397 / 532
381
AND NEVER THE TWAIN SHALL MEET: PARALLEL ARBITRAL AND COURT PROCEEDINGS…
application of
lis pendens
and
res judicata
since the conduct of the Czech Republic
amounted to a breach of both BITS
.
Beside the
lis pendens
concept, parallel litigation can give rise to
res judicata
considerations. There is a widespread acknowledgment that the main preconditions
for
res judicata
(and
lis pendens
as well) to apply in international law are the following:
(i) the proceedings must have been conducted before courts or tribunals in the
international legal order; (ii) the proceedings must involve the same relief; (iii) they
must involve the same grounds; and (iv) they must be between the same parties.
65
This will be the case, for instance, when a dispute previously heard and decided by
national courts will be adjudicated by an arbitral tribunal. This situation may emerge
especially when considering the party’s belief that the subject matter of the dispute
is not covered by the agreement to arbitrate or when a party acts on the basis of
procedural and substantive precaution with the intention to facilitate an increase in
its chances to succeed.
66
However, particularly in investment arbitration, the fact that
an arbitral tribunal is often connected with a court at the seat of arbitration through
the contingency of various control and assistance mechanisms does not exclude the
fact that, if a second court outside the arbitration seat would consider whether to
accept its own jurisdiction to hear the matter, the second court would easily find
itself to be competent to adjudicate the same matter too.
67
As some tribunals observed, the possibility that the national and international
understanding of
res judicata
remain unnoticed has to be, given its legal importance,
excluded. In the ICSID arbitration
Lucchetti v. Peru
68
the Tribunal held that: “
res
judicata
at national level produces its legal effects at the national level and will in
international judicial proceedings not be more than a factual element. This must be
so, because it cannot be left to each individual State to create, through its own rules
of
res judicata
, obstacles to international adjudication.”
69
According to some commentators, including Prof. Šturma, the competing
jurisdiction of various arbitral tribunals is based primarily on the fragmentation of
the investment protection under the BITs and other instruments of international
investment protection, whereby it is in practice often disputable whether the cases,
Respondent itself did not agree to a
de facto
consolidation of the two proceedings by insisting on a
different arbitral tribunal to hear CME’s case.”), thus making it impossible to settle the cases in a
joint effort. Therefore, the cases might have reached a very different ending if they would have been
assessed together on the basis of a consolidation. In the annulment proceedings initiated by the Czech
Republic, the Swedish courts confirmed the Tribunal’s approach by stating that the conditions for the
admissibility of the
res judicata
principle were not met given the fact that the parties to the dispute
were not identical. See: Czech Republic v. CME Czech Republic BV, Svea Court of Appeal, Case no. T
8735-01, Decision of 15 May 2003.
65
P. Muchlinski, F. Ortino, Ch. Schreuer,
supra
note 58, p. 1017.
66
B. M. Cremades, I. Madalena,
supra
note 3, p. 14.
67
Ibid
68
Empresas Lucchetti, S.A. and Lucchetti Peru
,
S.A. v. The Republic of Peru
, ICSID Case No. ARB/03/4.
69
B. M. Cremades, I. Madalena,
supra
note 3, p. 15.