Alternative Dispute Resolution

An Interview with Lucy Reed

The following is an excerpt from the published interview with Lucy Reed. To see the full interview, please click on the link to download the article above or below.

Q: For those unfamiliar with international arbitration, can you briefly describe your current work as an arbitrator and an advisor to clients involved in international arbitrations?

My colleagues and I work primarily as counsel to clients in international arbitrations, both companies and government entities. In international commercial arbitration, the disputes typically involve alleged breaches of contract (sales, construction, joint ventures, M&A), which the parties—from different States—have agreed be resolved through binding arbitration rather than one of the party’s national courts. These cases, for example under the International Chamber of Commerce (ICC) or London Court of Arbitration (LCIA) Rules, are by definition confidential.

We are also specialists in investment treaty arbitrations, in which a foreign investor is allowed by the relevant treaty to bring a dispute relating to that investment directly against the host State (rather than having to rely on its home State to represent it) for resolution through binding arbitration. Many are heard by panels constituted under the World Bank’s International Centre for Investment Disputes (ICSID), and the existence of the cases is public. For example, we represent ConocoPhillips in a multi-billion dollar ICSID case against Venezuela for (among other things) alleged expropriation of COP’s oil investments. We also defend the Government of Turkey in a multi-billion dollar claim brought under the Energy Charter Treaty by an alleged Cypriot investor.

As Freshfields is recognized as the pre-eminent international arbitration firm, we tend to get hired for major disputes, involving hundreds of millions and often billions of dollars. Unlike domestic arbitration, these international proceedings are rarely quick or inexpensive. We write extensive factual and legal “memorials” (briefs), interview witnesses, and do oral advocacy at hearings. Cases can go on for years, but the different stages of the cases provide a lot of variety.

I do not sit as an arbitrator in investment treaty disputes, to avoid facing “issue conflict” in connection with recurring legal issues under the investment treaties. In international commercial arbitration, I still prefer serving as counsel—I like advocating more than I like deciding—and so I sit as arbitrator in only two or three cases at a time. I just finished almost a decade of sitting on the Eritrea-Ethiopia Claims Commission, which was the first arbitration panel constituted to decide issues of international humanitarian law.

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Q: Can you describe your favorite legal issue/project that you have worked on (and why)?

My two favorite legal projects, because they were unique, were (1) serving as general counsel of the Korean Energy Development Organization (KEDO), the international organization set up after the North Korean nuclear crisis in 1994, and (2) sitting on the Eritrea-Ethiopia Claims Commission (EECC).

As for KEDO, it is hard to beat the experience of leading negotiations with North Korea and in North Korea. I remain proud of the work we did, with hundreds of experts, in effectively negotiating from scratch the regulatory infrastructure necessary to commence a nuclear power plant construction project in North Korea. I wrote about this process in my Hague Lectures in 2001.[1]

As for the EECC, it was a privilege to be part of the first tribunal resolving international humanitarian law disputes; as rough and imperfect as the EECC claims process had to be, the two governments did agree on a legal process rather than keep fighting. All EECC decisions are publicly available on the website of the Permanent Court of Arbitration.[2]

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Q: You have worked on international arbitrations that involved countries in which women are not expected to work as lawyers. Has that caused any issues? If so, how have you handled them? Do you have any advice for other female lawyers who encounter similar problems?I have been fortunate enough not to face any serious issues, but I have not had to work in some of the toughest countries like Saudi Arabia. At the Iran-U.S. Claims Tribunal we co-existed with our own traditions, and the Iranian Government representatives treated me no differently than they had the U.S. Government’s Agents who were men. (I have a favorite story about how there were more comments on my height than my gender.) True, they did not shake my hand, but I recognize that as part of their religion. And the one time I visited Iran, in 2002 as the guest of the Ministry of Foreign Affairs for an arbitration conference, I dutifully fulfilled the legal requirement of wearing a coat and a headscarf—it did not affect the high level of our discussions and debates as lawyers. In North Korea, if they were surprised that a woman would be head of delegation, they never showed it.

Advice for others? Prepare culturally, pick your battles, and practice responses to the worst that might happen.
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Q: What are the most important roles that you believe ASIL plays? What are the greatest challenges facing it or any other international law organization in the coming years?

The most important role ASIL plays is that of convener: convener primarily of academics and practitioners, but also of government lawyers and leaders, to discuss and debate—in person and in print—the most pressing international law issues of the day. The mission of ASIL is public education, to host and elevate the discourse, to emphasize that international law is not some elite specialty but rather real law that is on the front page and all around us.

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Read full article (PDF)

[1] Lucy Reed, Mixed Private and Public Law Solutions to International Crisis, in 306 Recueil Des Cours 177 (Académie de Droit International de la Haye ed., 2003).

[2] Eritrea-Ethiopia Claims Commission, Permanent Court of Arbitration, http://www.pca-cpa.org/showpage.asp?pag_id=1151 (last visited Apr. 2, 2011).

What Would a U.S.-China Bilateral Investment Treaty Mean?

Filed Under: Digest

Earlier this month, a senior U.S. Department of State official indicated that the United States and China, following years of consideration and five months of expedited negotiations, will soon have the draft text of a Bilateral Investment Treaty (BIT). The agreement would further liberalize the trade relationship between the United States and China, as well as providing a framework for resolving future commercial disputes.

But some commentators have raised questions about the full legal implications of such an agreement. In particular, the BIT could turn many American and Chinese regulatory decisions into arbitrable investment disputes.

A BIT typically permits aggrieved foreign investors to seek compensation for unfair or inequitable regulatory treatment in arbitration instead of host country domestic courts. Such an agreement with China would mark the first time that the United States has signed a BIT with a substantial foreign investor and opened the possibility of litigating American regulatory decisions before international arbitrators. With large scale regulatory reform on the horizon, particularly in the financial sector which has substantial Chinese investment, this possibility raises complex sovereignty questions.

In addition, arbitration of American regulatory disputes raises the tricky question of compliance with an adverse decision. The United States has typically treated BIT’s as self-executing treaties, but Congress would have to approve the payment of adverse judgments. Domestic political considerations would make such authorization unpalatable, and any failure to pay could jeopardize the overall BIT framework.

As of now, the parties have reached no agreement, and the U.S. Senate would have to ratify any BIT before it took effect. But, as several commentators have noted, the issues surrounding a U.S.-China BIT merit careful scrutiny.

For more information, please click here and here.

Archbishop Desmond Tutu, Along With Activists and Scholars, Discusses Transitional Justice at HLS

Filed Under: Digest

On Tuesday, March 9, Harvard Law School, the Harvard Human Rights Program, and UNICEF will sponsor the panel discussion “Children and Transitional Justice.”

Archbishop Desmond Tutu will participate by video, along with Yasmin Sooka of the Foundation for Human Rights, South Africa, Susan Bissell, Global Chief of Child Protection for UNICEF, Sharanjeet Parmar of Global Rights, and Jens Meierhenrich of the Harvard University Department of Government.

Harvard Law School Dean Martha Minow will moderate. The event will take place in the Ames Courtroom in Austin Hall from 12:00 – 1:00 pm.

For more information, please click here.

Violence Mars Darfur Peace Treaty

Filed Under: Digest

On February 20th of this year, a major ceasefire treaty was signed between the Darfuri Justice and Equality Movement (Jem) and the government of Sudan. Jem is only one of the many militant groups in the Darfur region. However, it has presented a significant threat to the Sudanese government. President Omar al-Bashir had made the group a priority after it launched an attack against the strategically important city of Omdurman. The treaty included a possible power-sharing agreement and provisions for the return of refugees. It was welcomed by both the international community and groups with Sudan as providing a real chance for peace within the region.

However, less than two weeks after the signing of the treaty, there are reports that the Sudanese government has begun an offense against other rebel groups in Darfur. These clashes have given weight to demands by NGOs and other international observers that the central government include other militant groups in the peace treaty process. It is unclear whether such a proposal would be feasible, as Jem has threatened to leave the peace talks if other rebel groups are included. As a result, despite the new treaty, the prospects for peace in Darfur remain uncertain.

For further information, please see here, here, and here.

North and South Korean Vessels Clash in Disputed Waters

Filed Under: Digest

On Tuesday, November 10, the navies of North and South Korea exchanged fire in disputed waters off the western coast of the peninsula, damaging ships from both sides and reportedly killing a North Korean sailor. The incident began when a 215-ton North Korean vessel entered South Korean-controlled waters. Ignoring warnings from the South, the ship exchanged fire with two 130-ton South Korean vessels before re-crossing the border, reportedly in flames. The North, which claims the waters where the incident took place, has blamed the South for instigating the confrontation and issued repeated warnings through its state news service.

South Korea’s options in responding to this incident are limited. Seoul’s right to military retaliation is constrained by the ongoing border dispute. The end of the Korean War never produced a peace treaty, and the North and South have technically been observing a truce since 1953. The North has never accepted the current sea boundary, a UN-drawn border called the northern limit line, and its ships regularly stray into waters controlled by the South. In this context, the South cannot make an undisputed claim that its territory was invaded.

South Korea’s options for less direct action are similarly constrained. While the South could initiate economic sanctions and asset-freezing, it believes that such measures could add to the desperate poverty of the North’s citizens and slow the recent détente between the two countries. In a sign that the confrontation has not altered trade relationships, a North Korean freighter was allowed to enter South Korean waters yesterday on its way to Incheon. Meanwhile, any attempt to arbitrate the dispute before an international body would require the consent of one of the most isolationist regimes in the world.

The North has a history of initiating skirmishes in order to escalate pressure before major regional events; the last time the countries clashed was in 2002, while the South was hosting the World Cup. In this case, analysts believe, the North may be trying to send a message to President Obama, who is currently visiting the region and is scheduled to arrive in Seoul on Wednesday. North Korea wants a formal peace treaty to replace the 1953 truce, including reconsideration of disputed territory. It also wants bilateral negotiations with the U.S., which it believes could lead to its acceptance as a nuclear power. President Obama, who has made engagement with “rogue states” a cornerstone of his foreign policy, plans to send special envoy Stephen Bosworth to Pyongyang for talks over ending the North’s nuclear program.

Honduras Institutes ICJ Proceedings against Brazil

Filed Under: Digest

The interim government of Honduras has filed a complaint against Brazil in the International Court of Justice (ICJ), the Court announced on October 29. The complaint arises from events surrounding the surprise return to Honduras of Manuel Zelaya, the deposed president, who entered the country on September 21 and took refuge in the Brazilian Embassy in Tegucigalpa. Specifically, Honduras charges that Mr. Zelaya and an unknown number of other Honduran citizens have been using the Embassy as a “platform for political propaganda” with the complicity of Embassy staff and thereby “threatening the peace and internal public order of Honduras.” Honduras has requested declaratory and injunctive relief from the ICJ.

The legal bases of Honduras’s complaint are Article 2 (7) of the UN Charter, which reserves to member states matters which are “essentially within [their] domestic jurisdiction,” and the 1961 Vienna Convention on Diplomatic Relations. As a practical matter, Honduras’s complaint is only one element of a broader political and diplomatic offensive aimed at preventing Mr. Zelaya from returning to power before the upcoming presidential elections scheduled for November 29. It is unclear whether the ICJ will agree to hear the complaint, which was filed by an interim administration that many international observers consider illegitimate. Current efforts toward national reconciliation may also determine whether the case goes forward.

For more information, please click here.