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GAR 100 - 12th Edition

Herbert Smith Freehills

05 April 2019

Aiding Chevron in its efforts to resist an allegedly “sham” Cairo award worth US$18 billion

People in Who's Who Legal 11
People in Future Leaders 16
Pending cases as counsel 137
Value of pending counsel work US$59.1 billion
Treaty cases 12
Third-party funded cases 0
Current arbitrator appointments 59 (35 as chair or sole)
Lawyers sitting as arbitrator 26

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 was named president of the LCIA Court in 2018.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 blogs on arbitration and public international law 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 total value of its portfolio has increased by more than US$10 billion in the past year, and includes five cases worth more than US$5 billion and four further cases exceeding the US$1 billion mark.

The firm has had one of the strongest networks of any UK practice in Asia, where it enjoys a particularly strong brand. 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 is now based in Kuala Lumpur (having relocated from Tokyo).

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. He was recently named the US practice head. 

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.

Network

In Europe, the main offices for arbitration are London, Paris, Madrid, Moscow, Frankfurt and Düsseldorf. In Asia, the key cities are Beijing, Shanghai, Hong Kong, Singapore, Tokyo, Bangkok, Jakarta and Seoul. The firm opened an office in Kuala Lumpur in 2017. 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 State Department (in a dispute over softwood lumber). 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, London-listed JKX Oil and Gas, Israel Chemicals and telecoms company Itisaluna.

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

Track record

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. An annulment committee upheld the award in 2018.

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. 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 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

The firm achieved a notable victory for Costa Rica in a US$100 million case brought by a group of US real estate investors under the Dominican Republic-Central America free trade agreement. The tribunal ruled that measures taken by state authorities to protect wetlands and forests were not arbitrary or in breach of DR-CAFTA. The high-profile case had its hearings livestreamed on the ICSID website.

HSF helped Chevron prevail in a US$1.1 billion dispute with Norway’s Statoil over the redetermination of shares in Nigeria’s largest deepwater oilfield. Brazil’s Petrobras is also a party to the dispute. 

Chevron is now using the firm to resist the enforcement of a US$18 billion award, which was rendered by an allegedly “sham” arbitral institution in Cairo. The award favours members of the Saudi royal family and other Saudi and Egyptian nationals who say they are heirs to a 1933 concession. Three arbitrators and two other employees of the arbitral institution have been convicted by an Egyptian criminal court in connection with the award.

A team led by Patricia Nacimiento in Frankfurt helped Kazakhstan to defeat an investment treaty claim brought at the ICC by a Turkish investor in one of the country’s most important airports.

Nacimiento continues to play a coordinating role for Kazakhstan in its battle to prevent the enforcement of a US$530 million Energy Charter Treaty award in favour of Moldovan oil and gas investors Anatolie and Gabriel Stati. Kazakhstan obtained a ruling from the English courts in 2017 that there was a “prima facie case” that the award was obtained fraudulently, leading the Statis to abandon enforcement efforts in that jurisdiction. However, the state’s fraud allegations have failed to prevent the award from being upheld at the arbitral seat in Sweden or enforced in the US. The Statis have obtained attachments against Kazakh assets in the Netherlands and Belgium, with other proceedings pending in Luxembourg.

There were wins in various commercial cases. The firm helped US-owned Mylan Laboratories defeat a US$300 million SIAC claim brought by an Australian biotechnology company over the development of a medicine designed to treat skin and bloodstream infections.

The London office won a US$17 million LCIA award for a subsidiary of Rendeavour, a major African urban land developer headed by New Zealand financier Stephen Jennings. The award upheld allegations of fraud against the client’s Kenyan-owned partner in a dispute over a multibillion-dollar real estate project near Nairobi. The Mauritian courts subsequently enforced the award. 

A team in London also secured the dismissal of a US$32 million ICC claim against their client, a subsidiary of Indian electric utility Reliance Power. The claim was brought by a subsidiary of Dallas-based North American Coal Corporation.

Andes Petroleum – a joint venture between China National Petroleum Corp and Sinopec – has retained the firm for an ICDR dispute with Houston’s Occidental Petroleum concerning rights to the proceeds of a billion-dollar ICSID award. Former HSF partner Larry Shore, now of BonelliErede, is co-counsel on the case.

The firm is acting for a Chinese state-owned oil and gas company in a SIAC arbitration worth US$6 billion in relation to a joint investment in offshore oil and gas assets

HSF has a growing number of disputes linked to Japan. It recently obtained a favourable settlement for a Japanese company in an HKIAC case relating to a delay in closing two share purchase agreements worth US$1 billion. It is also acting for a Middle Eastern client in a JCAA case relating to a long-term distribution agreement; a Japanese trading company in an ICC case seated in Geneva relating to an infrastructure project in North Africa; and a leading Japanese industrial boiler construction company in a case at the Thai Arbitration Institute.

A Japanese energy company is meanwhile using the firm for an ICC case seated in London relating to an oil concession in the Middle East and North Africa region.

In Dubai, the firm has been acting as strategic advisors to Leighton Offshore in disputes with an Iraqi state oil company, as well as acting for joint venture partners in a dispute with a prominent Emirati family.  

The engineering arm of Spain’s Iberdrola is using the firm for a €41 million LCIA claim against a Kenyan state-owned company over a cancelled contract to overhaul Nairobi’s electrical infrastructure.

The world’s largest nickel producer, Norilsk Nickel, has retained the firm for a US$277 million LCIA claim against a Botswana state-owned mining entity.

There were partner promotions for Amal Bouchenaki, Helen Tang and Clare Smethurst in New York, Shanghai and Brisbane.

Peter Behmke was hired as a partner in New York and Jonathan Ripley-Evans joined as a director in the Johannesburg office. Hew Kian Heong and Michelle Li joined as partners from Pinsent Masons’ construction practice, based in Shanghai and Hong Kong respectively.  

Gitta Satryani was promoted to of counsel in Singapore and Jakarta, and Chad Catterwell to executive counsel in Melbourne. 

Client comment

A construction client involved in an Asian airport dispute praises the firm’s ability to “overcome new issues as they arise” and “deal with other stakeholders”. The HSF team led by partners Paulino Fajardo and James Doe were also said to have a “good command of different languages”. 

Nahoji Kanayama of Japanese client Takuma says the firm “gives advice backed up by deep and accurate legal knowledge.” Partner Elaine Wong is an “honest and innovative lawyer combining attention to detail, foresight, agile response, and she also has integrity.” She has an “exceptional ability to see all angles … and identify what is essential to win the case.”  

Kanayama also says partner Chinnawat Thongpakdee in Bangkok is “very level-headed, very impressive and extremely bright”.

A US energy client says Herbert Smith have an “ability to translate a highly technical dispute into legal concepts that were fully understood by the tribunal”. He adds that the HSF team was “a pleasure to collaborate with”.

Insight

Reviews

Regional analysis from arbitrators around the globe, focussing on key developments in specific industry areas and jurisdictions.

Meaar reviews banner 1024 300 230x67

The Middle Eastern and African Arbitration Review 2019

Highlights

CRCICA Overview

Ismail Selim and Dalia Hussein

The Cairo Regional Centre for International Commercial Arbitration (CRCICA)

DIFC-LCIA Arbitration Overview

Alec Emmerson

DIFC Arbitration Institute (DAI)

Robert Stephen, Matthew Harley and Katy Hacking

DIFC-LCIA Arbitration Centre