Legal Counsel in Investment Treaty Arbitration: Does Background Matter?
Mis à jour : 17 mai 2019
Jean-Philippe Herbert is a Dispute Settlement Lawyer in the Rules Division of the World Trade Organization (WTO). Before joining the WTO, Jean-Philippe Herbert worked in private practice in Canada, mainly in the field of international investment law, international trade law, and commercial dispute resolution. He holds law degrees in Civil Law (B.C.L.) and Common Law (LL.B.) from McGill University in Canada, as well as a master’s degree summa cum laude in international law and economics from the World Trade Institute of the University of Bern in Switzerland. Opinions expressed in this article are only those of the author only.
Amidst recurring concerns over the legitimacy of arbitrators in investor-State dispute settlement (ISDS), a number of studies have investigated the background characteristics of arbitrators and the possible existence of patterns of behaviour capable of predicting how arbitrators decide disputes. But arbitrators, however influential in shaping the outcome of ISDS cases, are not the only pertinent actors. They indeed operate upstream from the attorneys (or legal counsel, as they are known) who argue before them on behalf of investors and States. These attorneys devise case strategies, frame legal issues, advance new substantive interpretations, and negotiate settlement agreements on behalf of clients wishful to secure favourable outcomes. To that extent, legal counsel are not only an inextricable part of the system, they are also presumed to bear significantly on how disputes are decided or resolved. If anything, the long-standing practice of litigants to carefully select their counsel, for example on the basis of prior successes and notoriety, lends credence to that proposition. Yet, unlike arbitrators, the vast and dynamic community of investment treaty counsel remains largely unexplored. In particular, there appears to be no published research attempting to isolate the specific features in the background of an attorney that are most frequently associated with victorious outcomes.
In a research conducted with Dr. Rodrigo Polanco, we tried to fill that gap by exploring the demographic, academic and professional background of legal counsel engaged in ISDS, as well as a wide range of individual background factors possibly correlated to the outcome of cases. A synopsis of our key findings is set out below. These and several other related findings are discussed extensively in a forthcoming academic publication alongside our complete dataset.
In essence, we designed an original database comprising case-specific observations on all 528 publicly available ISDS proceedings registered on UNCTAD’s Investment Policy Hub up to March 2018. The database includes information on arbitral outcomes and the names and background data of the lead attorneys in each dispute. From the total of 898 attorneys initially identified, there was sufficient data to document the background of 506 of them.
Unsurprisingly, the study substantiates a widespread belief that investors retain mainly Northern hemisphere-based, white male lawyers operating from elite international arbitration law firms. Beyond this, the study also reveals stark gaps in global diversity and inclusiveness not only among investor attorneys but also among attorneys defending States. Demographically speaking, it shows that male counsel for either party appeared before tribunals in frequencies significantly disproportionate to those of their female counterparts. The male-to-female ratio was nine-to-one for investors and eight-to-one for States. Western nationals, chiefly from the US, Canada and the UK, accounted for around seventy percent of the ten nationalities most prevalent among all litigators. Ninety percent of all investor lawyers were nationals of high-income economies on the classification run by the World Bank – compared to five and one percent for lower-middle-income and low-income economies, respectively.
Also significant is that most investor attorneys graduated from universities widely acknowledged as prestigious. For example, the study finds that, under the rubric “first law degree” (e.g., J.D., LL.B., B.C.L.), Harvard, Columbia and Yale dominated the list of educational institutions attended by the sampled attorneys. On the professional front, lawyers in private practice litigated ninety five percent of all cases brought by investors. The most represented firms were Freshfields Bruckhaus Deringer, King & Spalding, White & Case, Debevoise & Plimpton, and Shearman & Sterling (in descending order). By contrast, the study indicates that, in every second dispute, governments internalised the provision of legal defence services exclusively to a State-run legal department. In the rest of cases, States either externalised to law firms or relied on a mixed system of legal defence involving in-house and external lawyers. When externalizing to firms, however, governments retained White & Case, Arnold & Porter, Foley Hoag, Sidley Austin, and Freshfields Bruckhaus Deringer more than any other law firm (in descending order).
Arguing an ISDS case was a one-off experience for lawyers in almost six out of ten cases. This high ratio may come as a surprise in a field typically characterized by high-stakes claims. As for prior experience as an arbitrator, contrary to popular belief, we found that relatively few counsel had been appointed as an arbitrator prior to litigating a case. Twenty percent of investor lawyers had done so, compared to fourteen per cent for their State counterparts. Of note, the simultaneous involvement of lawyers as both arbitrator and counsel – “double-hatting”, as it is coined – occurred in nineteen percent of cases for investor counsel and thirteen for governments.
We also explored which background variables displayed correlations, positive or negative, with ISDS outcomes. In doing so, we established an average benchmark to allow for a consistent comparison between individual outcomes. For purposes of the study, investors were considered as having prevailed in a dispute when the tribunal awarded compensatory damages that were above an average cost threshold associated with investment treaty litigation. Conversely, States were deemed to have won disputes when cases were rejected on jurisdictional grounds or at the merits stage, or when proceedings were discontinued. Settlement agreements were not included in the computation of outcomes. For all cases documented in the database, we found that just over thirty five percent of proceedings initiated by investors resulted in a favourable award. Two patterns were plainly discernible. First, a lawyer’s prior ISDS experience and educational background in an elite university were factors positively correlated with favourable outcomes, irrespective of whether a lawyer represented an investor or a State. Second, female legal counsel acting on behalf of investors secured a ratio of favourable awards greater than their male counterparts. Their success ratio was, indeed, seventy five percent higher.
Furthermore, we focused on twenty “power brokers” of the ISDS system, a term that refers to a group of frequent and influential users of the system. The study centred on the ten investor and ten State attorneys with the greatest number of appearances as lead attorney before investment tribunals. Among this group, three findings are particularly notable. First, an immense wedge exists between males and females, as no female appeared among the ten investor attorneys. Conversely, three women appeared on the State’s list, including Argentinian government lawyer Angelina Maria Esther Abbona with 11 disputes as first chair. Second, nine out of the ten investor attorneys were nationals of Western hemisphere, high-income countries. The remaining one, Stanimir A. Alexandrov, is a long-term resident of the United States. For States, only three counsel originate in high-income countries, the other seven being nationals of upper-middle-income countries. Third, the power brokers representing investors showcased an impressive track-record, prevailing in as much as sixty percent of disputes. This ratio represents almost twice the average win ratio for investors, which, as noted above, was thirty five per cent. For States, however, the power brokers secured positive outcomes in only forty five percent of disputes. This value compares feebly with the overall average win rate for States of sixty five percent, although other factors may have exerted downward pressure on that value.
It is worth highlighting that the collection of empirical data on the community of international investment counsel was a daunting endeavour. Its success depends on the accessibility of information in a system still coloured by pro-confidentiality inclinations that have long prevailed in international commercial arbitration. Despite the fragmentation of available empirical data, our study combined different layers of information in an attempt to accurately characterize the community of investment counsel. Naturally, the overview of results discussed above comes with a number of built-in methodological limitations, an extensive review of which exceeds the scope of this note. Overall, though, the study highlights that global representativeness is lacking among the counsel who drive the ISDS market. At the same time, it also points out, among other things, that women acting as lead counsel for claimants were associated with substantially increased prospects of investors prevailing in their claims. Observations akin to these ones may serve as an incentive or informative starting point to further explore the impact of legal representation in ISDS.
 Three main pillars of information were identified. The first pillar included demographic characteristics of counsel, namely: (i) gender, (ii) age, (iii) nationality(ies), (iv) native language, and (v) income level of the country of origin. The second pillar concerned educational characteristics, namely: (i) legal system of studies; (ii) level of education; and (iii) name(s) of university(ies) for bachelors and for masters. The third pillar was about professional characteristics, namely: (i) private or public sector; (ii) name of law firm during the dispute; (iii) previous experience as lead counsel in ISDS at the time of initiation of the dispute; (iv) previous experience as arbitrator in ISDS at the time of initiation of the dispute; (v) concurrent appearance as counsel and arbitrator at any time during the dispute; and (vi) identification of the “power brokers”.
 For investors, these attorneys were: (1) Nigel Blackaby; (2) David W. Rivkin; (3) Doak Bishop; (4) Antonio Crivellaro; (4 – ex aequo) Emmanuel Gaillard; (6) Barry Appleton; (6 – ex aequo) Hamid Garavi; (6 – ex aequo) Robert Volterra; (6 – ex aequo) Stanimir A. Alexandrov; and (10) Stephen Jagusch.
For States, these attorneys were: (1) Osvaldo Cesar Guglielmino; (2) Angelina Maria Esther Abbona; (3) Hugo Perezcano Diaz; (4) Stanimir A. Alexandrov; (5) Diego Garcia Carrion; (5 – ex aequo) Reinaldo Enrique Munoz Pedroza; (7) Sylvie Tabet; (8) Claudia Annacker; (8 – ex aequo) Manuel Enrique Galindo; and (10) Ronald E. M. Goodman.