CYIL 2014

ZUZANA JAHODNÍKOVÁ – CYIL 5 ȍ2014Ȏ As has been argued, inside investment arbitration there is a lack of a lis pendens concept which would take into account the corporate nationalities of investors and would therefore protect States from facing parallel arbitrations commenced by subjects sharing a genuine link to one investment. One of the textbook examples of how parallel litigation can be detrimental to States in investment arbitration has been the awards issued in the Lauder 60 and CME Czech Republic B.V. 61 arbitrations . The cardinal issue which arose out of two different BITs concluded by the Czech Republic was represented by two proceedings held in parallel against the same state and relating to the same subject matter. The symbolic bone of contention was licences tendered to broadcasters and interference with broadcasting rights granted by the Czech authorities in the early 90’s. The applicable licence was granted to the CET 21 company, which was controlled by the CME Company CZECH REPUBLIC, incorporated under Dutch law. The majority shareholder of this company was Mr. Lauder, who happened to be a national of the United States of America. Mr. Lauder commenced London based arbitral proceedings pursuant to the BIT concluded between the United States and the Czech Republic. Subsequently CME, pursuant to the opportunities offered in the Dutch Czech BIT, went ahead and launched a second arbitration against the Czech Republic, with the appointed place of arbitration to be in Stockholm. This did not prevent the tribunal from continuing the proceedings, since the three-tier test failed to show the identity of the cases (The Tribunal did not regard the parties to be identical.). Also the Swedish Court of Appeal did not take into account a more flexible approach towards the emanation of the term “investor“ and concluded that: “ 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.” 62 As some authors concluded, „the CME and Lauder cases were the object of severe criticism“ 63 . Nonetheless, neither of the adjudicating parties 64 repudiated the 60 Ronald S. Lauder v. The Czech Republic , Ad hoc-UNCITRAL Arbitration Rules, Final Award of 3 September 2001. 61 CME Czech Republic B.V. v. The Czech Republic , Ad hoc-UNCITRAL Arbitration Rules, Partial Award of 13 September 2001 and IIC 62 (2003), Final Award of 14 March 2003. 62 CME v. the Czech Republic , Swedish Court of Appeal, Decision dated 15 May 2003, Case No T 8735-01, paras. 95, 98. 63 B. M. Cremades, I. Madalena, supra note 3, p. 8. 64 Notwithstanding the approach taken by the two different Tribunals in the CME and Lauder cases, the Czech Republic de facto rejected consolidation proceedings (Award, supra note 62, para. 173: “the MILOŠ OLÍK

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