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GAR 100 - 10th Edition

Foley Hoag

08 March 2017

A triumphant year brought headline-grabbing wins for Uruguay, El Salvador and the Philippines

People in Who’s Who Legal 1
Pending cases as counsel 28
Value of pending counsel work US$7.7 billion
Treaty cases 24
Current arbitrator appointments 14 (of which 5 are as sole or chair)
Lawyers sitting as arbitrator 4

Once upon a time, Foley Hoag’s international arbitration practice consisted of the occasional investor-state case, often on behalf of left-wing Latin American governments. Those cases were an offshoot of its higher-profile work in the public international law arena: practice head Paul Reichler was Nicaragua’s advocate in the International Court of Justice case in the 1980s concerning the US government’s support of Contra guerrillas.

Since 2007, the firm has expanded its practice greatly, bringing in additional partners known for investment treaty work, including Ronald Goodman, formerly of White & Case and Winston & Strawn; and Mark Clodfelter, for many years the United States’ NAFTA claims supremo at the Department of State. The Washington, DC, team also includes Nicaraguan-born investment and trade partner Mélida Hodgson and of counsel Alberto Wray, a former Ecuadorean Supreme Court judge.

In 2011, the firm set up an office in Paris – its first outside the United States – with a five-strong team poached from Winston & Strawn that is led by Bruno Leurent (a former member of the United Nations Compensation Commission, the body that assessed Iraq’s liabilities following the invasion of Kuwait). The collapse of Dewey & LeBoeuf also brought partners Derek Smith and Luis Parada to the DC office in 2012, adding to the firm’s ICSID expertise.

Ronald Goodman retired from the firm in July 2016, leaving Reichler as sole chair of the international arbitration practice and partner Lawrence Martin as his deputy.

Network

The centre of the practice is in Washington, DC, with a nine-strong team in Paris and a smaller contingent in Boston.

Who uses it?

A long list of governments in Latin America, Asia, Africa and, increasingly, Europe. In investor-state disputes, it has advised Bangladesh, Belgium, Ecuador, El Salvador, India, Slovakia, Ukraine, Uruguay and Venezuela. The firm has also been advising Canada on a couple of NAFTA matters.

The firm has also represented Bangladesh, Croatia, Djibouti, Guyana, Mauritius, Nicaragua and the Philippines in various state-to-state matters – including before the ICJ and the International Tribunal for the Law of the Sea (ITLOS). It reckons to have been involved in more cases at these two institutions than any other law firm.

Foley Hoag’s private clients don’t attract as many headlines, but Orange, Air France and Crédit Agricole have used it in international litigation and arbitration matters.

Track record

The firm has an enviably strong record of defence wins for states facing investment treaty claims. For instance, it helped Belgium prevail in its first-ever ICSID case in 2015, defeating a €1 billion claim by a Chinese shareholder in the Fortis financial services group affected by the 2008 global financial crisis.

It has had especially good results for Latin American states. Derek Smith and Luis Parada helped El Salvador defeat a controversial ICSID claim by Australian-owned mining company Pacific Rim in 2016 over the denial of permits on environmental grounds. The US$250 million claim had attracted the interest of NGOs and provoked protests outside the World Bank. At an earlier phase of the case, the Foley Hoag team prevented the investor from bringing claims under DR-CAFTA in the first successful use of a denial of benefits provision. 

For Venezuela, it won the dismissal of a US$1 billion ICSID claim by Canadian miner Infinito Gold in 2013 (the case lasted nine years); a pair of US$180 million treaty claims by Canada’s Nova Scotia Power; and a US$633 million ICSID claim brought by Dutch and Panamanian mining investors.  

Ecuador is another happy client. In 2010, Foley Hoag persuaded an ICSID panel to throw out a substantial claim by Murphy Oil concerning a tax on windfall oil profits because the investor hadn’t observed a “cooling off” period. After Murphy refiled its case before an UNCITRAL panel, the firm reduced the claim to a final award of just US$20 million plus interest.

In another dispute between Ecuador and Chevron, it succeeded in reducing a US$700 million claim to a US$96 million award in favour of the US oil company (relating to delays in the Ecuadorean court system). That case spawned a groundbreaking state-to-state arbitration between Ecuador and the US, also handled by Foley Hoag.

The firm’s record in the public international law arena is even more impressive. It led the Philippines to victory in a highly publicised arbitration with China over claims to the South China Sea. In July 2016, a tribunal in The Hague upheld the Philippines’ position that longstanding Chinese claims to a large part of those waters were without lawful effect under the United Nations Convention on the Law of the Sea (UNCLOS). China did not participate in the case, which has been described as one of the most significant international disputes of the past 20 years.

In another case, it helped Mauritius prevail against the UK government in relation to the Chagos archipelago in the Indian Ocean. In 2015, a tribunal chastised the UK for establishing a marine protection area around the islands in breach of UNCLOS. 

It has also obtained good outcomes for Bangladesh in disputes with Myanmar and India over rights to resources in the Bay of Bengal; and helped Nicaragua win three-quarters of a disputed territory in a boundary case at the ICJ against Colombia. In another ICJ case, the firm helped Uruguay defeat claims by Argentina alleging ecological damage caused by a pulp mill on the banks of a river between the two countries.

Recent events

Besides the high-profile victories for the Philippines and El Salvador already mentioned, Foley Hoag helped Uruguay defeat an ICSID claim by Philip Morris that had proved a lightning rod for public criticism of the investor-state dispute settlement system. In July 2016, a tribunal ruled that Uruguayan measures restricting the sale of variants of the same tobacco brand and requiring the display of prominent health warnings on packaging were a legitimate exercise of the state’s “police powers”. The tobacco company was also ordered to pay US$7.7 million towards the state’s costs.

Some cases for Venezuela didn’t go so well, however. Foley Hoag failed to prevent ICSID panels from handing down billion-dollar awards in favour of Canadian mining companies Rusoro and Crystallex. Steelmaker Tenaris also won US$338 million in two ICSID cases against the state (the company had claimed significantly more.) 

In another case, it helped Venezuela to settle a dispute with Canada’s Gold Reserve, with the state agreeing to pay a US$770 million ICSID award under a deal that allows the investor to continue operating in the country.

The firm was retained by Peru for the first time – to defend a US$200 million ICSID claim brought by a consortium building Lima’s second metro line.

Tafadzwa Pasipanodya was promoted to the partnership in DC, where Diego Cadena was also named international counsel. Russian national Ivan Urzhumov was promoted to counsel in Paris. Christina Hioureas, a former special legal adviser to Cyprus at the United Nations, joined as counsel in New York from Chadbourne & Parke.

Client comment

Khurshed Alam of the ministry of foreign affairs in Bangladesh described the Foley team as “outstanding in all respects”.

“They understood the case from the client’s perspective and gained our full trust and confidence. And they did a brilliant job in their written pleadings and oral presentations. They are the complete package,” he said.

Andrea Holíková of the Slovakian ministry of finance praised the firm’s “very professional approach, case management, and creativity”.