Parallel Proceedings in Investor‐State Treaty Arbitration: Responses for Treaty‐Drafters, Arbitrators and Parties

AuthorRobin F. Hansen
Publication Date01 July 2010
Date01 July 2010
Volume 73 July 2010 No 4
Parallel Proceedings in Investor-StateTreatyArbitration:
Responses forTreaty-Drafters, Arbitrators and Parties
Robin F. Hansen
Parallelinvestment treaty arbitrations present a demonstrated riskof inconsistent awards. This arti-
cle examinesseveral ameliorative responsesto parallel investment treatyproceedings, executable by
treaty-drafters,arbitratorsand parties themselves.The unique jurisdiction mechanicsand applicable
lawi n investment treatydisputes frames theresponses available. Despite the uniquecontext within
which parallel investment arbitrations occur, the challenges they poseto party interests, to princi-
ples includinglegal fairness and to the e¡ective pursuit of disputeresolution closelyresemble those
posed byparallel proceedings in otherdomestic and international legal fora.
This article examines arbitrations held between foreign investors and host states
pursuantto investment treaties. Speci¢cally, it reviews parallel investment arbitra-
tions and possible responses to such proceedings. Parallel investment arbitrations
are de¢ned as multiple arbitrations between states and investors of the same con-
structive identity which concern a particular state measures compliance with the
states investment lawobligations.
Parallel proceedings and inconsistent awards have already occurred in invest-
ment treaty arbitration
and with increasing investor recourse to such arbitration,
Assistant Professor, College of Law, University of Saskatchewan, Saskatoon, Canada. The author
would like to thank Daniel Urbas for his helpful comments on an earlier draft. All errors remainthe
author’s own.
1The most famousexample is the CME and Lauder cases, discussed brie£y below.The disputes have
been discussed at length in the legal literature.Ronald LaudervCzech RepublicAwardof September
2001at visited 24 September 2009); CME
CzechRepublic B.V.vCzech RepublicPartial Award of 13 September 2001 at
documents/CME-2001PartialAward.pdf (last visited 24 September 2009); CME Czech Republic
B.V.vCzech Republic Final Award of 14 March 2003 at
2003-Final_001.pdf (last visited 24 September 2009). See A. Reinisch,‘The Use and Limits of Re s
Judicata and Lis Pendens as Procedural Toolsto Avoid Con£icting Dispute Settlement Outcomes
(2004) 3 The Law and Practiceof International Courts andTribunals 37,43;T. Nakamura,‘International
InvestmentArbitration and Parallel Proceedings:Focusing on regulation and coordination under
national law’ Research Institute of Economy,Trade & Industry, (2008) IAARIETI Discussion
Paper Series 08-J-025, (Japanese) English abstract at
mary/08060006.html (last visited 24 September 2009); C. N. Brower and J. K. Sharpe, ‘Multiple
and Con£icting International Arbitral Awards’ (2003)4:2 Journalof WorldInvestment 211;W. Kˇhn ,
‘How to Avoid Con£icting Awards:The Lauder and CME Cases’(2004) 5:1 Journal of World
r2010The Author. Journal Compilationr2010 The Modern Law ReviewLimited.
Published by BlackwellPublishing, 9600 Garsington Road,Oxford OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA
(2010)73(4) 523^550
there is a signi¢cant risk of further inconsistencies arising. An unknown number
of investment arbitrations are not publicly announced, making the extent to
which parallel proceedings may be occurring di⁄cult toascertain from an outside
observers perspective.
As this article explores, steps to reduce parallel proceedings may be pursued at
the levels of investment treaty text, arbitrator interpretation and party conduct.
First, treaty text may be amended to directly address the following topics: claim
consolidation and party joinder, investors’ waiver of treaty claim standing
throughtheir pursuit of claims in other fora and investor identity, including cor-
porate nationality and delineation of the scope of indirect investor standing. Sec-
ond, arbitrators in theirinterpretationof treaties mayapply where appropriate the
principles of lis pendens,res judicata and comity, along with a non-formalistic
approach to investor identity and anopenness to consult previousrelevant arbitral
awards as interpretive guides.Third, parties themselves may agree to claim con-
solidation and joinder where possible,seek to appoint common arbitrators in par-
allel proceedings and avoid treaty-shopping in their pursuit of investment claims.
In examining parallel proceedings in the investment treaty context, this article
is organised in the following fashion.The current introductory section presents
investment treaty arbitration as a distinct mode of dispute settlement. The next
section broadly discusses parallel proceedings, including the risks and possible
responses associated with such proceedings. The third part assesses the types of
parallel proceedings which may arise in investment treaty arbitration speci¢cally
and discusses the methods available of addressing such proceedings. The fourth
section presents a synthesis ofthe articles analysis.
While it is beyond the scope of this article to examine the history and theore-
tical underpinnings of investment treaty arbitration in detail, a few observations
are merited. First, investment treaty arbitration is a rather recent form of dispute
settlement which has gained signi¢cant momentum in recent years.
¢rst known such arbitration, Asia n Agricult ural Prod ucts vSri Lanka, was initiated
in 1987.
Arbitrations between investors and host states prior to this award
were held pursuant to (1) state contracts between investors and host states, (2)
domestic investment laws or (3) speci¢c treaty instruments establishing a
highly discrete jurisdictional scope for arbitrations.
Since the ¢rst investment
Investment &Trade 7; B. Klein,‘How toAvoid Con£icting Awards:The Lauder and CME Cases
(2004) 5:1Journalof WorldInvestment &Trade 19;J. Carver,‘Howto AvoidCon£icti ng Awards:The
Laudera nd CME Cases’(2004)5:1JournalofWorld Investment&Trade 23; H. Bagner,‘Howto Avoid
Con£icting Awards:TheLauder and CME Cases’(2004) 5:1 Journal ofWorld Investment &Trade 31;
N. Gallagher, ‘Parallel Proceedings, Res Judicata and Lis Pendens: Problems and Possible Solu-
tions’ in L. Mistelis and J. Lew (eds), Pervasive Problems in International Arbitration (The Hague:
Kluwer International,200 6) 329.
2183of the 321di sputes contained in the Databaseas of August 2009 were initiated in 200 4 orlater.
UNCTAD, UNCTAD Database of Treaty-Based Investor-State Dispute Settlement Cases at http:// vis ited 24September 20 09).
3Asian Agricultural Products Ltd (AAPL) vSri Lank a (ICSID ARB/87/3) Award of 27 June 1990 at (last visited 24 September 2009)
(United Kingdom ^ Sri Lanka BIT).
4The Iran-United States Claims Tribunal was e stablished under the Algiers Declarations, Declara-
tion of the Government of the Democratic and Popular Republic of Algeria, (General Declaration) 19
January1981at visited 24 September 2009).
Parallel Proceedings in Investor-State TreatyArbitration
524 r2010The Author. Journal Compilation r2010The Modern Law ReviewLimited.
(2010) 73(4) 523^550

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