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By Brent Kendall
WASHINGTON--The U.S. Supreme Court on Monday agreed to consider an appeal by British energy company BG Group PLC (BRGYY, BG.LN) that seeks to restore a $185 million arbitration award it won against Argentina in 2007.
BG alleged the Argentinean government destroyed its investments in the country's natural-gas distribution sector through a series of state actions during Argentina's 2001-2002 economic crisis.
The company also accused Argentina of threatening businesses with serious penalties if they challenged the emergency actions in the country's courts.
BG chose instead to take its case to an arbitration panel, under rules laid out in a 1999 investment treaty between Argentina and the United Kingdom. The treaty required parties to litigate in Argentina for 18 months before going to arbitration, but BG argued it was excused from that obligation because Argentina had sought to stymie any such lawsuits.
The arbitration panel, based in Washington, awarded BG $185 million after finding Argentina violated the treaty by failing to treat investors fairly.
Argentina then sued in U.S. court and last year persuaded a Washington-based appeals court to throw out BG's arbitration winnings.
The U.S. Court of Appeals for the District of Columbia Circuit ruled the arbitration wasn't valid because BG didn't take its case first to Argentina's courts.
As the case comes to the Supreme Court, the legal question at issue is this: Who gets to decide whether a case can go to arbitration--an arbitrator or a court?
The justices will review the case during the Supreme Court's next term, which begins in October. The high court took the case against the advice of the Obama administration, which urged the court not to get involved.
BG said in a court brief that more than 25 foreign investors have brought similar arbitration cases against Argentina.
Write to Brent Kendall at brent.kendall@dowjones.com.