Arbitration Team of the Month #06
Volterra Fietta is a formidable boutique law firm specializing in public international law that regularly represents international corporations and sovereign States in investment treaty and State-to-State disputes. It also provides advice on treaty interpretation, State responsibility and other public international law matters. Volterra Fietta earns its spot for the Arbitration Team of the Month following its victory for its client the Federal Republic of Nigeria in a recent investment arbitration. We would also like to congratulate co-counsel Afe Babalola & Co from Nigeria and Rameau International Law from Washington D.C. for winning the case.
In an award issued on 6 Oct. 2020, an ICSID tribunal upheld jurisdiction under Nigeria’s foreign investment law but dismissed all claims on the merits, holding that Nigeria did not mistreat the U.S. claimants or expropriate either their shares in Pan Ocean Oil Corporation (Pan Ocean) or their interests in a joint venture concerning the operation and prospecting of two oil blocks.
This unprecedented ICSID victory for Nigeria confirms that effectively litigating investor-State arbitrations requires a counsel team with deep public international law expertise like Volterra Fietta.
Recent victory case analysis: Interocean v. Nigeria
- Until 1998, the Interocean companies held a 40% interest in an oil exploration and production joint venture between Pan Ocean and the Nigerian National Petroleum Corporation (NNPC), which had the majority (60%) stake.
- Vittorio Fabbri, the common owner of the Interocean companies, died intestate in 1998. Mr. Fabbri had allegedly executed a deed of transfer to his ex-wife, Mrs. Annabella Timolini, yet this deed was never recognized as valid by Nigeria.
- Pan Ocean’s Managing Director Festus Fadeyi then took control of the companies and sought a declaration from local courts that neither Mrs. Timolini nor Mr. Fabbri’s son was a shareholder or director of Pan Ocean.
- The case was resolved in favor of the claimants in November 2005, finding that Mr. Fabbri and the claimants were the only owners of the beneficial interest in Pan Ocean.
- Mr. Fadeyi later convened a general meeting and allotted 75% of Pan Ocean’s shares to himself and other individuals. The Nigerian courts sanctioned the move. The claimants then unsuccessfully pursued their private claims in domestic proceedings before Nigerian courts.
- In 2013, the claimants brought an ICSID claim against Nigeria under the 1995 Nigerian Investment Promotion Commission Act, seeking restitution of their stake in the joint venture and additional damages.
- William W. Park (President)
- Julian D.M. Lew (Appointed by the investors)
- Edward Torgbor (Appointed by the State)
- While the arbitrators accepted that the Interocean companies had been deprived of their investment, they also found that this loss could not be attributed to Nigeria. The arbitrators saw no evidence of a conspiracy to this effect.
- Likewise, the tribunal was unconvinced that Nigeria breached the minimum standard of treatment or fair and equitable treatment standard under customary international law.
Conduct by private party and the NNPC is not attributable to the State
- The tribunal noted that the NNPC, although state-owned under Nigerian law, was meant to engage in private and commercial activities.
- In the tribunal’s view, there was also no evidence that Nigeria and the NNPC’s failure to engage with the claimants was part of a conspiracy to deprive them of their investment in Pan Ocean for the benefit of Mr. Fadeyi.
- The tribunal reckoned that Nigeria and the NNPC’s failure to investigate Interocean’s pleas and requests does not lead directly to culpability on the part of the State.
No judicial expropriation absent exhaustion of domestic remedies
- The arbitrators saw no “judicial expropriation” in Nigerian courts’ decisions, which did not create liability for the State.
- The tribunal observed that the remedy for any miscarriage of justice should have been sought in Nigerian courts.
- The tribunal concluded that the claimants’ failure to exhaust domestic remedies barred their claims of judicial expropriation.
No breach of customary international law
- The tribunal dismissed the investors’ claims under customary international law for breach of the minimum standard of treatment and the fair and equitable standard of treatment (including the full protection and security standard).
- The tribunal also noted that the standalone denial of justice claim was later abandoned for the “judicial expropriation” claim and referred to its conclusions regarding acts allegedly constituting an indirect expropriation.
- The tribunal concluded that Mr. Fadeyi’s conduct was not attributable to Nigeria. It was also found that neither the NNPC nor Nigeria breached their duties toward the claimants concerning the alleged failures to investigate.
1. What does the outcome of Interocean v. Nigeria mean for shareholder disputes in investment arbitration?
The Interocean v. Nigeria Award confirmed that disputes between private shareholders of private corporate entities are unlikely to provide a basis for a successful investment arbitration claim. Unless the injury suffered by a shareholder is attributable to the State, that shareholder generally should exhaust all viable local remedies before the relevant national courts or rely on other mechanisms available to settle commercial disputes.
The Interocean v. Nigeria case concerned a shareholder dispute between the Claimants and private individuals for the ownership of Nigeria incorporated Pan Ocean Oil Corporation (Pan Ocean). Initially, the Claimants pursued their Nigerian law claims against those private individuals before Nigerian courts. However, in 2013, the Claimants decided to shift targets and bring an ICSID arbitration against Nigeria. In the ICSID proceedings, the Claimants first argued that Nigeria had conspired with one of Pan Ocean’s directors to deprive them of control over that company. Later in the proceedings, the Claimants pursued a new case theory based essentially on an alleged “judicial expropriation” by Nigeria’s courts. They also argued that Nigeria’s executive branch and the Nigerian National Petroleum Corporation (NNPC) had failed to protect the Claimants’ interests in their private dispute.
Eventually, the Tribunal rejected the Claimants’ claims on the merits in their entirety. The Claimants had failed to prove any conspiracy involving Nigeria and neither Nigeria nor the NNPC was responsible for the Claimants’ loss of control over Pan Ocean. The Claimants’ “judicial expropriation” claim failed too, among other reasons, because they had failed to exhaust local remedies.
2. With Nigeria’s victory, what effect will the Award have on the issue of attribution in public international law?
The Award is ground-breaking, in terms of confirming within the investment treaty context a number of well-established public international law principles of attribution applicable to private individuals and to State-owned entities such as the NNPC. This is important because many investment treaty arbitral awards either have misrepresented or made only a passing reference to the underlying substantive public international law (yet, the international law of foreign investment is not a stand-alone area of law but, rather, a sub-set of the public international law of State Responsibility). In accordance with the customary norms codified in Articles 4, 5 and 8 of the International Law Commission’s Articles on State Responsibility, the Award shows that, in most cases, the conduct attributable to the State is that of its organs or of others who have acted as agents of the State. Mere State ownership and incorporation of a commercial entity that, like the NNPC, has separate legal personality is generally insufficient to prove attribution to the State of that entity’s conduct. Unless the entity or private individual exercised governmental powers in relation to the act in question, attribution will normally require evidence showing that they acted “under the direction or control of” the State.
3. What impact do you think the Interocean v. Nigeria case will have on the issue of “judicial expropriation” in investment arbitration?
The Tribunal did not express its views on the soundness of the concept of “judicial expropriation”, which will likely remain controversial. However, the Award does provide guidance on the circumstances in which domestic courts’ decisions can trigger States’ liability under international law.
Relying on the Rumeli v. Kazakhstan and Saipem v. Bangladesh awards, the Claimants argued that a taking by the judicial arm of a State may amount to an expropriation and that, once judicial expropriation is proven, it is not necessary to establish that local remedies have been exhausted.
In the present case, the Claimants denounced two decisions rendered by the Federal High Court of Abuja as being the cause of their loss of control over their investment. The first decision authorized directors of Pan Ocean to hold a meeting. The second decision validated an allotment of shares to certain private individuals, decided at that meeting.
On the law, Nigeria responded that the concept of “judicial expropriation” is a stranger to public international law. The only sanction of a judicial action at international law is a denial of justice, which requires assessing more than just the individual decisions being challenged. Otherwise, international courts and tribunals would in effect become courts of appeal for any domestic judicial determinations. And there is no evidence of State practice or opinio juris suggesting that this is what States expect in public international law disputes. Rather, States have deliberately decided to grant a great degree of deference to domestic judicial systems. It followed that, before being entitled to impugn the decisions of the Federal High Court of Abuja, the Claimants had first to allow the Nigerian judicial system to correct itself (if that were required). Yet, the Claimants were asking the Tribunal to come charging in before they had exhausted local remedies.
The Tribunal did not expressly rule on the controversial concept of “judicial expropriation”. Instead, it rejected the Claimants’ claim based on two factual considerations. First, there was no basis to conclude that Nigeria was responsible for any action taken in the courts as part of an alleged intention to deprive the Claimants of their ownership of Pan Ocean. Second, the Claimants’ remedy to any alleged miscarriage of justice would have been to challenge it before the Nigerian Court of Appeal. Yet, rather than exhaust their local remedies, the Claimants abandoned the domestic judicial proceedings.
In sum, the Tribunal’s findings suggest that, to the extent that the concept of judicial expropriation exists at all under international law, a successful claim will often require the foreign investor to prove that the executive arm of the State instigated or was otherwise responsible for the relevant actions taken before the domestic courts. In addition, the foreign investor must exhaust all viable local remedies before challenging the decisions of national courts in international investment arbitrations.
4. As a leading public international law boutique in the market, can you share a case that you enjoyed working on? And why?
I have the good fortune to love my work and I enjoy being counsel and arbitrator in every case. Thinking back, the cases that make me smile most are often those which we have won and yet the opposing counsel tells the media that they claim a victory of some kind: long may my opponents suffer such victories at my hands.
To different degrees, I tend to enjoy all the cases in which I am involved. I have always felt fortunate to work in such a stimulating profession. I particularly enjoy cases that, like Interocean v. Nigeria, involve critical public international law issues. For example, I feel privileged to be part of the team that represents the Democratic Republic of the Congo in the ICJ case concerning the Armed Activities on the Territory of the Congo. That case has shaped the contemporary law on the use of force in international relations and might have major implications on the reparations due in future armed conflicts. I wish that the judgment in this case will discourage certain outrageous international law violations. Importantly, it is both a great responsibility and an honor to be able to seek reparations for at least part of the atrocities suffered by the DRC’s people during the so-called Great African War.
5. What future changes do you predict for investment arbitration in a post-COVID era?
While it is too early to tell with any certainty the extent to which the COVID pandemic will change investment arbitration, it seems clear that it will have a number of procedural and substantive implications.
The pandemic is already having a significant impact on procedural aspects, including on the conduct of the arbitral process and on the way counsel, arbitrators and clients prepare for that process. The pandemic has accelerated the use of video conferencing and other technologies in preparatory meetings between clients and counsel, witness interviews, procedural and substantive hearings and deliberations of arbitrators. However, as experienced litigators and arbitrators are aware, there are significant limitations on the efficacy of video hearings. In particular, the examination of witnesses and experts is less than satisfactory, when accomplished by video.
Nonetheless, the increasing reliance on video conferencing, which started before the pandemic, may not end entirely in a post-COVID era. Just as procedural hearings at the start of an arbitration routinely became telephone conference hearings, even before the pandemic, there are certain types of hearings that can probably be accomplished almost as well by video conference. This is so particularly in the case of procedural hearings or hearings that do not involve counsel pleadings only. Thus, certain changes may be here to stay, especially given the international nature of investment arbitration. It is undeniable that the use of video technology can reduce significantly travel and accommodation expenses as well as travel-related legal costs. In the post-pandemic context, certain clients might consider these cost savings to outweigh the benefits of certain in-person sessions (such as first sessions of arbitral tribunals and pre-hearing conferences, involving parties, counsel and arbitrators who are often based in different continents). For these types of hearings and for a number of preparatory meetings, they might prefer to use video conferencing and other technologies that have proven reasonably effective and certainly less costly. We can also expect that arbitral institutions around the globe will continue refining their guidelines and rules to ensure that the use of technology in investment arbitrations does not affect negatively the parties’ due process rights and the integrity of the proceedings.
On the other hand, once the health emergency improves and States lift travel and other COVID-related restrictions, we can probably expect a return to traditional evidentiary hearings and certain in-person client, witness and expert meetings. We are all aware that, despite the benefits of video calling, no video technology can replace effectively every kind of face‑to‑face interaction, for multiple reasons. For instance, in-person hearings are more suitable to assess the credibility of a witness and to read the reactions of tribunal members and opposing counsel. Equally, clients, counsel and arbitrators are likely to feel more comfortable discussing certain highly confidential and sensitive issues in person than they would in writing or through video conference, especially given the real threat of cyberattacks. Many might also claim that video conferences can diminish the persuasive effect of good advocacy, just as few would prefer watching a concert on TV rather than live in a concert hall. And every bit counts to prevail in investment disputes in which there is often so much at stake for both foreign investors and host States.
We know less about the substantive implications that the COVID pandemic will have in investment arbitration. It is likely that certain measures taken by States to respond to the pandemic will trigger a non-negligible number of investment arbitration disputes. It will be interesting to see the effects that the universal nature of the COVID pandemic could have on the minds of arbitrators. This crisis has affected all States in the world, including the home States of every arbitrator. This could well have an effect on the level of empathy that arbitrators feel and on the degree of deference they grant to States. It also could affect the way in which certain principles of international investment law are interpreted and applied going forward. Concepts such as the margin of appreciation, the police powers doctrine and a range of customary international law defenses will probably play a more prominent role in the coming years. This would lead to a greater body of jurisprudence and, hopefully, increased legal certainty on the content and extent of these legal concepts.
Presentation of the law firm
Volterra Fietta is an elite law firm specialized in public international law, complex cross-border disputes and investment issues. Exclusively dedicated to public international law and arbitration, the firm offers States, international organizations and commercial clients a unique blend of expertise and practical experience.
Volterra Fietta has one of the world’s largest investor-State arbitration practices. It is one of the few firms that represent sovereign States and foreign investors in equal measure before the leading international arbitration institutions, including ICSID, the PCA and the SCC. Likewise, the firm represents clients in commercial arbitration proceedings under the ICC Rules, the LCIA Rules, and various other arbitration rules. The firm also represents governments in State-to-State disputes before the ICJ, the PCA and UNCLOS tribunals. Equally, Volterra Fietta regularly represents clients before domestic courts in judicial proceedings concerning the application of public international law.
Volterra Fietta consistently leads in the development of public international law. Together with Professor Richard Schofield of Kings’ College London, the firm organizes the regular London International Boundary Conference, which addresses cutting-edge issues of land and maritime disputes and includes the most distinguished practitioners and academics in the world.
Founding partner Robert Volterra heads their Public International Law practice.
- For sovereign States: Barbados, the Democratic Republic of the Congo, the Republic of Croatia, the Arab Republic of Egypt, the Republic of Lithuania, the Federal Republic of Nigeria and the United States of America.
- For private clients: Koch Industries, Inc. and Owens-Illinois Inc.
Volterra Fietta also has a strong record of wins. In addition to the victory for its client the Federal Republic of Nigeria in Interocean v. Nigeria:
- In 2019, the firm caused the claimant to abandon its claim against the Republic of Lithuania in an ICSID arbitration brought under the Latvia – Lithuania BIT.
- In 2018, the firm secured a victory on behalf of bottle maker OI European Group B.V. in an ICSID annulment proceeding initiated by Venezuela.
- In 2017, the firm secured a US$400 million ICSID award for Koch Minerals Sàrl and Koch Nitrogen International Sàrl.
- That same year, the firm helped the Republic of Costa Rica defeat a US$350 million ICSID claim by Spanish vehicle inspection services provider Supervision y Control.
- In 2016, the firm helped the Government of Barbados defeat a US$26 million investment treaty claim brought by a Canadian businessman, Peter A. Allard, over a 34-acre wetlands area.
- In 2015, the firm secured a US$455 million ICSID award against Venezuela on behalf of OI European Group B.V.
- Also in 2015, the firm won a victory for its client the United States of America in a landmark case before the English courts concerning sovereign immunity.
Volterra Fietta’s recent instructions include:
- Representing the Republic of Croatia in four ICSID cases brought under the Austria – Croatia BIT by UniCredit Bank Austria and its subsidiary Zagrebačka Banka, Addiko Bank, Austria’s Raiffeisen Bank International and its Croatian subsidiary, and Austrian lender Erste Group Bank.
- Representing the Republic of Croatia in another ICSID case brought under the Croatia – France BIT by French bank Société Générale over its investments in the country’s banking sector.
- Representing Koch Minerals and Koch Nitrogen International in an ICSID annulment proceeding against Venezuela.
- Representing the Arab Republic of Egypt in an ICSID case brought under the Egypt – Qatar BIT by a Qatar-funded broadcaster.
- Representing the Republic of Lithuania in an ICSID case brought under the Latvia – Lithuania BIT.
- Representing the United Arab Emirates in the case concerning the Application of the International Convention on the Elimination of All Forms of Racial Discrimination (Qatar v. United Arab Emirates) and multiple other proceedings initiated by the State of Qatar before the ICJ.
- Representing the Democratic Republic of the Congo before the ICJ in the case concerning Armed Activities on the Territory of the Congo (Democratic Republic of the Congo v. Uganda).
Table of public international law cases involving Volterra Fietta (Recent victories/pending cases)*
Volterra Fietta is currently acting as counsel in multiple ICJ and ICSID cases, notably representing the Republic of Croatia in a series of ICSID claims brought by European banks.
To see all types of cases (investor-State, inter-State, commercial arbitration) involving Volterra Fietta available on Jus Mundi, please click here.
Volterra Fietta earns its spot to be the ATOM for its extensive track record of arbitration cases and clients. We selected a few recent victories and ongoing cases of Volterra Fietta in the table below.
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(Note*: This table is not exhaustive.)
Spotlight – the Interocean v. Nigeria case team
For many years, Robert has been recognized in the global legal directories as one of the world’s top public international law practitioners. He advises and represents sovereign States, international organizations, and private clients on a wide range of public international law and international dispute resolution issues. His practice focuses on resolving complex disputes and evolving issues in the field of public international law. Clients seek him to defend their interests in bet-the-country and bet-the-company disputes. He is the go-to public international law practitioner for cases dealing with novel and cutting-edge topics. Robert also regularly sits as arbitrator in investor-State disputes and is on the UK Attorney General’s A-list for public international law practitioners. Equally, he has been a Visiting Professor of International Law at University College London and a Senior Lecturer at Kings’ College London for more than 20 years. The Legal 500 and the Chambers & Partners legal directories consistently rank Robert in the top tier of practitioners and arbitrators globally.
A civil and common law qualified lawyer, Álvaro advises private entities, States, and international organizations on a wide range of contentious and advisory public international law matters. His contentious experience includes: representing and providing States in Africa, Asia, Latin America, the Middle East and North America with legal advice concerning ICJ proceedings; representing foreign investors and States in high-profile investment treaty arbitrations; and representing applicants and respondents in ICSID annulment proceedings. Álvaro’s non-contentious experience includes advising States and private entities on investment treaty law and multiple other public international law areas, including in relation to land and maritime delimitation and Business and Human Rights. In the last two years, the Legal 500 has listed Álvaro under the “Rising Stars” and “Next Generation Partners” sections of its public international law ranking for London.
For more information on Volterra Fietta’s investment treaty arbitration practice, click here.
Congratulations to the team again, and Jus Mundi wishes them good luck for the future!