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For many in the corporate world, the ascension of left-leaning Evo Morales to the presidency of Bolivia last year was a dark day. For Raul Herrera, a partner in the Washington office of Winston & Strawn, it was a business opportunity. Morales, an Aymara Indian and former leader of the coca-growers movement in Bolivia, rose to power on a platform of promoting the rights of indigenous people and nationalizing industries. In January, Herrera, who had met the head of the Bolivian Congress at an economic summit two years earlier, attended Morales’ inauguration, to which he had received an official state invitation. Hundreds of thousands of Bolivians, many wearing their traditional dress, crowded the Legislative Palace in La Paz as Morales took the oath of office. At the swearing in, Herrera watched as some newly elected congressional members tried, for the first time ever, to operate a water cooler. “There was a very strong sense of [the congressional members] showing their indigenous roots,” says Herrera. “It was a great experience. Most business trips become blurs. This was one of those memorable business trips.” Soon the trip paid off in dollars and cents, too. Shortly after Morales’ inauguration, Quimica e Industrial del Borax Ltda., a Chilean mining company, filed a claim for arbitration against the Bolivian government in the International Centre for the Settlement of Investment Disputes. ICSID is the arbitral arm of the World Bank and is the primary forum for high-profile disputes between investors�usually multinational companies�and sovereign states. The company claimed that Bolivia expropriated its property when it took over ownership of an ulexite mine. Bolivia convened a beauty contest, and Winston was tapped to represent the nation. (The arbitration has been suspended as the parties pursue negotiations.) Thanks in part to a wave of left-leaning government policies in South America, Latin American arbitration is experiencing a boomlet. Leaders in nations such as Venezuela, Bolivia, and Argentina have altered terms of concession agreements, confiscated property, expelled multinational corporations, or sent squatters to occupy land. “Particularly on the investor/state side, the politics has made a difference,” says Nigel Blackaby, an arbitration partner at Freshfields Bruckhaus Deringer. Of the 105 pending cases in ICSID, 57 involve Latin American nations, and the majority of those involve Argentina, whose economy collapsed in 2001. Lawyers who specialize in commercial arbitrations�disputes between two commercial parties�in Latin America say they too have seen a gradual rise in their caseloads. Increasingly, Latin American companies are including arbitration clauses in contracts, a practice they were loath to do for decades because arbitration was disregarded. (Commercial arbitrations are so confidential that their very existence often remains a secret, making statistics on the increase impossible to gather.) Latin American arbitration is a paradigmatic niche practice: A set of specialized lawyers, most with particular language skills, toil in relative obscurity, working in arbitral forums with their own set of rules and customs. Hogan & Hartson, King & Spalding, and Freshfields all have small practices devoted to representing commercial interests in Latin American arbitrations. At Winston & Strawn, 12 lawyers handle Latin arbitrations; the firm has found a niche focusing on sovereign disputes, such as ICSID cases. Herrera, the former general counsel of the Inter-American Investment Corp., and Winston & Strawn partner Paolo Di Rosa, a former counsel for Latin American legal affairs in the U.S. Department of State, both have extensive connections with Latin leaders. Their practice creates an odd juxtaposition: In its home base of Chicago, Winston is known for its connections to Republican politicians, such as former Illinois Gov. George Ryan. But in Washington the firm has a different kind of client list�governments of left-leaning Latin nations such as Chile, Bolivia, and Venezuela. “Every ICSID case, almost by definition, has a political component,” Di Rosa says. “They are very important to the state that is involved. There is usually a lot of internal intrigue. The client is usually the [country's] attorney general’s office, but the entity involved in the grievance is the ministry of energy or finance. . . . You have to navigate all these shoals.” Typically, governments turn to big-firm lawyers, rather than local counsel, to handle ICSID disputes. OIL SLICK Take Venezuela, a headline story in Latin American business and politics. Perhaps unwittingly, President Hugo Chavez is providing a little extra work to U.S. law firms. Chavez, an acolyte of Cuban leader Fidel Castro, has tightened the country’s grip on nearly every industry, from oil production to the media. Winston is defending Venezuela in the three claims by investors. One is a $1.2 billion claim brought by Vanessa Ventures Ltd., a Canadian mining company, over Venezuela’s alleged confiscation of gold mines. (Vanessa is represented by Torys partner John Terry.) Another is a claim by I&I Beheer, a Dutch energy company, over Venezuela’s alleged failure to honor a $500 million promissory note. The third is a claim brought by Vestey Group, a British agriculture company, over Chavez’s land-reform policies. Last year, squatters�at the behest of the Chavez administration�took over thousands of acres of Vestey cattle-grazing territory. This claim has been on hold since Vestey agreed to give up some land and the government let it keep some. (Vestey and I&I Beheer are both represented by Freshfields.) Chavez may spur more ICSID claims, as well. Last year, Petr�leos de Venezuela S.A. (PDVSA), the state-owned oil company, conducted contract and royalty rate negotiations with the 31 transnational companies that operate in Venezuela. Only two, Eni S.p.A. and Total S.A., have not yet reached agreements with the government. Privately, lawyers speculate that they may be priming for ICSID battles. (PDVSA was represented by George Kahale III, managing partner of Curtis, Mallet-Prevost, Colt & Mosle, who declined to comment on the negotiations.) In Ecuador a dispute is already brimming over oil. In May, Occidental Petroleum Corp. was expelled from the South American nation, where it had operated a crude-oil pipeline for more than 20 years and invested more than $1 billion. Two days after the expulsion, Occidental, which is represented by David Rivkin of Debevoise & Plimpton, filed a request for arbitration in ICSID. “[Ecuador has] first eviscerated and then outright confiscated all of [Occidental Petroleum's] investments in Ecuador, without compensation,” Occidental says in its filing. The expulsion was the culmination of a protracted battle over a previous arbitration over tax revenues between the two entities, in which Occidental received a $75 million award. After the award was upheld by a British appeals court this spring, workers in Ecuador’s oil-rich eastern region and in Quito, the capital city, protested and blocked roads. The protesters demanded Occidental’s expulsion, and on May 15 the government acceded to those demands. The Ecuadorean government is represented by Winston & Strawn in the ICSID matter. Five years after Argentina’s economic collapse, arbitration claims still linger in ICSID. After the Argentine government unilaterally increased tariffs and royalties from multinational gas, telephone, and electric companies after the economic crisis, the country faced more than 40 claims against it in ICSID�more than any other country had ever faced at one time in the forum. Argentina’s attorney general is defending each of these claims, and the country has not tapped an outside firm. Argentina has battled each active claim by objecting to ICSID jurisdiction, an objection that often takes two years to resolve, before the cases proceed to the merits. (Argentina has not yet prevailed with the argument.) Only one case, CMS v. Argentina, has been decided, with an award of $133 million plus interest for CMS Energy Corp. Argentina has sought to annul the award�the only recourse for appeal in the ICSID. “The overall view is that Argentina cases are still chugging along,” says Freshfields’ Blackaby, who represents a dozen claimants in ICSID arbitrations against Argentina. “I think commercial clients are disappointed at the [time] it takes.” More pileups in ICSID may be in the works, due to Bolivia’s and Venezuela’s nationalist policies. “We are working on potential cases against Venezuela and Bolivia, depending on what happens in those countries,” particularly in the power and energy industries, says R. Doak Bishop, a partner in the Houston office of King & Spalding. For Herrera that could mean plenty of work. Since the inauguration, he says, he’s kept in touch with the general counsel of the office of the president. Says Herrera, “We’re in wait-and-see mode.” Carlyn Kolker is a senior reporter for The American Lawyer, the ALM publication in which this article first appeared.

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