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GAR 100 - 10th Edition

Covington & Burling

06 March 2017

Acting for Ukraine on various cases relating to Russia’s annexation of Crimea

People in Who’s Who Legal 1
Pending cases as counsel 80
Treaty cases approx. 20
Current arbitrator appointments 9 (of which 4 are as sole or chair)
Lawyers sitting as arbitrator 4

In 1919, Covington & Burling represented Norway in the Norwegian Shipowners arbitration with the United States in The Hague, winning the then enormous payout of US$12 million – a case that helped establish the early principles of expropriation and is still taught in law schools today.

The firm has kept up its work in the area into modern times. Indeed, when GAR launched in 2005, Covington was among the few DC players with a strong reputation in commercial and investment arbitration – particularly cases with a Latin American dimension.

The European practice began to take off in 2009 with a pair of significant lateral hires in London: Stephen Bond, former head of White & Case’s arbitration team in Paris, and Gaëtan Verhoosel, a rising star who joined from Debevoise & Plimpton and became practice co-chair in 2011.

However, the past few years have also seen the departure of Verhoosel to Three Crowns and the loss of other senior figures, including well-known arbitrators Oscar Garibaldi and Thomas Johnson, who left for independent practice and the Iran-US Claims Tribunal, respectively.

The practice is now co-chaired by Allan Moore and Marney Cheek, an investment and trade law specialist. Partner Jonathan Gimblett is also highly regarded.

Network

The anchor of the practice is Washington, DC, but the firm has four other offices in the US as well as others in London, Brussels, Beijing, Seoul and Shanghai. Its Asian presence and experience in India and Latin America put Covington in a good position to work on “South-to-South” disputes.

Who uses it?

Besides ExxonMobil, Covington has been arbitration counsel to Occidental Petroleum, Murphy Petroleum, Swedish shipbuilder Kockums, Newmont Mining, Merck, Sumitomo and a group of Spanish investment funds that lost money when the Yukos Oil Company collapsed.

US pharmaceuticals group Eli Lilly is using the firm for a NAFTA claim against Canada concerning the revocation of patents for two drugs.

It has also been acting for Mexican food conglomerate Gruma in a US$500 million claim against Venezuela; and for Egypt in arbitration-related proceedings in the US courts.

A rare state client is Ukraine (and its national gas company Naftogaz) in various investor-state and state-to-state matters arising from Russia’s 2014 annexation of Crimea (see ‘Recent events’). 

Track record

The firm’s long-running work for ExxonMobil against Venezuela has produced some good results. A US$7 billion ICC claim against state oil company PDVSA ended in 2011 with a US$908 million award in Exxon’s favour, which the state satisfied in the following year. A parallel ICSID claim ended in 2014 with an award for Exxon worth US$1.6 billion, though that figure was offset by the sums already paid in the ICC case.

Another ICSID case against Venezuela saw Covington help US-based oil services company Tidewater win US$46 million plus interest in 2015 (it had claimed around US$250 million). The state is trying to have the award annulled but an ICSID committee recently held that two-thirds of the award can be enforced immediately.

Also at ICSID, Covington secured a defence win for Jordan in a long-running treaty dispute with a Turkish construction firm. Jordan received legal costs.

As co-counsel with Sidley Austin, Covington managed to get a US$200 million LCIA claim against the Trinidadian state oil company, Petrotrin, dismissed in its entirety in 2014. The counsel team received praise from the Caribbean state’s attorney general, who said that a loss would have bankrupted the company.

In 2012, a Covington team persuaded a panel in Stockholm to award damages to a group of Spanish minority shareholders in Yukos. Although the sum awarded was small in the scheme of things (US$2 million) the arbitrators put a value on Yukos of more than US$60 billion at the time of expropriation. However, the award was later set aside in the Swedish courts.

Looking back to the 1990s, the firm represented oil company Amoco in a major matter at the Iran-US Claims Tribunal, winning US$850 million.

Covington has a big name for insurance disputes, having helped Exxon recover US$780 million from insurers for the Exxon Valdez oil spill and advised BP America in insurance coverage proceedings for liabilities arising from the explosion of the Deepwater Horizon rig in the Gulf of Mexico.

Recent events

Covington was instructed by Ukraine’s Naftogaz for a US$2.6 billion investment treaty claim against Russia over the seizure of assets in Crimea following the Russian annexation of that territory in 2014. The firm also helped the Ukrainian government make amicus curiae submissions in various other treaty cases against Russia brought by private Ukrainian investors that had assets in Crimea. 

In addition, Covington is representing Ukraine in a state-to-state arbitration with Russia under the United Nations Convention on the Law of the Sea. That case concerns Russia’s alleged usurpation of Ukraine’s rights in oil-rich waters adjacent to Crimea, including in the Black Sea.

On the commercial side, the firm has been acting for Dutch entertainment group Talpa Global in a HKIAC dispute over one of China’s most successful television shows, “The Voice of China”.

Craig Pollack, former global head of international disputes at King & Wood Mallesons, joined the firm as a partner in London along with financial services disputes partner Greg Lascelles, also from KWM. In Washington, DC, Alexander Berengaut and public international law specialist David Zionts – a former legal adviser to the US Department of State – were promoted to the partnership.