23-24 January 2020, Houston, Texas

This year’s annual joint conference on International Energy Arbitration by the Institute for Transnational Arbitration, the Institute for Energy Law of The Center for American and International Law and the ICC International Court of Arbitration, entitled ‘A world in transition’, explored the many external issues and events facing and influencing the industry, and the role commercial and investment treaty arbitration will play in the years to come.

The conference commenced with an introduction by representatives of the three host organizations: Joseph E. Neuhaus (ITA Chair, partner, Sullivan & Cromwell, New York), Ana Sera e Moura (Deputy Secretary General of ICC International Court of Arbitration, Paris), and David M. Castro (IEL Chair, The Woodlands, Texas).

This was followed by a welcome to the Young Lawyers Roundtable by Rafael Boza (ICC YAF Representative, Regional Legal Counsel – Americas of Sarens USA Inc.), Robert Reyes Landicho (Young ITA Chair, Senior Associate, Vinson & Elkins LLP, Houston), and Christopher M. Hogan (IEL YEP Representative, Partner, Reynolds Frizzell LLP, Houston; currently Partner at Hogan Thompson LLP, Houston).

The first panel was an informative ‘Tour Around Our "Troubled" World’ moderated by Christopher H. Hogan. This Young ITA panel provided a survey of recent developments in three ITA regions: the Americas, Asia and the Middle East. Teresa Garcia-Reyes (Senior Counsel, Baker Hughes Company) presented an overview of key arbitration-related developments in the Americas, including an assessment of Mexico’s status as an arbitration-friendly jurisdiction in light of the election of President Andrés Manuel López Obrador. Chiann Bao (Independent Arbitrator, Arbitration Chambers, Hong Kong) observed that while fossil fuels, including coal and oil, continue to dominate the energy mix in Asia, the region has also seen an increase in the use of other energy sources, including renewables. Finally, Dilpreet Dhanoa (Associate, Squire Patton Boggs, Dubai) discussed developments in the Middle East. She noted that there has traditionally been a struggle in the region between Sharia law and the adoption of arbitration-friendly policies, which has made it more difficult for the Middle East to be a leader in the arbitration space.

The next panel, moderated by Rafael Boza, explored the potential impact of issues of national security, trade and sanctions on the resolution of energy disputes. Damara Chambers (Partner, Vinson & Elkins LLP, Washington, D.C.) kicked off the panel’s discussion by providing a ‘deep dive’ into the US regulatory regimes governing the imposition of sanctions on foreign persons and entities, and the CFIUS regime, which governs investments by foreigners in the U.S. John E. Lash (Principal, Control Risks, Washington, D.C.) discussed the implications of these regimes for companies. He noted that companies now have to think carefully about their technology and data systems, and whether these might invoke any national security concerns. Crina Baltag (Senior Lecturer, Stockholm University) discussed the intersection of the national security regime with international arbitration and enforcement proceedings.

On the second day, the conference’s co-chairs, Sophie J. Lamb QC (Partner, Latham & Watkins LLP, London), Alberto F. Ravell (Lead Counsel – Arbitrations at ConocoPhillips Company), and Luke A. Sobota (Partner, Three Crowns LLP, Washington, D.C.) welcomed the attendees.

Francisco J. Monaldi (Director, Baker Institute for Public Policy at Rice University, Houston) kicked off the second day of the conference with a keynote speech on how politics have affected the Latin American oil sector. He noted that resource nationalism is the norm in Latin America and that governments only liberalize when they must in order to attract investment, irrespective of the political bent of the government. The oil sector, in particular, is very vulnerable to regulatory changes due to the high fixed costs of producers, high rents sought by the government and an evolving risk profile that can swing rapidly between the producers and governments.

The conference continued with a panel, moderated by Sophie J. Lamb QC, on how climate change, and environmental and human rights concerns are being addressed in international energy arbitration. Yousuf Aftab (Director, Atelier Aftab, New York) noted that there has been a shift in approaching sustainability issues from a reactive, public relations exercise to a standards-driven model with the advent and rising recognition of soft law standards such as the OECD Guidelines for Multinational Enterprises and UN Guidelines on Business and Human Rights. Liz Snodgrass (Partner, Three Crowns, Washington, D.C.) commented on how such issues are being reflected in contracts and investment treaties. She noted that it is becoming more difficult for investors to secure stabilization clauses in contracts as States are signing up to international agreements, such as the Paris Agreement, that deter States from providing such perceived exemptions. Theodore J. Boutrous Jr. (Partner, Gibson Dunn, Los Angeles) described his experience explaining the science of climate change before US federal courts in California, where he represented Chevron against a group of plaintiffs seeking billions of dollars in damages, and for which he presented the court with a scientific tutorial on climate change.

The next panel was moderated by Luke A. Sobota on how the investor-State arbitration system has evolved with the introduction of various new clauses in model and signed treaties, and whether these changes reflect a growing consensus among States to renegotiate investment agreements to limit their scope. Matt Swinehart, from the U.S. Treasury, noted that most new investment arbitration provisions are included in broader trade agreements. In these settings, investment considerations tend to take a back seat to trade negotiations. Abby Cohen Smutny (Partner, White & Case, Washington, D.C.) observed that the States she worked with are not necessarily clamoring for the changes often raised in the debates on arbitration reform. For example, States tend to be concerned about having enough time to put together their defense rather than the cost or delays associated with arbitration procedures. Eugene Silva (Senior Counsel of the International Disputes Group at ExxonMobil) noted that an investor is most concerned with the commercial aspects of the arbitration, such as its speed, efficiency, etc. Therefore, investors are not generally interested in many of the suggestions put forward by States, such as investment courts, that will tend to increase the costs and resources involved in resolving disputes. Investors will accordingly likely seek other alternatives, such as contractual arbitration provisions or indemnification guarantees from the State. Noiana Marigo (Partner, Freshfields Bruckhaus Deringer, New York), along with her co-panelists, commented on some recent treaty provisions, such as the Comprehensive Economic and Trade Agreement between the European Union and Canada, incorporating changes that seek to address some of the criticism of international arbitration.

Laurence Shore (Of Counsel, BonelliErede, Milan) further provided an overview of what he considered were the ten most significant rulings and industry trends in 2019 for energy arbitration. Among other cases and events, he noted that the first investment arbitration case against the European Union had been initiated last year by Nordstream, which is owned by Gazprom. He also commented on the significance of a number of other US and foreign commercial and investor-State cases that would have important implications in 2020 and the years to come.

Jonathan A. Hunter (Partner, Jones Walker, New Orleans) moderated the next panel on how the Deepwater Horizon event has had long-term impacts on the oil and gas industry, including on contracting, regulation, industry standards and, of course, dispute resolution. Megan Pizor (General Counsel, Litigation Management, Inc., Ohio) discussed how technology and data-driven decision-making pushed for changes in the civil procedure rules in Macondo’s aftermath. Given the volume of claims after the disaster, there was concern that many of the claims were fraudulent. Ultimately, the courts decided to conduct an early case assessment process to weed out plainly frivolous or fraudulent claims, leading to proposed changes to the civil rules of procedure. Richard D. Deutsch (Partner, McGuireWoods LLP, Houston; currently Partner at Pillsbury Winthrop Shaw Pittman LLP, Houston) described his experience as counsel in the aftermath of the disaster. He noted that the reputation of both BP and the energy sector as a whole suffered due to the crisis, and disputing parties would often seek ways to tie the opposing side to BP or the incident. Peter Cameron (Professor and Director of Centre for Energy, Petroleum and Mineral Law & Policy at the School of Social Sciences at the University of Dundee) commented on how the rest of the world reacted to the Macondo incident. He noted that because this was not a cross-border incident (even though Mexico felt some effects), the effects on the international community were relatively dispersive.

Alberto Ravell moderated the last panel where senior in-house counsel of several leading oil and gas companies discussed the various issues affecting the industry. Laura Robertson (Deputy General Counsel of Litigation, Arbitration & IP at ConocoPhillips Company) observed that the existence of investment treaties with arbitration clauses was important, noting the company’s recent investment arbitrations awards against Venezuela. David Moyer (Chief Corporate Counsel at Chevron Corporation) agreed that while treaty protection was important, if this was not available in a certain jurisdiction, the company would look for alternative ways to manage the risk. Elizabeth Matthews (Deputy Managing Director, Executive Vice President and General Counsel at Total American Services, Inc.) discussed the instability created by the sanctions regime given that major oil and gas projects happen to be located in targeted jurisdictions such as Russia.