In its Decision on Liability (October 3, 2006) and subsequent Award (July 25, 2007), the Tribunal adjudicated claims brought by LG&E Energy Corp. and others against the Argentine Republic arising from the "pesification" and freezing of tariffs in the gas distribution sector following the 2001 economic crisis.

The Tribunal held that Argentina breached the Fair and Equitable Treatment (FET) standard under Article II(2)(a) of the US-Argentina BIT. It concluded that the Respondent dismantled the specialized regulatory framework—including the calculation of tariffs in U.S. dollars and their semi-annual adjustment based on the US Producer Price Index—which had been specifically designed to induce foreign investment. The Tribunal found that these stability guarantees formed the basis of the Claimants' legitimate expectations and that their abrogation constituted a violation of the Treaty.

Regarding the umbrella clause in Article II(2)(c), the Tribunal determined that Argentina's failure to observe specific obligations contained in the gas regulatory framework and the licenses granted to the investment vehicles constituted a treaty breach. While the Tribunal found that the measures were discriminatory, it rejected the Claimants' allegations of arbitrary conduct, noting that the measures were not taken in wilful disregard of due process or for reasons unrelated to the economic crisis. Furthermore, the Tribunal dismissed the claim for indirect expropriation, reasoning that while the value of the investment was impacted, the Claimants remained in control of their assets and the interference did not reach the threshold of being permanent or equivalent to a taking.

A pivotal legal finding concerned the "state of necessity" defense under Article XI of the BIT and customary international law. The Tribunal held that between December 1, 2001, and April 26, 2003, Argentina faced an economic and social crisis of such magnitude that its essential interests were threatened. Consequently, the Respondent was exempted from liability for damages incurred during this specific period. The Tribunal emphasized that Article XI is a "self-precluding" provision that operates as a threshold defense to the treaty’s substantive protections during periods of extreme emergency.

In the final phase of the proceedings, the Tribunal addressed quantum. It applied a methodology focused on the "actual loss" suffered by the Claimants, rather than a full Fair Market Value (FMV) analysis, as the investments were still operational. The Tribunal calculated the difference between the dividends the Claimants would have received had the regulatory framework remained intact and the dividends actually received. After excluding the period of necessity, the Tribunal awarded US$ 57.4 million in compensation, plus compound interest based on U.S. Treasury bills. Each party was ordered to bear its own legal costs and expenses, while the costs of the arbitration were divided equally.