Insights

• Kobre & Kim currently represents ConocoPhillips in its efforts to enforce over US $10 billion in judgments and arbitration awards against the Republic of Venezuela and related state-owned entities. 
• A recent victory in the U.S. Third Circuit Court of Appeals has cleared a path for ConocoPhillips to enforce a judgment recognizing an ICSID award against Venezuela's state-owned oil company's shares in its Delaware subsidiary. 
• This victory shows how the "alter ego" theory can be used as an effective leverage point against a recalcitrant sovereign debtor, increasing claimant chances of achieving favorable returns.

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• Creditors and investors in sovereign debt are riding a wave of new opportunities driving returns with global public debt projected to exceed US$100 trillion by the end of 2024, making it possible to reap higher returns on claims against sovereigns previously thought too difficult to enforce.
• A well-thought-out strategy can increase returns and accelerate enforcement timelines.

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• The UK continues to use sanctions as an aggressive political strategy to attack adversarial governments and their perceived allies. 
• While Russian entities have borne the focus of these efforts in recent years, the potential use of secondary sanctions—targeting those with connections to sanctioned countries or individuals—could be on the horizon.
• This development may significantly impact Chinese businesses and citizens engaged in trade or holding interests in the UK.

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• Disinformation is the creation and proliferation of inaccurate information with the intent of causing harm, posing a significant threat to ultra-high-net-worth individuals as it is often designed to cause serious financial and reputational damage.
• From disgruntled former business partners seeking retribution to political adversaries trying to influence governments against their targets, disinformation can cause a ripple effect of dire consequences.
• Some tools can help mitigate risks and combat harmful narratives. 

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• International investors and other claimants have long struggled to enforce cross-border claims in the United Arab Emirates (UAE) and the wider Middle East.
• Recent UAE courts decisions informing how they approach enforcement against debtors, including sovereigns, have signalled that the tides may be turning in creditors’ favor.
• As China looks to consolidate its new investment model for China-Middle East collaboration, this issue may particularly impact PRC-based investors with an eye on the region.

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• Economic ties between Latin American and Chinese businesses continue to deepen. There are unique risks involved if a dispute arises with the Chinese company.
• Even if an organization or investor succeeds in an arbitration or litigation against a Chinese company, the Chinese legal system’s intricacies may create barriers to getting the company to pay.
• Latin American companies and investors should consider cross-border strategies to increase their leverage.

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• In South Korea, family struggles and key shareholder disputes over control of conglomerates, or chaebols, have long posed risks to minority shareholder interests.
• As the chief of South Korea’s Financial Supervisory Service raises concerns over a bid to take over Korea Zinc, many are preparing for impact on shareholder value. 
• Global investors, including activist funds, should consider deploying creative strategies to maximize their positions.

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• On October 22, England’s Court of Appeal dismissed the Kingdom of Spain’s challenge to enforce a US $109 million arbitral award in favor of Kobre & Kim’s client.
• Despite Spain’s arguments asserting state immunity, Lord Justice Phillips interpreted the 1965 ICSID Convention.

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• A Kobre & Kim client received a recent ruling by the New York Supreme Court that eases global bondholders’ ability to monetize claims.
• Justice Joel Cohen found Zhu Xinli, the sole director of Huiyuan Juice subsidiary Huiyuan Beijing, personally liable for more than US $114 million. 
• The decision means that bondholders increasingly have monetization options against recalcitrant debtors, including the ability to collect at par from well-heeled decision-makers when the primary obligors may be effectively insolvent, judgment-proof, or even already in bankruptcy proceedings.

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• Propel Fuels, Inc. (“Propel”), a low-carbon fuel provider, was awarded victory by a jury in its trade secrets misappropriation case against Phillips 66 Company (“Phillips 66”). 
• On October 16, 2024, the jury found that Phillips 66’s renewable fuels business was developed using Propel’s trade secrets in violation of California’s Uniform Trade Secrets Act and awarded unjust enrichment damages totaling US $604.9 million.
• The jury also found Phillips 66’s misappropriation willful and malicious, meaning the Court may triple the total damages award.

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• When large-scale cryptocurrency fraud or cyber-attacks hit, the stolen assets can quickly be dispersed across the globe, with perpetrators hard to find. In these cases, the initial hours and days can be critical.
• However, a recent victory shows that even after considerable time has passed since a hack, victims can trace stolen assets and react quickly to recover them due to the public nature of blockchain transactions and the powers of the English and US Courts to order injunctive relief.

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• As geopolitical tensions pressure sovereign debt, more investors are taking their disputes against sovereign states and entities to arbitration and judicial forums. There is a world of difference between demanding payment of a defaulted debt, judgment, or award from a sovereign and seeing the sovereign pay up.
• Meanwhile, Chinese private investors have become more prominent in sovereign-related investments through acquisitions, joint ventures, and infrastructure projects in Europe, Africa and Latin America.
• Investors and other claimants should not be afraid to stand up to sovereign debtors with aggressive non-traditional strategies.

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