issue #05, week 07. 13 February 2008
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

Korea: KDIC to Delay Selling Stake in Woori Group

February 12, http://www.koreatimes.co.kr/www/news/biz/2008/02/123_18791.html

Korea Deposit Insurance Corporation (KDIC) has decided to delay selling its stake in the Woori Financial Group amid global stock market turmoil.

The state-run deposit insurer, which holds a 73 percent stake in Woori Finance, was scheduled to block sell a 7 percent stake, worth approximately 1 trillion won, by the end of February. The global stock market plunge following the U.S. subprime mortgage crisis, however, made things unfavorable for the seller. The insurer said it would delay sale to make a deal later at higher prices.

…

Regarding the sale of its stake in Korea Life Insurance to Hanwha Group, he said the deal should be nullified, and added that the ruling from the arbitration would come in the latter half of the year.

The deposit insurer and Hanwha Group separately filed for arbitration with the International Court of Arbitration over Hanwha's takeover of Korea Life Insurance in 2002. The insurer said the sale should be nullified, citing Hanwha's behind-the-scenes agreement with Macquarie Life, which formed a consortium with Hanwha.

…

Canada/India: Imax awarded $11 million in arbitration against E-City Entertainment

February 12, http://canadianpress.google.com/article/ALeqM5h8ntDpp3V-oeKYpYd-ZBSRSQCSDA

Imax Corp. says it has been awarded up to $11 million by an international arbitration panel in a legal battle with E-City Entertainment Ltd. over the development of its theatres in India. The Toronto-based large-format film company said late Monday that the award from the panel of the London-based International Chamber of Commerce is for $9.4 million, plus interest and costs.

…

ProLink Holdings Files Suit Against Elumina Iberica and Shareholders

February 08, http://www.finanznachrichten.de/nachrichten-2008-02/artikel-10075882.asp

ProLink Solutions, a wholly-owned subsidiary of ProLink Holdings Corp. and the world's leading provider of Global Positioning Satellite ("GPS") golf course management systems and on-course advertising, announced today that it has commenced litigation against Elumina Iberica, S.A., Elumina Iberica UK Limited, GP ADS, S.L., and GP ADS LTD and related parties (collectively "Elumina") as a result of multiple breaches, including non-payment, under its distribution agreement. ProLink has also commenced legal action against Elumina in connection with the previously announced acquisition of Elumina. Effective February 1, 2008, the Company terminated its distribution agreement with Elumina Iberica S.A. On January 9, 2008 the Company terminated its agreement to acquire Elumina.

Pursuant to the terms of the acquisition agreement, ProLink has filed claims against Elumina with the International Chamber of Commerce Court of Arbitration, seeking a determination that it properly terminated the acquisition and damages for non-payment of $4.5 million in receivables generated from ProLink's sales of commercial equipment and other services to Elumina. The Company has also filed a complaint in U.S. District Court in Phoenix against Kevin Clarke d/b/a Elumina UK for non-payment of goods sold and delivered, and has filed a claim against Elumina Iberica, S.A. with the International Centre of Dispute Resolution (ICDR) for arbitration under the UNCITRAL Arbitration Rules for arbitration, for arbitration in Phoenix, Arizona as provided for in the parties' Exclusive Licensing and Distribution Agreement seeking damages for non-payment of goods sold and delivered, breach of representations and warranties, legal fees and consequential damages.

…

Reporter claims govn't advisor is involved in Exxon Mobil's complaint

February 12, http://english.eluniversal.com/2008/02/12/en_eco_art_reporter-claims-govn_12A1361323.shtml

Reporter Leocenis García rejected the fact that some sectors in Venezuela are "celebrating" the occurrences in connection with ExxonMobil-Pdvsa dispute, but pointed to an advisor of the Solicitor General's Office as one of the major culprits for the legal dispute.

"I am deeply concerned that an irresponsible sector in this country is celebrating the incidents related to Exxon Mobil's lawsuit against the Bolivarian Republic of Venezuela," he said.

…

Exxon VP: Interested In 'Fair Market' Discussions With Venezuela

February 12, http://money.cnn.com/news/newsfeeds/articles/djf500/200802121259DOWJONESDJONLINE000662_FORTUNE5.htm

ExxonMobil Corp. (XOM) remains interested in getting into "substantive discussion" with Venezuela's state-owned oil company over compensation for its oil assets in the Andean nation, a senior company official said Tuesday.

"We do remain interested in getting into a substantive discussion with PdVSA about the fair market value of the assets that have been expropriated," said Mark Albers, Exxon senior vice president, speaking at the Cambridge Energy Research Associates conference here.

…

South American state wont be intimidated by ExxonMobil: Venezuela

February 11, http://www.independent-bangladesh.com/200802111711/business/south-american-state-wont-be-intimidated-by-
exxonmobil-venezuela.html

Caracas Venezuelan energy minister Rafael Ramirez said Friday that the South American state would not be intimidated by US energy giant ExxonMobil in a legal spat tied to the nationalisation of key oil fields. Ramirez spoke a day after ExxonMobil said it had won international court orders freezing 12 billion dollars in the worldwide assets of Venezuela s state oil firm, Petroleos de Venezuela (PDVSA), as it seeks compensation related to the nationalization push.

…

Chavez threatens to cut off U.S. oil supply

February 10, http://www.marketwatch.com/news/story/chavez-threatens-cut-off-us/
story.aspx?guid=%7BD98A199D-2985-43E6-AC41-54C9484ACA12%7D

President Hugo Chavez on Sunday threatened to cut off oil sales to the United States in an "economic war" if Exxon Mobil Corp. wins court judgments to seize billions of dollars in Venezuelan assets, according to a media report. Chavez repeatedly threatened to cut off oil shipments to the U.S., which is Venezuela's No. 1 client, if Washington tries to oust him, Associated Press reported.

…

Venezuela Returns Fire Against Exxon

February 9, http://online.wsj.com/article/SB120250089574154509.html?mod=crnews

Venezuela reacted angrily Friday to Exxon Mobil Corp.'s move to freeze $12 billion in overseas assets of Venezuela's state-run oil titan, Petroleos de Venezuela SA, calling it "legal terrorism."

…

Pdvsa denies freezing of assets in connection with Exxon Mobil's complaint

February 8, http://english.eluniversal.com/2008/02/08/en_eco_art_pdvsa-denies-freezin_08A1354885.shtml

After US oil major Exxon Mobil reportedly won court orders in New York and London to freeze the Venezuelan oil firm Pdvsa's both accounts in the United States and USD 12 billion-worth assets in the United Kingdom, Pdvsa CEO Rafael Ramírez Friday denied any move against Pdvsa's assets or accounts in connection with a complaint Exxon Mobil filed with the International Center for Settlement of Investment Disputes (ICSID).

The official branded such claims as "absolutely false." "We have not been informed of any ruling by any court that may be final regarding any of our assets. A US court issued a precautionary ruling and we have the right to reply. In short, this is a temporary measure, while we file our allegations." Ramírez showed confidence that the precautionary measure would be lifted.

Exxon wins freeze on $12 billion of Venezuelan assets

February 7, http://news.yahoo.com/s/nm/20080208/bs_nm/exxon_venezula_dc

Exxon Mobil Corp has won court orders freezing up to $12 billion in Venezuelan assets around the world as it fights for compensation for operations lost to President Hugo Chavez's nationalization drive. The largest U.S. company sought the asset freeze to guarantee repayment should it win arbitration over the Cerro Negro heavy oil project.

…

Record year for ICC Court in 2007

February 7, http://www.iccwbo.org/iccbihfi/index.html

The number of new cases filed with the ICC International Court of Arbitration in 2007 totalled 599, a figure unprecedented in the Court's 85-year history. Below are some key figures released by the Court for 2007, pending publication of its annual Statistical Report.

The full Statistical Report will be published in June/July 2008 in the ICC International Court of Arbitration Bulletin.

Bangladesh Government unveils model PSC for 3rd round bidding

February 08, http://www.independent-bangladesh.com/200802081576/country/govt-unveils-model-psc-for-3rd-round-bidding.html

The government of Bangladesh on Wednesday unveiled the model production sharing contract for the third round bidding for offshore blocks with a provision to realise compensation from international oil company for any accident in gas fields.

The model PSC, approved by the council of advisers on Tuesday, has also a provision for holding arbitration with any IOC, selected in the bidding for 28 blocks, in accordance with Bangladesh Arbitration Act 2001, and the arbitration will be held in Bangladesh.

…

South Africa Govt may face 'claims worth billions' from foreign firms

February 06, http://www.engineeringnews.co.za/article.php?a_id=126307

Foreign companies operating in South Africa that have lost production and ultimately profit as a result of the power supply crisis might be able to claim back their losses from the government, according to corporate law firm Werksmans.

The legal firm explained that foreign companies might have a legal right of recourse to the International Centre for the Settlement of Investment Disputes (ICSID) based in Washington, because of the government's obligations under its bilateral investment treaties.

"The main thrust of the treaties is that the South African government undertakes to create 'favourable conditions' for the investments by foreign companies, and that there shall be no unfair discrimination. There is certainly an argument that the South African government has breached these obligations simply by failing to provide for increased power generation when it knew the country's power generation could not keep pace with population and economic growth," Werksmans said in a statement.

…

Qatar: Economy Ministry studying changes in foreign investment law

February 07, http://www.thepeninsulaqatar.com/Display_news.asp?section=Local_News&subsection=Qatar+News&month=February2008&
file=Local_News200802072448.xml

DOHA - A study to allow foreign investors up to 100 percent ownership in certain sectors of the economy is being conducted by the Ministry of Economy and Commerce, Al Sharq reported yesterday, quoting the Director of the Department of Investment Promotion at the Ministry, Dr Khalid Al Darbasti.

The idea is to allow full ownership to foreign investors in sectors which can add value to the national economy such as export-oriented industries. The study would include suggestions to make suitable amendments to the existing foreign investment law.

....

Kuwait: New tax law for foreign firms seen boosting FDIs

February 07, http://www.zawya.com/Story.cfm/sidZAWYA20080207091713/SecMain/pagHomepage/
chnPolitical%20Affairs/obj1549BA27-8F0C-11D4-867000D0B74A0D7C/

In its latest economic brief, National Bank of Kuwait (NBK) reports that, a much-awaited amendment to Kuwait's tax regulations affecting foreign companies doing business in Kuwait finally became law after it was published in the official Gazette on Feb 3, 2008. The most important feature of the amendment is the replacement of the old progressive tax rate structure which saw companies charged between 5 percent and 55 percent on earnings above KD 5,250 Ñ with a flat rate tax of 15 percent.

The amendment also states that profit earned by foreign companies from trading in Kuwaiti shares, whether directly or through investment portfolios or funds, is not to be taxed, and excludes from taxation the profits of Kuwaiti agents earned on trading foreign goods for their own account. Neither the old tax law nor the new amendment subjects foreign individuals to income taxes. Only foreign body corporates with an independent juristic personality are subject to taxation.

…

Article: International Centre for the Settlement of Investment Disputes (ICSID): Tokios Tokeles and Ukraine (Award) (July 26, 2007)

http://www.asil.org/ilib/2008/01/ilib080125.html#j2

The Arbitral Tribunal was composed of: Lord Mustill, President, Professor Piero Bernardini, Arbitrator, and Mr. Daniel M. Price, Arbitrator.

The Arbitral Tribunal dismissed all of the investor's claims alleging the breach of the 1994 Bilateral Investment Treaty (BIT) for the Promotion and Reciprocal Protection of Investments between the Republic of Lithuania and Ukraine. The claimant asserted that the Ukrainian government's actions amounted to a wrongful "expropriation" of his propriety rights and breached Ukraine's obligation to accord fair and equitable treatment to his investment. Furthermore, in support of the Treaty-based claims, these violations were claimed to have constituted a breach of Ukrainian law by "failing to protect the Claimant's business investments" and interfering in his activities. The Tribunal disagreed finding no violation of the BIT or Ukrainian law. Instead it ordered that each side should bear its own costs and expenses and contribute one half of the Costs of Proceedings.

Column: Considering a NAFTA-based Lawsuit? Not So Fast

February 6, http://www.embassymag.ca/html/index.php?display=story&full_path=/2008/february/6/peterson/

Albertan ranchers have a few things in common with their Texan counterparts, an affinity for wide-open spaces and conservative politics not least among them. But now they share something else. Both groups have failed in their attempts to use the North American Free Trade Agreement (NAFTA) to extract financial damages from a neighbouring country in a trade dispute.

Last week, a group of Canadian Cattle Ranchers were informed by a NAFTA arbitration panel that they cannot sue the U.S. government for closing the border in the midst of the Mad Cow Disease scare.

…

PODCASTS

A conversation with Lord Harry Woolf, England's former Lord Chief Justice

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.

Join Mike and CPR President Kathy Bryan as they discuss with Lord Woolf the ADR-centric civil justice reforms he spearheaded in the United Kingdom.

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

Protection of Foreign Investments through Modern Treaty Arbitration - Diversity and Harmonisation

In an ever more globalised world, increasingly based on private sector investments in foreign economies, the issue of investment protection is becoming increasingly important. Over recent decades, the business and legal communities have seen legal protection through arbitration based on bilateral and multilateral investment treaties gaining importance. This conference will offer a framework within which to address many of the issues surrounding modern investment arbitration, both with regard to jurisdictional issues and substantive standards of protection available to an investor.

March 7 2008, Zurich
More information at the website of Swiss Invest Forum

Specialised Arbitration & Advocacy Skills in International Oil & Gas Disputes

Seminar Presenters:
James M. Gaitis, Esq;
Professor T.W. Walde;
Tim Martin, Esq;
Arif Hyder Ali, Esq;
William H. Knull III, Esq and others.

September 08 - 12. Hilton Hotel, Dundee
More information is available at the CEPMLP website (PDF)

MOVES / JOBS

Lee A. Steven promoted to counsel (White & Case Arbitration Practice in Washington, DC)

February 6, http://www.whitecase.com/News/Detail.aspx?news=1979

Global law firm White & Case LLP today announced the promotion of Lee A. Steven to counsel in its International Arbitration Practice in Washington, DC. The promotion follows the election of three new arbitration partners in the Firm's London, New York and Paris offices in January.

…

Laurence Shore joins Gibson Dunn in New York

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/02-07-2008/0004751199&EDATE=

Gibson, Dunn & Crutcher LLP is pleased to announce Laurence Shore will join the firm as partner in the New York office. Shore focuses his practice on international arbitration and litigation. He previously practiced with Herbert Smith in its London office, where he served as global head of the international arbitration practice.

"We are delighted to welcome Larry to the firm," said Ken Doran, Managing Partner of Gibson Dunn. "Larry is well known and highly regarded among international arbitration practitioners. The expansion of our international arbitration practice is a strategic priority for the firm, and the addition of Larry to that group, together with Cy Benson who we recruited to our London office last year, will raise our profile and expand our capabilities in that area in furtherance of that strategic priority."

…

BOOKS

International Competition for Resources: The Role of Law, the State and of Markets

Editor Philip Andrews-Speed
£35 ISBN 9781845860462
Publication due March.
http://www.dup.dundee.ac.uk/title/international_competition.html

The book analyses some of the key economic and legal issues and challenges facing the international energy and mineral industries today. Written by academics who are both leaders in the field and closely involved with the industries they address, the book is essential reading for advisers and policy makers, government officials, lawyers and consultants as well as academics and think tank members.

Contents include:

Visit the DUP website for full details http://www.dup.dundee.ac.uk/title/international_competition.html

Oil and Gas Law: Current Practice and Emerging Trends

edited by John Paterson & Greg Gordon
ISBN 9781845860332
Price £90

Oil and Gas Law - Current Practice and Emerging Trends is a concise and readable account of oil and gas law, not only as it stands but as it is likely to evolve in the context of the United Kingdom Continental Shelf as a maturing province.

Visit the DUP website for full details http://www.dup.dundee.ac.uk/