A press conference held by Ping An Group in Beijing. (File photo/CNS)
Ping An Group, China's leading insurance firm, has appealed to the International Centre for Settlement of Investment Disputes, a division of the World Bank, for arbitration over a dispute with the Belgium government for the improper nationalization of Euronext, which involves several ten billions of yuan in compensation.
The nationalization of Euronext led to a plunge in Euronext's share price, forcing Ping An, Euronext's largest shareholder, to appropriate 23.8 billion yuan (US$3.8 billion) in loss reserves.
Ping An does not have an obvious advantage in the arbitration case. Many people believe that the loss the firm incurred in the nationalization of Euronext can be attributed partially to improper investment but mainly to the irresistible force of the global financial tsunami.
However, there are also loud voices on the capital market supporting Ping An in defending its interests, in order to demonstrate its responsibility to shareholders.
According to the practice of international jurisdiction, the ruling of ICSID's arbitration will be final and Ping An will have to accept the outcome without any other judicial recourse. As a result, Ping An has hired topnotch international law firm Kirkland & Ellis LLP to defend its case. The defense will be carried out by the London branch of Kirkland & Ellis LLP, one of the strongest branches of the firm. Ping An will inevitably have to pay a huge attorney fee for the case.
The arbitration promises to be a protracted process, as the efficiency of ICSID, like other international organizations, is notoriously sluggish. An insider says that it may take six months or even longer to organize an arbitration committee before the launch of the actual arbitration process. The case may last two to three years and during the period, Ping An cannot resort to other channels for judicial relief.
The outcome of the arbitration will hinge not only on the quality of evidence offered by both parties but also the climate of the ICSID platform. In addition to the evidence put forth by both parties, ICSID's arbitrators will also collect evidence themselves and they are famous for the right to free judgment. Therefore, the inclination of the arbitrators will greatly influence the outcome.