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GAR 100 - 10th Edition

Vinson & Elkins

10 March 2017

Defending the Panama Canal Authority against mounting claims

People in Who’s Who Legal 3
Pending cases as counsel 65
Value of pending counsel work US$14.5 billion
Treaty cases 8
Current arbitrator appointments 20 (of which 9 are as sole or chair)
Lawyers sitting as arbitrator 3

Houston-headquartered firm Vinson & Elkins styles itself as “the world’s leading energy firm”. Its US oil clients have tended to take the firm wherever they go in the world, calling on it to draw up energy-related contracts and turning to it the minute a dispute arises.

In the 1990s, commercial litigation lawyers handled most of the firm’s international disputes, but an increasing demand for arbitration, particularly investment treaty claims, led the firm to start building up a practice in 2000 with the recruitment of James Loftis.

Loftis – who now leads the disputes practice – joined in London after working at the United Nations Compensation Commission (the body set up to deal with claims against Iraq arising from the first Gulf War). The practice expanded to the United Kingdom in 2001, followed by Beijing and Hong Kong, with the recruitment of partner Christopher Walker from Linklaters in 2008.

By that time, the group had turned into a free-standing international dispute resolution team, reporting to the firm’s head of commercial litigation.

The arrival in 2013 of George Burn, former London head of international arbitration at Dentons legacy firm Salans, brought added expertise in investment arbitration.

While the focus remains on the energy sector, big strides have been made in developing the construction side of the practice. Led by partners Amir Ghaffari in Dubai (formerly of Shearman & Sterling) and Nick Henchie in London, the firm is acting in some of the largest construction disputes in the world: the expansion of the Panama Canal; a terminated project to build a pipeline to run from Russia to southern Europe via the Black Sea; and the Marmarey rail project to develop a link between Europe and Asia under the Bosphorus Strait.

Vinson & Elkins is proud of the fact that its lawyers are always in the thick of the action – but this has sometimes led to a spot of bother. In recent years, the firm has seen two of its attorneys arrested by the police in a state against which the firm was bringing a treaty claim, and one came under small-arms fire, also in the course of duty.

Network

The firm’s core business is such that it opened in China before New York. The arbitration team is small but covers a lot of ground. There is a regular arbitration presence in Houston, Beijing, Hong Kong, London, Riyadh and Washington, DC.

After spending a significant amount of time in the Dubai office, building up relationships in the Middle East, Loftis is now based in Houston. Ghaffari relocated from London to Dubai in 2017 to lead the firm’s dispute resolution practice in the region.

Who uses it?

In upstream oil and gas, the firm represents the majors as well as a number of national oil companies.

Big-name clients include Cairn Energy, Noble Energy, Statoil and El Paso Corporation, while newer ones include the Iraqi state-owned oil trading company SOMO. It represents Iraq in a claim against Turkey and its state-owned pipeline operator BOTAS over the purchase of crude oil from the semiautonomous region of Iraqi Kurdistan.

Lower down the value chain it has been connected with arbitration work for an Omani power company and Essar Oilfield Services.

Outside the energy sphere, the firm has acted for Dubai’s Alamar Foods in a US arbitration concerning a fast food franchise, Dubai Mercantile Exchange in shareholder disputes and Emirate Aluminium Company in a claim brought by a subcontractor.

In the investment treaty field, it has advised investors bringing claims against India, Ecuador and Armenia. The firm has also featured on a list of 15 international firms that China prefers to use for such matters.

Resource contractors have also instructed the firm to represent them in a number of maritime boundary disputes, including between Nicaragua and Colombia, Cyprus and Turkey, and Lebanon and Israel.

In the Panama Canal case, it’s acting for the Panama Canal Authority against a European consortium; meanwhile, in the Black Sea pipeline case, it’s acting for Eni Saipem, which was contracted by Gazprom entity South Stream to lay the submarine sections of the pipeline.

Track record

The firm helped Spectra Energy defeat a US$170 million claim by ExxonMobil. It also won a US$20 million award for Niska Energy during a disagreement about the final purchase price of gas storage facilities in North America.

Partner Christopher Walker was behind one of the first successful retroactive applications of an arbitration clause in the United Kingdom. In Norscot Rig Management v Essar Oilfield Services, the court agreed that an arbitration clause could be applied to a dispute from a contract that pre-dated the arbitration clause, but was related to it.

For more than a decade, the firm has been representing Cairn Energy, Ravva Oil and Videocon Petroleum against the government of India in three UNCITRAL arbitrations and related court claims in India and Malaysia. The disputes arose out of a joint venture to develop an oilfield in the Bay of Bengal.

In 2011, one of the arbitral tribunals made a ruling in favour of the firm’s clients to the tune of around US$500 million. The award was later upheld in the Malaysian courts at two instances. Vinson & Elkins and local co-counsel HM Ooi & Associates defended the award.

Another good result was for Iraq’s State Organization for Marketing of Oil (SOMO) in 2015, when the English Court of Appeal rebuffed an attempt to enforce an award against letters of credit issued by award debtor SOMO in favour of the Central Bank of Iraq.

Recent events

The Panama Canal Authority retained the firm to defend it from two additional ICC claims filed by engineering consortium Grupo Unidos por el Canal over the expansion of the canal. The claims, worth US$2.3 billion, now bring the total number of cases against the authority to five.

The firm continues to act for Reliance Industries in a billion-dollar UNCITRAL claim jointly brought with UK partner BG Group against India over oil and gas fields off the coast of Mumbai. In October 2016, the tribunal issued a partial award reportedly rejecting the main demands of Reliance and BG, including royalty claims and requests for higher cost recovery limits.

In the Houston courts, the firm defended Victoria Oil and Gas from an attempt by its joint venture partner RSM to obtain an injunction in support of an ICC claim over a rig and drilling project in Cameroon.