INTERNATIONAL ARBITRATION 1/3LY
IN CONVERSATION WITH MAARTEN SCHOLTEN 05
DAV ID Is this something that youwould encourage in- house counsel to do generally? MAART EN Well, yes. What we can offer in-house lawyers in large andmedium-sized organisations, is a good variety of work andmobility. Thismay not be appropriate or desirable for all in-house lawyers, but manywould benefit from taking a step outside of their roles to observe the legal function from a completely different perspective. Having said that, I also want to underline the importance of specialists and expertise. There are lawyers who have the skills, capability and intelligence to be very good in certain areas of expertise. We need them. On the other hand, there are others who havemore of a global commercial viewandwho aremore generalist. I think the trick is to have a good balance within the organisation and to offer interesting career opportunities which appeal to each of these different types of talent pools. DAV ID In January 2014, you became General Counsel of Total. Is the borderless career something you’ve tried to promote within Total, or was this already in place? MAART EN I think, generally, it was in place, as it is in many large corporate environments – that is what makes going in-house so attractive. Mobility is something that we are promotingmore andmore in today’s environment. Where I feel that we need to bemore creative is inmaking sure that lawyers who have in-depth expertise and knowledge in certain specialist areas, which are essential for a global company like ours, have a stimulating and rewarding career. This notion is not unique to the legal function, nor to the oil industry –we also see it in the technical community and in other industries. Sometimes the reward, or the attention, is givenmore tomanagers and generalists, as opposed to those who are specialists with deep expertise. I think there should be a better balance.
DAV ID In the legal function, howdoes the balance you are referring to tie inwith the use of outside counsel? MAART EN In Total, our objective is to do asmuch legal work as possible in-house andwe are proud of that. However, like a large number of in-house legal departments, we turn to people like you for expertise when needed. So, finding the right balance between our own generalists and specialists and outside counsel is critical and is something we keep under careful review.
DAV ID Do you think the contractual adjustments that you mentioned also spill into the liability and indemnity provisions between operators and contractors? Have you seen a movement towards the reallocation of risk and liability? MAART EN Some of the basic tenets of the waywe work together with the service industry should be given a fresh look. What we need to do is develop amore efficient way of working together, for example to review contracts and see how to better allocate risks. It seems tome that in certain cases we take similar risks on each side with each party taking out insurance to cover those risks, evenwhen they are overlapping. This is a waste of money. I do think, however, that major accidents have had a bigger impact on some of these risk allocation issues than the oil price cycle. TheMacondo blowout is perhaps themost obvious example of this. DAV ID I fully agree. To the extent there have been changes, or attempted changes, to the risk allocationwithin the sector that probably has beenmore driven byMacondo than the low oil price. DAV ID Have you seen an increase in the amount of disputes, as a result of the low oil price? MAART EN No, not really, for us, it has been quite flat. Yes, we have a huge number of suppliers and contractors, but themajor projects are done with a relatively limited amount of external players, and the external partners that we do work with, we know verywell and they are verywell known in the industry. If there is an increase in litigation it is probably related to bankruptcies but this generally involves the smaller players in the industry. There is a significant interdependency between a limited number of large players; so as a result, this is not the most litigious kind of environment, compared to perhaps other sectors of the economy. MA IN TA INING REL AT I ONSHI P S A ND MI T I G AT ING D I SP U T E S
OP ER AT ING IN A L OW O I L PR I CE EN V I RONMEN T
DAV ID Has the low oil price had a big impact on the type of day-to-day issues faced by in-house counsel generally? MAART EN There has been some impact but this is certainly not commensurate with the tremendous drop in oil prices. It takes time before big shifts in themarket cascade down to the legal departments of the large energy companies. In the United States, there have recently been a significant number of bankruptcies amongst the smaller independent players, which is a recent phenomenon in our business and definitely a result of the steep drop in the oil &gas price. More generally, I would say that the legal department has changed its focus. We are now lookingmore at contracts and pushing certain contractual terms which perhaps in the past were not given the same level of attention as they are today. Every penny counts. Lawyers looking after procurement and contracts now feel a lot more pressure tomake sure that we negotiate the best possible commercial terms and get the cost reductions that we need in order to be able to survive in a low oil price environment. I have been in this business for 30 years andwe’ve been through a number of these cycles. Due to the fact that we enjoyed high oil prices for a number of years, a lot of people forgot that this is a very cyclical business.
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