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GAR 100 - 11th Edition

Wikborg Rein

04 April 2018

Led Naftogaz to a multibillion-dollar win against Gazprom

Pending cases as counsel 44
Value of pending counsel work US$58 billion
Treaty cases 0
Current arbitrator appointments
1 (of which 0 are as sole or chair)
Lawyers sitting as arbitrator 1

Wikborg Rein was founded as a one-man shipping law firm in Oslo in 1923 by Erling Wikborg, later Norway’s foreign minister. The other name partner, Norwegian resistance fighter Alex Rein, joined after the end of the Second World War.

The initial focus on shipping expanded to cover energy, banking and other industries as the firm followed its Norwegian clients abroad. It opened an office in London in 1987 and set up outposts in Singapore and Shanghai in the early 2000s.

International arbitration has therefore been part of the fabric of the firm from the very beginning, with shipping disputes still a mainstay of the practice in the Bergen office.

A successful representation of a European buyer in a (then rare) arbitration against a Norwegian oil and gas producer around 2006 led the Oslo office to pick up more energy work, later adding defence and telecoms sector clients to the mix.

In 2010, the London office recruited three experienced English disputes lawyers from City firms: Clare Calnan, Chris Grieveson and Robert Jardine-Brown. Two further partners joined in London in 2016, Mike Stewart from K&L Gates and Nick Shepherd from Ince & Co, both also bringing arbitration experience. The firm reckons it is the only Norwegian firm with a significant English law capability.

Other names to know include Trond Eilertsen and Ola Haugen in Oslo and Øystein Meland in Bergen, who have all served as arbitrators.

The past few years have seen the practice expand into the upstream gas market, handling disputes between producers in Norway and abroad. It has gained added recognition thanks to its work for Ukraine’s national gas company Naftogaz in a monumental pair of cases against Gazprom, which media reports have valued at around US$80 billion (see ‘Recent events’).

Who uses it?

Besides Naftogaz, the firm has acted for Germany’s RWE in gas price matters. The London office has advised offshore contractors Kvaerner, Seajacks, Synergy, Bassoe and Prospector; shipowners Spar Shipping, Navig8 and Pareto; and mutual P&I insurance associations including Gard, Norwegian Hull Club, London P&I Association and Britannia and Standard Club.

It’s also acted for commodity traders Ronly and Bulk Trading. HNA Group, one of the largest privately owned conglomerates in China, has used it in more than 50 disputes since 2011, with a combined value of US$360 million.

Track record

In 2014, the London office helped an energy contractor prevail in an expedited LCIA arbitration against an Italian oil company concerning a major offshore project in Kazakhstan. After a nine-day hearing, the client was awarded more than 80% of the US$112 million it had claimed.

The Oslo office won a gas price adjustment for a Czech affiliate of RWE against Russia’s Gazprom in 2013, in an ICC arbitration seated in Vienna. The award entailed a refund of more than €1 billion from Gazprom. The year before, the firm persuaded a different ICC panel to reduce the client’s “take or pay” obligations for gas purchased under the same contract.

Another success was in 2011 for Norwegian shipping group Odfjell, securing the enforcement of an SCC award worth US$44 million against Russian state-owned shipyard Sevmash in the courts of St. Petersburg.

It won a favourable award in 2016 for another gas client, who was relieved from potentially onerous obligations for a 35-year period.

Recent events

In December 2017, the firm obtained a final award for Naftogaz in a Stockholm arbitration against Russia’s Gazprom under their long-term gas suppy agreement. The SCC tribunal upheld Naftogaz’s claim for a downward price revision linked to German hub rates – but applied it only after 2014, three years later than Naftogaz wanted. It threw out a US$56 billion counterclaim by Gazprom for alleged breach of “take or pay” obligations.

Naftogaz has celebrated the outcome, saying its total positive financial effect will be more than US$75 billion over the life of the contract. Gazprom has disputed this interpretation and is pursuing set-aside proceedings in the Swedish courts. The SCC tribunal is expected to rule in February 2018 on a US$16 billion claim Naftogaz brought under a separate gas transit agreement. In both cases, Wikborg Rein partners Dag Mjaaland and Aadne Haga co-counselled with Swedish firm Gernandt & Danielsson and Ukrainian firm Aequo.

Wikborg Rein and Aequo are also representing Naftogaz’s gas production subsidiary UkrGasVydobuvannya (UGV) in an SCC arbitration against subsidiaries of Misen Energy, a Swedish company that media reports have linked to controversial Ukrainian oligarch Dmitry Firtash. The dispute over a joint venture agreement is expected to see an award on all issues except quantum in May 2018. Misen has also threatened to bring a US$3 billion treaty claim against Ukraine over the venture.

Pål Wien Espen joined the firm as counsel in January 2017 after more than 20 years with Norwegian telecoms operator Telenor. Ian Teare relocated to the Singapore office to take up the role of managing partner.

Client comment

Eirik Thomassen, head of legal in the project department at Kværner, has high praise for the firm’s work on a complex dispute that encompassed a vast number of technical and commercial issues. “I think it is their good balance between attention to the details and a holistic approach that distinguishes them from other arbitration teams,” he says.

An in-house counsel for a multinational that has used the firm for gas price review cases since 2012 says: “For arbitration proceedings in the energy sector that involve the North European area or Russia, I consider Wikborg Rein the best choice.”

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