An International Arbitration Practice In Expansion Mode

Wednesday, November 1, 2006 - 01:00

Editor: Mr. Di Rosa, please give our readers some idea of your professional experience.

Di Rosa: Following law school, I started my career in 1991 at Steptoe & Johnson in Washington, D.C., where I was involved in a variety of matters, including litigation and international privatization matters.

Three years later I moved to the State Department's Office of the Legal Adviser (equivalent to General Counsel's Office) where I ultimately headed the Office of the Legal Adviser for Western Hemisphere Affairs, which covers Latin America, the Caribbean and Canada. I was involved in a variety of legal issues affecting U.S. relations with the countries in these regions and acted as chief negotiator for the U.S. on a significant number of treaties and international agreements. In the late 90s I was involved in all of the legal issues associated with the transfer of the Panama Canal. This work was similar to that of an in-house counsel in that one individual has an opportunity to deal with a wide range of issues.

From the State Department I went to White & Case, where my work centered on international arbitration, with a particular focus on Latin America. After two years the Latin American arbitration group joined Winston & Strawn.

I should also mention my personal ties to Latin America. While I was born in the U.S., I spent a number of years in Paraguay as a child, and I have family there. I attended international schools and went on to Harvard College and Harvard Law School, where my focus was on international legal issues.

Editor: Please tell us about your practice.

Di Rosa: The primary focus of my practice is on Latin American arbitration. The international arbitration practice at Winston & Strawn is in most respects a freestanding one, and much of the litigation we undertake is related to arbitration, such as litigating to enforce an arbitration award. About 95 percent of my time is spent on arbitration. We are also engaged to a certain extent in public international law and international trade issues.

Overall the firm's international arbitration group consists of about 20 to 25 full-time practitioners, spread across a number of offices, including Washington, Geneva, Paris, New York, Chicago and Los Angeles. Here in Washington we have about a dozen full-time and three or four part-time attorneys, and the next largest contingent - seven or eight - is located in Geneva.

Editor: Who are the clients here? Are there particular industry sectors that lend themselves to arbitration rather than litigation?

Di Rosa: The clients are mostly large private sector companies, although in some instances they are sovereign nations or government entities. The sectors in which parties frequently resort to arbitration as the main form of dispute resolution include the construction industry and the energy sector. The extractive industries usually carry on their activities pursuant to concession contracts, which typically provide for arbitration as the dispute resolution mechanism. In addition, there is a trend toward inclusion of arbitration clauses in private commercial international contracts. Today, many global corporations insist that the agreement contain an international arbitration clause as the exclusive form of dispute resolution, which is a departure from the historic pattern whereby disputes were resolved in the national courts of one of the parties. Arbitration is recognized as usually more predictable than court litigation in terms of duration, cost, due process and quality of legal reasoning. And, of course, arbitration typically insulates the parties from local judicial corruption or bureaucratic lethargy. Today it is becoming increasingly rare for a sizable dispute involving international parties to be handled in the local court system.

One of the distinct advantages of arbitration is that the parties can determine in advance that they will select a panel of arbitrators through a mechanism where each party picks at least one of the arbitrators and has some say in the selection of the chair of the tribunal. That ensures that the persons selected will possess the requisite integrity and technical expertise, which, in turn, provides the parties with a higher degree of confidence in the process. In addition, and while there are arbitrations that are complex and lengthy, most cases proceed much more expeditiously that they would in court. Further, international arbitral awards are easier to enforce in other countries than local court judgments. All of this contributes to the popularity of arbitration over litigation in many industry sectors.

Editor: You have extensive experience in Latin America. How did Winston & Strawn get into this market?

Di Rosa: Winston & Strawn had long had experience with certain matters in Latin America, mainly on an ad hoc basis. Two factors have contributed to the recent development of the Latin American practice at Winston. The first involves the transplantation of the international arbitration group from White & Case. We brought with us a significant group of clients with interests in Latin America. We also brought several sovereign clients - national governments and the instrumentalities of such governments - to Winston. Secondly, the synergies of our group with the existing Latin America practice of Raul Herrera, former General Counsel at the Inter-American Investment Corporation, a multilateral financial institution affiliated with the Inter-American Development Bank. Raul was at the IAIC for seven years and developed a huge network of contacts, both private and sovereign, which has been of great benefit to our Latin America practice.

Since coming to Winston, our arbitration group in DC has more than doubled in size. We represent the governments of Chile, Ecuador and Venezuela in arbitrations and litigation matters, and we have acted in opposition to the government of Argentina. Much of this work relates to investment transactions in Latin America and involves claims that in some cases exceed $1 billion.

At this point Winston has the largest Latin American arbitration practice in the U.S. The very substantial increase in our work is the result, I think, of the perception that Winston & Strawn has the resources - in terms of expertise, language, cultural skills and personnel - to address the needs of this market. Most of the people in the group are, like me, bilingual and bicultural. We have personal ties to the region, and we understand how business, government, and the legal system operate there.

Editor: Have any thoughts been given to establishing a permanent presence in Latin America?

Di Rosa: That question often comes up. The firm has been cautious in opening foreign offices, although we do have offices in London, Paris, Geneva and Moscow. We are conscious of the many firms that have overextended their reach and found themselves supporting very unprofitable operations abroad. The overseas offices of Winston were established after years of careful planning. There must be a viable business case to be made for such an office, and a clear convergence between client needs and the firm's ability to meet those needs must underlie such a case. In addition, it has been our experience - and Latin America is a particular case in point - that much of the business that comes through the door is referral business from local counsel in different countries. Once a firm develops an office in a particular country, it becomes a competitor for those firms already there who might otherwise be referring matters. Whenever the question of having an office in Latin America comes up, we have to address that reality.

Editor: Speaking of relations with local firms, are you able to call upon the resources of well-connected firms in, say, Buenos Aires or Mexico City?

Di Rosa: Absolutely. We have ties with leading law firms in virtually every Latin American country. In the arbitration matters we handle there is almost always a national law angle that requires the attention of local counsel, as a result of which we have developed close relationships with many of the most prestigious firms in the region.

Editor: Why is arbitration such an important feature of doing business in Latin America?

Di Rosa: The judiciary in Latin America is not always very effective. That manifests itself in different ways. Judges do not have the resources to be able to manage their cases expeditiously. They are overburdened, and there are often serious delays in the resolution of cases. The system itself is somewhat antiquated - which means that corporate counsel must rely especially heavily on local counsel - in contrast to international arbitration, where corporate counsel is usually in a better position, in terms of background and experience, to monitor.

There is also a corruption issue, which unfortunately is fairly prevalent in Latin America. That is a factor which makes judicial proceedings there unpredictable. There is also the issue of political influence. In many countries, the executive branch is in a position to bring political pressure to bear on the judiciary. That can have an adverse effect on due process and fairness in the proceedings.

Another important factor in the growth of arbitration in Latin America is the widespread subscription of bilateral investment treaties in recent years, particularly in the 1990s, when they were concluded at a feverish pace in order to attract foreign investment. They provide foreign investors with legally binding guarantees, including a prohibition on expropriation, arbitrary or discriminatory measures, and a guarantee of "fair and equitable" treatment. Further, they provide for settlement of any grievance by resort to international arbitration. This last aspect is unprecedented because for the first time individuals or companies are able to litigate directly against a foreign state in an international tribunal.

One unique aspect of these treaties is that they apply irrespective of any contractual provisions. For example, even if the company's contract with the government requires a dispute to be submitted to the local courts, the treaty permits recourse to international arbitration. This state of affairs has resulted in many favorable awards for corporations, and these awards are relatively easy to enforce.

Editor: What about the future? Where would you like this practice to be in, say, five years?

Di Rosa: We have more than doubled the size of our group in recent years, and it seems likely to continue growing for the reasons I have discussed, including the increasing number of investor-state arbitrations. As corporate counsel become more familiar with the bilateral investment treaties, they are resorting to them for purposes of resolving their investment disputes. They are seeing large awards being issued and enforced. As a consequence, they are becoming more confident in the utility of these treaties and in the international arbitration arrangements they afford. Approximately 2,500 bilateral investment treaties exist today, and roughly half of the arbitration disputes that arise under these treaties concern Latin America.

In addition, many of the free trade agreements that have been negotiated recently have investment provisions, including provisions that track what appears in the bilateral investment treaties with regard to dispute resolution. All of the foregoing makes it likely that the number of arbitrations worldwide will continue to increase for the foreseeable future, and if that proves to be true, our group looks forward to a sustained growth.

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