International courts are taking more business cases than ever before and the race is on to pick up this lucrative source of work. Matheu Swallow finds that UK firms are desperately trying to catch up with their US rivals.
International litigation is booming. There has been an explosion both in the number of international courts, tribunals and other adjudicative bodies, and in the number of cases before them, and firms are looking closely at this area for new business.
But as well as conducting high-profile public international law cases such as the International Criminal Tribunal case against President Milosevic or Yugoslavia brining proceedings against 10 Nato members before the International Court of Justice, these international adjudicative bodies are also proving to be an increasingly popular forum for resolving disputes within the international business community.
The International Centre for the Settlement of Investment Disputes (ICSID) is open to individuals and corporations to levy actions against a state they feel has prevented or impinged upon investment in that country.
Between 1965 and 1990 ICSID heard only 10 cases. However, in the last year alone there have been 20 cases.
These international courts are becoming more popular as corporations see how successful counterparts have been. Statistics from ICSID show that in 30 completed cases, the state party has only been successful in two instances, 16 cases were settled and in 12 instances the aggrieved party won outright in court.
Public international law, such as matters before the Dispute Settlement Body (DSB) of the World Trade Organisation (WTO), is also having a growing impact on commerce. Although made to appear as inter-state matters, they are often private disputes.
Law firms which have spotted the trend are now gearing up to tap into the massive potential of international work.
Firms such as Freshfields and Herbert Smith are already leading players in public international law and Clifford Chance has an established WTO group.
Now other leading City practices are looking to expand their litigation departments to handle the boom and diversification of this area of practice.
Rowe & Maw, for example, recently launched its international trade group, combining WTO skills with the firm's existing EC law expertise.
“With the globalisation of the world economy, a legal environment is emerging that is regulated on three levels,” says partner Philip Ruttley, who heads the 11-strong team at Rowe & Maw.
There are the new multilateral agreements such as those of the WTO, a proliferation of regional systems such as the EU and the continued relevance of national law.
“Clients are now asking for firms to advise on all three levels, both in terms of straightforward legal advice and also for strategic planning,” says Ruttley.
WTO agreements are negotiated at government level, but many multinationals are asked for input and can influence the outcome, he says. For this reason, the team at Rowe & Maw is made up of both lawyers and economists.
The competition for this work is coming direct from US firms, as Ruttley recently discovered on what he describes as a “sobering” trip to the US.
“I thought we were ahead of the game with our 11-strong team,” he says, “but the US is way ahead of the Europeans. It is no wonder they are coming into Europe – they have the strength, the clout and the depth.”
Ruttley predicts there will be more and more US firms breaking into Europe and targeting this area of work. He says it will be essential for the top UK firms to develop WTO capacity and for this to be integrated with the EU law team.
Richard Johnson, senior partner at leading Washington DC practice Arnold & Porter, says that tactically it is often better to “dress up” private disputes as inter-state matters before the DSB.
“Our competitive edge is the ability to understand the legal, policy, and political linkage,” he says.
US firms, says Johnson, especially those with a Washington base, are more used to dealing with the political context in which legal issues are framed.
Another advantage, he says, is that US lawyers tend to be given a broader brief, and are therefore better placed to co-ordinate a legal team that will often include not just lawyers, but technologists, scientists and environmental experts.
Johnson's firm consists of broad international public policy and trade teams of up to 40 members, with a network of additional specific expertise that is employed when needed. Johnson describes his firm's role as that of a “general contractor, putting together the right team”.
International work is also an important source of work for the English bar, although the expertise is generally acknowledged to be contained within a small number of chambers.
Blackstone Chambers and 20 Essex Street are the recognised leaders for pure public international law, while 3 Verulam Buildings and Essex Court Chambers are developing growing reputations.
All the instructions received by 20 Essex Street, for example, involve disputes where one or more party is foreign, and in more than 70 per cent of cases both parties are foreign.
In terms of international courts, perhaps the most significant is the ICJ, which handles pure public international law, and which last week rejected Slobodan Milosevic and the Yugoslav government's attempts to halt the Nato bombing.
Sir Arthur Watts QC, former legal adviser to the Foreign and Commonwealth Office and now a tenant at 20 Essex Street, says it is rare for at least one of the parties in an ICJ case not to be represented by an English lawyer.
One of the reasons for this is that the ICJ deals with cases only in English or French. UK lawyers have also developed an excellent reputation for handling ICJ matters and are reaping the benefits now that the ICJ is a popular forum for resolving inter-state disputes.
There was a bad period in the 1960s, says Watts, when many developing countries felt the ICJ was prejudiced against them.
“This has taken a long time to get over but confidence is now very widespread, as evidenced by the countries that are now bringing cases before the court,” says Watts, citing Nigeria, Cameroon, Botswana, Namibia and Libya among those recently taking disputes to the ICJ.
The fact that counsel is addressing 15 judges all from different countries, means appearing in the ICJ is a unique experience, significantly different to appearing in a UK court.
“You are not addressing a culturally homogenous group. This has a distinctive effect on the way in which one has to address and deal with the court,” says Watts.
“It is very difficult to engage all the judges in the ICJ. You have to spread eye contact through 120 degrees to talk to the judge at either end of the table,” he says.
Translation is another problem, which means that unlike the UK courts where counsel will ad lib, in the ICJ speeches are read out.
“What is striking to an English lawyer accustomed to the House of Lords is the utter silence of the bench. They just sit, there is no interruption of counsel,” adds Watts.
Many disputes are resolved through ad hoc arbitrations. However, there is a cost advantage in choosing the forum of an international court because the parties do not have to cover the costs of establishing a “court” to hold the arbitration.
However, Watts says there is growing concern among public international lawyers, both practising and academics, on the length of time cases before the ICJ take to complete.
“It is very difficult to envisage a case being less than five years and it is likely to be significantly longer,” says Watts, explaining that the sheer volume of evidence involved in a major international dispute, as well as sourcing that evidence and translating it, poses significant problems and makes it difficult to reduce the time span.
This is not deterring states from taking their cases before the ICJ and other bodies such as the Dispute Settlement Body of the WTO, which have a better reputation for dealing with things expeditiously.
International forums do offer a viable way of resolving disputes and major multinational clients are seeking legal advice from a truly international perspective.
However, Philippe Sands, a barrister at 3 Verulam Buildings and director of the Project on International Courts and Tribunals (PICT), believes that many lawyers still have to wake up to their potential.
With US firms increasing their European presence, and Ruttley's assertion that they are “way ahead” when it comes to international law, it is clear that UK practices that wish to be truly international in their scope need to develop this area of practice now.
“The transformation over the past two decades has been remarkable. There has been a sharp increase in the number of international judicial bodies and in the number of cases before them.
“Frequently, international courts now provide a practical and effective alternative to national proceedings, sometimes even for individuals and corporations.
“The implications for the legal profession are clear, even if most practitioners remain unaware about the existence of most of these bodies,” concludes Sands.
The main courts and tribunals
The International Court of Justice (ICJ) (pictured above) is based in The Hague, and is now busier than at any time in its 50-year history. As well as the Yugoslav cases, the court is currently dealing with cases raising a wide range of issues, from boundary disputes in Africa and Asia to the rights of individuals under consular conventions. Although the court only has jurisdiction in inter-state disputes, many of its cases concern the rights of individuals and corporate interests.
The International Centre for the Settlement of Investment Disputes (ICSID) was established in 1965 and is based at the World Bank in Washington DC. It provides a forum for arbitration and conciliation of foreign investment disputes, principally expropriation claims. Proceedings may be invoked by private parties or by states. In the past five years it has witnessed an explosion in the number of cases before it. Last year, a first case was filed against the US, alleging that the practice of imposing punitive damages in a civil case violated international foreign investment protection agreements.
The Dispute Settlement Body (DSB) of the World Trade Organisation was established in 1995 as the successor to the GATT panel system. It comprises a system of first instance panels with rights of appeal on points of law to a powerful Appellate Body. Based in Geneva, the DSB has jurisdiction on a wide range of trade disputes. Although only states may bring proceedings, underlying corporate interests are often involved, as the on-going banana and beef hormone cases between the EU and the US show. In a landmark decision in 1997, the Appellate Body ruled that states were free to involve private lawyers in dispute proceedings, opening the door to a growing practice area.
The International Tribunal for the Law of the Sea is based in Hamburg, and became operational in 1996. Its first case raised the question of whether coastal states are entitled to apply and enforce customs duties to oil bunkering activities carried out within their exclusive economic zone. St Vincent and the Grenadines turned to the tribunal to obtain the prompt release of a vessel it claimed had been unlawfully detained. Judgment on the merits is expected on 29 June.
Other international tribunals
Human rights bodies
European Court of Human Rights (1950, Strasbourg)
Inter-American Commission and Court of Human Rights (1959 and 1969, Washington DC and Costa Rica)
African Commission and Courts on Human and People's Rights (1981, Banjul, The Gambia)
UN Human Rights Committee (1966, Geneva and New York)
Committee Against Torture (1984, Geneva)
Committee on the Elimination of Racial Discrimination (1965, Geneva)
International Labour Organisation Representation and Complaint Procedure (1950s Geneva)
European Social Charter Collective Complaints Procedure (1995, Strasbourg)
Regional economic integration bodies
European Court of Justice (1957, Luxembourg)
Court of Justice of the Common Market for Eastern and Southern Africa (Comesa) (1994, Lusaka)
Central American Court of Justice (1991, Managua)
North American Free Trade Agreement (Nafta) Commission and Panel System (1992)
European Free Trade Area (Efta) (1994, Luxembourg)
International Criminal Courts
International Criminal Tribunal for the former Yugoslavia (1993, The Hague)
International Criminal Tribunal for Rwanda (1994, The Hague)
International Criminal Court (1998, The Hague, not yet in force)
Multilateral Development Banks Inspection Procedures (allowing administrative claims by legal and natural persons alleging violation by the bank of its policies and procedures):
World Bank Inspection Panel (1993, Washington DC)
Inspection of the Inter-American Development Bank (1994, Washington DC)
Inspection Policy of the Asian Development Bank (1995, Manila)
Permanent Court of Arbitration (1899, The Hague)
Iran-US Claims Tribunal (1981, The Hague)
UN Compensation Commission (1991, Geneva; claims arising out of the 1991 Gulf conflict)
Information provided courtesy of the Project on International Courts and Tribunals (PICT). Contact Louise Rands on 0171 637 7950