← The HC Commodities Podcast
The HC Commodities Podcast
Disputes, Arbitration and Navigating a Fractious Commodities World with Alex de Gramont
00:49:17
In this episode, we tackle disputes, arbitration, and the challenges of navigating a fractious commodities world. Energy and natural resources have always sat at the heart of international transactions and, in today’s more volatile climate, disputes are arising more frequently. What happens in international contract disputes? What is international arbitration? And how can companies best mitigate the risks upfront? What are the most effective strategies for handling disputes and arbitrations once you are in them? Our guest is Alex de Gramont, Partner and Head of International Disputes at Womble Bond Dickinson, an international law firm with a strong focus on energy and natural resources. For more on Enco Insights and their expert witness offering, please visit: https://www.encoinsights.com/ HC Commodities Podcast Live Event: Rivers of Money Book Launch On October 1, HC Group will welcome Colin Bryce and Adi Imsirovic, authors of The Rivers of Money, to our London office for an eve...
Loading summary
Transcript55 lines
- [00:00]
A
Foreign welcome to the HC Commodities Podcast, a podcast dedicated to the commodities sector and the people within it. I'm your host, Paul Chapman. This podcast is produced by HC Group, a global search firm dedicated to the commodities sector. Today we're talking disputes, arbitration and navigating a fractious commodities world. Energy and natural resource has always sat at the heart of international transactions, and in a more volatile world, disputes are arising more often. What happens in international contract disputes? What is international arbitration? And how do companies both mitigate the risks up front? What are the best strategies for handling disputes and arbitrations once you're in them? Our guest is Alex de Gramont, partner and head of International Disputes at Womblebond Dickinson, an international law firm that, among other things, has a specialty in energy and natural resources. Also on the evening of September 30th we have an HC Commodities Podcast Live event as part of the Argus Global Markets Conference in London, which is held on September 30 to October 1. Our panel is Beyond Adapting Trading Strategies to a Shifting Geopolitical Landscape, and our panelists are Saad Rahim, chief Economist at Trafigura, Kurt Chapman, Director at Levmet, David Fife, chief Economist of Argus, and Nick Kumleben of Greenmantle. The Argus Global Markets Conference is an excellent event. You have to be part of that conference to attend the live podcast panel, but I encourage people to sign up and I'll put links to the event in the show. Note and many thanks to Argus for the invitation. We also have an upcoming HC Commodities Live event to celebrate the publication of Colin Bryce's and Adi Msurovich's book the Rivers of A History of Modern Oil Trading. The event will be on October 1st in London with a Q and A with the authors and drinks and canapes. Tickets are RSVP only and limited, but if you want to register your interest, I'll put a link in the show notes. As always, you really can support the show by leaving us a positive review and subscribing to us on the platform you're listening on or YouTube and as always, I hope you enjoyed the episode. Alex, welcome to the show.
- [02:34]
B
Thank you Paul. Delighted to be here.
- [02:37]
A
I'm looking forward to this. We did an episode on a transactional lawyer and that role focused on the energy transition. Indeed. So this is somewhat part two if you'd like. And talking about disputes, an arbitration in energy and natural resources, particularly from an international perspective and why indeed, you know, in a more fractious world, this is becoming more and more prevalent and salient in the Sector, I guess we are focusing on the international aspect of this. A lot of what we talk about is true for domestic as well. But can you give us some sense of why international contracts and why particularly. I guess oil and gas is a good place to start. Why is it such a challenging part of law and an interesting part of law?
- [03:22]
B
Well, you know, the oil and gas arbitrations go back to at least the 1950s, mostly involving the Middle east and Western countries. And, you know, throughout the last hundred years or so, a lot of oil and gas has been found and originates from countries with legal systems that are less, that are considered less developed than in the west and with governments that are considered to be less predictable than in the West. So you have a lot of resource nationalism in places like Central and Eastern Europe and Latin America. Lots of expropriations, lots of regulatory changes, lots of unpredictability. And the idea behind international arbitration is that it provides a neutral forum, really for both sides, so that neither party has to go into the domestic courts of one side or the other. They can choose, typically three neutral arbitrators, and they might apply a neutral law. So if you have a US Party and a Romanian counterparty, you might apply English law or French law and seat the arbitration in Paris or London. And typically arbitration involves a combination of civil law and common law traditions. So most parties will be, if not as comfortable as they would be in their domestic courts, generally familiar with type of proceedings that an arbitration will use and the expertise. There are arbitrators who are very, very well versed in different oil and energy issues. But I think the ability to apply international law, to apply different bodies of law, is probably the most important part of being an arbitrator.
- [05:40]
A
Yeah. Can we, I guess taking a step back, can we just do some definitions for a poor recruiter in the absence of arbitration? And I want to kind of come on a little bit to the history of it. What are your options? So I guess in the absence of arbitration, how would a dispute typically be handled between two entities that sit in different countries?
- [05:59]
B
Yeah, I mean, it would almost always be brought in the domestic courts of one party or the other. Now, let's say you have a US and English JV joint venture. Typically the US Party would have to bring the case or would seek to bring the case in the US Courts, and the English side would want to seek to bring its case in the English courts. Now, that's probably not problematic, but let's say your counterparty is in Cameroon or Mongolia. It may be very difficult to get that party into a US Court, both for jurisdictional reasons and enforcement reasons. Right. So if you have an arbitration agreement, the other side, if it honors it, and there are various ways to enforce it, will come to the arbitration a neutral city, a neutral state, and will be bound by international treaties to pay the judgment. And if they don't pay, then under these international treaties, the judgment or the award as we call it in arbitration, can be enforced anywhere, any state that is a signatory to the treaty and where assets are located. So the most well known, the most far reaching treaty is called the New York Convention, dating back to the 1950s. And there are something like 170 of the world's nations are signatories and have ratified the treaty. So the arbitral awards can be enforced in any of those contracting states where assets of the losing party can be found. So that's a pretty powerful tool. And you know, the United States doesn't have any treaties for the enforcement of judgments. It's all done on a, on the basis of the particular, you know, so if you try to enforce a US Judgment in France, the French court will apply French law. Same thing if you tried to enforce it in Mongolia. Mongolian court may or may not enforce a US Judgment, but under international treaty, it's required to enforce an international arbitration award.
- [08:31]
A
Yeah. So when you're in the normal run of things, when you're negotiating a contract, part of that will be under which law it's enacted. And you'd also write in what the process would be around arbitration and how that there's some agency in how that might look and which entities would actually be ultimately responsible for arbitration. That would be your typical setup.
- [08:55]
B
Yes, exactly. So let's, let's just as a hypothetical, let's say, and I did have a case involving Mongolia, so I will use Mongolia, a Canadian entity invested in Mongolia. This was actually a uranium mine. And instead of leaving any disputes to the Canadian or Mongolian courts, they had an arbitration agreement that provided for, I believe it was the application of Mongolian law. But the arbitration was to be held in Paris under the rules of the International Chamber of Commerce or the icc. And so when a dispute arose, there was a very predictable framework, predictable rules, under which the arbitration proceeded in Paris. And it resulted in an award, fairly sizable award, which the government of Mongolia voluntarily paid. So that's the way the process ought to work. And you can see under those circumstances why the Canadian company would much rather go to an arbitration in Paris than a court in Mongolia.
- [10:09]
A
Just before we get on to, well, A couple of questions on just the mechanics here. Is this a lengthy process? Is that ultimately, you know, dependent on if you have a recalcitrant party, you know, what happens to parties that don't follow those, you know, can you give us some sense of that?
- [10:23]
B
I mean, it varies dramatically from one case to another. So some of the really big international arbitrations against governments, for example, have gone on for a decade or more in the commercial context, where you have two reasonably sophisticated entities. Depending on the size of the dispute and how aggressively the parties arbitrate it, you can probably get an award in about two years, which is faster than most court proceedings. And you know, I did have a case where one party just didn't show up and the tribunal was heard. Our arguments took about six months to review all the documents and entered an award against the other party in our favor, which we were then able to enforce in the Latin American country where our adversary resided.
- [11:26]
A
Okay, let's talk enforcement and then I want to talk about who are these arbitrators and sort of the, some of the history to this, which I know both you and I like our history. But if you have, you're in that circumstance, you might have, you're going against the government and the government itself doesn't want to play ball with any decision. Are you are signatories to that investment treaty, arbitration, that treaty, are they then able to seize assets? How does enforcement work?
- [11:54]
B
I think enforcement against a foreign government, depending on the foreign government can be challenging, right? I mean, most international arbitrations involve commercial entities where the entities voluntarily pay or have assets that are readily attachable. When it comes to governments, they're protected by sovereign immunity to a degree, to a considerable degree. So you can only attach or execute against assets that are used for commercial purposes. Now it used to be that governments would always pay the awards. I think it was really Russia who started the trend of not paying awards, leading the claimants to have to go and chase assets. Other states, not a lot, but a few, Venezuela have followed suit. There's a lot of controversy in investor state arbitration really everywhere. But it has especially crystallized within the European Union, where the European Court of Justice has held that European or EU investors cannot bring treaty arbitrations against European Union states. So it's very difficult to enforce the intra EU treaty awards against European states in the eu. But interestingly, at least so far in common law countries like the United States, the United Kingdom, England and Wales and Australia, the courts have enforced those awards against foreign sovereigns. Notwithstanding the ECJ's. The European Court of Justice's decision. So, you know, you have these arbitration awards that cannot be these intra EU arbitration awards that cannot be enforced within the eu. And so the investors are taking them to other courts like those in the US or Euro England and Wales or Australia, and so far have been succeeded in getting those awards recognized and in some instances have been able to seize and execute against foreign assets.
- [14:22]
A
Yeah, well, the backdrop to this episode we kind of it's my fault for bearing the lead a little bit is. And the reason why we're doing, I guess our building blocks for the last few minutes is obviously the world is getting more risky in terms of the transact, the nature of the transactions themselves. Right. Tariffs, volatile market prices, all of these, you know, a whole slew of events we talked about a lot on this podcast that sometimes means contracts can be failed to be fulfilled or incentivized not to be fulfilled or whatever it might be. At the same time you've got this breakdown or start erosion of international order of a globalized world and set playing rules, so to speak, and a growing sort of fractionalization, Balkanization of of states into different groups. And in other words, less international cooperation that themselves means that you've got a dual influence of more volatile markets at the same time as less stable international law. All of which is leading us up to how to start thinking about this in a more fractious world and how to mitigate up front some of these challenges and then strategies to help you get what you need in this environment. One final piece before we get there is anything is instructive is when did this idea of international arbitration come about and what perhaps can that tell us about those days that might be analogous to today as well?
- [15:44]
B
Yeah, that's a great question and a really fascinating question. There's a legal historian, or there was a legal historian at Cornell named Henry Frazier, who in the 1920s was writing histories of international arbitration from ancient Greece through the Renaissance and into the early 20th century. And there was always this desire to be able to resolve disputes among parties of different nationalities outside the state system. Right. Which could be perceived and maybe was biased in favor of its own national. So there were various types of international arbitration really going back to ancient Greece. The modern, the contemporary international arbitration that we as practitioners today are familiar with really started in the wake of World War I and were inspired by, you know, really the carnage of World War I. And the idea was that if you could promote international commerce business between peoples of different nations, that would promote mutual understanding and peace and One of the ways to promote international commerce was by providing a neutral, independent forum in which to resolve those disputes. So, you know, in 1917, the Stockholm Chamber of Commerce arbitral center was created. That's still used commonly today. 1923, the International Chamber of Commerce or the ICC in Paris. Probably the most commonly used international arbitration center for commercial cases, the American arbitration association in 1926. So starting roughly around the time that World War I was ending, you had these systems of international arbitration centers being created. They got traction in some cases more than others. I mean, really, international arbitration didn't start to be widely used in the United States until 1970 or so. And you know, the oil and gas, the energy field has always been incredibly volatile and intertwined with politics. So there were a lot of disputes again going back to at least the 1950s. I think what has become more commonplace is the use of international arbitration to resolve cross border disputes. The recognition that the domestic courts of some states, many states, are quite unpredictable. Just as an example, in Mexico there was this so called judicial reform by which judges are now elected instead of appointed. The regional politics in Mexico of the different Mexican states can be, let's be frank, it can be very corrupt. The concern is that the court system, which was actually improving a lot in Mexico, is now going to regress considerably. So anyone who is doing business in Mexico and who could be called into court could be subject to the jurisdiction of the Mexican courts. It's just critical for them to have an international arbitration provision in their contracts or to structure the holdings of the investment so that they could seek recourse to international arbitration. Under one of these treaties that we've been discussing.
- [19:53]
A
The energy and resources sector is experiencing unprecedented change. To help navigate this change and capture its opportunities, HC Group launched Enco Insights, a global advisory network dedicated to the sector providing senior advisors and subject matter experts to investment and infrastructure funds, law firms and corporates. Enco Insights leverages HC Group's 20 years of connections in energy and commodities to give clients the expertise they need when the stakes are high and insight matters. Learn more@encoinsight.com you're quite right, right? If you look at international, you know, energy and natural resources has always been something that binds the world together, but is also therefore at the same time has kind of led the way in terms of international commercial relations and transactions. It's always been highly volatile. Am I, you know, one of the narratives on this podcast is that the last seven years, or at least since COVID and then Russia's invasion of Ukraine. The feeling is, you know, we've reversed course and we've, after spending the 90s and the 2000s sort of marching towards better global stability, global markets, globalization, you know, the march of international law, common law, all this stuff, we've started seeing a regression from that. Is it fair to say that the, the last, you know, seven years, five years of your career was more interesting than the first 25 in this world, to put it crudely?
- [21:21]
B
You know, I mean, yes, yes and no. Right. I mean, I, I first started doing these cases in the early 2000s when resource nationalism was rampant in certain Central Latin America and South American states. So you had governments like Bolivia and Ecuador seizing, nationalizing foreign oil and gas companies, or in the case of Ecuador, imposing a 95% tax rate on profits. So I saw a lot of cases arising out of Latin America really over the past two decades. And then in Central and Eastern Europe, you had all these formerly state owned energy companies being privatized, so acquired mostly by Western companies snatched up.
- [22:19]
A
Yeah, yeah.
- [22:20]
B
I mean, some, some of the European states did this as part of its accession to the European Union. You know, most economists thought, and probably correctly, that, that private companies operate better than state owned companies. But in many of these countries, you know, there was the company, the, the Western companies came in and ran the companies like private companies, so they might lay off employees or shut down a refinery and chaos would ensue. Right. I mean, there would be immense public pressure on the governments to take back and re. Nationalize the company or somehow diminish the influence of the Western owners. And that gave rise to a lot of arbitration. I mean, now we do have the situation in which two superpowers, both of which are large suppliers of oil and gas to the rest of the world, are not directly in conflict. But you know, because of the invasion of Ukraine, there are embargoes and all, all the rest against Russian oil. And so it does feel in this particular moment chaotic, perhaps because of the players involved.
- [23:47]
A
There have always been disputes, as you say, there's always been sort of resource nationalism. You've always, you know, you've always had that piece in place and that stems back, you know, that's not the last 50 years, 70 years, that's the last 100 years plus or forever. It seems that what perhaps has changed is the likelihood of you not being able to get an, you know, enforce a judgment against a nation state or a company within that nation state has decreased as the incentive structure, because in 2002 not being part of the international system was very deleterious to your ability to finance your government to all these things to do business today. You could argue that actually, well, okay, this might bar me from certain dollar transactions, this might bar me from certain, from the west in inverted commas, but I can go do business with China, I can do business with Russia, I can do business with the BRICs. But, and, and actually it's not, you could argue, it's not so deleterious in this exact moment. That means that whilst you've got the same level of disputes. I agree, I'd say they've gone up because you've got a more, you know, we've got a European land war for example, and all this stuff and tariffs and a sort of increasing government intervention in markets. But it seems to me like more importantly, there's less incentive for global cooperation at the moment and enforcing these judgments.
- [25:13]
B
Well, I mean, look, there have always been, I mean, I think just during my lifetime there was the OPEC embargo against the US and Western Europe in 73 that caused this huge global energy crisis. There was Iraq's invasion, of course Kuwait in 1990. There was the earlier Russian invasion of Crimea about 10 years ago now. Right. So I think these events, these sort of earth shaking events have often happened. But you're right, what has changed is that we are much more interdependent, that there are far more markets, far more consumers. And now you have the involvement of the United States and Russia and Europe in what is not only a political and military dispute, but a dispute that's using energy as a weapon. And that has become, you know, a huge bargaining chip, understates it, but a huge bargaining chip in the politics of and in the war. And you're right, you do have a fragmentation of states, you know, whether it's China and Russia, whether it's Brick or the west, all of which have more consumers, more demand. So yes, the world has become much more interdependent and therefore much more complex. And certainly political events of the past few years have been pretty, what's the right word? Fractious? Disturbing.
- [27:05]
A
Yeah. I mean, it's hard to tell, isn't it? Because you kind of, you build these, it's hard to dissociate your own sort of period of maturation. And you know, and you always think your own time is special. Right. And kind of then taking a bit of a longer view and saying, oh, is this really different? There are some things that feel quite different. Right. I mean, you know, you've got alternatives now in terms of crypto to the dollar. You've got, you know, you do have invasions and lands, land wars that you know. So there's lots of kind of fragmentation going on that feels that is, is it is a more fractious time, as you say. But then again at the same time you've got all this increase interdependence, you've got large multinational companies. So you, there is more need for international law. That moves us nicely on to I guess the crux of this in some ways, which is today you're an executive in energy and natural resources. And let's take it in two parts. One is how do you mitigate these things up front? What should you be thinking about in your contract and risk management upfront? And then we'll talk about kind of strategies when, if the proverbial does hit the fan, but you're advising your clients on international contracts and so forth, what is now a sort of sine qua non in these contracts of doing business internationally that people need to be thinking about?
- [28:25]
B
Well, certainly having an international arbitration clause. I do think that's less of a concern if you're talking about a relationship between say a US and English part party or US and French party, or anywhere that has a relatively modern judicial system. But when you are investing or doing business in countries with less judicial stability, less political stability, which is a lot of the, a lot of the parts of the world where you're doing business if you're in the energy sector, it's really critical to have an international arbitration contract, rather an international arbitration provision.
- [29:12]
A
How do you pick the arbitrators?
- [29:15]
B
So that will depend on to some extent on how you draft the agreement and on the institution. The typical way for a three person tribunal and most tribunals in big cases are three persons. One party will pick one arbitrator, the other party will pick the second, and then either the two parties will agree on the chair or if they can't, there will. Typically the arbitral institution like the ICC will pick the chair. And it's done in part on expertise. You know, if a person has had lots of experience in LNG disputes, for example, the parties and the institution might try to find arbitrators with experience in that particular area, but they are also chosen typically, and I'm speaking primarily about the chair, on the basis of being of a different nationality, having familiarity with the different legal systems and in particular the law that's going to apply to that dispute, and also the experience to oversee what is typically a complex and contentious case in which the Courts rarely get involved until the very end when enforcement comes into play. So I would say there are universes of different arbitrators. There's a sort of international arbitration community that focuses on energy disputes. And those of us who do those disputes tend to know most of those arbitrators, either having been before them or having sat with them or having at least seen them speak or met them at conferences. There's a growing universe of life sciences arbitrators, for example, who really know that area. And then there are these really specialized arbitration panels that are focused on very specific sectors like the lme, the London Metals Exchange and their arbitration panels that focus on, you know, on cotton and grain and various other types of very specific sectors.
- [31:39]
A
So these are for profit entities that are licensed or sort of are acknowledged by whatever particular treaty it might be. Is that how, is that how they're set up?
- [31:49]
B
Well, no. So, okay, so the framework is you have these international treaties that provide for the recognition and enforcement of arbitral awards like the New York Convention. And then each nation, each country has its own domestic arbitration law that typically conforms to the requirements of the New York Convention. And then you have these arbitral centers which for the most part are, to my knowledge, are non profit entities like the International Chamber of Commerce, the Stockholm Chamber, the London Court of International Arbitration, the American Arbitration Associations. And they will administer the arbitrations under a particular set of their rules. There are the ICC rules, the LCIA rules, which don't vary dramatically, but they, they more or less provide for a similar framework in which the arbitration proceeds. Most of these institutions have their own rosters of arbitrators, but parties are free to, typically free to go outside of those rosters and pick, you know, arbitrators that come from any country, from any background with, with the potential particular expertise that the party thinks will be useful for the arbitration. So it does provide both for a lot of flexibility and party autonomy in that the parties really can create and if they can reach agreement, mold the procedure to the needs of the particular dispute.
- [33:27]
A
And it also points to that expertise. Need and shout out to and Summers, who was the marketing chair at the Society for Maritime Arbitrators in New York. So, you know, at one focus, particularly on shipping. Right. Again, I guess is the complex nature of that kind of commodities is business on hard mode, as we always say, you know, requires that expertise. Because you're dealing not only with operational infrastructure, you're also dealing with quite complex market operations.
- [33:55]
B
Yeah, no, that's, that's exactly Right. And candidly, most of my arbitration experience is, takes place in the more general arbitral centers, like, you know, the deal with commodities, that deal with oil and gas, that deal with either breaches of contracts generally, or with these disputes that arise under international treaties. You know, there are very specialized practitioners who will arbitrate the cotton disputes or whatever, but that's not really what I do.
- [34:27]
A
Hello, I'm David Hunt, founder and managing director at Hyperion Search. Founded over a decade ago, Hyperion Search has helped organizations from major utilities to startups recruit their leadership teams and key individual contributors to accelerate both their growth and the energy transition. Our three main verticals are renewable power, energy storage, and E mobility. The energy transition and the talent that delivers it has been our passion since the day one. To find out more, visit hyperionsearch.com or listen to my Leaders in Clean Tech podcast, available on all platforms. You've done all the things that you should do. You've done your due diligence. You've recognized that, you know, even the more stable countries might look, you know, things might be changing. You've got your arbitration clause in there. You've been very deliberate about who would be an arbitrator in that case. Hopefully, as you said earlier, you've, you've identified holdings that could be recoverable if there were an issue and so forth. If things do go south, what is the strategy then? And then, you know, is that when you get the call and kind of, what, what do you think are some winning edges people might need to think about as they, they start to line up for an arbitration?
- [35:35]
B
Yeah, and hopefully I've gotten the call when the arbitration clause is being drafted because, I mean, there, there are a lot of mistakes that in, you know, I had a case involving a US company and a Chinese company, and the seat of the arbitration was in Honolulu, I guess, because that's in between, more or less geographically in between the two. But Honolulu courts, even the federal courts, don't have a lot of arbitration cases. So, you know, ceding the arbitration in a city where the courts are very familiar with arbitration, like New York or Paris or London or Singapore, is important. And the stronger the arbitration cause and the more enforceable it is, and the more prepared you are for the arbitration, the more leverage you will have for settlement. And in virtually every case I have, maybe putting aside the cases involving governments, the incentives are commercial incentives, and the parties want to resolve the dispute without paying lots of legal fees. And so just as in a court case, the parties will typically try to settle and the party that is better situated for the dispute often has leverage in those discussions.
- [37:02]
A
Yeah, yeah. And then I guess when the unthinkable happens and you do start heading towards a dispute, is it the first person to get the best expert witnesses? And you know, you should call Enco Insights for that, you know, in terms of that deep industry expertise. But you know, how, you know, what are the strategies to kind of like recognize that this is happening and to get yourself on the front foot? I mean, what's the, what sort of the advice, the free advice you give in the first sort of 30 minute meet to see whether you'll take them on as a client?
- [37:32]
B
Yeah, I, you know, I think it's important to explore all avenues of settlement. Right. And there may be different ways to do that depending on the companies involved, the jurisdictions involved. It might make sense. And in the past I've had cases where it made sense for the, for our client to go talk to the US Government to see if the State Department or the Commerce Department can intervene on their behalf. There are some cases that, where it makes sense to deploy a public relations strategy and try to get, try to influence the other party through media or other means. There are some cases where you have to hire investigators, whether it's to learn more about your adversary or to identify assets. And there are cases where you will want to, where there are very few experts. Right. And so you will, you will want to approach them before the other side does.
- [38:37]
A
Yeah. Does it just on that expert witness side? And we obviously bring this up because that's a core part of Enco Insights offering. And I guess somewhat of the thesis is that there are obviously they're established standard expert witnesses out there. And of course, because a lot of these cases are, as we said, very complex. Is there, is there benefit to bringing expert witnesses who aren't sort of on the circuit, so to speak, or, you know, how does that bit work when you're in front of these arbitrators who are themselves potentially experts at the same time?
- [39:09]
B
I mean, often we will combine the two. You know, if we're, whatever side we're on, we will have an economic expert and an industry expert expert. So someone who knows how to do the discounted cash flow analysis and someone who is very expert in with the particular issue. I mean, we had a case involving the value of cushion gas, you know, the gas that has to be kept in a gas tank in order for it to remain functional. And it was not easy to find industry experts on that particular issue. As a general Matter. I do like to have experts who have testified before in addition to having the substantive expertise because it is, it's a hard exercise. It's a hard thing. It's a hard craft to master how to write a report that the arbitrators will read and understand and then how to withstand what is typically a pretty rigorous cross examination. Now there's, you know, there's, you come across experts sometimes who just are naturals who have never done it before and who are great. But as a general matter, I'd like to have an expert, particularly if it's on an important issue or a high value dispute that has gone through this drill before.
- [40:34]
A
Yeah, yeah, I think we found sort of there's sometimes demand for fresh voices as well. But then as you say, there's a premium put on people who've stood before. Is there also, in terms of like, I mean, in the very complex matters, how do you go about building a team that's going to advise you on even if they're not actually presenting to the arbitrators, but building the case? You know, I mean, that seems like you can, as you say, you can really go down the rabbit hole on some of these things that are very material.
- [41:02]
B
Yeah, I mean, you know, if it's a big high value dispute involving the law of a different country that's going to take place in a different country, we will often use co counsel in that country. We will try to staff lawyers who speak the language. The, the arbitration may be held in English, but if you're talking about a project in Argentina or anywhere in Latin America, it's really critical to have native Spanish speakers who can read the documents and interview witnesses. And then there's also the industry expertise. So in a really complex dispute involving difficult regulatory issues, we might bring someone from our oil and gas or mining team or elsewhere. In addition to the international arbitration expertise, there's also industry expertise, language expertise and just a lot of factors that go into how to structure a team for a particular case, depending on the case's circumstances.
- [42:17]
A
And I guess in terms of financing, all of them, this having been in D.C. recently, it was fascinated to hear on podcast adverts for targeted specifically at Congress people to, to stop international dispute financing and all this stuff.
- [42:31]
B
Yeah, yeah, yeah.
- [42:33]
A
Adverts, podcast adverts in D.C. are a fascinating thing onto themselves.
- [42:37]
B
Unique. They are unique.
- [42:39]
A
They are unique. Right. They're targeted at one senator or whatever it might be.
- [42:42]
B
Yeah, right.
- [42:43]
A
This, you said yourself these, some of these things can go especially when you're up against the state. These can go on for a decade. And your chances of actually having recovery of the judgment are also itself is uncertain as well. I mean, in other words, these can be very challenging things for, especially for a smaller company to go into. How does that, how does that work? I mean, obviously there's insurance and so forth. Can you just give us some sense on, on how, how do you, how do you, how do you tool up to go for one of these disputes?
- [43:12]
B
Yeah, well, you know, I mean some of our clients are obviously well resourced, but I'm a big fan of third party funding for a lot of reasons. I mean, it does enable smaller companies that, that don't have the resources to fund their case. It and even some mid size and larger companies want to, you know, hedge the risks and have a third party funder funding some or all of the case, you know, in exchange for some of the upside. And then also the, most of the sophisticated third party funders are really good at analyzing cases because if they're going to invest in a case, they want to know that there's a reasonably good sign of the money's not going to be out of pocket for, you know, decades.
- [44:04]
A
So if you've got some good finances in there, it's quite a good sign that you think your case is pretty strong.
- [44:09]
B
Yes. And they have, you know, they, they typically provide a very good set of eyes for the case and they see things, you know, that maybe the client or even the lawyer didn't take into consideration in their enthusiasm about bringing the case. So I think it's, I think third party funders can be tremendously helpful and that most of the criticism you see, at least in the context of international arbitration, is really misplaced.
- [44:41]
A
So I guess, you know, a couple final questions. I, I found this fascinating. I guess if you're a younger, a younger listener considering your career in law. I mean, what's the pitch for commercial, international commercial disputes being the place to be for the most fascinating career in law?
- [44:58]
B
Well, it is. I mean, I'm glad you said you found it interesting because I do find it fascinating and I should say I spent the first 10 years of my career doing US court litigation and I sort of fell into this accidentally, but I loved it as soon as I did because it involves different cultures, different legal cultures, different business cultures. Every case is different not only because of the particular circumstances of the case, but also because it arises in say, Mongolia or Croatia or Bolivia. And there is almost always some political dynamic to it. So, you know, it's not Just a legal dispute. It is very often a political dispute. And so there are just so many different facets to international arbitration that you really don't see, or at least that I didn't see in domestic litigation. Now, I will also say a lot of people want to do this, and I, you know, I grew up at a time where you could sort of stumble into it if you were a general litigator. I think it is. The competition for these jobs is increasingly intense. And so if it's something you want to do, you want to start doing it in law school. You know, they didn't have international arbitration courses when I was in law school, but take the international arbitration course. See if you can be a research assistant and help the international arbitration professor with articles. Go to the many, many, many events on international arbitration that you will find in virtually every major city. And to the extent you have foreign language skills, those are really, really useful. So, you know, if your Spanish is pretty good, try to. Try to get it even better.
- [46:59]
A
Yeah. And there's a. I. I always like to think my Spanish is okay, but my wife is. Does it for business. There's a massive golf. Right. And then you throw on, throw in law. And I imagine it's a entirely different ball game.
- [47:10]
B
Yeah.
- [47:10]
A
Yeah. And also just, I mean, I really want to ask more about getting PR firms involved and all of the tricks of the trade, but we don't have enough time for it. But when should people call you? When should people call Womble Bomb Dickinson?
- [47:24]
B
Yeah. I would love it if people would call me when they're drafting the arbitration. Cause I would love it if people called me at the very outset of the dispute, because I think we can bring expertise to bear that will give them increased chances of amicably resolving the dispute and then winning the dispute if the case can't be settled. I mean, we have particular substantive expertise in energy, natural resources, but we do a lot of other things, too. We have a strong life sciences practice, a strong intellectual property practice. And one of the things I think we really do well at WAMBL is to bring in the people with the substantive expertise to work with the international arbitration specialists. So the teams are not. Or the groups are not compartmentalized. They really work well together. And I think that's critical in an international arbitration that is going to involve complex issues of potentially international law and international arbitration procedure, but also will require very precise substantive expertise.
- [48:42]
A
Yeah. Well, it's been an absolute pleasure having you on, Alex, and look forward to having you on again in the future. And hopefully the world is just as chaotic, but no more chaotic.
- [48:53]
B
Yes, I share that sentiment, Paul, and thank you so much for having me. It was really a pleasure.
- [49:01]
A
Thank you for listening. To find out more about HC Group, our global offices, and our expertise in search within the commodities sector, please visit www.hcgroup.