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GAR 100 - 10th Edition

Freshfields Bruckhaus Deringer

08 March 2017

Lucy Reed retired as practice co-head as the firm enjoyed a run of victories against Venezuela, Ecuador and Egypt

People in Who’s Who Legal 14
Pending cases as counsel 176
Value of pending counsel work US$75 billion
Treaty cases 66
Current arbitrator appointments 49 (of which 25 are as sole or chair)
Lawyers sitting as arbitrator 16

Freshfields Bruckhaus Deringer topped every edition of the GAR 30 ranking between 2008 and 2014 and since then has only faced serious competition from one other firm for the top spot.

How has it managed such a consistent run of success? A bit like the Beatles, Freshfields seems to have pulled off a clever trick: being both first into a new pursuit, and somehow the “best” so far.   

Why is it accurate to call Freshfields the “first”? That requires a trip back to the 1970s, when two of the firm’s London partners, Alan Redfern and Martin Hunter, found themselves representing Kuwait in the Aminoil dispute, in which the US oil company sued the state over a construction project. It remains a leading public international law case.

The experience convinced Redfern and Hunter to pitch the idea that the firm treat international arbitration as a discrete skill set, fenced off from litigation. That in turn led them to propose to Jan Paulsson (a rising star of the Paris arbitration world whom they’d met while working on Aminoil) that he join their project. A London–Paris connection would make sense, they reasoned, as Paris was where the action was.

So before most firms even had one partner that “specialised” in this area, Freshfields had three – in charge of their own stand-alone international arbitration group.

The next 10 years saw strong growth, fuelled by a string of major cases (international arbitration and public international law) and by the gravitational pull of Paulsson’s reputation, which attracted young lawyers from around the world who were curious to try this “new and sexy” area of law. Freshfields became an unofficial university for international arbitration (ask many of the big names at other practices where they got their start and you’ll hear something like “in Paris, working for Jan”).

Paulsson also recruited the eminent Lucy Reed (from the US Department of State) as his co-chair.

Of course, Paulsson and Reed weren’t the only ones building a name for themselves in international arbitration during this period. But where they seem to have differed from their rivals at other firms was in their willingness not to micromanage. They didn’t insist on signing every brief (something a few big practices struggle with to this day). As a result, from 1999 onwards, an entire generation of homegrown international arbitration partners emerged (this may explain why Freshfields has had the largest contingent in GAR’s “45 Under 45” ranking of leading younger practitioners).

That was healthy, but it also meant that, by the early 2000s, the practice had a problem. It was very Paris-centric (in part because Paris lawyers had lower charge-out rates so clients wanted to go there), while all the opportunities (clients and underserved markets) seemed to be everywhere else (the US, the UK, the Middle East and Asia). The group tackled the issue head-on, moving some of its new names to those places.

By 2012, Reed and Paulsson had together achieved what nobody else had – and built a network of international arbitration teams dotted around the world, all of them seemingly friendly and collaborating.

At this point, Paulsson was well past the Freshfields retirement age (he had remained thanks only to special consulting deals). In 2013, it was agreed that the time was right for him to part company from the practice that had accreted around him.

What happened next was interesting. In 2014, two people who were seen (at least by the rest of us) as potential successors to Paulsson left the firm: Constantine Partasides and Georgios Petrochilos. Even worse: they left to join Paulsson at a new shop – Three Crowns (also in the GAR 100).

Freshfields responded by appointing Nigel Blackaby as the new co-head of the group alongside Reed. Blackaby, based in Washington, DC, has been with the firm for more than 20 years and has long been at the forefront of its Latin America-related investment treaty work.

As of 2016, he leads the group alone, after  Reed retired from the partnership to accept an academic post in Singapore. She retains a consulting role with Freshfields.

Another veteran partner, Nigel Rawding QC, now heads the London arbitration practice, which has been further strengthened by the relocation of Reza Mohtashami from Dubai and the hire of Will Thomas (former head of international arbitration at Eversheds).  Paris-based Ben Juratowitch (recently appointed QC) co-heads the public international law group.

Network

The main locations for the international arbitration team are London, Paris, various German and Austrian offices, New York, Washington, Dubai, Hong Kong and Singapore. Madrid, Milan, Moscow, Rome and Amsterdam are more peripheral, but nevertheless play their part.

Who uses it?

As one might expect, the client list is a who’s who of states and global corporations. Of late, a lot have been energy companies. One reason for this is gas-pricing arbitrations, where the practice was one of the first to build a name in the area. Another reason is the team’s expertise in Africa – where more and more infrastructure and resources disputes are under way. Freshfields can now point to experiences in Nigeria, Kenya, Tanzania, South Africa and Madagascar, along with several Portuguese-speaking former colonies.

Clients (current and past) include Abertis, Alpiq, Anglo American, AstraZeneca, BG Group, Boeing Satellite Systems, BP, China National Offshore Oil Corporation, CMS Energy, ConocoPhillips, Credit Suisse, Crescent Petroleum, Danone Asia, Deutsche Bank, Dubailand, Electrabel, Eni, EVN, Maersk Oil, MTN Group, Marubeni Corporation, National Grid, Repsol, Rurelec, Shell, Siemens, Tata Group, Techint, Tiffany, Total and Tullow Oil.

The practice also represents governments. Notable states that have instructed it include Cambodia (for the state’s first ICSID matter), Chile, Guatemala, Grenada, Kenya, Romania, St Lucia, South Africa (on a case relating to black-empowerment policies), Tanzania, Turkey and Vietnam.

Lately it’s also been acting for state entities including Brazil’s national oil and gas company, Petrobras, (in a claim against Ecuador) and Oman’s State General Reserve Fund (in an ICSID case against Bulgaria).

Track record

Freshfields certainly has an illustrious record that began during the Paulsson era. A few of its  greatest hits are:

  • the Megafon dispute, in which Freshfields turned around an initial loss in a Russian telecoms “war” into a much bigger victory, leading to the unseating of a Russian minister amid corruption allegations;
  • multiple wins for investors against Argentina in the wake of its financial crisis;
  • acting in the first investment treaty claim by a Japanese investor (Nomura v Czech Republic), obtaining a US$236 million settlement for the client;
  • the World Duty Free case at ICSID, in which Freshfields absolved Kenya from liability despite evidence that the country’s then president had received a bribe; and
  • defending Turkey in three ICSID claims under the Energy Charter Treaty worth a combined US$17 billion, including one that resulted in a US$25 million costs award for the client.

More recently the team has:

  • secured a US$1.98 billion award for the UAE’s Crescent Petroleum and Dana Gas in an LCIA claim against the Kurdistan regional government of Iraq over payment for gas deliveries;
  • won the only investment treaty matter ever heard by the US Supreme Court (BG v Argentina);
  • obtained a US$2 billion award for ExxonMobil and Shell in a dispute with the Nigerian National Petroleum Corporation;
  • inflicted Bolivia’s first loss in an investment treaty case (US$29 million for UK power producer Rurelec) and negotiated the state’s highest-ever settlement with a foreign investor (US$357 million for Pan American Energy);
  • enabled the Karachaganak oil and gas field consortium to continue operating in Kazakhstan;
  • helped Repsol settle its YPF expropriation claim against Argentina for US$5 billion;
  • won US$405 million for a group of European water utlilities including Suez and Vivendi in ICSID and UNCITRAL claims against Argentina;
  • secured a landmark jurisdictional win allowing dual nationals to pursue an investment treaty claim against one of their countries of nationality (in a case against Venezuela); and
  • defeated a US$300 million claim against Cambodia, winning the state over US$5 million in cost.

Recent events

As mentioned, Paris-based Eversheds practice head Will Thomas joined the London office in 2016, bringing 18 years’ experience in investor-state, commercial and public international law disputes for clients including Iran and Qatar.

Canadian Caroline Richard was promoted to the partnership in Washington, DC. The firm also made three new counsel Jean-Paul Dechamps in London, Kim Rosenberg in Dubai and Shaparak Saleh in Paris.

Nigel Rawding in London was one of only three solicitor-advocates in England and Wales to be named Queen’s Counsel in 2016. Ben Juratowich took silk a year later and was added to the prestigious “A Panel” of advisers to the UK government on public international law matters.

On the case front, the practice has continued to achieve remarkable results, particularly in Latin-America related work. There has been a winning streak against Venezuela, beginning in April 2016 with a US$1.4 billion award for distressed Canadian mining company Crystallex in a third-party funded ICSID claim – one of the largest awards in the centre’s history. The award has since been recognised in Canada and the firm is now helping Crystallex pursue litigation in Delaware to prevent Venezuelan state entity PDVSA from transferring assets out of creditors’ reach.

Another major victory against Venezuela came in August, when Freshfields won an award worth over US$1.2 billion for Canada’s Rusoro Mining in another third-party funded claim. Enforcement proceedings are now under way in DC.

It helped Luxembourg-based steel pipe producer Tenaris obtain two ICSID awards against Venezuela, worth US$173 million and US$165 million respectively; and won US$98 million against the state for British meat producer Vestey in an ICSID claim over the expropriation of a cattle farming business.

A US appeals court affirmed a set of ICC awards in favour of Phillips 66 (a ConocoPhillips spin-off) against Venezuela’s state oil company PDVSA. Freshfields acted as counsel in the arbitration and court proceedings.

There was also success on behalf of ConocoPhillips unit Burlington Resources in a long-running ICSID case against Ecuador concerning a 99% levy on windfall profits of oil companies. A tribunal awarded the client US$380 million for unlawful expropriation, though it also partly upheld a counterclaim by Ecuador for environmental damage to the Amazon (the state won just US$43 million out of the US$2 billion it claimed).

Meanwhile Freshfields soundly defeated Argentina’s attempts to annul an ICSID award in favour of French oil major Total (reportedly worth US$300 million). Argentina also finally paid an UNCITRAL award that the firm had obtained for the UK’s BG Group nine years earlier.

The firm convinced an ICSID tribunal to dismiss US oil company RSM’s US$200 million claim against Saint Lucia and is now defending the Caribbean state in annulment proceedings.

There was another ICSID win against Egypt on behalf of investors in Eastern Mediterranean Gas (EMG), with a tribunal holding the state liable for the termination of an agreement to supply gas to Israel following pipeline attacks in the wake of the Arab Spring. The ICSID panel has still to rule on a US$636 million damages claim. Freshfields already won US$324 million for EMG in an ICC case against two state entities in 2015, and awards in parallel UNCITRAL and Cairo Centre cases are pending.

It acted for ConocoPhillips in an arbitration with East Timor over tax on a gas pipeline in the Timor Sea. There was a final award in March 2016 but the outcome hasn’t been disclosed.

There were setbacks in a few cases. In ICSID annulment proceedings, the firm failed to overturn an award against its client Romania in favour of Sweden’s Micula brothers; and it couldn’t prevent a US investor from reviving a US$222 million claim against Guatemala concerning an electricity tariff review.

On the commercial side, it defended Tata Sons in an LCIA arbitration brought by Japanese mobile operator NTT Docomo, which ended with a US$1.17 billion award against the client. And it failed to persuade the European Court of Justice that an award worth €160 million against pharmaceuticals client Genentech was in breach of EU competition law.

There were many new instructions, including for three new treaty claims against Colombia – brought by mining company Eco Oro, Mexican telecoms group América Movíl and Glencore. It’s also acting for farming and food investors in two new cases against Venezuela.

Other instructions came from Total and Repsol in a US$400 million ICC claim against Algeria’s Sonatrach; and Kazakhstan’s state-owned oil and gas company KazMunayGas in a claim against Romania.

In the public international law arena, Ben Juratowich QC remains part of a team acting for Italy in a politically sensitive dispute with India over the killing of two fishermen by Italian marines. In May, a tribunal in The Hague ordered India to relax its bail conditions for one of the marines.

Away from the casework, the firm has been making waves for its push towards gender equality in arbitration. In May 2016, partner Sylvia Noury launched the Equal Representation in Arbitration Pledge – a call for the international arbitration community to increase on an equal opportunity basis the number of women appointed as arbitrators. As of 5 December 2016, the Pledge had attracted 1,568 signatories.

Client comment

Amro Khaldoun Al Jayousi of Dubai Properties Group used Freshfields’ arbitration team on a dispute of vital importance to the group. He was “very impressed”, saying the Freshfields lawyers “shone far above the other side in etiquette, manner and advocacy, and were in command at all times.”

“They’re not cheap,” he says, “but the work product is worth so much more. I recommend them to colleagues and friends.”

Architect Erick van Egeraat hired a Freshfields team for a dispute that he puts as a seven out of 10 in seriousness for his company. When a certain “harmful document” appeared unexpectedly in the record, the Freshfields team wasn’t fazed. “They reviewed our options and agreed to go forcefully on the offensive,” he recalls.

That strategy “paid off wonderfully”. He says he got value for money. “Actually, we got more than we hoped for.”