WASHINGTON (CN) - Argentina will not get another shot in the Supreme Court to contest a $185 million arbitration ruling for an energy investor, the justices said Monday.
The dispute stems from a controversial emergency law Argentina enacted after its economy collapsed in 2002, terminating the 1:1 currency parity between the Argentine peso and the U.S. dollar. Emergency law 25,561 also converted dollar-based adjustment clauses in agreements to peso-based adjustment clauses, barred inflation adjustments based on foreign price indices and converted dollar-based tariffs into peso-based tariffs at a rate of one peso to one U.S. dollar.
U.K.-based BG Group said these changes hurt its investment in Gas Argentino, of which it owned 54.67 percent. Gas Argentino owned 70 percent of MetroGas, one of eight distribution companies under the state-owned Gas del Estado.
Though the U.K.'s bilateral investment treaty with Argentina would have compelled BG Group to resolve any dispute with the country in Argentine courts, the treaty also says that arbitration is the next step if no final court ruling is forthcoming within 18 months or if a court ruling failed to resolve the dispute.
Estimating that it would take six years to resolve its claim in the Argentine courts, BG Group filed a notice of arbitration against the South American country in 2003.
An arbitral panel in Washington, D.C., then concluded that it had jurisdiction because Argentina's emergency decrees restricted access to its courts.
Indeed, a literal reading of the treaty would produce an "absurd and unreasonable result," the panel said.
After finding in 2007 that Argentina had violated Article 2 of the treaty, the panel awarded BG Group $185 million, excluding interest, cost and attorneys' fees, for the loss in its investment.
Finding that Argentina had induced BG Group to invest in Gas Argentino in the early 1990s, the panel said Argentina "violated the principles of stability and predictability inherent to the standard of fair and equitable treatment" by dismantling the regulatory scheme that induced the investment.
Though a federal judge ordered enforcement of the award, the D.C. Circuit reversed in January 2012, saying that the applied the wrong review.
After the D.C. Circuit ruled for BG Group on remand, Argentina petitioned the Supreme Court for a writ of certiorari.
The South American nation was denied such relief, without explanation, Monday.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.