Circuit has continued to recognize the “manifest disregard of the
law” standard after Hall Street Associates, see Comedy Club, 553 F.3d at 1281, the District of Columbia Circuit has
                                                                                                       (continued . . .)

                                                          12
that such an award cannot be denied confirmation under Article V of the Convention,7 see M &

C Corp., 87 F.3d at 851 (concluding that “Article V of the [New York] Convention lists the

exclusive grounds justifying refusal to recognize an arbitral award,” and that “[t]hose grounds . .

. do not include . . . manifest disregard of the law”). Thus, the plain language of Article V(1)(c)

does not appear to have the far reach that Argentina desires.

         Nonetheless, the Court need not conclusively decide whether Article V(1)(c) allows the

Court to deny recognition of an arbitral award in every instance where an arbitration panel (or an

individual arbitrator) exceeds its powers, because even assuming that Article V(1)(c) can be

interpreted so broadly, the Court already concluded in its earlier memorandum opinion in this

case that the arbitral panel did not exceed its powers during the course of the arbitration that is

the subject of this case. See Republic of Argentina, 715 F. Supp. 2d at 121. While the Court

previously examined the arbitral panel’s exercise of power in the context of whether the Award

should be vacated under Section 10(a)(4) of the FAA, see, e.g., id. at 121 (“Argentina asserts that

the Court must vacate the Award under Section 10(a)(4) because, inter alia, the arbitral panel

improperly ‘permit[ed] BG [Group] to arbitrate its claims’ before seeking recourse in the

Argentine courts[,] . . . and . . . that the arbitral panel wrongfully rejected ‘the discounted cash

flow method’ in calculating the amount of the Award” (internal citations omitted)), the fact that

Argentina now relies on Article V(1)(c) of the New York Convention makes no difference. The

upshot of the Court’s earlier opinion is that the arbitral panel did not exceed its powers, and that


(. . . continued)
yet to address this issue, see Regnery Pub., Inc. v. Miniter, No. 09-7039, 2010 WL 1169843, at *1 (D.C. Cir. Mar.
17, 2010) (assuming, without deciding, that the “manifest disregard of the law” standard survived Hall Street
Associates).
7
  In fact, this appears to be the exact argument that Argentina is pursuing here—not that the arbitrator resolved a
dispute falling outside the scope of the arbitration, but that the panel deliberately ignored the terms of the Investment
Treaty and applicable principles of international law.  


                                                          13
conclusion has the same legal effect whether Argentina relies on Section 10(a) of the FAA, or

Article V(1)(c) of the New York Convention. And, because Argentina fails to provide any

reason why the Court should revisit its prior ruling, Argentina’s attempt to deny confirmation of

the Award under Article V(1)(c) must be rejected. See Lemmons v. Georgetown Univ. Hosp.,

241 F.R.D. 15, 22 (D.D.C. 2007) (Walton, J.) (quoting Judicial Watch v. Dep’t of Army, 466 F.

Supp. 2d 112, 123 (D.D.C. 2006) (Urbina, J.)) (“[W]here litigants have once battled for the

Court’s decision, they should neither be required, nor without good reason permitted, to battle

for it again.”).

        Turning to the issue of whether recognition of the Award would be contrary to the public

policy of the United States, the Court finds it helpful to review some foundational and relevant

legal principles in this regard. “The public policy defense” under the New York Convention “is

to be construed narrowly [and] applied only where enforcement would violate the forum state’s

most basic notions of morality and justice.” TermoRio, 487 F.3d at 938 (quoting Karaha Bodas

Co., 364 F.3d at 305-06). More specifically, the Court’s authority to deny recognition of an

arbitral award under the New York Convention “is limited to situations where the contract as

interpreted [by the arbitrators] would violate some explicit public policy that is well defined and

dominant, and is to be ascertained by reference to the laws and legal precedents and not from

general considerations of supposed public interests.” Banco de Seguros Del Estado v. Mutual

Marine Office, Inc., 344 F.3d 255, 264 (2d Cir. 2003) (emphasis added and alteration in original)

(quoting United Paperworks Int’l Union v. Misco, Inc., 484 U.S. 29, 43 (1987)). This does not

mean, however, that an arbitral award may be denied confirmation simply because it violates

some statute in existence in the United States. As one court noted:

        All laws, be they procedural or substantive, are founded on strong policy
        considerations. Yet not all laws represent this country’s “most basic notions of

                                                14
       morality and justice.” Were it otherwise, the Convention’s public policy
       exception would eviscerate the very goal of the Convention as a whole—to
       encourage the recognition and enforcement of commercial arbitration agreements.

A. Halcoussis Shipping Ltd. v. Golden Eagle Liberia Ltd., Civil Action No. 88-4500 (MJL),

1989 WL 115941, at *2 (S.D.N.Y. Sept. 27, 1989). Given the public policy defense’s narrow

application, the burden of establishing that an arbitral award is contrary to public policy “is high,

and infrequently met,” Ackermann v. Levine, 788 F.2d 830, 841 (2d Cir. 1986); and “[o]nly in

clear[]cases” should the party seeking to deny confirmation of an arbitral award prevail, Tahan v.

Hodgson, 662 F.2d 862, 866 n.17 (D.C. Cir. 1981); see also Karaha Bodas Co. v. Perusahaan

Pertambangan Minyak Dan, 190 F. Supp. 2d 936, 955 (S.D. Tex. 2001) (“Application of the

public policy exception will succeed in only the narrowest of circumstances . . . .”). With these

principles serving as the Court’s touchstone, the Court turns to each of the contentions raised by

Argentina in both its supplemental memorandum and at the September 28, 2010 hearing.

   A. The Arbitrability of the Dispute

       Argentina argues that the Court should deny confirmation of the arbitral award under

Article V(b)(2) because it did not consent to arbitrate this dispute.            From Argentina’s

perspective, the Court must first “second guess” the arbitral panel’s conclusion that this dispute

was arbitrable, see Tr. 4:11-15, Sept. 28, 2010 (“THE COURT: But why should I question the

[a]rbitration [p]anel’s decision as to its authority to issue the arbitration award? You’re not

suggesting I should second[-]guess that, are you? MR. BOTTINI: Yes, Your Honor, we are

saying that.”), and instead adopt its interpretation that Argentina’s consent to arbitrate this

dispute rested on the condition that “the dispute had to be submitted for [eighteen] months to . . .

an Argentine judge,” id. at 5:5-7, id. at 7:15-18. Then, Argentina urges the Court to find that

because this condition was not met, it therefore did not consent to arbitrate this dispute, and thus



                                                 15
enforcement of the Award would contravene the principle that “arbitration of a particular

dispute” is to occur only when “the parties agreed to arbitrate that dispute.” Granite Rock Co. v.

Int’l Brotherhood of Teamsters, ___ U.S. ___, ___, 130 S. Ct. 2847, 2856 (2010); see also Stolt-

Nielsen, ___ U.S. at ___, 130 S. Ct. at 1773 (recognizing “the basic precept that arbitration ‘is a

matter of consent, not coercion’” (quoting Volt Information Sciences, Inc. v. Bd. of Trustees of

Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989)).

         Argentina’s analytical approach is flawed, however. As the authorities cited above

command, the Court is without authority to deviate from the arbitral panel’s interpretation of the

Investment Treaty in determining whether enforcement of the Award would contravene the

public policy of the United States. Rather, the Court must accept as correct the arbitral panel’s

construction of the Investment Treaty in determining whether the agreement violates public

policy. See Banco de Seguros Del Estado, 344 F.3d at 264 (quoting United Paperworks Int’l

Union, 484 U.S. at 43) (holding that the question to be resolved on a challenge under Article

V(2)(b) is whether “the contract as interpreted would violate some explicit public policy”

(emphasis added)); cf. Nat’l R.R. Passenger Corp. v. Consol. Rail Corp., 892 F.2d 1066, 1070

(D.C. Cir. 1990) (quoting W.R. Grace & Co. v. Local Union 759, Int’l Union of the United

Rubber, Cork, Linoleum & Plastic Workers of America, 461 U.S. 757, 766 (1983)) (concluding

in the context of the FAA that it is the duty of the courts to resolve “question[s] of public policy

[that are] implicated under the contract as interpreted” (emphasis added)). Besides, in a case

such as this one, in which Argentina “acknowledge[s] that the [a]rbitral [panel] has the principal

power to rule upon its jurisdiction,”8 Tr. 4:2-3, Sept. 28, 2010, any extensive judicial review of


8
  To be sure, the issue of whether the parties in a dispute “have agreed to submit a particular dispute to arbitration” is
one that is “typically an issue for judicial determination.” Granite Rock, ___ U.S. at ___, 130 S. Ct. at 2855
(internal quotation marks omitted). Only where the record reflects a “clear and unmistakable” intention by the
                                                                                                         (continued . . .)

                                                           16
the panel’s interpretation of the Investment Treaty would be contrary to the Supreme Court’s

ruling in First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995). There, the

Supreme Court observed that where

         the parties agree[d] to submit the arbitrability question . . . to arbitration . . . . then
         the court’s standard for reviewing the arbitrator’s decision about that matter
         should not differ from the standard courts apply when they review any other
         matter that [the] parties have agreed to arbitrate . . . . That is to say, the court
         should give considerable leeway to the arbitrator, setting aside his or her decision
         only in certain narrow circumstances[, e.g., Section 10 of the Federal Arbitration
         Act].

Id. at 943 (citing 9 U.S.C. § 10). In other words, where the parties have conferred upon the

arbitrator the authority to determine whether the dispute is arbitrable, then judicial review of that

decision “is extremely limited,” and this Court is without authority “to hear claims of factual or

legal error by an arbitrator.” Teamsters Local Union No. 61, 272 F.3d at 604 (quoting Kanuth,

949 F.2d at 1178). Thus, it is the arbitral panel’s interpretation of the Investment Treaty, and not

Argentina’s (or this Court’s), that controls the Court’s analysis.

         Accepting, as it must, the arbitral panel’s construction of the Investment Treaty, it is

evident to the Court that Argentina was not compelled to arbitrate this dispute without its

consent, and thus there was no violation of the principle set forth in Granite Rock.9 Here, the

arbitral panel concluded that Article 8(2)(a)(i) of the Investment Treaty, as agreed to by both the

United Kingdom and Argentina, allowed BG Group to submit its claim to arbitration without

(. . . continued)
parties to arbitrate arbitrability would that issue fall outside the reach of the courts. First Options of Chicago, Inc. v.
Kaplan, 514 U.S. 938, 944 (1995). Given Argentina’s concession that the arbitral panel had the authority to rule on
its own jurisdiction, however, the Court need not decide whether “clear and unmistakable evidence” exists in this
case.
 
9
  Consequently, the Court finds it unnecessary to decide whether the issuance of an arbitral award, despite a finding
by an arbitral panel (or individual arbitrator) that one or both of the parties did not consent to the arbitration, is one
that contravenes this country’s “most basic notions of morality and justice.” TermoRio, 487 F.3d at 928 (quoting
Karaha Bodas Co., 364 F.3d at 305-06).
 

                                                           17
first seeking recourse before the Argentine courts. See Award ¶ 157 (“The Tribunal . . . finds

admissible the claims brought by BG [Group] in this arbitration . . . .”). Although the arbitral

panel acknowledged that Article 8(2)(a)(i) requires claimants, as a general matter, to “litigate in

the [Argentine] courts for [eighteen] months before they can bring their claims to arbitration,” id.

¶ 146, it found that “[a]s a matter of treaty interpretation, . . . Article 8(2)(a)(i) cannot be

construed as an absolute impediment to arbitration,” id. ¶ 147.                           This, the arbitral panel

concluded, is because it must apply both the terms of the “treaty itself, [as well as] the applicable

principles of international law,” id. ¶ 90, and if Article 8(2)(a)(i) were read to require BG Group

to seek relief before the Argentine courts even where Argentina passed measures that were

essentially meant “to bar recourse to the courts,” id. ¶ 148, that “interpretation would lead to the

kind of absurd and unreasonable result proscribed by Article 32 of the Vienna Convention,” id. ¶

147 (emphasis added).10 Thus, the arbitral panel concluded that Article 8(2)(a)(i), when viewed

in light of Article 32’s directive to interpret treaty provisions to avoid an “absurd and

unreasonable result,” did not require recourse to the Argentine Courts for eighteen months as

Argentina had made attempts “to unilaterally elude arbitration.” Id. Based on that interpretation,

therefore, it cannot be said that Argentina’s participation in the arbitration was without its

consent; to the contrary, the arbitral panel concluded that Article 8(2)(a)(i), as agreed to by

Argentina, allows for direct recourse to arbitration. Accordingly, enforcement of the Award does


10
     As the Court noted in Republic of Argentina, 715 F. Supp. 2d at 122:

           Article 32 of the Vienna Convention on the Law of Treaties, to which Argentina is a signatory,
           provides that “[r]ecourse may be had to supplementary means of interpretation” when standard
           means of treaty interpretation would “leave[ ] the meaning [of the provision] ambiguous or
           obscure[,] or ... lead[ ] to a result which is manifestly absurd or unreasonable.” The arbitral panel
           was authorized, if not compelled, to resort to sources of international law in construing Article
           8(2)(a)(i) of the Investment Treaty. See Investment Treaty, art. 8(4) (requiring “[t]he arbitral
           tribunal [to] decide the dispute in accordance with the provisions of [the Investment Treaty] and
           the applicable principles of international law”). 


                                                           18
not offend the notion that “[a]rbitration is strictly a matter of consent,” Granite Rock, ___ U.S. at

___, 130 S. Ct. 2847, 2857, and thus the Court rejects Argentina’s efforts to prevent confirmation

of the Award on this basis.

    B. BG Group’s “Derivative” Claims

        Next, Argentina argues that the arbitral panel’s decision to allow BG Group to directly

proceed against Argentina on a “derivative claim[] . . . is contrary to the public policy of the

United States of America.” Pet’r’s Supp. Mem. at 16. Specifically, Argentina asserts that it was

MetroGAS that directly suffered harm as a result of the various measures enacted in 2002, id. at

13, and that any damages suffered by BG Group were limited to the decrease in the value of its

shares in Gas Argentino, S.A. and MetroGAS, id. at 12. Argentina further contends that it is

well-established in both international and United States jurisprudence that “a shareholder does

not have an individual cause of action against third parties for wrongs or injuries to the

corporation in which he or she holds stock,” id. at 14, and that the adjudication of this claim by

the arbitral panel, therefore, violates this principle, id. at 16.

        The Court agrees with Argentina that, as a general matter, a shareholder cannot “maintain

a direct action when the alleged injury is inflicted on the corporation and the only injury to the

shareholder is the indirect harm which consists of the diminution in the value of his or her

shares.” Lapidus v. Hecht, 232 F.3d 679, 683 (9th Cir. 2000); see also Labovitz v. Washington

Times Corp., 172 F.3d 897, 902 (D.C. Cir. 1999) (recognizing the “general principle[] of

corporate law” that a shareholder “cannot recover on account of injury done to the corporation”

(internal quotation marks omitted)). But what Argentina fails to recognize is that there are

numerous exceptions to this rule, including where “a special contractual duty exists.” Nocula v.

UGS Corp., 520 F.3d 719, 726 (7th Cir. 2008); see also Oliver v. Sealaska Corp., 192 F.3d 1220,



                                                    19
1226 (9th Cir. 1999) (recognizing that a direct action can be maintained by a shareholder where,

inter alia, “there is a special duty, such as a contractual duty”). Moreover, such a duty can be

owed to a third-party beneficiary to a contract, so long as “the contract not only reflects the

express or implied intention to benefit the party, but that it reflects an intention to benefit the

party directly.”11 Glass v. United States, 258 F.3d 1349, 1354 (Fed. Cir. 2001).

         These principles, when applied to the facts of this case, refute Argentina’s argument that

BG Group could not bring a direct action against it under the Investment Treaty. There is no

question that Argentina, as a “contracting party,” directly owed BG Group, an “investor,” the

duty under the Investment Treaty to refrain from enacting “unreasonable or discriminatory

measures” that would “impair . . . the management, maintenance, use, enjoyment, or disposal of

investments in its territory.”12 Investment Treaty, art. 2(2). BG Group is, therefore, a third-party

beneficiary under the Investment Treaty,13 and the arbitral panel’s decision to entertain BG


11
   The principles detailed in these cases are applicable in the present case because the Investment Treaty is at its very
essence a contractual agreement between Argentina and the United Kingdom. See, e.g., Trans World Airlines, Inc.
v. Franklin Mint Corp., 466 U.S. 243, 253 (1984) (“A treaty is in the nature of a contract between nations”).

12
   In fact, Argentina owed BG Group a litany of other duties under the Investment Treaty. See Investment Treaty,
art. 2(1) (“Each Contracting Party shall encourage and create favourable conditions for investors of the other
Contracting Party to invest capital in its territory, and . . . shall admit such capital.”); id., art. 3(1) (“Neither
Contracting Party shall in its territory subject investments or returns of investors of the other Contracting Party to
treatment less favourable than which it accords to investments or returns of its own investors or to investments or
returns of investors of any third State.”); id., art. 3(2) (“Neither Contracting Party shall in its territory subject
investors of the other Contracting Party, as regards their management, maintenance, use, enjoyment[,] or disposal of
their investments, to treatment less favourable than that which it accords to its own investors or to investors of any
third State.”); id., art. 4 (“Investors of one Contracting Party whose investments in the territory of the other
Contracting Party suffer losses owing to . . . a state of national emergency . . . shall be accorded by the latter
Contracting Party treatment . . . no less favourable than that which the latter Contracting Party accords to its own
investors or to investors of any third State.”); id., art. 5(1) (“Investments of investors of either Contracting Party
shall not be nationalised, expropriated[,] or subjected to measures having [the same] effect . . . in the territory of the
other Contracting Party except for a public purpose related to the internal needs of that Contracting Party on a non-
discriminatory basis,” and in such cases the investor “shall have a right . . . to prompt review[] by a judicial or other
independent authority of that Contracting Party.”); id., art. 6(1) (“Each Contracting Party shall in respect of
investments guarantee to investors of the other Contracting Party the unrestricted transfer of their investments and
returns to the country where they reside.”).
13
   Although BG Group was not explicitly identified in the Investment Treaty as a beneficiary of the agreement, that
is of no moment here. See, e.g., Synovus Bank of Tampa Bay v. Valley Nat’l Bank, 487 F. Supp. 2d 360, 368
                                                                                                    (continued . . .)

                                                           20
Group’s direct action against Argentina for enacting “unreasonable [and] discriminatory

measures” that “impair[ed]” BG Group’s investment, Investment Treaty, art. 2(2); Award ¶ 413,

is consistent with, rather than contrary to, well-settled principles of American jurisprudence.14

As a consequence, the Court rejects Argentina’s “derivative claim” argument.

     C. The Arbitral Panel’s Damages Assessment

        Finally, Argentina asserts that the arbitral panel’s assessment of damages in this case is

contrary to the public policy of the United States. Pet’r’s 3d Supp. Mem. at 17. It is important

to note here that, as far as the Court can tell, Argentina does not dispute the general rule applied

by the arbitral panel in assessing the award of damages in this case, to wit, the difference in the

value of BG Group’s “investment in MetroGAS immediately before and after promulgation of

the [emergency measures],” Award ¶ 438; see also id. ¶ 443 (calculating damages based on the

difference between the value of BG Group’s investment prior to enactment of the emergency

measures and the value of the investment after Argentina’s measures were in place). What

Argentina does take issue with is what it believes to be the arbitral panel’s failure to assess the

fair market value of BG Group’s shares in MetroGAS as of the date when the emergency

measures went into effect, Pet’r’s 3d Supp. Mem. at 22, which was January 6, 2002, Pet’r’s Pet.

at 6-7; Respt’t’s Cross-Mot. at 2. Specifically, Argentina argues that the arbitral panel should

have appraised the value of BG Group’s investment on “the day before the [emergency]

measures” were taken, Tr. 17:7, Sept. 28, 2010, when the Argentine economy had already

(. . . continued)
(S.D.N.Y. 2007) (“While the third-party beneficiary does not have to establish that it is explicitly mentioned in the
contract, New York law requires that the parties’ intent to benefit a third-party be shown on the face of the
contract.”).
 
14
  Because the Court concludes that enforcement of the Award would not violate any general principle of corporate
law recognized by the courts of this country, it need not resolve the question of whether enforcement of an arbitral
award that would contravene this principle would be contrary to this country’s “most basic notions of morality and
justice.” TermoRio, 487 F.3d at 928 (quoting Karaha Bodas Co., 364 F.3d at 305-06). 


                                                        21
collapsed, Pet’r’s 3d Supp. Mem. at 18, instead of assessing “the value of BG[ Group’s] stake in

MetroGAS in 1998 . . . . when the Argentine economy was at its peak,” id. at 18, by relying on

the July 12, 1998 transaction involving the sale of Gas Argentino, S.A. shares, Award ¶ 441.

Argentina asserts that the arbitral panel’s valuation of BG Group’s investment resulted in

Argentina being “held responsible . . . for the effects of the economic crisis it suffered between

1998 and 2001,” and thus the arbitral panel’s ruling conflicts with both the principle that

“[a]ctual pecuniary loss sustained as a direct result of the wrong is the measure to be applied in

fixing damages,” Pet’r’s 3d Supp. at 22 (citing Ainger v. Michigan General Corp., 476 F. Supp.

1209, 1233 (S.D.N.Y. 1979)),15 as well as the Fifth Amendment’s guarantee of entitlement to

only “just compensation” for the taking of property, see Tr. 15:21-25, Sept, 28, 2010 (asserting

that “the guiding principle of just compensation and the [T]akings [C]lause of the Fifth

Amendment is that the owner of the condemned property must be made whole[,] but is entitled

to no more”).

         These arguments are without merit. For starters, Argentina distorts the arbitral panel’s

reliance on the 1998 transaction. At the onset of its analysis regarding Mr. Wood-Collins’s

damages assessment, the arbitral panel observed that he

         a) assessed the loss in the fair market value of BG[ Group’s] investment in
         MetroGAS as [of] January 2002; [and]

         b) adjusted the result of (a) above to account for the part of the loss which might
         be borne by the creditors of [Gas Argentino, S.A.] and calculated BG[ Group’s]
         “historical loss” for the period of January 2002 to December 2005.


15
   Argentina also cites American Fire & Casualty Co. v. Finn, 341 U.S. 6 (1951), as standing for the proposition that
“[a]ctual pecuniary loss sustained as a direct result of the wrong is the measure to be applied in fixing damages.”
Pet’r’s 3d Supp. at 22. The case, however, has little, if anything, to do with the appropriate standard to be applied in
calculating damages. Rather, the issue confronting the Supreme Court in Finn was to determine what is “the proper
federal rule to be followed on a motion by a defendant to vacate a United States District Court judgment, obtained
by a plaintiff after removal from a state court by [a] defendant, and to remand the suit to state court.” Finn, 341 U.S.
at 7. 


                                                          22
Award ¶ 430. At no point in its analysis, however, did the arbitral panel take issue with Mr.

Wood-Collins’s conclusion that January 1, 2002, should be the starting point for measuring the

loss in BG Group’s investment. Award ¶ 438. Rather, the only concern expressed by the arbitral

panel regarding Mr. Wood-Collin’s assessment of the fair market value of BG Group’s

investment was that his figures were “uncertain and speculative.”          Id. ¶ 439.    The panel

concluded that the more “objective indication of the value of BG[ Group’s] investment,” id. ¶

440, were actual transactions that reflected MetroGAS’s fair market value, id. ¶ 443 (noting that

the arbitral panel’s calculation of damages was “based on actual transactions”) (emphasis

added)); specifically, the cancellation of debt totaling $38,200,000 “in exchange for an 18.8%

interest in MetroGAS that took place after the enactment of Argentina’s emergency measures,

see id. (concluding that the “Ashmore/Marathon transaction . . . . provides an objective

indication of the value of BG[ Group’s] investment after the Emergency Law”), and the sale of a

25% interest in Gas Argentino, S.A. for $75,000,000, id. ¶ 442 (concluding that a 1998

transaction involving an interest in MetroGAS “is also a better proxy of the value of BG[

Group’s] investment before promulgation of the Emergency Law”). It is not the case, therefore,

that the arbitral panel found that July 12, 1998, was the appropriate date from which to measure

the damages suffered by BG Group; instead, the panel agreed (albeit implicitly) with Mr. Wood-

Collins that January 1, 2002, was the starting point for calculating the damages in this case, but

in reaching this conclusion, it found that the value of MetroGAS’s shares, as reflected by the July

12, 1998 transaction, was a “better proxy of the value of BG[ Group’s] investment before

promulgation of the [e]mergnecy [l]aw.” Award ¶ 442.

       As a practical matter, this analytical distinction makes little difference because under the

arbitral panel’s calculus, its exclusive reliance on the July 12, 1998 transaction has the result of



                                                23
equating the value of BG Group’s investment in MetroGAS in 1998 with the value of that

investment on January 1, 2002. As a legal matter, however, this distinction is significant. Had

the arbitral panel concluded that July 12, 1998, was the correct starting point to measure the

damages suffered by BG Group, even though the act that caused the injury—the promulgation of

the emergency law—occurred on January 1, 2002, then Argentina would have a colorable

argument that it is being held accountable for something more than just “the actual pecuniary

loss sustained as a direct result of the wrong.” Ainger, 476 F. Supp. at 1233. But, because the

arbitral panel measured the fair market value of BG Group’s investment in MetroGAS as of

January 1, 2002, Argentina’s challenge must not be directed at the date at which the panel

measured the damages, but rather at the fact that the arbitral panel relied on the 1998 transaction

to appraise the fair market value of BG Group’s investment in MetroGAS in 2001. Given that

the employment of the “fair market value” standard “as a measuring device in the workaday

world of business” does not include resorting to “the equivalent of a precise scientific formula,”

McDonald v. Comm’r, 764 F.2d 322, 330 (5th Cir. 1985); see also BMW of North America v.

United States, 39 F. Supp. 2d 445, 447 (D.N.J. 1998) (observing that “the determination of ‘fair

market value’ is not an exact science, and that reasonable persons . . . could reach different

conclusions with respect to . . . ‘fair market value’”); In re Air Vermont, Inc., 41 B.R. 486, 491

(Bankr. D. Vt. 1984) (“It is generally known that determination of the fair market value . . . by

appraisal is not an exact science.”), this value assessment “is necessarily one of fact to be

determined by the evidence,” Crawford v. Helvering, 70 F.2d 744, 745 (D.C. Cir. 1934) (per

curiam).   And, in considering whether enforcement of the Award is contrary to public policy,

the Court is without authority to conduct “an exercise in factfinding,” United Paperworkers Int’l

Union, 484 U.S. at 44, as “[t]he parties did not bargain for the facts to be found by a court, but by



                                                 24
an arbitrator chosen by them,” id. at 45. The Court, therefore, cannot second-guess the arbitral

panel’s reliance on the 1998 transaction in determining the fair market value of BG Group’s

investment in MetroGAS on January 1, 2002, and because the panel appraised the value of the

investment as of the date that Argentina enacted the emergency measures that ultimately caused

monetary harm to BG Group, the Court cannot conclude that enforcement of the Award would

contravene any principle in Ainger.16

        Neither does the Award contravene the principle of “just compensation” as set forth in

the Fifth Amendment. The Takings Clause of the Fifth Amendment “prohibits the government

from taking private property for public use without just compensation.” Palazzolo v. Rhode

Island, 533 U.S. 606, 617 (2001) (emphasis added). For the Court to find that enforcement of the

Award would offend the policy of the “just compensation” mandate of the Fifth Amendment, the

Court would have to conclude (1) that there was a government taking; (2) that the taking was of

private property for public use; and (3) that the taking occurred without providing “just

compensation.” U.S. Const., amend. V. It had been Argentina’s position during the arbitration

proceeding, however, that no government expropriation occurred in this case. See Award ¶ 252

(“Argentina denied that any expropriation under Article 5 of the [Investment Treaty] has

occurred.”). Indeed, the arbitral panel sided with Argentina on this point, reasoning that “the

impact of Argentina’s measures has not been permanent on the value of BG[ Group’s]

shareholding in MetroGAS,” as the “business never halted, continues to operate, and has an asset

base which is recovering.” Award ¶ 270. Thus, enforcement of the Award cannot be said to be


16
  Finding no inconsistency between the arbitral panel’s ruling and the principles set forth in Ainger, the Court need
not resolve the question of whether an arbitral award that imposes damages in excess of actual pecuniary loss would
be contrary to this country’s “most basic notions of morality and justice.” TermoRio, 487 F.3d at 928 (quoting
Karaha Bodas Co., 364 F.3d at 305-06).
 

                                                        25
contrary to the Takings Clause when, as Argentina successfully demonstrated in the arbitration,

there had been no improper government expropriation of BG Group’s investment.17

        To the extent Argentina is asserting that the arbitral panel’s issuance of the Award itself

violates the Takings Clause and contravenes the public policy of the United States, that position

is also without merit. Of course, the arbitral panel is not an arm of any government, and thus any

decision rendered by it could not constitute a “government taking.” But even assuming that the

arbitral panel, as a quasi-judicial body, see, e.g., Portland Gen. Elec. Co. v. U.S. Bank Trust

Nat’l Assoc., 218 F.3d 1085, 1090 (9th Cir. 2000) (observing that an “arbitrator plays a quasi-

judicial role” in conducting an arbitration), could be viewed as a governmental entity, the

Supreme Court noted in Stop the Beach Renourishment, Inc. v. Florida Dep’t of Environmental

Protection, ___ U.S. ___, ___, 130 S. Ct. 2592, 2604 (2010), that no clear standard exists for

what constitutes a “judicial taking, or indeed whether such a thing as a judicial taking even

exists.” It cannot be said, therefore, that the arbitral panel’s issuance of the Award was an act

that “violate[d] some explicit public policy that is well defined and dominant.” Banco de

Seguros Del Estado, 344 F.3d at 264 (quoting United Paperworkers Int’l Union, 484 U.S. at 43)

(emphasis added). Accordingly, if Argentina’s position is that the issuance of the Award itself

offends the Takings Clause and precludes confirmation of the Award, that argument also fails.

                                                IV. Conclusion

        “A judgment is unenforceable as against public policy to the extent that it is ‘repugnant to

fundamental notions of what is decent and just in the State where enforcement is sought.’”

Ackermann, 788 F.2d at 841 (quoting Tahan, 662 F.2d at 864). Argentina’s attempts to convince

17
  The Court takes no position on whether enforcement of an arbitral award that fails to comport with the Takings
Clause would contravene this country’s “most basic notions of morality and justice.” TermoRio, 487 F.3d at 928
(quoting Karaha Bodas Co., 364 F.3d at 305-06).
 

                                                      26
the Court to deny confirmation of the Award fall exceedingly short of this standard. Indeed,

Argentina failed to establish that the arbitral panel’s interpretations of the Investment Treaty

contravened any well-settled law or case precedent, let alone that its rulings were contrary to a

principle so inextricably woven into the fabric of American jurisprudence to warrant this Court’s

intervention. Having failed to meet “the showing required to avoid summary confirmation,”

Ottley, 819 F.2d at 376, the Court concludes that the Award must be confirmed, and that BG

Group is entitled to damages of $185,285,485.85, along with interest, costs for the arbitration,

and attorneys’ fees.18

        SO ORDERED on this 21st day of January, 2011.19

                                                                       REGGIE B. WALTON
                                                                       United States District Judge




18
  According to BG Group’s calculation, the total award including interest and attorneys’ fees as of July 2010, was
$233,344,409.91. Resp’t’s 4th Supp. Mem., Ex. 1 (July 21, 2010 Declaration of Elliot Friedman) Ex. A.
Presumably, BG Group will seek an award of interest that will include the time period between July 2010, and the
date of the final order confirming the Award. The parties, therefore, shall appear before the Court for a hearing at
2:00 p.m. on February 3, 2011, for the purpose of determining the appropriate amount of interest payments owed by
Argentina to BG Group as of the date of the hearing. An order to this effect will be issued contemporaneously with
the issuance of this memorandum opinion. 
 
19
  A final order will be issued at the conclusion of the February 3, 2011 hearing (1) granting BG Group’s cross-
motion to confirm the Award; (2) entering final judgment in favor of BG Group and against the Republic of
Argentina in the amount of $185,285,485.85, plus an amount of interest to be determined at the February 3, 2011
hearing.   


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