issue #23, week 45. 08 November 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

United States: Supreme Court assesses role of arbitration

November 8, http://www.ft.com/cms/s/9487697e-8d9f-11dc-a398-0000779fd2ac,
Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F9487697e-8d9f-11dc-a398-0000779fd2ac.html
%3Fnclick_check%3D1&nclick_check=1

The US Supreme Court yesterday struggled to determine the future of arbitration, the privatised form of justice that has long been seen by business as a way to restrain excessive litigation costs.

The court's foray into the field is being closely watched by the business community at a time of increasing concern that the high cost of US lawsuits is hampering the competitiveness of markets.

…

Nigeria: Foreign Firm Sues Govt Over Power Project

November 6, http://allafrica.com/stories/200711060506.html

An Austrian Firm, M. Schneider and its Nigerian Partner, Falcony Limited have sued the Ministry of Power and five others over a power project asking the Federal High Court in Abuja to stop the defendants from cancelling, converting or assigning the project pending the determination of the substantive suit.

Other defendants in the suit are: National Integrated Power Project, Niger Delta Power Holding Company Limited, O.T. OTIS Lahmeyer International M. Schneider Energy Limited and Transnational Energy and Power Systems Limited.

The plaintiffs are asking the court for a determination that the plaintiffs's interest in the fifth defendant either as shareholders or technical partners are subsisting and confers on them benefits to all businesses of the fifth defendants."A determination that 1st-4th defendants' decision to cancel its other contracts with the 5th defendant was illegal, unjust and prejudicial to the plaintiffs interests."In a suit filed on their behalf by their counsel, O.K. Ukoha, the plaintiffs are praying for special damages in the sum of US$80M against the defendants for the loss of income and goodwill.

The statement of claim stated that following a dispute among the shareholders of M. schneider Energy Limited, a number of suits were commenced from 2006 one of which was at the International Court of Arbitration, Paris.They said that by their letter of the 8th of August 2006 and 30th April 2007, the 1st-4th defendants listed five contracts purportedly cancelled "but unsually conceal the facts and status of the federal government contract on Engineering, procurement and construction of distribution projects awarded to the 5th defendant on 5th February 2007 in the sum of N1,948,I47,599.92K."

…

Bolivia plows its own fiscal path

http://www.statesmanjournal.com/apps/pbcs.dll/article?AID=/20071106/OPINION/711 04007/1049
OP-ED, Marcela Sanchez

WASHINGTON -- A few years ago, Bolivia's dependence on Washington as a source of cash was such that its ministers made frequent treks begging for loans to meet the government payroll. They usually had no trouble getting them because Bolivia could be counted on to follow to the letter the economic prescriptions of the international financial institutions located here.

Then in 2006, Bolivia broke with the International Monetary Fund and signaled its desire for independence. Last week the Andean nation becomes the first country ever to withdraw from the International Center for the Settlement of Investment Disputes, a World Bank body that referees contract disagreements between foreign investors and host countries.

…

Conoco to seek arbitration on Venezuela

November 1, http://investing.reuters.co.uk/news/articleinvesting.aspx?
type=allBreakingNews&storyID=2007-11-01T112454Z_01_N01393173_RTRIDST_0_CONOCOPHILLIPS-VENEZUELA-URGENT.XML

ConocoPhillips (COP.N: Quote, Profile , Research) expects to file a request for international arbitration on Nov. 2 over compensation for oil operations seized by Venezuela, the U.S. oil company said in its quarterly report filed with regulators on Thursday.

Leftist Venezuelan President Hugo Chavez pushed both ConocoPhillips and Exxon Mobil (XOM.N: Quote, Profile , Research) out of the country in June as part of a nationalization drive that also included utilities and telecommunications companies owned by international companies. Exxon has already filed for arbitration.

…

United States: Alabama Supreme Court Overturns State's Largest Ever Punitive Damages Award in ExxonMobil Royalties Dispute

November 1, http://home.businesswire.com/portal/site/exxonmobil/index.jsp?
ndmViewId=news_view&ndmConfigId=1001106&newsId=20071101006657&newsLang=en&vnsId=667

The Alabama Supreme Court today overturned a $3.5 billion punitive damages award against Exxon Mobil Corporation (NYSE:XOM), validating the company's assertion that the state had improperly turned a contract dispute into a fraud action. The award resulted from a lawsuit regarding payment of Mobile Bay project royalties to the state.

"This ruling indicates that the Alabama Supreme Court agrees with ExxonMobil's position that this case stems from a contract dispute over a poorly drafted lease agreement. It's a dangerous precedent for a state to be able to charge someone with fraud if you don't agree with its interpretation of a contract," said ExxonMobil General Counsel Charles Matthews.

In 2003, a jury found that ExxonMobil committed fraud in the calculation of royalties it paid the state on production from its Mobile Bay natural gas wells.

During oral arguments in February, ExxonMobil maintained that the evidence clearly showed that the state, for tactical reasons, had tried to turn a contract dispute into a fraud claim. In its appeal, the company wrote, "The jury and the trial court rewarded those tactics with a giant punitive damages award. But there was no evidence of fraud, and no basis for any punitive damages. The State could not prove and the evidence they submitted does not prove fraud. That's because there was no fraud."

Since production began at Mobile Bay, the company has paid to the state more than $1 billion in royalty and lease payments. ExxonMobil's total capital investment in Alabama currently exceeds $3 billion. The company employs more than 200 people and numerous contractors, and more than 300 retirees live in the state.

Since 1995, ExxonMobil has contributed about $3.5 million to charitable, civic and educational organizations throughout Alabama. The U.S. Department of the Interior has honored ExxonMobil for excellence in mineral royalty and production reporting and compliance.

Venezuela: Las Cristinas Arbitral Tribunal Set

November 1, http://biz.yahoo.com/prnews/071101/to419.html?.v=28

Vannessa Ventures Ltd. ("the Company") announces that the arbitration process dealing with the Las Cristinas property in Venezuela continues before The International Center for the Settlement of Investment Disputes ("ICSID"). The Company reports that the parties have agreed to a new chairman for the arbitral tribunal panel that will continue the process that was suspended temporarily in May of 2007. ICSID has also now confirmed that Dr. Robert Briner will chair the tribunal with Prof. Brigitte Stern and Dr. Charles Brower serving as co-arbitrators.

The Company maintains that its rights to mine Las Cristinas were expropriated in a discriminatory manner and without prompt adequate and effective compensation by Venezuela after an investment of approximately US$ 185 million for the exploration and development of the properties that led to a determination of reserves in excess of 12 million ounces of gold and over 1 billion pounds of copper.

…

United States: Under the FAA, Choice of Law and Venue Are Decisions for the Arbitrator to Resolve

http://arbitration-forum.blogspot.com/2007/11/courts-respect-authority-of-arbitrators.html

Burress, Inc. v. John Deere Construction & Forestry Co., No. 7:07-CV-00310, 2007 WL 3023975 (W.D. Va. Oct. 15, 2007) 10/15/2007. Under the Federal Arbitration Act (FAA), disputes over where arbitration will occur or which law is applicable are matters for the arbitrator to resolve, according to a Virginia federal court.

In Burress, Inc. v. John Deere Construction & Forestry Co., No. 7:07-CV-00310, 2007 WL 3023975 (W.D. Va. Oct. 15, 2007), Burress and John Deere entered into a dealership agreement that contained an arbitration clause. A contract dispute between Burress and John Deere arose out of the dealership agreement... Full Story

…

PODCASTS

New episode IDN podcast: Dispute Resolution in Brazil, Interview with Antonio Tavares

http://www.cpradr.org/TrainingEvents/Podcasts/tabid/261/Default.aspx

International Dispute Negotiation (IDN) is presented by CPR as an example of the ways professionals from different countries and backgrounds approach dispute resolution. The podcast is intended to help listeners understand the risks of disputes and shed insight on optimal ways of accepting, mitigating, and managing those risks in the real world, whether through mediation, arbitration, or litigation that arises far from home. The host is Michael McIlwrath, Senior Counsel, Litigation for GE Infrastructure - Oil & Gas.

A new episode is available for download: IDN 4 - Dispute Resolution in Brazil, Interview with Antonio Tavares

EVENTS

Frankfurt Investment Arbitration Moot Court
The Frankfurt Investment Arbitration Moot Court is the first international student competition focussing on investment protection. The students will present their arguments orally on 15 February 2008 before tribunals of arbitration and investment treaty specialists.
February 15 – 16 2008. Frankfurt am Main Chamber of Commerce and Industry, Germany
More information is available at www.investmentarbitrationmoot.com

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