On Tuesday a unanimous federal appellate panel threw out a $185 million arbitration award that global energy company BG Group Plc won against the government of Argentina five years ago. BG Group, which is based in the United Kingdom, claimed that Argentina’s freeze on natural gas prices during its economic crisis of the early 2000s triggered the bankruptcy of Metrogas SA, an Argentine gas distributor in which BG Group owned a controlling stake.

Starting in 2003, BG Group pursued its claim against Argentina in arbitration, and in 2007 an arbitration panel in Washington, D.C., ruled in the company’s favor. In a January 2011 decision, D.C. federal district court judge Reggie Walton upheld the arbitration award. But a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit overturned Walton’s decision in its Tuesday decision.

D.C. Circuit Judge Judith Rogers wrote that BG Group failed to pursue its claim first in Argentine courts for 18 months, as required by the commercial treaty governing the case. In a decision that was joined by Judges David Sentelle and Karen LeCraft Henderson, Judge Rogers wrote, “The arbitral panel rendered a decision wholly based on outside legal sources and without regard to the contracting parties’ agreement establishing a precondition to arbitration.” Here’s the 17-page opinion from Judge Rogers, and here’s a story on the case from Bloomberg.

BG Group’s lawyer, Alexander Yanos at Freshfields Bruckhaus Deringer, declined to comment when reached at his office Tuesday by phone. A company spokeswoman did not respond to our email.

Gabriel Bottini, the director of national affairs and international disputes in the office of Argentina’s Treasury Solicitor, argued the case for the country before the D.C. Circuit. He was joined in briefing by lawyers at New York’s Gleason & Koatz. John Gleason was out of the office when we called for comment and he did not respond to our email by the time of this post.