The tribunal was at pains to emphasize the interim award was final and binding under Article 32 of the UNCITRAL Rules, which means that Chevron could pursue recognition and enforcement of the award in jurisdictions around the world. It could do so offensively by seeking declaratory relief in Ecuador (or elsewhere), or defensively in response to an attempt by the Ecuador plaintiffs to seek enforcement of the Ecuador judgment. Of course, the Interim Award is only binding on Ecuador and Chevron, so it is not clear what a domestic court outside Ecuador would do with an award imposing injunctive relief on Ecuador.

Meanwhile, on Thursday the Second Circuit issued its long-awaited opinion in Chevron v. Naranjo. The Second Circuit’s crucial holding was that New York’s Uniform Foreign Money-Judgments Recognition Act precludes declaratory injunctive relief by a foreign judgment debtor. “There is … no legal basis for the injunction that Chevron seeks, and, on these facts, there will be no such basis until judgment-creditors affirmatively seek to enforce their judgment in a court governed by New York or similar law.”

The Second Circuit had little sympathy for Chevron’s attempt to pursue an antienforcement injunction, particularly given the comity concerns at stake.

“[W]hen a court in one country attempts to preclude the courts of every other nation from ever considering the effect of that foreign judgment, the comity concerns become far greater. In such an instance, the court risks disrespecting the legal system not only of the country in which the judgment was issued, but also those of other countries, who are inherently assumed insufficiently trustworthy to recognize what is asserted to be the extreme incapacity of the legal system from which it emanates. The court presuming to issue such an injunction sets itself up as the definitive international arbiter of the fairness and integrity of the world’s legal systems.”

But at the same time, the Second Circuit emphasized that it expressed “no views on the merits of the parties’ various charges and counter-charges regarding the Ecuadorian legal system and their adversaries’ conduct of this litigation, which may be addressed as relevant in other litigation before the district court or elsewhere.” It also avoided any decision with respect to the underlying RICO claims that Chevron has filed against the Ecuador plaintiffs and their lawyers, focusing simply on the improper procedural device that Chevron sought to employ to enjoin enforcement of the Lago Agrio judgment abroad.

Where does the case go from here? In Ecuador, Chevron has appealed to Ecuador’s highest court to review the case. No word yet as to whether Chevron will seek to have the arbitral tribunal’s Interim Award recognized and enforced in Ecuador. The arbitral tribunal is scheduled to hold hearings on February 11-12 to determine what steps Ecuador is taking to prevent enforcement of the Lago Agrio judgment.

As for the Ecuador plaintiffs’ efforts to enforce the judgment, there is no indication that Chevron will post an appeal bond, which means that the Ecuador plaintiffs are free to pursue enforcement anywhere in the world where Chevron has assets.

It appears that the Ecuador plaintiffs will not seek to have the judgment enforced within the United States. Ecuador Plaintiffs’ lawyer James Tyrrell stated yesterday that “The Ecuadorean plaintiffs are not coming to New York to enforce this judgment.” Given the locus of Chevron’s assets, it is not obvious why the plaintiffs have adopted this strategy, unless they have reason to believe that there is a high probability that the judgment would not be enforced.

There is, of course, the option of pursuing enforcement abroad. If the Invictus Memo is reliable, the Ecuador plaintiffs have identified twenty-seven nations where Chevron has substantial activities, including countries that are friendly with Ecuador, such as Colombia and Venezuela. That memo candidly states the ultimate end game strategy for the Ecuador plaintiffs:

“After approximately seventeen total years of litigation in the United States and Ecuador, the case against Chevron now enters its most critical, multi-faceted, and labor intensive…. With the ultimate goal of effecting and swift and favorable settlement, the strategy of the Plaintiffs’ Team will incorporate the following components: … managing the public relations impact of Chevron’s manipulation of the Cabrera narrative … [and] identifying jurisdictions globally that are most hospitable to an enforcement action.”

As most of you know, the CPR Institute is a nonprofit think tank and alliance of global corporations, law firms, scholars, and public institutions dedicated to the principles of commercial conflict prevention and alternative dispute resolution. The “Best Electronic Media Award” is presented annually to “a company, group, or individual that has produced exceptional electronic media that was focused on the field of Alternative Dispute Resolution.”

CPR presented the award at a wonderful dinner in New York last week as evidenced by the photo.

(Tali Finkelstein (left), Roger Alford (center), and Leslie Alford (right))

Without sounding cliché, the award recognizes the outstanding work of all of our permanent and guest contributors, and the tireless support from Kluwer Law International (with a special shout out to KLI superstars Gwen de Vries, Eleanor Taylor, Vincent Verschoor, and Raymond Blijd).

Others CPR winners include:
ADR Center in Italy for Outstanding Practical Achievement;
Roselle Wissler for Outstanding Professional Article;
Stacie Strong for Outstanding Short Article;
Michael Diamond and Nate Mealey for Outstanding Student Articles;
Douglas Noll for Outstanding Book.

Congrats to all!

As for the invalidity of the trial “for procedural fraud and violation of the guarantees of due process” it must be said that the record of the trial court reflects that the Defendants have exercised a vigorous and ample defense in the trial—the thousands of pages that bloat the trial have already been mentioned, in addition to this appeal and litigation; insinuating expert witnesses; requestioning and reexamining these same judicial auxiliaries, and to witnesses, visiting each and each one of the formalities given in the first trial. As such, the trial has been public and, from what can be seen, also transparent, with a horrifyingly uncommon temporal duration, and without a doubt, affecting the interests of those that drive the case, as since the action, more than eight years have passed in Ecuador alone; definitely putting into process the proof and the performances—all of them—requested by the parties in the investigative procedures….

Fraud and corruption were also mentioned, of officials, attorneys, and representatives, the issue of which this Court should not make any reference, only to leave emphasized that the same accusations can be found pending before authorities of the United States in the denouncement that has been presented the same here by the Defendant Chevron, under the RICO act, and the Court does not have competence to resolve the conduct of attorneys, expert witnesses, or other government employees or administrators and judicial auxiliaries, if that is the case….

The logical anticipated consequence, in the case of carrying out the request, was that it was impossible to rely on any expert, and resulted in not being able to have expert proof which paralyzed the trial; thus Chevron has acted up until the outer limits of its defense and the Court considers the particularly precarious situation which could doom the administration of justice should it be allowed during the controlling procedural moments and stages of the suit, making it depend on its decision in the advancing of the cases. The deeds made public considered in the judge’s decision at the first instance, and Chevron was condemned to pay trial costs for manifest bad faith, notorious and obvious; so much so that now suffice it to say that the procedural conduct of the defendant, few times seen in the annals of the administrator of Justice in Ecuador, were abusive to the point that, in terms of attitude, that the Court will not even dedicate any more writings to this portion of the decision, it would be an example of disastrous precedent for other litigants.

Following the judgment, plaintiffs’ attorney Pablo Fajardo indicated that Chevron is authorized to request clarifications of the appellate court decision within the next month or so. According to my conversation with plaintiffs’ representative Karen Hinton yesterday, if Chevron wishes to appeal to the Ecuador National Court in Quito, Chevron must post an appeal bond of approximately 10%, or $1.8 billion. Chevron itself contends that the appeal bond could be 100% of the judgment, forcing it “to deposit, with no likelihood of recoupment, billions into the very court system whose corruption and bias … render the Lago Agrio judgment unenforceable.“

Meanwhile Chevron has filed a motion with the Second Circuit this morning asking the Second Circuit to lift the temporary stay on the district court’s antisuit injunction. The Second Circuit’s principal concern that an antisuit injunction was not ripe has been obviated by the Ecuador Appeals Court judgment. “Without such relief, the [plaintiffs] will be able immediately to commence their extortionate plan to harass Chevron through multiplicative, vexatious enforcement proceedings expressly intended to disrupt the operations of Chevron’s affiliates in foreign countries.”

In its motion, Chevron argues that “The Ecuadorian appellate decision … does not purport to explain or even mention the extensive evidence that the Lago Agrio Judgment was ghostwritten by parties other than Judge Zambrano, who had secret access to the LAP’s internal, unfiled work product.” Among other things, Chevron argues that the Ecuadorian appellate judgment ignores (1) the extensive verbatim overlap between the judgment and the LAP’s unfiled “Fusion memo”; (2) the overlap between the judgment and the LAP’s unfiled record summary; (3) the LAP’s internal emails evidencing their plan to draft the judgment; and (4) expert linguistic testimony that the judgment was not written by Judge Zambrano.

Yesterday Chevron has also filed a motion with the UNCITRAL arbitration tribunal in The Hague requesting that panel to order Ecuador to inform the tribunal of the steps it intends to take to comply with the tribunal’s February 2011 order requiring Ecuador to prevent the Lago Agrio judgment from being enforced.

After almost two decades of litigation, the Chevron Ecuador judgment has reached the critical enforcement stage. The $18 billion question is whether the Second Circuit will stay enforcement of the Ecuador judgment, and if not, whether foreign courts will recognize and enforce the Ecuador judgment. Overshadowing it all is an investment arbitration that may require Ecuador to pay Chevron for any damages it has incurred from the enforcement of a judgment in violation of the Ecuador-United States bilateral investment treaty.

Bederman was a prince of a guy, and a great international law scholar who loved the life of the law. I’ve known him for over twenty years and always appreciated his thoughtful analysis and kind words.

When I asked him several years ago what sustained him as he was battling cancer, he said that, in addition to his family, he loved to wake up every morning and think about his latest writing project. He wrote until his dying days, finishing his last great book, Custom as a Source of Law, just last year. Among his passions was international arbitration, especially the history of international adjudication.

Just to give you a taste of his work, here’s a choice excerpt from a book chapter he wrote:

What made international claims tribunals the preferred method of claims settlement until the end of the Second World War? One factor not to be underrated is the psychology of international arbitration. It makes for a superb face-saving device in the conduct of international relations. Contentious disputes are submitted to what appear to be a neutral authority which adjudicates them on the basis of a respect for law. The highly-charged political circumstances which gave rise to the claims—whether wars or political upheavals—are neutralized with (usually) years of dispassionate legal analysis and adjustment. If nothing else, international claims settlement is a superb political soporific.

David Bederman gave a “Final Lecture” in September 2011, but it was not a self-reflective journey on the meaning of life. Rather it was the Inaugural David J. Bederman Lecture.

Interim Dean Robert Schapiro introduced David by stating “Please join me in welcoming … our friend and colleague, and a hero of mine, Professor David J. Bederman.” After a standing ovation, David said, “I’m glad to be here, in so many respects. I look out in the audience and see so many friends and I’m going to try and spend a few minutes with each of you after the lecture. I am deeply touched that you would spend your afternoon with me. It means a lot to me.” Then he spent the next hour discussing his latest work on the role of custom in law.

That was David Bederman. Always thinking, always excited about the life of the law, always looking to his next great project. A scholar and friend to the very end.

Welcome Annalise!

Topics will include: Do arbitrators have the power to give Chevron what it wants? Are there any limits left on U.S. discovery in aid of arbitration? What will the endgame look like, and will it advance human rights?

Moderators:
• Michael D. Goldhaber, The American Lawyer
• Professor Robert Howse, NYU Law School
Commentators:
• Professor Roger Alford, Pepperdine Law School & Notre Dame Law School (Jan. 2012)
• Stuart Newberger, partner Crowell & Moring
• Oliver Armas, partner Chadbourne & Parke
• Catherine Amirfar, partner Debevoise & Plimpton
• Eric Bloom, partner Winston & Strawn (counsel to Ecuador)
• Steven Donziger (counsel to the Ecuadorian Plaintiffs)

Should be very interesting for anyone following one of the most fascinating and controversial transnational cases in the world.

Articles 3 through 10 and other provisions that qualify or create exceptions to these Articles are self-executing. With the exception of these Articles, the Treaty is not self-executing. None of the provisions in this Treaty confers a private right of action.

Articles 3 through 10 of the BIT address traditional substantive guarantees for investors, such as national treatment, MFN treatment, and compensation for expropriation. The other non-self-executing provisions deal with issues such as dispute settlement mechanisms, including dispute resolution of investor-state claims and state-to-state claims.

The Senate hearing on the treaty made clear that the purpose of this language was to respond to Medellin.

“Following the Supreme Court’s decision in Medellin v. Texas, 552 U.S. 491 (2008), the committee has taken special care to reflect in its record of consideration of treaties its understanding of how each treaty will be implemented, including whether the treaty is self-executing…. The resolution of advice and consent contains a statement reflecting the committee’s understanding of the extent to which this Treaty will be self-executing. This provides that Articles 3-10 of the Treaty are self-executing and do not confer private rights of action enforceable in United States courts. The remaining provisions of the Treaty are not self-executing and do not confer private rights of action enforceable in United States courts.”

I’m glad to see that the Senate is carefully addressing the issue of domestic implementation of treaties following Medellin. The dispute settlement mechanisms in the treaty are not self-executing and any arbitration award rendered pursuant thereto must be enforced using either the New York Convention or the ICSID Convention. Makes sense. But I’m curious what impact a treaty declaration will have in the future for substantive treaty guarantees that are self-executing but do not confer a private right of action. Beyond protecting the United States as a litigant, what does self-execution achieve for the substantive provisions of the BIT that are designed to protect investors?

“What did they spend it on? Regardless of the nature of the dispute and the amount of money that a party spent (whether claimant or respondent), the cost breakdown by percent was remarkably much the same. Six cost categories were listed in the survey; Chart 12 illustrates the percentages allocated to each one. 74% of party costs were spent on external legal costs (including where applicable barristers’ fees), with the remaining 26% spread across the other headings. For example, as Chart 12 indicates, out of a total expenditure of £1,000,000, the costs a party would incur might be distributed as follows:
■ £740,000 for external legal fees
■ £100,000 for experts’ fees and expenses
■ £80,000 for external expenses
■ £50,000 for witness fees
■ £30,000 for management costs”

“Of the 74% of costs referred to on the preceding page, Chart 13 shows that, irrespective of the nature of the dispute, parties spent 19% on the pre-commencement/commencement of the arbitration, 25% on the ex-change of pleadings, 5% on discovery, 14% on fact and expert witnesses,* and the remaining 37% on the hearing (before, during and after). To illustrate the practical application of these percentages, a party with external legal costs of £740,000 might have spent:
■ £140,600 on pre-com/com work
■ £185,000 on the exchange of pleadings
■ £37,000 on discovery
■ £103,600 on witness costs
■ £273,800 on the hearing (before, during and after)”

In collaboration with the Academic Council, the Executive Committee and the Young Arbitrators Initiative of the Institute for Transnational Arbitration (ITA) are proud to announce the creation of a new annual Winter Forum. Building on the Academic Council’s tradition of biennial exploration of scholarly papers and the format of the Friday Forum in Dallas, the Winter Forum will provide a unique opportunity for academic and scholarly debate – with a practical twist – for topical issues in international arbitration.

The first half of the Winter Forum will showcase several works-in-progress, including presentations by authors, commentary by internationally recognized academics and practitioners, and interactive discussions among all participants. Our objective is to integrate the unique insights of academics and practitioners, encourage collaboration, and promote the evolution of international arbitration during a time of global transition. After lunch and a keynote address by Professor George A. Bermann of Columbia Law School, the Winter Forum will conclude with a Tylney-Hall-style discussion forum.

In connection with this initiative, we now initiate a call for works-in-progress. We encourage authors to consider a broad variety of topics, including:
(1) Emerging issues of substantive law in international commercial arbitration or international investment law;
(2) Consideration of procedural issues, including issues related to arbitrator selection and challenge, evidentiary considerations, preliminary measures, concurrent proceedings, and enforcement and review;
(3) The relationship between international commercial arbitration and investment law, as well as between these two pillars and other branches of law, such as intellectual property and environmental law;
(4) The recent jurisprudence of national courts related to international arbitration, either domestic or comparative, and the implications for basic concepts of jurisdiction, arbitrator competence and independence;
(5) Innovative research methodologies for the exploration and consideration of international arbitration and transnational dispute resolution;
(6) The interactions among scholars, practitioners, government officials and civil society groups active in international arbitration;
(7) The consideration of international arbitration’s commercial impact, including implications of cost, the net value of arbitration and the opportunities to build sustainable dispute resolution into international business and investment.

We encourage works-in-progress that are from both established and junior scholars and practitioners. The Winter Forum is intended to integrate the scholarly insights and perspectives of both academics and practitioners. Previous explorations of scholarly works-in-progress during Academic Council events have included presentations by international arbitration luminaries such as David Caron (“The Design and Operation of International Courts and Tribunals: A Theory of Bounded Strategic Space and Positional Logics”), José Alvarez (“The Once and Future Investment Regime”) and Jan Kleinheisterkamp (“The Impact of Internationally Mandatory Laws on the Enforceability of Arbitration Agreements”). We anticipate that the works-in-progress and commentaries presented in the Winter Forum will follow this tradition of excellence, and we intend to reserve one presentation for work by a junior scholar or practitioner.

All proposals must be submitted by October 15, 2011, via email to ITAWinterForum@gmail.com in accordance with the following conventions. First, proposals should be made in a Word document that is no longer than 1,000 words. Second, your cover email should indicate your affiliated institution, your contact details and whether your paper has been submitted or accepted for publication elsewhere. In evaluating proposals, please note that priority will be given to unpublished papers and works-in-progress. Every paper proposal will be reviewed on a blind basis by at least two members of the Conference Committee (identified below).
We anticipate announcing the selected papers by November 15, 2011. Authors selected for the Winter Forum must be prepared to circulate a substantially complete draft of their paper no later than Wednesday, January 18, 2012.

Please submit enquiries to either of the ITA Winter Forum Co-Chairs, Susan Franck (francks@wlu.edu) or Leah Harhay (Leah@LeahDHarhay.com).

The take away seemed to be that counsel should be more judicious in what they choose to present to the arbitrators for review. Mountains of documents do not help their cause. Briefs should be snappy, concise, and sensitive to the arbitrators’ limits. Less is more.

One should never be quick to dismiss Landau’s suggestions, but I’m frankly conflicted by his advice. I have no doubt that briefs should be presented in a manner that maximizes the potential for arbitrators to understand and digest the arguments. We are all familiar with situations in which the brief was not written to assist the arbitrators in resolving the case, but rather was written to score points with the client or against the opposing side. It’s good advice to maintain unrelenting focus on the intended audience: the arbitrators.

Does that mean that mountains of documents are inappropriate or counterproductive? It depends. There are pleadings we intend for the arbitrators to read, and there are pleadings we provide for ready reference. There are key documents and there are peripheral documents. I do not expect an arbitrator to be interested in the minutiae, but that does not mean minutiae should be omitted from the record. Why bother with boxes of invoices or gigabytes of email correspondence? Because we know that something could peak their interest, but we don’t know in advance what that something will be. An arbitrator might spot check invoices to verify the veracity of the claims, or search keywords in a particular email correspondence, or be unusually interested in a particular event that gave rise to the dispute. It’s reference material that is there if they need it.

If one thinks of pleadings in terms of concentric circles, there are (1) materials we know arbitrators will read; (2) materials we expect them to read; (3) materials we hope they will read; (4) materials we doubt they will read but are available in the record; and (5) materials we know they will not read and are not produced.

Landau seems to argue that counsel should focus on the inner concentric circles and not bother with peripheral pleadings, which do more harm than good. I’m willing to accept the legitimacy of lawyers producing massive document dumps with no expectation that it will be read, but that is available for ready reference.