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GAR 100 - 12th Edition

Hughes Hubbard & Reed

05 April 2019

The US firm has brought groundbreaking treaty claims against Russia relating to the annexation of Crimea

People in Who's Who Legal 4
People in Future Leaders 1
Pending cases as counsel 20
Value of pending counsel work US$6.1 billion
Treaty cases 8
Current arbitrator appointments 30 (10 as chair or sole)
Lawyers sitting as arbitrator 7

While it might in the past have seemed more of a domestic litigation shop, Hughes Hubbard & Reed in fact stands out from the crowd by its early embrace of international arbitration. The firm was founded in 1888 by Charles Evan Hughes, a future Chief Justice of the United States who became a member of the Permanent Court of Arbitration at The Hague and served as a US delegate to the Pan American Conference on Conciliation and Arbitration in 1928.

The modern arbitration practice was started by Paris partner Axel Baum and Washington, DC partner John Townsend nearly 40 years ago, when they filed their first ICC case. Under Baum’s tutelage, lawyers in Europe and the US have had the time and space to develop true credentials in the field and are now recognised figures in their own right who sit as arbitrators as well as conducting counsel work.

Townsend today leads the international arbitration practice with New York-based partners John Fellas and Hagit Elul, while James Boykin in DC has recently become chair of the investment treaty arbitration practice. Another name to know is Luis O’Naghten, who joined the Miami office in 2019 from Baker McKenzie and brings extensive experience in Latin America-related work.

A former chairman of the board of the American Arbitration Association, Townsend has been a vice president of the LCIA Court since 2014. He’s been on the ICSID panel of arbitrators since 2008. Other members of the team are visible in the wider arbitration community. Fellas sits on the executive committee of the Swedish Arbitration Association, while Elul chairs the arbitration committee of the CPR Institute and sat on the ICC’s task force on financial institutions.

Network

The New York, Paris and Washington, DC offices house the majority of the firm’s arbitration lawyers, with a few in Los Angeles and Miami.

Who uses it?

Recent clients include Ukrainian-Cypriot-Israeli businessman Igor Kolomoisky, Areva, US military shipbuilder Huntington Ingalls, private equity group Tenor Capital, London-listed Hardy Oil & Gas, the US arm of Australian financial services group Macquarie, LG Electronics, Swedish telecoms operator Tele2 Sverige, Indian wind power provider Suzlon Energy and cosmetics producer Roche.

State clients have included Hungary, Lithuania, Togo and Canada (one of the firm’s partners, Joanne Osendarp, is a former trade lawyer for the government) and it has also advised the central bank of a South American country.

Turkish state oil and gas company Türkiye Petrolleri AO used the firm for an ICSID claim against Kazakhstan.

Track record

Hughes Hubbard helped Areva defeat a €150 million ICC claim brought by a Belgian businessman over a failed joint venture to mine uranium in the Central African Republic.

It won an ICSID claim against Serbia over the privatisation of a fertiliser factory on behalf of Lithuanian clients Arbi and Sanitex.The firm helped Lithuania defeat a €206 million claim brought by an Italian investor in the sparkling wine industry in 2013. Although the UNCITRAL panel found the state in breach of a bilateral investment treaty, it refused to award any damages.

In 2012, Osendarp and Townsend helped Canada prevail in an LCIA arbitration brought by the United States concerning the under-pricing of softwood lumber from forests in British Columbia killed by a mountain pine beetle infestation.

In 2010, a Hughes Hubbard team helped a UK subsidiary of US hedge fund Elliott Associates win an SCC award against Russia. It was the first time the state had been held liable under an investment treaty for the expropriation of Yukos Oil Company. The award was later overturned by the Swedish courts, however.

Recent events

The past year has been dominated by developments in a series of groundbreaking claims the firm has been pursuing against Russia on behalf of Ukrainian investors who lost assets in Crimea following Russia’s annexation of the territory in 2014. The investors include controversial businessman Igor Kolomoisky and a number of companies associated with him.

A final award came in the first of these cases in May 2018, with a group of investors winning US$159 million for expropriated real estate properties. The Ukrainian courts have since enforced the award and granted attachments against the assets of three Russian state-owned banks.   

There have also been awards on liability in two other cases where damages have still to be determined: a billion-dollar claim brought by Ukrainian state-owned bank Privatbank over the loss of its Crimean banking operations; and a claim by Kolomoisky personally, which relates to an airport terminal.

Two other cases brought by Kolomoisky-linked companies have seen favourable awards on jurisdiction, which were upheld by the Swiss Federal Supreme Court in October 2018 after a rare public deliberation between the judges.

Away from the Crimea cases, a team led by partner John Wood in DC helped Huntington Ingalls win a US$129 million award against Venezuela’s defence ministry over the repair of naval frigates – a dispute that began more than 15 years ago and gave rise to arbitral proceedings in Rio de Janeiro and US litigation.

The firm also helped Hungary settle an US$800 million ICSID claim lodged by Engie under the Energy Charter Treaty.

The firm is defending Togo from a contract-based ICSID claim brought by a subsidiary of France’s Bolloré Africa Logistics relating to container handling operations.

Other ongoing ICSID work includes representing US businessman Edmond Khudyan in a US$15 million claim against Armenia over the state’s failure to act on allegations that he was defrauded by his business partner.

Elul and Fellas are leading a team defending the Japanese state-controlled operator of the Fukushima nuclear power plant from a US$682 million ICC claim brought by a Canadian mining company over the cancellation of its contract to supply uranium.

Luis O’Naghten joined in Miami, while two lawyers working on the Crimea claims, Leon Ioannou and Vitaly Morozov, were promoted to counsel in DC and Paris respectively.

There were also two partner departures from the Paris office. Marc Henry left to join Fischer Tandeau de Marsac Sur & Associés; while Marc-Olivier Langlois, co-chair of the firm’s construction disputes practice, moved to King & Spalding.

Client comment

Canadian government trade adviser Colin Bird says Hughes Hubbard & Reed “dominated” in written and oral submissions in the softwood lumber disputes, which he said had direct tax implications of over half a billion dollars to Canada. “These were highly complex arbitrations involving high stakes, multiple stakeholders, extensive economic data and novel legal issues,” he says.

Of Townsend, Bird says: “His ability to develop a rapport with the bench has no peer and he is a master at presenting complex economic evidence in a clear and compelling way.” Others in the team “demonstrated an unparalleled command of the economics and context.”

Another client’s former legal director praises the firm’s “intelligence, tenacity and conviviality” in a multi-jurisdictional insurance dispute, adding that Townsend “knows international arbitration inside and out.”

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