Mélida N Hodgson, head of international arbitration in Jenner & Block’s New York office, is an expert in investor-state and commercial arbitration involving state-owned entities. She also advises on investment protection and World Trade Organization dispute resolution and policy issues. She has extensive experience in leading billion-dollar infrastructure, transportation, energy and contract disputes. Ms Hodgson is an arbitrator, and is on the roster of various institutions. She is a founder of Washington Women in International Arbitration.
What inspired you to specialise in international arbitration?
I was put on an arbitration as a junior associate. It was a revelation! International arbitration married my passion for advocacy with an efficient proceeding that led to resolution, and allowed me to use my native Spanish skills. At the time I was getting tired of doing the motion practice and document review that typifies commercial litigation in major US firms. A bonus was international travel.
What do you make of the planned proposals for a multilateral investment court?
I think the MIC will face the same challenge that other multilateral investment negotiations have faced – trying to reach agreement over disparate national policies and protections. This is so because of the fact that, among the 3,000-plus agreements that provide for investment arbitration, there are some that provide little guidance on procedures (the earlier treaties) and some – those in existence since 2004, for example – that provide a lot more guidance to tribunals about the proceedings (for example, procedures to address frivolous claims). The negotiators have to come up with a model that addresses those differences. The negotiators also have to address the fact that many of the complaints about investment arbitration have to do with the substantive obligations, not the procedures, and those are outside the scope of the MIC negotiations. They will need to prioritise which goals matter most. But I do think eventually there will be some kind of multilateral framework – perhaps an appellate mechanism.
What are the main challenges tribunals are currently facing when handling arbitration proceedings involving corruption claims?
The main challenges are first whether to allow evidence regarding corruption, and second what weight to give that evidence. Arbitrators are uncomfortable dealing with issues that are related to corruption because it’s often portrayed as unfair to the party that has not invoked corruption – or as rewarding a party to corruption at the expense of the other. In addition, it often involves separate, criminal proceedings that are beyond the tribunals’ control. The primary challenge is often framed as an issue of proof – what weight to give to the “evidence” – particularly when national criminal proceedings are involved. Tribunals in investment cases may also be concerned about being seen to promote one side at the expense of the other – the legitimate right of states to protect their citizens from the effects of corruption, or acquiescing to the claims of investors that the corruption charges are fabricated or vindictive. This is exacerbated when there are criminal proceedings and one side requests interim protective measures. But we are now seeing more tribunals find a way to address these claims, because after the Odebrecht scandal it’s not possible to avoid this anymore. We have seen the issue of corruption also give rise to claims that tribunals have been complicit. So for the sake of the legitimacy of the process, tribunals are having to address these claims.
How are you seeing increasing concerns around climate change affect the nature and type of commercial disputes?
In my own work we have seen claims based on disrupted climate change obligations, as well as environmental damage. My colleague Patricia Cruz Trabanino has studied this issue. The science is there, but the big challenge for tribunals appears to be one of proof of damages. Nonetheless, I think that is a matter of education, and as the effects of climate change become more severe, the proof and damages policy issues will become less of a challenge. The ICC recently issued a report on climate change that I think will go a long way to helping practitioners grasp these issues. It is clear, perhaps as usual, that business is absorbing the effects of, and obligations related to the effects of, climate change, in the midst of government inaction. The report examines climate change arbitration with a focus on the energy, infrastructure and financial sectors.
What role do you see third-party funding playing in arbitration moving forward?
It is common in commercial arbitrations. In arbitration involving states, it is now a staple for claimants and over time we will see more funding of states and SOEs through commercial (rather than not-for-profit) funding, at least in commercial arbitrations where counterclaims are more feasible (and some state entities do initiate arbitration).
If you could implement one reform in international arbitration, what would it be?
In investment arbitration, an appellate mechanism – something I examined while working on the revision of US model agreements when I worked for the US government. But that will take a while, so more immediately I think we need a code of conduct for lawyers as well as and arbitrators. Some of the lost efficiency that has crept into the arbitral process is due to the shenanigans that counsel engage in and the reluctance of arbitrators to sanction that behaviour.
What steps can younger arbitration practitioners take to improve their chances of getting appointments?
Learn the substance, including of procedure. If you haven’t been through it a few times, I don’t see how you can be an effective arbitrator. Is there an important role to play here for experienced lawyers? Absolutely, you need to find ways to give younger lawyers the opportunity to have leading roles, in both the written and oral stages of proceedings.
What advice would you give to younger lawyers looking to specialise in the area?
Try to join a practice (firm or government) that does 50–75 per cent arbitration, so that you don’t end up sidetracked. If you can’t, stay involved through the many arbitral organisations, and in the meantime build solid litigation skills.
Mélida Hodgson focuses her practice on investor-state and commercial arbitrations, counselling governments and state-owned entities, as well as corporate entities, with respect to international investment protection provisions, business disputes and World Trade Organization dispute resolution and international trade policy issues.
Ms Hodgson has been recognised by Latinvex as one of the top 50 female practitioners, and one of the top 100 lawyers, with a Latin America-focused practice. Additionally, she has been ranked in The Legal 500: Latin America, as well as Chambers Latin America, Chambers USA and Chambers Global.
Ms Hodgson is an arbitrator of international disputes and is inscribed on various’ arbitral institutions’ list of arbitrators, including AAA/ICDR, the British Virgin Islands’ International Arbitration Centre and the NAFTA Chapter 19 list of panellists.
Ms Hodgson began her career in private practice before becoming a US government litigator at the US Department of Justice. She then joined the Office of the United States Trade Representative as an associate general counsel, where she litigated international trade disputes before the WTO; provided counsel in NAFTA Chapter 11 investor-state arbitrations involving the US, Canada and Mexico; and defended the US in ad hoc arbitrations under the 1996 Softwood Lumber Agreement between the US and Canada.
Ms Hodgson has been appointed to the International Chamber of Commerce’s Commission on Arbitration and Alternative Dispute Resolution, as well as the councils of the AAA, the ICC Institute of World Business Law and the American Society of International Law. She is a founding member of DC Women in International Arbitration. Ms Hodgson is a native Spanish speaker. Prior to attending law school she was a banker at JP Morgan Chase’s predecessor, the Chemical Bank.