Lucy Greenwood was recently appointed Chair of the North America Branch of the Chartered Institute of Arbitrators.
Here is a full report of the NAB Energy Conference that Greenwood recently co-chaired in Houston:
Kathleen Paisley, from Ambos Law, who spoke on one of the panels said: “I speak at many high level international arbitration events every year and this was one of the most interesting and well organized conference I have attended in a very long time, and this sentiment was echoed by all the other attendees and speakers with whom I spoke”.
The launch of GAR’s Arbitrator Research Tool and the imminent launch of the Arbitrator Intelligence Questionnaire were celebrated at a Diversity and Transparency Event chaired by Greenwood. A pre-cursor to the main Energy Arbitration Conference the networking event was sold out weeks in advance.
Greenwood kicked off the discussion with overview of the recent statistics she has gathered on the numbers of women appointed to international arbitration tribunals, and noted particularly the imbalance between the number of women being appointed by institutions, which is showing a significant increase on previous years, and the number of women being appointed by the parties, which remains a low figure.
Greenwood gave a detailed presentation on the ART to the delegates, and Juliet Blanch, International Arbitrator and one of the delegates and a recent addition to the ART, commented from the floor about her experiences. Delegates were extremely impressed with the scope of the product, particularly the ability to cross-refer to tribunal chairs, co-arbitrators and counsel with whom each arbitrator has conducted cases, what GAR has called its “secret ingredient”.
Greenwood describes ART as a “brilliant product” and something that, as it develops and adds more arbitrators, “will mean that parties no longer have to rely upon word of mouth or make possibly flawed assumptions in relation to arbitrator appointments”. Professor Catherine Rogers, founder of Arbitrator Intelligence, explained that the project was conceived as a solution to address the difficulties of obtaining information on arbitrators, particularly those faced by parties from developing countries. Through its questionnaire, Arbitrator Intelligence aims to promote transparency, fairness, and accountability in the selection of international arbitrators, and to facilitate increased diversity in arbitrator appointments.
Rogers explained that the AIQ will be formally rolled out for public participation on June 1, with a launch at a series of events in Singapore, Hong Kong, and Kuala Lumpur.
Delegates enjoyed champagne and macaroons after the event, which was hosted by Locke Lord LLP and sponsored by Norton Rose Fulbright LLP.
All the conference delegates were then invited to cocktails at the Coronado Club in Houston, before the main conference began on Friday morning.
Key Note Address
Robertson introduced the President of the CIArb, Nayla Comair-Obeid, the first woman to have started a law firm in Lebanon and the first President of the CIArb from the Middle East. Comair-Obeid addressed CIArb’s mandate to promote the resolution of disputes through methods other than litigation. One of the CIArb’s goals for 2017 is to educate its membership on the synergies between common law and civil law in international arbitration. Comair-Obeid also addressed the conference theme of resolving micro-crises within macro-crises, namely the oil price crisis, geopolitical crises in the Middle East and Africa and the environmental crisis. Encouraging the peaceful resolution of disputes, Comair-Obeid said the CIArb was charged with providing a blueprint for international best practices, academic excellence, and professional integrity.
The conference then moved to discuss issues relating to energy arbitration in panels. Where panelists used powerpoint, we have provided links to the materials - click on the panelist’s name to view the presentation.
Around The World In 50 Minutes
The first panel was chaired by Benjamin Hughes (Independent Arbitrator), with panelists Tim Martin (Independent Arbitrator), Comair-Obeid, Funke Adekoya (ÆLEX Law Firm), Jose Antonio Rodriguez Marquez (Bufete Rodríguez Márquez, S.C).
Despite the Middle East and North Africa having two-thirds of proven oil reserves and half of the world’s natural gas reserves, Tim Martin observed that a miniscule proportion of international arbitration cases come from that region. He spoke about the implications of Sharia law and procedural hurdles. Comair-Obeid briefly discussed Qatar’s 2017 arbitration law, but the bulk of her presentation centered on Lebanon’s approach to development of the oil reserves discovered in 2010. Lebanon expects to begin production in the mid-2020s, but faces challenges due to its fragile political and social situation as well disputes over maritime borders with Cyprus and Israel. Funke Adekoya addressed challenges in Ghana, Nigeria and Uganda and also touched on the importance of due diligence in drafting production sharing contracts and joint operating agreements. Rodriguez Marquez addressed the five principles of the recent Mexican energy reforms and the 10 trends that militate in favor of arbitration. Hughes concluded with brief remarks on the energy arbitration environment in Korea. Koreans are significant users of arbitration, and Korea recently reformed its arbitration act to adopt the 2006 revisions to the Model Law.
Damages: The Who, The What And The How Much
The panel on damages comprised Professor Pablo T. Spiller (University of California, Berkeley), Wayne Wilson (The Claro Group) and Helmut K. Johannsen (Singleton Urquhart LLP) and was chaired by Herfried Wöss (Wöss and Partners PLLC). Wöss introduced the panel by explaining the origins of the full compensation principle applied through the but-for premise which leads to the expectation interest, and on the difference in the structuring of damages claims between bilateral sales and works contracts and trilateral income generating contracts and investments, Wilson discussed Professor Steven R. Ratner’s 2017 article, Compensation for Expropriations in a World of Investment Treaties: Beyond the Lawful/Unlawful Distinction, and shared the principles behind compensation for expropriation: (1) make investors whole; (2) incentivize states not to expropriate; (3) send a signal to states, investors and other actors; (4) maintain viability of international arbitration; and (5) ease of administration. Johannsen addressed three topics: (1) the types of damages available; (2) construction delays and the major methods for analyzing such delays; and (3) practical aspects of damages in construction arbitration (mostly managing and limiting document production requests, and managing issues when there are numerous complex claims in dispute). Spiller addressed the use of stock market information in damages assessments in recent awards, including Yukos v Russia (2014), Rompetrol v Romania (2013), Crystallex v Venezuela (2016) and Rusoro Mining v Venezuela (2016).
Choosing The Right Energy Arbitrator
The panel was chaired by Derrick Carson (Locke Lord LLP), with panelists Kevin O’Gorman (Norton Rose Fulbright US LLP), Juliet Blanch (Juliet Blanch Arbitration) and Olivier Andre (CPR Institute). Carson stated that the choice of arbitrator was the key ingredient to a well-managed arbitration. In addition to guiding the panel’s discussion, Carson urged the audience to consult the CIArb guidelines entitled Interviews for Prospective Arbitrators. O’Gorman raised three questions to consider when picking an arbitrator: (1) who is picking the arbitrator? (the parties, co-arbitrators, the institution); (2) what criteria should the arbitrator fulfill? (contractual requirements, availability, language, nationality, subject-matter expertise, reputation, soft skills, etc.); (3) how should the arbitrator be identified? (word-of-mouth, scholarly articles, membership lists, energy arbitrator lists, or with the newest aids such as Arbitrator Intelligence or GAR's Arbitrator Research Tool). Blanch addressed the lack of women as arbitrators. She noted that 20% of women are part of senior partnership at law firms, but only 10% are appointed as arbitrators. She noted that the Equal Representation in Arbitration pledge, which seeks to improve the profile of women and their appointment to tribunals on an equal opportunity basis, now has over 1,800 signatures and she encouraged those present to sign the Pledge online. André responded that diversity on CPR panels has a long ways to go, but there is some progress. In 2016, the selection of women and minorities as panelists was higher than their proportional representation on the CPR panel lists.
Billed as “musings from the trenches, a look back and forward at international arbitration”, Robertson interviewed Nigel Blackaby (Freshfields Bruckhaus Derringer LLP) on his career in international arbitration. Diverting and engaging, the program was extremely popular with delegates, who also enjoyed the lunch hosted by Locke Lord LLP.
When asked what sparked his interest in energy disputes, Blackaby reflected on their challenging nature, raising the need to deal with geopolitical issues arising between states and how such disputes took in “parts of the world as diverse as Siberia and the Ecuadorian Amazon.” He described his first energy arbitration, which related to a well workover project in Siberia and involved a complex mixture of geopolitics and a bilateral investment treaty between the UK and the USSR. Reflecting on the role of the Argentina cases in defining the role of investment treaties in the field of energy arbitration, Blackaby highlighted the importance of negotiating good stabilization, arbitration and applicable law clauses.
Robertson asked Blackaby what strategies he employed when formulating a case. Blackaby emphasized the importance of telling a good story and finding “the moral angle – as an arbitrator you want to feel that you are doing the right thing”, capturing the attention of the tribunal with a compelling narrative and explaining why your client is a good and responsible investor. Blackaby highlighted the importance of keeping a line of communication open with the government – settlement discussions can then proceed in parallel with the arbitral proceedings. The parties should also be creative about the ways in which they can settle their differences and consider how value can be created in that process, whether through bond payments, block swaps or extensions to concessions, or by the investor helping to promote the state as a good place to invest. Robertson observed that Blackaby was not only a practitioner of arbitration but also a student and invited his observations on trends in arbitration. Blackaby commented that “states have become more savvy” and that the new generation of treaties are three or four times longer: “every treaty needs to be looked at on its own terms” and carve outs need to be navigated. Third party financing has also become a “major aspect” of international arbitration and tax disputes “area major source of recent claims” in which stabilization provisions play an important role.” The discussion then moved to third party funding - Blackaby observed that “all cases for a corporation are third party funded, either by shareholders’ funds or lenders’ funds” and that on occasion, third party funding has been “a lifeline for access to justice”.
Robertson asked Blackaby about the strangest places his job had taken him. Blackaby recalled a tribunal visit to the Ecuadorian Amazon, a ride in a Bahraini military helicopter and an audience with the President of Guatemala. Blackaby concluded by describing the two most exciting moments of his commercial life: being part of the team in the first investment arbitration to be considered by the US Supreme Court in the BG Group v Argentina case and overcoming the defense of necessity in the first Argentina crisis case (for CMS Energy).
Ten Tips on Effective Advocacy in Energy Arbitration
The afternoon session began with 'Ten Tips on Effective Advocacy in Energy Arbitration', a panel chaired by Gerald Ghikas QC (Independent Arbitrator) who began by emphasizing the importance of appreciating that appearing as an advocate in an arbitration is very different from appearing in court. Thomas Brewer (Independent Arbitrator) recommended that advocates grasp the significance of the first procedural conference and "treat is as your first opportunity to begin winning the case" - be proactive, involve your client in your preparation and give advance thought to what sort of impression you are going to give to the tribunal. Paula Hodges QC (Herbert Smith Freehills LLP) addressed the use of motion practice in arbitration, cautioning that "multiple applications can backfire" and encouraging judicious use of applications to avoid "smoke and mirrors" being used to disguise weaknesses in the case. Highlighting the importance of written advocacy - "do not underestimate the power of the pen" - Hodges discussed the importance of providing a coherent narrative and working with witnesses when preparing witness statements. Drawing on the IBA Rules on the Taking of Evidence in International Arbitration, Cunningham observed that "discovery has begun to overwhelm arbitration" and highlighted the importance of requesting a document with specificity if it is required. Cunningham proceeded to address the use of depositions in arbitration, which although "generally not appropriate" can be useful in limited circumstances, particularly where a witness is unavailable for a hearing or where their evidence is extremely complex and technical. The best way to control the use of discovery and depositions is, Cunningham advised, to "make sure that you select the right arbitrator."
Jean Kalicki (Independent Arbitrator) concluded the session by providing some valuable tips on adapting oral advocacy to an arbitration environment. In particular, know your audience and their expectations - consider the "cultural, generational and educational backgrounds" of the tribunal, not just their legal backgrounds, and be aware of gestures and body language that can "go awry" in a cross-cultural context. With main oral submissions being made at final hearing the role of the advocate is to "synthesize an enormous amount of information that the tribunal has already received." Kalicki's key lessons in this regard were: 1) persuasion starts with a powerful beginning; 2) identify a few powerful themes to simplify your narrative and inspire empathy; 3) offer effective roadmaps that include your conclusions and key reasoning; 4) use tools such as decision trees, chronologies or diagrams to help organize your information; and 5) focus on the holes in the other side's case and be prepared to adapt your own to the other side’s attacks, because "as in war, no battle plan in arbitration survives first contact with the enemy."
Use and Abuse of Process in International Arbitration
The 'Use and Abuse of Process in International Arbitration’ panel, chaired by Murray Smith, (Independent Arbitrator) examined the role of the courts in upholding core principles of international arbitration and preserving the integrity of the process.
David Haigh QC (Burnet, Duckworth and Palmer LLP) began by highlighting some of the interactions between the two fora. Haigh identified Taizhou Haopu Investment Co. Ltd v Wicor Holding AG as an example of a case where the local court would not uphold an ICC award rendered in Hong Kong based on public policy, observing that despite the obscurity there was “a certain coherence or logic within that paradigm”. Haigh then addressed Commisa v Pemex, a decision of the 2nd Circuit where the court considered the decision of a judge in the Southern District who had upheld the award and provided a detailed overview of the Chevron v Ecuador proceedings. Professor Andrea Bjorklund (McGill University) began by emphasizing that lawyers love process and the importance of "ensuring that litigants receive due process in the concern of every judicial proceeding". The question is "When does due process itself become abusive process?" Bjorklund examined this question by reference to the enforcement of ICSID awards through the lens of the competing visions of the New York and D.C. courts, with specific reference to Micula v Romania. Highlighting one of the key benefits of an ICSID award, namely that it will be treated as a final award in the courts of member states, Bjorklund noted that following Article 54 of the ICSID Convention, an ICSID award still has somehow to be given the status of a domestic award and res judicata status. Bjorklund explained that the U.S. courts have implemented the ICSID Convention, which is entitled to full faith and credit but the implementing language refers only to enforcement not recognition – Bjorklund questioned “how do you fill the gap?” and noted that the statute also gives exclusive jurisdiction to the federal courts to enforce awards, something normally addressed by state courts. The options for federal courts are therefore to follow an ex parte or plenary procedure. The D.C. courts have taken a different approach, suggesting that the judgment creditor must sue on the judgment as a debt, which requires service of process. Bjorklund explained that the plenary procedure gives the debtor the option to contest the enforceability of the award. The EU appeared amicus curiae, arguing that the ICSID award was not enforceable as it violated EU law. The New York District Court dismissed the EU’s arguments and the Micula case is on now appeal to the 2nd Circuit. Bjorklund concluded by observing that Romania had achieved value from the delay – it has still not paid the award, asking “is that due process for Micula or abuse of process for Micula?”
Arbitrating the Mega Energy Case
Examining the challenges posed when 'Arbitrating the Mega Energy Case’, panel chair Gary McGowan (Independent Arbitrator) began by defining a 'Mega Energy Case' as one involving over $100m of claims, scores of factual and expert witnesses and a significant number of issues. McGowan invited the panelists to share their thoughts on why the preliminary conference is critical and how it can be made more efficient. Alan Crain (Independent Arbitrator) emphasized the importance of the tribunal focusing on the fundamentals of the arbitration from the beginning; understanding the probable breadth and depth of the case, and the advocates need to prepare similarly, putting together a budget, finding experts early – making sure they have “nailed down what your case really is.” The tribunal and the parties should consider opportunities for consolidation or joinder of parties, if appropriate, to avoid parallel proceedings with inconsistent results in different forums around the world. It is important to remember that “companies are not in the business of winning lawsuits or arbitrations, they are in the business of business”.
McGowan invited the panelists to share their views on dispositive motions. Jim Loftis (Vinson & Elkins LLP) observed that in mega cases dispositive motions remain rare, noting that tribunals want to know what the wider consequences will be before granting such motions. Kathleen Paisley (Ambos Law) highlighted the “inherent tension” between dispositive motions and the tribunal’s desire to ensure the enforceability of its award and to have all the facts before deciding, although she anticipated that there would be a push towards the use of some form of dispositive motions in the future. Crain noted that when sitting as an arbitrator he always encourages parties to bring motions early and to have the tribunal consider them as early as possible. McGowan added that he encouraged their use in respect of pure questions of law.
Inviting the panel to consider what a tribunal can and should do to allow fairness and due process when ordering discovery, McGowan described discovery in a mega case as the “lion”, with the tribunal in the role of “lion tamer”. Loftis observed that discovery and experts are the two things that derail cases – the tribunal must put in place and require the parties to comply with a discovery process structured to facilitate: 1) predictability; 2) practicality; 3) planning; and 4) compliance. Compliance does not simply require the parties to stick to the deadlines – it also requires the tribunal to exercise oversight. Turning to depositions, Loftis highlighted the “huge cultural issue” surrounding the use of depositions in international arbitration, noting that if witness statements were properly drafted then there was normally no need for depositions.
McGowan noted that in mega cases expert evidence can be “unnecessarily complicated and too voluminous”, and it is “easy to get lost in the woods and not see the forest when expert opinions and reports are too long”. Loftis highlighted the English court practice of identifying areas for expert evidence in advance and suggested that legal expert opinions should be discouraged, on the basis that there are few laws that cannot be dealt with more effectively by having an advocate appear. Crain indicated that he participated in arbitrations where the tribunal had experts conduct a “teach in” where each side’s expert would present on a related topic to the tribunal and the tribunal would then “hot tub” the experts with questions only from the tribunal. On the topic of expert hot tubbing, Loftis explained that he had formerly been of the view that this was a bad idea, placing an extra burden on the tribunal to provide questions to the experts in advance to enable them to properly prepare answers and to properly monitor the process to make sure that the expert who came off better was not simply the better advocate.
McGowan asked the panel how counsel can assist with expert evidence on damages. Paisley advised that the key is rigour in the damages analysis without overcomplicating the evidence, which requires lawyers to work with damages experts early to ensure they fully understand the damages evidence in the same way they do liability and can effectively advocate it to the tribunal. She noted that as an arbitrator she had observed “increasing interaction” between parties, experts, and tribunals from early in the proceedings, and that informed tribunals were increasingly sophisticated in their approach to both experts and counsel concerning difficult damages issues.
In-house Counsel Open Forum
The conference program concluded with a lively and informative Open Forum, with Greenwood leading a discussion with Eugene Silva (ExxonMobil) and Teresa Garcia-Reyes (GE Oil & Gas), debating whether the world of commercial arbitration needed radical change to keep its users happy. Greenwood began by addressing the issue of costs and time, noting that a 2010 study of the Corporate Counsel International Arbitration Group found that 100% of participants believe that arbitration “takes too long” and “costs too much”. Noting that this particular study was undertaken seven years ago, Greenwood asked Silva and Garcia-Reyes for their take on how corporate counsel view arbitration now, observing that around the same time as the study international arbitration had been described as the “least worst alternative”. Silva noted that he was “not at all surprised” to hear that users were unhappy, accepting that the reality is that “few in house counsel are happy with any litigation”, arbitration is a “transaction cost” and “in some respects, the least worse option.” Garcia-Reyes concurred with Silva’s view that no one likes to see a litigator or for a dispute to last longer than a day, noting that there are ways to control how long arbitration will take and cost: “people forget the concept of predictability” – in state court it is possible to get a great or bad judge, in arbitration the parties can decide who will decide.
Jim Reiman (ReimanADR) provided the first question from the floor and asked the panel for their thoughts on the use of single arbitrator in all but “bet the company” or extremely large/complex matters, in conjunction with adopting the appellate rules for protection against a single arbitrator “going off the rails” as a means to reduce time and costs. Garcia-Reyes explained that it had become her default position to provide for a single arbitrator in smaller cases. Garcia-Reyes added that studies suggest that three arbitrators only add value when the issues raised are more complex. Silva advised that he recommended a single arbitrator for certain contracts, noting that although “everyone is for efficiency in the abstract”, such an approach “runs counter to the deep seated desire to have their guy on the tribunal.”
Blanch asked the panel to what extent they had the right to refuse potential arbitrator candidates when provided with candidates from institutions. The panel’s view was that there were certain messages that they could convey to the institution to influence the choice. Blanch continued, asking whether institutional rules should try and reduce costs, whether it should be up to the parties or whether the tribunal should use discretion. Garcia-Reyes noted that although parties talk a lot about efficiency, “efficiency does not always equate to fast and cheap”. Garcia-Reyes added that the tribunal should really listen to what the parties want and expressed the view that institutions have a role to play when it comes to making proceedings run efficiently, making sure that “all expectations are managed and the tribunal is actually doing what the parties expect them to.”
The panel was asked whether the time had come for arbitrators and parties to embrace motion practice to narrow issues and quickly resolve cases on threshold issues where appropriate. Silva recalled a recent case where a sole arbitrator had ruled on a dispositive motion at the start of a hearing which led to the other side dropping their case before the hearing concluded. However, he hesitated to embrace the idea fully and noted that there was probably room for a happy medium. He also suggested that it would be helpful for the parties to have more contact with the tribunal during the proceedings, instead of contact being focused on the preliminary and final hearings.
Greenwood then posed the question of what a tribunal should reasonably expect from counsel and vice versa? Silva began by observing that the “best way to manage was sometimes with the pocketbook” – the tribunal should make it clear that if parties adopt a certain course of action then it will result in an award of costs against them. Garcia-Reyes observed that the danger was that arbitrators are not necessarily providing a judicial function and may not always be ableto effectively police the parties and their counsel.
Greenwood asked whether it is ever possible to objectively evaluate arbitrators after the fact. Silva questioned how objective you can really be, noting that we are all “held hostage to our own experiences and biases” and that while information may be beneficial, such information will contain a lot of “noise” and we are therefore all likely to come back to our personal experiences. Greenwood noted that the publication of awards by the institutions, including the name of the arbitrator, has been suggested as one way to enable parties to evaluate arbitrators and expand the pool of arbitrators. Garcia-Reyes said that she did not have an issue with publication of awards, expressing the view that they could be helpful when selecting an arbitrator and may result in more appointments for certain arbitrators if parties had an insight into what they had done in the past. Silva recognized that publication was contrary to the principle of confidentiality, noting that it was difficult for clients to “get behind sanitation” and observing that an arbitral award delivered by a three-arbitrator tribunal was effectively a decision “by committee – who’s to say what is attributable to which arbitrator?” Garcia-Reyes agreed that this was an excellent point, adding that in her view this was why projects like Professor Rogers’ Arbitrator Intelligence project goes hand in hand with the ‘puppies or kittens’ proposal to enable parties to see arbitrators’ general preferences.
Paisley asked the panel what percentage of cases they mediated before commencing arbitration and whether they used stepped dispute resolution clauses. Silva explained that he saw very few cases where the parties agreed to or required a formal mediation, although he considered it useful for senior management to meet and had seen that approach adopted in practice. Conversely Garcia-Reyes advised that GE’s contracts used a three stage approach – executive management meeting, mediation and arbitration – and that almost all disputes go to mediation first.
The panel were asked whether they interview prospective arbitrators. Garcia-Reyes explained that GE liked to interview arbitrators, particularly to gain an insight into their soft skills and in some cases to consider their likely leaning on interpretation issues. Silva added that ExxonMobil interview in a great many cases and that they stick closely to the CIArb’s Guidelines on Interviewing Arbitrators. There was a suggestion from the floor that the future of international commercial arbitration was in the Americas, “the one consistently bright spot on the globe”. Silva expressed the view that he did not foresee a lessening in the use of international arbitration but where there was a case to be made for going to domestic courts he could foresee some bias in favor of that approach, although if cross border enforcement was required then arbitration was “the only show in town”.
Greenwood concluded the session by asking the panel whether international arbitration was really the “least worst alternative”. No, said Garcia-Reyes, observing that in a lot of cases it was a “pretty good option”. Silva concurred, adding that he thought that arbitration was “probably better than that”. The conference concluded on that cautiously optimistic note.
Following the conference young members of the North American Branch hosted post conference cocktails for the delegates, sponsored by Jackson Walker LLP, before the delegates changed into jeans and repaired to Jackson Street BBQ for real Texas barbeque, complete with obligatory hats, bandanas and Texas lapel pins. As one delegate put it, whilst proudly wearing their cowboy hat, this had been a "great event, lots of knowledge gathered in one room, rounded up by the perfect Texan BBQ".
Click on the photo gallery below to see selected photographs from the event.