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the ICSID sought to decline its jurisdiction. The Court, however, looked at the
nature of the claims and decided that there is a need to also consider the BIT breach
since “contractual claims arising out of the Contract do not have the same cause of
action as the Treaty claims”.
82
The Tribunal went on to rule that, when the conduct
of the State results in actions which cause a breach of contract and, at the same time,
constitutes a violation of the Treaty, the Tribunal both would be appropriate for and
would accept the jurisdiction, in spite of the Contract’s jurisdiction clause.
Choosing the route of avoiding the danger of parallel proceedings through the
usage of fork-in-road clauses seems like a suitable way to forestall the commencement
of several proceedings. In spite of the fact that this could be a straightforward approach
setting the conditions of investment litigation prior to a dispute, one cannot omit
the fact that certain problems arise when the exercise of domestic procedural rights is
ambiguous. This could make it rather difficult to pass a judgment on whether these
actions are triggering the applicability of the fork-in-road clause. As some authors
pertinently pointed out, an approach which would narrow the application of these
clauses to every action of an investor undertaken within the national legal order
would lead to a situation where “guarantees of effective domestic remedies (would be)
traps designed to lure an investor into domestic proceedings with the consequence that
the door to international arbitration will be closed forever no matter what the outcome
of the domestic proceedings may be”.
83
However, given the complexity of these clauses
and their limitations, in practice, they have had very little application so far. As one
commentator said, arbitral tribunals have demonstrated a tendency to deprive these
clauses of their genuine meaning by never applying them in favour of a state.
84
4.5 Parallel Litigation and the Denial of Justice
Indeed, the position of defying arbitration in conjunction with an intercurrent
process aimed at ceasing foreign adjudication constitute a basis for novel claims
brought about by investors. This could be seen in a scenario where a State’s court acts
in collusion or conspiracy with the State’s executive to obstruct an investor’s pursuit
of arbitration. Subsequently, in this case, it too has committed a denial of justice
and a breach of internationally accepted principles of arbitration law, for which the
State is responsible.
85
However, this prohibitive conduct could perhaps under some
circumstances not pass unnoticed and without any consequence.
but rejected the jurisdiction to rule on the contractual claims. The Tribunal held that “it is a claimant’s
prerogative to formulate the claims that it is asking the judges to resolve”
and that the alleged claims
have to be assessed in the further stages of the proceedings.
SGS v. Pakistan
, Decision of the Tribunal
on Objections to Jurisdiction, paras. 89-90.
82
Toto Costruzioni Generali S.p.A. v. Republic of Lebanon, supra
note 80, Decision on Jurisdiction,
11 September 2009, para. 211, p. 61.
83
Ch. Schreuer, “Travelling the BIT Route.”,
supra
note 71, p. 249.
84
P. Muchlinski, F. Ortino, Ch. Schreuer,
supra
note 58, p. 1027.
85
R. Garnett,
supra
note 26, p. 488 with reference to the
Saipem SpA v Bangladesh
ICSID case
No. ARB/05/7, Award of 30 June 2009 para. 147.