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GAR 100 - 11th Edition

Cleary Gottlieb Steen & Hamilton

06 April 2018

Still a giant for sovereign states, the firm helped Austria defeat its first ever ICSID claim

People in Who’s Who Legal 2
People in Future Leaders 3
Pending cases as counsel 75
Value of pending counsel work US$125 billion
Treaty cases 20
Current arbitrator appointments
13 (of which 5 are 
as sole or chair)
Lawyers sitting as arbitrator  5

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 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 its 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 1949 in Paris (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 led 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), the Republic of the Congo, Egypt, Iraq and Greece. It also defended France and Austria in their first ICSID cases.

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. It has also acted for 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 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. The award is now being challenged in the French courts.

That year, the firm also successfully defended EDF in a high-profile ICC arbitration initiated by the German state of Baden-Württemberg, 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. In that case, Cleary worked alongside Shearman.

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.

The year before, it helped Russia’s Tatneft win a US$130 million investment treaty award against Ukraine for the seizure of an oil refinery and has since secured a number of court victories as part of the company’s multi-jurisdictional efforts to the enforce the award. It continues to advise the government of Tatarstan (a shareholder in Tatneft) in another treaty claim against Ukraine over the same refinery.

Another success was for Egypt in 2014 – when the firm successfully invoked the fork-in-the-road clause in an investment treaty to secure the dismissal of ICSID claims brought by a hotel investor.

Cleary also 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), clearing the way for the country’s return to the capital markets.

Recent events

In November 2017, Cleary helped Austria prevail in its first-ever ICSID case; a €200 million claim by a private investment bank linked to Julius Meinl V – the heir to an Austrian business dynasty that founded a famous coffee business and the “Julius Meinl am Graben” store in central Vienna. A tribunal rejected the claim on jurisdictional grounds.

It also enabled subsidiaries of US computer storage company Western Digital to settle a trio of ICC arbitrations with joint venture partner Toshiba, which will allow the companies to proceed with the US$18 billion sale of its flash memory unit to a consortium led by Bain Capital.

The firm has had a number of successes as it pursues enforcement of the UNCITRAL award in favour of Tatneft. The Russian Supreme Court declined to hear an appeal by Ukraine, allowing enforcement efforts to continue, while an English Commercial Court has also granted ex parte enforcement. Decisions are pending before the French Supreme Court and the US District Court for the District of Columbia.

In a new instruction, it is defending Greece against an ICSID claim by the Bank of Cyprus over measures taken by the state to address its financial and sovereign debt crisis.

Client comment

A representative of one of the states using Cleary praised the firm’s “international character, deep knowledge of the international economic and financial issues and the wise choices of the people involved”.

Annacker is “a born leader with team spirit, a strategy maestro with a unique and impressive presence in the court room”, the source said.

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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