issue #13, week 26. 27 June 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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Recent issues:

NEWS

Farmers seek $14m from Zimbabwe

June 26, http://www.ft.com/cms/s/6550f8d4-23fd-11dc-8ee2-000b5df10621.html

A group of dispossessed Dutch farmers has launched a novel compensation claim against Zimbabwe after their farms were seized in a series of violent land invasions they say were backed by Robert Mugabe's government.

The lawsuit has been launched at the International Centre for Settlement of Investment Disputes (ICSID), an arbitration tribunal housed at the World Bank in Washington. It underlines the potential for private litigants to sue governments for compensation in politically explosive areas using official bilateral investment treaties.

…

Ecuador: Arbitration in Occidental Case Rejected

June 23, http://www.forbes.com/feeds/ap/2007/06/23/ap3851354.html

President Rafael Correa said Saturday that Ecuador has no plans to enter arbitration with Occidental Petroleum Corp. over a canceled contract, contradicting comments his foreign minister made just days ago. The California-based oil company filed an arbitration claim with the World Bank's International Center for Settlement of Investment Disputes in Washington in May 2006 after Ecuador canceled its operating contract, claiming Occidental had broken the terms of the deal. Occidental denies any breach of contract and Ecuador had refused to recognize the arbitration claim.

…

Indonesia to restrict foreign investment

June 25, http://www.caycompass.com/cgi-bin/CFPnews.cgi?ID=1023104

SINGAPORE (AP) - Indonesia's new investment law will restrict foreign investment in transportation, mining, broadcasting and armament, a senior government official said Monday.

Foreign investors will be allowed to hold stakes of up to 45 percent in transportation companies and projects, and stakes of not more than 20 percent in the broadcasting sector, said Muhammad Lutfi, chairman of Indonesia's Investment Coordinating Board.

…

Nigeria's Foreign Oil Companies: Are They Really Nigerian or Foreign?

June 25, http://www.thisdayonline.com/nview.php?id=81970

... Most countries these days impose a requirement for foreign investors to be locally incorporated under their laws as a pre-condition for engaging in business in that jurisdiction. In Nigeria, while the Companies Act of 1968 did not have such a requirement, the CAMA, the NIPC Act and sector specific laws make such a requirement a condition. In respect of the oil sector, the Petroleum Act s. 2(2) requires companies that seek oil exploration activities in Nigeria to be incorporated under CAMA. Nigerian laws however do not make clear whether foreign oil companies that are incorporated in Nigeria are "Nigerian companies" with Nigerian nationality, or "foreign companies" with nationalities that is not Nigerian. For instance, s. 18 the Deep Offshore Act, states that a license/lease "Holder" is "any Nigerian company who holds an oil prospecting license or an oil mining lease....." ...

Chad: Orascom wins arbitration ruling in TchadMobile dispute

June 25, http://www.forbes.com/business/feeds/afx/2007/06/25/afx3853489.html

... the company also said an International Chamber of Commerce panel issued a final decision in its favour, with financial compensation, in the arbitration action against Chad-based fixed telecom operator Sotel Tchad and the Republic of Chad.

The dispute arose from a decision by Chad's Ministry of Telecommunications to invalidate the transfer of 51 pct of the shares in TchadMobile to OTH despite the fact that a valid agreement was entered into in late 2002 between OTH and Sotel Tchad. As a result, OTH suspended its operation of TchadMobile in July 2004 and proceeded with the ICC arbitration.

Yemen: Cabinet opens the door wider to investors

June 23, http://www.yobserver.com/front-page/10012450.html

The Cabinet made two significant decisions during its Tuesday meeting intended to dramatically improve Yemen's investment climate. First, it approved an amendment to an article of the Trade Law of 1991, in order to allow non-Yemenis to practice trade without the partnerships of Yemenis. Previously, companies in Yemen had to have a majority Yemeni ownership. "I expect that this amendment will encourage and attract foreign capital to invest in our country," said Dr. Yahya al-Mutawakel, the Minister of Industry and Trade.

…

Venezuela: Exxon, ConocoPhillips say no to Chavez

June 26, http://www.star-telegram.com/190/story/149602.html

Exxon Mobil Corp. and ConocoPhillips refused to sign deals Tuesday to keep pumping heavy oil under tougher terms in Venezuela's Orinoco River basin, signaling their departure from one of the world's largest oil deposits.

Analysts said the move, however, won't have a major effect on supplies or lead to higher prices at U.S. pumps because production by the two companies will shift to other producers who agreed to the pacts.

The changes are part of a broader nationalization drive by President Hugo Chavez to assume greater control over strategic areas of the economy. Aside from the oil industry, the government recently nationalized the country's top telecommunications and electricity companies.

…

Chavez: Big oil firms to leave Venezuela

June 23, http://money.cnn.com/2007/06/23/news/international/chavez_oil/index.htm

President says several major companies reject terms for nationalizing project as deadline nears.

CARACAS, Venezuela -- Some major oil companies have rejected Venezuela's terms for the takeover of their multi-billion dollar projects and can leave the OPEC nation, President Hugo Chavez said Friday, days before a deadline for them to strike nationalization deals.

Exxon Mobil, ConocoPhillips, Chevron Corp., Norway's Statoil, Britain's BP Plc and France's Total are the targeted companies in projects valued above $30 billion and capable of producing 600,000 barrels per day.

…

United States: Revised version US-Peru FTA

June 25

The U.S. has now published on USTR's website a revised version of the U.S.-Peru Trade Promotion Agreement (the US-Peru FTA). The revised version can be found at http://www.ustr.gov/Trade_Agreements/Bilateral/Peru_TPA/Final_Texts/Section_Index.html

Ghana: Areeba Makes U-Turn in Arbitration Case

June 22, http://allafrica.com/stories/200706220597.html

SCANCOM LIMITED, operators of Areeba mobile telecommunications network, has beaten a dramatic retreat from pursuing an arbitration process it filed at the London Court of International Arbitration (LCIA), in the case in which a Ghanaian Investor is laying claim to 20% shares in the company.

…

The motion filed by Grandview Management Ltd, was seeking an order of the court to restrain Scancom Limited from going ahead with the arbitration processes before LCIA since it has the tendency of bringing about confusion in the issue.

…

Russia: The Taxman Takes Control of Russneft

June 21, http://www.kommersant.com/p776257/r_1/Russneft_tax_fraud/

The Moscow Arbitration Court confirmed yesterday that stock in Mikhail Gutseriev's Russneft has been frozen in connection with the suit filed by the Federal Tax Service. Sources say that the tax service is claiming a controlling share in the company. Experts note that the situation is looking more and more like a repeat of YUKOS, but Gutseriev still has a chance to avoid the fate of Mikhail Khodorkovsky.

The Moscow Arbitration Court confirmed yesterday that stock in Russneft oil company has been frozen. ZAO Servis-reestr, the company's registrar, has been prohibited to perform transfer operations with the disputed stock. The court ruled to freeze the stock in question in seven cases involving firms that own it. There is another case in which the respondent is Russneft shareholders. No stock has been frozen in it yet. The court was unable to say what quantity of stock was frozen. Russneft declined to comment on the question.

…

Russia: Arbitrators Tackle Russian Corruption in Fight Over Cell Phone Operator

June 20, http://www.law.com/jsp/article.jsp?id=1182243947726

Both sides got dirty in the tussle over Russian cell phone operator OAO MegaFon. In Switzerland, industrial spies searched an arbitrator's garbage. In Bermuda, a retired British spy turned private eye persuaded a gullible KPMG International accountant to turn over confidential company information via a "dead drop" in the basket of his moped. And those are most likely the tactics of the (relatively) good guys.

The case pits Russian conglomerate Alfa Group Consortium and its allies against a Bermuda investment vehicle called IPOC International Growth Fund Limited. The prize: a stake in MegaFon worth up to $2.5 billion today. IPOC accuses Alfa of directing the dirty tricks in this case. But Swiss arbitrators and judges have found IPOC to be guilty of something much worse than dumpster diving. They have declared IPOC to be a vessel for Russia's minister of telecommunications, Leonid Reiman, to launder money stolen from the Russian people. Reiman, say the Swiss arbitrators and judges, abused his office by issuing a valuable cellular license to a company that he himself controlled, then parked the proceeds in IPOC

…

Burundi: Argosy Minerals Inc.: Musongati Arbitration

June 21, http://www.marketwire.com/2.0/release.do?id=744874

Andover Resources NL ("Andover"), a wholly owned subsidiary of Argosy Minerals Inc. (ASX:AGY) has instructed its French legal counsel, Shearman & Sterling LLP to commence arbitral proceedings under the Rules of the International Court of Arbitration of the ICC in Paris against the Government of Burundi to enforce its rights pursuant to the Mining Convention between the parties dated 11 February, 1999.

This decision has been taken after extensive, but futile, attempts by Andover to negotiate with the Government of Burundi to continue its work under the Mining Convention, and to obtain the necessary research permit from the Minister of Mines for that purpose.

…

Argentina: King & Spalding Earns $140 Million Arbitration Award for Creditors of Enron and Ponderosa

June 21, http://www.marketwire.com/2.0/release.do?id=744922

King & Spalding, a leading international law firm, announced today that its international arbitration team has earned a key victory for creditors of Enron Corporation and Ponderosa Assets, L.P., in their claim against the government of Argentina. King & Spalding won approximately $140 million for its clients, making this award one of the five largest ever granted by the International Centre for the Settlement of Investment Disputes (ICSID), a division of the World Bank.

The dispute arose from the passage of Argentina's so-called "Emergency Law" in January 2002, during the height of Argentina's 2001-2002 economic crisis. The law "pesified" (i.e., converted from U.S. dollars to Argentine pesos) and froze all public utility tariffs, including those of Enron's Argentine gas transportation subsidiary, TGS. The effect of these measures made TGS insolvent by reducing its revenues by nearly two-thirds.

…

United Arab Emirates: Bracewell & Giuliani LLP opens office in Dubai

June 25, http://www.bracewellgiuliani.com/index.cfm/fa/news.release/item/
a807fd58-1b72-4384-9b99-ae09ed5948c4/Firm_Opens_Office_in_Dubai.cfm

Bracewell & Giuliani LLP announced the opening of its office in Dubai, United Arab Emirates today. The Dubai office will be led by partner David M. Stockwell, a 25-year resident and legal practitioner and a former senior United States diplomat in residence there.

The Dubai office will advise clients on doing business in Dubai and in the other member-states of the United Arab Emirates, including operations in the new Dubai International Financial Centre (DIFC), and on local labor law, commercial and corporate law, arbitration, licensing, litigation, energy and environmental matters in the Arabian Gulf region. Mr. Stockwell serves as a current member of the Financial Markets Tribunal of the Dubai Financial Services Authority, which hears appeals of regulatory/administrative rulings of the Authority, the regulator of activities within the DIFC.

…

Canada Welcomes Favourable Decision on UPS Legal Challenge

June 13, 2007, No. 78, http://news.gc.ca/web/view/en/index.jsp?articleid=317579

The Honourable David Emerson, Minister of International Trade, and the Honourable Lawrence Cannon, Minister of Transport, Infrastructure and Communities, today welcomed a favourable decision from the arbitration tribunal in the UPS v. Government of Canada dispute initiated under NAFTA's Chapter 11.

"I am pleased with the tribunal's decision. It confirms that Canada is meeting its NAFTA obligations. We did not discriminate against UPS and treated them fairly," said Minister Emerson.

In January 2000, United Parcel Service of America, Inc. initiated a legal challenge against Canada, alleging that Canada Post was benefiting from undue privileges as a government-owned corporation. The hearing was held in December 2005 in Washington before a tribunal constituted under NAFTA Chapter 11. The tribunal issued a final decision on this matter on June 11, 2007, confirming that Canada had met its NAFTA obligations and dismissing UPS's claim for damages.

"Canada's right to operate a public postal service was never challenged," declared Minister Cannon, "but some Canada Post specialized services were targeted. We are very satisfied with the tribunal's decision."

Under the NAFTA, Chapter 11 provides rights and protections for investors and investments in member countries. Companies that believe these investor rights have been violated have direct access to dispute settlement before an impartial arbitration tribunal.

OPINION

A New Assertiveness for Latin American Governments

Mark Weisbrot, International Business Times, June 11, 2007
http://www.cepr.net/index.php?option=com_content&task=view&id=1214&Itemid=45

The relationships between governments and investors - especially transnational corporations -are changing rapidly, and this is especially true in Latin America today. Last month, Bolivia, Venezuela, and Nicaragua surprised many international observers by announcing that they would withdraw from the World Bank's international arbitration body, the International Center for the Settlement of Investment Disputes (ICSID). The ICSID is a place where - under prior arrangement - foreign investors who have a dispute with a host government can submit their case to binding arbitration.

Bolivia's position is that ICSID is not an impartial arbitrator, and cannot be expected to act as one, so long as it is part of the World Bank. As was highlighted by the recent controversy that led to the resignation of World Bank head Paul Wolfowitz, the Bank may have 185 member countries, but it is really dominated by Washington. The saga continues as the Bush Administration once again has chosen a close neo-conservative associate of President Bush - former U.S. Trade Representative Robert Zoellick - to run the institution. The World Bank has long used its power - not only from its own lending of $23 billion annually, but also as part of a "creditor's cartel" led by the International Monetary Fund - to pressure governments to adopt policies favored by transnational corporations. These include privatizations and removing restrictions on foreign ownership, trade, and investment flows.

…

When the corrupt cannot hide

June 27, http://www.monitor.co.ug/oped/oped06274.php

Transparency International defines corruption as "the misuse of entrusted power for private gain". Corruption ranges from petty to the grand or macro corruption. Macro corruption entails high ranking public officials pocketing billions of shillings intended for large national development projects.

…

In my last article, I discussed the recent English case of Attorney General of the Republic of Zambia v. Meer Care & Desai and Others (the Chiluba Case) as a precedent that may be used in Uganda to recover looted State funds. I wish to highlight the recent decision of another foreign tribunal, the World Bank's International Centre for the Settlement of Investment Disputes (ICSID), which will be a useful precedent.

In October 2006, an ICSID Arbitral Tribunal comprised of President Gilbert Guillame (the former head of the International Court of Justice), Professor Andrew Rogers QC (the former Chief Justice of New South Wales in Australia) and V.V. Veeder QC (a leading English commercial barrister) delivered a landmark judgement in the case of World Duty Free v. The Republic of Kenya.

…

EVENTS

Specialised Arbitration & Advocacy Skills in International Oil & Gas Disputes
Annual CEPMLP Seminar exploring the legal and practical issues arising in the resolution of oil and gas disputes through commercial and investment arbitration
August 27-31, 2007 (provisional). The Old Course Hotel, St. Andrews, Scotland, UK
More information is available at the seminar website.

West Tankers: Anti-Suit Injunctions to Protect Arbitration Agreements - July 11

British Institute of International and Comparative Law
Wednesday 11 July 2007, 17:00 to 19:00
Location: British Institute of International and Comparative Law, Charles Clore House, 17 Russell Square, London, WC1 5JP

Participants: Chair: The Rt Hon Lord Justice Lawrence Collins

Speakers:

Referred to the European Court of Justice for a preliminary ruling on 27 February, the case of West Tankers Inc v. RAS & Others [2007] UKHL 4 has the potential to significantly impact on arbitration in the EU. The question raised is whether Regulation 44/2001 permits anti-suit injunctions to protect an arbitration agreement. The seminar will assess the legal and practical implications of an ECJ decision prohibiting such injunctions.

For further details visit www.biicl.org

See:

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

ICSID: Nassib G. Ziade Appointed Chief Counsel

ICSID NEWS RELEASE, June 20, 2007

http://www.worldbank.org/icsid//highlights/06-20-07.htm

On May 18, 2007, the Secretary-General of the International Centre for Settlement of Investment Disputes (ICSID), Ms. Ana Palacio, announced the appointment of Mr. Nassib G. Ziade as its new Chief Counsel.

Mr. Ziade, a dual Lebanese and Chilean national, has extensive experience in the administration of international legal proceedings, and in the management and development of international tribunals. Since 1997, he has served as the Executive Secretary of the World Bank Administrative Tribunal (Tribunal). In this capacity, he reorganized and strengthened the Tribunal's Secretariat, and administered over 260 cases while serving five successive Tribunal Presidents. He was in 1998 a member of the Grievance Process Review Committee which reviewed and reformed the Bank's Internal Conflict Resolution System, and has since been involved in all subsequent reviews of the System. He is a former Counsel at ICSID and a member of the Board of Editors of the ICSID Review - Foreign Investment Law Journal. In addition, he advised the Government of Bahrain and played an important role in the establishment of Bahrain's Constitutional Court.

Mr. Ziade has published numerous studies in international law, organized several high-level international colloquia and spoken at numerous conferences. He is a Patron of the American Society of International Law and a member of its Executive Council. He is also a member of the Societe francaise pour le droit international and of the Swiss Arbitration Association. He has since 1991 been a member of the Editorial Advisory Committee of International Legal Materials and since 1987 its Corresponding Editor for the Middle East. He has been invited by The Hague Curatorium to deliver a course on public international law at The Hague Academy of International Law.

Mr. Ziade studied private and public law as well as international law, administrative and political science, and business administration at the French university in Beirut, the American University of Beirut, Cambridge University and the Sorbonne. Mr. Ziade is fluent in Arabic, English and French, and has working knowledge of Spanish.

Mr. Ziade was selected to this position through an international competitive selection process. He officially assumes his new functions with ICSID on July 1, 2007.

McMillan Binch Mendelsohn LLP has added international disputes partner Robert Wisner to its Toronto office

June 25, http://www.cnw.ca/fr/releases/archive/June2007/26/c8903.html

McMillan Binch Mendelsohn LLP is pleased to announce that Robert Wisner has joined its highly regarded Litigation and Dispute Resolution group as partner. His practice will focus on international arbitration and litigation, foreign investment protection and international trade.

Returning to McMillan Binch Mendelsohn after four and a half years at a boutique firm specialising in investor-state arbitration, Mr. Wisner has extensive experience in international commercial disputes and expects to carry out a mixed commercial and treaty-based international practice.

…

Squire Sanders bolsters New York litigation presence

June 26, http://www.thelawyer.com/cgi-bin/item.cgi?id=126843&d=11&h=24&f=23

US firm Squire Sanders & Dempsey has continued its recent hiring spree by taking on a team of litigators for its New York office.

Pavia & Harcourt litigation head Richard Mattiaccio joins Squire Sanders as a partner with his colleagues Steven Skulnik and Victor Genecin, leaving Pavia with just 17 lawyers in total.

…

BOOKS etc.

The Art of Advocacy in International Arbitration

R. Doak Bishop, Editor, List Price: $125.00 500 pages. 1 Hardcover Volume. Index. Published March 2004. ISBN:1-929446-42-X

For a limited time, the publisher offers a 20% discount off the list price of $125, valid until June 28, 2007.

For further information and to order: http://www.jurispub.com/books/book.php?id=211&m=ge

To view the Table of Contents: http://www.jurispub.com/books/book.php?id=211&mode=toc

About the Editor: R. Doak Bishop is a Partner in King & Spalding's Houston Office and Chair of the Firm's International Arbitration Practice Group. Mr. Bishop has over 27 years of experience focusing on international arbitration and litigation of oil and gas, energy, and construction disputes. He is Vice-Chair of the Institute of Transnational Arbitration; a Fellow of the Chartered Institute of Arbitrators and Chartered Arbitrator. He has served as sole, chair, party-appointed, and institution-appointed arbitrator in ICC, AAA, UNCITRAL arbitrations and has substantial experience as counsel in ICSID arbitrations. He is the author of numerous articles on international arbitration

About the Book: In this ground-breaking work, the subject of advocacy is explored in the context of the cross-cultural environment in international arbitration. Despite the prevalence of arbitration as the preferred method of dispute resolution in international contracts, virtually nothing has been written about the crucial topic of advocacy-until now. This work addresses that void. The book focuses on the differences in substance and style of advocacy in the civil and common law systems and among variant cultures in Europe, Latin American, Asia, and North America. The procedures and practices of advocacy in different arbitral forums are also discussed. The critical importance of credibility, a sound strategy and written advocacy are emphasized. Specific techniques for advocacy are highlighted. Rules of cross-examination tailored to international arbitration are developed. The arbitrator's perspective on the tactics of advocacy is also addressed. In conclusion, a model is outlined for harmonizing the differing cultural approaches to advocacy. For the international advocate, this seminal work is a must.

Note: Doak Bishop will be preparing a special feature on the subject for TDM.

Fulbright 2007 International Arbitration Report published

The recently published Fulbright & Jaworski 2007 International Arbitration Report can be downloaded here http://www.fulbright.com/images/publications/PubIA.pdf

The report has become an annual must-read for anyone involved in cross-border transactions and business operations, particularly in the energy and project finance areas. This year's report contains an analysis of the Draft UNCITRAL Model Law, a report on the busiest arbitral institution in the world and the outcomes of pivotal arbitrations recently concluded around the world.