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GAR 100 - 4th Edition

Covington & Burling LLP

18 February 2011

One of Covington & Burling’s first clients after it opened in 1919 was Norway, in an arbitration with the United States at The Hague.

People in Who’s Who:
4
Pending cases as counsel:
22
Value of pending counsel work:
US$17.5 billion
Treaty cases:
0
Current arbitrator appointments:
6 (of which 3 are as sole or chair)
No. of lawyers sitting as arbitrator:
3

The firm, including lead counsel Dean Acheson, the future US secretary of state, won its client a then-enormous payout of US$12 million. The Norwegian Shipowners case, as it’s known, remains a staple of legal textbooks to this day.

The firm’s reputation in the area has similarly continued. When ExxonMobil hit issues with the Venezuelan government, and arbitration became inevitable, its company turned to Covington & Burling. When GAR began publishing in 2005 the firm was one of the few Washington DC players regarded as able to hold its own on the bigger stage. More recently the firm has been tapped by BP for insurance matters arising from the Gulf of Mexico oil spill, and by Spanish investors in Yukos Oil Company for an SCC claim against Russia.

Today, as many as eight partners cover arbitration on a regular basis. The Washington office is home to a sizeable contingent of Spanish-speaking arbitration specialists and various former diplomats who lend strategic insight on cases. The group has now branched beyond its stronghold in DC into Europe, with two significant lateral hires in London. Those added Stephen Bond, former head of White & Case’s arbitration team in Paris, and Gaëtan Verhoosel, a well-regarded member of the Debevoise & Plimpton European arbitration group.

Network

The international arbitration practice is now split between Washington and London. Besides its five US offices, the wider firm has operations in Brussels and Beijing.

Who uses it?

The practice has a particular following with clients from oil and gas, mining, insurance (on the policyholder side) and life sciences/IP, which are the firm’s chief competencies. Perenco is a client. It’s using the firm (with Debevoise & Plimption) in its ICSID claim against Ecuador. The firm has also been representing Jordan in its interminable Dead Sea dyke feud with Turkish contractor ATA. Newmont Mining has also used the team on several major disputes, including one with the Indonesian governments.

Big wins

When US pharmaceuticals group Merck & Co ran into trouble over liabilities for its withdrawn painkiller, Vioxx, Covington & Burling represented its arbitration in London against its insurers: winning a US$500 million award. That award was ranked, in a 2009 survey, as the third-largest commercial arbitration award of the past five years.

Covington & Burling also persuaded a panel consisting of Jan Paulsson, Charles Brower and Toby Landau QC to let part of a “test” case against the Russian government over the Yukos saga proceed. The case will decide the claim of Spanish funds that hold American depository receipts. Afterwards, both sets of lawyers claimed victory. In Covington & Burling’s favour, however, it was noted that the arbitrators went against the run of previous decisions on one particular legal point.

Recent events

Marney Cheek in the DC office became a partner in 2010. Cheek is a former associate general counsel in the Office of the US Trade Representative, and acts for companies and trade associations in international trade and investment matters.

One of the firm’s high-profile cases, ATA v Jordan, took an unexpected turn in May with an ICSID tribunal upholding part of the Turkish claimant’s case but dismissing another. Both Covington & Burling, representing Jordan, and ATA’s counsel, Latham & Watkins, hailed the ruling as a victory for their client. Jordan has now filed for annulment, at the same time recalling the original tribunal for interpretation proceedings to clarify the effect of the award.

In the Venezuela ICSID arbitration, ExxonMobil’s claim cleared the jurisdictional threshold in June – but the panel rejected claims relating to events before 2006 when Exxon restructured its investment through a Dutch holding company to take advantage of the Venezuela-Netherlands BIT. That’s expected to cut the value of the claim to much less than the original US$10 billion.

Client comment

A counsel at a Fortune 500 company that used the London office for a substantial arbitration matter commends the team as “extraordinarily thorough and organised”, with a “grasp of the facts” that the opposing side noticeably didn’t share. “We received commensurate value for the money [we paid]. I would definitely recommend the team,” the client says.

That’s echoed by another client who asked to stay off the record. In an insurance arbitration, the team’s “cross-examination of witnesses demonstrated great preparation that facilitated skilful handling of virtually any answer. [They have] rich experience in handling these matters, and a really top-flight group of attorneys makes the Covington team a ‘go-to’ group.”

A senior counsel at a major international energy company, who’s used the firm three times on arbitrations “significant to the company”, also provided a recommendation. In arbitration, he added Covington & Burling had taken over the claim a year into its life. The Covington & Burling team duly spotted a claim that their predecessors “had either missed or had judged not worth pursuing”, with positive results “increasing our eventual recovery by several hundreds of millions of dollars... I would strongly recommend the Covington attorneys to a friend without reservation.”

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