London. A group of international arbitration students are about to receive their first lecture. Each year, it’s broadly the same.
“This is the White Book,” says their teacher – a partner at a London law firm –holding up a copy of the United Kingdom’s court rules of procedure. “It’s two volumes and takes up this amount of space on your shelves.”
He measures a breeze block with his hands. “It tells you everything that can happen in a High Court case.
“And these are the ICC rules,” he says, holding up a pamphlet. “The document’s about this thick,” he says, picking up an imaginary cat in a finger-pinch. “But ICC arbitration is no less complex than High Court litigation.
“The difference between these two thicknesses” – he does the pinch and the breeze block again – “is what international arbitration lawyers know. And it’s not written down.”
It’s that unwritten lore that gives rise to this book, which helps readers to identify those who have “it”. Because unless you have that sort of person as your guide, you don’t stand much chance of successfully navigating a process that is unique within the law. A leading textbook on the subject – Redfern & Hunter on International Arbitration – observes that a stranger stumbling into an international arbitral hearing might fail to realise that a legal process was under way. The process would likely be happening in a hotel room or training room somewhere. There would be two small groups on one side of the table, in standard business attire. On the other, a trio looking similar, with possibly a bit more grey hair. Something would clearly be going on, but you wouldn’t immediately conclude it was deciding anyone’s legal rights. It’s all very informal. There’s no audience or usher and little hint of ceremony. It could be a training course – except for the stenographer tapping away.
And yet millions, possibly billions, would be at stake.
As business has globalised, international arbitration has become the world’s commercial court. And more recently, a check on capricious government too. Russia’s government has been ordered to pay US$50 billion over the dismemberment of Yukos Oil Company by an arbitral panel in The Hague. Not long ago, arbitrators told Ecuador to pay US$2 billion to Occidental. In the world of telecoms, at least two European players owe their current state of ownership to arbitral rulings about buy-out clauses. The sums are huge.
It is a serious business being an international arbitration counsel.
But the work itself isn’t everyone’s cup of tea. For a start, as the name suggests, it is international. That brings with it not only enormous amounts of travel, but also all sorts of legal and cultural issues – ranging from the mindset of the opposing lawyer to working under some other nation’s law.
A big ICC case from a few years ago helps to illustrate. On one side, a Middle Eastern government with a strong Islamic tradition; on the other, two international oil companies. The arbitrators are French, Belgian and English. Although the hearings physically take place in Europe, the law to be applied is Middle Eastern. One of the law firms finds it must convey all of its advice to the client orally; this is the client’s tradition. So, no use of written memorandums.
It can be a bit unsavoury at times. Clients who end up in big international arbitrations are not always nice, listed companies from developed economies. Indeed, many arbitrations have their roots in the cut-throat politics of resource-rich states. The opponent can be a handful too. Often they are governed by a different ethical code – which they’re using to play less nice. Or they may be completely out of their depth. Some arbitration lawyers describe the quandary of having to do an opponent’s job for them – just to create enough of a case to then rebut.
A lawyer who holds him or herself out as skilled in international arbitration must be at ease with all of these aspects.
Little wonder, then, that some don’t like it. A GAR reporter once sat next to a mid-level associate at a dinner (a non-arbitration affair), who went on at some length about how much he’d loathed his stint with the international arbitration group. He said that some of the rough-house tactics he’d seen were appalling.
He isn’t alone. Quite a few lawyers who step across from litigation report feeling almost seasick in this world with so few bearings – where the process for each case has to be invented.
Given all of this, it’s no surprise that, over the years, more and more big commercial law firms have come to regard international arbitration as a unique skill set. That trend began in the early 1990s when firms such as Freshfields, Clifford Chance and Shearman & Sterling began to centralise international arbitration work. Other firms resisted the fashion. They assumed that if one could do litigation, one could do arbitration. Indeed, one leading arbitration figure of his era says, while in practice, he tried for years to get his managing partner to see the value of giving arbitration its own department (to no avail). Then one day, the managing partner heard one of his favourite clients describe a rival (Freshfields) as “specialist arbitration firm”, and realised his mistake. He “changed his tune overnight”.
So these days, many law firms can supply a client with a lawyer or two who has spent most of his or her career in international arbitration. And their clients are the better for it. As you will have worked out by now, international arbitration is a game unto itself. And when someone who plays a game at a high level takes on someone who’s only dabbled, the results tend not to be pretty.
It’s not just because the skilled arbitration counsel knows the protocol – how to address the chairman of the tribunal (although there is that, and indeed some funny stories exist about arbitrators being addressed as “your excellency” and “your Holiness” by US plaintiffs’ lawyer-types). A novice will tend to make a wrong move. For example, when cross-examining, they may come out of the blocks “at 100 miles per hour” against a witness who merits a little more respect - an elderly Swiss professor, say, as happened to one GAR source in a treaty case: “That may be appropriate in a courtroom, but will play badly in front of arbitrators, especially if they are also Swiss professors!”
Or they might accidentally prick the curiosity of the arbitrators when they’re trying to shield a particular area of their client’s position. For example, hotly protesting that a topic is off-limits – when in fact arbitrators have broader powers than most judges to go into whatever aspect of the case they wish. Or they may simply come across as rather condescending to lawyers from other legal traditions. Common law lawyers especially are prone to this hauteur.
Or it may be that they’re just less skilled in picking tribunals. So much of the art is in creating a panel which is predisposed to “fall your way”, while still ticking the box for full independence, in the words of one source who understands international arbitration ringcraft.
Matthew Weiniger QC – a partner with Linklaters in London (and the visiting professor whose students get the breeze-block/cat-pinch comparison) – has had a number of cases against less experienced opposition. He recalls one occasion where he was gifted a case by an opponent’s naïveté.
That opponent – a reasonable UK corporate firm (“you’d immediately know them”) and a QC (“who was brilliant but doing his first arbitration”) – misconstrued a key procedural order. That led them to hand over more documents than they needed to: “the good and bad documents – everything, including internal client memos.” Weiniger romped through the cross-examination, as he was better prepared. The arbitrator’s order, he recalls “was a fairly standard” formulation.
Does Weiniger get gifts of that type often? “I’m used to it,” he says, although “usually it’s more subtle things.”
Another public example from not so long ago: in 2011, a US$16 billion joint venture proposal between BP and Rosneft imploded after BP lost an arbitration. It was noted by the cognoscenti in London that BP’s chosen law firm was (then) not particularly renowned for international arbitration, whereas the opponent’s was.
In the end, a lot of what the international arbitration specialist brings comes down to the old adage, “know your judge” – or, its even more important variation, “make sure your judge knows you”. The longer an advocate spends in the presence of his or her adjudicators, the better they tend to do. This advantage arises for two reasons: improved intuition and the fact that the advocate arrives in front of them with personal capital.
“QCs, in the High Court, are brilliant because they know those panels inside out and that style of advocacy,” says one London international arbitration specialist, who asked to speak on condition of anonymity.
“Laurence Rabinowitz QC [a well-known UK advocate for commercial cases from One Essex Court] can appear before any judge and they know him. ‘Ah, Mr Rabinowitz – very interesting and nice to see you!’ The same thing applies in international arbitration. For example, I’ve got a case right now in front of [a leading international arbitrator]. Every time I go to a conference, he’s there... we read each other’s books. My opponent, in comparison... he hasn’t got a clue.”
Rabinowitz, it should be said at this point, is undertaking an increasing amount of arbitration – and gets many glowing reports. But the source’s point – that everybody has their milieu – remains.
“If you take all the partners in our group,” the source explains, “then we’ve appeared before every single arbitrator worth knowing. Not just once, but multiple times in the past few years. We have inside knowledge as a result of that. So that means, if I pick up the phone to [a leading arbitrator] because I want to appoint them, I know they’re going to phone back. QCs in the High Court are brilliant, because what they have is ringcraft. But when it comes to international arbitration, I have the ringcraft.”
He and his colleagues have also sent work to some of those arbitrators on several occasions. Which never hurts when you want to be taken seriously.
Another specialist, who also asked for anonymity, agrees that international arbitration purists are the way to go. He notes that it immediately introduces efficiency. “In fact, I would love to do more cases against, say, Freshfields,” the source says. “I tell clients, ‘If this were against Freshfields, I’d get you a deal in two days. It would be over. But because we’ve got these idiots, we’re probably going to have to fight for years.’”
Sophisticated clients now know this. They value specialism on the part of international arbitration counsel. A survey* published in 2006, since updated, found that three-quarters of in-house counsel interviewees would seek a lawyer they regarded as an international arbitration advocate rather than a litigator. (They defined “specialisation” as a mix of reputation, amount of work undertaken and experience. In the interim, more law firms have found religion and created their own international arbitration groups.)
So the challenge has become separating the wheat from the chaff – finding the true specialist counsel.
The book you are holding may help. Ten years ago, Global Arbitration Review conceived the GAR 100 as a vehicle to identify at least 100 firms one can consider “approved” in this discipline. To gain inclusion, a firm would have to open its books to our researchers and allow us to “audit” exactly what they’d been up to. Broadly, we’ve used the criteria identified in that survey: reputation, amount of work undertaken and experience.
With this edition – our tenth – 163 firms are profiled, representing around 45 countries. We’ve added six firms and dropped others (they’re welcome to reapply). The new entrants include firms from Colombia, Romania and India as well as the UK, US and Switzerland.
Once again, the GAR 100 comprises large and small practices – sometimes as small as one person (if that person is sufficiently well known).
With all those firms, we strive every edition to improve our descriptions. Many of our profiles now tell you about the history of the practice (where we have it) and its lineage (ie, how it ties in with some of the influential figures who pioneered this area).
Similarly, we’re doing our best, where possible, to put greater weight on success. Not just undertaking work – but winning (though winning is at times a tricky and relative concept – a smaller than expected loss may in fact be a “win”, and vice versa). But we don’t think it’s unreasonable to expect an arbitration group to achieve good results as it goes about its general work.
The book also includes a report on expert witnesses. We’ve applied a similar methodology to them as to law firms – asking to be shown proof of work on cases.
The research period for the statistics in the book is 1 August 2014 to 1 August 2016. All other information is correct as of 1 January 2017.
As ever we are indebted to the firms who every year supply us with a large amount of information, including some who ultimately don’t get into the guide. In most cases, we’re sure that their time will come.
Within Law Business Research, we are indebted to Tom Barnes, Stuart McMillan and Nina Nowak from Who’s Who Legal for their labour on our behalf.
On a personal note, I’d like to thank the many international arbitration lawyers – young and old – who have taken time over the years to explain the nuances of their craft to me. And the whole GAR editorial team who undertake this annual marathon task – particularly Sebastian Perry and Alison Ross for their energy and good humour.
* International Arbitration: a study into corporate attitudes, by PricewaterhouseCoopers and the School of International Arbitration, London.