The king (of Asian investment treaties) is dead. Long live the king?

For U.S. companies looking to protect their investments in Asia from political and regulatory risk, one large door may have closed, but another could be opening. While U.S. domestic politics seem to have put an end to the long-heralded Trans-Pacific Partnership (TPP) and its investment protection chapter, an even farther-reaching treaty promoted by China could take its place. And even though it appears for now that the United States will not be a part of that treaty either, resourceful American businesses may be able to benefit from it nonetheless.

As President Donald Trump has made rather clear, the United States will not be part of the TPP. That, in turn, may doom the TPP itself. Japanese Prime Minister Shinzo Abe has said that the treaty would be “meaningless” without the United States. Gone with the TPP will be its Chapter 9, which guaranteed various legal protections for companies from TPP member states (such as the United States) who invested in other member states (such as Japan, Malaysia and Vietnam), as well as the ability to enforce those rights through international arbitration. Continue Reading

The Lagarde Prosecution: A Blow to Finality in Investor-State Arbitration?

On December 19, 2016, International Monetary Fund Managing Director Christine Lagarde was convicted of criminal negligence for failing, as French finance minister, to appeal an adverse arbitration award against a French government-owned company.  This criminal conviction suggests increasing peril for arbitral tribunals and government officials involved in international arbitration.  It remains to be seen whether this conviction impacts future decisions of state respondents who might otherwise be inclined to settle, recognize, or agree to pay for future commercial or investor-state awards issued against them. Continue Reading

ICC Announces New Expedited Rules for Smaller International Arbitrations

On Nov. 4, the International Court of Arbitration of the International Chamber of Commerce (ICC) announced that its Rules of Arbitration would be amended as of March 2017 to implement a new Expedited Rules procedure for smaller disputes. The Expedited Rules are designed to streamline and speed up the arbitration process but involve major departures from the traditional dispute resolution practices to which many are accustomed.

Although the ICC has not yet published the Expedited Rules, the ICC announced that the rules will automatically apply to every case involving less than $2 million in dispute. Parties with larger disputes can mutually choose to adopt them as well. Continue Reading

Choice of Law Meets Civil RICO

The Supreme Court’s opinion in RJR Nabisco, Inc. v. European Community (decided June 20, 2016) limited the extraterritorial reach of the Racketeering Influence and Corrupt Organizations Act (RICO). Now, a recent case out of the Southern District of New York illustrates the practical effects of the Nabisco decision. Because the Court appears to have incorporated a choice of law analysis into RICO’s private right of action, civil RICO plaintiffs are now well-advised to consider very carefully a forum’s choice of law rules prior to filing suit.

RICO creates both civil and criminal liability for engaging in a pattern of prohibited, or “predicate,” acts. RICO’s private right of action, which was at issue in Nabisco, is very attractive to private plaintiffs because it offers treble damages along with the recovery of attorney’s fees. In Nabisco, the Court articulated two tests for RICO’s extraterritorial scope: one for RICO’s provisions enforced by the United States (including its criminal provisions), and an entirely different one for RICO’s private right of action. Continue Reading

Not So Fast – The High Court Decides Parliament Gets a Say in Brexit

While the dust was still settling on the United Kingdom’s June referendum to leave the European Union, the “Remain” campaign scored a major win in the English High Court of Justice on Thursday, Nov. 3, 2016. This decision casts even more uncertainty over an already uncertain time in global politics.

Though the results of the June 23 referendum immediately sent the pound spiraling, withdrawal from the EU is anything but an overnight process. The June vote was a decision in favor of invoking Article 50 of the Treaty on European Union, which governs the withdrawal of a member state. Once Article 50 has been invoked, a two-year period of negotiations ensues to determine the rights of the exiting member state. While Prime Minister Theresa May has yet to invoke Article 50, she considers it solely within her purview, a controversy at the heart of the recent High Court case R (Miller) v Secretary of State for Exiting the EU [2016] EWHC 2768. The question presented to the High Court was whether the Crown (i.e., the executive branch of government) could act unilaterally in invoking Article 50 of the Treaty on European Union.  Continue Reading

Yes, We Can (Order a Country to Suspend Criminal Prosecution and Extradition): Hydro v. Albania Redux

An update, if not an epilogue, to the Hydro v. Albania saga. As described in our prior post, the ICSID arbitration tribunal in that case had imposed interim measures directing the Albanian government to suspend its prosecution of two of the individual claimants and its efforts to extradite them to Albania. A UK judge then enforced the tribunal’s order, ruling that it was binding under international law and that the extradition could not proceed. In light of that ruling, the arbitration tribunal has modified its order slightly, dropping its demand that the Albanian criminal proceedings themselves be stopped, but maintaining that, indeed, it had the authority to require the suspension of those proceedings and associated extradition efforts, and was right to do so.

The scenario seems dramatic and exotic. But it may not prove entirely rare: As we have noted, another tribunal recently issued a similar order. As foreign investors facing what they believe are abusive or politically motivated criminal charges by host states increasingly turn to investment treaties and arbitration to push back, and as some states launch investigations or prosecutions after arbitrations have begun, investor-state arbitral tribunals may increasingly face such requests for interim measures. Courts, too, will have to decide how to respond. Continue Reading

Congress Overturns Presidential Veto on FSIA, Authorizing Suits Against Saudi Arabia for September 11

The U.S. Congress overturned a veto by President Obama allowing families of the victims of September 11 to sue Saudi Arabia in U.S. courts. While the U.S. domestic politics will be debated elsewhere (like everything else this election season), we want to focus on the terms of the legislation and the legal cases underpinning from the perspective of our experience in immunity cases.

Sovereign immunity is not a trivial issue to the United States. The conduct of foreign affairs is generally the responsibility of the President, but immunity claims have been assigned in certain circumstances to the courts.  The immunity rules are generally designed to recognize the foreign policy implications and to ensure that our country and officials  are not hailed into courts worldwide for a myriad of actions.  In recognition of these risks, the Executive Branch routinely supports claims of sovereign and other immunities raised by foreign states (and their officers and employees) in U.S. courts, even those made by unfriendly countries like Venezuela. Saudi Arabia already threatened to withdraw its assets from the United States, and a rash of lawsuits worldwide from Saudis and others testing the legality of the Guantanamo Bay prison under international law is not the best way to conduct foreign policy.  But that seems to be where we are going.     Continue Reading

Another International Arbitral Tribunal Orders Extradition and Criminal Proceedings Halted

The worlds of white-collar criminal law and international investment arbitration continue to collide. Following on the heels of March’s decision in Hydro S.r.L. v. Albania, in which an International Centre for Settlement of Investment Disputes (ICSID) tribunal directed the Albanian government to suspend its efforts to extradite and arrest two of the claimants in the arbitration, and a UK judge’s July order deferring to the arbitrators and blocking the extradition (see our prior post), another ICSID tribunal has just similarly ordered Cyprus to refrain from attempting to arrest four Greek bankers, including witnesses and a claimant in a treaty arbitration brought against Cyprus. Continue Reading

Barclays to Pay $100 Million to Settle Multistate LIBOR Manipulation Investigation

The LIBOR scandal is back in the news with Attorney General Eric Schneiderman’s announcement of a $100 million settlement between Barclays and 44 states for artificially manipulating U.S. dollar-LIBOR (“USD-LIBOR”). The August 8, 2016, settlement is the result of a multistate effort led by the Attorneys General of New York and Connecticut.

The investigation found, among other things, that from approximately late August 2007 through at least approximately January 2009, members of Barclays’ management were worried about negative media attention and speculation about Barclays’ liquidity problems and told Barclays’ USD-LIBOR submitters to make submissions that were consistent with the expected rates of other panel banks. This was done notwithstanding the fact that Barclays employees knew that other USD-LIBOR panel banks were making unrealistically low USD-LIBOR submissions. Certain Barclays derivatives traders also made requests for favorable submissions from at least as early as June 2005 until approximately September 2007, and occasionally thereafter through approximately May 2009.

The Barclays settlement will likely be followed by similar settlements with other USD-LIBOR-setting panel banks. Barclays is one of several banks that have been under investigation by the Attorneys General. The settlement agreement applauds Barclays for its cooperation, which has been “extensive and has been of substantial value in furthering the Attorneys General’s investigation.” It also says that the “investigation into the conduct of several other USD-LIBOR- setting panel banks is ongoing.” The Royal Bank of Scotland, Bank of America, Deutsche Bank, Credit Suisse, and JPMorgan Chase are all part of the panel of 16 banks responsible for setting USD-LIBOR. Continue Reading

Supreme Court to Resolve Pleading Standard for Foreign Sovereign Immunities Act Claims

The Supreme Court granted certiorari recently in Helmerich & Payne International v. Venezuela, to resolve a circuit split about the proper pleading standard needed to allege an expropriation claim under the Foreign Sovereign Immunities Act (FSIA) that survives a motion to dismiss. Is raising some facts that could show an expropriation enough to survive a motion to dismiss, or does a plaintiff actually need to show that some type of expropriation in violation of international law occurred?

The facts of the case are relatively straightforward. Venezuela nationalized oil rigs belonging to a Venezuelan subsidiary set up by its parent corporation, plaintiff-respondent Helmerich & Payne International. The plaintiff filed suit in the United States, fearing that it would not obtain a fair process in Venezuela (shocking!), relying on FSIA’s expropriation exception, 28 U.S.C. § 1605(a)(3). That section denies the assertion of sovereign immunity “in any case . . . in which rights in property taken in violation of international law are in issue.” The plaintiff lost on this issue before the district court, but the D.C. Circuit reversed, holding that dismissal is proper only if the plaintiff failed to allege a “taking in violation of international law or has no rights in property in issue only if the claims are “wholly insubstantial or frivolous. A claim fails to meet this exceptionally low bar if prior judicial decisions inescapably render the claim frivolous and completely devoid of merit.” Continue Reading