Clifford Chance and Freshfields have been on the opposite sides of an arbitration that led to the settlement of the biggest damages claim ever heard under English law – for $13bn.
The sum, being claimed by a Nigerian government-backed consortium from the Italian state electricity company, was so huge that it reportedly could have prevented Italy's early entry to the EMU.
Clifford Chance's head of contentious litigation Chris Perrin was instructed by the Nigerian consortium Nigeria LNG in October 1996 to try to get the Italian company ENEL to fulfil its contract signed four years earlier to pay LNG $13bn over 22 years for supplying it gas.
Perrin said that ENEL may not have been able to afford such a huge amount, but under Italian law, if state companies cannot meet their liabilities, the Italian government has to.
ENEL instructed Freshfield's Nigel Rawding in December 1996. It claimed that it could not build an Italian port to receive the gas because of an intervention from the new left-wing government. “This was against the background that the political landscape had changed,” said Rawding.
Perrin said his side thought that the Italian government set ENEL a deadline of 31 December 1997 to reach a settlement. Rawding denied this. ENEL and LNG had themselves set the deadline in a joint memorandum of understanding, he said.
Both sides instructed counsel for several preliminary hearings in an international arbitration court in Geneva. A hearing to decide liability was scheduled for last week, but before that date, on the day of the deadline, a settlement was agreed.
Italy will no longer have to build a port. The Nigerian gas will instead be shipped to France for French consumption and in return the French have agreed that a similar quantity of Russian gas, originally bound for France, will be piped to Italy. ENEL has had to pay the costs of this gas swap.