CYIL 2014

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.

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