KluwerArbitration

Document information Part II Chapter 5: The Issues Raised by Parallel

Proceedings and Possible Solutions
Publication August Reinisch
The Backlash against (★ )
Investment Arbitration
I Introduction
Topics Investment arbitration has proven to be a highly successful method of dispute settlement
in international economic law. The sheer numbers speak of themselves. In the last two
Investment Arbitration decades, there has been a veritable boom in investment arbitration. But like most
systems of dispute settlement coming of age, a number of crises must be overcome. The
system seems currently to be on its way to adolescence and must demonstrate its
Bibliographic reference enduring viability for the future.
August Reinisch, 'Part II The sharp increase in investment arbitration, largely resulting from the fact that most
Chapter 5: The Issues modern bilateral investment treaties (BITs) allow investors to resolve claims through
Raised by Parallel investment arbitration and in particular through the International Centre for Settlement
Proceedings and Possible of Investment Disputes (ICSID), has led to a multiplication of decisions and awards that is
Solutions', in Michael unparalleled in international law. Traditional international lawyers accustomed to
Waibel , Asha Kaushal , et expect one or two important International Court of Justice (ICJ) judgments per year that
al. (eds), The Backlash P 114 would then undergo intensive scholarly scrutiny for months have had to become used
against Investment to the new speed with which quasijudicial dispute settlement takes place in the field of
Arbitration, (© Kluwer Law international investment law.
International; Kluwer Law
International 2010) pp. 113 - II Dangers of Multiple Proceedings
126
With this acceleration, phenomena familiar to any national legal system but largely
foreign to international law appeared on the international scene: litigants engaging in
strategic considerations about where and how to bring their claims (forum shopping),
litigants trying to pursue their claims before different fora, be it simultaneously or
subsequently (duplication or multiplication of proceedings), different courts and
tribunals reaching different or sometimes even contradictory results with regard to
similar or even identical issues (divergent outcomes/inconsistent decisions). The threat
of unpredictability and instability easily fed into international lawyers' fears of
fragmentation of international law, (1) a result often seen as the almost inevitable
consequence of the so-called proliferation of international courts and tribunals. (2)

III The Particularly Fragmented Universe of Investment Arbitration

Dispute settlement institutions have indeed “proliferated” on the international level. The
last few decades have seen an astonishing wave of new institutions being established,
including the International Tribunal for the Law of the Sea (ITLOS), the International
Criminal Court (ICC), the International Criminal Tribunal for the Former Yugoslavia (ICTY),
the International Criminal Tribunal for Rwanda (ICTR), as well as the strengthening of
existing dispute settlement mechanisms, such as the WTO Dispute Settlement
Understanding after the Uruguay Round. As opposed to the simple increase of cases
before these new institutions, investment dispute settlement under the ICSID Convention
and other arbitration rules has flourished in a particularly fragmented way due to each
investment tribunal being an ad hoc creature of the disputing parties. With three
arbitrators usually being appointed for the resolution of just one specific investment
P 115 dispute, there is not only absence of continuity in the persons entrusted with the task
of deciding these disputes but also a lesser expectation of continuity.
Thus, fragmentation, inconsistency, and lack of predictability would appear to be
particularly likely companions of such a highly decentralized ad hoc system. Indeed, one
may question whether the term “system” is appropriate at all. Against this background, it
is almost surprising that the actual level of fragmentation and inconsistency is relatively
low and that most of the other dangers associated with the proliferation of dispute
settlement, such as forum shopping and multiplication of proceedings, have materialized
only to a limited degree.

IV The Central Risk of Multiple Proceedings: Inconsistent Outcomes

The multiplication of investment proceedings, of which parallel proceedings are but one
subcategory, bears a number of risks and costs. First, where the same issues are litigated
in different fora the costs of proceedings multiply and dispute settlement resources are
wasted. Second, defendants may have to respond to harassing and oppressive litigation
tactics of overly zealous claimants. Finally, the greatest risk of multiple proceedings lies
in the potential of conflicting decisions and awards. As the success of dispute settlement
systems depends upon the confidence of the users in the system, the risk of conflicting

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 decisions and awards is particularly harmful. Where investment tribunals produce
inconsistent or even conflicting awards, one of the central values of any rule-based
system of law, that is, predictability, is lost. For analytical purposes, it is useful to
distinguish between different forms of inconsistencies between dispute settlement
outcomes.

A Divergent Views on Legal Issues

Investment tribunals may come to different conclusions concerning the same or similar
legal issues. For instance, in the SGS cases, two ICSID tribunals diverged in their
assessments of, inter alia, the meaning of umbrella clauses. (3) While the SGS v. Pakistan
tribunal held that via an umbrella clause “breaches of a contract [are not] automatically
‘elevated’ to the level of breaches of international law,” the SGS v. Philippines tribunal
found that that an umbrella clause “makes it a breach of the BIT for the host state to fail
P 116 to observe binding commitments.” A number of tribunals have followed the SGS v.
Pakistan approach, (4) while others have endorsed the SGS v. Philippines approach. (5)
Similarly, the Maffezini tribunal and a whole line of subsequent tribunals are split on the
correct interpretation of MFN clauses, frequently included in BITs and other international
investment agreements. In 2000, an ICSID tribunal held that a BIT's MFN clause was not
limited to substantive standards of treatment but extended to procedural issues and
thus permitted an investor to rely on the more favorable (that is, shorter) waiting periods
before instituting arbitration that were contained in another BIT of the host state. (6)
While this reasoning has been followed by a number of tribunals, (7) it has been rejected
by others. (8)

B Divergent Assessments of Identical Facts

Investment tribunals may reach different results not only on similar legal issues but also
concerning the same or similar facts. A case in point is the different conclusions reached
by the ICSID tribunals in CMS, (9) Enron, (10) and Sempra, (11) on the one hand, and LG&E v.
Argentina, (12) on the other hand as to whether a state of necessity prevailed in Argentina
in the early 2000s—different views which are likely to be continued as further investment
tribunals dealing with claims against Argentina reach awards on the merits.
P 117

C Conflicting Results in the Same Dispute

Finally, investment tribunals may come to opposing results in situations where the same
dispute is litigated both by a subsidiary and its parent, as was the case in the
CME/Lauder arbitrations. While the tribunal, following the claim of the controlling US
shareholder, established pursuant to the Czech Republic-US BIT (13) in Lauder v. Czech
Republic (14) that a minor infraction of the treaty did not lead to the liability of the Czech
Republic, the tribunal, following the claim of the Dutch subsidiary, established pursuant
to the Czech Republic-Netherlands BIT (15) in CME v. Czech Republic (16) that various BIT
standards had been breached and ultimately found the Czech Republic liable in the
amount of almost US 500 million. (17)
It is clear that the above categorization reflects a problematic outcome. While one may
still rationalize the diverging results of investment tribunals in cases like SGS v. Pakistan
and SGS v. Philippines and the post-Maffezini case law concerning the scope of MFN
clauses as a consequence of different BITs containing differently worded umbrella and
MFN clauses, it is more difficult to understand why the same situation in Argentina
qualified as a state of necessity defense in one case and not in three others. Finally, it is
close to incomprehensible how the identical acts of the same host state, the Czech
Republic, could have been qualified as indirect expropriation and violations of
treatment standards including fair and equitable treatment and full protection and
security by one tribunal, while another tribunal reached the opposite conclusion.
While, strictly speaking, only the last type of inconsistent investment awards was the
result of parallel proceedings, in the sense of proceedings concerning the same dispute,
it is clear that the central problem of ensuring uniformity and predictability and thus
creating confidence in the system is affected by any of the above forms of
inconsistencies.
P 118

V Possible Solutions
A number of possible solutions have already been suggested. Among them are an
appellate structure, a preliminary reference system, the consolidation of proceedings, a
more liberal use of res judicata and lis pendens, and the strengthening of the de facto
case law. While all of these proposals will be briefly addressed, the focus will be on
consolidation of proceedings and the potential of res judicata and lis pendens as
techniques to avoid parallel proceedings.

A An Appellate Mechanism for Investment Arbitration

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 The inconsistent awards in the Lauder/CME arbitrations provided support for the idea of
an appellate mechanism for investment arbitration, a possibility that was already being
intensely discussed in the investment arbitration community at the time. A resulting
discussion paper of the ICSID Secretariat (18) later outlined the possibility of establishing
such an appellate institution within the ICSID system. (19) However, since the introduction
of an appellate system would have probably required an amendment of the ICSID
Convention (20) —hardly feasible as a matter of practice—the plan was not further
pursued. Some relicts of the idea of an appellate mechanism can still be found in a
number of US BITs, including the 2004 US Model BIT, which provides for future discussions
on the establishment of an “appellate body or similar mechanism” for investment
arbitration. (21)

B Preliminary References in Investment Matters

A kind of “appeal light” version may be suggested in the alternative to an outright
P 119 appellate structure, modeled on the basis of the EU's “preliminary reference” system.
According to the Treaty Establishing the European Community (EC Treaty), national courts
may ask the European Court of Justice (ECJ) for a preliminary ruling on matters of
Community law, which is then binding on them in their final decision of the dispute. (22)
This instrument primarily serves to secure the coherence and uniformity of European
Community law and has been recognized as a potential template for other areas of
international law. For example, scholars and practitioners (including presidents of the
ICJ) have proposed that specialized international courts and tribunals should have
similar opportunities to make such “references” to the ICJ with regard to questions of
general public international law. (23) It is thus not surprising that investment lawyers
have also recognized the potential of a similar reference system and have suggested the
establishment of a permanent body authorized to give preliminary rulings on investment
law issues. (24)

C Consolidation of Proceedings
As far as parallel proceedings are concerned, the consolidation of related arbitration
proceedings, for example, because they involve the same respondent state and/or the
same or similar claims and facts, may provide a sensible and pragmatic solution able to
avoid divergent outcomes. Consolidations have already taken place in a number of NAFTA
Chapter 11 cases, (25) and they may also occur in other investment arbitrations. (26)
P 120
The main problem with consolidations lies in the fact that it is voluntary and requires the
consent of all parties involved. (27)
Absent formal consolidation, investment tribunals have also adopted other pragmatic
solutions to secure the consistency of results. In a number of ICSID cases, as for instance
in the Argentinean cases of Camuzzi v. Argentina (28) and Sempra v. Argentina, (29) the
parties agreed on an identical or at least a similar composition of the tribunals. Thus,
while the proceedings remained technically separate and strictly constituted parallel
proceedings, de facto they were almost consolidated, as the identity of the arbitrators
guaranteed that the outcomes would not be contradictory. Indeed, the two awards on
jurisdiction, based on two different BITs due to the different nationality of the two
investors, were rendered on the same date and the tribunal did not only reach the same
conclusion, but they also relied on largely identical reasons in upholding their
jurisdiction over the claims. Similarly, the fact that the presiding arbitrator was the same
in both the Enron v. Argentina (30) and Sempra v. Argentina (31) cases may have
contributed considerably to the consistent outcome and largely identical language.

D Res judicata and Lis pendens

Parallel proceedings, be it simultaneously or subsequently, may simply result from the
fact that investors can claim violations of contractual obligations pursuant to the
applicable dispute settlement clauses as well as treaty violations where there is a BIT or
other International Investment Agreement (IIA). Alternatively different shareholder-
investors may be able to rely on different BITs—even where it is always the same
respondent state and the same facts that give rise to their complaints. In domestic law,
most legal systems rely on the principles of lis pendens and res judicata in order to avoid
such duplication or relitigation of proceedings. (32)
P 121
While both lis pendens and res judicata are generally accepted as principles of
international law, (33) it is unclear as to what extent they may be helpful in avoiding the
duplication or relitigation of proceedings on the international level. It is broadly
considered that both principles, in order to be relied upon, require identity between the
parties involved, the object, and the cause of the actions. (34) In the context of
investment arbitration, the problem simply is that, by definition, different shareholders,
as well as the shareholders and the companies they own, are separate legal or physical
persons. Similarly, claims brought on the basis of different BITs—in spite of the similarity
of treatment standards usually contained in them—are regarded as legally distinct. For
instance, in the Lauder/CME arbitrations, (35) there was no question that, although both

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 cases concerned exactly the same dispute between a US investor/his Dutch subsidiary
and the Czech Republic, they were brought under different BITs (the Czech Republic-US
BIT (36) and the Czech Republic-Netherlands BIT, (37) respectively) and by legally distinct
persons. Thus, it is hard to take issue with the decisions of both the Lauder/CME v. Czech
Republic tribunals and the Swedish Svea Court, where challenge proceedings had been
brought relying, inter alia, onres judicata and lis pendens. These courts and tribunals
stressed the formal non-identity of the two claimants, Mr. Lauder and CME, and of the two
different BITs providing the legal basis for the claims brought against the respondent
state and concluded that therefore both res judicata and lis pendens were inapplicable.
(38)
P 122
The question is not whether these issues were correctly decided or not—they are after all
res judicata—but whether such a strict and rather formalistic approach is adequate in
international investment arbitration. The nature of mixed arbitration, which implies that
it is not a single home state that exercises diplomatic protection by instituting
proceedings on the international level on behalf of its investors, as well as the
recognition of shareholders as potential claimants with individual standing, necessarily
leads to a multiplication of the opportunities to bring investment claims. In such a
situation, it may be more appropriate to focus on issues and facts of a dispute rather
than on the parties and causes of actions when applying the triple identity test. Under
this more flexible test, special attention should be given to the corporate structure of
foreign investors. (39)
When assessing the “identity” of the parties it may be appropriate to consider the
economic realities of foreign investments. By relying on a “realistic attitude” and an
“economic approach,” (40) which arbitral panels have adopted in deciding other areas of
jurisdiction, it should be possible to consider the link between shareholders and
P 123 subsidiaries as well as between different groups of shareholders. Piercing the
corporate veil, the ECJ's “single economic entity” doctrine, (41) as well as the common law
concept of privity, (42) may provide useful sources of inspiration for such a more flexible
approach. (43)
Equally, tribunals should assess the content of the investment standards invoked in
treaty arbitration when assessing the “identity” of cause. While it is certainly true that the
wording of treatment standards may sometimes markedly differ in different BITs, it is
also clear that by and large there is a common meaning given by arbitral tribunals to the
core standards, such as fair and equitable treatment and full protection and security or
Most-Favored Nation (MFN) and national treatment. In the absence of very specific
differences, it would thus appear sensible to regard identically or similarly worded
provisions in different BITs as identical grounds for the purposes of applying res judicata
and lis pendens principles. Indeed, insistence on the formal distinction of different IIAs
would often appear artificial. Also in this regard, lessons may be learned from other
fields of international law. The way arbitral tribunals under the Law of the Sea Convention
assessed the identity of cause when claims were brought under a fishing limitation treaty
and the United Nations Convention on the Law of the Sea (UNCLOS) (44) is instructive, as
is the approach of human rights bodies when they have to assess whether complaints
brought under different human rights instruments are the “same matter” or not. (45)
These tribunals have adopted the flexible approach advocated here by emphasizing not
only the substantive similarity of the provisions invoked but also the identity of the
factual background.
It is submitted here that investment tribunals should consider adopting similar flexible
approaches to the use of lis pendens and res judicata in order to avoid parallel and
multiple proceedings.
Alternatively, tribunals may seek to avoid duplication of proceedings by relying on
discretionary considerations when determining whether to exercise jurisdiction or
P 124 whether to refrain from doing so, even if only temporarily in order to await another
tribunal's decision. In ICSID arbitration, the so-called Pyramids case provides a good
example of an investment tribunal deciding to stay its proceedings “in the interest of
international judicial order” until another arbitral tribunal had rendered a decision. (46)
Similarly, in a non-investment context, the procedural decision of the arbitral tribunal in
the MOX Plant Arbitration, which suspended its proceedings until the ECJ had decided on
issues of EC law, provides a good example of how such discretionary powers could be
exercised. (47)

E Precedent
With regard to the most serious threat to the system of investment arbitration,
fragmentation as a result of contradictory outcomes not only in parallel proceedings, but
also in unrelated subsequent cases, it appears that the most effective antidote lies in the
development of a robust and consistent case law with tribunals being willing to take into
account the decisions of other tribunals in order to avoid inconsistencies.
While the common law doctrine of precedent or stare decisis (48) is generally regarded to
be inapplicable on the international level, (49) it seems that international courts and
tribunals have often been rather “faithful” to earlier decisions, be it their own or those of

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 other dispute settlement institutions. (50)
P 125
In a similar fashion, although investment tribunals have avoided acknowledging any legal
obligation to follow previous decisions, they have in practice adhered to a system of de
facto precedent. (51) Although investment tribunals often emphasize that they exercise
their adjudicatory powers on the basis of specific legal rules that are often legally
distinct, in particular where they are based on different BITs, (52) they have usually tried
to avoid any open conflict. (53) Instead, they have attempted to adhere to convincing
interpretations of similar legal issues, (54) demonstrating a cautious reliance on other
cases as “persuasive authority” (55) and paying “due consideration” to a series of
P 126 consistent cases. (56) This development of a more or less consistent jurisprudence
constante or “soft” case law is likely to help ensure the stability and predictability of
international investment arbitration. (57)
Although tribunals have not always been consistent in their assessments of similar
investment law issues, it should be kept in mind that we have focused on the above-
mentioned “pathological” cases. In general, the level of consistency among investment
decisions is fairly high. Provided this trend is sustained, it is to be expected that the
principal users of investment arbitration will continue to have confidence in the system.
P 126

References
★ ) August Reinisch: August Reinisch is Professor of International and European Law at
the University of Vienna, Austria, and Professorial Lecturer at the Bologna Center of
SAIS/Johns Hopkins University in Bologna, Italy. He may be contacted at
[email protected].
1) See Gerhard Hafner, Risks Ensuing from Fragmentation of International Law, in
Report of the International Law Commission of its 52nd session, 321–39, U.N. Doc
A/55/10; Martti Koskenniemi, Fragmentation of International Law: Difficulties Arising
from the Diversification and Expansion of International Law/Report of the Study
Group of the International Law Commission (2007).
2) See Jonathan I. Charney, Is International Law Threatened by Multiple International
Tribunals?, 271 RCADI 101 (1998); Benedict Kingsbury, Is the Proliferation of
International Courts and Tribunals a Systemic Problem?, 31 NYU J. Intl. L. & Pol. 679
(1999); August Reinisch, International Courts and Tribunals, Multiple Jurisdiction, in
Max Planck Encyclopedia of Public International Law (Rüdiger Wolfrum ed., 2006),
www.mpepil.com/; Yuval Shany, The Competing Jurisdictions of International Courts
and Tribunals (2003).
3) Contrast SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan,
ICSID Case No. ARB/01/13, Decision on Jurisdiction (Aug. 6, 2003), 18 ICSID Review—
Foreign Investment Law Journal 301 (2003); 42 ILM 1290 (2003), with SGS Société
Générale de Surveillance S.A. v. Republic of the Philippines, ICSID Case No.
ARB/02/6, Decision on Jurisdiction (Jan. 29, 2004), 8 ICSID Reports 515.
4) Cf. El Paso Energy Int'l Co. v. The Argentine Republic, ICSID Case No. ARB/03/15,
Decision on Jurisdiction, (Apr. 27, 2006), para. 82; Pan American Energy LLC v. The
Argentine Republic, ICSID Case No. ARB/04/8, Decision on Jurisdiction (Apr. 27, 2006),
para. 113.
5) Cf. Eureko B.V. v. Republic of Poland, Partial Award, Aug. 19, 2005, para. 257.
6) Emilio Agustín Maffezini v. Kingdom of Spain, ICSID Case No. ARB/97/7, ICSID Decision
on Jurisdiction (Jan. 25, 2000), 40 ILM 1129 (2001), 16 ICSID Review—Foreign
Investment Law Journal 212 (2001).
7) Siemens A.G. v. The Argentine Republic, ICSID Case No. ARB/02/8, Decision on
Jurisdiction (Aug. 3, 2004), 44 ILM 138 (2005); Gas Natural SDG, S.A. v. The Argentine
Republic, ICSID Case No. ARB/03/10, Decision on Jurisdiction (Jun. 17, 2005); and
Suez, Sociedad General de Aguas de Barcelona S.A., and InterAguas Servicios
Integrales del Agua S.A. v. The Argentine Republic, ICSID Case No. ARB/03/17,
Decision on Jurisdiction (May 16, 2006), para. 55.
8) Salini Costruttori S.p.A and Italstrade S.p.A v. The Hashemite Kingdom of Jordan,
ICSID Case No. ARB/02/13, Decision on Jurisdiction (Nov. 19, 2004), 44 ILM 569 (2005);
Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No. ARB/03/24,
Decision on Jurisdiction (Feb. 8, 2005), 44 ILM 721 (2005) and Telenor Mobile
Communications A.S. v. Republic of Hungary, ICSID Case No. ARB/04/15, Award (Sep.
13, 2006), paras. 92–95.
9) CMS Gas Transmission Company v. The Argentine Republic, ARB/01/8, Award (May 12,
2005), 44 ILM 1205 (2005), paras. 320, 321.
10) Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, ICSID Case No.
ARB/01/3, Award (May 22, 2007), para. 313.
11) Sempra Energy International v. The Argentine Republic, ICSID Case No. ARB/02/16,
Award (Sep. 28, 2007), para. 355.

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 12) LG&E Energy Corp., LG&E Capital Corp. and LG&E International Inc. v. Argentine
Republic, ICSID Case No. ARB/02/1, Decision on Liability (Oct. 3, 2006), 46 ILM 40
(2007), para. 257.
13) Treaty between the United States of America and the Czech and Slovak Federal
Republic Concerning the Reciprocal Encouragement and Protection of Investment,
signed on Oct. 22, 1991 (US-Czech BIT), in ICSID, Investment Promotion and Protection
Treaties, looseleaf.
14) Re An UNCITRAL Arbitration (Lauder v. The Czech Republic), Award (Sep. 3, 2001), 9
ICSID Reports 66; 14 World Trade and Arbitration Materials (2002), 35.
15) Agreement on Encouragement and Reciprocal Protection of Investments between
the Kingdom of the Netherlands and the Czech and Slovak Federal Republic, signed
on Apr. 29, 1991 (Netherlands-Czech BIT), 2242 UNTS 224, also in ICSID, Investment
Promotion and Protection Treaties, looseleaf.
16) Re UNCITRAL Arbitration Proceedings (CME Czech Republic BV v. The Czech
Republic), Partial Award (Sep. 13, 2001), 9 ICSID Reports 121, 14 World Trade and
Arbitration Materials 109 (2002).
17) CME Czech Republic B.V. v. The Czech Republic, Final Award on Damages (Mar. 14,
2003), 9 ICSID Reports 264.
18) Possible Improvements of the Framework for ICSID Arbitration, discussion paper of
the ICSID Secretariat dated Oct. 26, 2004.
19) See Noah Rubins, Judicial Review of Investment Arbitration Awards, in NAFTA
Investment Law and Arbitration: Past Issues, Current Practice, Future Prospects 359
(Todd Weiler ed., 2004); Christian Tams, An Appealing Option? The Debate about an
ICSID Appellate Structure, in Beiträge zum Transnationalen Wirtschaftsrecht, Heft 57
(Christian, Gerhard Kraft & Rolf Sethe eds., June 2006); British Institute of
International and Comparative Law's Investment Treaty Forum, Appeals and
Challenges to Investment Treaty Awards: Is it Time for an International Appellate
System?, TDM Vol. 2 (April 2005); David Gantz, An Appellate Mechanism for Review of
Arbitral Decisions in Investor-State Disputes: Prospects and Challenges, 39 VJTL 39
(2006); Appeals Mechanism in International Investment Disputes (Karl Sauvant ed.,
2008).
20) Article 53 of the ICSID Convention expressly provides that ICSID awards “shall be
binding on the parties and shall not be subject to any appeal […].”
21) See Annex D 2004 US Model BIT, which provides: “Within three years after the date of
entry into force of this Treaty, the Parties shall consider whether to establish a
bilateral appellate body or similar mechanism to review awards rendered under Art.
34 in arbitrations commenced after they establish the appellate body or similar
mechanism.”
22) Article 234(1) of the Treaty Establishing the European Community (Nice Consolidated
Version) provides: “The Court of Justice shall have jurisdiction to give preliminary
rulings concerning: (a) the interpretation of this Treaty; (b) the validity and
interpretation of acts of the institutions of the Community […].”
23) See The Proliferation of International Judicial Bodies: The Outlook for the
International Legal Order, speech by His Excellency Judge Gilbert Guillaume,
President of the International Court of Justice, to the Sixth Committee of the General
Assembly of the United Nations (Oct. 27, 2000), www.icj-cij.org/presscom/index.php?
pr=85&p1=6&p2=1&search=%22nagymaros%22. In fact, these suggestions are not
completely new. Already the Havana Charter (1948) provided in its Art. 96 for the
possibility to ask the ICJ for advisory opinions with regard to various issues
concerning the envisaged International Trade Organization.
24) See Christoph Schreuer, Preliminary Rulings in Investment Arbitration, in Appeals
Mechanism in International Investment Disputes 207 (Karl Sauvant ed., 2008);
Gabrielle Kaufmann-Kohler, Annulment of ICSID Awards in Contract and Treaty
Arbitrations: Are There Differences?, in Annulment of ICSID Awards 189, 221 (Emmanuel
Gaillard & Yas Banifatemi eds., 2004).
25) Re The North American Free Trade Agreement (NAFTA) and a Request for
Consolidation by the U.S.A. of the Claims in Canfor Corp v. U.S.A. & Tembec v. U.S.A. &
Terminal Forest Products Ltd v. U.S.A., Order, NAFTA Consolidation Tribunal (Sep. 7,
2005), http://naftaclaims.com/Disputes/USA/Softwood/Softwood-ConOrder.pdf;
Canfor Corporation v. United States of America & Terminal Forest Products Ltd. v.
United States of America, Consolidated NAFTA Arbitration, UNCITRAL Rules, Decision
on Preliminary Question, Jun. 6, 2006,
http://naftaclaims.com/Disputes/USA/Softwood/NAFTA-Softwood_Consolidation-
Preliminary_Decision-6_June_2006.pdf.
26) See Antonio Crivellaro, Consolidation of Arbitral and Court Proceedings in Investment
Disputes, 4 The Law and Practice of International Courts and Tribunals 371 (2005).
27) See, e.g., Art. 33(1) of the 2004 US Model BIT, which provides: “Where two or more
claims have been submitted separately to arbitration under Art. 24(1) and the
claims have a question of law or fact in common and arise out of the same events or
circumstances, any disputing party may seek a consolidation order in accordance
with the agreement of all the disputing parties […].”
28) Camuzzi International S.A. v. The Argentine Republic, ICSID Case No. ARB/03/2,
Decision on Jurisdiction (May 11, 2005).
29) Sempra Energy International v. The Argentine Republic, ICSID Case No. ARB/02/16,
Decision on Jurisdiction (May 11, 2005).

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 30) Enron v. Argentina, supra note 10.
31) Sempra v. Argentina, supra note 11.
32) “Interest reipublicae ut sit finis litium, and nemo debet bis vexari pro una et eadem
causa.” “It is in the public interest that there should be an end of litigation and no
one needs to be vexed twice for one and the same cause.” 16 Halsbury's Laws of
England 852, n. 1. See also Peter Barnett, Res Judicata, Estoppel and Foreign
Judgments (2001); Declining Jurisdiction in Private International Law (J.J. Fawcett ed.,
1995).
33) International courts and tribunals have generally recognized both doctrines as
binding in international law, either as customary law or as expressions of general
principles of law, although with regard to lis pendens there appear to be fewer
precedents. Cf. Effect of Awards of Compensation Made by the United Nations
Administrative Tribunal, 1954 I.C.J. 47, 53 (It is a “well-established and generally
recognized principle of law” that “a judgment rendered by a judicial body is res
judicata and has binding force between the parties to the dispute”); Certain German
Interests in Polish Upper Silesia, 1926 P.C.I.J. (ser. A) No. 6 at 20 (“principles generally
accepted in regard to litispendance”); Waste Management v. United Mexican States,
ICSID Case No. ARB(AF)/00/3, Mexico's Preliminary Objection Concerning the
Previous Proceedings (Jun. 26, 2002), para. 39. (“There is no doubt that res judicata is
a principle of international law, and even a general principle of law within the
meaning of Art. 38(1)(c) of the Statute of the International Court of Justice.”) See also
Bin Cheng, General Principles of Law as Applied by International Courts and
Tribunals 336 (1953); Hersch Lauterpacht, The Development of International Law by
the International Court 19, 325 (1958); Encyclopaedic Dictionary of International Law
341, 339 (Clive Parry et al. eds., 1986); Shany, supra note 2.
34) Trail Smelter (U.S. v. Canada), 3 R.I.A.A. 1905, 1952 (1941); see also Judge Anzilotti in
the Chorzów Factory Case, speaking of “three traditional elements for identification,
persona, petitum, causa petendi.” Interpretation of Judgments Nos. 7 & 8 Concerning
the Case of the Factory at Chorzów, 1927 P.C.I.J. (ser. A) No. 11, at 23 (dissenting
opinion of Judge Anzilotti).
35) See supra notes 14 and 16.
36) See supra note 13.
37) See supra note 15.
38) Re An UNCITRAL Arbitration (Lauder v. The Czech Republic), Award (Sep. 3, 2001), 9
ICSID Reports 66, at 87, para. 171. (“The Arbitral Tribunal considers the Respondent's
recourse to the principle of lis alibi pendens to be of no use, since all the other court
and arbitration proceedings involve different parties and different causes of action.
[…].”) CME Czech Republic B.V. v. The Czech Republic, Final Award on Damages (Mar.
14, 2003), 9 ICSID Reports 264, at 355, para. 432. (“The Tribunal further is of the view
that the principle of res judicata does not apply in favor of the London Arbitration for
more than one reason. The parties in the London Arbitration differ from the parties
in this arbitration. Mr. Lauder is the controlling shareholder of CME Media Ltd,
whereas in this arbitration a Dutch holding company being part of the CME Media
Ltd Group is the Claimant. The two arbitrations are based on differing bilateral
investment treaties, which grant comparable investment protection, which, however,
is not identical. Both arbitrations deal with the Media Council's interference with the
same investment in the Czech Republic. However, the Tribunal cannot judge whether
the facts and circumstances presented to this Tribunal have been presented quite
differently to the London Tribunal.”) CME v. Czech Republic, Svea Court of Appeal,
May 15, 2003, Case No. T 8735-01, 95, 98. (“The issue whether lis pendens and res
judicata may be applicable in a situation such as the instant one has not, as far as is
known, arisen previously. The mere fact that the arbitrations were initiated under
different investment treaties which were entered into between different states, the
Czech Republic and the United States in the one treaty and the Czech Republic and
the Netherlands in the other, militates against these legal principles being
applicable at all. […] Identity between a minority shareholder, albeit a controlling
one, and the actual company cannot, in the Court of Appeal's opinion, be deemed to
exist in a case such as the instant one. This assessment would apply even if one were
to allow a broad determination of the concept of identity.”) See also Charles N.
Brower & Jeremy K. Sharpe, Multiple and Conflicting International Arbitral Awards, 4
The Journal of World Investment and Trade 211 (2003); Lars Heuman, Swedish
Supreme Court Refuses to Enforce an Arbitral Award Pursuant to the Public Policy
Provision of the New York Convention, 20 Journal of International Arbitration 493
(2003); Christer Söderlund, Lis Pendens, Res Judicata and the Issue of Parallel Judicial
Proceedings, 22 Journal of International Arbitration 301 (2005).
39) See August Reinisch, The Use and Limits of Res Judicata and Lis Pendens as Procedural
Tools to Avoid Conflicting Dispute Settlement Outcomes, 3 The Law and Practice of
International Courts and Tribunals 37 (2004); Andrea Bjorklund, Private Rights and
Public International Law: Why Competition Among International Economic Law
Tribunals is not Working, 59 Hastings Law Journal 101 (2007).
40) See Reinisch, supra note 39, 58 et seq.
41) In a number of competition law cases, the ECJ had resort to this concept. Cf. Case
48/69 ICI v. Commission (Dyestuffs Case) 1972 E.C.R. 619, para. 133. See also Case
52/69 Geigy v. Commission 1972 E.C.R. 787, para. 44; Case 6/72 Europemballage and
Continental Can v. Commission 1973 E.C.R. 215, para. 15.

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 42) See Barnett, supra note 32.
43) See also ILA Committee on International Commercial Arbitration, Interim Report,
“Res Judicata” and Arbitration, in Report of the Seventy-First Conference 827
(International Law Association ed., 2004).
44) Southern Bluefin Tuna Case (Australia and New Zealand v. Japan), Award on
Jurisdiction and Admissibility (Aug. 4, 2000), 39 ILM (2000), 1359, para. 54. (“The
Parties to this dispute […] are the same Parties grappling not with two separate
disputes but with what in fact is a single dispute arising under both Conventions. To
find that, in this case, there is a dispute actually arising under UNCLOS which is
distinct from the dispute that arose under the CCSBT would be artificial.”)
45) U.N. Human Rights Commission 452/1991, Glaziou v. France, Jul. 18, 1994. (“[T]hat the
author's complaint before the European Commission was based on the same events
and facts as the communication that was submitted under the Optional Protocol to
the Covenant, and that it raised substantially the same issues; accordingly, the
Committee is seized of the ‘same matter’ as the European Commission.”)
46) SPP v. Egypt, Decision on Jurisdiction I (Nov. 27, 1985), 3 ICSID Reports 112, 129. (“When
the jurisdictions of two unrelated and independent tribunals extend to the same
dispute, there is no rule of international law which prevents either tribunal from
exercising jurisdiction. However, in the interest of international judicial order, either
of the tribunals may, in its discretion and as a matter of comity, decide to stay the
exercise of its jurisdiction pending a decision by the other tribunal.”)
47) Mox Plant, Order No. 3, Suspension of proceedings on jurisdiction and merits (Jun. 24,
2003) 42 ILM 1187 (2003), para. 28. (“In the circumstances, and bearing in mind
considerations of mutual respect and comity which should prevail between judicial
institutions both of which may be called upon to determine rights and obligations as
between two states, the Tribunal considers that it would be inappropriate for it to
proceed further with hearing the Parties on the merits of the dispute in the absence
of a resolution of the problems referred to. Moreover, a procedure that might result
in two conflicting decisions on the same issue would not be helpful to the resolution
of the dispute between the Parties.”)
48) According to Black's Law Dictionary (6th ed., 1990), 1406, the Common Law doctrine
of stare decisis (et non quieta movere) means a “[p]olicy of courts to stand by
precedent and not to disturb settled point.”
49) Article 59 of the Statute of the ICJ provides: “The decision of the Court has no binding
force except between the parties and in respect of that particular case.” See also
Art. 33(2) Statute of the International Tribunal for the Law of the Sea, Annex VI to the
UNCLOS, Dec. 10, 1982. Though Art. 53(1) ICSID Convention, supra note 20, merely
provides that an “award shall be binding on the parties […],” this provision is
generally interpreted as excluding the applicability of the principle of binding
precedent in ICSID arbitration. Cf. Christoph Schreuer, The ICSID Convention: A
Commentary 1082 (2001).
50) See Mohamed Shahabuddeen, Precedent in the World Court (1996); Robert Jennings,
The Judiciary, International and National, and the Development of International Law,
45 I.C.L.Q. 9 (1996); Raj Bhala, The Precedent Setters: De facto Stare Decisis in WTO
Adjudication, 9 Journal of Transnational Law & Policy 1 (1999).
51) Amco v. Indonesia, Decision on Annulment (May 16, 1986), para. 44, 1 ICSID Reports
509, 521. (“Neither the decisions of the International Court of Justice in the case of
the Award of the King of Spain nor the Decision of the Klöckner ad hoc Committee
are binding on this ad hoc Committee. […] the absence […] of a rule of stare decisis in
the ICSID arbitration system does not prevent this ad hoc Committee from sharing
the interpretation given to Art. 52(1)(e) by the Klöckner ad hoc Committee.”) LETCO v.
Liberia, Award (Mar. 31, 1986), 2 ICSID Reports 346, 352. (The tribunal is “not bound by
the precedents established by other ICSID Tribunals, it is nonetheless instructive to
consider their interpretations.”)
52) SGS v. Philippines, supra note 3, para. 97. (“[…] in the end it must be for each tribunal
to exercise its competence in accordance with the applicable law, which will by
definition be different for each BIT and each Respondent State.”)
53) The SGS v. Philippines case is one of the few decisions where an ICSID tribunal
openly rejected an interpretation adopted by another ICSID tribunal. SGS v.
Philippines, supra note 3, para. 97. (“In the Tribunal's view, although different
tribunals constituted under the ICSID system should in general seek to act
consistently with each other, in the end it must be for each tribunal to exercise its
competence in accordance with the applicable law, which will by definition be
different for each BIT and each Respondent State. […] Moreover there is no doctrine
of precedent in international law, if by precedent is meant a rule of the binding
effect of a single decision.”)
54) AES Corporation v. The Argentine Republic, ICSID Case No. ARB/02/17, Decision on
Jurisdiction (Apr. 26, 2005), para. 30. (“Decisions on jurisdiction dealing with the
same or very similar issues may at least indicate some lines of reasoning of real
interest; this Tribunal may consider them in order to compare its own position with
those already adopted by its predecessors and, if it shares the views already
expressed by one or more of these tribunals on a specific point of law, it is free to
adopt the same solution.”)

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 55) ADC Affiliate Limited and ADC & ADMC Management Limited v. Republic of Hungary,
ICSID Case No. ARB/03/16, Award (Oct. 2, 2006), para. 293. (“The Parties to the present
case have also debated the relevance of international case law relating to
expropriation. It is true that arbitral awards do not constitute binding precedent. It
is also true that a number of cases are fact-driven and that the findings in those
cases cannot be transposed in and of themselves to other cases. It is further true
that a number of cases are based on treaties that differ from the present BIT in
certain respects. However, cautious reliance on certain principles developed in a
number of those cases, as persuasive authority, may advance the body of law, which
in turn may serve predictability in the interest of both investors and host States.”)
56) Saipem S.p.A. v. The People's Republic of Bangladesh, ICSID Case No. ARB/05/07,
Decision on Jurisdiction (Mar. 21, 2007), para. 67. (“The Tribunal considers that it is
not bound by previous decisions. At the same time, it is of the opinion that it must
pay due consideration to earlier decisions of international tribunals. It believes
that, subject to compelling contrary grounds, it has a duty to adopt solutions
established in a series of consistent cases. It also believes that, subject to the
specifics of a given treaty and of the circumstances of the actual case, it has a duty
to seek to contribute to the harmonious development of investment law and thereby
to meet the legitimate expectations of the community of states and investors
toward certainty of the rule of law.”)
57) See Andrea Bjorklund, Investment Treaty Arbitral Decisions as Jurisprudence
Constante, in International Economic Law: The State and Future of the Discipline
(Picker, Bunn & Arne eds., 2008); Gabrielle Kaufmann-Kohler, Arbitral Precedent:
Dream, Necessity, or Excuse, 23 Arbitration International 357 (Nov. 4, 2007); August
Reinisch, The Role of Precedent in ICSID Arbitration, in Austrian Arbitration Yearbook
495 (2008).

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