issue #05, week 15. 11 April 2007
Prepared by TDM and Aloysius Gng (CEPMLP/Dundee)

TDM News Digest

provides a condensed overview of recent events of interest to the international arbitration community.

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TDM 2 (2007) - Table of Contents

The Legacy & Lessons of Distressed & Failed Infrastructure Investments in the 1990s special was edited for Transnational Dispute Management by Dr. Ryan J. Orr of CRGP, Stanford University.

EDITORIAL

LEGACY & LESSONS OF DISTRESSED & FAILED INFRASTRUCTURE INVESTMENTS ...

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NEWS

ICSID: Vestey Group Ltd v. Bolivarian Republic of Venezuela (Case No. ARB/06/4) - Claimant files a request for the suspension of the proceeding

Subject Matter: Farming enterprise
Date Registered: March 14, 2006
Status of Proceeding: Pending (Tribunal not yet constituted; the Claimant files a request for the suspension of the proceeding on March 20, 2007)

Indonesian law to ensure investor equality

Apr 11, 2007, Bill Guerin, http://www.atimes.com/atimes/Southeast_Asia/ID11Ae01.html

JAKARTA - After 10 months of deliberations and 11 years in the planning, Indonesia's Parliament passed a new investment bill that ensures equal government treatment for foreign and domestic investors and promises to cut the costly and cumbersome red tape that inhibits many local business sectors.

The new law integrates previous investment-related laws and is specifically designed to revive sagging foreign investment, especially foreign direct investment (FDI) in new industrial capacity and natural-resource extraction. The move comes as Indonesia has been hit particularly hard by China receiving the lion's share of Asia-destined foreign capital in recent years.

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Long-term complaints

Foreign investors in Indonesia have long complained about rampant corruption, red tape, poor infrastructure, powerful labor unions, local-autonomy problems and judicial unpredictability. The foreign business community has so far responded coolly to the new law, which many contend does not go far enough without revisions to the labor and tax laws. And, of course, there are concerns about the actual implementation and the judiciary's willingness to uphold the new law impartially.

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Thailand gets tough on foreign business

11 April, Doha Time, http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=143134&version=1&template_id=48&parent_id=28

BANGKOK: Violators of Thailand's new foreign investment law could face up to five years in prison, under a revised version of the proposed amendments approved by the cabinet yesterday.

The changes, first proposed in January, would limit foreigners to holding no more than 49% of the shares or voting rights in Thai companies. The revised version raised the fine for violations five-fold to up to 5mn baht ($154,000) and also increased possible jail time from three to five years in prison, according to Commerce Minister Krirk-Krai Jirapaet. Companies would also have three years rather than two to adjust to the new regime, he added.

…

Thailand: Foreigners seek business act clarification

April 10, Bangkok Post, http://www.bangkokpost.com/breaking_news/breakingnews.php?id=117994

Foreign investors in Thailand have sought clarification on the need to amend the kingdom's Foreign Business Law, saying they feared it would undermine investor confidence and discourage foreign capital inflows. They made the move at a seminar on "Public Participation: Foreign Business Bill" jointly organised by the National Economic and Social Advisory Council and the Joint Private-Sector Committee to heed opinions by many parties.

Stephen Frost, a board member of the British Chamber of Commerce in Bangkok, said foreign investors had respected Thailand's sovereignty in amending laws governing the supervision of foreign investors investing in the country.

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Thailand: Falling behind regional rivals

April 10, Bangkok Post, http://www.bangkokpost.com/Business/10Apr2007_biz31.php

Foreign business leaders remain adamant that any changes to the Foreign Business Act that expands the definition of foreign firms would be detrimental to Thailand's efforts to attract overseas investment. The cabinet in January approved a new FBA draft that says voting rights would help determine a company's status and ability to operate in protected sectors. Members of the National Legislative Assembly have proposed a separate law with slight changes in how companies are screened for eligibility under the law.

But members of the Joint Foreign Chamber of Commerce say any moves to tighten the law would be greeted unfavourably by the foreign business community.

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Yemen: Aden governor, WB official discuss investment matters

April 10, SABA, http://www.sabanews.net/view.php?scope=f9129&dr=&ir=&id=129239

ADEN - Aden governor Ahmed al-Kuhlani discussed on Tuesday with the international expert at the Foreign Investment Advisory Service (FIAS), affiliated to the World Bank (WB), issues related to foreign and Arab investment activities in Aden.

They talked about obstacles which investors face and sought mechanisms to organize tourism and investment activities in a way to improve investment climate for attracting foreign investments into the governorate. Al-Kuhlani asked lands and security authorities in the governorate to cooperate with investors help them benefit from opportunities which Yemeni investment law offers.

USA: Investment Protections under KORUS FTA

via Mark Kantor, OGEMID

The KORUS FTA text has not yet been made public, but USTR has released a fact sheet summarizing its provisions. That fact sheet is located here - www.ustr.gov/assets/Document_Library/Fact_Sheets/2007/asset_upload_file649_11034.pdf [pdf]. The text of the fact sheet dealing with the investment chapter appears to follow the structure of other recent US FTAs, as follows.

Azerbaijan: Preliminary trial on case of Barmek officials continues

09 April, APA, http://en.apa.az/news.php?id=24186

Preliminary court proceeding on case of president of Barmek-Azerbaijan Electricity Distribution LLC Huseyn Arabul and seven more company officials, who are accused of abuse of power, embezzlement and negligence of court judgements, continued, APA reports.

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Armenia: Q&A Ken Fleuriet (King & Spalding) with about Global Gold's claim against government

April 9, 2007, http://www.hetq.am/eng/court/0704-global_gold.html

Global Gold mining company submitted its claim to the International Center for Settlement of Investment Disputes (ICSID), a body adjunct to the World Bank, against the Government of the Republic of Armenia (ROA). The Company is trying to protect its investment rights in arbitration court. International lawyer of Global Gold Ken Fleuriet, a representative of King & Spalding, answered Hetq's questions.

Peru-Chile border dispute headed for The Hague

Wolfy Becker on April 9th, 2007, http://journalperu.com/?p=820

The International Court of Justice in The Hague, Netherlands, may soon have the last word on a century old conflict: Peruvian president Alan Garcia is contemplating to bring the historic maritime border dispute with southern neighbor Chile before the highest judicial organ of the United Nations.

Shortly before a protest march of Peruvian nationalists was thwarted last week close to the Chilean-Peruvian border, Chilean president Michelle Bachelet remarked on TV that her country has maintained its position throughout history. "If Peru decides to go to the international justice courts, then that's up to them", she said and added that her government will continue to work on a future agenda. "We have a lot more to gain if we cooperate and look at areas of common interest than if we remain stuck in past agendas".

Garcia responded just a few hours later: "Following President Bachelet's friendly declaration, the doors have been opened for us to go to The Hague".

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Mozambique: Country Prepares for Negotiation of EPAs

Agencia de Informacao de Mocambique, April 6, 2007, http://allafrica.com/stories/200704060544.html

The Mozambican government is preparing its position for negotiations with the European Union, scheduled to begin in May, on the controversial Economic Partnership Agreements (EPAs).

On Thursday, a seminar on the subject was held, bringing together officials of the Ministry of Industry and Trade, members of the business community and representatives of civil society.

Ireland: The dispute business

Joe Kelly, Legalweek.com, 05/04/2007, http://www.legalweek.com/Articles/1019943/The+dispute+business.html

Everything moves at a faster pace in Ireland these days. That includes dispute resolution. But what has surprised people is the extent to which alternative dispute resolution (ADR) and arbitration methods have been embraced. The simple explanation is the capacity of these dispute resolution processes to deliver speedy results.

USA: Merrill Lynch Executives to be Retried for Enron Case

05 Apr 2007, Juan A. Lozano, Associated Press Writer, http://www.myfoxhouston.com/myfox/pages/News/Detail?contentId=2858983&version=1&locale=EN-US&layoutCode=TSTY
&pageId=3.3.1

HOUSTON - Three former Merrill Lynch & Co. executives whose 2004 fraud and conspiracy convictions connected to an Enron Corp. deal were overturned last year will be retried in January, a judge said Wednesday. James A. Brown, Daniel Bayly and Robert S. Furst were convicted of conspiracy and wire fraud for helping push through Enron's sham sale of three power barges moored off the coast of Nigeria to the brokerage in 1999.

Jurors also convicted William Fuhs, a fourth Merrill Lynch executive, as well as Dan Boyle, a former Enron finance executive. The jury acquitted in-house Enron accountant Sheila Kahanek.

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CIEL and partner NGOs filed an amicus curiae brief in the Biwater-Tanzania case

http://www.ciel.org/Tae/Biwater_Amicus_26March07.html

On March 26, 2007, CIEL and partner NGOs filed an amicus curiae brief in the Biwater-Tanzania case.

This investment dispute before an ICSID Tribunal is at the heart of the controversy between the Tanzanian Government and a foreign investor concerning the provision of water services in Dar es Salaam from 2003 until 2005. The Tanzanian government announced in May 2005 that it had terminated its contract with City Water because the company had failed in its promise to provide clean drinking water to millions of people in Dar es Salaam. Biwater, the UK-based investor, is now demanding compensation under the UK-Tanzania Bilateral Investment Treaty.

The brief puts forward arguments as to the responsibilities of foreign investors under international investment agreements, particularly where investments implicate sensitive human rights or sustainable development objectives

The submission was filed by the Lawyers' Environmental Action Team (LEAT), the Legal and Human Rights Centre (LHRC), the Tanzania Gender Networking Programme (TGNP), the Center for International Environmental Law (CIEL) and the International Institute for Sustainable Development (IISD). It was opposed by the British water company Biwater, but was supported by the Tanzanian government.

On Feb 2, 2007, the arbitral tribunal granted CIEL and its partners the opportunity to file a written amicus curiae submission. The arbitral tribunal issued its decision two months after receiving the petition for amicus status in the pending Biwater v. Tanzania case.

Amicus Curiae Submission available at http://www.ciel.org/Publications/Biwater_Amicus_26March.pdf [pdf]

Iraq: The Kurdish region seeks more foreign investment

From the Economist Intelligence Unit ViewsWire, http://www.economist.com/daily/news/displaystory.cfm?story_id=8960605

You would be hard pushed to find an area keener on attracting foreign investors than Iraqi Kurdistan. The region is almost entirely dependent on imports, as the authorities search for ways to rebuild an economic base that was all but destroyed during the Anfal campaign of Saddam Hussein in the late 1980s.

Local industry and, especially, agriculture (once the dominant employer in Kurdistan) were all but annihilated by the time Kurdistan gained its autonomy in late 1991. Large parts of the local population had been forcibly evicted from their razed villages to the towns by Saddam, and subsequently employed in the public sector in an effort to ensure their dependence on Baghdad (even now some 1.1m people out of the Kurdistan population of 5m still work in the public sector). Meanwhile, infrastructure was left to deteriorate, and several universities and schools closed. From such an unpromising beginning, the Kurdistan Regional Government (KRG) was born, comprising the three governorates of Dohuk, Erbil (the regional capital) and Suleimaniyah. A civil war between the two main Iraqi Kurdish parties—the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK)—between 1994 and 1996 hardly helped matters, and led to a splitting of the administration into their respective strongholds in Erbil and Suleimaniyah. Since that time, however, the region's fortunes have revived, as the toppling of Saddam Hussein in 2003 and the descent into anarchy in Baghdad and much of central Iraq, combined with a rapprochement between the PUK and the KDP (most state ministries are now merged and located in Erbil), has seen the KRG area emerge as a relative haven of stability.

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The Netherlands: Eureko continues to hope that an elegant solution may be achieved for conflict with the Republic of Poland over PZU

http://www.openpr.com/news/17853/direct-Eureko-B-V-NL-Eureko-Announces-2006-Annual-Results.html

Eureko B.V. is a privately-owned financial services group whose core business is insurance.

…

Meanwhile, the political situation in Poland has further frustrated Eureko's plans for an increased shareholding in PZU S.A. Despite a partial award of an international Court of Arbitration in Eureko's favour, as well as a number of lawsuits filed in connection with Eureko's conflict with the Republic of Poland over PZU, the situation remains unresolved. However, Eureko continues to hope that, through discussions, an elegant solution may be achieved.

…

In August 2005, Eureko's submission to the International Court of Arbitration against the Republic of Poland received a verdict, which was in Eureko's favour (i.e. the Court adjudged the the RoP had infringed Eureko's rights as a foreign investor, by failing to afford sufficient protection to its investments in Poland - as laid down in the 1992 bi-lateral treaty between the Netherlands and Poland).

Verdict of International Court of Arbitration (26/8/2005)

Following the publication by the Ministry of State Treasury in Poland, Eureko confirms it has received the verdict of the International Court of Arbitration, which it is now studying. Eureko's initial reaction is one of great satisfaction. The International Court of Arbitration has recognised that the State Treasury afforded insufficient protection to Eureko's investment in Poland, whereby it breached several provisions of the Agreement between the Republic of Poland and the Kingdom of The Netherlands on the Encouragement and Reciprocal Protection of Investments dated 7 September 1992.

More at http://www.eureko.net/polish/pdf/doc14-en.pdf [pdf]

Canada: Minister MacKay Introduces Bill to Protect Canadian Investment Abroad

March 30, 2007, http://news.gc.ca/cfmx/view/en/index.jsp?articleid=288679

The Honourable Peter MacKay, Minister of Foreign Affairs and Minister of the Atlantic Canada Opportunities Agency, today introduced a bill in the House of Commons as a first step toward implementation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

Philippines: AEDC reiterates $200M offer to bail out gov't from NAIA 3 mess

March 26, http://www.malaya.com.ph/mar26/news8.htm

ASIA'S Emerging Dragon Corp. (AEDC) yesterday reiterated its $200 million bailout offer to the government for the controversial Ninoy Aquino International Airport Terminal III (NAIA-3) despite confirmed structural defects. Eduardo Ceniza, AEDC legal counsel, said the bailout remains the most viable solution to the NAIA 3 legal and financial problems.

…

AEDC said the investment claims amounting to $1 billion against the Philippines filed by Piatco and Fraport AG pending before the International Chamber of Commerce and International Center for Settlement of Investment Disputes (ICSID), respectively, would be dismissed if government withdraws the expropriation case it filed before the Pasay City court.

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Lawyers question corporate bribery confessions

Brooke Masters, March 29 2007, FT.com, http://www.ft.com/cms/s/7948e468-de0d-11db-afa7-000b5df10621.html

The recent jump in the number of international and US firms that have paid tens of millions of dollars to settle cases alleging overseas bribery in breach of US law is sparking a serious debate in the corporate legal community on how to handle such violations.

Prosecutors and regulators strongly encourage companies to turn themselves in and promise co-operation will be rewarded. But a string of record-breaking fines for companies that did self-report have led some defence lawyers to openly question the strategy.

…

ICC: Thai translations of ICC rules

http://www.iccwbo.org/iccbcdcc/index.html

The ICC Rules of Arbitration and the ICC Rules for a Pre-Arbitral Referee Procedure, which have already been translated into several languages, are now available in Thai…

EVENTS

The Investigations into the Oil-for-Food Programme: Lessons learned? - April 16

http://www.dcbar.org/for_lawyers/events/event_Detail.cfm?itemID=2266

Off-The-Record Luncheon Program
District of Columbia Bar
International Law Section / Public International and Criminal Law Committee
Federal Bar Association, Criminal Law Section

Date: Monday, April 16, 2007

Time: 12:00 pm - 2:00 pm

Location: Arnold & Porter, 555 12th Street, NW (Metro Center)

The United Nations Oil-for-Food Programme has been the subject of an unprecedented number of investigations, presenting unique challenges in prosecution and defense, as well as raising crisis management, public investor relations and political concerns for companies involved in the program. The various investigations had different objectives and agendas. This D.C. Bar program will explore the impact of the multiple investigations, including such questions as whether they furthered the stated objective of the Senate's Permanent Subcommittee on Investigations of "following the money" and identifying the corruption; aided the House International Relations Committee's goal of "UN Reform"; and served the U.N. Independent Inquiry Committee's goal of investigating "administration and management" by U.N. officials and personnel and contractor conduct.

What are the lessons learned from this experience for future international investigations into corruption, especially those related to Iraq? What can we expect in any future investigations by the new Congress? Hear from the former Chief Investigative Counsel for the Independent Inquiry Committee into the U.N. Oil-for-Food Programme (the "IIC") Michael Cornacchia; Lawrence J. Halloran, Deputy Staff Director, House Committee on Government Reform (Republican Staff); Frances Berger, Managing Director of Forensic Risk Alliance (a dispute analysis and litigation support company that advised a high profile client in the investigations); and Evelyn M. Suarez, Partner at Williams Mullen and counsel to a Swiss company heavily involved in the various investigations.

Speakers:

Cost:

Registration form https://www.dcbar.org/ecommerce/default.cfm?itemID=2266&action=detail

Unknown Trade Agreements Affecting U.S. Business Overseas: Inter-American FTAs to Which the United States is Not a Party - April 26

http://www.dcbar.org/for_lawyers/events/event_Detail.cfm?itemID=2348

District of Columbia Bar
International Law Section / Inter-American Affairs Committee
International Trade Committee
Luncheon Program

Moderator: Mary Patricia Michel, McKenna Long & Aldridge LLP, Chair, International Law Section

Date: Thursday, April 26, 2007

Time: 12:00 pm - 2:00 pm

Location: McKenna Long & Aldridge LLP, 1900 K Street, NW (Farragut West)

Inter-American trade is an unknown area for many Americans but can have a significant affect on U.S. businesses in the region. This program will explore agreements such as the Andean Community, Mercosur, CSME and other Inter-American trade agreements.

Speakers:

Cost:

Registration form https://www.dcbar.org/ecommerce/default.cfm?itemID=2348&action=detail

2nd Spanish Arbitration Club Conference - June 17-19

The 2nd Spanish Arbitration Club Conference will be held on June 17-19, 2007 at Casino de Madrid (Spain) under the title "El Arbitraje y la Jurisdicción" (Arbitration and State Courts).

More at http://www.clubarbitraje.com/?&lan=eng

CIArb: Outstanding Performances in Vis (East) Arbitration Moot

http://www.arbitrators.org/Institute/PR_CIA021.asp

The Chartered Institute of Arbitrators (CIArb) is pleased to record its congratulations to the more than 300 students from 46 law schools who participated in the recent 4th Willem C Vis (East) Moot in Hong Kong. The Vis East is organised and sponsored by the CIArb's East Asia Branch. The overall standard was very high and the talents of the leading teams exceptional. Participants came from Hong Kong and Mainland China, Indonesia, Thailand, Japan, Korea, India, Spain, Switzerland, Brazil, Australia, Germany, Canada and the USA.

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University of Sydney Wins 2007 Shearman & Sterling Jessup Cup

April 4, http://www.shearman.com/newsevents/jessup/

Australia's University of Sydney has won the 2007 Shearman & Sterling Jessup Cup. The team competed against King's College London on March 31 in the final of the Shearman & Sterling International Rounds of the Philip C. Jessup International Law Moot Court Competition.

The award was presented by Jaculin Aaron, a partner in Shearman & Sterling's Litigation and Insurance practice groups and a past Jessup Competition participant who also took home the top honor when her school won in 1983. This is the third time a team from Australia has won the competition in the past five years. The University of Queensland, Australia and the National University of Singapore were semifinalists.

Short overview of upcoming events

The above information is reproduced from the International Arbitration Planner by kind permission of Lovells (www.lovells.com and www.lovells.com/arbitration). More details on these and many other events can be found at www.arbitrationevents.com

MOVES / JOBS

Freshfields Bruckhaus Deringer: Georgios Petrochilos, Bea Tormey and Peter Yuen promoted to partner

April 2, http://www.freshfields.com/news/dynamic/Pressrelease.asp?newsitem=1154

Freshfields Bruckhaus Deringer announced that Georgios Petrochilos (Paris), Bea Tormey (London) and Peter Yuen (Hong Kong) will be appointed to the partnership as of 1 May 2007.

Abu Ghazaleh appointed as deputy chairman of Global Compact

Jordan Times, 06/04/2007, http://www.menafn.com/qn_news_story_s.asp?StoryId=1093148998

AMMAN - UN Secretary General Ban Ki Moon appointed Talal Abu Ghazaleh, chairman and CEO of the Amman-based Talal Abu Ghazaleh Organisation, as the deputy chairman of the UN Global Compact during its second meeting held at UN headquarters in New York earlier this week.

The Global Compact board of directors includes 20 international figures that represent some of the largest global businesses, the International Chamber of Commerce, the International Labour Union, in addition to other civil institutions.

The meeting addressed topics such as combating corruption, governance, climate change, transparency, prevention of conflict and optimal performance in education in accordance with its 10 principles.

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