Insights

In this issue:

This alert forms part of a series of updates designed to help businesses prepare for the post-Brexit world. Here, we consider London’s position as one of the world’s leading centres for international commercial arbitration, and argue this will be unaffected by Brexit. Put simply, the attributes that make English law and London-seated arbitrations attractive to commercial parties are largely independent of the U.K.’s membership of the EU.

In a 7-2 decision, the U.S. Supreme Court on Wednesday upheld the $185 million award of an UNCITRAL tribunal in a dispute brought by BG Group under the UK-Argentina Bilateral Investment Treaty (BIT). The decision reversed a unanimous decision of the D.C. Circuit that had vacated the 2007 arbitral award under Section 10(a) of the Federal Arbitration Act, citing BG Group's failure to observe the treaty's requirement to pursue remedies in Argentine courts for a period of 18 months before bringing a BIT claim. 

On September 17, the United States requested formal dispute settlement consultations against China under the World Trade Organization (WTO), accusing China of violating WTO rules by providing export-contingent subsidies to automotive industries. According to the request from the U.S. Trade Representative (USTR), at least twelve cities in China are recognized as "export bases," where subsidies are offered to auto and auto parts manufacturers in the form of grants for research and development, tax preferences, and interest rate subsidies. Such subsidies topped $1 billion between 2009 and 2011.

Companies that operate internationally face an increasingly complex business environment, in large part because of uncertainty created by governments. Whether because of their political cultures and commitment to the rule of law, their international economic and foreign policies, or their use of state-controlled companies, governments are affecting markets in more ways and to a greater extent than they have in the past. To deal with this uncertainty, global companies need to do more than overcome the traditional business challenges. They also need to address the regulatory, policy, and geopolitical risks that governments create for them.

On April 13, 2010, the FAR Councils issued a final rule implementing an executive order that encourages federal agencies to use project labor agreements--defined as pre-hire collective bargaining agreements with one or more labor unions that establish the terms and conditions of employment for a specific project--for federal construction contracts, when the total cost to the government is $25 million or more. If an agency determines that such agreements would "[a]dvance the Federal Government's interest in achieving economy and efficiency in Federal procurement producing labor-management stability, and ensuring compliance with laws and regulations governing safety and health, equal employment opportunity, labor and employment standards, and other matters," it must insert a solicitation and/or contract provision requiring prime contractors and subcontractors (if engaged in construction services) to negotiate a project labor agreement with one or more labor unions for the term of the construction contract.

Chambers USA has released its 2009 rankings of national Government Contracts practices, and C&M once again ranks in the First Band. Chambers takes note of our "extraordinary depth and experience across the board" and "pure quality and prestige" and recognizes several individuals as "Leading Lawyers" in the field -- congratulations to Terry Albertson, Tom Humphrey, Stan Johnson ("everybody's gold standard"), Kent Morrison, and Angela Styles.

For the fourth year in a row, Chambers USA, in its annual publication rating law firm practice groups, has given Crowell & Moring's Government Contracts Group a nationwide rank of "one," the highest rank a practice group can achieve.  The Chambers publication, which is based upon interviews with clients and other practitioners in each practice area, also named Terry Albertson, Tom Humphrey, Stan Johnson, Kent Morrison, and Angela Styles as leading lawyers in the Government Contracts field (press release: http://www.crowell.com/NewsEvents/PressRelease.aspx?id=211; Chambers summary: http://www.chambersandpartners.com/usa/resultseditorial.aspx?fid=2838&cid=618&pid=15&solbar= 1&grouptype=2#2838).

For the second year in a row, Chambers USA , in its annual publication rating law firm practice groups, has ranked Crowell & Moring No. 1 among Government Contracts groups nationwide (http://www.chambersandpartners.com/ usa/comment35.aspx?cid=618&pid=690&fid=2838&parentkey=2838), along with two other firms, stating "[y]et again, one of the discipline's original superstar firms impresses the market with its ' deep bench strength ' and ' uniformly good people who know their stuff. '" Based on interviews with clients and other practitioners in the practice area, Chambers named Stan Johnson, Terry Albertson, Tom Humphrey, and Kent Morrison as leading lawyers in the Government Contracts field.

In Medlin Constr. Group, Ltd. v. Harvey (June 1, 2006), the Federal Circuit sided with the contractor, finding that only the contractor's interpretation did not read relevant provisions out of the contract.  Of primary interest, though, was the alternative holding, in which the court held that, even if there had been an ambiguity, it would have been resolved against the government under the order of precedence clause, giving that clause seemingly greater weight than the court has previously in many "patent ambiguity" cases decided against the contractor.

Despite the Government's earlier approvals of CAS Disclosure Statements found to have disclosed the contractor's accounting practice, the ASBCA in United Technologies Corp., Pratt & Whitney found no affirmative misconduct by the government estopping it from asserting a retrospective claim based on non-compliance with CAS. In following guidance from the Federal Circuit that to prevail on estoppel the Company was required to prove affirmative misconduct by the government, the Board found no inherent conflict between the Supreme Court's rulings in Winstar and other cases that, "when the United States enters into contract relations, its rights and duties therein are governed generally by the law applicable to contracts between private individuals" and Federal Circuit law applicable "in the context of the government's performance of contractual duties in conjunction with CAS rules and regulations . . . not applicable to contracts between private litigants."

After 15 years of litigation, two trials and the deaths of two judges, Chief Judge Hogan of the U.S. District Court in D.C. wrote the latest chapter in the subway litigation saga, Mergentime-Perini v. WMATA (11/28/05), issuing a 192-page opinion upholding the default terminations of contracts for two Washington Metro subway stations, denying virtually all of the contractors' claims and awarding WMATA over $21 million in excess reprocurement costs and other damages, plus prejudgment interest. Crowell & Moring has represented WMATA in this protracted litigation, which has already established precedent on such issues as whether performance bonds cover allegedly unauthorized contract modifications and the duties of successor judges who take over an uncompleted case after trial.

Chambers USA, in its annual publication rating law firm practice groups, has ranked Crowell & Moring No. 1 among Government Contracts groups nationwide, along with two other firms. The Chambers publication, which is based upon interviews with clients and other practitioners in each practice area, also named Stan Johnson and Terry Albertson as leading lawyers in the Government Contracts field.

In Naplesyacht.com, Inc. v. United States, the Court of Federal Claims denied a protest despite finding that the Navy had abused its discretion in finding the two awardees' proposals technically acceptable, concluding that the protestor had not shown irreparable injury because its damage was limited to lost profit on one boat and because the Navy had assured the court that the awardees would have no advantage in follow-on competitions. However, the court took the unusual measure of providing its opinion to the Antitrust Division of the Justice Department, under seal, based on the proximity of the two awardees' prices, suggesting that one awardee had pre-bid knowledge of the other's proposal, in possible violation of Section 1 of the Sherman Act and Section 423 of the Procurement Integrity Act.

The National Reconaissance Office has adopted a clause prohibiting offerors on NRO procurements from entering into exclusive teaming agreements, based upon a determination that "such arrangements unduly limit competition." N15.209-70(i), prescribing N52.215-020, "Exclusive Teaming Prohibition (May 2004)." By contrast, having received comments that it could have the effect of impairing legitimate, pro-competitive teaming arrangements, DOD in April 2002 withdrew a proposed DFAR that would have required contracting personnel to refer to the Justice Department exclusive teaming agreements that they considered to be "anti-competitive," finding that there was no demonstrated need for such a regulation.