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GAR 100 - 10th Edition

Cleary Gottlieb Steen & Hamilton

09 March 2017

Won huge cases for Telecom Italia, EDF and Greece – as the Yukos award was set aside

People in Who’s Who Legal 1
Pending cases as counsel 70
Value of pending counsel work US$100 billion
Treaty cases approx. 14
Current arbitrator appointments 23 (of which 11 are as sole or chair)
Lawyers sitting as arbitrator 6

Cleary Gottlieb Steen & Hamilton is best known for its work for Russia on the 10-year arbitration brought by majority shareholders in Yukos over the collapse of the oil giant, giving rise to the largest arbitration award ever. In a spectacular reversal of fortune, the US$50 billion award was set aside on jurisdictional grounds in April 2016, with a district court in The Hague accepting arguments Cleary had originally advanced in the arbitration as to why Russia is not bound by the provisional application of the Energy Charter Treaty.

Though Cleary didn’t appear for Russia in the set-aside hearing, the outcome has been a major vindication for a firm that can claim to have represented more sovereign states, in more substantial matters, than almost any of its competitors. It would be a shame if the Yukos saga continued to overshadow the group’s impressive work in other cases  – not least a recent triumph in one of the biggest commercial arbitrations on record (for Telecom Italia).  

The firm has been involved in large international arbitration matters as part of its broader transactional and disputes work since opening its first office outside the US, in Paris, in 1949 (where it advised the French government in connection with the Marshall Plan). It branched out across Europe in the ensuing decades, and opened a Moscow office in 1991.

Partners to know at the firm include Claudia Annacker in Paris, who has led the work on the Yukos cases; Jonathan Blackman and Howard Zelbo in New York; Matthew Slater in Washington, DC; Christopher Moore in London; and Richard Kreindler in Frankfurt. Several partners sit as arbitrators, including Ferdinando Emanuele in Rome and Jean-Yves Garaud in Paris.

Network

The New York office has the highest number of arbitration specialists, followed by London and Paris. There are also members of the group in Frankfurt, Rome, Milan, Brussels and DC.

Who uses it?

Apart from Russia, the firm’s state clients have included Argentina (in arbitration and litigation relating to its sovereign debt default), Egypt and Greece. It is also defending France and Austria in their first ICSID claims.

Cleary is representing Iraq in a sensitive ICC case against Turkey and its state-owned pipeline company over the transport of crude oil from Kurdistan in breach of inter-state agreements. It has also defended the Republic of the Congo in a large ICC matter.

On the investor side, it has acted for Gazprom (against Lithuania); Russian oil company Tatneft and the semiautonomous Russian republic of Tatarstan (in treaty claims against Ukraine); and UAE port operator DP World (in an ICSID case against Peru).

Other commercial clients include ArcelorMittal, Agfa-Gevaert, Del Monte International, EDF, Citigroup, Telecom Italia, Sanofi, Pluspetrol, Egyptian telecoms company Orascom and Asian corporations such POSCO Daewoo and Huawei. Another client is Brazil’s Vale in a high-stakes LCIA dispute with Beny Steinmetz Group Resources alleging fraud in connection with a mining deal in Guinea.

Track record

One of the firm’s biggest successes to date came in September 2016 when it helped Telecom Italia win the complete dismissal of a US$15 billion ICC claim brought by former business partners in Brazil. The case (which once again pitted Cleary against Shearman & Sterling, its adversary in the Yukos saga) involved allegations of industrial espionage, coercion and bribery. If the claimants had prevailed, it would have been the largest-ever reported award in a commercial arbitration.

In the investment treaty arena, Cleary obtained an important win for Greece in 2015 in an ICSID case initiated by Slovakian and Cypriot investors, which challenged the sovereign debt restructuring carried out in response to the Greek financial crisis that threatened the future of the eurozone. The firm persuaded a tribunal that Greek government bonds weren’t protected investments under the treaty, and saw that decision upheld by an annulment committee in the following year.

It helped Russia’s Tatneft win a US$130 million investment treaty award against Ukraine in 2014 in compensation for the seizure of an oil refinery, and saw off a challenge to the award in the Paris Court of Appeal in late 2016. It’s now advising the government of Tatarstan (a shareholder in Tatneft) in another treaty claim against Ukraine over the same refinery.

In 2014, the firm secured the dismissal of ICSID claims brought by a hotel investor against Egypt – in a rare example of the successful invocation of a fork-in-the road clause in an investment treaty.

For Belgian-German client Agfa-Gevaert, it has defeated claims worth €750 million and won over €10 million in costs in a series of related ICC arbitrations under German law arising from the sale of its consumer imaging division (other claims are pending).

Big wins from 2013 and before include successfully defending Iraq’s Ministry of Electricity against a contract claim by Vulcan Energy Solutions at the American Arbitration Association, and defending the Iraqi government against a claim by a liquidated German state-owned company under the rules of the Austrian Federal Economic Chamber.

The second of these disputes involved issues of compliance with UN sanctions enacted against the regime of Saddam Hussein. Cleary demonstrated the financial arrangement on which the claims were based was a scheme to release frozen Iraqi assets in violation of UN sanctions, leading the tribunal to dismiss all claims.

Recent events

Besides the good results for Telecom Italia and Tatneft already mentioned, the firm successfully defended EDF in a high-profile ICC arbitration initiated by the German state of Baden-Wurttemberg, winning the complete dismissal of claims worth more than €4.6 billion. The tribunal held that there was no state aid involved in EDF’s sale of a stake in a power company to the state.

It assisted Argentina in the settlement of a US$2.5 billion claim at ICSID brought by tens of thousands of Italian investors in defaulted sovereign bonds (the famous Abaclat case). A new centre-right government in Argentina agreed to make a cash payment of US$1.35 billion in 2016 to resolve the dispute. The deal was part of a US$9.3 billion payout to the state’s creditors – including hedge funds that pursued Argentina in decade-long US litigation in which Cleary was also involved. The settlements cleared the way for Argentina’s return to the international capital markets.

Cleary continues to be involved in Yukos-related work, defending Russia in an Energy Charter Treaty case brought by Luxembourg-registered Yukos Capital – one of a “second wave” of arbitrations relating to the collapse of the oil company.  It emerged in February 2017 that a tribunal had upheld jurisdiction over the claim, once again rejecting Cleary’s arguments on the provisional application of the ECT.

As a member of the Singapore International Arbitration Centre court, Claudia Annacker chaired a subcommittee that drafted the SIAC investment arbitration rules, which entered into force at the start of 2017 – the first time a private arbitral institution has produced such rules.

Richard Kreindler was elected to the advisory board of the German Institution of Arbitration (DIS) and was asked to join a working group established by the German Federal Ministry of Justice to consider possible reforms to the country’s 1998 arbitration statute.

The firm promoted Laurie Achtouk-Spivak in Paris, Milo Molfa in London and Francesca Gesualdi in Milan to counsel.

Client comment

One client who retained the firm for an investment treaty claim praises Annacker and her team for their broad knowledge of languages and willingness to cooperate with state lawyers without the involvement of a private local firm.

Gabriel Bottini, a former member of Argentina’s treasury attorney general’s office who is now a partner at Spanish firm Uría Menéndez, says of Cleary’s work on the Abaclat case: “We were impressed when we received the drafts of the written submissions on the law and practice of sovereign debt issuance and restructuring and on certain specific aspects of Italian law. These were mostly uncharted waters in investment arbitration, which were dealt with thoroughly and cogently.”

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