Repsol informed the Buenos Aires government on Tuesday that it was following through with legal action under the Treaty for Investment Promotion and Protection between Spain and Argentina. Repsol is seeking compensation with the World Bank's International Center for Settlement of Investment Disputes, Reuters reported.
Both sides will know in six months' time if the ICSID will take up the case.
The company and President Cristina Fernandez's government have been at odds with each other since April, following Argentina's expropriation of a majority stake in YPF, Argentina's largest oil company.
Ferandez's government is disputing the amount Repsol should be compensated.
Repsol chairman Antonio Brufau said his company has based its request for compensation on YPF's total value of $18 billion.
Argentina said it nationalized YPF because the Spanish company was not doing enough to develop the country's energy deposits, forcing it to import more oil and gas for its energy needs.
The move was designed to bring the country's resources more firmly under the control of Buenos Aires, but it could have dampened investor willingness to enter the country, according to a report from the International Energy Agency, because it clouds the investment climate for international companies.
In Tuesday trading, Repsol (Madrid: REP) was down six cents to $18.14 a share.