News

Law360 reports on the latest proceedings pertaining to LLC Energoalliance v. Republic of Moldova. Representing Moldova, GST LLP urged the court to pause a $58MM award enforcement considering the recent European Court of Justice's ruling on the arbitration provision found in the Energy Charter Treaty.

Representing Guatemala, GST LLP applied to annul an ICSID award on the basis of Bulgarian arbitrator Stanimir Alexandrov's alleged failure to disclose ties with an expert witness – a year after Spain successfully annulled an award based on similar allegations. The state also argues there are contradictions in the decision and it violates the res judicata of a previous award issued in the same dispute.

Venezuela triumphs in Dutch Court of Appeals. A US$240 million claim brought by the members of the García Armas family was rejected based on their dual nationality in Manuel Garcia Armas and others v. Venezuela. According to Partner Ignacio Torterola, the judgment confirms that dual nationals bringing claims against their home state “is alien to international law, including investment law.” GST LLP served as counsel to Venezuela, while The Garcías were represented by Freshfields and Dechamps International Law.

Represented by GST LLP, Guatemala has lodged a counterclaim in a US$350 million DR-CAFTA dispute with third-party funded mining investors, seeking damages for alleged misrepresentation and a failure to meet environmental commitments. The state alleges that when obtaining their license, Kappes and KCA (the investors that hold licenses for the gold and silver mining projects) “omitted key information” in their environmental impact assessment (EIA), which did not meet international standards and failed to show the effect the projects would have on local water resources.

Law360 reports on Teco Guatemala Holdings LLC v. Republic of Guatemala. Represented by GST LLP, Guatemala filed an emergency motion to nix a freezing order on nearly $16 million being held by Bank of New York Mellon as a Teco Energy subsidiary tries to enforce a $35 million arbitral award. According to GST, "because of Teco's flawed legal strategy, the funds that were intended to satisfy Guatemala's bond obligations are currently restrained at [BNY Mellon]. And while Guatemala no longer owns or possesses those funds, the bondholders may very well declare a default on the bonds and cause grave financial consequences for the state."

The Commercial Court in London has requested further details pertaining to a partial ICC award won by an Australian mining venture against Pakistan as corruption allegations continue to be invoked. Christopher Hancock QC of Twenty Essex chamber appeared on behalf of Balochistan, while GST LLP acted for the provincial government there and as co-counsel for Pakistan.

The dual Venezuelan-Spanish nationality of claimants compelled an UNCITRAL tribunal to decline jurisdiction. GST LLP partners Ignacio Torterola and Diego Gosis noted that the decision, the third rejecting a claim of double nationals is “fundamental”, and that it provides “useful guidance” on obtaining dispute resolution.

Venezuelan opposition leader Juan Guaidó has failed to persuade a US court to stay the enforcement of an ICSID award worth over US$400 million – after the court said it “may take years” to stabilize the country and transition to another political regime. Lawyers from Curtis Mallet-Prevost Colt & Mosle are acting on behalf of Guaidó; Venezuelan President Nicolás Maduro is represented by GST LLP.

Pakistan, represented by GST LLP, negotiates a settlement with a Turkish energy company which will avoid their paying any part of an ICSID award worth US$1 billion.

GST LLP Partners Quinn Smith, Ignacio Torterola and Diego Gosis report that they are pleased with the “amicable resolution” of a dispute between Pakistan, their client, and Turkish energy company Karkey Karadeniz Elektrik Uretim AS over their corrupt dealings to obtain a contract for a barge-mounted rental energy project in Karachi.

Pakistan, represented by GST LLP, negotiates a settlement with a Turkish energy company which will avoid their paying any part of an ICSID award worth US$1 billion.

GST LLP is pleased with an apparent settlement and termination of litigation between Pakistan and Turkey achieved by the two governments over a dispute regarding the lease of floating power plants by Turkish company Karkey to Pakistan during an energy crisis in 2006

GST LLP will defend Pakistan in an enforcement action against mining company Tethyan. An ICSID tribunal had orginally found that Pakistan unlawfully denied Tethyan a lease to mine copper and gold in Pakistan, but Pakistan alleges bribery and corruption of officials.

Quinn Smith of GST LLP argues that appointments to the board of Citgo made by temporary or interim President of Venezuela Juan Guiado are not legitimate.

GST LLP’s Quinn Smith and Katherine Sanoja are acting as attorneys for Venezuela as US glassmaker Owens Illinois moved against it to collect on US$500 million awarded in 2015.

Quinn Smith of GST LLP agrees with move by US District court to pause litigation filed by a Turkish energy company against Pakistan, so that a World Bank arbitral institution considers allegations of corruption, namely a scheme to influence the award of the contract.

As a Delaware-based Chancery Court hears arguments, Quinn Smith of GST LLP asserts that the letter of Venezuelan law states that only the President of Venezuela has the right to name board members to Citgo in that country. He said, “Reading powers outside the text in dangerous. That word [interim] is crucial.”

Quinn Smith of GST LLP defends Venezuela’s Ministry of Defense in a matter involving an award in favor of shipbuilder Huntington Iingalls because the tribunal did not comply with the terms of the agreement specifying that arbitration take place in Venezuela. The dispute dates back to a 1997 deal for Huntington Ingalls to modernize two warships for Venezuela’s navy.

A US court in Washington, DC has refused to enforce US shipbuilder Huntington Ingalls US$129 million award against Venezuela’s ministry of defense in a 17-year dispute over a contract to upgrade two missile-armed navy frigates. The Virginia based Huntington Ingalls had previously asked a federal court in Mississippi to retain jurisdiction in the case. GST LLP’s Quinn Smith, representing the ministry, was pleased with the ruling to dismiss.

A Washington DC Federal court judge ruled that an earlier Mississipi district court retains jurisdiction over a dispute involving US shipbuilder Huntington Ingalls and Venezuela’s Ministry of Defence. Quinn Smith of GST LLP approved of the judge’s decision to “...dismiss the case, without ordering its transfer.”

UNCITRAL declines jurisdiction over an investment treaty claim against Venezuela. GST LLP Partner Ignacio Torterola acknowledges the fairness of the outcome, citing that Clorox España’s transfer of shares is not a protected investment in its Venezuelan subsidiary.

An UNCITRAL tribunal in Geneva has declined jurisdiction over a US $185 million investment treaty against Venezuela brought by a Spanish subsidiary of US cleaning products group Clorox. It found that Clorox España did not have a protected investment under the Spain-Venezueal bilateral investment treaty. GST LLP partner Ignacio Torterola tells GAR: “The tribunal has affirmed the rule in investment arbitration that a transfer of shares without consideration is not a protected investment.”

A tribunal has declared that Clorox España is disqualified from seeking damages against Venezuela, due to the fact that it is a shell company created to take advantage of a bilateral investment treaty (BIT) in place between Spain and Venezuela. The Clorox company owned its Venezuelan investments through an American subsidiary, explained GST LLP Partner Diego Gosis. He applauded the ruling, saying the decision confirms the long-standing view in international law that “to access the protections granted by the investment arbitration system, a meaningful, qualified investment must actually have been made.”

GST attorneys for the Maduro government Quinn Smith and Katherine Sanoja rejected the suggestion by opposition leader Guaido’s attorneys that a summary judgment be issued due to “The fundamental disagreement over who has the authority to represent Venezuela.” They further explained that parallel arbitration proceedings by Owen Illinois subsidiaries are underway for the same alleged misdeeds, further complicating the matter.

A US court said “limited” discovery was warranted in support of a pending investigation by anti-corruption authorities in Pakistan. The court ordered Arnold & Porter to answer a number of “basic questions” posed by Pakistan about the material within 30 days. Pakistan sought the material in aid of its efforts to overturn an US$850 million ICSID award issued in 2017 by a tribunal composed of Yves Derains of France, Horacio Grigera Naón of Argentina and David Edward QC of the UK.

A Washington DC federal judge granted Pakistan’s request for interrogatories related to its allegations of corruption by Turkish energy company Karkey.

Maduro-selected attorneys Quinn Smith, Diego Gosis and Katherine Sanoja of GST LLP assert that attorneys for opposition leader Juan Guaido never received permission from the Washington DC court to substitute as counsel for Venezuela, and that GST LLP never consented to such a substitution. This is one instance of an ongoing power struggle between the two Venezuelan leaders before several US courts over which government has the right to appear in litigation filed against the crisis-stricken nation.

Pakistan, represented by GST LLP attorneys Quinn Smith, Gary Shaw and Derek Womack, argues that Turkish energy company Karkey’s bid to confirm a prior award should be denied, that it had not been properly served, that the court lacked jurisdiction under the Foreign Sovereign Immunities Act, and importantly, that the award is suspect, as the tribunal did not permit access to evidence demonstrating corruption by Karkey.

Pakistan’s attempts to unseat members of an ICSID tribunal for their conflicts of interest regarding a dispute over mining in Pakistan filed in 2012. Ignacio Torterola of GST LLP in Washington, D.C., counsel for Pakistan, expressed that “Pakistan’s only hope was to have an independent and impartial tribunal in a case as important as this one, in which the future of an underdeveloped part of the world is at stake.”

An ICC tribunal has allowed India’s Jindal Steel & Power company’s claim to proceed against a Bolivian state-owned mining entity while discarding claims against the state itself and another state-owned entity. Ultimately, the tribunal allowed contractual claims against state-owned Empresa Siderúrigica del Mutún (ESM) to proceed, with GST LLP as counsel.

GST LLP argues that Pakistan was deprived of its due process in proceedings awarding Turkish energy company Karkey an award of nearly US$846 million. They assert that documents proving corruption were refused consideration by the ICSID tribunal.

A tribunal hearing BIT claims against Venezuela has ordered the third-party funded claimants to post US$1.5 million in security for costs – only the second known time such an order has been made in an investment arbitration. In support of this measure, GST LLP Partner Ignacio Torterola representing Venezuela tells GAR: “States should not be perceived as the ones footing the bill in investment arbitration, especially in cases that do not belong before the jurisdiction of international tribunals, as those brought by dual nationals with the dominant nationality of the State party in the dispute. Those cases belong to the municipal law.”

In arguments on behalf of the Ministry of Defense of Venezuela, GST LLP attorneys claim that a US federal court lacks subject-matter jurisdiction because the contract at issue is military, rather than commercial in nature, and treaties invoked by US shipbuilder Huntington Ingalls apply to commercial matters. They also declared that an award in favor of Hungtington Ingalls is unenforceable due to arbitrations occurring in venues other than Venezuela, which had been stipulated in the parties’ arbitration agreement.

Quinn Smith, representing the Ministry of Defense of Venezuela asserted that the ICSID tribunal abandoned the terms of the contract between Venezuela and US shipbuilder Huntington Ingalls by sending arbitration to Rio, and then further erroroneously refering to arbitration having taken place in Washington, DC. He stated, “We trust that the court will agree that the arbitral tribunal did not apply the will of the parties.”

GST LLP’s Diego Gosis represents Bolivia who has agreed to pay US $42.6 million to satisfy an ICSID award in favor of Chilean mining company Quiborax and its Bolivian subsidiary, a significant savings on the original US $151 million sought.

Huntington Ingalls, a subsidiary of US defense contractor Northrop Grumman has won nearly US$129 million in arbitration with Venezuela’s defense ministry over repair and upgrade of naval frigates. Filings and counter-filings have appeared since this dispute began over 15 years ago, amid deteriorating US-Venezuela relations. Quinn Smith of GST LLP, handling the matter in US courts, confirms that the tribunal “accepted some of Huntington’s claims, while rejecting others, and admitted the ministry’s counterclaim.”

Diego Gosis of GST LLP, also working with Guglielmino & Asociados, questions the impartiality of an ICSID ad hoc committee member after he made derisive references to Venezuela. Venezuela requested that committee member Alvaro Castellanos Howell be removed while the committee is deciding whether to revive or annul a claim by Blue Bank International of Barbados against Venezuela.

A Bilateral Investment Treaty panel orders Spanish-Venezuelan family Garcia Armas to demonstrate financial solvency should they be required to pay costs in their case against Venezuela. Diego Gosis, partner at GST LLP in Miami and counsel to Venezuela, approves, saying that claimants can no longer enjoy a “free ride” by bringing “speculative” investment treaty claims without risk of liability if they lose.” His colleague Ignacio Torterola agrees, stating “States have the right to protect themselves against frivolous claims and to provide for the expenses incurred in defending those claims.”

Washington DC federal judge Amy Berman Jackson paused a glassmaker’s petition to enforce a $500 million arbitration award issued against Venezuela for expropriating two production plants. GST LLP partner Quinn Smith noted that several arbitrations launched by OEIG regarding the same asset ought to warrant dismissal, but he was pleased with the judge’s order to stay.

Responding to several actions by glassmaker Owens-Illinois subsidiary OIEG to pursue an award from Venezuela in multiple arbitration jurisdictions, US District Court Judge Amy Berman Jackson ordered that the matter be stayed, pending regular review. Quinn Smith of GST LLP, representing Venezuela, reports that OIEG has launched two separate arbitrations, and that he believes a dismissal is the right course.

Failure to disclose conflicts of interest have led to a bid by Pakistan to disqualify all three members of an ICSID tribunal from hearing a claim brought by Tethyan Copper Company. GST LLP shares that it has documentation indicating that Bulgarian arbitrator Stanimir Alexandrov provided expert services in which a particular cash flow valuation calculation method was used.

An ICSID tribunal rejected a claim brought against Veneuela by an investor in a BMW and MiniCooper import business. Diego Gosis, for Guglielmino & Asociados in Buenos Aires and GST LLP in Miami notes a “…consistent pattern that dismisses claims by fake foreign investors – in this case, a known Venezuelan impresario intending to sue Venezuela under the guise of a Barbadian investor”. He adds that “tribunals have rejected jurisdiction in the last three ICSID cases against Venezuela where awards were issued: Blue Bank, Favianca and now Transban.”

Diego Gosis of GST LLP applauded the ICSID tribunal’s finding of lack of jurisdiction in an arbitration against Venezuela over its expropriation of glass production plants, saying that “The case was in many ways a speculative attack against the rule of law.”

An ICSID tribunal has ruled it has no jurisdiction to hear a bottlemaker’s billion-dollar claim against Venezuela because it was filed after the state gave notice of its denunciation of the ICSID Convention nearly six years ago. Diego Gosis, of Guglielmino & Asociados in Buenos Aires and GST LLP in Miami, comments “We feel that the award reaches a good and solid decision on the issue of the form and effect of denunciation of treaties in general and of the ICSID convention in particular.”

Pakistan has retained GST LLP in its application to annul an ICSID award ordering it to pay $800 million - one of the highest damages sums in the center’s history - for detaining power generation vessels used during a power crisis in Karachi. GST LLP’s Ignacio Torterola reports that the award, in favor of a Turkish company who leased the vessels “is as flawed as it gets,” failing to offer reasons for the damages which include ordering payment of interest relating to a matter occurring two years later.

Regarding an $800 million award that the ICSID issued to Turkish energy firm Karkey against Pakistan, GST LLP attorneys were quoted saying they have “never seen an award with flaws that are so numerous.” They immediately filed a petition to annul, with Gosis stating further “Arbitrators failed to apply the applicable law, exceeded their jurisdiction and decided on things not at issue resulting in inflated damages.”

Venezuela’s Ministry of Defense told a New York federal judge Friday that Canadian mining company Crystallex can’t seize funds from a Bank of New York Mellon account, arguing that the money belongs entirely to another company. Quinn Smith of GST LLP, counsel for Venezuela, further elucidated that the move by Crystallex to establish a New York judgment against the Ministry goes against “the trust and its language that states’ assets are immune under US and customary international law.”

After discovering that glassmaker OIEG concealed the fact that it sold the right to enforce a US$500 million award to an unnamed Irish investment fund, GST LLP attorneys are quoted as saying that the company is essentially foisting “...a flawed award on this court that takes advantage of an arbitrator’s misconduct, continues to exploit a weakness of the investment arbitration system and conceals the owner of the award and true party in interest.” Quinn Smith noted the “significant doubts” arising and further suggested that it wasn’t even clear whether the sale of the award actually took place. Law360 notes the “stiff opposition” mounted by GST LLP which asserted that federal law prohibits arbitral awards being granted in the proceedings in NY and that OIEG had also brought a parallel complaint in DC.

The sale of an award against Venezuela by glassmaker OIEG to an undisclosed third party is “problematic” according to Diego Gosis of GST LLP. He explains that any conflicts of interest are also unable to be confirmed, and that “article 27 of the ICSID convention states that no contracting state shall provide diplomatic protection to its nationals in relations to ongoing proceedings.”

The bid to disqualify an arbitrator who Pakistan alleges has a conflict of interest in deciding a dispute with Tethyan Copper Company will go to an outside arbitral institution for an opinion. GST LLP partner Diego Gosis submitted on behalf of Pakistan that an arbitrator appointed by Tethyan uses the same experts and methods of valuation used by that company and would have an interest in defending their validity.

GST LLP Partners Diego Gosis and Ignacio Torterola welcome the enforcement of security costs to protect against frivolous claims appearing before tribunals after two investment treaty cases against Venezuela were ordered to prove they have sufficient assets to pay costs if they lose. The García Armas family are pursuing UNCITRAL and ICSID under the Spain-Venezuela BIT over the expropriation of their food distribution businesses.

Relative to a multibillion-dollar mining rights claim over a valuation process in which Pakistan has requested disqualification by a Bulgarian arbitrator, GST LLP Partner Diego Gosis explains Pakistan’s concerns that the arbitrator refused to disclose “outrageous conflicts of interests.” A particular “modern” discounted cash-flow analysis has been applied which predicts inflated damages.

As an ICSID claim moves to the damages phase, Pakistan has applied to disqualify a Bulgarian arbitrator because the claimants are relying on a rare valuation method involved in another case where the arbitrator is acting as counsel. Diego Gosis, a partner at GST LLP in Miami, states that “The thrust of Pakistan’s concern lies with the stance adopted by the arbitrator – that he felt no disclosures were necessary even in the face of outrageous conflicts of interests.”

Diego Gosis confirmed on behalf of his client, Pakistan, that there exists a single publicly available case in a claim against Peru by a Canadian mining company in which aritral committee member Alexandrov relies on a “very peculiar” form of discounted cash flow-based valuation to quantify damages. This method is proposed by the Canadian claimants Tethyan in its current proceeding against Pakistan. He stated “The fact that some arbitrators are making the same arguments as counsel that they are accepting to decide on as arbitrators is very problematic in this sense, and any failure to make all necessary disclosures of those overlaps puts the feasibility of the entire system at risk.”

In response to Venezuela’s fourth dismissal in an effort to unseat an arbitrator involved in a dispute by US glassmaker Owens Illinois, GST LLP attorney Diego Gosis responded that the standard set in this dismissal would “make challenging conflicted arbitrators virtually impossible, and departs from established rules and principles in international arbitration.”

An ICSID tribunal acknowledged that it made an error by previously deciding that it lacked authority to rule on claims made by US real estate investors in Costa Rica. “The tribunal applied an improper test using erroneous information. Correcting the information does not cure the improper test,” states GST LLP partner Diego Gosis. Attorneys for Costa Rica have asked the tribunal to terminate proceedings.

A tribunal acknowledges a “factual error” regarding the status of litigation under the Dominican Republic-Central America Free Trade Agreement in a dispute brought by American party Berkowitz against Costa Rican expropriation of real estate there. Unknown to the tribunal, the Costa Rican courts had in fact ruled in the case, ordering that the Berkowitzes be compensated up to an amount far exceeding the state’s offer. But the State has attempted to appeal the decision in a way the family says continues the alleged breach of DR-CAFTA. Diego Gosis of GST LLP, on behalf of the Berkowitz family, asserts that the arbitration should be discontinued.

OIEG case against Venezuela stymied by GST LLP’s claim that federal law prohibits arbitral awards from being granted in New York federal court proceedings. Quinn Smith of GST LLP noted that his firm will represent Venezuela in actions taking place in Washington DC where it is relevant.

The risk of conflicting decisions and/or double recovery rendering any award by a NY federal court unenforceable is cited by GST LLP attorneys representing Venezuela, who faces glassmaker Owens Illinois there.

Quinn Smith of Smith International Legal Consultants in Miami (now GST LLP) expressed pleasure with the result of arbitration regarding construction and delivery of a power plant by US engineer Bechtel to Brazil. He stated that his clients, Brazilian power associations “rely on complex, turn-key contracts with similar provisions across the sector. Defining ’substantial completion’ to include mechanical completion and final testing gives certainty to the power producers and fulfils the intentions of the contract.”