familiar with the case, Ekran
argued that the removal of its
leasehold violated the China-Malaysia BIT, in force since
1990. The parties settled
within three months, says Pé.
This case isn’t the start of
a flood, he believes, but it
does reflect a growing awareness among clients in Asia
that they have the option to
sue governments under an
investment treaty.
For lawyers, treaty arbitration is not a path to riches by
itself. Sovereign parties often impose a cap on fees, says
Pé. “These investment treaty cases are more about prestige
than anything else, particularly if you’re acting for the
state,” he says. His team recently went head-to-head with a
rival for a role representing an Asian government in a treaty
arbitration, a pitch he says was highly competitive. Having
reached the final choice
between two firms, Orrick
lost out on the assignment—a
decision Pé says came down
to fees.
But the prestige that comes
with sovereign cases more
than compensates for the paltry fees in terms of commercial
business, he says. Pé was a supporting partner in Orrick’s
team representing the government of the Democratic
Republic of the Congo in a high-profile case in Hong Kong
this year. The firm succeeded in persuading Hong Kong’s
highest court that Congo was entitled to absolute sovereign
immunity from the enforcement of two arbitral awards.
Orrick argued that Hong Kong is now part of China, one of
a few countries that still gives governments full immunity
from lawsuits. The decision was widely reported because it
implied that other governments could claim such immunity—and the win brought other work, says Pé. “We’re now
doing some corporate work in Congo that I think our success in that case has helped us win,” he says.
more dominated by PRC
people, or people with PRC
connections.”
There are other advantages
to being local. Arbitration
lawyers know that selecting
the right tribunal is a critical part of arbitration strategy. Many of the region’s top
arbitrators are independent
or attached to barristers’
chambers; examples include
Hong Kong’s Michael Moser
and Teresa Cheng, and
Singapore’s Michael Hwang.
Knowing which arbitrator is suitable for a particular dispute
comes only through familiarity, says Freshfields’s Chalk: “If
you get the tribunal right, you’re halfway there.”
An increasingly sophisticated base of in-house lawyers in
Asia will soon tire of liaising with partners in New York or
When Freshfields represented Danone in the Wahaha
arbitration, the firm’s Paris office took the lead, traveling to
the Stockholm-based hearing when necessary. But arbitration lawyers based in Hong Kong could interview witnesses
in China, cutting time and costs considerably, says Chalk.
And having a local contact is simply good service, adds
Chalk. Clients respond better to someone whom they can
meet locally, or at least contact in the same time zone, he
says: “It’s just human nature.”
Cleary partner Christof von Dryander, who is based in
Hong Kong and Frankfurt, says he sees the value in being
close to the client. But he says there are “numerous situations” in which it’s advantageous to use an arbitration team
based primarily overseas, such as when key documents are
located overseas, or if a dispute needs specialized expertise
the firm cannot offer locally. “In any event, over the years
we have attracted substantial arbitration work for Asian
clients and on Asian matters through our offices in Europe
and the U.S.,” he adds.
While firms like Cleary bide their time, those with arbitration partners already in Asia are consolidating their positions. Freshfields plans to redeploy an arbitration partner
to the region early next year, says Chalk. It’s a balancing
act, he says: Too many arbitration lawyers, and they end up
sitting around; too few, and the client goes elsewhere. “If
we think we’re losing out—if we think we find ourselves at
a competitive disadvantage because we can’t act on significant disputes—then we would have to act,” he says. ■
King & Spalding’s John Savage (left) calls Asian arbitration a dicey
bet in the short term—but says the trend is upward. Richard Chalk
of Freshfields expects bigger cases and more competition.
“These investment treaty cases are
more about prestige than anything
else,” says Orrick’s Pé, “particularly
if you’re acting for the state.”
FOR FIRMS WITH AN EYE ON EXPANDING INTO
arbitration, the biggest challenge—as is so often in Asia—is
recruiting talent. Savage’s switch to King & Spalding was
a rare example of a partner with a strong arbitration focus
making a lateral move in Asia. Another was Dechert’s hire
of Beijing partner Jingzhou Tao from Jones Day in May.
Tao—managing partner of Coudert Brothers’s China practice until the firm collapsed in 2005, then a partner at DLA
Piper until 2007—has carved out a niche in international
arbitration that is still unusual in China. “I do think it’s
a promising business, but it’s hard to find the right combination of skills and local connections,” says Shearman’s
Bersani. “I think the business in China has become much
