World Bank international arbitrations add to D.C. legal workload

By Amanda Becker
Monday, January 3, 2011; 11

A recent explosion of cases before an arm of the World Bank Group that facilitates the resolution of international investment disputes has proven advantageous for area law firms, generating work for burgeoning practice groups that are largely based in the District.

Over the past few decades, international arbitration has come into favor as a way to protect the interests of multinational corporations that have operations and investments located abroad, offering an alternative to settling disagreements in foreign court systems by arbitrating disputes at centers in Paris, New York and elsewhere. Even more recently, the World Bank's International Centre for the Settlement of Investment Disputes (ICSID), based here in the District, has seen an influx of cases, largely thanks to an uptick in the use of legal agreements called bilateral investment treaties, which allow entities to seek redress from foreign governments by registering a claim with the center.

Disagreements over these types of treaties, which accounted for 63 percent of the center's caseload this fiscal year and provide a way for companies to recoup investment losses not otherwise covered by a commercial contract, generate work for lawyers here who specialize in that area of expertise.

"International arbitration is a field more and more U.S. law firms are discovering. It's a thriving area," said Dechert's Anne Marie Whitesell, a former secretary general of the International Chamber of Commerce's arbitration center in Paris, which oversees disputes over commercial contracts.

To date there are 157 countries that have signed -- and 144 that have ratified -- an agreement to arbitrate disputes via the ICSID, which oversees the sort of politically charged disagreements that can pit domestic companies against foreign governments. Though it was founded in 1966, the venue's use did not come into vogue until recently, when dispute resolution clauses meted out over the last decade have landed before ICSID arbitrators.

"It was a sleepy institution for a good 20 to 30 years, fairly specialized and unknown," said Paolo Di Rosa, head of Arnold & Porter's international arbitration group. "But during the 1990s there was a feverish negotiation of these treaties, which created a mechanism for investors to arbitrate at the World Bank's center."

Di Rosa has practiced full time in the area of international arbitration for about eight years now, coming to Arnold & Porter just over three years ago with a group of about eight attorneys, bringing the firm's total in that practice area at the time to more than a dozen. Since then, the group has doubled or tripled. Other firms with robust international arbitration groups locally include White & Case, WilmerHale and the United Kingdom's Freshfields Bruckhaus Deringer.

Geography has been kind to the District law firms equipped to handle international dispute resolution. As the host city of the ICSID, which has seen its caseload grow from between one and four cases a year from 1972 to 1996 to an apogee of 37 cases in 2007 and 27 in the fiscal year of 2010, the attorneys here are in close proximity to the action. The nation's capital is also seen as a key connection point between Latin America, where nearly a third of ICSID cases originate, and the rest of the world. The Argentine economic crisis of the late 1990s and early 2000s prompted at least 40 ICSID cases on its own, prompting the country to open a special District office to oversee its interests here.

"In many of our pitches to work for Latin American countries, they have requested that the firm have a D.C. office," Whitesell said.

Though arbitrating an ICSID case can be a lengthy process -- Sempra Energy International's case against Argentina was first brought at the end of 2002; Duke Energy's dispute with Peru has been pending since 2003 -- it is still an attractive option given that its judgments are more easily enforced than those won in other venues. If a member state refuses to pay an award, for example, the company or entity that won can freeze the nation's assets within another signatory country. The near certainty of post-outcome success means multinational corporations are unlikely to shy away from ICSID arbitration anytime soon.

"Of all the types of international judgments and awards you can have, this is probably the most powerful," Di Rosa said.

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