CC A yf T) Česká společnost pro mezinárodní právo O IVl L Czech Society of International Law r/ 00K Q & PRIVATE IONALLAW ská ročenka mezinárodního práva řejnéhXa^mikromého ONDRE) SVOBODA LIS PENDENS BETWEEN INTERNATIONAL INVESTMENT TRIBUNALS .. S Pani« i: widely-shared treaty practice."4* Admirtedly, its clauses defining the Contract! international treaty inter alia as the Member States of the EU reptesent the of EU law. However, they are not a safety net of continued participation of thelj^ n'UUr' the UK will not satisfy the definition of Member States linked to "Contracting!^ ^'IUI* TEU and the TFEU" in the preamble. This conclusion is further supported by tettitotial application of EU tteaties. Among many other experts, professor Kourrako referendum campaign rhar "following Brexir, rhe UK would have to renegotiated wh"^ of trade agreements with third countries.'M(; As trade relations with countries outside^ £■ "8 tht the UK has to find ways how to mitigate negative impacts of losing its status. If the Ul not conclude a transitional agreement wirh the EU safeguarding future participation i FTAs, there is a high probability that the UK will exit without market access and . benefits to the 63 counrries now accessible under EU FTAs. Regarding next steps, it is best for rhe UK to follow one of two possible opn, seek membership to EU FTAs as a third parry, while the effective accession of the L then be conditional upon consent of the EU and the relevant pattner; or (ii) rCp| FTAs and deviates from its texts based on specific UK priorities and interests.'* ! Brexit is an unprecedented situation, parties involved can bring up a completely dift cteative provisional framework. But only after gaining some experience and a corn-understanding of the content of FTAs could the British Government prepare its own template of rrade agreement for future reflecting about the country's trade preferences. [n: HILLON.Ck™«1*<-States m tht Vbrtí. OA* OLSON, Peter M., Mlxity from the Outside: the Perspective of a Treaty Parti KOUTRAKOS, Panes (eds.), Mixed Agreements Revisited: The EU and its Mem Hart Publishing 2010, p. 333. KOUTRAKOS, supra note 6. House of Commons Library, Brexir; impact across policy areas, Briefing Paper No. 07213 (2(> > Institute for Government, Taking back control of trade policy (17 May 2017), p. 36. 514 ■ pinta .c PENDENS BETWEEN INTERNATIONAL INVESTMENT TPIRITNAT .S AND NATIONAI íTiTTTřTQ * TRIBUNALS AND NATIONAL COURTS ' Zdenek Nový iittract: "fte paper addresses lis pendens between international investment arbitration Junals and national courts in case of factually and legally related disputes. After giving '. ^rview of the role of lis pendens in national law, it focuses on the analysis of its position 'public international law. Afterwards, the paper specifically turns to parallel proceedings foternarional invescment arbitration, in particular those pending simultaneously before [t0rs and in national courts. Thereafter, it is submitted that the principle of abuse of often invoked as a corrective tool for lis pendens, does not actually offer a reliable KoDOr mitigation thereto. Finally, the paper suggests that a solution to the problem of ^widens between an investment tribunal and national court might not be resolved by i[iaIioaal law, but national law. Although this solution does not provide a unity, k is giHstic. i& Příspěvek se zabývá problematikou litispendence mezi investičními tribunály národními soudy ve fakticky a právně souvisejících sporech. Nejprve je podán výklad iioli litispendence v národních právních řádech. Následně se příspěvek zaměřuje na pojdi litispendence v mezinárodním právu veřejném. V zápětí je analýza zúžena již pouze Bobksti mezi národní investiční arbitráže. Poté příspěvek klade otázku, zda princip zákazu (cuiiú procesních práv, mající svůj původ v národních právních řádech, může poskytnout Utniči zmírnění nepříznivých důsledků litispendence mezi investičními tribunály a soudy. Invent se navrhuje, že řešení otázky litispendence možná neleží v rovině práva mezi ná rod-Act, leč práva vnitrostátního. Tento přístup nezaručuje jednotnost, nicméně je realistické, ty words: Arbitration, Courts, Investment Arbitration, Lis Pendens. )n the Author: Zdeněk Nový is a teaching assistant in public international law at the rtment of International and European Law, Faculty of Law, Masatyk University in bo, Czech Republic; attorney at law. He studied law at the Faculty of Law, Masaryk Smersiry in Brno and at the European University Institute in Florence, Italy. His stays kaá include: The Hague Academy of International Law, UNIDROÍT, and the EUL He lolpait in foreign conferences as a speaker (Cambridge, Essex), as well as in workshops ^inised with recognised institutions, such as the Arbitration Institute of the Stockholm limber of Commerce or WTO). His academic as well as practical interest is mainly in ■trnnional arbitration. Paper has been craned within the project supported by the Grant Agency of the Czech Republic GA15-08182S ' ^ <>f Public Interests in International Commercial and Investment A rbitration." 515 ZDENĚK NOVÝ 1. Introduction International investment arbitration has been a subject to extensive criticis for its alleged lack of the protection of public interest. 'Die exponential rise in th" ^rC'Cu'ar international investment treaties has led over the years to the mushroomin of nUm^L'r"' arbitrations, including strategic choices by claimants. One of the points of critique is thus an artificial multiplication of proceedin Ti, risks connected to such developments are two: irreconcilable decisions in diffe ^ 1 to irreconcilable decisions or double compensation to an investor lead t This paper will address the issue of lis pendens between international and national investment cribi courts. Imagine (not an unlikely) scenario, in which an investor national court proceedings in order to protect its investment.1 As long as the commence proceedings ate protracted and accompanied by the usual ^diciarexchange^ofTh ^ among court instances, the investor decides to turn to investment arbitration Should1*1* situation be considered as lis pendens''. How should react the arbitration tribunal seized f dispute? The paper recognizes that the so-called triple identity test is alive and well in internationa investment arbitration. It is then unrealistic to expect that there would be any unified soluť to this problem in international law, including attempts to introduce traditional procedure devices limiting procedural right under national laws, like abuse of process. The paper thin proposes that a 'solution' should not be looked for in international, but in national Uw Legislation as one of the typical functions of states allows for reaction to unwelcome parallel proceedings. 2. The Domestic Origins of the Lis Pendens Rule Lis {alibi) pendens is a rule recognised by Civil Law countries, whereas Common Law systems have traditionally used different tools to prevent/coordinate parallel proa The traditional solution to lis pendens, i.e. pending proceedings in two or more fora, in Civilian countries is the first-in-time rule, meaning that the second court seized should stay the proceeding.' Common laws use the wider repertoire of doctrines and procedw a to react to parallel proceedings, like forum non conveniens or anti-suit injunction.11 The idea behind preventing lis pendens, similarly to res judicata, is ňiai interest rap ut sint finis litium,5 hence there is some wisdom in reducing disputes than in mull i 1 them. As noted by Kaj Hober, '[tjhe rationale underlying the principle of lis pendens is threefold: (i) to prevent parallel proceedings which usually cause a waste of time, money 1 It may, for instance, bring an action against the state for damages caused by wrongful use of public pww,« incorrect decision etc. 2 For the purposes of the present article, the discussion on compatibility of traditional procedural devices of English law as the F,U .Member Srare is not omitted. J BAKTKKAS, llias, An Introduction to International Arbitration (1 edn CUP 2015)138. 4 MCLACHALAN, Campbell, Us Pendens in Inrcrnational Litigation RDCADI366 (Icdn, Martini Publishers, 2009). 5 See CAPPELLETTl, Mauro, The Judicial Process in Comparative Perspective (Clarendonn Press I ON- US PENDENS BETWEEN INTERNATIONAL INVESTMENT TRIBUNALS .. . to avoid conflicting judgments; to protect parties from oppressive litigation HLtc ate three requirements shared by the Civil Law system for finding lis pendens (the J|ed tnple identity test): ■ die same parties {partes), I me Same legal grounds {causaepetendi), I ^ same subject-matter ipetiium).7 |iaS t0 De said now at this point that it is not possible to artificially isolate these elements L„, each other. ln parallel proceeding: s in international investment arbitration and national where legal grounds are different, the parties would be different. Cross-bordet Lis Pendens :ed under national laws and scarcely B&pendens and similar procedural devices are accepted I problems. However, given the impermeable nature of national states and their legal iJkrs in the post-Westphalian world, the admissio ti of lis pendens in a cross-border situation, Ere courts of one sovereign state take into account the court proceedings pending before purrs of another, can be considered as some, albeit recent, achievement.* I f>]ow the rules on lis pendens among Member States' courts are contained in the so-called Lsels 1 bis regulation.'-1 However, this regulation deals only with parallel proceedings among (ourts. not courts and arbitrators.10 f Furthermore, as a rule, it is rather rare that international arbitrators should defer to court fceedrngs pending in the same matter before a state court, since arbitrators are authorised Icorisider their jurisdiction regardless of any other proceedings (Kompetenz-Kompetenz Bnciple)-" I It does not come, therefore, as a surprise that there has been no international treaty Irectly regulating lis pendens between commercial arbitration and national courts.1" As Mted by Hans Van Houtte: FhOBER, Kaj, Res Judicata and Lis Pendens in Inremational Arbitration RDCADI 366 (1 edn, Martinus NijhofF I Publishers 2014) 144. Yet, perhaps more importantly, if res judicata as a realization of the proceedings is deemed represent (juridical) truth {resjudicata facit de nigra album et de rotunda quadratum) and therefore a correct [ solution of trie case, there may be only one truth -hence no reason for two pending proceedings. The acceptance I rfnvo proceedings pending in the same matter would prevent finding of the true (single) solution of the case. I This conclusion surely presupposes a certain concept of civil procedure as seeking for truth. I MCLACHALAN, Campbell, Lis Pendens in International Litigation 283. I MCLACHALAN, Campbell, Us Pendens in International Litigation 282. I Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December on jurisdiction I ind die recognition and enforcement of judgments in civil and commercial matters (recast), f See article I (2) (d) in conjunction with arricle 29 (1) of the Regulation. f One of the exceptions to the rule is the decision of the Swiss Supreme Court ATF 4P 37/2001 Le cour civil Bl4 mai 2001, Fomento de Construcciones y Contratas S.A„ a Madrid (Espagne) a sentence arblrrale rendue Ik 30 Jiovcmbrc 2000 par un Tribunal arbitral CCI siegeanr a Geneve et compose de MM. Bruno Keppcler, 1 president, Alberto Mazzoni et Jose Carlos Fernandez Ro7.as, arbiues, dans ia cause qui oppose la recouiante liColon Container Terminal 5.A., a Eldorado (Republique de Panama), representee par Mes Benoit Daycr et Howard Koogcr, avocats a Geneve. Available at: htrp: accessed 29 May 2017. I To be sure, there is the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New 516 517 ZDENĚK NOVÝ 'There does not yet exist a cleat and global transnational lis alibi » j the arb.tration and jurisdiction convention,. Arbitration and court™ ^P^n I isdiccion and enforcement conventbnT"- ""S to separate worlds with their own jutisdictio.. „ neglected the interface between arbitration and court jurisdiction.'"""™"0'18, I,",' In sum, as international investment arbitration has a 'hybrid fn a the features of both public and private tnternational law, the exi 1" r*°* . 1 ....wuvu.tuuu litw, me existence pendens in private international law may be a promising indicator W fi i * Cr°""'' tool in public international law. nndlnS the same 1^ Lis Pendens in Public international law Given that at least national laws use lis pendens, the essential question is wheth h principle of Us pendens also fotms part of international law. International law was u based on national law analogies.1' Thus, as traditional international law was rather poor procedural rules,16 it borrowed from national procedures, including lis pendens}' This would intimate that international lis pendens would be basically the same as that in national Uw Nonetheless, the situation is more complex. First of all, we may disringuish the following situations of potential lis pendens-}* • among international courts; • among public international arbitrations (including investment arbitration); • between international courts and public international arbitration; • between international courts and national courts; " between public international arbitration and national courts. York, 1958) (the NY Convention) UN Treaty Series vol 330 p.3. The article ii (3) of this convention provtda that '[t]he court of j Contracting State, when seized of an action in a matter in respect of which the parua luve made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the par arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being pi i . See also Arc. V European Convention On International Commercial Arbitration (1961) UN Treaty Sena Vol. 484 p. 349- Available at:< hrxps://treaties.un.org/pagesA'iewDetflikasp>:?src=TRl^TY&:mtdb(^no= 1 28čchaptcr=22íSí'clang=_en> This former convenrion regulates, however, recognition and enforcemen no: jurisdiction, whereas the latter provides rules for jurisdiction, but is accepted by a rather limited nl states (31 Parties - me number valid as to 29 May 2017). li VAN HOUTTE, Hans, "Parallel proceedings before srare court and arbitration tribunals: is there a transnational Us alibi pendens - exception in arbitration or jurisdiction conventions? In Arbitral Tribunals or State Coura. lPfc» must defer fo whom?' ASA Special Series No. 15 (2001), pp. 53-54. Emphasis added by the author. 14 DOUGLAS, Zachary, 'The Hybrid Foundations of Investment Treaty Arbitration (2004) 74 RYU l !i The reason for adopting civil law analogies in the form of general principles of law was the relative paudtjdf international law rules at the inception of modern international law. The procedural vehicle lor doing to w» arbitration, which allowed for entering of civil law concepts as general principles of law into international t-■'■ See ČEPELKA, Čestmír, ŠTURMA, Pavel, Mezinárodni právo veřejné {lean, C. H. Beck 5008) 123. Ul Sec MALENOVSKÝ, Jiří, Mezinárodni právo veřejné Obecná Část a poměr k jiným právním systémům (6"' cdn . Doplnélí-Aleš Čeněk 2014) 27. 17 BOISSON DE CHAZOURNES, L., 'Plurality in the Fabric of International Courts and Tribunals The Ihmdi of a Managerial Approach' (2017] 28 EJIL 46. ls A similar attempt at systematization of parallel proceedings may be found e.g. in CREMADLS, Bernardo M-MADALENA, lgnacio, 'Parallel Proceedings in International Arbitration' (2008} 24 Arbitration lutermnt»ui 518 LIS PENDENS BETWEEN INTERNATIONAL INVESTMENT TRIBUNALS . j ternati°na^ courts and arbitrators will apply primarily international law. A national l w-ill apply national law and international law, to the extent tbat it was incorporated Cthe national law, Bitot) 'c's necessary to f°r a source °f tr*e & pendens principle in international law. L starting point of the analysis would article 38 (1) of the International Court of Justice jprute- international conventions, whether general or particular, establishing rules expressly recognized by the contesting states; I international custom, as evidence of a general practice accepted as law; L general principles of law recognized by civilized nations; L subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law.'15 The usual suspect' concerning lis pendens would be the 'general principle of law1 shared V national legal orders. Indeed. Yet, the level of abstraction in the analysis is of importance, liiere would be perhaps no legal system which would not react on the situation on more jading proceedings before state courts and/or arbitrators. Nevertheless, different states react sL^esituation with different legal instruments and tools, which may be comparable to only Ljnea probably too-stretched functional approach in such legal comparison.20 As to the opinions of highly qualified publicists, Campbell McLachlan summatized the fnding of his study on lis pendens in international law as follows, '[tjhe question whether the fcctrine of lis pendence is a general principle of law common to civilized nations has still not |ten authoritatively answered by an international tribunal. However, the research presented ifothese lectures strongly suggests the existence of such principle.'21 Kaj Hober also within his lecture on lis pendens and res judicata held at the Academie de droit international de la Haye denied the existence of such a principle in international law, fas far as the principle of lis pendens is concerned, its status under international law is more [iBcertain [compared to res judicata]. Based on existing case law, (...) it [the principle of th jmdens) is not - at least not yet - a general rule or principle of international law.'22 Judge Treves in his separate opinion in the Mox Plant Case declared that: I lh seems also useful to underline that while article 282 [UNCLOS] can be seen as imechanism for avoiding that situations of litispendence arise, it is not a rule providing .fcrrhe consequences of litispendence. It leaves completely open the question as to whether, ■ case a dispute concerning the interpretation of provisions of a treaty other than the pnveniioa but equivalent or similar to provisions of the Convention has been submitted to Itourt or tribunal competent under the provisions of such a treaty, the dispute settlement wdies competenr under the Convention would consider it fit to hear a dispute concerning Statute of the International Court of Justice. Available at< http://www.icj-cij.orgydocumeiits/indcx.php?pl = 4&p2=2&> accessed 29 May 2017. fct functional ity as a key methodological tool in legal comparision sec the classical piece KÖTZ, Hein, ZWEIGERT, Konrad, Einführung in die Rechtsvergkichung : auf dem Gebiete des Privatrechts (3cdn J. C. B Mohr \ 1396) 33. MCLACHALAN, Campbell, Lis Pendens in International Litigation RDCADI 366 (ledn. Martinus Nihoff Publishers, 2009) 506. "OBER, Kaj, 'Res Judicata and Lis Pendens in International Arbitration' 331. 519 ZDENEK NOVY equivalent or similar provisions of the Convention. The existence and c law rule or of a general principle concerning the consequences of litispend ^ CUst0fr considerations of economy" of legal activity and of comity between courts and' ^ might be discussed in such a situation.1" As pointed out by Yuval Shany: '[I]t looks as if existing case-law on the question of lis alibi pendens is also t non-definitive to establish the existence of such general rules or principle in j law, in the relations between international courts and tribunals. NonerhpUcc rriation a plausible case that lis alibi pendens may qualify as a general principle of law re most legal systems, at least with respect to intra-systematic jurisdictional competiti Hence, the rule of lis pendens is applicable to intra, not inter, systemic confl jurisdiction. In other words, it is possible to think of lis pendens either among national or international courts, the underlying premise being a strict dualism between irucmafoj[! and national law.15 "The rationale behind lis pendens is a consistency and coherence w •■ ' one legal system. This is not the case of international adjudication on the one hand based international law an applying it, and national decision-making systems on the other hand As long as international law has claimed its superiority over national law international tribunals, an international investment tribunal need not take into account d» pending proceedings before a national court.27 The specific implication of such sum that national court decision may not have any impact on the jurisdiction of an international tribunal.2S Moreover, as noted by the Permanent Court of International Justice (PCIJ) in thi Silesia Case. "There is no occasion for the Court to devote time to this discussion in the prcser because it is clear that the essential elements which constitute litispendence are not There is no question of two identical actions: the action still pending before the Germano-Polish Mixed Arbitral Tribunal at Paris seeks the restitution to a private Company of rhc factory of which the latter claims to have been wrongfully deprived; on the othet hand, the Permanent Court of International Justice is asked to give an interpretation of cereal of the Geneva Convention. The Parties are not the same, and, finally, the Mixed Arbitral Tribunals and the Permanent Court of International Justice are not courts of the same character, and, a fortiori, the same might be said with regard to the Court and the Polish Civil Tribunal of Kattowttz.'29 " International Tribunal for the Law of the Sea (ITLOS). Mox Planr Case (Ireland v United Kingdom I Measures, Separate Opinion of Judge Treves, para 5- Available at: https://www. itlo5.org/fileadmin/idos/documeno/ cases/case_no_10/sep.op.Treves.E.orig.pdf. u SHANY, Yuval, The Competing Jurisdictions of International Courts and Tribunals {QU?, 2003) 244. « MCLACHLAN, Lis Pendens in International Litigation 500. See only article 27 of the Vienna Convention on the Law of Treaties. 27 CUNIBERTI, Gilles, 'Parallel Litigation and Foreign Investment Dispute Settlement' 393. « ICSID Case No. ARB/03/4-Annulmem Proceedings Induscria Nacional de Aiimentos, S. A and Indal i S.A. v. The Republic of Peru, 5 September 2007. para 87. Case concerning Certain German Interests in Polish Upper Silesia. Series A-No.6, at 20. Emphasis idifcd author. LIS PENDENS BETWEEN INTERNATIONAL INVESTMENT TRIBUNALS ... a result, the international tribunal may approach national court proceedings as a mere otas comparable judicial proceedings. As put by the arbitration tribunal resolving JJT/W II dispute between Germany and Romania, '[a]s regards foreign states, the of national courts are less judgments than simple manifestations of state activity ) ^ is solely within the internal law that authority of res judicata by a national court finds ■plication.'-0 ■ Thus- Us pendens is possible between international courts or tribunals on the one hand, or I en national courts on the other hand, but not an international arbitration tribunal and _^Ejalcourt. In short, 'comparable adjudicators' are lacking here." 1 However, one may ask whether the above arguments based on a strictly dualist approach compatible with the contemporary reality of the ever-increasing penetration of international ■ into national laws and decision-making. Should not it matter that national courts play K [han ever the dual role {dedoublement fonctionnet) of protectors of both international [national values?32 On the other hand, a national court may and, depending on the domestic law, must take htoconsideration pending proceedings before an international court or tribunal. Hence, the ieofUs pendens might be resolved in the sphere of national law (sec below). Kaj Hober stated that 'in addition to the triple identity test, under international law the weeding* must be, or must have been, conducted before courts and tribunals in the international 4 order.'^ From this short expose, it is clear that there has been disagreemenr on the very issue (lether lis pendens as a principle originating in national law successfully found its way into Brnational law. The reason behind such a conclusion is not that it would be unimaginable ft lis pendens is part of international law, but due to the fact that lis pendens is inherently mited to one legal system (national vs. international law). Lis Pendens in Internal inal Investment Arbitration At the outset, two situations have to be distinguished: • Lis pendens between two investment tribunals; • Lis pendens between an investment tribunal and national court/commercial arbitration. It should be borne in mind that arbitration is based on the idea of exclusive jurisdiction wing from the arbitration agreement between the parties.3,1 It is thus unnecessary for any ubitration tribunal to pay regard to a court procedure, even in a similar matter. ■ Affaire de Chemins de fer Buzau-Nchoiasi (Allemagnc contre Roumanie), 7 juillct 1939 RIAA Vol 3 1836. [ Available at: accessed 29 May 2017. r CUNIBERTI, Gilles, 'Parallel Litigation and Foreign Investment Dispute Settlement' (2006) 21 ICSID Review I 399-401. r See TZANAKOPOULOS, Antonios, 'Domestic Courts in International Law: The imernarional Judicial ■function of National Courts' (2011) 34 Loy LA Int't & Comp L Rev 133-168. The present author is not, I however, overoptimistic about the 'dedoublement' thesis, seeing e.g. Jurisdictional Immunities of the State f (Germany v Italy: Greece intervening). Judgment, I. C. J. Reports, 2012. I "OBER, Kaj, 'Res Judicata and Lis Pendens in International Arbitration' 311. IB0ISSON DK CHAZOURNES, L., 'Plurality in the Fabric oflnrernadonal Courts and Tribunals The Threads | of a Managerial Apptoach' (2017) 28 EJ1L 47. 520 521 ZDENĚK NOVY US PENDENS BETWEEN INTERNATIONAL INVESTMENT TRIBUNALS . Parallel proceedings in international investmenr arbitration involve three k is the litigation as CME/Ronald Lauder where the same set of facts generated. tw. Second is the situation in which a contract claim is pursued in an international °UtCCIrriCV tribunal although it should be heard by national court instead.35 The last' lnVestni*:m shopping, i.e. an attempt to establish jurisdiction of an investment arbitral tribu al basis of the investment treaty by evasive or unfair means.3fi In the following, only the situation of two pending proceedings will be considered of them had been initiated by a local company before a state court of the boggfl second commenced later in international investment tribunal by the company's sharehV' by virtue of a bilateral investment treaty. Does this situation present lis pendens] The starting point for considering, inter alia, the situation of lis pendens is the text f k investment treaty. The treaty may require that domestic remedies are exhausted before in't' investment arbitration or set forth a fork-in-the-road provision. The letter provision 'n that an investor has to choose between going to arbitration or courts. Once it has mad such choice, it cannot select another dispute resolution option.57 It should be emphasised that the state undertook by the bilateral investmenr , obligation de moyen, meaning that it will resolve a dispute with an investor specificalh [■ international investment arbitration as a dispute resolution means. It is submitted thai requesting the investment tribunal to stay arbitration proceedings because there is a nation.! court proceedings, albeit in a related matter, would contradict this internatioi obligation assumed by the state. Regarding the requirement of exhaustion of local remedies, unless expressly laid down by the treaty, it is usually dispensed with in international investment arbitration. hH exhaustion of local remedies is the rule developed within general international law for ilu-invocation of responsibility of states by injured states for internationally wrongful conduct As long as international investment law is deemed to be lex specialis, the rule on exhaustion of local remedies does not apply.3" Another limitation of the rule is that only the ex] of effective remedies is necessary. 39 Yet, unless there is one of these rules, there does not seem to bean obstacle for inve arbitration tribunals to hear cases, regardless of whether there are also pending proceeding with similar/identical factual and legal background. This, however, should be verified by the analysis of the investment arbitration cases. Investment Arbitration Cases B) jpp v. Egypt (tne Pyramids case), the tribunal found no reason why it should be W^tyz lis pendens rule: Ityheri the jurisdiction of two unrelated and independent tribunals extend to the same L there is no rule of international law which prevents either tribunal from exercising PP^'. MO ■iction. ■ . jnvestment tribunal in GAMI v Mexico stated that '[international Ijcd jurisdictionally by the fact that the same question is in the courts of arbitratron is not one of the Lns. Such an international tribunal has power to act without teference thereto, and if Ementhas been pronounced by such court, to disregard the same...'4' r^e tribunal continued that '[ultimately each jurisdiction is responsible for the application mfe law under which it exercises its mandate. It was for the Mexican courts to determine Ether the expropriation was legitimate under Mexican law. It is for the present Tribunal to Ljge whether there have been breaches of international law by any agency of the Mexican Uernment... 4~ [ Also the tribunal in SGS v. Pakistan observed that '[I]f the claims are not idem, bis does tot arise As the causes of action are not identical, the doctrine of lis pendens cannor operate v preclude us from exercising j urisdiction over the BIT claims.'43 In Benvenuti & Bonfant v. Congo, the arbitration tribunal had to decide whether it Li jurisdiction to hear the case when there were proceedings before a national court in jhzzavile. The tribunal decided that '[t]he Government's plea of & pendens could only jtcceed if there were identity of the parties, the object and the cause of action in the two sets if proceedings, This was not the case here.' ! As seated by the tribunal in SGS v. Pakistan '[I]f the claims are not idem, bis does not fc.As the causes of action are not identical, the doctrine of Us pendens cannot operate to fcclude us from exercising jurisdiction over the BIT claims.'45 In addition, the ILA Final Report on lis pendens and res judicata refers to the Svea Court of appeal decision in CME v. Czech Republic, which has confirmed that one of the fundamental (wditions for lis pendens is identity of parties, and that a controlling shareholder and the ampariy are not identical for this purpose.'46 This situation may arise due to an umbrella clause which may allow a contract claim to have bet international one. jorun Baumgartner aptly distinguishes between treaty shopping' and 'forum shopping'. Forum shopping mean*. in □ nutshell, choice of the most favourable forum to claimant. See BAUMGARTNER, lorun, Tnm in InternationalInvestment Law(OUP 2016) 15/-19. BLACKABY, Nigel, PARTESIDES, Constanrine, REDFERN, Alan, HUNTER, Martin, Redfem and Hvun on International Arbitration Student Version. (6* edn DUP 2015) 463. See Article 17 Draft Articles on Diplomatic Protection. Available at:http://legal.un.org/ilc/tests/instruiwnu englisli/draft_ajuclcs/9_a_2006.pdf accessed 29 May 2017. Case concerning Elenronica Sicula s.p.a. (ELSI) (United States of America v. Italy) ICJ judgment of 20 J 1989. ■ Cited in SH ANY, Yuval, Ihe Competing jurisdictions of International Courts and Tribunals. 243. " GAMI Investments Inc. v. The Government of the United Mexican States, NAFTA/UNICTRAL, Final Award ^Rl5 November 2004 para 39. Ibid para {1. \ Sociece Generale de Surveillance S. A. (Claimant) versus Islamic Republic of Pakistan (Respondent) ICS1D CASE No. ARB/01/13 SGS (Decision of The Tribunal on Objections To Jurisdiction), para 182. ' Roseman- Rayfhs (cd.J ICSID Reports Vol. 1. (GrQtius Publications Ltd, 1993), 332. I-Societe Generale dc Surveillance S.A. (Claimant) versus Islamic Republic of Pakistan (Respondent) ICSID ' CASE No. ARB/01/13 SGS (Decision of The Tribunal on Objections'To Jutisdiction), para 182. tntetnational Law Association (I LA} Final Report on Lis Pendens and Arbitration Toronto Conference (2006) I«9; Available at: < http://vvw.ik-hq.org/index.php/committees?committceID= 14 > accessed 29 May 2017 522 523 ZDENEK NOVY ----—^£1^(20,7, In Pantechniki v. Albania, the sole arbitrator Paulsson refused the cl ' because the Claimant's grievance thus arises out of the same purnorreH C ^ bcf°re ^'fli the Albanian courts.47 F Q Werner.- In sum, the tribunals tend, to considet the triple identity test as decisi 7. Abuse of Process as a Panacea? Easy solutions are tempting ones. Some of them are those based on TOcess.4a It constitutes an abuse of process , -----r««0 ^^.^ Ui t^ww ttl.L. muse uasea on general 1 I i like abuse of process.43 It is, however, rather difficult, though not impossible \f constitutes an abuse of process. Before embarking on the journey in search for the role of abuse of process in i investment arbitration, three factors should be taken into account. Firstly, dieTe"*^1""^ lent arbitration given to an investor by the inw«™.««. .----' . rClSa fl§'11 * indeed use/e; : treaty. An investor t usually set limit exercise of such right, such limitation can be looked for outside the treaty, i.e in oth of inrernarional law, namely customary law and general nrincinles of |aw this right. As bilateral investment treaties do not usually set limiaaj ely customaty law and general principles of lain that respect, it should be perhaps mentioned that probably49 the nnlw in convention expressly reacting to abuse of process is the UNCLOS, as follows-'Article 294 Preliminary proceedings 1. A court or tribunal provided for in article 287 ro which an application is made ' respect of a dispute teferred ro in article 297 shall detetmine at the request of a parry, or may determine propria motu, whether the claim constitutes an abuse of legal facie, well founded. If the court or tribunal determines that the claim process or it is, prima constitutes an abuse of legal process or is prima facie unfounded, it shall take no further action in the case.' Interestingly, the very same convention prohibits abuse or rights, 'States Parties fulfil in good faith rhe obligations assumed under this Convention and shall exercise tbe righrs, jurisdiction and freedoms recognized in this Convention in a manner which would not constitute an abuse of right/50 The issue of starting (public) international arbitration under the UNCLOS t of tbe matters dealt with by the Arbitral Tribunal in an arbitration berween China and Philippines. The rribunal 'note (d) that the mere act of unilaterally initiating an arbitration under Part XV in itself cannot constitute an abuse of rights.'*1 Ir added that, '(l)n light ol the serious consequences of a finding of abuse of process or prima facie unfounded ncss, the Tribunal considers that the procedure is appropriare in only the most blatant cases ol abac or harassment.'52 ICSID Case No. ARB/07/21 between Pantechniki Contractors & Engineers SA (Greece) (Claimant) and the Republic of Albania (Respondent), Award, 30 July 2009, para 67. See recently Emmanuel Gailkrd 'Abuse of Process in International Aibitrauion (2017) 32 ICSID Review 17-57 There are of course more or less explicit references to the notion of abuse of rights in other treaties aü well. M e.g. article 17 European Convention on Human Righrs (ECHR). Article 300 United Nations Convention on the Law of rhe Sea (UNCLOS) UN Treaty Series vol 183 I | ■ PCA Case No 2013- 19 before an arbitral tribunal constituted under Annex VII to the United Convention on the Law of rhe Sea berween the Republic of Philippines and rhe Peoples Republic Award on Jurisdicdon and Admissibility, 29 October 2015, para 1 26. Ibid, parä 128. US PENDENS BETWEEN INTERNATIONAL INVESTMENT TRIBUNALS . i a similar vein, in the Free Zones of Savoy and the District ofGex, the PCIJ stated that I ,r!/ation must he made as regards the case of abuses of a right... But an abuse cannot be f flted by the Court?1 Thus, there is presumption of good faith (lack of abuse of process). [ Let us applytriese facts to international investment arbitration.54 [ Pirst of all* h seems that the situation where the treaty expressly prohibits abuse of rights L Id be distinguished from those which do not do so, like most bilateral investment E.:es 55 Moreover, investment arbitral rribunals from time to time apply equitable j^jples, including abuse of rights.*' Secondly; there is a rebuttable presumption of not abusing tbe righr to arbitration by an Yet, before the court uses the remedy not to continue to heat the case as to its merirs, it Laid have to be proven that there actually is an abuse of process.57 The present author agrees with rhe dictum in the China v. Philippines arbitration, in that L-ay nor be sufficienr ro say that the investor had started proceedings in national courts, thichhas nor been finished yet, before it sought the protection of its investment in investment Bitration. It would have to be demonstrated by the state as respondent in the investment Juration that the investor has maintained rhe two parallel proceedings for malicious reasons, jpother interpretation would mean denial of justice to rhe investor — company or to shareholders p the investment arbitrarion proceedings. The decline of jurisdiction either by an investment jpuna] or national court should not be taken lightly as it may result in denial of justice.53 I As a practical note, it would be oftentimes very expensive and time-consuming for l|einvestor nor only to go to international investment arbitration but also to continue in jmbnal court proceedings. Thus, the commencement of investment arbitration would not gjways be some kind of caprice by investor, but rather a last resort to protect its investment. 1 Permanent Court of International Justice, Free Zones of Upper Savoy and the District of Gex, Judgment of Ki June 1932. 1 The present author's assumption is that the considerations regarding general principles may be extrapolated from the law of the sea to international investment arbitration. This assumption is neirher sclf-evidenr nor runconuoversial. The argument behind the assumption is that general principles, it they are actually 'general', are shared by all or most 'regimes' of international law. However, the present: author is aware that such a view is not accepted by all authors, e. g. SCHWARZENBERGKR, Gcoig, international Law and Order (Stevens & sons 11971) 118. ' Moreover, in contrast to the majority of investment treaties, the article 295 UNCLOS requires exhaustion of local temedies. It might thus be reasonably assumed that the Contracting Parties to the UNCLOS did not have in mind a situation of two parallel disputes berween national courts and dispute settlement body under the WNCLOS as abuse of righ ts. I ICSID Case no. ARB/06/5 Phoenix Action, Ltd. (Claimant) v. The Czech Republic (Respondent), Award, [15 April 2009, paras. 106-107. ' KOLB. Robert, 'General Principles of Procedural law' in ZLMM ERMANN, Andreas, TOMUSCHAT, Christian Itnd OELLERS-FRAHM, Karin (eds) The Statute of the international Court of Justice A Commentary (OU15 p)G6) 831. French law, which may be considered as arbitration-friendly jurisdiction, guarantee a right ro arbitration \{U droit ir ('arbitrage) based on arbitration agreement as contract. GUINCHARD, S., CHAINAIS, C. | PLICOSTOPULOS, C.S., DELICOSTOPOULOS, J. S., DOUCHZ-OUDOT, M., FERRAND, R, j LAGARDE, X., MAGNIER, V„ RUIZ FABRI, K, SINOPOL1, L, SORELJ.-M., Droitproemmt Droit Ipidamentaux dn proces (8 edn Dalloz 2015) 1377. Normally, investment arbitration is based on an arbitration provision in the investment treaty. This, however, does not exclude the 'logic' behind right to arbitration. 524 525 70 ZDENEK NOVÝ „f2017) 1/5 PENDENS BETWEEN INTERNATIONAL INVESTMENT TRIBUNALS .. 7.1 Abuse of Process v. Denial ofJustice Abuse of process is to be used, as any other legal device limiting th< rights, with caution. In particular, erroneous finding of abuse of process rnayfe d ''^ justice to investors. As the PCIJ in the Chorzow factory case found that' M n dcniai of 1 Ji* Coun, When cannot allow it, „ its own f'y clear denial it has to define its jurisdiction in relation to that of another tribunal, ^ competency to give way unless confronted with a clause which it considers suffix' to prevent the possibility of a negative conflict of jurisdiction involving the danger of of justice.,,9 But also the ILA Final Report on Lis Pendens and Arbitration underscores the ' of access to justice vis-a-vis other considerations, including an abuse of process. ^Qtanct one hand, the tribunal should seek to avoid inconsistent decision, but on the orh h ^ a tribunal is mandated to decide the dispute referred to it without unnecessary deln " a claimant has a right to have its claim determined (see e.g. Article 6 ECHR).' On the other hand, the problem of national parallel proceedings may be resolved by th very BIT. Some may contain a fork-in-the-road clause. Nevertheless, for various reasons, these two instruments have not been effective in preventing multiplication of proco In general public international, the best prevention of possible lis pendens would be the application of the exhaustion of local remedies rule. Yet, this rule is, unless expressly provided for in a bilateral investment treaty, excluded in this specific regime of international law61 Nonetheless, when there is no such express provision in the BIT, its reading into the text would deprive the investor of the possibility to protect its investment. In addition, two factors should be taken into account. Firstly, there may be considerable delays in national court proceedings, with no reasonable prospect of a final decision. Secondly, if national coun proceedings were initiated by a company and investment arbitration by its shareholder, ur vice versa, then these two remain different subjects of law. It may be difficult to justify whv one subject should bear detrimental consequences of the action by another one.1'-' The ... would be clear and unwelcome: denial of jusrice. 8. In Lieu of Conclusion: A Possible Solution in National Law (?) There is ample literature offering various theories how to cure parallel proceedings Mom authors appear to believe in improvement through a change of international law. [hus, tb elements of the triple-identity test should be re-interpreted,63 or investment arbitrators should defer to courts or other arbitrators etc. There arc some difficulties with these ideas. First of all, at a more abstract level, the betid that it is possible to change the order of things simply by changing laws may prove to be unfounded. Secondly, these opinions expect of international law perhaps too much, taking >4 Factory at Chorzow, Claim for Indemniry, jurisdicrion, Judgment of 16 July 1927. PCIJ Series No. 9(192" 60 MCLACHLAN, Campbell, Arc National Courts and International Arbitral Tribunals in Two Worlds Of (2016) 7J.Int. Disp. Settlement^. bl See e.g. DOUC-LAS, Zachary, Ihe International Law of Investment Claims (CUP 2009), 178, 179. bl This holds true unless a doctrine of piercing of the corporate veil is recognised in international invewnem In 63 See recently SCH WARABOW1TZ, Michal, 'Identity of Claims in investment Arbitration: A Plea i theLegal System' (2017) JIDS 280-302; see also RE1N1SCH, August, 'The Issue Raised by Parallel Proc and Possible Solutions' in WAIBEL, Michael, KAUSHAL, Asha, CHUNG, Kyo-Hwa, BALCH IN ' The Backlash against Investment Arbitration Perception and Reality. (Kluwer Law International 2010), 122. unt that international law is historically a much less developed system of law than "pallaws, in particular as regards procedural rules.64 , . certainly no secret master plan how to rebuild international investment arbitration, rnational law in general, so that it satisfies all interests involved. However, would not -•. —'-----ntler national law? It should bettet solution fot states to reconceptualise lis pendens under i mbered what was said above, lis pendens has its roots in national law, and it is maybe where the seatch for an improvement may start. It is the state as the central subject of i-mational law that has a wide discretion in changing its internal laws.65 | If for instance, states wish to exclude parallel proceedings of shareholders in international Lesiment arbitration and their local company before national courts, why do not they Em- the rules on lis pendens by relaxing the requirement of identity of parties in national if there is an inseparable factual and economic link between the parties in national and trnational proceedings? ' Thus, once the court decides the case befote the national court in favour of the state, ■d the arbitral tribunal will later render the award in favour of the investot, then the state Lw resist the recognition and enforcement of the award in its territory66 on the basis of res iUjctUt (provided that the above change as regards the identity of the parties is adopted). LjKeover, if the state wins the dispute in national courts, the final judgment may be a strong Lif not decisive - piece of evidence in pending international investment arbitration, which fjtvir) turn lead to the end oi the arbitration. L In another scenario, where an arbitration award favourable to the state is rendered, l&c Utter may rely on the res judicata effect of the arbitration award in the pending court tceedings. In this tespect, one should not forget that in states like the Czech Republic,''7 Lbitral award has the same legal effects as judgement,68 namely res judicata. I It should be also recalled, as regards the 1CSID atbitration awards, that article 54 (1) of AelCSJD Convention stipulates that '[e]ach Contracting State shall recognize an award KnrJered pursuant to this Convention as binding and enforce the pecuniary obligations ■nposed by that award within its territories as if it were a final judgment of a court in that l|«e.'OT Thus, reading the text of this provision in good faith it seems that the ICSID awatd ■to be treated as a final judgment in the state, including the possibility to attack Its finality the extent allowed under national law.70 No more, no less. " Thac national law-making may have important consequences for investment protection has been recently I emphasised with regard to consent to arbitration. See MULLEN, Stephanie, WHITTSIT, Elisabct, 'ICSID and Legislative Consent to Arbitrate: Questions of Applicable Law ' (2017) 32 ICSID Review 92-115. Bin other stares, rhe state will invoke state immunity, which is not possible before its own courts as this is not I a decision-making of a organ of a foreign state {hence par in parem 'logic' does nor apply here). I Ihe jurisdiction of the present author. r S 28 (2) no 216/1994 Coll., Law on Arbitration and Enforcement of Arbitration, Award, ¥ Convention on the Dispute Settlement of Investment Disputes between States and Nationals of other States. I Available at: hrtp: Accessed 29 May r 2017. Emphasis added by the author. 'Ihe textual interpretation, which is die starting consideration under the I general rule of interpretation under article 31 VCLT, suggests that the ICSID awards do not enjoy more favourable I legime than final judgments in a particular state. See also BALDWIN, Edward, KANTOR, Mark and NOLAN, ^pfichael, 'Limits to Enforcement of ICSID Awards' (2006) 23Journal of International Arbitration 1-24. [ The limit of this might be an idiosyncratic rule which has no counterpart in other legal orders. 526 527 ZDENĚK NOVÝ There are of course counterargument £y1l8(2017 -----------D---------- International arbitral awards should automatically treated as judgment of national courts.71 Hence, as a pro-arbitration * ^ which has been created in the international society, they should be maintained and ^V'r°nmcni' At any rate, states must comply with their international obligations in gooc; t- y a treaty provides for binding mechanism of resolution of dispute in case of its bre '|' arbitration, then it is the part of the pacta sunt servanda principle that also the^ ■ arising thereof are respected.7,1 This is even clearer where the investment treaty expt's lyL down such obligation, like the abovementioned article 54 (1) ICSID Convention • • - l'i l ■ -76 n or certain provisions in bilateral investment treaties/5 Thus, they may not refuse the recognition and enforcement of arbitration award for other than those foreseen under international,'6 in eventu national law. International Law Association (ILA) Final Report on Lis Pendens and Arbitration. ! Sec G AlLLARD, Emmanuel, 'The Urgency of Not Revising the New York Convention in Albert Jjn vjn den Berg (ed) 50 years of the New York Convention: ICCA International Arbiiration Conference ICCA OfflgM Series Vol 14 (KJuwcr Law International 2009) 692. Available at: accessed 29 May 2017. Article 26 VCLT. "Ihe present author inclines to say that international investment arbitration awards ought to be generally put on equal footing with judgments ofrmernational courts as regards their effects in national legal order. The m behind Such conclusion is that the source of the binding force of both awards and judgments is die result ol consent oFthc state. Their main legal effect is the same, meaning that both are binding between the pun regard to the binding nature of international judgments from the perspective of the Czech con5iiiuiion.il Ij» see MOLEK, Pavel 'ČL 1 Základní principy' in BAHÝLOVÁ, I.., FILIP, J., MOLEK, P„ PODHRAZSI SUCHÁNEK, R„ ŠIMÍČEK, V., VYHNÁNEK, L, Ústava Crské republiky, kómemái Lindě, Praha 2010. p K See e. g. article 10 (2) Czechoslovak-German treaty on support and mutual protection of investments (Dohoda mezi Českou a Slovenskou Federativní Republikou a Spolkovou republikou Německo o podpoře a vzjjemrK ochrané investic). Available in both original versions at:< http://www.mfcr.cz/cs/legislativ:i/dohody-o-podpurc-a-oclirane-investicyprehled-platnych-dohod-o-podpore-a-ochta#rwortl_n> accessed 29 May 2017. See art. V of the NY Convenrion. 528 BÍZ017) SI WAR: FOREIGN INVESTMENTS IN DANGER ... WAR: FOREIGN INVESTMENTS IN DANGER c0 INTERNATIONAL HUMANITARIAN LAW OR FULL PROTECTION AND SECURITY CLAUSE ALWAYS SAVE IT? Petr Stejskal' I ijdiract: The a'm °^ tn's article is to think of particular scenarios which can put foreign I. ,,inenr in jeopardy during an armed conflict and give some real examples. It provides I . model scenarios with a prospective legal framework provided by the law of armed I diet and law of international investments with special focus on so-called full protection [«1 security clauses and war clauses. The scope of application of norms of international I, unitarian law is quite wide and a foreign investor enjoys the protection stemming from Í attain standards of conduct towards civilian property {namely those relating to the principle Ij distinct) on and protection of civilian objects). Nevertheless, parties to the conflict arc lijwed to act in a damaging way towards civilian objects under certain conditions when lairing a legitimate military aim. International law of foreign investments provides a foreign Wcstorwith more generous standards of treatment and stronger enforceability of his rights ifOLieh the mechanism of dispute settlement. However, the standards of treatment and IWstor's locus standi are dependent on the existence and content of an investment treaty t a particular situation. Even if there is an investment treaty applicable, the protection tovided by these treaties seem to be limited in times of armed conflict as they do not Instant i ally cover the conduct of all the parties to the conflict and even in the situation there the state leading a military operation is bound by a particular investment treaty, its (andards of protection may be evaded if a qualified exception is triggered. The article also identifies some practical issues and interactions between the law of armed conflict and the bv of foreign investments. Resumé: Cílem tohoto článku je zamyšlení se nad konkrérními situacemi, ve kterých může |ýtohrožena zahraniční investice během ozbrojeného konfliktu s odkazem na reálné příliv. Článek k těmto modelovým situacím nabízí možný aplikovatelný právní rámec vycházející z práva ozbrojených konfliktů a práva zahraničních investic se zaměřením na tzv. StU protection and security' a válečné doložky. Nomy práva ozbrojených konfliktů jsou poměrně široce aplikovatelné a nabízí investorovi ochranu zejména skrze zásadu rozlišování ipravidel týkajících se ochrany civilních objektů. Nicméně i přes to mohou válčící strany 1áurčitých podmínek investici poškodit v rámci naplňování vojenského cíle. Mezinárodní páro zahraničních investic nabízí štědřejší standardy ochrany a jejich lepší vymáháte!nosr, lictíiéně pouze v závislosti na existenci a obsahu smlouvy o ochraně investic v konkrétním případě. 1 když bude nějaká taková smlouva na konkrétní případ dopadat, aplikace standar-p zacházení může být v ozbrojeném konfliktu omezená ať už z toho důvodu, že regulují The present article is an interim outcome of a project named Selected Aspects of the Protection afForeign Investments during the Armed Conflict, project number IGA_PF_2017_005, financially supported by die Internal Grant i Agency of Universiry Palacký in Olomouc (Interní grantová agentura UP Olomouc). '^his article was written with die kind help of rhe supervisor in my doctoral studying program, JUDr. Pavel Bureš, Ph.D., D.H.A., who provided me with valuable suggestions and opinions. I would like to thank him very much for thar. 529