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GAR 100 - 11th Edition

Herbert Smith Freehills

05 April 2018

The practice retains a busy caseload despite the loss of some senior personnel

People in Who’s Who Legal 13
People in Future Leaders 24
Pending cases as counsel 129
Value of pending counsel work US$48.6 billion
Treaty cases 14
Current arbitrator appointments 38 (of which 26 are as sole or chair)
Lawyers sitting as arbitrator 18

This firm was born of a 2012 merger between the UK-headquartered international firm Herbert Smith and one of the “Big Six” Australian law firms, Freehills. Of the two, Herbert Smith was the better known for international arbitration, though Freehills has added more energy and natural resources expertise into the mix.

Herbert Smith was unique among London firms in that it initially built its reputation through dispute resolution. The firm pioneered the idea that a solicitor could offer value when most others simply farmed cases out to the English Bar. When it became clear that international arbitration was on the rise, the firm went out and recruited one of the few UK lawyers with a name in the field: Julian Lew (now QC), who joined from Coudert Brothers.

Lew duly taught the firm’s senior litigators how to handle international arbitrations. He also brought through a generation of younger lawyers (a role he later institutionalised by founding the School of International Arbitration at Queen Mary, University of London). Many of Lew’s protégés have emerged as leaders in the field, at Herbert Smith Freehills and elsewhere.

Despite that early step, Herbert Smith resisted the temptation to carve out international arbitration completely from its huge litigation group – a fact that became a bone of contention by the time some of Lew’s protégés had grown up and were champing at the bit. When Lew left to become a barrister in 2005, the firm finally created such a group. In doing so, it made London and Paris one in accounting terms for the purposes of arbitration – they book to the same profit centre – sidestepping problems that other firms had had with internal rivalry.

Nowadays, Herbert Smith Freehills’ international arbitration practice is led by Paula Hodges QC in London, who is a vice president of the LCIA Court and member of that institution’s board of directors. Its commercial arbitration group is a force to be reckoned with and the firm has a strong reputation in public international law and investment treaty arbitration, increasingly acting for governments in state-to-state negotiations and boundary and treaty disputes.

Members of the firm are also actively engaged in the wider community, undertaking pro bono initiatives, including advising Sierra Leone on its accession to the New York Convention. It also maintains a blog on arbitration and holds memberships with various international institutions.

On the back of some high-profile results, the practice has seen an influx of high-value work in recent years. The firm reckons its portfolio of pending investment treaty work is as large as it’s ever been. It has nine cases worth more than US$1 billion (including one worth US$18 billion).

The firm has had one of the strongest networks of any UK practice in Asia, where it has enjoyed an even better reputation for international arbitration than at headquarters. That endures thanks to a spine of partners with arbitration experience across the region including in Japan, China, Hong Kong, Singapore and Seoul. Indeed, the firm’s global head of dispute resolution, Justin D’Agostino, resides in Hong Kong and its Asia disputes head Peter Godwin has relocated from Tokyo to launch a new office in Kuala Lumpur.

The team has also expanded into the Americas, launching a New York office in 2013. Partner Christian Leathley is based there and focuses on Latin America-related work.

Other names to know are Craig Tevendale (who took over from Hodges as London group head); Brenda Horrigan in Sydney; Jessica Fei in Beijing; and Patricia Nacimiento in Frankfurt.

Some experienced members of the practice have left for other firms in the past few years, including Isabelle Michou and Emmanuelle Cabrol in Paris, Matthew Weiniger QC in London and Laurence Shore in New York, who had headed the investor-state arbitration and public international law groups.

Network

In Europe, the main offices for arbitration are London, Paris, Madrid, Moscow, Frankfurt and now Düsseldorf. In Asia, the key cities are Beijing, Shanghai, Hong Kong, Singapore, Tokyo, Bangkok, Jakarta and Seoul. As of 2017, the firm has an office in Kuala Lumpur. There are also arbitration practitioners in New York, Dubai, Melbourne, Sydney, Perth, Brisbane and Johannesburg.

Who uses it?

Spain retained it to defend a pair of Energy Charter Treaty cases triggered by reforms to the country’s renewable energy sector. Other state clients include Tunisia, Costa Rica, Malaysia, Kazakhstan and the US Department of Justice (in a softwood lumber matter against Canada that was the first state-to-state dispute under LCIA rules). It also advises China’s state-run oil company Sinopec.

On the investor side, clients include Grupo Ortiz, Standard Chartered Bank, water utility Tallinna Vesi and London-listed JKX Oil and Gas.

Some other clients are UBS, Goldman Sachs, Eurotunnel, Stagecoach, RWE Group, IBM, Marriott Hotels, Mitsubishi Heavy Industries, Alfa Bank, Norilsk Nickel, Rio Tinto, BP, BHP Billiton, Chevron Texaco, AkzoNobel, Eni, EDF, GDF Suez, Huawei, Itochu and Premier Oil.

Track record

Though most of its wins aren’t public, the group achieved a notable victory for Malaysia in a sensitive public international law dispute with Singapore at the Permanent Court of Arbitration in The Hague. The case concerned a billion-dollar development charge on land formerly occupied by Malayan Railways.

It’s had some good results in investor-state cases too. As co-counsel with Linklaters, the firm helped Standard Chartered win US$148 million in an ICSID case against Tanzanian state entity Tanesco after persuading the tribunal that it had been misled by the respondent in an earlier phase of the dispute. Annulment proceedings are pending.

There was a good result on behalf of Spain in 2016, in the first Energy Charter Treaty case concerning the state’s reforms to the tariff regime for solar power. An SCC tribunal threw out the €10 million claim, holding that the measures didn’t violate investors’ legitimate expectations. The claimants were also ordered to pay €1.3 million in costs.

It had a great win for Eurotunnel in the Sangatte dispute some years ago over asylum seekers. Although the compensation was only medium-sized, the case took place in a febrile atmosphere and had a number of unusual elements, not least a five-member arbitral tribunal.

In Asia, the firm emerged on the winning side of Grand Pacific Holdings, a landmark case on enforcement in Hong Kong. That same case also helped to determine that parties who challenge awards unsuccessfully will generally be ordered to pay indemnity costs under Hong Kong law.

It helped Kuwaiti telecoms firm Wataniya defend its position in a Tunisian joint venture – an award worth at least US$1 billion – and helped BP and Rio Tinto defeat an unusual ICSID claim brought by an Indonesian provincial government about operations in Borneo.

In Australia, it obtained freezing orders worth more than US$700 million for a client in aid of an arbitration in Switzerland – the first time Australian courts had made such orders for a wholly foreign arbitration.

Recent events

There were a number of departures at the partner level. Emmanuelle Cabrol in Paris left in early 2018 to head the local practice at Ashurst. In the previous year, Laurence Shore moved to Italian firm BonelliErede, while another former head of the public international law group, London-based Dominic Roughton, moved to Boies Schiller Flexner.

The co-head of the disputes team in Moscow, Vladimir Melnikov, left for Linklaters, following in the footsteps of Matthew Weiniger QC, who moved there in 2015.

Meanwhile partner Gavin Margetson in Singapore moved to Berwin Leighton Paisner and senior associate Robert Stephen in Dubai left to become the new registrar of the DIFC-LCIA Arbitration Centre.

The firm added to its ranks in Paris. Thierry Tomasi joined as partner from Paris boutique Betto Seraglini and Emily Fox rejoined the office as counsel from Quinn Emanuel.

Herbert Smith promoted various new partners, including Javier de Carvajal in Madrid, Tania Gray in Sydney, Hannah Cassidy in Hong Kong and Greig Anderson, Donny Surtani and Rachel Lidgate in London. It also promoted Martin Wallace to senior consultant in Hong Kong, Emi Rowse to of counsel in Bangkok and Dana Kim to counsel in Seoul.

Meanwhile, Paris-based partner Andrew Cannon was added to the prestigious “A Panel” of advisers to the UK government on public international law matters.

On the work front, Patricia Nacimiento in Frankfurt has been playing a coordinating role for Kazakhstan in its efforts to resist enforcement of a US$520 million Energy Charter Treaty award in favour of a group of Moldovan investors. While a challenge to the award failed in Sweden, an English court has agreed to examine the state’s allegations that the award was obtained fraudulently. The investors have meanwhile obtained attachments against more than US$27 billion in Kazakh assets in other jurisdictions.

The Paris and Frankfurt offices successfully defended Algeria’s national electricity company Sonelgaz against an ICC claim worth over €100 million brought by a German company over a terminated project to build a solar power plant near Algiers.

In another Africa-related victory, the firm reports defeating several claims in ICC emergency proceedings brought by a distributor in the OHADA zone against two Swiss investment companies specialising in oil and gas products in Benin.

The London courts refused to enforce an arbitral award in favour of its client, Russian billionaire Nikolay Maximov, against Russian steel producer NLMK after the award was set aside by a court in Moscow.

New instructions came from a group of telecoms investors bringing an ICSID claim against Iraq; and from a subsidiary of Israel Chemicals in one of the first known treaty cases against Ethiopia in a dispute over a potash mine.

The firm continues to act for German investor Axos in the largest treaty claim ever filed against Kosovo; and for Vedanta Resources in a claim against India. It is also representing Samsung C&T Corporation in a SIAC arbitration with Spanish contractor Duro Felguera over a large iron ore mine in Australia and related litigation.

Client comment

Alejandro De la Torre Terrero, in-house counsel at Spanish utility company Iberdrola, says the firm’s attention to detail and “personal attention” are top-notch and that the team led by senior associate Beverly Timmins in Madrid is “incredible.”

The firm’s Dubai team, led by partner Craig Shepherd, attracts high praise from its clients. Senior in-house counsel at Engie Laura Thomson says: “The best compliment I can give is that Herbert Smith Freehills have made it very difficult for us to instruct anyone else.” James Morson, in-house counsel at Summit global Power, adds that the team’s performance in an international construction was “first rate from start to finish.”

BHP Billiton in-house counsel Alistair Warren says the firm’s advice “demonstrates a profound understanding of the company’s commercial priorities”. He says partner Leon Chung in Sydney is “always very responsive”, while Christian Leathley in New York has shown “a strong understanding of pre-arbitration strategy”.

Stephane Harmand, vice president of legal and compliance at Volvo Group Trucks Sales and Marketing in Japan, describes Herbert Smith Freehills as “a class act” that is “head and shoulders above the competition for arbitration work in the Asia–Pacific region”.

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