Asia, says Hong Kong–based capital markets
partner Matthew Bersani, who manages the
firm’s practice in the region. “One of the rea-
sons we’re interested in arbitration is that it’s
a countercyclical practice to capital markets
and M&A,” he says. “Having that kind of
practice would be very helpful.”
If Shearman does expand its arbitration
team in Asia, says Bersani, it’s unlikely the
firm would relocate partners from elsewhere.
Rather, it would build a local team with
heavy supervision from the firm’s Paris office.
Emmanuel Gaillard—Shearman’s senior
statesman of arbitration—and his lieutenants
would make frequent trips to Asia.
But the Asian arbitration market may be
too small to support many more entrants,
believes Savage. “People, including ourselves,
see potential, but I think there’s a risk that it
has been hyped up more than it deserves,”
says Savage. The amounts in dispute in Asia
are often low, he says. “The question I’m ask-
ing myself is, under the perception, is there
anything to back it up?”
The amounts in dispute do occasionally
hit the stratosphere. Eight Asia-seated con-
tract disputes made this year’s Arbitration
Scorecard, with amounts in dispute of at
least $500 million. Seven were seated in
Singapore; the other was an ad hoc arbi-
tration—that is, one with no institutional
oversight—convened by the Supreme Court
of India, relating to a broader dispute heard in London
under LCIA rules.
The hype will become reality eventually, says Savage:
“It’s going to happen as trade and investment in Asian
economies increases. I expect the trend to be upward.”
One such investment was that of French food and bever-
age company Groupe Danone, which entered into a joint
venture with Hangzhou Wahaha Group Co. Ltd., based in
China’s Zhejiang Province, in 1996. Things went awry when
Danone accused its business partner of breaching a non-
compete clause. Danone and Wahaha appointed Freshfields
and China’s King & Wood, respectively, to represent them
in a series of eight Stockholm-seated arbitrations that ended
in 2009. The amount in dispute was $1.3 billion.
“There’s going to be more of those, just given the law of
averages,” says Richard Chalk, the Hong Kong–based head
of Freshfields’s Asia arbitration practice. “We anticipate all
our competitors will beef up their practices in Asia, and
some have.”
CONTRACTUAL DISPUTES AREN’T ARBITRATION’S
only potential growth area. Both Savage and Chalk pre-
dict an increase in investment treaty disputes, too. At
the moment it’s a minor niche in Asia. Only six of the
Debevoise’s
Christopher
Tahbaz spends
half his time in
Hong Kong, half
in New York.
Christopher Tahbaz TK
152 treaty arbitrations worth at least $100 million in this
year’s Arbitration Scorecard involved Asia-Pacific parties,
compared with 18 of the 111 contract arbitrations worth
$500 million or more. The only two Asian treaty arbitrations with more than $1 billion at stake were a tax dispute
between Russian mining companies and the government of
Mongolia, and a dispute between the operator of Frankfurt
Airport and the Philippine state.
The elephant in the room is China, which as of June
of this year had signed a whopping 127 bilateral investment treaties, compared with the United States’s 37. Early
Chinese BITs omitted arbitration clauses, but that policy
changed in 1998, and most of the 56 treaties signed since
then allow for arbitration.
So far, companies have been reluctant to take the
Chinese government to task over alleged breaches of
investment treaties. “The size of that market, and the
potential loss if you lose out on that market, is very scary to
investors,” says Orrick’s Pé.
A Malaysian company, Ekran Bhd., became the first
known party to challenge China under a BIT earlier in
May. A Chinese subsidiary of Ekran had its leasehold over
land in China’s Hainan Province revoked by local authori-
ties in 2004, on the grounds that it had failed to meet its
legal obligation to develop the land. According to lawyers
| Winter 2012 | 27
