CYIL 2014

ZUZANA JAHODNÍKOVÁ – CYIL 5 ȍ2014Ȏ although seemingly similar, are passing the threshold for the application of lis pendens / res judicata principles. 70 4.4 Fork-in-the-Road Clauses in International Investment Arbitration States have been given the prospect of negotiating what could be termed a “set the brake” clause, which could require investors to exhaust the local remedies 71 which are accessible in the host State, or obligate the investor to the decision of making a choice between commencing domestic court proceedings or international arbitration (the so-called “fork-in-the-road clauses” 72 ). Alternatively, if the investor is already a part of a national court proceeding, they would only be given the choice to recourse to arbitration if they waive their claims in any other forum. 73 A typical clause providing that the investor must choose between the litigation of its claims in the host State’s domestic courts or international arbitration and that, once made, the choice is final is often referred to as a “fork-in-the-road” provision. 74 This type of clause, as Christoph Schreuer explains, is expressed by the Latin maxim of una via electa non datur recursus ad alteram (“once one road is chosen, there is no recourse to the other”). 75 70 G. Kaufmann-Kohler, supra note 32, p. 13. 71 As noted by Cremades and Madalena, it is rare to integrate the exhaustion-of-local-remedies into BITs. If, however, the BIT contains such a clause it is usually one of the first-generation BITs concluded before the proliferation of BITs and BIT litigations. See: supra note 3, p. 52 and Ch. Schreuer, “Travelling the BIT Route. Of Waiting Periods, Umbrella Clauses and Forks in the Road”, The Journal of World Investment & Trade , Vol. 5 (2004), No. 2, p. 239; available at: http://www.univie.ac.at/intlaw/pdf/68. pdf; accessed: 4 April 2012. The feature of the exhaustion requirement can also be found in ICSID arbitrations. In Maffezini v The Kingdom of Spain the tribunal held that there are jurisdictional concerns if an investor fails to observe the duty to exhaust local remedies provided to investors before initiating arbitration proceedings. Despite this conclusion, the award opens the door for cases where there is a most-favoured-nation (“MFN”) clause in the BIT. MFN clauses are a frequent part of the BITs. This provision obliges the States to the BIT to act in a manner in which they shall not accord each other’s investors less favourable treatment than they accord to foreign investors coming from other countries. In Maffezini the Tribunal came to the conclusion that the investor could rely on the MFN clause, and was therefore entitled to skip the requirement for the exhaustion of national remedies. Cremades and Madalena, supra note 3, p. 20. 72 As rightly observed by Schreuer, under these provisions the loss of access to international arbitration applies if the same dispute between the same parties is submitted to the domestic courts or to the administrative tribunals of the host State. Given the trepidation of investors and cautious approach when evaluating the possibilities of State influence exercised in the course of national proceedings, it is rather likely that international arbitration will remain the most common decision made under the fork-in-road clause. Ch. Schreuer, “Travelling the BIT Route”, supra note 71, p. 242. Apart from the BITs, fork-in-the-road clauses can also be found in multilateral treaties containing litigation clauses. The Energy Treaty Charter states in Article 26(2) that investors must decide whether to submit their dispute to domestic courts which are arbitrating under the Energy Treaty Charter, or to any optional dispute resolution procedure stipulated and specified in the contract or agreement concluded with the host State. 73 Cremades and Madalena, supra note 3, p. 19. 74 Ch. Schreuer, “Travelling the BIT Route.” supra note 71, p. 239-240. 75 Ibid , p. 240. MILOŠ OLÍK

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