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NEWSLETTER(Page 11)
Main Index
Index:
* Global Warning
* A Western crisis becomes a global problem
* Dubai has taken a few knocks but is still hugely attractive to law firms.
* IBA Madrid conference 2009
Monday October 5
* Global Warning
| Regulation of emissions reduction is becoming a priority for most developed countries. Lucy Trevelyan | |
IBN - October 2009
After years of scepticism, there is now little doubt that our way of life has had a huge impact on the planets climate. Regulation of emissions reduction is becoming a priority for most developed countries.
The world is heating up. Whether climate change is a natural phenomenon or one caused by humankinds persistent abuse of the planet has also been increasingly hotly debated. However, most now concede that the billions of tonnes of pollutants pumped into the environment by humans every year cant be helping.
The environmental movement, once largely dismissed as alarmist mumbo jumbo, is now influencing the political agendas of most of the developed world, with governments striving to find new ways to lessen human impact on the environment.
Measures being introduced or considered by governments to encourage the adoption of a more environmentally friendly existence by businesses and individuals include both carrots (financial incentives) and sticks (environmental taxes), or a combination of the two.
One increasingly popular scheme, already adopted in the European Union, is emissions trading (cap and trade), whereby a limit is set on the amount of a pollutant that can be emitted by each company or group. Those who wish to exceed their emission allowance must buy credits from those who pollute less.
Some countries, such as the United Kingdom, have conducted feasibility studies on the introduction of a similar scheme that would be applicable to individuals. Personal carbon trading would involve setting a national emissions cap. Individuals would be allocated emissions rights, or carbon credits, which would be used to buy, eg, electricity, gas or petrol. Again, those who want to exceed their allowance would need to buy credits from lower polluters.
The US Congress is also currently considering a carbon cap and trade proposal,the plan successfully passing through the House of Representatives in June this year. If implemented, the move would mark a significant departure from the policy stance of the previous administration, which believed only in voluntary steps towards emissions reduction, says Roberta Mann, Professor of Law at the University of Oregon.
Anthony Hobley, head of climate change and carbon finance at Norton Rose, says the prospect of a truly global and linked carbon market with the United States and Australia on board, which successfully integrates with key developing countries, is tantalising.
However, Georgie Messent, partner at Burges Salmon, says although cap and trade schemes are beneficial in some respects allowing organisations that reduce their emissions cost-effectively to trade these on the market and make a profit they are not without their drawbacks. If the total amount of carbon dioxide allowances (or landfill tax allowances) that are on the scheme is high there is an insufficient driver for change, she says.
Messent suggests that on the EU Emissions Trading Scheme (ETS) the Member States national allocation plans had too many EU allowances in the first phase. An obvious problem with the EU ETS has been an oversupply of allowances, which has massively reduced the cost of EU allowances (currently approximately 13 per tonne), She says. This means the cost abatement curve indicates it is cheaper to buy allowances than it is to invest capital in plant upgrades or changes to reduce emissions.
Claire Sheppard, partner in the planning and environment group at Addleshaw Goddard, says the EU ETS is now in its second phase, which means an increasing proportion of allowances will be auctioned rather than allocated free. This should mean the market works better in the future than it has in the past, she says.
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The prospect of a truly global and linked carbon market with the United States and Australia is ''tantalising''
UK ETS
In April 2010, the United Kingdom will introduce a new mandatory ETS, targeting emissions currently not included in the EU ETS, from up to 5,000 large organisations. All energy other than transport fuel will be covered, such as electricity, gas, fuel and oil. Initially, allowances will be sold at a fixed price then allocated through auctions with a diminishing number of credits available over time. Company performances in terms of carbon emissions and reduction will be summarised in annual league tables.
Sheppard says the carbon reduction commitment is the first scheme of its type, explaining that the revenue received from the annual sales of allowances will be recycled to participants each year, in proportion to their emissions in a footprint year for each phase of the scheme. The recycling payment made to each participant will be boosted or reduced according to its position in the league table. We anticipate that the recycling payments and the league table will make it less likely that participants will simply add the increased costs to their prices and will instead strive to reduce their carbon footprint, she says. Those that do will have a good chance of receiving more money back in recycling payments than they spent on allowances, but even greater savings will result from the reduced energy bills.
Taxing times
Tax policies have long been used across the globe to combat climate change, with varying levels of success. In Sweden, for example, a specific carbon tax was introduced in 1991, and national emissions have decreased since then. The Swedes, says Hobley, are currently pushing for an EU-wide carbon tax, which would apply to those installations not in the EU ETS. The French and Dutch Governments are also said to support this idea. The principle here is that while cap and trade can work for large emitters, taxes may be more appropriate for those difficult-to-get-to areas to reduce regulatory burdens, he says. Both outcomes represent a cost to the consumer and a revenue stream for governments.
Sonia Velasco, partner at Cuatrecasas and Vice-Chair of the IBAs Taxes Committee, says an effective measure implemented in Spain is the feed-in tariff system for the renewable energies generation sector. This entitles renewable energies producers to connect their installations to the network and to transfer all their output to it, he says. This system entitles the producers to sell this output to the market at a price that improves the market price of the electricity (the price is considered a premium or a regulated tariff, depending on the case).
Other climate change taxes include fuel and air passenger duties, water pollution levies, increased car tax for high polluting vehicles, as well as those specifically labelled as climate-related, such as the climate change levy, which has been imposed on business and the public sector in the United Kingdom since 2001. The scheme allows more energy-intensive organisations to enter into a climate change agreement that imposes energy targets, which, if met, entitle them to an 80 per cent rebate of the levy.
Tax credit systems are also popular in many countries (they are one of an array of measures currently being considered in the United States), including tax credits for:
solar, wind and biomass;
hybrid vehicles and plug-in hybrid vehicles;
renewable fuels such as ethanol and biodiesel; and
residential energy efficiency improvements such as insulation and water heaters.
Mann suggests that tax policy can be an effective means of combating climate change, working either as a carrot (tax incentives) or a stick (carbon taxes). In either case, the effect is to change the price of the targeted commodity. In the case of tax incentives for renewable energy the tax break reduces the cost, she says. In the case of the carbon tax, it increases the cost of carbon-intensive activities, such as using coal to generate electricity. Economists generally agree that carbon taxes are more efficient than tax incentives but the latter hold less appeal in a down economy, as they reduce tax liability for the investing business. If businesses are in a tax-loss situation anyway, they have no reason to invest in tax credits.
Drawbacks to carbon tax
However, Mann suggests that there are at least two drawbacks to a carbon tax. The main ones are cost and politics. Carbon taxes make carbon-intensive activities more expensive indeed, that is the point, she says. As lower income groups spend a higher proportion of income on energy, a carbon tax would have a disproportionate impact. However, the revenues from a carbon tax could be used to mitigate this regressive impact. From a political standpoint, it should come as no surprise that taxes are unpopular.
Carola van den Bruinhorst, partner at Loyens & Loeff NV and Co-Chair of the IBAs Taxes Committee, says another potential drawback with a green tax policy is that if the incentives for polluters to use other resources are successful, governmental proceeds from environmental taxes reduce. As a result, income/employment taxes should remain unchanged or should even be increased to secure the budget (budget neutrality), she adds.
It may be difficult for worthy environmental intentions to survive the economic crisis. Already, the Dutch Government has heeded the pleas of the ailing aviation industry and this month scrapped its aeroplane travel tax. Although Dutch aeroplane travel tax was primarily aimed at improving the environment, the economic downturn caused the abolition of this tax measure, Says Bruinhorst. It may indeed be concluded that the economic situation influenced the governments plans regarding climate change.
However, many of the US proposals have been put on the table since the downturn and several of the UKs pledges such as its commitment to reduce emissions by 80 per cent by 2050 and to provide financial aid for climate mitigation in the developing world have been announced during the bad times. Climate change is an issue that governments simply cant afford to ignore, Hobley says. However, governments are clearly now looking closely at what legal, regulatory and financial frameworks can be put in place that can most effectively unlock and leverage private funding to fight climate change, in the knowledge that government funding is under massive pressure.
As Mann points out, though, it will take a worldwide response to curtail climate change. If China, which last year became the largest emitter of greenhouse gases, and India, which is still behind the US but moving up fast, refuse to tackle the problem, obviously the efforts of the developed world will be less effective, she says. However, the developed world could help with technology transfer.
Although China is still building dirty coal plants, in some ways it is ahead of the United States in climate change mitigation, building more clean coal plants and working to stop deforestation.
The principle of common but differentiated responsibilities is leading the negotiations in this area. There is a move towards separating the developing world into two categories, with the most developed developing countries like China and Brazil taking on sectoral targets, Hobley says. China could be a deal-breaker and has been a very important constituent of the global carbon markets to date. It is difficult to imagine a deal that includes the United States without China and vice versa, though how their relative responsibilities will be defined remains to be seen.
Lucy Trevelyan is a freelance writer. She can be contacted by e-mail at lucy@bluemoon-media.com.
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* A Western crisis becomes a global problem
| David Evans | |
Its been called a global financial crisis, but that doesnt mean its seen as such from all quarters. For some of those outside the main financial centres of New York and London, its viewed as a Western crisis that, because of the incestuous nature of the international banking system, has become everyones problem. Owing to systemic failures, a rice farmer in rural China cant get a loan to buy a new rotavator partly because a securities trader in London lost millions betting on a financial instrument so complex, few outside the City would understand it.
Problem waiting to happen
According to the Singapore-based Mathew Welch, Head of Financial Institutions Asia, ING Wholesale Banking, the crisis was seen as failings in the Western system, but also a global problem waiting to happen. While the West has been quick to rush through high-profile recommendations and legislation think the Walker Review of Corporate Governance of the UK Banking Industry, published in July in the wake of the crisis, this doesnt mean the Chinese authorities arent also busy behind the scenes working on their own solutions. So, while to the person-in-the-field this might look to be yet another case of West influencing East, the reality is everyone working on the same problems but in their own way.
Referring to a speech given by Paul Volcker in June to a meeting of the International Institute of Finance in Beijing, Welch said the Chinese authorities appeared to agree with the former Federal Reserve Chairmans view that steps needed to be taken to limit the need for official bailouts. This would include making insurance and central bank liquidity facilities only available to the deposit-taking institutions that provide the backbone of a countrys financial system. No stranger to bailouts themselves, back in early 2004 the Chinese authorities had already injected nearly US$50 billion into the Bank of China and China Construction Bank ahead of their listing on international markets.
The cash was seen as a quick fix to shore up the banks balance sheets. Despite the scepticism at the time, this cash-driven banking reform seems to be holding with no banks in China having gone under in the current crisis. By contrast, the US and UK Governments were forced to bail out their own banks nearly four years later, but in very different circumstances.
Western failings
There is a clear view in China, although it is expressed diplomatically, that there were certain failings in the US and certain Western banking sectors both in terms of regulation and also of behaviours and incentives, says Welch. The Chinese view, for example, is that regulators should focus not just on controlling inflation, but also on being watchful for credit bubbles and asset bubbles. [Chinese regulators] did for example get concerned about property prices [in China] and gently leaned on the banks to curb their enthusiasm for lending in the sector. Such bubbles can be pricked with micro-prudential regulations such as regulated loan to value ratios for mortgages, and not only by the blunt instrument of interest rates. The bankers comments touch neatly on two of the more contentious issues to come out of the crisis in the West sub-prime housing loans and bankers remuneration. Some say it is the bonus culture that encouraged bankers to play fast and loose with depositors money. Ronald Scherpenhuijsen Rom, Vice-President, Bank of Beijing, says financial incentives in China tend to be very modest when compared to those of the West.
Chinese senior management seems to be attempting to balance and satisfy the interests of all its stakeholders, rather than just the shareholder as in the West, says Beijingbased Scherpenhuijsen Rom. Its stakeholders include the government, the party, the labour union, the employees, the clients and the shareholders. The performance towards all stakeholders seems the basis for pay.
So, in retrospect, were the Chinese authorities already taking steps to avoid a banking crisis that, because of their free-market approach, Western authorities were reluctant to? Nobody is questioning the basic assumption of capitalism as the most effective form of economic organisation, Welch suggests. But, recent events have reinforced the view that there is a legitimate role for the visible hand of government as a necessary complement to the invisible hand of the market.
New global currency
One area in which Chinas growing economic influence could hold sway is in calls to address imbalances in the international financial system by replacing the US dollar as the global reserve currency. China holds one-third of the worlds total dollar foreign exchange reserves and is concerned that the printing of more dollars will erode its underlying wealth. Senior bankers, including Zhou Xiaochuan, the Governor of the Peoples Bank of China, has called for the adoption of a new global currency and is encouraging the international use of the renminbi. He proposes replacing the dollar with the SDR (Special Drawing Rights), created in 1969 by the International Monetary Fund. Today it is based on the weighted average of the dollar, euro, yen and pound. The idea has received strong backing from both Russia and India.
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This is a legitimate role for the ''visible hand'' of government as a necessary complement to the ''invisible hand'' of the market
Matthew Welch
ING Wholesale Banking
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Lok-sang Ho, a professor of economics at Lingnan University in Hong Kong and holder of a PhD in economics from the University of Toronto, has himself proposed the establishment of the World Currency Unit (WCU) as a unit of global purchasing power. Statistical evidence shows that higher real oil prices and commodity prices tend to follow dollar weakness, he says. Quoting commodity prices in the WCU will promote stability in real commodity prices and should be helpful for global economic stability.
In a speech to the US Chamber of Commerce in Beijing on 15 July, Gary Locke, the US Secretary of Commerce, said that if China allowed for greater flexibility in its exchange rate and further opened up its domestic markets for imports and foreign direct investment, it would accelerate the worlds return to growth.
Professor Ho points out that trade settlements using the renminbi have already started between Shanghai, Guangzhou, Hong Kong, Macao and ASEAN countries. This is seen as a step towards reducing exchange rate risks and the start of the internationalisation of the yuan, which is vital to the governments goal of building Shanghai into an international financial centre by 2020, he says.
Lessons to be learned
What most commentators seem to agree on is that while the first and most dramatic stage of the crisis appears to be coming to an end, there are hard lessons to be learned on both sides. Events such as the Asian economic crisis of 1998 and the collapse of Enron and WorldCom exposed weakness in both regulations and institutions on both sides of the Greenwich Meridian. Only by working together to address the issues will similar scenarios be avoided.
I believe that we will see some repetition of the past years events albeit on a smaller scale, says Scherpenhuijsen Rom. However, the cause of the next financial crisis will most likely be different than this one so, even if we learn from this crisis, these lessons wont help us for the next one. In my mind, there is no way to avoid at least some form of a crisis in our continuous development of the banking system globally and in China.
For some, such as former UK Liberal Democrat leader Lord Ashdown, the shift from Western to Eastern dominance of the worlds finance markets has already begun. Ashdown, the European Unions former High Representative for Bosnia and Herzegovina, is a prolific speaker on international affairs. He says we are coming to the end of 500 years of supremacy of Western values, Western power and Western institutions in international affairs.
It seems to me very probable that the United States will still be the worlds most powerful nation for one or two decades yet, which, in practical terms is as far ahead as it is reasonable to make predictions. But, though the position of the US as the worlds pre-eminent power is not likely to change, the context in which she holds that position is now certain to, says Ashdown. We are soon going to discover that, if we want to get things done, such as redesigning the world economic order, or intervening for peace, we cannot any longer just do them within the cosy Atlantic club; we are going to have to find new allies in places we would never previously have thought of. And they will be less congenial and have demands of their own. The recent global financial crisis has made it very plain. If we want a more ordered world at a time of great instability, we are going to have to provide a space at the top tables for nations that do not share our culture, our history, our world view or even our values.
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David Evans is a freelance journalist. He can be contacted by e-mail at thefeaturewriter@gmail.com.
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* Dubai has taken a few knocks but is still hugely attractive to law firms.
source: http://www.ibanet.org/Search/Default.aspx?q=iran&page_num=2
High hopes - Anthony Notaras
The global financial downturn has had its fair share of casualties, and within the Middle East, Dubai is the most high profile. It began in 2008 as a gleaming example of all that could be achieved in the Gulf, and the destination of choice for international law firms. Now it provides the sort of cautionary tale that always seems to follow an economic boom: that of the carefree high flyer brought crashing down to earth by the inevitable, sobering effects of gravity.
For Dubai as a standalone economic entity, the picture does look grim. In an economy where real estate has become the key asset, property prices in the emirate have dropped by 45 per cent since the peak. Many of the ambitious multi-billion-dollar infrastructure projects that initially brought Dubai so much glowing attention have been put on hold. The tower cranes that dotted the skyline have fallen idle. To compound matters, unlike other states in the region, the resources-poor emirate doesnt have the fallback of oil and gas to rely on. Its growth was financed by debt, which has since been hard to refinance.
The preceding boom was inevitably very attractive to lawyers, and the past five years have seen a huge influx of Western law firms flock to the emirate. Many have been drawn to the creation of the Dubai International Financial Centre (DIFC), a tax-free economic zone that allows 100 per cent foreign ownership. This has helped Dubai become a business hub for the cash-rich Gulf region, providing a convenient and user-friendly headquarters for international banks, companies and professional services firms that wish to access to lucrative markets such as Saudi Arabia, Kuwait, Qatar, the UAE as well as the Indian sub-continent. At present, 38 law firms are registered there, all but four of which are international. Several more have large offices in Dubai that are outside the DIFC, including DLA Piper, which, in 2009, had to announce two rounds of significant job cuts to its Middle Eastern practice as a direct result of the downturn. Most of these redundancies were in the Dubai office, which only opened in January 2006. DLA isnt the only firm to make cuts, and the fallout reinforced the belief that many firms overstretched themselves in Dubai, and some, perhaps, should have never opened there in the first place. For those lawyers on the ground in Dubai, however, the downturn should be seen in relative terms.
Regional hub
There was a great deal of optimism in 06/07 about where the market was going, says Arman Galledari, a partner in Jones Days Dubai office, which opened in what he concedes was the bottom of the market in March 2009. A great many law firms, consistent with other institutions, banked on a continued rate of growth, which was very high. A great many lawyers were recruited and the idea was these would service the demand at this phenomenal rate. Of course that didnt happen and the market contracted, which meant there was huge over capacity. Galledari remains unconcerned about the condition of Dubais micro economy. Pure domestic work has never been the breadwinner or enough to support the office, he adds. Most of the revenue is generated acting for international clients doing work in the region, or, in some instances, Middle Eastern clients doing business or litigating overseas.
The stories that you read about Dubai are completely overblown, adds Craig Shepherd, a Dubai-based Herbert Smith dispute resolution partner. Dubai has undoubtedly had a tough time, but the logic of Dubai as a regional centre still holds good. If we werent in Dubai we would certainly still be opening here. This stems from the fact that while Dubai might be suffering on a local level, the Middle East as a region is phenomenally attractive to Western business, much of this being fuelled by the oil and gas industry. At time of writing, oil prices remain high at US$66 a barrel, which, while nowhere near the hugely inflated peak of US$147 a barrel in July 2008, represents a significant profit for oil and gas producing giants such as Saudi Arabia, Abu Dhabi, Qatar and Kuwait. That cash has enabled the various national governments to make up for the significant shortfall in private sector investment that has occurred since the credit crunch began.
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Dubai has undoubtedly had a tough time, but the logic of Dubai as a regional centre still holds good
Craig Shepherd
Herbert Smith
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Definitely Dubai has been affected more than any other neighbouring areas, and those firms that were heavily reliant on work in Dubai have been affected the most, says Husam Hourani, the head of banking and finance at Al Tamimi & Company, the Middle Easts largest independent firm, which also has offices in Abu Dhabi, Jordan, Qatar, Sharjah, Saudi Arabia and Iraq. Those that came with just one speciality, such as banking, project finance and capital markets, have had more difficulties. Those with offices in most of the GCC [Gulf Co-operation Council] countries have done substantially better in the sense that they could reinvest into areas like litigation, arbitration and restructuring.
Hourani adds: Its not been easy. Weve had to relocate lawyers from litigation in our Saudi office to come to Dubai. Weve also relocated capital markets lawyers from Dubai to Abu Dhabi.
Indeed, if changes are to be made, it will be with firms, such as Al Tamimi, rebalancing their practices in the region to where the work is. In the case of Herbert Smith, that included opening an office in Abu Dhabi in May 2008. The Abu Dhabi practice we anticipate growing substantially in the next three years and that is where I think the bulk of the growth in the Middle East is going to be, says Shepherd.
Local rivals
It is easy to see the attraction of Abu Dhabi. While it might not offer the same sort of liberal lifestyle that made Dubai so welcoming to Western companies (although even here the traditionally more conservative emirate is relaxing), it is where most of the UAEs money and oil resides. Its importance was highlighted in February 2009 when US$10 billion of Dubais US$20 billion government bond issue was underwritten by the UAEs Abu Dhabibased central bank. Seen by many as a bailout for Dubai and a reassertion of Abu Dhabis prominence a timely reminder of who pulled the purse strings it also signified that as long as Abu Dhabi could help it, Dubai would never be allowed to fail. Dubai had come too far for that and was too important for the region as a whole. It also put paid to any ideas that Abu Dhabi wanted to challenge Dubai as the regions hub, even though it is itself a critical centre for infrastructure and oil and gas.
There is that understanding in Abu Dhabi that Dubai is a good base and there is no point in challenging that, says Campbell Steedman, Norton Roses Abu Dhabi-based international managing partner. The DIFC is a very well established financial centre now and to try and replicate that 100km up the road would be futile. What we have seen is the emergence of UAE as a federal entity rather than the emirates going their different ways.
Most lawyers concede that other centres such as Qatar, which had set up its own financial centre, the QFC, and has attracted several international firms over the past few years, are unlikely to challenge Dubais position in the region. Qatar cannot really replace Dubai as a regional centre, says Hourani. Most of what we see now is local rather than regional.
Qatar needs to define what it stands for, adds Steedman. From a law firms perspective they have probably tried to come into the market at the wrong time. Its real growth will come from when their gas comes online.
Equally, Bahrain, which up until the late 1990s had been the main banking centre for the Middle East, can no longer compete with Dubai as a full service hub for the region. Yet for niche areas such as Islamic finance, it is still considered a key player. In August 2009, it also positioned itself as a potential rival to Dubai in the field of dispute resolution, when the Bahrain Chamber for Dispute Resolution (BCDR) teamed up with the American Arbitration Association to set up a local arbitration centre.
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It is still part of the local culture to have the contracts governed by courts and not arbitration
Husam Hourani
Al Tamimi & Company
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Disputes central
Unsurprisingly, given the economic climate, it is the inevitable rise in restructuring and dispute resolution work that is keeping most of the law firms in the region busy. Disputes arising from Dubais multitude of stalled construction projects have become a substantial source of work for lawyers. In addition to this, the February 2008 opening of the DIFC/LCIA (London Court of Arbitration) Arbitration Centre was a significant statement of intent. Dubai also hosts the Dubai International Arbitration Centre (DIAC), which rewrote its rules in 2007 and has since become a far more credible venue for dispute resolution. Since the beginning of 2009 the DIAC has hosted close to 180 arbitrations, many of which are infrastructure related. Alec Emmerson, a Clyde & Co disputes consultant based in Dubai, puts this down to amazingly good timing on the part of the DIAC, whose rule changes came just before the downturn. Once the rules had revamped, DIAC became an arbitration clause of choice, certainly for UAE, Dubai and regional contracts, says Emmerson. We have also had cases involving entities in India, Germany and California.
The hope is that the DIFC/LCIA arbitration centre will have a similar level of buy-in, not just from the Middle East, but also Africa and Asia. Aside from the convenient geographical location, other practical advantages include more relaxed visa regulations, whereby foreign witnesses for international disputes can be far more easily brought to Dubai, rather than London or Paris. In the short term, however, it will still take a while to catch on. It arrived a little bit late on the scene to catch the boom, says Emmerson. With arbitration, you first have to choose those rules and then you have to have a dispute that arrives from that. It will be very popular and we are certainly seeing more
of these clauses put into contracts. For those clauses to translate into disputes, however, could take a while.
Despite the attraction of arbitration centres based on common law, local lawyers still query how popular the arbitration centres will truly be. In vital jurisdictions such as Saudi Arabia, there can be problems with enforcement as well. None of us recommend putting arbitration clauses into local contracts, says Andreas Haberbeck, a partner at the Saudi firm The Alliance of Abbas F Ghazzawi & Co and Hammad & Al-Mehdar. If it is important for some reason to have UK law or foreign law governed agreements, fine, but then you have the problem of enforcement. We always advise people to go into the local courts because they are honest, you get your judgment in about two years and you dont have any problems enforcing it. Litigation here is quite cheap, certainly if you compare it to the UK or the US, so at the end of the day you get it at a fraction of the price.
Local clients in the UAE and other parts of the region are still quite reticent about arbitration. It is still part of the local culture to have the contracts governed by courts and not arbitration, says Al Tamimis Hourani. In my opinion its not going to be a quick turn from what we have now to arbitration. DIAC is getting more and more in terms of agreed
jurisdiction clauses, but I still cannot say there is a substantial shift, and that we see less going to court and more going to arbitrations. The international clients prefer arbitration rather than UAE courts, but I dont think they have reached that bargaining power where they can dictate their terms.
Nevertheless, whether or not the arbitration centres prove to be a success, most international firms now recognise the importance of having more disputes lawyers on the ground. When UK firm SJ Berwin opened its Dubai office in June 2009, it sent out one of its top arbitration partners, Tim Taylor, to spearhead the move. More recently, in September, Herbert Smith relocated disputes partner Stuart Paterson to help bolster its Dubai office. This is more a reflection of the fact that their Middle Eastern clients, whether they are based in Dubai or elsewhere in the region, are demanding that they have disputes lawyers nearby, rather than in London or New York. The fact that the law firms are responding is indicative of how seriously the region is being taken and how sophisticated those local clients have become. As long as this remains the case, then a Dubai office will form an important part of an international law firms network. For most, the downturn has merely tempered expectations that had previously been inflated by a global financial bubble.
We were spoiled until September last year and everyone had a substantial amount of work, concludes Hourani. We have come to a stage where people have adjusted. People have adapted to a new reality.
Doing business in Saudi Arabia
The Kingdom of Saudi Arabia is the largest economy in the Gulf, and for many law firms it is the main reason for being in the region in the first place. The big question has been how best to tackle the kingdom. While Dubai is a good central hub, it is no substitute for actually having lawyers on the ground, but convincing non-Muslim lawyers to move to Riyadh is extremely difficult. There is also the fact that local regulations dictate that foreign firms can only set up there through an association with a local lawyer or firm. These partnerships have not always been successful, although firms such as Clifford Chance, Baker & McKenzie, White & Case, and, most recently, Allen & Overy have proven that it is possible to forge profitable and longstanding relationships. In September 2009, Lovells became the latest UK firm to enter the market, through an association with local firm Al Yaqoub Attorneys and Legal Advisers.
It was the next logical step in terms of our development in the Middle East, says Crispin Rapinet, Lovells Asia managing partner. Its not just a sort of convenient association so that we can say to people weve got representation in Saudi. The fact that were putting two lawyers out of our Dubai office is indicative of the fact that were taking this seriously.
The influx of foreign firms Eversheds, Clyde & Co and Norton Rose are among the more recent arrivals comes at a time when Saudi law firm turnovers are starting to flatten out. It is definitely not buoyant, warns Andreas Haberbeck, a German-born partner in the Jeddah-based firm The Alliance of Abbas F Ghazzawi & Co and Hammad & Al-Mehdar. For the last five years we had annual growth of 30 per cent a year, which was marvellous, but this year it is flat. There is only a fraction of the capital markets work, and for six months we didnt have any IPOs at all. The projects are still going on, except there is a little twist to that: the mega projects are no longer wholly privately financed, as the governments have come back in and the banks have become much more risk averse. The new entrants will be hoping to take their share of the work, but Haberbeck claims that many will be hampered by a lack of investment. Its about money, he says. They want to say they have a presence here, but they dont want to invest the money.
Doing business in Iraq
While most international firms agonised over a move into the UAE, Qatar or possibly Saudi Arabia, in May 2009, the Middle Easts largest independent law firm, Al Tamimi & Company, reopened its doors in Baghdad. The three-lawyer office had originally been opened in 2003, but the worsening security situation had forced it to close down in 2006.
We started an office when everyone thought that Iraq would pick up in a quicker period of time than it did, explains Al Tamimis Dubai-based head of banking and finance Husam Hourani. Once things started to go in the wrong direction we started to get very worried about it and reduced the number of staff and moved them to a place that was more secure.
Despite the relatively stable environment Hourani concedes: We still dont feel comfortable to have lawyers from other countries, that is why we use Iraqi lawyers.
Given Iraqs vast oil reserves, the attraction for establishing an office there is plain to see, especially since there is no competition from other international law firms. In reality, Hourani admits that the work isnt of the big-ticket variety. Iraq will need at least a year to two before we can see international types of activity, he adds. For the time being our office there is focused on insurance and restructuring related work, and is very heavily supported by our Jordan office. I dont think we will see a big change of activity there at all.
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Anthony Notaras is a freelance journalist and can be contacted at anthonynotaras@me.com
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* IBA Madrid conference 2009
Monday October 5
| We were saved by our rules QUESTION: Which sessions are you most looking forward to? Small steps to justice How to prosecute terrorists |  |
Its a concept that lawyers will be more than familiar with: the existence of a common rule book to enforce the standards and principles that they work to defend. And according to Quentin Peel (right), international affairs editor of the Financial Times and keynote speaker at this years opening ceremony, now more than ever a global rule book is what we need.
Peel took on the daunting task of trying to explain to his audience whether a new international order was emerging from the recent financial crisis, and if so, what we could expect it to look like.
Rules, he said, have already helped governments around the world to avoid repeating the terrible mistakes of the 1930s the last time they faced recession and financial disruption on such a global scale. The work of the World Trade Organisation (WTO) in particular has been crucial in discouraging the worst of the expected protectionism, with the organisations rules on trade meaning that offending parties are being shamed into obeying. The influence of international organizations like the WTO should even, said Peel, be attributed with stopping this recession from becoming a depression.
But now all eyes must turn to the Group of 20 (G20), whose responsibility it will be to develop and implement a universal set of rules that can stabilise economies worldwide and avoid, as far as possible, a repeat of what he called a classic recession after a classic boom bubble.
The composition of the G20 perfectly demonstrates the new world order, the needs of which must be met by any regulatory plans. Though it may have initially come together as an ad hoc committee, its subsequent success has depended on it being a group that brought together not just the old West, but also the newer economies of countries such as China, India and Brazil, said Peel. The groups recent work in Pittsburgh, and the declaration that it will radically reform the International Monetary Fund and become the permanent council for international economic cooperation, proves that the expanded assembly is committed to global rule making and implementation.
As Peel put it: The G20 is the best thing available, and it seems to be doing the trick. But as any lawyer will appreciate, developing a set of rules that is fair, applicable and open to everyone is far from easy. And not least because this recession is different in several ways.
Never before have there been such open borders, or such globally active financial players moving unprecedented amounts of money around. There is also a huge global imbalance between the deficit of the US economy and the surplus of China. Add to this the increasingly complex and opaque financial instruments that are being developed, and its easy to see how this downturn presents challenges that have never been faced before.
The danger, insisted Peel, is that individual countries could be too concerned with domestic worries to take their place as leaders in a new global framework of cooperation and consolidation. Though he now perceives a real desire around the world to see US leadership again, the undeniable damage of the disastrous last eight years of unilateralism and anti-Americanism caused largely by foreign wars, has left the previously unchallenged world leader in no position to sustain that preeminence.
Rules stopped this recession becoming a depression
But who can replace the US, and is a sole global superpower really the right solution for such a diversified and multipolar world?
China might seem the obvious successor. But, despite being a rising star that will undoubtedly become the worlds second largest economy in the next 20 years, it faces an abundance of internal problems that will hinder its ascension to the global stage. Even alongside the US, China is certainly not ready to become part of a G2.And another economy that has grown rapidly in recent years, Russia, faces asimilar predicament. It has been badly hit by the economic downturn due to its reliance on oil pricing and failure to diversify, and still suffers from widespread internal corruption and a dependence on foreign lending.
The solution to this balance of powers is multilateralism, a system that relies on a unified and functional set of rules. And the audience of internationally active lawyers can be cautiously optimistic about what this will mean. At the very least, as Peel pointed out: I dont think you are going to be out of work.
Attendees were also honoured to have the conference opened by His Majesty the King of Spain, Juan Carlos I (above), who alluded to the great tradition of legal science and scholarship in the Spanish legal system, before welcoming the audience to the city of Madrid and this annual IBA conference.
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QUESTION:
Which sessions are you most looking forward to?
Renato Lima Gonalves
Zancaner e Lima Gonalves Advogados
Brazil
I am most looking forward to the tax law and corporate law sessions. I think there is something about state planning of highyield family businesses that sounds really good. I mostly focus on tax law and
business law and I will be looking to go to sessions on contracts, but not litigation.
Temple N Ejekwu
Temple N Ejekwu & Co
Nigeria
I am looking forward to the business sessions, not any particular session, but the whole section. I am not speaking this year, but I plan to listen in and contribute. I am interested in how new business laws will
affect Nigeria and this is the place to find answers to my questions.
Geraldine M Clarke
Gleeson McGrath Baldwin Solicitors
Dublin, Ireland
I am a speaker, so I am looking forward to the PPI showcase on money corruption tomorrow [Show me the money! Auditorium, lower level -4, Monday, 10am]. Later in the week I am looking forward to hearing about changing relations between lawyers and clients in the new economic climate. All the law firm management sessions on the effect of the recession will be interesting. I am also looking forward to meeting colleagues from all over the world this is what the IBA is all about.
Carolina Sigwald
Daz Bobillo Richard & Sigwald
Buenos Aires, Argentina
Im looking forward to the construction and arbitration sessions. They were very good in Buenos Aires last year so it will be interesting to hear about the updates and also discuss what will be the hot topics in
Vancouver next year. Im also looking forward to the panel on Latin American M&A [Special aspects of M&A deals in Latin America, Auditorium, Tuesday, 3pm].
Robert J Cleary
Proskauer Rose
New York, US
The panel that I am most looking forward to is the one Im speaking on! Its on Wednesday morning on cartels [Halifax room, 10am]. Were going to be discussing the development of the prosecution emphasis in the US and other countries. There is a panel of five or six of us from different countries comparing and
contrasting what the law enforcement authorities in our respective countries are doing.
VOX POP
Guillermo Canalejo
Uria Menendez
Spain
I am looking forward to tax sessions because I specialise as a tax lawyer. There are a number of panels on this topic, but on Friday there is one on intangible migration [A manual for migrating your corporate intagibles. Ontario, 10am] on which I am speaking. So I am focusing on that but I will try to fit in other sessions as well.
Yoshio Shimoda
ILS Shimoda Office
Tokyo, Japan
Im going to be speaking at a session on Tuesday, an immigration update with other lawyers [Global business immigration update, Tuesday, 3pm]. I practice Japanese immigration law so Im looking forward to the sessions related to that. Once I have spoken at my session I will be able to relax more and network with friends and colleagues.
Stephen Denyer
Allen & Overy
Frankfurt, Germany
Im chairing two panels one on Monday [Successful models for the practice of law in Europe, Paris room,
10am] which is about whether local law firms can compete with global firms. The other is on Tuesday
[Alternative business structures, Mexico/Buenos Aires/La Habana rooms, 2.45pm] about external investment in law firms. Were going to put the UK and Australia in the dock for allowing this.
Ejaz Maqbool
Maqbool & Company
India
Im a litigation lawyer so Ill look to that and other corporate areas. I only just registered and have been too
busy to plan my week thoroughly. However, it will all flow once the conference gets going. There are lots
of Indian lawyers here and I think I represent them all in saying that the IBA should really hold a conference in India soon.
Laine Skopina
Liepa Skopina Borenius
Latvia
I am a real estate committee officer and am looking forward to all of our sessions. Part of my role is to turn up to them all and make sure that everything goes well. On Wednesday, there is going to be a real estate tour of Madrid. It is a property workshop incorporating the law into a snapshot of real estate in the city. It will be very interesting to see the progress of some of the projects.
Margery Nicoll
Law Council of Australia
Canberra, Australia
I am an officer on the Bar Issues Commission and on Tuesday we are hosting Independence Day [Mexico/Buenos Aires/La Habana rooms, all day from 9.30am]. Weve also just launched a magazine
called Bar Executive Exchange to help the bar executives get to know each other. So Im looking forward to distributing that. I feel the committee is starting to gain momentum on this.
Henry S Shyn
Yoon Yang Kim Shin & Yu
Seoul, South Korea
I mostly work on M&A so I am looking out for sessions on that topic. Tomorrow I am co-chair of a session
[International sales contracts: how to avoid expensive pitfalls, Montevideo/La Paz rooms, 3pm]. We
have lawyers from Russia, Brazil, Japan, India, England, the USA and Germany. My role is also to tell people about the Asia-Pacific Forum. I think our Tuesday lunch is once again sold out.
Richard Naidu
Munro Leys
Fiji
I am a general corporate lawyer I come from a tiny country so I cant specialise too much. The Cape Town Convention session tomorrow [Toronto room, lower level -4, Monday, 10am] should be great and
hot topics for IP [Lisbon room, 10am] too as I do a lot of trademark work. I also fancy the dispute resolution panel [Madrid room, 10am] so Im going to be very busy tomorrow morning!
Olajumoke A Okunnu
Professor A B Kasunmus
Chambers
Nigeria
I plan to attend the session on why women are not in the top positions in the legal profession [Women in law firm and company management, Novotel A, Tuesday, 10am]. I do a lot of office management so am
interested in administration and managing people in the law.
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THE INTERNATIONAL CRIMINAL COURT
Small steps to justice
Its taken a while, but the ICC has taken up its first case and issued a warrant for its first sitting head of state. Small steps in the right direction, says Joel Abraham
This year, the International Criminal Court ventured into unchartered territory. The ultimate goal of a permanent institution dedicated to ending impunity may be some way off, but landmarks were reached. These included the start of the ICCs first ever trial, as well as the issuing of its first arrest warrant for a sitting head of state, a bold start to what will be a long, arduous journey.
The ICC has come a long way since its inception a decade ago. The foundations were established in June 1998, following years of negotiation aimed at establishing a permanent international tribunal to punish individuals that commit serious international crimes. The United Nations General
Assembly convened a five-week diplomatic conference in Rome, with the resulting Rome Statute adopted by a vote of 120 to seven, with 21 countries abstaining.
Harmed by abstentions
The abstentions have become a notable challenge to the credibility of the ICC, as a number of states, including
China, Russia, India and the United States, are critical of the court and have not joined. Moreover, the United States and Israel unsigned the Rome Statute in 2002, indicating that they no longer intend to be part of it and, as such, have no legal obligations arising from their signature of the statute.
Mark Ellis, executive director of the IBA, comments: There is no question that the court would be stronger if these countries were state parties. The court can exist without them, but the goal should be to reach a point where all of the major countries are state parties.
I think that will eventually happen but it will be a long journey. Considering how long it took to create the ICC to begin with, I think this is an aim that we can all work towards. With regards to the US involvement,
Ellis says: I am hopeful that we will see a change in the new dministrations position towards the ICC. Even in the Bush administration, there was a significant warming towards the ICC to the point at which the US, in essence, agreed to the UN Security Councils decision to refer the case of Darfur to the ICC.
That would not have happened eight years ago, so theres movement in the right direction. The most important thing the US can do is not be a hindrance to the principles of the ICC. Even if the administration decides its not yet time to ratify the Rome statute, at least it will stop the past policies of trying to interfere with and create barriers for the ICC. That is a major step forward.
I am hopeful that the ICC will continue to gain support from the international community and particularly from states that have not yet become parties. It is important that states see the ICC as an objective and highly qualified institution, with a great deal of credibility to undertake these types of investigations if need be.
Jurisdiction over Gaza
The ICC can only exercise jurisdiction in cases where the accused is a national of a state party, the alleged crime took place on the territory of a state party, or a situation is referred to the court by the United Nations Security Council. The court is designed to complement existing national judicial systems: it can exercise its jurisdiction only when national courts are unwilling or unable to investigate or prosecute such crimes. Primary responsibility to investigate and punish crimes is therefore left to individual states.
As of October 2007, the Prosecutor had received 2889 communications about alleged crimes in at least 139 countries. After initial review, however, the vast majority of these communications were dismissed as manifestly outside the jurisdiction of the Court.
Ellis says: There are jurisdictional holes. We should not feel despondent, but look on this as a challenge for the international community to expand the jurisdiction of the ICC so it truly becomes the world court that upholds the principle of accountability for those that have committed these horrendous crimes.
One of the instances of disputed jurisdiction is the decision by the Office of the Prosecutor to investigate alleged war crimes in Gaza. Objective evidence and reviews suggest that war crimes were committed by both sides, says Ellis.
The question is whether or not the ICC has the correct jurisdiction. Unfortunately, it hasnt, simply because the Rome statute was deliberately crafted to give the court a very specific and very limited jurisdiction. However restrictive that jurisdiction is, it is important that the ICC stays within its jurisdictional boundaries.
For the Prosecutor to suggest that the court has jurisdiction over Gaza would require the court to invalidate the legal status of the territories and effectively recognise a Palestinian state, and there is no basis for that right now.
Israel is not a signatory to the Rome statute, and the Palestinian territories do not constitute a state under international law. It is unfortunate, but there is a restriction there.
New definitions of crime
The Rome Statute grants the court jurisdiction over four groups of crimes, which it refers to as the most serious crimes of concern to the international community as a whole: the crime of genocide, crimes against humanity, war crimes, and the crime of aggression. The states parties are due to hold a Review Conference in the first half of 2010 to consider amendments to this statute. The aim is to adopt a definition of the crime of aggression, allowing the ICC to exercise jurisdiction over the crime for the first time.
The reason this is complicated is that it goes to the heart of how the court defines the act of aggression, what the conditions are of the exercise of that jurisdiction, and who determines whether a country is acting with aggression. The triggering mechanism is a big issue. And that assumes the case has got over the first hurdle of coming up with an agreed definition for the crime.
Im not too optimistic that youre going to see a movement towards its inclusion, says Ellis. I dont necessarily think thats a bad thing. Because its such a complicated issue, Ive always been concerned that it would dilute the focus on the crimes of genocide, crimes against humanity and war crimes. If we shift our focus on tackling the issue of aggression, Im concerned that we will fail in sufficiently rooting the other three crimes within the mindset of the international community.
Many states asked to add terrorism and drug trafficking to the list of crimes covered by the Rome Statute, but both were shelved. The states were unable to agree on a definition for terrorism, and the inclusion of drug trafficking would inevitably overwhelm the courts limited resources. Ellis comments: The purpose of the conference is to debate these issues, so whether they are in fact adopted is not as important as the fact that theyre being debated. I think thats a very healthy process for the international community.
Satisfying the demands of all parties is a thankless task. India lobbied to have the use of weapons of mass destruction included as a war crime, but this move was also defeated. India has since expressed concern that the Statute of the ICC lays down, by clear implication, that the use of weapons of mass destruction is not a war crime. This is an extraordinary message to send to the international community.
Some commentators have argued that the Rome Statute defines crimes too broadly or too vaguely. For example, China has argued that the definition of war crimes goes beyond that accepted under customary international law. The British television media company, ITN, wrote to the UK government in 2007 asking it to support an amendment to the definition of war crimes to include the intentional targeting of journalists.
Another priority is the revision of Article 124, an optional protocol that allows states to not subject their nationals to the jurisdiction of the Court for seven years with regards to war crimes. However, Ellis states that the provision has been less contentious than anticipated. There was a lot of concern when this was a compromise provision during the Rome conference, and there were many who criticised that compromise.
The fact is that only two states have applied the article, France and Colombia. France has already withdrawn its declarations, and Colombia is soon to follow. There will still be a push to remove this article but history shows it has not been as controversial as it was expected to be. If it allows non-signatories to the statute to feel more comfortable in adhering to the Rome statute then its worth keeping.
First warrant for a head of state
In March, the ICC reached a contentious landmark in its decision to issue an arrest warrant for Sudanese President Omar Al-Bashir. This was the first warrant issued for a sitting head of state, a bold step for the Court that has received praise and criticism in equal measure.
The controversy of the Al-Bashir case has been due not only to its political implications, but also to fact that genocide charges were included in the warrant, contrary to the recommendations of the United Commission of Inquiry on Darfur. The court ruled that there was insufficient evidence to charge President Al-Bashir with genocide, with Al-Bashir himself predictably denying all charges, describing them as not worth the ink they are written in.
The arrest warrant decision has major implications for the ICCs public perception. There have been allegations of bias against Africa, and some believe that the issue of an arrest warrant has had a negative effect on local peace processes. The Courts engagement with regional groups has become an urgent priority after the African Union voted to suspend cooperation with the ICC in protest over the indictment.
One of the biggest bones of contention is the compatibility of the ICC with reconciliation processes that grant amnesty to human rights abusers as part of agreements to end conflict. Article 16 of the Rome Statute allows the Security Council to prevent the court from investigating or prosecuting a case, and Article 53 allows the Prosecutor the discretion not to initiate an investigation if he or she believes that an investigation would not serve the interests of justice.
Former ICC President Philippe Kirsch has said that some limited amnesties may be compatible with a countrys obligations genuinely to investigate or prosecute under the statute. It is sometimes argued that amnesties are necessary to allow the peaceful transfer of power from abusive regimes. By denying states the right to offer amnesty to human rights abusers, the International Criminal Court may make it more difficult to negotiate an end to conflict and a transition to democracy.
For example, the outstanding arrest warrants for four leaders of the Lords Resistance Army in Uganda are regarded by some as an obstacle to ending the insurgency. Czech politician Marek Benda argues that the ICC as a deterrent will in our view only mean the worst dictators will try to retain power at all costs. However, the UN and the International Committee of the Red Cross maintain that granting amnesty to those accused of war crimes and other serious crimes is a violation of international law.
Ellis adamantly supports this notion. The court is premised on the principle of international law that is clear in stating there is no impunity for these crimes. Since that is such a fundamental principle, it should not surprise anybody that the court and the international community would speak out very loudly against any state that would suggest providing impunity for individuals that have committed these crimes. Years down the road, this will be the courts greatest legacy.
This is what governments do: suggest that if we can compromise on the accountability issue then that will make it easier to achieve peace. History simply doesnt show that. In fact, history is quite clear in stating that there is no lasting peace unless you base that peace on justice, and there is no justice unless you embrace the concept of accountability. It seems absurd to suggest that it would be better to allow the perpetrators of these crimes to negotiate themselves out of being held accountable, since they are the ones who can bring the peace.
Lessons from Lubanga
To date, the court has opened investigations into four situations: Northern Uganda, the Democratic Republic of the Congo, the Central African Republic and Darfur, indicting 14 people; seven remain free, two have died, and five are in custody. The IBA ICC Programme releases regular reports on the ICC, commenting on proceedings and advocating ways to move forward. However, it is still too early to judge the full impact of the ICC, having not yet completed a full procedural cycle.
The trial of Thomas Lubanga in January 2009 was an historic moment for the ICC: the first trial at the worlds only permanent international criminal court, and the first time that victims had the right to actively participate in such proceedings. Lubanga, former leader of the Union of Congolese Patriots militia in Ituri, became the first person to be arrested under a warrant issued by the court in March 2006, charged with conscripting and enlisting children under the age of 15 years and using them to participate actively in hostilities.
The ICC did not make the most auspicious of starts, stumbling at the first hurdle. Lubangas trial was due to begin in June 2008, but halted when the court ruled that the Prosecutors refusal to disclose potentially exculpatory material had breached Lubangas right to a fair trial. This led to serious concerns about the viability of the ICC, but the court lifted the suspension in November 2008, helping to restore public confidence in its credibility.
The progress made in the trial so far is heartening. Seventeen out of 31 witnesses have testified, and the decisive approach of the Chamber in managing proceedings bodes well. One of the great innovations is the series of rights granted to victims, who have the right to present their views and observations before the Court.
The familiarisation process being implemented by the Victims and Witnesses Unit appears to be successful, and victims have been afforded the opportunity to participate in the trial in a meaningful way. One of the biggest challenges is to fully respect the rights of not only the victims and witnesses, but also the defence. So the Chambers decision to allow the Office of Public Counsel for Defence access to the proceedings in real time was greeted with approval. However, there are problems with guaranteeing adequate resources for defence counsel under its legal aid system, with Lubangas defence team claiming that it has been given a smaller budget than the Prosecutor.
Another problem with the trial has been that much of the proceedings are held in closed session due to fears for the witnesses safety. The number of closed session hearings arguably impinges on Lubangas right to open, transparent public proceedings. Other criticisms are the courts failure to address the issue of self-incrimination, and the late disclosure of the potentially exculpatory material (which initially led to the delay in proceedings) that may have affected the defendants ability to prepare his case.
The accuracy of interpretation has also been called into question. International criminal proceedings are understandably complex, involving different languages and cultural nuances. Procedural safeguards are crucial to resolving such issues, and the Chamber has stressed that interpreters must provide full interpretations and not summaries of what was said. The Lubanga trial has revealed many obstacles, but the ICC appears to be adjusting well to the learning curve.
Less is more for the Court
Ellis believes that less is more with regards to the ICCs activity. It is important to remember that the ICC is still a court of last resort. It will only take jurisdiction over a situation if a country is unwilling or unable to investigate. In the future, hopefully we will see less work being done in The Hague through the ICC, and more focus on the responsibility of all nations to hold accountable those who have committed these crimes. The ICC is now embedded into the international legal scheme as an entity that will uphold the concept that there will be no impunity for those that have committed the most atrocious crimes known to man.
The progress of the ICC might best be described as slow and steady. The first trial has taken a long time to begin, but the developments bode well. There is a long road ahead, but the small steps so far have certainly been in the right direction.
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INTERVIEW: SUE HEMMING
How to prosecute terrorists
The UK head of counter-terrorism at the Crown Prosecution Service talks about her role in charging terrorists and her expectations of speaking at this years conference. By Nicholas Pettifer
Sue Hemming has been Head of counter-terrorism in the Crown Prosecution Service (CPS) in the UK since the division was created in 2005. She manages a team of almost 50, half of which are lawyers prosecuting some of the most dangerous people in the world.
Hemming started her career in the CPS and has never wanted to work anywhere else. Originally she worked in Cambridgeshire before moving to the services headquarters near St Pauls Cathedral after 12 years. But it was her promotion four years ago that provided Hemming with her most difficult challenges. From prosecuting Abu Hamza al-Masri to helping charge the fertiliser plotters, she has been at the forefront in punishing terrorists in the UK.
Only last month, three terrorists were convicted for planning to blow up aeroplanes in the UK. Hemming was involved in the charging decision process for all three. Between 10am and 1pm today, Hemming will be speaking about torture, detention and rendition alongside panelists from Buenos Aires, Chicago, The Hague, London and New York. Here, she talks about her plans for the session and recalls some highlights from her career.
IBA Daily News: What are you planning to focus on at the IBA session in Madrid?
Sue Hemming: I have agreed with the chair that I will speak about the prosecutor in the context of the UK system, because we have an international audience. I will also speak about working with the police and the intelligence services on international terrorism and how we actually work in practical terms. About international relations and working with colleagues abroad and the practical issues with obtaining admissible evidence and disclosure. And then, just briefly, how torture and rendition come into the UK prosecutorial system.
We dont, and cant, use any evidence from torture; rendition means that we cant try a defendant and that we have to have lawful extradition. Then finally, I will mention how we deal with allegations that are made during the course of a criminal prosecution against international agencies that have been holding defendants and where the evidence has come from.
How will the session be structured?
I understand that we are each going to speak on a topic, from different perspectives. There are people from different countries speaking and people from different disciplines as well. Then there is going to be an interactive session with the audience answering questions and having a discussion around the topics.
What else are you going to particularly focus on in your time?
I will be stressing the amount of work that you have to do with colleagues in different disciplines and different countries in order to successfully prosecute terrorism cases. That is why I want to speak about working with the investigators and the intelligence services and also about international cooperation, because that is crucial when you are dealing with international terrorists.
Will you be using hypothetical case studies or will you talk from your experiences?
Im going to talk from experience. For example, when we are dealing with rendition I can talk about successful extraditions or prosecuting people who have been deported. So I will use a couple of examples of where that has worked. I will also use a couple of case examples for having to deal with allegations
Cases such as?
The best example of having to do an extradition quickly, and ensure that it was done lawfully before we could go to trial, was Hussain Osman who was one of the 21/7 bombers. We used a European arrest warrant, for the first
time with Italy, in relation to him. And he was extradited, I think, within 55 days. That was after having been through all the processes, allowing all the appeals and getting him back to try him with the others.
That sounds extraordinarily quick. What is the typical timeline?
That is quick. There isnt really a typical time because it depends on the type of extradition that you are working with whether it is a European arrest warrant, whether it is an old style European or whether it is a full case one where it takes a lot, lot longer. That was quick though and that is one of the reasons why I am going to use it as one of my examples: how you can use the lawful process in order to get people back to try them.
You mentioned torture. Is that something that has to be actively investigated by your prosecutors when building a case?
There will be allegations made by the defence during the course of a prosecution. Either that evidence has come as a result of torture, or where the defendant claims that where he was held previously, before he was returned to the UK, he was subject to torture. When we are dealing with those, we have to look at what is alleged and try to find whatever material may be available to support that or show that it is not right. We have to do quite a wide disclosure process as well making sure that we look through all the materials that may be in the possession of either the investigators or third parties. You dont just accept or reject it at face value. You have to do an evaluative process in order to be able to proceed.
Is this something that you work on a day-today basis on?
Im the head of the counter-terrorism division, so I oversee all of the cases of prosecution for counter-terrorism in England and Wales. I have a much wider role than a prosecutor dealing with one of those cases. But it does
mean that I have experience of knowing about where it has happened in lots of different cases as opposed to one specific one. It does take up part of my role because those types of issues would be so significant that they would
come to my notice and I would be involved in working with the prosecutors.
At what stage does your team get involved with a case?
In most criminal charges, the latest that a prosecutor will get involved is at the time of charge. But in this sort of work we start working with the police at a much earlier stage and weve generally been briefed on cases or started working on them before arrest takes place. Not always, because sometimes an arrest is quite fast moving and has to be done because of information received. But if there is an ongoing operation, then generally we will be briefed and working with the police from very early on.
How do the police get in touch?
It differs from case to case. What usually happens is that the police (the senior investigating officer or, in some cases, the senior national coordinator for terrorism investigation) will approach me, or my deputy, and say that they need a prosecutor or they need to speak to us. Then we get briefed on the case and we allocate the appropriate prosecutor to deal with it from there onwards.
Youve been in your current role a few years now. What have been the highlights?
It is quite difficult when you deal with cases that are so interesting! I worked on the Abu Hamza al-Masri case and that was obviously a really interesting to work on. We were dealing with old offence of soliciting murder. We also charged him with inciting racial hatred and also an offence under section 58 of the Terrorism Act. So it was quite a varied indictment and it was fascinating to deal with the wide range of things that he preached on and the views that he had. He was also being sought for extradition from the US during the course of the domestic prosecution. I didnt deal with the extradition, but I had to work within that context.
I also dealt with the charging decisions on a number of the high profile case that we have had over the last few years. I was involved in advising on the fertiliser plot [to blow up nightclubs and other targets such as Bluewater shopping centre in Kent] and in particular in the early stages before charging Omar Khyam and others. I was also involved in the charging decisions in the trial that has the jury out at the moment on the alleged airline plot. [Since this interview was conducted, three defendants were found guilty of conspiracy to murder thousands.]
How does that process work?
My involvement in each of those was slightly different. In the fertiliser plot I was involved several months beforehand advising as the case went along. I advised right up until the time of arrest. With the alleged airline plot, it was the first use of the 28 day holding power under the terrorism legislation. In that particular case I went to the police station fairly early on after the arrest and spent 12 to 14 hours a day working with police. I was reviewing materials, reviewing each of the suspects and advising on all the aspects of the case right up until the 28th day.
I went to the police station fairly early on after the arrest and spent 12 to 14 hours a day working with police
It must have been really exciting.
It was a really interesting case. We were very conscious of the fact that we had a large operation and that the law had just changed to allow 28 days. But the obligation of a prosecutor is to charge at the earliest opportunity. And while we have those 28 days ultimately available to us, you only have until the time that the next warrant runs out. You need to charge at the earliest opportunity, which in fact we did. We charged, I think, 11 suspects on the 10th or 11th day. It was interesting because I was dealing with something for the first time and it was probably one of the biggest and most interesting cases.
I think some people would think that working in one organisation means that your experience is restricted, but mine certainly hasnt been
Youve always been within the CPS. Was going into public service always something you had planned?
I enjoy working for the CPS and I think it is a really great organisation to work for. I have been very fortunate that I have had the opportunity to work on almost everything that the organisation does. After working in an area for 12 years doing everything from no-MOT [UKs Ministry of Transport certificate to prove a cars road worthiness] to murder and quite a lot of organised crime work, I moved into headquarters. This gave me the opportunity to do extraditions, Criminal Case Review Commission work and a lot of mutual legal assistance.
I then moved onto this where I have been able to do counter terrorism, crimes against humanity, official secrets and racial and religious hatred. I think some people would think that working in one organisation means that your experience is restricted, but mine certainly hasnt been. Ive had the opportunity to do so many different things in my career that I havent really had much interest in working anywhere else. Equally, being a public servant is important to me. I havent got any interest in going into private practice.
You mentioned mutual legal assistance, do you mean helping other countries?
In my post before doing terrorism, we used to advise and help areas on mutual legal assistance from other countries on their cases. And that is a very big part in dealing with international terrorism as well getting assistance from others in obtaining evidence. But it is quite a big topic in itself and something that you dont come across that often if you are dealing with everyday prosecuting.
You read law at Cardiff. Was there anything you studied there that gave you the impetus to
go into public service?
Not in terms of becoming a public servant, but I had wanted to do criminal law from about the age of 11 or 12. It was always my aim to go and do criminal law, so when I was at university the subjects that would be of most interest were criminal law, criminal procedure, evidence and those sorts of topics. It is obviously quite good to have a varied education and do all of the other topics as well, but those were the things I was most interested in and always have been.
Finally, are you looking forward to Madrid?
I am really looking forward to this. It will be my first time at the IBA Conference and I think it will be a pleasure to be involved in a session with people from lots of other different jurisdictions.
Why we cant carry liquids
One of the many challenging cases that Hemming has been involved in recently was the prosecution of seven men over a plot to blow up aeroplanes. Last month, three of the men Abdulla Ahmed Ali, Tanvir Hussain and Assad Sarwar were convicted of conspiracy to murder using explosives on an aircraft, and conspiracy to murder persons unknown. Umar Islam was also found guilty of the second charge.
The men planned to explode liquid bombs constructed from chemicals placed in empty drinks bottles on seven flights leaving Heathrow for the US. The men were arrested in August 2006 after a surveillance operation involving an MI5 intelligence team and over 220 police officers.
Despite an initial trial in 2008 where the jury failed to reach a verdict, the Crown Prosecution Service successfully prosecuted the men on the second attempt. (The trial concluded on September 7 2009.) The jury at the second trial was able to see coded email evidence in which the British plotters discussed the conspiracy with extremists in Pakistan.
Investigators think that the plot also involved Al Qaeda. Another crucial piece of evidence used to convict the wannabe bombers was a series of martyrdom videos recorded by the plotters in the style of those made by the London tube bombers in 2005.
The discovery of the plot led to restrictions on the amount of liquid that can be taken onboard aeroplanes that are still in place. Development of a scanner to identify between harmless liquids and those that might be explosives is underway but, until this is finalised, security restrictions thanks to this plot will continue.
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2003 Iranian Bar Associations Union
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