GAR Highlights Aníbal Sabater’s Role as Emergency Arbitrator in Prominent Mining Dispute

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GAR Highlights Aníbal Sabater’s Role as Emergency Arbitrator in Prominent Mining Dispute

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August 2016 –  Under the headline “Brazil’s CCX settles Colombian coal fight,” Global Arbitration Review published a story on August 23rd discussing CCX’s US$125 million ICC arbitration with Turkish conglomerate Yildirim Holding.  According to GAR, the dispute concerned several mining assets in northern Colombia, including fifth-largest coal deposit in the world.

According to GAR, “CCX had sought to sell the assets for US$450 million in 2013 as part of a series of divestments . . . Yildirim agreed in March 2014 to buy the assets from CCX for US$125 million, a deal that Bloomberg described as a “fire sale”. The Turkish group paid an initial US$35 million and was to pay the remainder upon the transfer of the assets, which was expected to happen by the end of that year. But the mining titles were not all transferred by the scheduled date, leading Yildirim to lodge an ICC claim in March 2015 seeking to compel CCX to fulfil all conditions to closing.”   GAR notes that Yildirim filed a request for emergency relief after CCX received an unsolicited US$170 million bid for the assets from a group of investors led by US private equity group Blackstone. In its request Yildirim reportedly sought an emergency order to prevent CCX from engaging in talks with potential third-party buyers.  CCX opposed the request.

As GAR’s story notes, Chaffetz Lindsey partner Aníbal Sabater acted as emergency arbitrator in the matter and issued in April 2015 an emergency order disposing of Yildirim’s application and CCX’s opposition thereto.

Aníbal frequently acts as counsel and arbitrator in complex matters under all major international arbitration rules.  Actively involved in professional organizations, Aníbal is the chair of the New York International Arbitration Center’s Programs Committee, a Fellow of the Chartered Institute of Arbitrators, and a Vice President of the American Branch of the International Law Association.  He was also a member of the committee that worked on the first ever ICDR expedited procedures, and is a member of the ICC Taskforce on Financial Institutions and the ICC Taskforce on Emergency Arbitrator Proceedings.

To read this article in its entirety, please click here. (Note: A subscription to GAR may be required to view this article.)

Commisa v. Pemex: Second Circuit Confirms Arbitration Award Vacated At Its Seat

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August 2016 – Last week the U.S. Court of Appeals for the Second Circuit issued a long-awaited ruling in which it:  (i) enforced an arbitral award even though it had been set aside by the courts of the seat of the arbitration; and (ii) re-affirmed the principle that state-owned corporations are entitled to invoke the due process protections of the U.S. Constitution so long as they are not the “alter ego” of the state itself.

The deference issue.  U.S. courts have traditionally deferred to decisions by the courts of the “seat” – that is, where the arbitration took place – to set aside or vacate an arbitration award.  Nonetheless, some U.S. courts previously recognized a potential limited exception for “extraordinary circumstances” where such deference would be “repugnant to fundamental notions of what is decent and just.”  See, e.g., TermoRio v. Electranta, 487 F. 3d 928, 938 (D.C. Cir. 2007).  Until now, however, no court had found that a case met the burden to invoke that exception.[1]

The Second Circuit held that such “extraordinary circumstances” did exist in Corporación Mexicana de Mantenimiento Integral v. Pemex-Exploración Y Producción, No. 13-4022 (2d Cir. Aug. 2, 2016) (“Pemex“).  The case followed a long fight between Commisa, a Mexican subsidiary of U.S. corporation KBR, and Pemex, a subsidiary of the Mexican state-owned oil corporation.  Just before the arbitral tribunal issued a $300 million award in favor of Commisa, Mexico passed two laws that directly affected the dispute.  Those laws: (i) gave exclusive jurisdiction to Mexico’s tax court over claims relating to public contracts; and (ii) provided that a state-owned entity’s decision to exercise rights of “administrative rescission,” the very claim at issue in the arbitration, was not subject to arbitration.

Pemex sought vacatur of the arbitration award in Mexico and obtained a ruling that Commisa’s claims were not arbitrable under the newly enacted laws.  Commisa petitioned for and obtained confirmation of the same award in the Southern District of New York.  The district court held that the retroactive application of newly enacted laws by the Mexican courts effectively deprived Commisa of any forum for its claims.  Hence, the Mexican court’s decision was “repugnant” to U.S. public policy principles and was not entitled to deference.  The Second Circuit affirmed, agreeing that the unique facts in Pemex made this an “extraordinary” case in which the award should be enforced despite the Mexican set-aside decision.

Ultimately, the Pemex decision does not signal a change in the way U.S. courts will view decisions to vacate arbitral awards at the seat.  Instead, it illustrates the extraordinary circumstances that will be required for a U.S. court to consider a decision “repugnant” to U.S. public policy principles.  Future courts are unlikely to follow the result in Pemex absent similarly extreme facts.

The due process issue.  While the ruling on confirmation has received the most press, the Second Circuit also weighed in on a second important issue:  whether state-owned entities are entitled to invoke the due process protections of the U.S. Constitution in contesting personal jurisdiction of U.S. courts.  In the traditional analysis, a foreign state-owned corporation enjoys due process protections, while a foreign state does not.  Here, the Second Circuit found that Pemex should be treated as the Mexican state, because Pemex itself had argued that it was “functionally the Mexican government” in challenging enforcement of the award.[2]  Therefore, it concluded that Pemex was not entitled to due process protections.

Importantly, however, the Second Circuit specifically recognized that state-owned entities are presumed to be separate from the state, and therefore may assert due process challenges to personal jurisdiction.  Their success in asserting those protections will depend on whether they are found to be the alter ego of the state.

We would be pleased to provide you with additional information or answer any questions you may have about how this decision could affect you going forward.  Please feel free to email or call your partner contact at Chaffetz Lindsey for more details.

[1] The U.S. District Court for the District of Columbia also confirmed an arbitral award that was nullified at the seat of the arbitration in Matter of Arbitration Between Chromalloy Aeroservices and the Arab Republic of Egypt, 939 F. Supp. 907 (D.D.C. 1996).  There, however, the court confirmed the award based on its finding that the award would not have been vacated under U.S. federal arbitration law, rather than applying an “extraordinary circumstances” test. This broad holding has been criticized and has not been followed.  See TermoRio, 487 F. 3d at 937.
[2] The Second Circuit also concluded that Pemex had waived its right to challenge personal jurisdiction based on its conduct in this case.

By: Cecilia Moss, Jennifer Permesly, J.D. Anders, and Meredith Craven

This note is provided as a service to our clients and colleagues and does not constitute legal advice.  Should you have any questions about this decision or our practice, please contact any of the lawyers you have worked with in the past or any of the lawyers at Chaffetz Lindsey.

Chaffetz Lindsey Team Successfully Obtains Section 1782 Order Authorizing Discovery in Aid of Pending Proceedings in Brazil

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June 2016 – A Chaffetz Lindsey team consisting of partner Andy Frischknecht and associate Jungmin Cho has successfully obtained a discovery order in the Southern District of Florida on behalf of our client Banco Safra, a Brazilian financial institution.  The federal district court’s order pursuant to 28 U.S.C. § 1782  authorizes the production of documents and the taking of depositions in Florida in aid of pending litigation in Brazil.  Andy and Jungmin are co-counseling in this matter with Janet Munn of Rasco Klock Perez & Nieto, P.L. in Miami.

James Hosking Appointed to AAA Committee

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May 5, 2016 – Chaffetz Lindsey partner James Hosking has been appointed to the International Advisory Committee of the Council of the American Arbitration Association.  The newly-formed committee is tasked with advising the AAA and its international division the ICDR on issues relating to international arbitration rules, regional groupings, training, outreach and education.  The International Advisory Committee held its inaugural meeting on May 5 to coincide with the AAA’s annual Board meeting.

International Arbitration Involving Construction: Best Practices for Documenting Claims and Defenses

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April 2016 – Chaffetz Lindsey lawyers Jennifer Permesly and Tania Cohen have co-authored an article for Practical Law Arbitration entitled “International Arbitration Involving Construction: Best Practices for Documenting Claims and Defenses.”

The article discusses the type of documentation that may be relied upon in SMALL Thumbnail_JLP&TC_IAConstructionArticleinternational arbitrations involving complex construction disputes, and provides an overview of best practices for maintaining documentation during the construction project.  This article is also available in Spanish and Portuguese.

Jennifer Permesly, Partner, specializes in international arbitration and U.S.-based litigation for international clients.  She regularly acts as counsel to owners, contractors and related parties in international arbitrations involving construction disputes.

Tania Cohen, Associate, represents corporate clients in arbitration and general commercial litigation, and has acted as counsel in several high-profile construction arbitrations.

Chaffetz Lindsey Launches New York Commercial Litigation Report

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April 2016 – Chaffetz Lindsey has launched the first edition of its New York Commercial Litigation Report.  The report contains recent case summaries to keep you informed on new developments, and reminded of old ones.  The cases in this issue include:

Spreading the (sovereign) wealth …WelcomeNY_Vol1b
Second Circuit: Foreign Sovereign Immunities Act permits federal securities fraud claims against Kazakhstan’s sovereign wealth fund.  Court finds that alleged misrepresentations outside the United States had a “direct effect” on U.S. investors.

Court boots footwear distributor out of Australian proceeding … 
Commercial Division:  Contractual choice of New York as an exclusive forum prohibited Australian distributor from pursuing litigation in Australia against subsidiary of well-known footwear designer Steve Madden.  NY court issued a rare anti-suit injunction.

“Extraordinarily unlikely” and “truly exceptional” …
Second Circuit decision underscores the difficulty of establishing general personal jurisdiction over out-of-state corporate defendants even where they maintain a substantial physical presence in the forum state.

To view the report in its entirety, please click here.Forum-Choice_V1a

Editors: Charles Scibetta and Andreas Frischknecht

 

Illustrations by Hank Blaustein
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Law360 Quotes Aníbal Sabater in “Conoco ICSID Case Highlights The Expense Of Fairness”

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April 2016 – Law360 recently published an article titled “Conoco ICSID Case Highlights The Expense Of Fairness” as the resignation of the tribunal president in the long-running ConocoPhillips arbitration against Venezuela sparks renewed concerned regarding potential time and efficiency costs that sometimes plague international arbitrations.

Chaffetz Lindsey partner Aníbal Sabater was quoted in the article as saying, “As arbitration users keep repeating, time and cost efficiency is a must in international arbitration. Conoco v. Venezuela is a sad reminder that this goal is not always achieved.  A most immediate difficulty, and a first in a case of this complexity and repercussion, is that the award on liability has now to be supplemented with a decision on damages issued by a tribunal where at least two of the arbitrators were not involved in the liability phase.”

“Ultimately,” he said, “it’s up to the arbitration community as a whole to support ICSID and help it introduce changes in its procedures to avoid situations like the Venezuela-Conoco case in the future.  Like other major institutions around the world, ICSID should be more clearly empowered to decisively address delays, deal with dysfunctional tribunals and have the last word on whether an arbitrator’s resignation is accepted.”

Aníbal acts regularly in investment arbitration matters, and is presently representing clients in various proceedings under investment treaties.  He is an international arbitration specialist with over 18 years of experience, representing clients from around the world and industries as diverse as construction, energy, mining, shipping, technology, and telecommunications, in arbitrations under all major international arbitration rules, including AAA/ICDR, ICC, LCIA, and UNCITRAL. He has also acted in several investment arbitration cases under the UNCITRAL Rules and the ICSID Convention/Rules, as well as in commercial disputes involving states and state-owned entities. Licensed in several US jurisdictions, England and Wales (solicitor), and Spain, Aníbal has represented clients in disputes governed by the laws of more than 20 nations across Latin America, North America, Europe, North Africa, and the Middle East.

To read the Law360 article in its entirety, please click here (a subscription may be required).

Chaffetz Lindsey Represents Liberia in Successful Resolution of Investment Treaty Dispute

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March 2016 – Global Arbitration Review (GAR) has reported on the resolution of an investment treaty dispute between Canadian mining company Diamond Fields International and the Republic of Liberia.   Chaffetz Lindsey attorneys David Lindsey, James Hosking, Jennifer Permesly and Erin Valentine served as counsel to Liberia.

In its claim filed with the International Centre for the Settlement of Investment Disputes (ICSID) in May 2011, Diamond Fields alleged that Liberia had wrongfully terminated certain licenses granted to the company for the exploration of gold and diamonds in Liberia.  At the time that Diamond Fields was prospecting in Liberia, the country was recovering from 14 years of civil war and undergoing a significant governmental transition.  After several years of negotiations as well as several suspensions of the arbitration in light of the ebola crisis facing the country in 2014-2015, the parties eventually reached an agreement in February 2016 to dismiss the arbitration without prejudice to refilling.

“We are very pleased to have assisted Liberia in reaching an amicable resolution of this dispute,” Jennifer Permesly is quoted as saying.  “The claim dates back to a period during which the Liberian government was undergoing a significant transition, which always raises complex issues in investment treaty arbitration. The dismissal of the claim permits Liberia to focus its attention on the country’s ongoing development, including its impressive efforts to rebuild after the recent ebola crisis.”

To view this article in its entirety on the GAR website, please click here (a subscription is required).

Law360 Quotes James Hosking in “3 Things To Consider In Face Of Asian Arbitration Boom”

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March 2016 –A recent article published by Law360, titled “3 Things To Consider In Face Of Asian Arbitration Boom,” highlights the fact that Asia has increasingly taken a front and center role in international arbitration, leaving practice group leaders to ponder practical questions about how much they want to expand their footprint on the continent.  The article examines what factors firms should consider before expanding their international arbitration practices eastward.

Chaffetz Lindsey co-founder and partner James Hosking was quoted in the article explaining the firm’s preference to partner with leading international firms rather than expand its own footprint, specifically in Asia.  As James explains, “We want to be free to take on work and to counsel with the right firm in the right jurisdiction when we need to, and we think we can do that more effectively because we know the Asia-Pacific market well.  We know which firm will suit a particular case and we can put together a team to represent a client rather than having to build the brick and mortar office.”

Chaffetz Lindsey has an active Asia-related practice, having handled in the last year alone more than fifteen disputes involving seven different jurisdictions within Asia-Pacific.  Chaffetz Lindsey lawyers are active as counsel in Asia-related arbitrations, sit as arbitrators in arbitrations seated in Asia-Pacific, represent Asian clients in US litigations, and have active roles in regional organizations.  The firm has particular expertise in commercial and investment arbitration disputes arising out of Asia-Latin America investment flows.

To read the entire Law360 article, please click here (a subscription might be required to access the article).

Law360 Quotes James Hosking in “3 Things To Consider Before Getting An Emergency Arbitrator”

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March 2016 – The leading arbitral institutions now offer appointment of emergency arbitrators who can grant parties interim relief before a tribunal has been constituted.  Chaffetz Lindsey lawyers have been at the forefront of these innovations as counsel, arbitrator and drafters of the rules. In the Law360 article written by Caroline Simson, “3 Things To Consider Before Getting An Emergency Arbitrator,” Chaffetz Lindsey partner James Hosking offers his insights.

To read the article in its entirety, please click here (a Law360 subscription might be required).

Law360 Highlights Shareholder Dispute Victory for Chaffetz Lindsey Client Greatex

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February 2016 – Law360 reported on February 29th that Chaffetz Lindsey has filed a petition asking a New York federal court to confirm and enforce an arbitration award issued by an international arbitration tribunal in favor our client Greatex Trade & Investment Limited.  The dispute involved a project to develop a private aircraft facility at Stansted Airport in England.  The Tribunal rejected all the claims asserted by the claimant Eighteen Ltd. and awarded Greatex more than $300,000 in attorneys fees.

To read Law360’s entire story covering this arbitration, please click here (subscription might be required).

Greatex is represented by Steven H. Reisberg, Ted DeBonis, Stephanie Sado and Gretta L. Walters of Chaffetz Lindsey LLP.

The case is Greatex Trade & Investment Limited v. Eighteen Ltd, case number 1:16-cv-01540, in U.S. District Court for the Southern District of New York.

Charles Scibetta Elected to NYPLI Board of Directors

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February 2016 – Charlie Scibetta, Partner and Co-Founder of Chaffetz Lindsey, has been elected to the board of directors for New York Lawyers for the Public Interest (NYLPI).  NYLPI was established to advance equality and civil rights, with a focus on health justice, disability rights and environmental justice, through the power of community lawyering and partnerships with the private bar.  Through community lawyering, NYLPI puts its legal, policy and community organizing expertise at the service of New York City communities and individuals.  NYLPI’s partnership with the private bar strengthens its advocacy and connects community groups and non-profits with critical legal assistance.

The organization runs four major project areas:

  • NYLPI’s Pro Bono Clearinghouse maintains a network of over 80 law firms and corporate legal departments willing to volunteer their time to address the legal needs of New York’s underrepresented communities.
  • The Disability Justice Program works to advance civil rights and ensure equality of opportunity, self-determination, and independence for people with disabilities. Our advocacy spans many areas, including housing, transportation, education, community integration, and equal access to programs and services in New York City.
  • The Health Justice Program works to bring a racial justice and immigrant rights focus to health care advocacy in New York City and State through representing immigrant  and  detained  individuals  with  serious  health  care  needs,  providing support  to community based organizations mobilizing on the ground, and seeking to eliminate racial and ethnic discrimination and systemic and institutional barriers that limit universal access to health care and impact the social determinants of health.
  • The Environmental Justice Program provides community organizing and legal assistance to low-income neighborhoods and communities of color that bear an unfair burden of environmental threats.
  • What began in 1976 as a small-scale staff working to link low income clients and organizations with attorneys willing to volunteer pro bono legal services, NYLPI has grown into an unparalleled resource for low income, community-driven legal representation.

For more information about NYLPI, please click here.

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