The Doctrine of Res Judicata Before International Commercial Arbitral Tribunals 0198715617, 9780198715610

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OX FOR D INTER NATIONA L A R BITR ATION SER IES Series Editor: Louk as Mistelis Professor of Transnational Commercial Law and Arbitration Queen Mary University of London

THE DOCTR INE OF R ES JUDICATA BEFOR E INTER NATIONA L COMMERCIAL ARBITRAL TRIBUNALS

OX FOR D INTER NATIONA L A R BITR ATION SER IES Series Editor: Louk as Mistelis The aim of this series is to publish works of quality and originality on specific issues in international commercial and investment arbitration. The series aims to provide a forum for the exploration of important emerging issues and those issues not adequately dealt with in leading works. It should be of interest to both practitioners and scholarly lawyers.

Editorial Board Professor Andrea K. Bjorklund

L. Yves Fortier Chair in International Arbitration and International Commercial Law, McGill University

Professor Lawrence Boo

Resident, The Arbitration Chambers, Singapore

Teresa Cheng

Des Voeux Chambers, Hong Kong

Lawrence Collins, Lord Collins of Mapesbury Professor, University College London Honorary and Emeritus Fellow, Wolfson College, Cambridge

Paul Friedland

Global Head, International Arbitration Practice Group, White & Case LLP, New York

Professor Hans van Houtte

Director of the Institute for International Trade Law, University of Louvain (KU Leuven)

Professor Catherine Kessedjian

Professor of European Business Law and International Dispute Resolution, University of Panthéon-​A ssas, Paris II

Professor Vaughan Lowe

Essex Court Chambers, London, and Emeritus Fellow of All Souls College, Oxford

Professor Francisco Orrego Vicuña

Professor of Law, Heidelberg University Center for Latin America, Santiago

Professor William W. Park Professor of Law, Boston University

THE DOCTR INE OF RES JUDICATA BEFOR E INTER NATIONAL COMMERCIAL ARBITR AL TR IBUNALS Silja Schaffstein

1

1 Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © Silja Schaffstein 2016 The moral rights of the author have been asserted First Edition published in 2016 Impression: 1 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Crown copyright material is reproduced under Class Licence Number C01P0000148 with the permission of OPSI and the Queen’s Printer for Scotland Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2016933784 ISBN 978–​0 –​19–​871561–​0 Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY Links to third party websites are provided by Oxford in good faith and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work.

SER IES EDITOR’S PR EFACE

This series of monographs is dedicated to specific issues in international arbitration law and practice, and gives authors the opportunity and the challenge of a more in-depth treatment than is possible in leading generalist works. It also provides an international forum for the profound exploration of important practical and theoretical matters and will further the development of arbitration as a self-luminous academic discipline and major international legal practice area. This eleventh book in the series addresses one of the most complex and largely unchartered issues in international arbitration: the doctrine of res judicata before international arbitration tribunals. With the expansion of international arbitration and the increased involvement of multiple parties as well as multiple contracts and actions, we have witnessed a good number of disputes that are adjudicated in two or more different fora, national courts, or arbitral tribunals. As a result, there are critical issues concerning the effects of prior judgments or awards, which have not, before this book, been adequately and thoroughly examined. It is expected that such multiplication of disputes in closely related matters in different fora may further increase. There is, however, no formal coordination and no clarity as to how international arbitral tribunals could or should address issues of res judicata pleaded before them. The doctrine of res judicata (which is typically regulated only in the context of litigation) is the legal basis for the effect of a court judgment and arbitration award being conclusive, and hence barring the re-litigation of a decided matter. Despite the importance of arbitration for commercial dispute resolution, this doctrine had not been fully addressed, let alone adequately ‘regulated’. The author effectively provides the first practical and comprehensive guidance on res judicata matters for international arbitration practitioners with a clear focus on commercial arbitration. The book is structured in two parts. Part I examines the doctrine of res judicata in litigation, providing a systematic analysis of the doctrine as applied in different domestic laws (including, in particular, England, France, Switzerland, and the United States), as well as in private and public international law. Part II explores and determines whether, and to what extent, the res judicata doctrine may be applied by international commercial arbitral tribunals. Case law is systematically presented and analysed. Several case studies are identified in which issues of res judicata may arise before arbitral tribunals and solutions are being offered. Schaffstein argues that transnational principles of res judicata should be v

Series Editor’s Preface elaborated and seeks to formulate such principles. Her analysis looks at how the doctrine should be applied by arbitral tribunals in their relations with other arbitral tribunals or state courts, and within the arbitral proceedings pending before them. Consequently, the author sets out the transnational principles in the form of guidelines for international arbitrators. The choice for ‘transnational’ principles is justified to ensure the integrity and autonomy of the arbitral process and its differences from litigation, and to further guarantee that solutions do not strictly originate from any given legal system while effectively being compatible with all developed legal systems—but also introducing a high degree of fairness, certainty, and predictability that arbitration users increasingly demand. The author of this book assumed a significant challenge and fully succeeded in her task, making a major contribution to the study of this highly important topic. The monograph is a testament of extensive comparative law work and provides a wealth of research and a systematic doctrinal analysis. It is also very well written and is, as such, accessible, innovative in academic terms, precise, and very relevant to practice. I am also personally delighted with this book, the eleventh in the Oxford International Arbitration Series, as it has developed from research conducted to a large extent in the School of International Arbitration at the Centre for Commercial Law Studies, Queen Mary University of London. LM London 7 August 2015

vi

FOR EWOR D

Over the course of the last few decades, the face of international commercial arbitration has changed drastically. Not only has there been a sharp rise in the number of disputes submitted to international arbitral tribunals, but the nature of these disputes has also changed to become increasingly complex, with more and more disputes involving multiple parties, contracts, and issues. Unsurprisingly, multiple proceedings before courts and international arbitral tribunals over identical or related claims, or issues between identical or related parties, are now an increasingly frequent phenomenon, as are questions of res judicata. A reflection on the doctrine of res judicata before international commercial arbitral tribunals is thus most timely. It has been said that ‘the defense of res judicata is universally respected, but actually not very well liked’.1 Whether res judicata is liked or not, uncertainty and confusion surround its application in international commercial arbitration, ranging from misunderstandings about the nature and content of the res judicata doctrine, the situations to which it applies, the law or rules of law governing res judicata in international arbitration, the requirements for the doctrine to apply, and the effects of a decision with res judicata in subsequent arbitration proceedings. The present book, which is the result of a PhD thesis presented at Queen Mary and Geneva universities, sheds light on these and many other important questions of res judicata that international commercial arbitral tribunals and practitioners now commonly face. It examines the doctrine of res judicata in comparative and private international law—​covering the laws of England, the United States, France, and Switzerland—​as well as in public international law. It then explores the application of res judicata principles in international commercial arbitration. The central question underlying this work is whether the traditional doctrine of res judicata as initially developed in domestic laws for court judgments should apply before international arbitral tribunals in the light of the specificities of international commercial arbitration in its current state. To date, courts and international arbitral tribunals are inclined to apply a particular domestic law when faced with res judicata issues, despite the absence of any clear conflict-​of-​laws rule. Silja Schaffstein identifies the weaknesses of this approach and demonstrates why the better approach is for international commercial arbitral tribunals to apply 1

  Dissenting opinion by Judge Clarke in Riordan v Ferguson, 147 F.2d 983, 988 (2d Cir. 1945).

vii

Foreword transnational res judicata principles, developed with the specificities of international commercial arbitration in mind, rather than domestic law. At the same time, transnational res judicata principles must necessarily build on the commonalities of national laws, which must be adjusted to the particularities, nature, and objectives of international commercial arbitration. This book fills a gap: it is the first book discussing in depth the application of the res judicata doctrine by international commercial arbitral tribunals. Apart from various articles, to date the most important work on this subject is the 2006 ‘Recommendations on Res Judicata and Arbitration’ by the International Law Association, together with the accompanying reports. However, many practitioners and academics may not find them truly helpful in that they leave many questions untouched. The present research provides international arbitration practitioners—​be they arbitrators or counsel—​and academics with most valuable information and analysis. The author is particularly commendable for having summarized her findings in the form of transnational res judicata principles for international commercial arbitral tribunals. No doubt these principles and the underlying research and analysis greatly contribute to a better understanding of what is currently one of the major and most complex topics in the field of international arbitration. Gabrielle Kaufmann-​Kohler Geneva 29 July 2015

viii

ACK NOW LEDGEMENTS

This book is a revised version of my doctoral dissertation, written under the joint supervision of Professor Gabrielle Kaufmann-​Kohler of the University of Geneva, School of Law, and Professor Loukas Mistelis, Clive M. Schmitthoff Professor of Transnational Commercial Law and Arbitration at Queen Mary University of London. My first debt of gratitude is to them. I am particularly grateful to Professor Kaufmann-​Kohler for her unfailing generosity in sharing her experience, expertise, and precious time. She has been and still is a wonderful mentor and an inspiration. I am equally grateful to Professor Mistelis for his continuous support and feedback, and for recommending me for the Ilse Schmitthoff Scholarship in International Commercial Law, which allowed me to focus on my doctoral studies. Furthermore, I am immensely grateful to Professors Kaufmann-​Kohler and Mistelis for recommending my doctoral dissertation for publication with Oxford University Press and for writing the foreword and preface to this book. I would like to thank my examiners, Professor Thomas Kadner of the University of Geneva, V.V. Veeder QC of Essex Court Chambers in London, and Professor Jan Kleinheisterkamp of the London School of Economics, for their valuable comments during my viva voce examination, especially their suggestions for Chapter 6 on ‘Transnational Res Judicata Principles for International Commercial Arbitral Tribunals’. I am also grateful to Norah Gallagher, Academic Director of the Energy and Natural Resources Law Institute at Queen Mary University of London, and Rebecca Lanctot for their valuable comments on earlier drafts of this book. They, like Professors Kaufmann-​Kohler and Mistelis, are of course all absolved of any responsibility with respect to possible shortcomings and errors that remain in this book and which are entirely mine. Furthermore, many thankful thoughts go to Professor Julian D.M. Lew QC of 20 Essex Street Chambers and Queen Mary University of London, who took me under his wing when I arrived in London and offered me the opportunity to work with him at 20 Essex Street Chambers. He has been a wonderful mentor and friend. Thank you, Julian, for such an enriching experience, and for your generosity, guidance, and support. There are many more people who have helped me make this book. I would like to mention in particular Dr. Laurent Lévy, Professors Antonio Rigozzi and Sébastien Besson, Sabina Sacco, Erika Hasler, Marion Paris, Eva Kalnina, and Dr. Fabrice Robert-​Tissot of Lévy Kaufmann-​Kohler in Geneva; Monica Fernandez-​Fonseca ix

Acknowledgements of Allen & Overy in Paris; Dr. Florian Stadtler of the University of Exeter; Stéphanie Lammar, Maire en exercice de la Ville de Carouge; David Holloway of No. 5 Chambers in London; Dr. Thomas Schultz of King’s College London; Professor Stavros Brekoulakis of Queen Mary University of London; and Dr.  Romesh Weeramantry of Clifford Chance in Hong Kong. Many thankful thoughts also go to my New North Road flatmates, Constance Ridout, Kylie Duff, Eveline Moser, Eugene DeSouza, Marco Comuzzi, and Alex Miller, for being my family away from home and for some of my most treasured memories. Finally, I would like to thank Oliver Kiehl for his support and patience over the past months. Lastly and most importantly, I am immensely grateful to my family: my brother Søren, my sisters Sofia and Stella, my godmother Malou, and especially my parents, Anne and Wolfgang Schaffstein. I am dedicating this book to my parents in love and gratitude. Thank you for giving me not only roots, but also wings.1 Silja Schaffstein Geneva 18 November 2015

1  Johann Wolfgang von Goethe allegedly said that ‘there are two things children should get from their parents: roots and wings’.

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CONTENTS

Table of Cases  Table of Legislation  List of Terms and Abbreviations 

xv xxxi xxxvii

Introduction  A. Literature Review 

0.07

B. Aim of this Research 

0.14

C. Methodology 

0.15

D. Scope of this Research 

0.21

E. Terminology 

0.22

I  THE DOCTR INE OF R ES JUDICATA IN LITIGATION 1.  The Doctrine of Res Judicata in Domestic Laws  A. Common Law 

1.04 1.05 1.07 1.17 1.37 1.47 1.50 1.61 1.71

1. England  a. Constituent elements  b. Effects  c. The same parties  2. United States  a. Constituent elements  b. Effects  c. The same parties 

B. Civil Law 

1. France  a. Constituent elements  b. Effects  c. Requirements for the application of the doctrine of res judicata  2. Switzerland  a. Constituent elements  b. Effects  c. Requirements for the application of the doctrine of res judicata 

C. Conclusion 

1.87 1.89 1.92 1.105 1.110 1.127 1.132 1.147 1.149 1.159

xi

Contents 2.  The Doctrine of Res Judicata in International Law  A. Private International Law 

2.06 2.09 2.42 2.58

B. Public International Law 

2.66 2.76 2.77 2.84 2.85 2.87 2.88 2.92 2.99 2.105 2.108 2.114 2.120 2.127 2.129

C. Conclusion 

2.131

1. The Brussels I Regulation  2. The Hague Convention on Choice of Court Agreements  3. The ALI/​U NIDROIT Principles of Transnational Civil Procedure  1. Constituent elements  a. A judgment  b. A judicial court or tribunal  c. A tribunal of competent jurisdiction  d. A final decision  e. A judgment on the merits?  f. The scope of res judicata  2. Effects  3. Requirements for the application of the doctrine of res judicata  a. Identity of parties  b. Identity of object  c. Identity of cause  d. Identity of facts?  e. Identity of legal order 

II  THE DOCTR INE OF R ES JUDICATA IN INTER NATIONA L COMMERCI A L A R BITR ATION  3.  Res Judicata Issues Arise in International Commercial Arbitration A. Issues of Res Judicata Between International Commercial Arbitral Tribunals and State Courts 

3.04

B. Issues of Res Judicata Between Different International Commercial Arbitral Tribunals 

3.09

C. Issues of Res Judicata Before the Same Arbitral Tribunal 

3.17

D. Conclusion 

3.20

4.  Res Judicata in International Commercial Arbitration—​A Problem A. Interests at Stake Due to the Occurrence of Res Judicata Issues in International Commercial Arbitration  1. Waste of resources  2. Undue burden on the winning party in the first proceedings  3. Risk of inconsistent decisions 

B. How are Res Judicata Issues Currently Dealt With in International Commercial Arbitration Law and Practice?  1. International commercial arbitration law  a. Domestic arbitration laws 

xii

4.03 4.04 4.05 4.06 4.12 4.14 4.15

Contents b. Institutional arbitration rules  c. International commercial arbitration conventions  d. International arbitration ‘soft law’: The ILA reports and ­Recommendations on res judicata and arbitration  e. Conclusion  2. International commercial arbitration practice  a. Which law governs res judicata issues in arbitration proceedings?  b. Which res judicata requirements must be met before ­international commercial arbitral tribunals?  c. To what extent have international arbitral tribunals afforded res judicata effects to prior decisions?  d. In what circumstances have international commercial arbitral tribunals denied res judicata effects to prior decisions that were res judicata?  e. What effects have international commercial arbitral tribunals afforded to prior decisions that were not res judicata?  f. Conclusion 

C. Conclusion 

4.97 4.105 4.114 4.115 4.122 4.126 4.142 4.162 4.170 4.173 4.179 4.188

5. Search for an Appropriate Approach A. Possible Approaches to Res Judicata Before International Commercial Arbitral Tribunals  1. 2. 3. 4.

Arbitral autonomy  Conflict-​of-​laws approach  Comparative law approach  Transnational approach 

B. The Appropriate Approach: Transnational Res Judicata Principles for International Commercial Arbitration 

1. Analogy between international commercial arbitration and ­domestic litigation for res judicata purposes  a. What is international commercial arbitration?  b. Fundamental features of international commercial arbitration  c. Conclusion  2. Sources of transnational res judicata principles  3. Legal basis for the application of transnational res judicata principles 

C. Conclusion 

5.04 5.05 5.14 5.27 5.31 5.37 5.39 5.40 5.47 5.91 5.95 5.105 5.114

6. Transnational Res Judicata Principles for International Commercial Arbitral Tribunals A. Res Judicata in Cases of Prior National Court Judgments Before International Commercial Arbitral Tribunals  1. Constituent elements of a res judicata  a. A judicial decision  b. A judicial tribunal 

xiii

6.04 6.16 6.17 6.18

Contents c. A final and binding decision  d. A judicial tribunal with jurisdiction over the parties and the subject matter?  e. A decision ‘on the merits’  2. The scope of res judicata effects to be given to national court ­judgments in international commercial arbitration proceedings  a. Claim preclusion  b. Issue preclusion  c. The abuse of process doctrine  3. Requirements for the application of the res judicata doctrine  a. The triple identity test  b. Is the prior judgment capable of recognition in the country of the arbitral seat?  4. Conclusion 

B. Res Judicata in Cases of Prior Arbitral Awards Before International Commercial Arbitral Tribunals 

1. Constituent elements of a res judicata  a. An arbitral award  b. A final and binding arbitral award  c. A valid arbitral award  d. An arbitral tribunal with jurisdiction over the parties and the subject matter?  e. An arbitral award ‘on the merits’  2. The scope of res judicata effects to be given to prior arbitral awards in international commercial arbitration proceedings  a. Claim preclusion  b. Issue preclusion  c. The abuse of process doctrine  3. Requirements for the application of the res judicata doctrine  a. The triple identity test  b. Is the prior arbitral award capable of recognition in the country of the arbitral seat of the other arbitration?  4. Conclusion 

C. Transnational Res Judicata Principles for International Commercial Arbitral Tribunals 

1. Transnational res judicata principles with respect to prior national court judgments  2. Transnational res judicata principles with respect to prior arbitral awards 

6.19 6.23 6.32 6.66 6.68 6.73 6.89 6.103 6.106 6.124 6.135 6.139 6.142 6.143 6.154 6.159 6.164 6.167 6.195 6.197 6.200 6.206 6.208 6.210 6.215 6.222 6.227 6.230 6.239 299

Conclusion  Bibliography  Index 

303 317

xiv

TABLE OF CASES

A R BITR A L  AWA R DS American and British Claims Arbitration Tribunal In re S.S. Newchwang (Great Britain v United States of America), Claim No. 21, 9 December 1921, AJIL, Vol. 16 (1922), pp. 323 et seq.���������������������������������������������������2.104 Cairo Regional Centre for International Commercial Arbitration CRCICA Case No 67/​1995, Award, 11 August 1996, Arbitral Awards of the Cairo Regional Centre for International Commercial Arbitration, M.E. Alam Eldin (ed.), 2000, pp. 153 et seq.���������������������������������3.05, 4.99, 4.104, 4.127, 4.128, 4.142, 4.146, 5.100 Chamber of National and International Arbitration of Milan Chamber of National and International Arbitration of Milan, Case No. 1491, 20 July 1992, Yearbook Commercial Arbitration Vol. XVIII, A.J van den Berg (ed.), (1993), pp. 80 et seq. (reported in HANOTIAU, Bernard, Complex Arbitrations, The Hague 2005, para. 555, pp. 254 et seq.).���������������������������������������������������������� 3.15, 6.201 Court of Arbitration for Sport Dieter Baumann v International Olympic Committee (IOC), National Olympic Committee of Germany and International Amateur Athletic Federation (IAAF), Award, 22 September 2000, CAS ad hoc Division (O.G. Sydney 2000) 2000/​06, Recueil des sentences du TAS/​Digest of CAS Awards II 1998–​2000 (Matthieu Reeb ed., 2002), pp. 633 et seq.������������������������������������������������������������������������������������3.16, 4.131, 4.139, 4.147 French-​Venezuelan Mixed Claims Commission of 1902 French-​Venezuelan Mixed Claims Commission of 1902, Company General of the Orinoco, 31 July 1905, RIAA, Vol. X, pp. 184 et seq.������������������������������������������������������������2.94, 2.102 International Centre for Settlement of Investment Disputes ICSID, Apotex Holdings Inc., Apotex Inc v United States of America, ICSID Case No. ARB(AF)/​12/​1, Award, 25 August 2014, available at http://​icsid.worldbank.org.��������������������������������������������������������������2.98, 2.101, 2.102, 2.106 ICSID, RSM Production Corporation et al. v Grenada, ICSID Case No. ARB/​10/​6, Award, 10 December 2010, available at http://​icsid.worldbank.org.����������� 2.94, 2.102, 2.106 ICSID, Phoenix Action Ltd v The Czech Republic, Award, 15 April 2009, available at http://​icsid.worldbank.org.�����������������������������������������������������������������������������������������2.104 ICSID, Helnan International Hotels A/​S v The Arab Republic of Egypt, Award of 3 July 2008, available at http://​icsid.worldbank.org.����������������������� 2.113, 2.125, 2.127, 2.128 ICSID, Compañia de Aguas del Aconquija SA, Vivendi Universal SA v Argentine Republic, Decision on Jurisdiction, 14 November 2005, available at http://​w ww.investmentclaims.com.�������������������������������������������������������������������������������2.104 ICSID, Waste Management Inc. v. United Mexican States, Decision on Mexico’s Preliminary Objection concerning previous proceedings, 26 June 2002, ILM, Vol. 41 (2002), pp. 1315 et seq.�������������������������������������������������������������������������������� 2.67, 2.70

xv

Table of Cases ICSID, Amco Asia Corp v. Indonesia (Resubmission: Jurisdiction), ILM, Vol. 27 (1988), pp. 1281 et seq.��������������������������������������������������������������������� 2.70, 2.92, 2.102 International Chamber of Commerce ICC Case Nos 2745 and 2762, 1977, Collection of ICC Arbitral Awards (1974–​1985), (Siegvard Jarvin and Yves Derains ed., 1990), pp. 325 et seq. ���������������������������������������3.15, 4.127, 4.128, 4.164, 6.204 ICC Case No. 3383, 1979, Collection of ICC arbitral awards (1974–​1985), (Siegvard Jarvin and Yves Derains ed., 1990) pp. 394 et seq.��������������������������������� 3.11, 4.132, 4.145, 4.156, 6.165, 6.218 ICC Case No. 3540, 1980, Collection of Arbitral Awards (1974–​1985), (Siegvard Jarvin and Yves Derains ed., 1990), pp. 399 et seq. �����������������������������������������4.127 ICC Case No. 4131, 1982, Yearbook Commercial Arbitration, Vol. IX, (A J van den Berg ed.), (1982) pp. 131 et seq.���������������������������������������������������������������������5.95 ICC Case No. 3267, 1984, Yearbook Commercial Arbitration, Vol. XII, (A J van den Berg ed.), (1987), pp. 87 et seq.�������������������������� 3.18, 4.136, 4.161, 4.168, 6.205 ICC Case No. 4126, 1984, Collection of Arbitral Awards (1974–​1985), (Siegvard Jarvin and Yves Derains ed., 1990), pp. 511 et seq.��������������������������������� 3.06, 4.135, 4.136, 4.146, 4.148, 4.158, 4.174, 6.60 ICC Case No. 4862, 1986, Collection of ICC Arbitral Awards 1986–​1990, (Sigvard Jarvin, Yves Derains, Jean-​Jacques Arnaldez ed., 1994), pp. 508 et seq.������������� 4.157 ICC Case No. 5423, 1987, Collection of Arbitral Awards (1986–​1990), (Sigvard Jarvin, Yves Derains, Jean-​Jacques Arnaldez ed., 1994), pp. 339 et seq.��������������� 3.11 ICC Case No. 5294, 1988, Yearbook Commercial Arbitration, Vol. XIV, (A J van den Berg ed.), (1989), pp. 137 et seq. ����������������������������������������������������������������� 4.157 ICC Case No. 5901, 1989, award reported by Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001, (2004), p. 19.�������������������������������� 3.09, 4.127 ICC Case No. 6293, 1990, award reported by Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001, (2004), p. 20.����������4.129, 4.131, 4.146, 4.147 ICC Case No. 6363, 1991, Yearbook Commercial Arbitration, Vol. XVII, (A.J. van den Berg ed.), (1992), pp. 186 et seq.���������3.05, 3.08, 4.137, 4.146, 4.148, 4.175, 5.100 ICC Case No. 6840, 1991 Collection of Arbitral Awards (1991–​1995), (Jean-​Jacques Arnaldez, Yves Derains, Dominique Hascher, Paris, New York, 1997), pp. 467 et seq.�������������������������������������������������������������������������������������5.108 ICC Case No. 6079, 1992, award reported by Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001, Paris 2004, p. 27.����������������������������������� 6.145 ICC Case No. 6233, 1992, Yearbook Commercial Arbitration, Vol. XX, (A.J. van den Berg ed.), (1995), pp. 58 et seq.���������������������������������������������������������� 3.09, 4.134 ICC Case No. 6535, 1992, Collection of Arbitral Awards (1991–​1995), (Jean-​Jacques Arnaldez, Yves Derains, Dominique Hascher, Paris, New York, 1997), pp. 495 et seq.������������������������������������������������������������������3.05, 4.156, 5.100 ICC Case No. 7438, 1994, award reported by Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001, (2004), p. 19.��������������������� 4.127, 4.128, 4.149, 4.166, 6.204 ICC Case No. 8023, 1995, award reported by Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001, (2004), p. 21. ����������������������3.16, 4.127, 4.128, 4.131, 4.148, 4.165 ICC Case No. 2858, 1996, award reported by Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001, (2004), p. 30. ���������������������������������3.18

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Table of Cases ICC Case No. 7061, 28 November 1997, award reported by Bernard Hanotiau, Complex Arbitrations, (2005), para. 551.������������������������������������������������������ 3.16, 4.154, 4.176 ICC Case No. 9787, 1998, Yearbook Commercial Arbitration, Vol. XXVII, (A.J. van den Berg ed.), (2002), pp. 181 et seq.�������������������������������������������������������������������3.08 ICC Case No. 9800, 2000, Collection of ICC Arbitral Awards (2001–​2007), (Jean-​Jacques Arnaldez, Yves Derains, Dominique Hascher, (2009), pp. 659 et seq.�������� 4.149, 5.20 ICC Case No. 10027, 2000, award reported by Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001, (2004), p. 20. ���������������������������������������4.129 ICC Case No. 10574, 2000, award reported by Horacio A. Grigera Naon, Choice-​of-​law Problems in International Commercial Arbitration, RCADI, tome 289 (2001), p. 171.������4.127 ICC, Partial Award, 26 June 2001, Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan (cited in Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46, para. 33).���������������������������������������������������������������������������5.57 ICC Case No. 10623, 2001, ASA Bulletin, Vol. 21, No. 1 (2003), pp. 82 et seq.�������������4.157, 5.88 ICC, A v Z, Order No. 5, 2 April 2002, regarding Claimant’s request for interim relief, ASA Bulletin, Vol. 21, No. 4 (2003), pp. 810 et seq. ���������������������������� 3.06, 4.04, 4.143, 6.60 ICC Case No. 12226, 2004, award reported in commentary to ICC Case No. 9800, 2000, Collection of ICC Arbitral Awards (2001–​2007), (Jean-​Jacques Arnaldez, Yves Derains, Dominique Hascher, 2009), p. 667.�����������������������������������������������������������5.20 ICC Case No. 13507, Company X (Spain) v Company Y (Switzerland), Company Z, in liquidation (Switzerland), Final Award, Yearbook Commercial Arbitration, Vol. XXXV, (Albert Jan van den Berg ed), (2010), pp. 158–​167.���������������������������4.127, 4.160 ICC Case No. 13509, 2006, 4 Journal du droit international 1205 (2008). �����������������4.131, 6.141 ICC Case No. 13808, 2008, reported in Luca Radicati di Brozolo, Res Judicata, Post Award Issues, ASA SPECIAL SERIES No. 38 (Pierre Tercier ed., 2011), pp. 139–​140 and Pierre Mayer, L’ obligation de concentrer la matiere litigieuse s’ impose-​t-​elle dans I’arbitrage international?, 2 Cahiers De L’Arbitrage 413, pp. 417–​418 (2011). ������������������������������������������4.63, 4.127, 4.131, 4.167 ICC Case No. 13254, 2011, reported in Luca Radicati di Brozolo, Res Judicata, Post Award Issues, ASA SPECIAL SERIES No. 38 (Pierre Tercier ed., 2011) pp. 140–​141. �������������������������������������������������������������������������������������������������������� 4.63, 4.167 Iran-​US Claims Tribunal Iran-​US Claims Tribunal, Case No. 601-​A 3/​A8/​A9/​A14/​B61-​FT Full Tribunal, Partial Award, 17 July 2009, pp. 1 et seq. �������������������������������������������������������������������������2.97 Iran-​US Claims Tribunal, Case No. A33 (132-​A 33-​F T), Awards of the Full Tribunal, 9 September 2004, Yearbook Commercial Arbitration, Vol. XXX, (A.J. van den Berg ed.), (2005), pp. 279 et seq. ������������������������������������������������������ 3.12, 4.149 Permanent Court of Arbitration PCA, Pious Fund of the California (United States v Mexico), 14 October 1902, The Hague Court Reports, pp. 1 et seq.������������������������������������������������������������������2.70, 2.104 PCA, Dispute Concerning the Course of the Frontier Between BP 62 and Mount Fitzroy (“Laguna Del Desierto”) (Argentina v Chile), 21 October 1994, ILR, Vol. 113, pp. 1 et seq.������������������������������������������������������������������������������������������������ 2.67, 2.70 PCA, Trail Smelter Arbitration (Canada v USA), 16 April 1938 and 11 March 1941, RIAA, Vol. 3 (1941), pp. 1905 et seq. ���������������������������������������������������2.67, 2.70, 2.88, 2.105 PCA, Affaire des chemins de fer Bužau-​Nehoiaşi Railway (Allemagne c Roumanie), 7 July 1939, RIAA, Vol. 3 (1939), pp. 1827 et seq.�����������������������������������������������������������2.127 PCA, Case Concerning the Delimitation of the Continental Shelf Between the United Kingdom of Great Britain and Northern Ireland and the French Republic (Interpretation of the Decision of 30 June 1977) (United Kingdom v France), 14 March 1978, RIAA, Vol. 18, pp. 270 et seq.��������������������������������������������������������2.94, 2.96

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Table of Cases PCA, The Government of Sudan v The Sudan People’s Liberation Movement/​Army, Final Award, 22 July 2009, available at http://​w ww.pca-​cpa.org.�����������������������������������6.175 Spanish-​US Claims Commission Machado Case (1880), reported in John Bassett Moore, History and Digest of the International Arbitrations to Which the United States Has Been a Party, Vol. 3, 1898, pp. 1293 et seq.������������������������������������������������������������������������������������������� 2.117 Delgado Case (1881), reported in John Bassett Moore, History and Digest of the International Arbitrations to Which the United States Has Been a Party, Vol. 3, 1898, pp. 2196 et seq.������������������������������������������������������������������������������������������� 2.116 Swedish Chamber of Commerce SCC Case No. 24 of 2002, reported in 2 Stockholm Arbitration Report, (2004) and by Kaj Hobér, Res judicata and lis pendens in international arbitration, in Collected Courses of the Hague Academy of International Law, Vol. 366, pp. 285–​286.���������������4.162 United Nations Commission on International Trade Law UNCITRAL, Antoine Biloune and Marine Drive Complex Ltd v Ghana Investments Centre and the Government of Ghana, Awards of 27 October 1989 and 30 June 1990 Yearbook Commercial Arbitration, Vol. XIX (A.J van den Berg ed.), (1994), pp. 11 et seq.�����������������������������������������������������������������������������3.18, 3.19, 4.172–​4.174, 6.183 UNCITRAL, Wintershall AG, International Ocean Resources Inc, Veba Oel AG, Deutsche Schachtbau-​und Tiefbohrbesellschaft mbH, Gulfstream Resources Canada Ltd v The Government of Qatar, Partial Award of 5 February 1988 and Final Award of 31 May 1988, Yearbook Commercial Arbitration, A J van den Berg (ed.), Vol. XV (1990), pp. 30 et seq.������������������������������������������������������������������������ 3.18, 3.19, 4.132 UNCITRAL, Ronald Lauder v Czech Republic, Final Award, 3 September 2001, available at http://​ita.law.uvic.ca/​documents/​L auderAward.pdf.����������������������������������� 2.110 UNCITRAL, CME Czech Republic, BV v The Czech Republic, Final Award, 14 March 2001, available at http://​w ww.cetv-​net.com/​iFiles/​1439-​cme-​cr_​eng.pdf. �����2.108, 2.110, 2.125 UNCITRAL, CME Czech Republic BV (The Netherlands) v The Czech Republic, Partial Award, September 13, 2001, available at www.italaw.com/​documents/​CME-​2001PartialAward.pdf������������������������ 2.94, 2.111, 6.110 UNCITRAL, unpublished award rendered in 2007, reported in Kaj Hobér, Res judicata and lis pendens in international arbitration, in Collected Courses of the Hague Academy of International Law, Vol. 366, pp. 259–​262.������������������������������������������������� 4.114 DECISIONS R ENDER ED BY INTER NATIONA L A ND SUPR A NATIONA L COURTS A ND TR IBU NA LS European Court of Human Rights ECHR, Cereceda Martin v Spain, Case 16358/​90, 12 October 1992, DR Vol. 73, pp. 120 et seq.�����������������������������������������������������������������������������������������������������������������2.108 Court of Justice of the European Union ECJ, Jean Reynier and Piero Erba v Commission of the European Economic Community, Cases 79/​63 and 82/​63, 9 July 1964, 1964 ECR, p. 259.�������������������������������������������������� 2.69 ECJ, Mrs Emilia Gualco (née Barge) v High Authority of the European Coal and Steel Community, Case 14/​64, 16 February 1965, ECR, p. 51. ���������������������������������������� 2.69 ECJ, Jozef De Wolf v Harry Cox BV, Case 42/​76, 30 November 1976, 1976 ECR, p. 1759. �������������������������������������������������������������������������������������������������������� 2.37

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Table of Cases ECJ, Hoogovens Groep v Commission, Cases 172 and 226/​83, 19 September 1983, 1985 ECR, p. 2831.�������������������������������������������������������������������������������������������������������� 2.69 ECJ, Gubisch Maschinenfabrik KG v Giulio Palumbo, Case 144/​86, 8 December 1987, 1987 ECR, p. 4861.������������������������������������������������������������������������������������������������2.12, 2.28 ECJ, Asteris v Commission, Cases 97, 99, 193 and 215/​86, 1988 ECR, p. 2181.�������������������������2.94 ECJ, Horst Ludwig Martin Hoffmann v Adelheid Krieg, Case 145/​86, 4 February 1988, 1988 ECR, p. 645.���������������������������������������������������������������������������������������� 2.20, 2.22, 2.39 ECJ, France v Parliament, Cases 358/​85 and 51/​86, 22 September 1988, 1988 ECR, p. 4846.�������������������������������������������������������������������������������������������������������� 2.69 ECJ, Italian Republic v Commission of the European Communities, Case C-​281/​89, 19 February 1991, 1991 ECR, p. I-​347.��������������������������������������������������������������������2.69, 2.94 ECJ, Overseas Union Insurance Ltd and Deutsche Ruck UK Reinsurance Ltd and Pine Top Insurance Company Ltd v New Hampshire Insurance Company, Case C-​351/​89, 27 June 1991, 1991 ECR, p. I-​3317.���������������������������������������������������������������������������������2.12 ECJ, Marc Rich & Co. AG v Società Italiana Impianti PA, Case C-​190/​89, 21 July 1991, 1991 ECR, p. I-​3855 �������������������������������������������������������������������������������������������� 6.52, 6.134 ECJ, Solo Kleinmotoren GmbH v Emilio Bloch, Case C-​414/​92, 2 June 1994, 1994 ECR, p. I-​2237.�����������������������������������������������������������������������������������������������2.17, 2.18 ECJ, Tatry v Maciej Rataj, Case C-​406/​92, 6 December 1994, 1994 ECR, p. I-​5439.����������������������������������������������������������������������������������������������2.24, 2.28, 2.29, 2.54 ECJ, Lenz v Commission, Case C-​277/​95, 28 November 1996, 1996 ECR, p. I-​6109.���������������2.94 ECJ, Drouot assurances SA v Consolidated metallurgical industries (CMI industrial sites), Protea assurance and Groupement d’ intérêt économique (GIE) Réunion européenne, Case C-​351/​96, 19 May 1998, 1998 ECR, p. I-​3075.������������������������������������������������������ 2.26 ECJ, Van Uden Maritime BV, trading as Van Uden Africa Line v Kommanditgesellschaft in Firma Deco-​Line and Another, Case C-​391/​95, 17 November 1998, 1998 ECR, p. I-​7091 �������������������������������������������������������������������������������������������� 6.52, 6.134 ECJ, Limburgse Vinyl Maatschappij NV v Commission, Cases T-​305-​07, 313-​16, 318, 325, 328-​9 and 335/​94, 1999 ECR, p. II-​931.�������������������������������������������������������������������2.94 ECJ, France v Monsanto Company and Commission of the European Communities, Case 248/​99P, 8 January 2002, 2002 ECR, p. I-​1.�����������������������������������������������������������2.70 ECJ, Italian Leather SpA v WECO Polstermöbel GmbH & Co, Case C-​80/​00, 6 June 2002, 2002 ECR, p. I-​4995.������������������������������������������������������������������������ 2.19, 2.20 ECJ, Gantner Electronic GmbH v Basch Exploitatie Maatschappij BV, Case C-​111/​01, 8 May 2003, 2003 ECR, p. I-​4207. �������������������������������������������������������������������������������� 2.28 ECJ, Gerhard Köbler v Republik Österreich, Case C-​224/​01, 30 September 2003, 2003 ECR, p. I-​10239.���������������������������������������������������������������������������������������������������� 2.69 ECJ, Maersk Olie & Gas A/​S v Firma M de Haan en W de Boer, Case C-​39/​02, 14 October 2004, 2004 ECR, p. I-​9657. ����������������������������������������������������������������2.12, 2.28 EJC, Rosemarie Kapferer v Schlank & Schick, GMBH, Case C-​243/​04, 16 March 2006, 2006 ECR, p. I-​2585.���������������������������������������������������������������������������� 2.69 ECJ, P & O European Ferries (Vizcaya) and Diputación Foral de Vizcaya v Commission, Joined Cases C442/​03P and C-​471/​03P, 1 June 2006, 2006 ECR, p. I-​4845.��������2.41, 2.69 ECJ, Allianz SpA et al v West Tankers Inc, Case C-​185/​07, 10 February 2009, 2009 ECR, p. I-​663. �������������������������������������������������������������������������������������������� 6.52, 6.134 ECJ, Amministrazione dell’Economia e delle Finanze and Agenzia delle Entrate v Fallimento Olimpiclub Srl, Case C-​2/​08, 3 September 2009, 2009 ECR, p. I-​7501.���������������������������2.39 ECJ, Realchemie Nederland v Bayer CropScience AG, Case C-​406/​09, 18 October 2011, 2011 ECR, p. I-​9773.�������������������������������������������������������������������������������������������������������2.17 ECJ, Artegodan v Commission, Case C-​221/​10P, 19 April 2012, 2012 ECR, p. I-​0000.������������ 2.69 ECJ, Gothaer Allgemeine Versicherung AG et al. v Samskip GmbH, Case C-​456/​11, 15 November 2012, published in the electronic Reports of Cases under http://​curia.europa.eu/​juris/​liste.jsf?num=C- ​456/​11&language=EN.������������������� 2.19, 2.36, 2.37, 2.41, 2.69, 2.94

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Table of Cases International Court of Justice Judgments ICJ, The Corfu Channel Case (Compensation) (United Kingdom of Great Britain and Northern Ireland v People’s Republic of Albania), 15 December 1949, 1949 ICJ Reports, pp. 244 et seq.���������������������������������������������������������������������������������������������� 2.89 ICJ, Case Concerning the Arbitral Award Made by the King of Spain on 23 December 1906 (Honduras v Nicaragua), 18 November 1960, 1960 ICJ Reports, pp. 192 et seq. .������������ 2.69 ICJ, South West Africa Cases (Ethiopia and Liberia v South Africa), Preliminary Objections, 21 December 1962, 1962 ICJ Reports, pp. 319 et seq.������������������������������������������������������ 2.83 ICJ, Case concerning the Northern Cameroons (Cameroon v. United Kingdom), Preliminary Objections, 2 December 1963, 1963 ICJ Reports, pp. 15 et seq. �������������������2.79 ICJ, Barcelona Traction Light and Power Company, Ltd. (New Application) (Belgium v Spain) (Preliminary Objections), 1964 ICJ Reports, pp. 6 et seq. ������������������ 2.87 ICJ, Request for Interpretation of the Judgment of 11 June 1998 in the Case Concerning the Land and Maritime Boundary between Camaroon and Nigeria (Camaroon v Nigeria), Preliminary Objections, 25 March 1999, 1999 ICJ Reports, pp. 31 et seq. ���������������������� 2.69 ICJ, Maritime Delimitation and Territorial Questions between Qatar and Bahrain (Qatar v Bahrain) Merits, 16 March 2001, 2001 ICJ Reports, pp. 40 et seq.�������������������� 2.69 ICJ, LaGrand Case (Germany v United States of America), 27 June 2001, ICJ Reports 2001, pp. 466 et seq. ������������������������������������������������������������������������������������ 2.82 ICJ, Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v Serbia and Montenegro), 26 February 2007, available at http://​w ww.icj-​cij.org. ��������������������������������������������2.69, 2.90 ICJ, Territorial and Maritime Dispute (Nicaragua v Colombia), Application by Honduras for Permission to Intervene, 4 May 2011, available at http://​w ww.icj-​cij.org.�������������������2.94 Advisory Opinions ICJ, Interpretation of Peace Treaties with Bulgaria, Hungary and Romania, Advisory Opinion, 30 March 1950, 1950 ICJ Reports, pp. 221 et seq. ���������������������������� 2.83 ICJ, International Status of South West Africa, Advisory Opinion, 11 July 1950, 1950 ICJ Reports, pp. 128 et seq. ������������������������������������������������������������������������������������ 2.83 ICJ, The Effect of Awards of Compensation Made by the United Nations Administrative Tribunal, Advisory Opinion, 13 July 1954, 1954 ICJ Reports, pp. 47 et seq.������� 2.67, 2.69, 2.84 International Labor Organization Administrative Tribunal ILOAT, Chen (No.2), Judgment No. 547 (1983), reported in August Reinisch, The Use and Limits of Res Judicata and Lis Pendens as Procedural Tools to Avoid Conflicting Dispute Settlement Outcomes, 3(1) Law and Practice of International Courts and Tribunals, p. 64 (2004).������������������������������������������������������������������������������� 2.114 International Tribunal for the Law of the Sea ITLOS Case No. 3 & 4, Southern Bluefin Tuna case (Australia and New Zealand v Japan), Award on Jurisdiction and Admissibility, 4 August 2000, ILM, Vol. 39 (2000), pp. 1359 et seq�����������������������������������������������������2.122 ITLOS Case No. 10, The Mox Plant Case (Ireland v United Kingdom), Request for Provisional Measures, Order of 3 December 2001, available at http://​w ww.itlos.org.�����������������������������������������������������2.125 Permanent Court of International Justice PCIJ, Certain Questions Relating to Settlers of German Origin in the Territory ceded by Germany to Poland, Advisory Opinion, 1923 PCIJ, Ser. B, No. 6. ������������������������������ 2.83 PCIJ, Certain German Interests in Polish Upper Silesia, 1925 PCIJ, Ser. A, No. 6.����������������������������������������������������������������������������������������������� 2.79, 2.83, 2.130

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Table of Cases PCIJ, Certain German Interests in Polish Upper Silesia (the Merits), 1925 PCIJ, Ser. A, No. 7. �������������������������������������������������������������������������������������������������������������������5.67 PCIJ, Polish Postal Service in Danzig Case, 1925 PCIJ, Ser. B, No. 11.�������������������������������������� 2.86 PCIJ, Interpretation of Judgments Nos 7 and 8 (The Chorzów Factory), 1927 PCIJ, Ser. A, No. 13.�������������������������������������������������������������������������������������2.67, 2.73, 2.93, 2.104 PCIJ, Case of the Free Zones of Upper Savoy and the District of Gex, 1929 PCIJ, Ser. A, No. 22.��������������������������������������������������������������������������������������������������������2.80, 2.81 PCIJ, The “Société Commericiale de Belgique”, 1939 PCIJ, Ser. A/​B., No. 78.������� 2.69, 2.99, 2.100 STATE COURT DECISIONS Australia Blair v Curran (1939) 62 CLR 464, HCA.�������������������������������������������������������������������������������1.24 Cameron v Cole (1944) 68 CLR 571, HCA. ����������������������������������������������������������������������������� 1.10 Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (1993) 43 FCR 510.�������������������������1.46 Young v Murphy [1996] 1 VR 279, CA.������������������������������������������������������������������������������������1.45 Austria Oberster Gerichtshof, 20 October 1993, Radenska v Kajo, Rev. arb. (1998), pp. 419 et seq.�������5.61 Oberster Gerichtshof, 23 February 1998, Radenska v Kajo, Rev. arb. (1999), pp. 385 et seq.�����5.61 Bangladesh Himpurna California Energy Ltd v Republic of Indonesia, High Court, Dhaka, 5 April 2000,15 Mealey’s Int. Arb. Rev. (February 2000), pp. A1 et seq.���������������������������6.50 Belgium Brussels Tribunal of First Instance, 6 December 1988, Sonatrach v Ford, Bacon & Davis Inc, ASA Bulletin (1989), p. 213�����������������������������������������������������������������������������5.61 Brussels Court of Appeal, 9 January 1990, Journal des tribunaux (1990), p. 386.���������������������5.61 England and Wales Aldi Stores Ltd v WSP Group Plc & Ors [2007] EWCA Civ 1260.���������������������������������������������1.36 Andrew Henley v Shelley Bloom [2010] EWCA Civ 202.�����������������������������������������������������������1.36 Arnold v National Westminster Bank plc [1991] 2 AC 93, HL.��������������������������������� 1.24, 1.27, 4.28 Associated Electric and Gas Insurance Services Ltd (Aegis) v European Reinsurance Company of Zurich (European Re) [2003] UKPC 11, [2003] 1 All ER (Comm) 253, [2003] 1 WLR 1041, PC.������������������������������������3.14, 4.25, 4.29, 5.16, 5.81, 5.89–​5.90, 6.09 Bank Mellat v Helliniki Techniki SA [1984] 1 QB 291. �������������������������������������������������������������5.62 Barakot Ltd v Epiette Ltd [1998] 1 BCLC 283, CA.�������������������������������������������������������������������1.45 Barrow v Bankside Members Agency Ltd and another [1996] 1 WLR 257, CA.������������������ 1.32, 1.35 Bon Groundwork Ltd v Foster [2012] EWCA Civ 252. ������������������������������������������������������������� 1.10 Bradford & Bingley Building Society v Seddon [1999] 1 WLR 1482, CA.�����������������������������������1.36 Caledonian Railway Co v Turcan [1898] AC 256. �������������������������������������������������������������������� 4.22 Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2) [1967] 1 AC 853, HL. ������ 1.46, 6.09, 6.21, 6.84 Christopher Brown Ltd v Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe Registrierte GmbH [1954] 1 QB 8������������������������������������������������� 1.10 Churchill & Sim v Goddard [1937] 1 KB 92.�����������������������������������������������������������������������������1.45 Colt Industries Inc v Sarlie (No 2) [1996] 1 WLR 1287, CA.����������������������������������������������������� 1.11 Conquer v Boot [1928] 2 KB 336��������������������������������������������������������������������������������������4.25, 4.29 Coppée Lavalin & Voest-​Alpine v Ken-​Ren Chemicals [1994] 2 All ER 449. �������������������������������5.62 Cummings v Heard (1869) LR 4 QB 669.�������������������������������������������������������������������������������� 4.20 Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46. �����������������������������������������������������������������������5.57

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Table of Cases De Crittenden v Bayliss [2005] EWCA Civ 1425.���������������������������������������������������������������������1.32 Desert Sun Loan Corp v Hill [1996] 2 All ER 847, CA.�����������������������������������������������������1.15, 1.16 Dexter Limited v Vlieland-​Boody [2003] EWCA Civ 14.��������������������������������������������������1.36, 4.29 Deutsche Schachtbau-​und Tiefbohrgesellschaft mbH v Ras Al Khaimah National Oil Co and another appeal [1987] 2 All ER 769.���������������������������������������������������������������������������3.05 Diag Human SE v The Czech Republic [2014] EWHC 1639 (Comm).���������������������������� 1.08, 6.159 Doe d Davy v Haddon (1783) 3 Doug KB 310. ������������������������������������������������������������������������ 4.20 DSV Silo-​und Verwaltungsgesellschaft mbH v Owners of The Sennar and 13 other ships, The Sennar (No. 2) [1985] 1 WLR 490, HL.��������������������������������������������1.12, 1.14, 1.15, 1.25 Eastwood & Holt v Studer (1926) 31 Com Cas 251.������������������������������������������������������������������� 1.11 Enron (Thrace) Exploration v Clapp [2005] EWCA Civ 1511.��������������������������������������������������� 1.11 F. J. Bloemen Pty Ltd v Council of the City of Gold Coast [1973] AC 115, PC������������������������������ 4.23 Fidelitas Shipping Co Ltd v V/​O Exportchleb [1966] 1 QB 630; [1965] 1 Lloyd’s Rep. 223, CA.������������������������������������������������������������������������4.22, 4.23, 4.25, 4.28 Gbangbola v Smith and Sherriff Ltd [1998] 3 All ER 730. �������������������������������������������������������� 4.30 Gladman Commercial Properties v Fisher Hargreaves Proctor and others [2013] EWCA Civ 1466.�������������������������������������������������������������������������������������������������������������1.36 Gleeson v J Wippell & Co Ltd [1977] 1 WLR 510. ������������������������������������������������������������ 1.44, 1.45 Good Challenger Navegante SA v Metalexportimport SA (The Good Challenger) [2003] EWCA Civ 1668. ����������������������������������������������������������������������������������������1.08, 1.25 Henderson v Henderson (1843) 3 Hare 100. ��������������������������������1.30, 1.34, 1.36, 1.64, 1.120, 1.126, 1.158, 4.25, 4.26, 4.27, 4.28, 4.29, 4.63, 4.167, 6.91 Henry Boot Constr. Ltd v Alstom Combined Cycles Ltd [2005] EWCA Civ 814, CA.������������������ 4.24 House of Spring Gardens Ltd v Waite and others [1991] 1 QB 241, CA.���������������������������������������1.46 Hoystead v Commissioner of Taxation [1926] AC 155�����������������������������������������������������������������1.25 Hunter v Chief Constable of the West Midlands [1982] AC 529, HL.�������������������������������������������1.39 Imperial Gas Light & Coke Co v Broadbent (1859) 7 HL Cas 600.�������������������������������������������� 4.22 In the matter of Surety Guarantee Consultants Limited and in the matter of the Insolvency Act 1986, Ian Oakley Smith, Dan Schwarzmann v QBE Insurance (Europe) Limited, Markel International Insurance Company Limited, Templeton Insurance Limited [2010] EWHC 3172 (Ch).�������������������������������������������������������������������������������������� 1.08, 1.11 Indian Grace, The [1993] AC 410.������������������������������������������������������������������������������������������� PI.05 Isaacs v Robertson [1985] AC 97.����������������������������������������������������������������������������������������������� 1.10 Johnson v Gore Wood & Co [2002] 2 AC 1. ������������������������������������������������������������� 1.32, 1.36, 1.44 Letang v Cooper [1965] 1 QB 232.���������������������������������������������������������������������������������������������1.20 LIDL GmbH v Just Fitness Limited [2010] EWHC 39 (Ch).��������������������������������������������4.25, 4.29 McIlkenny v Chief Constable of the West Midlands [1980] 1 QB 283, CA. ������������������������ 1.27, 1.39 Mecklermedia Corp v DC Congress GmbH [1998] Ch. 40.���������������������������������������������������������1.45 Merchant International Co Ltd v Natsionalna Aktionerna Kompaniya Naftogaz Ukrayiny [2011] EWHC 1820 (Comm).�����������������������������������������������������������������������������������������6.21 Michael Wilson & Partners Ltd v Sinclair and others [2012] EWHC 2560 (Comm)������������������ 4.29 Molnlycke Health Care AB et al v BSN Medical Ltd et al [2009] EWHC 3370 (Pat)������������������ 2.26 Mulkerrins v Price Waterhouse Coopers [2003] 1 WLR 1937.�����������������������������������������������������1.08 Naraji v Shelbourne MD and others [2011] EWHC 3298 (QB).�������������������������������������������������6.21 National Navigation Company v Endesa Generacion SA [2009] EWCA Civ 1397.���������� 6.52, 6.134 Noble Assurance Co. v Gerling-​Konzern General Insurance Co [2007] EWHC 253 (Comm)������������������������������������������������������������������������������������������������������ 4.23 Nomihold Securities Inc v Mobile Telesystems Finance SA [2012] EWHC 130 (Comm).������������ 4.29 North West Water Ltd v Binnie & Partners [1990] 3 All ER 547. �����������������������������������������������1.24 Nouvion v Freeman (1889) 15 App Cas 1, HL. ���������������������������������������������������������������� 1.11, 6.21 P&O Nedlloyd BV v Arab Metals Co and others [2006] EWCA Civ 1717. ���������������������������������1.24 People’s Insurance Company of China, Hebei Branch; China National Feeding Stuff Import/​Export Corporation v Vysanthi Shipping Co. Ltd (The ‘Joanna V’) [2003] 2 Lloyd’s Rep. 617.�����������������������������������������������������������������������������������������������������������4.25 Pitcher v Rigby (1821) 9 Price 79. �������������������������������������������������������������������������������������������� 4.22

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Table of Cases Powell v Wiltshire [2004] EWCA Civ 534, [2005] QB 117.�������������������������������������������������������1.46 R v Inhabitants of the Township of Hartington Middle Quarter 119 ER 288 �������������������������������1.24 Relfo Ltd v Varsani [2009] EWHC 2297 (Ch.).������������������������������������������������������������������������� 1.16 Republic of Kazakhstan v Istil Group Inc [2006] EWHC 448 (Comm).���������������������������4.157, 6.43 Republic of Kazakhstan v Istil Group Inc (No. 3)[2007] EWHC 2729 (Comm).���������������4.157, 6.43 Ruttle Plant Hire Ltd v Secretary of State for the Environment [2007] EWHC 1773 (TCC).�������������������������������������������������������������������������������������������������������1.31 Secretary of State for Business, Innovation and Skill v Potiwal [2012] EWHC 3723 (Ch).�����������1.44 Seele Austria GmbH Co v Tokio Marine Europe Insurance Limited [2009] EWHC 255 (TCC)���������������������������������������������������������������������������������������������������������1.31 Siporex Trade SA v Comdel Commodities Ltd [1986] 2 Lloyd’s Rep. 428.���������������������������������� 4.23 Smith v Johnson, (1812) 15 East 213.�����������������������������������������������������������������������������������������1.34 Soteriou v Ultrachem [2004] All ER (D) 278 (Apr.) (QB); [2004] IRLR 870.�������������������������� 4.24 Stuart v Linde and others [2008] EWCA Civ 2.�������������������������������������������������������������������������1.36 Sun Life Assurance Co. of Canada, American Phoenix Life and Reassurance Co., Phoenix Home Life Mutual Insurance Co. v The Lincoln National Life Insurance Co [2005] 1 Lloyd’s Rep. 606.����������������������������������������������������������������������������� 3.16, 4.29, 4.31 Svenska Petroleum Exploration AB v Government of the Republic of Lithuania and another (No 2) [2006] EWCA Civ 1529.���������������������������������������������������������������������������4.25 Sweetman v Nathan [2003] EWCA Civ 1115.���������������������������������������������������������������������������1.36 Tannu v Moosajee [2003] EWCA Civ 815. �������������������������������������������������������������������������������1.31 Telfair Shipping Corporation v Inersea Carriers SA, The Caroline P [1983] 2 Lloyd’s Rep. 351.��������������������������������������������������������������������������������������������������4.25, 4.28 Thoday v Thoday [1964] P 181, CA.������������������������������������������������������������������������� 1.20, 1.21, 1.26 Thomas and Agnes Carvel Foundation v Carvel [2007] EWHC 1314 (Ch). �������������������������������1.46 Varsani v Relfo Ltd [2010] EWCA Civ 560, [2011] 1 WLR 1402.��������������������������������������������� 1.16 Watt (formerly Carter) v Raghib Ahsan [2007] UKHL 51 ������������������������������������������������ 1.08, 1.16 Westland Helicopters Ltd v Al-​Hejailan [2004] 2 Lloyd’s Rep. 523.������������������������������������������ 4.23 Yukos Capital S.A.R.L. v OJSC Rosneft Oil Company [2011] EWHC 1461 (Comm). ������������������������������������������������������������������������������������������������������� 1.24, 1.25, 1.27 Yukos Capital S.A.R.L. v OJSC Rosneft Oil Company [2012] EWCA Civ 855.���������������������������1.25 France Cour de cassation Cour de cassation, 9 October 1984, Pabalk Ticaret Limited Sirketi v Norsolor SA, Rev. arb. (1985), pp. 431 et seq.�����������������������������������������������������������������������������������������5.61 Cour de cassation, 28 October 1987, SARL Bureau Qualitas et Conte v Viet et Boudy, Rev. arb., No. 1 (1988), pp. 149 et seq.�������������������������������������������������������������������������������4.57 Cour de Cassation, Fougerolle v Procofrance, 25 May 1992, Rev. arb. (1993), p. 91�����������������4.172 Cour de cassation, 10 March 1993, Polish Ocean Line v Société Jolasry, Rev. arb. (1993), p. 258 (2nd case).�������������������������������������������������������������������������������������������������5.61 Cour de Cassation, 20 December 1993, Municipalité de Khoms El Mergeb v Dalico, Rev. arb., No. 1 (1994), pp. 116 et seq.�������������������������������������������������������������������������������5.57 Cour de cassation, 23 March 1994, Société Hilmarton v Société OTV, Rev. arb. (1994), pp. 327 et seq.�������������������������������������������������������������������������������������������������������������������5.61 Cour de cassation, 25 March 1999, Acquier v Faure, Rev. arb., No. 2 (1999), pp. 311 et seq.�������������������������������������������������������������������������������������������������������������������4.58 Cour de cassation, 31 March 2004, Bull. civ., IV, No. 64, cited in Laura Weiller, L’extension du principe de la concentration des fondements juridiques à l’arbitrage, note sous Cass. civ. 1er, 28 May 2008, Rev. arb., No. 3 (2008), p. 471.������������������ 1.103, 3.12 Cour de cassation, 22 November 2005, Bull. civ., I, No. 425, cited in Laura Weiller, L’extension du principe de la concentration des fondements juridiques à l’arbitrage, note sous Cass. civ. 1er, 28 May 2008, Rev. arb., No. 3 (2008), p. 471.��������������������������� 1.103 Cour de cassation (assemblée plénière), 7 July 2006, Cesareo v Cesareo, available at http://​w ww.courdecassation.fr. �����������������������������������������������������������������������1.124, 1.158

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Table of Cases Cour de cassation, 13 July 2006, Bull. civ., II, No. 208, cited in Laura Weiller, L’extension du principe de la concentration des fondements juridiques à l’arbitrage, note sous Cass. civ. 1er, 28 May 2008, Rev. arb., No. 3 (2008), p. 471. ����������������������������������������� 1.103 Cour de cassation, 29 June 2007, Société PT Putrabali Adyamulia v Société Rena Holding et al, Rev. arb. (2007), pp. 645 et seq.�������������������������������������������������������������������5.61 Cour de cassation (3ème Ch. Civ), 13 February 2008, M. jorge X v société civile immobilière du 24 rue des Petites Ecuries, no. 06-​22.093, available at http://​w ww.courdecassation.fr..������������������������������������������������������������������������������������� 1.125 Cour de cassation, 7 May 2008, Procédures, July 2008, No. 201, cited in Laura Weiller, L’extension du principe de la concentration des fondements juridiques à l’arbitrage, note sous Cass. civ. 1er, 28 May 2008, Rev. arb., No. 3 (2008), p. 471.��������������������������� 1.103 Cour de cassation, 28 May 2008, Sté G. and A. Distribution SARL v Sté Prodim SAS, Rev. arb., No. 3 (2008), pp. 461 et seq.��������������������������������������������������������1.120, 1.126, 4.61 Cour de cassation, 12 November 2008, no. 08-​10.138, cited in Jacques Héron and Thierry Le Bars, Droit Judiciaire Privé, (4th ed., 2010), para. 335-​1, fn 112.������������������� 1.125 Cour de cassation, 13 March 2009, M. Antoine X v M. Claude Y, no. 08-​16.033, available at http://​w ww.courdecassation.fr.������������������������������������������������������������������� 1.103 Cour de cassation (2e Ch. Civ), 10 June 2010, Frot Barbier v Deplebain et al., no. 09-​67.172: JurisData no. 2010-​008925.������������������������������������������������������������������� 1.125 Cour de cassation (1ère Ch. Civ), 26 January 2011, L’Institut national de la santé et de la recherche médicale (INSERM) v Fondation Letten F. Saugstad, no. 09-​10.198, available at http://​w ww.courdecassation.fr.���������������������������������������������������������������������4.58 Cour de cassation (1ère Ch. Civ), 3 February 2011, X v Y and Z, no. 09-​71.179, available at http://​w ww.courdecassation.fr.������������������������������������������������������������������� 1.103 Cour de Cassation (1ère ch. Civ.), 12 April 2012, Société Carrefour v société Codis Aquitaine et autre, Rev. arb., No. 1 (2013), pp. 121 et seq.���������������������������������������� 4.58, 4.61 Cour d’appel de Paris Cour d’appel de Paris, 25 June 1982, Société Grainex v Société Cargill, Rev. arb., No. 3 (1983), pp. 344 et seq.�������������������������������������������������������������������������������������������� 4.68 Cour d’appel de Paris, 18 December 1985, X v A et al, Rev. arb., No. 2 (1988), pp. 330 et seq.�������������������������������������������������������������������������������������������������������������������4.59 Cour d’appel de Paris, Polyfrance Imma v Sporprom Service BV, 29 April 1986, reported in Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001, (2004), p. 29 (Rev. arb., No. 4 (2001), pp. 805 et seq.). �������������������������4.69 Cour d’appel de Paris, 16 February 1995, Alama El Radi Khalil Ali Darwish v Société Huure Oy, Rev. arb., No. 1 (1996), p. 125 et seq. ���������������������������������������������������4.69 Cour d’appel de Paris, 12 January 1996, Gouvernement de l’Etat du Qatar v Crighton Ltd, Rev. arb., No. 3 (1996), pp. 428 et seq. �����������������������������������������������������������������������������4.70 Cour d’appel de Paris, 16 April 1996, Gallay v Fabricated Metal, reported in Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001, (2004), p. 29 (Rev. arb., No. 4 (2001), pp. 805 et seq.).�����������������������������������������������������4.69 Cour d’appel de Paris, 14 January 1997, République Arabe d’Egypte v Société Chromalloy Aero Services, JDI (1998), p. 750. �������������������������������������������������������������������������������������5.61 Cour d’appel de Paris, 2 April 1998, Société Technip v Société Asmidal, Rev. arb., No. 4 (1999), pp. 821 et seq.���������������������������������������������������������������������������������������������4.69 Cour d’appel de Paris, 29 April 2003, Société nationale des pétroles du Congo v Société Total Fina Elf E&P Congo, JDI, Vol. 2 (2004), pp. 511 et seq. �������������������������������������������4.57 Cour d’appel de Paris, 10 June 2004, Société Bargues Agro Industries v Société Young Pecan Company, Rev. arb., No. 1 (2006), p.154 et seq.�������������������������������������������������������5.61 Cour d’appel de Paris, 18 November 2004, SA Thalès Air Défense v GIE Euromissile, Rev. arb., No. 3 (2005), pp. 751 et seq.; JDI, No. 2 (2005), comment by Alexis Mourre.�����������������������������������������������������������������������������������1.104, 4.60, 4.63, 4.121

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Table of Cases Cour d’appel de Paris, 10 March 2005, SA Sucres et denrées v Scté Multitrade Cairo, Rev. arb., No. 2 (2006), pp. 456 et seq.�������������������������������������������������������������������1.115, 4.71 Cour d’appel Paris, 29 September 2005, Direction générale de l’aviation civile de l’Emirat de Dubai v Société International Bechtel, Rev. arb. (2006), p. 695 et seq.���������������������������������������������������������������������������������������������������������������������5.61 Cour d’appel de Paris, 11 May 2006, Groupe Antoine Tabet v Républic du Congo, Rev. arb., No. 1 (2007), p. 101.�����������������������������������������������������������������������������������������4.71 Cour d’appel Paris, 18 January 2007, La société SA Lesbats et fils v Monsieur Volker le docteur Grub, cited in Emmanuel Gaillard, Aspects philosophiques du droit de l’arbitrage international, Recueil des Cours de l’Académie de Droit international, Vol. 329 (2007), p. 117. ���������������������������������������������������������������������������������������������������5.61 Cour d’appel de Paris, 13 September 2007, Société Comptoir Commercial Blidéen v Société l’Union Invivo, Rev. arb., No. 2 (2008), pp. 313 et seq.�����������������������������������������6.120 Cour d’appel de Paris, 28 February 2008, Société Liv Hidravlika DOO v SA Diebolt, Rev. arb., No. 4 (2008), pp. 712 et seq.�����������������������������������������������������������������������������4.58 Cour d’appel de Paris, 26 March 2009, Société Papillon Group Corporation v République Arabe de Syrieet autres, Rev. arb., No. 3 (2010), pp. 525 et seq.�������������� 4.56, 6.119 Cour d’appel de Paris, 9 September 2010, Marriott v Jnah development, 4 Cahiers de l’Arbitrage 1171, (2010)�������������������������������������������������������������������4.63, 4.68, 4.71, 4.169 Cour d’appel de Paris, 18 March 2010, Société Prodim S.A.S v Société G et A Distribution, Rev. arb., No. 2 (2010), pp. 345 et seq. ���������������������������������������������������������������� 1.120, 4.172 Cour d’appel de Paris, 17 June 2010, SARL African Petroleum Consultants (APC) v Société Nationale de Raffinage (SONARA), Rev. arb., No. 3 (2010), pp. 671 et seq. ���������������������4.172 Cour d’appel de Paris, 3 February 2011, Département de commercialisation du pétrole -​Petroleum Marketing Department (Sytrol) v SARL Babanapht, No. 08.20951, Rev. arb., No. 1 (2011) pp. 284 et seq. and No. 2 (2011), pp. 468 et seq.�����������������������������4.62 Cour d’appel de Paris, 5 May 2011, SARL Somercom v SARL TND Gida Ve Temizlik Mad Dagtim A.S., No. 10-​5314, Rev. arb., No. 4 (2011), p. 1093.�����������������������4.62 Cour d’appel de Paris, 2 October 2012, S.A. Cevede et autres v S.A. Coopérative de commerçants détaillants “Système U” Centrale Régionale Est, Rev. arb., No. 4 (2012), pp. 868 et seq.���������������������������������������������������������������������������������������������4.58 Other Cour d’appel de Pau, 22 February 2011, Société Carrefour proximité France v SARL Falco et fils, Rev. arb., No. 1 (2011), pp. 287–288.��������������������������������1.120, 4.58, 4.61 Cour d’appel de Reims, 2 November 2011, S.A.J. & P. Avax v Société Tecnimont SPA AS, Case No. 10/​02888 (available under http://​a rbitragem.pt/​jurisprudencia/​a rbitragem-​ estrangeira/​2011-​11-​02-​-​acordao-​da-​cour-​d-​appel-​de-​reims.pdf).�����������������������������������4.57 Tribunal de commerce de Nanterre, 5 September 2001, Société Technip France vSociété Banque extérieure d’Algérie et autres, Rev. arb., No. 2 (2002), pp. 455 et seq. ���������������������4.65 Tribunal de grande instance de Chaumont, 31 January 2002/​Cour d’appel de Dijon, 23 April 2002, JDI, Vol. 2 (2003), pp. 459 et seq.�������������������������������������������������������������4.56 Germany Landgericht Essen, Docket No. 12 O 37/​12, 24 March 2015.�������������������������������������������������6.216 India Upendra Nath Bose v Lall [1940] AIR (PC) 222 ����������������������������������������������������������������������� 1.16 Ireland Yukos Capital S.A.R.L v OAO Tomskneft VNK [2014] IEHC 115.���������������������������������������������5.10 Jamaica Strachan v Gleaner Co Ltd [2005] 1 WLR 3204, PC.��������������������������������������������������������������� 1.10

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Table of Cases Netherlands Gerechtshof, Amsterdam, 28 April 2009, Yukos Capital v OAO Rosneft, Yearbook Commercial Arbitration, Vol. XXXIV, (A J van den Berg ed.), (2009), pp. 703 et seq.��������5.61 Hoge Raad, 26 October 1973, Société européenne d’ études et d’entreprises v République fédérale socialiste de Yougoslavie, Rev. arb. (1974), pp. 311 et seq. ���������������������������������������5.61 Northern Ireland Shaw v Sloan [1982] NI 393.�����������������������������������������������������������������������������������������������������1.33 Pakistan HUBCO v WAPDA, Supreme Court of Pakistan, 20 June 2000, 16(4) Arbitration International 439 (2000)�������������������������������������������������������������������������������������������������6.50 Singapore High Court, 20 October 2005, PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2006] 1 SLR 197. �����������������������������������������������������������������������������������������������������������3.12 Court of Appeal, 1 December 2006, PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR 597. �����������������������������������������������������������������������������������������������������������3.12 Sweden Svea Court of Appeal, 15 May 2003, The Czech Republic v CME Czech Republic BV, Case no. T 8735-​01, available at http://​w ww.mfcr.cz/​cps/​rde/​xbcr/​mfcr/​Judgment_​ English_​pdf.pdf.����������������������������������������������������������������������������������������������������������� 2.111 Switzerland ATF 89 II 429, 11 December 1963, von Moos v Kunz.������������������������������������������������������������ 1.151 ATF 112 II 268, 6 May 1986, Denner AG v Schweizerischen Bierbrauerverein und Mitbeteiligte.����������������������������������������������������������������������������������������������������������� 1.165 ATF 115 II 187, 2 March 1989, X v W. �������������������������������������������������������������� 1.135, 1.136, 1.144 ATF 116 II 738, 13 December 1990, R. v dame R. ����������������������������������������������������������������� 1.156 ATF 117 Ia 166, 30 April 1991, Gesellschaft X. v Y. AG. �����������������������������������������������������������4.72 ATF 121 III 474, 3 November 1995, Siegfried Aktiengesellschaft v The Wellcome Foundation Ltd.������������������������������������������������1.129, 1.130, 1.134, 1.144, 1.145, 1.147, 1.152 ATF 123 III 16, 15 January 1997, E v M. ���������������������������������������������������������������������1.152, 1.154 Decision of the Federal Tribunal 4C.384/​1995, 1 May 1997������������������������������������������������� 1.155 Decision of the Federal Tribunal 4C.429/​1995, 26 September 1997 �������������������������������������1.136 ATF 124 III 83, 19 December 1997, Compañìa Minera Condesa SA and Compañía de Minas Buenaventura SA v BRGM-​Pérou S.A.S. and arbitral tribunal.�����������������������������6.131 ATF 125 III 241, 17 June 1998, WRH Marketing AG and Ferag Maschinenbau GmbH v Grapha Holding AG.���������������������������������������������������������������������������������������������1.130, 1.152 ATF 125 III 8, 3 November 1998, X v Y. SA���������������������������������������������������������������������������1.134 Decision of the Federal Tribunal, 8 December 1999, Arthur Andersen Business Unit Member Firms v Andersen Consulting Business Unit Member Firms, ASA Bulletin, Vol. 18, No. 3 (2000), pp. 546 et seq.�������������������������������������������������������������������������������3.10 Decision of the Federal Tribunal 1P.113/​2000, 20 September 2000, République de Pologne v Saar Papier Vertriebs-​GMbH and tribunal arbitral CCI Zurich, ASA Bulletin 2001, pp. 487 et seq. ��������������������������������������������������������������� 1.129, 4.85, 4.88 ATF 127 III 279, 14 May 2001, Fomento de Construcciones y Contratas S.A. v. Colon Container Terminal S.A.������������������������������������������ 1.165, 3.05, 4.07, 4.86, 4.117, 6.55, 6.216 ATF 127 III 496, 12 September 2001, X v Y. �������������������������������������������������������������������������1.138 ATF 128 III 191, 3 April 2002, X. Inc. v Z. Corporation. ����������������������������� 1.165, 4.73, 4.79, 4.84 ATF 128 III 284, 8 May 2002, X. AG v Y. ����������������������������������������������������������������������������� 1.155 Decision of the Federal Tribunal 5C.242/​2003, 20 February 2004, A v B.����������������������������� 1.139 ATF 130 III 755, 6 October 2004, A v B.�������������������������������������������������������������������������������� 4.88 Decision of the Federal Tribunal 4C.314/​2004, 17 November 2004, A v B.�������1.139, 1.144, 1.152

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Table of Cases Decision of the Federal Tribunal 4P.98/​2005, 10 November 2005, La République X v Y and Z.��������������������������������������������������������������������������������������������� 1.165 Decision of the Federal Tribunal 4P.278/​2005, 8 March 2006, Tensacciai SPA v.  Freyssinet Terra Armata SRL�������������������������������������������������������������������������������������������� 6.88 Decision of the Federal Tribunal 4C.82/​2006, 27 June 2006, A, B, C, D v X.��������������������������������������������������������������������������������1.130, 1.134, 1.139, 1.144 ATF 134 III 467, 25 June 2007, S v B. �����������������������������������������������������������������������������������1.136 Decision of the Federal Tribunal 4P.4/​2007, 26 September 2007, Sàrl X v Y AG, ASA Bulletin, Vol. 1(2008), pp. 152 et seq.���������������������������������������������������������������������� 4.87 Decision of the Federal Tribunal 5A_​438/​2007, para. 2.1.1, 20 November 2007, Dame X. v X. ����������������������������������������������������������������������������������������������������������������� 1.156 Decision of the Federal Tribunal 5A_​337/​2008, 15 July 2008, X SA en liquidation v Banque Y.����������������������������������������������������������������������������������������������������������������������� 1.157 Decision of the Federal Tribunal 4A_​490/​2009, 13 April 2010, Club Atlético de Madrid SAD v. Sport Lisboa E Benfica –​Futebol SAD & FIFA.�������������������� 1.165, 4.87, 6.214 Decision of the Federal Tribunal 4A_​458/​2009, 10 June 2010, Adrian Mutu v Chelsea Football Club Limited, ASA Bulletin, Vol. 28, No. 3 (2010), pp. 520 et seq.�����������������������4.75 Decision of the Federal Tribunal 4A_​414/​2010, 27 October 2010, X Bank v Y������������������������ 6.88 Decision of the Federal Tribunal 4A_​386/​2010, 3 January 2011, Alejandro Valverde Belmonte v Agence Mondiale Antidopage (AMA), Union Cycliste Internationale (UCI), Real Federación Española de Ciclismo (RFEC).����������������������������������������������������������������� 1.165 Federal Tribunal decision 4A_​508/​2010, 14 February 2011, X. BV v A.������������������������ 6.10, 6.216 Decision of the Federal Tribunal 4A_​603/​2011, 22 November 2011, X. v A, B, C SA.�����������1.129 Decision of the Federal Tribunal 4A_​392/​2010, 12 January 2011, FC Sion Association v Fédération Internationale de Football Association (FIFA), Al-​Ahly Sporting Club.������������� 1.165 Decision of the Federal Tribunal 4A_​496/​2012, 25 February 2013, A v X Ltd.�����������������������������������������������������������������������������������������1.129, 1.147, 1.154, 1.155 Decision of the Federal Tribunal 4A_​141/​2013, 22 August 2013, F.X. v A.Y., B.Y., C.Y., D.Y.��������������������������������������������������������������������������������������������� 1.139 Decision of the Federal Tribunal 4A_​545/​2013, 28 November 2013, A.X., B.X. v V.Z. �������������������������������������������������������������������������������������������������1.129, 1.150 Decision of the Federal Tribunal 4A_​508/​2013, 27 May 2014, A v B.������������������������1.129, 1.150, 1.154, 1.155, 1.156, 1.165, 4.73, 4.87, 4.89, 5.74, 6.31 Decision of the Federal Tribunal 4A_​374/​2014, 26 February 2015, Club A v B and C.������������������������������������������������������������������������������� 1.136, 1.165, 4.83, 6.10 Decision of the Federal Tribunal 4A_633/2014, 29 May 2015, A LLP v B [ATF 141 III 229]������������������������������������������4.73, 4.74, 4.84, 4.86–4.89, 4.114, 6.88, 6.216 USA Akhenaten v. Najee, LLC, 544 F. Supp. 2d 320 (S.D.N.Y. 2008). ���������������������������������������������1.78 Alary Corp v Sims (In re Associated Vintage Group), 283 B.R. 549 (Bankr. 9th Cir. 2002). ������������������������������������������������������������������������������������������ 1.48, 1.63 Allen v McCurry, 449 US 90 (1980).�����������������������������������������������������������������������������������������1.62 Amalgamated Sugar Co. v NL Indus., Inc., 825 F.2d 634 (2d Cir. 1987).�����������������������������������1.78 Anderson v Beland, 672 F.3d 113 (2d Cir. 2011).�����������������������������������������������������������������������4.43 B&B Hardware, Inc. v Hargis Industries, Inc., No. 10-​3137 (8th Cir. 2013).�����������������������������1.66 Baker by Thomas v General Motors Corp, 522 US 222 (1998). ���������������������������������������������������1.48 Baker Marine (Nig.) Ltd v Chevron (Nig.) Ltd, 191 F.3d 194 (2d Cir. 1999).�����������������������������5.61 Bancol y Cia. S. en C. V Bancolombia SA, 280 F.Appx. 85 (2d Cir. 2008).�������������������������������� 4.27 Barnes v Oody, 514 F.Supp. 23 (E.D. Tenn. 1981).����������������������������������������������������������4.46, 4.49 Brody v Hankin, 299 F. Supp. 2d 454 (E.D. Pa. 2004).�������������������������������������������������������������1.62 B-​S Steel Of Kansas, Inc. v Texas Industries, Inc., 439 F.3d 653 (10th Cir. 2006).���������������������� 4.46 Catlin v United States, 324 US 229 (1949).������������������������������������������������������������������������������� 1.55 Chick Kam Choo v Exxon, 486 US 140 (1988)���������������������������������������������������������������������������1.66 Chiron Corp. v Ortho Diagnostic System, Inc., 207 F.3d 1126 (9th Cir. 2000).���������������������������5.16

xxvii

Table of Cases Chromalloy Aeroservices v The Arab Republic of Egypt, 939 F. Supp. 907 (D.D.C. 1996).�����������5.61 Citigroup, Inc. v Abu Dhabi Investment Authority, 13 Civ. 6073 (PKC). �����������������������������������5.16 Commissioner v Sunnen, 333 US 591 (1948).�����������������������������������������������������������������������������1.62 Coover v Saucon Valley School District et al., 955 F. Supp. 392 (E.D. Pa. 1997).�������������������������1.57 Costantini v Trans World Airlines, 681 F.2d 1199 (9th Cir. 1982).���������������������������������������������1.63 Cromwell v County of Sac, 94 US 351 (1876). ���������������������������������������������������������������������������1.67 Cutter v Town of Durham, 411 A.2d 1120 (N.H. 1980).�����������������������������������������������������������1.84 Dean Witter Reynolds v Byrd, 470 US 213 (1985).���������������������������������������������������������������������4.52 Durfee v Duke, 375 US 106 (1963).�������������������������������������������������������������������������������������������1.60 Edcare Mgt, Inc. v Delisi, 50 A.3d 448 (D.C. App. 2012).���������������������������������������������������������1.63 Expert Elec. Inc. v Levine, 554 F.2d 1227 (2d Cir. 1977). ���������������������������������������������������������1.63 F. Hoffmann-​La Roche Ltd. v Qiagen Gaithersburg, Inc., 730 F. Supp. 2d 318 (S.D.N.Y. 2010).�������������������������������������������������������������������������������������������������������������� 4.46 Fireman’s Fund Ins. Co. v Cunningham Lindsey Claims Management, Inc., 2005 WL 1522783 (E.D.N.Y. 2005).�������������������������������������������������������������������������������4.47 FleetBoston Financial Corp. v. Alt, 638 F.3d 70 (1st Cir. 2011).�������������������������������������������������4.37 Freecharm Limited v Atlas Wealth Holdings Corporation, Atlas One Holdings LLC, Daniel Kalb, Paul Weiss, Jorge Kalb, Napoleon Aponte, 2012 WL 6029136 (11th Cir. 2012).�������������������������������������������������������������������������������������������������������������� 4.36 Gates v Mortgage Loan and Insurance Agency, Inc, 200 Ark 276. ��������������������������������������������� PI.02 Georgia-​Pacific, et al. v Four-​U-​Packaging, Inc., No. 11-​4394 (6th Cir. 2012). ����������������1.84, 1.86 Greenblatt v Drexel Burnham Lambert, Inc., 763 F.2d 1352 (11th Cir. 1985).�������������������������� 4.36 Harris v Jacobs, 621 F.2d 341 (9th Cir. 1980).���������������������������������������������������������������������������1.63 Headwaters Inc, Forest Conservation Council v US Forest Service, 382 F.3d 1025 (9th Cir. 2004).���������������������������������������������������������������������������������������������������������������1.78 I. Appel Corp. v Katz, 1999 WL 287370 (S.D.N.Y. 1999).���������������������������������������������������������4.49 IDS Life Ins. Co. v Royal Alliance Ass’n, Inc., 266 F.3d 645 (7th Cir. 2001).�������������������������������4.43 International Shoe Co. v Washington, 326 US 310 (1945).���������������������������������������������������������1.53 Jacobson v Fireman’s Fund Ins. Co., 111 F.3d 261 (2d Cir. 1997).���������������������������������������������� 4.46 Khaligh, In re, 338 B.R. 817 (9th Cir. BAP 2006).�������������������������������������������������������������������4.49 Khaligh, In re, 506 F.3d 956 (9th Cir. 2007).���������������������������������������������������������������������������4.49 Kamakazi Music Corp. v Robbins Music Corp., 534 F.Supp. 69 (S.D.N.Y. 1982).�����������������������4.49 Karcher v May, 484 US 72, 108 S. Ct. 388, 98 L. Ed. 2d 327 (1987)�����������������������������������������1.73 Kremer v Chemical Construction Corp, 456 US 461(1982). �������������������������������������������������������1.62 Lacroix et al v Marshall County, Missippi, 2011 US App LEXIS 2250.���������������������������������������1.61 Lewis v Circuit City Stores, Inc., 500 F.3d 1140 (10th Cir. 2007).���������������������������������������������4.37 M&M Stone Co. v Hornberger, 2009 U.S. Dist. LEXIS 91577.�������������������������������������������������1.63 MACTEC Inc. v Gorelick, 427 F.3d 821 (10th Cir. 2005). ������������������������������������������������������ 4.36 Magnolia Petroleum Co. v. Hunt, 320 U.S. 430 (1943).�������������������������������������������������������������4.33 Maidman v O’Brien, 473 F.Supp. 25 (S.D.N.Y. 1979).������������������������������������������������������������ 4.46 Manion v Nagin, 394 F.3d 1062 (8th Cir. 2005).�������������������������������������������������������������������� 4.36 Martin Spier v Calzaturificio Tecnica SpA, 71 F. Supp. 2d 279 (S.D.N.Y. 1999).�����������������������5.61 McAdoo v Dallas Corp., 932 F.2d 522 (6th Cir. 1991). �������������������������������������������������������������1.86 Mc Donald v City of West Branch, 466 US 284 (1984). ������������������������������������������������������������ 4.34 Migra v Warren City Sch. Dist. Bd. of Educ., 465 US 75 (1984). �����������������������������������������������1.48 Mitsubishi v Soler Chrysler Plymouth, 473 US 614 (1985).����������������������������������������������� 5.57, 5.110 Moncur v Agricredit Acceptance Co (In re Moncur), 328 B.R. 183 (Bankr. 9th Cir. 2005). ���������������������������������������������������������������������������������������������������1.50 Montana v United States, 440 US 147 (1979).���������������������������������������������������������������������������1.76 National Treasury Employees Union v Internal Revenue Service, 765 F.2d 1174 (D.C. Cir. 1985).����������������������������������������������������������������������������������������������������������� PI.05 National Union Fire Ins. Co. v Belco Petroleum Corp., 88 F.3d 129 (2d Cir. 1996). �������������������5.16 Neopharm, Inc. Securities Litigation, In re, 2007 WL 625533 (N.D. Ill. 2007).�������������������������4.47 New Hamphire v Maine, 532 US 742 (2001). ���������������������������������������������������������������������������1.48 Norris v Grosvenor Mktg Ltd, 803 F.2d 1281 (2d Cir. 1986).�������������������������������������������� 4.37, 4.46

xxviii

Table of Cases O’Connor v Pierson, 568 F.3d 64 (2d Cir. 2009)�����������������������������������������������������������������������1.61 Parklane Hosiery Co. v Shore, 439 US 322 (1979).���������������������������������������������������������������������1.84 Pryner v Tractor Supply Co., 109 F.3d 354 (7th Cir. 1997).������������������������������������������������������ 4.46 Riordan v Ferguson, 147 F.2d 983 (2d Cir. 1945) ������������������������������������������������������������������������vii Ritchie v Landau, 475 F.2d 151 (2d Cir. 1972).�������������������������������������������������������������������������4.47 Robertson v Isomedix, Inc. (In re Int’l Nutronics), 28 F.3d 965 (9th Cir. 1994).�������������������������1.63 Rudell v Comprehensive Accounting Corp., 802 F.2d 926 (7th Cir. 1986). ���������������������������������4.37 Salahuddin v Jones, 992 F.2d 447 (2d Cir. 1993).���������������������������������������������������������������������1.61 Sanders v Washington Metropolitan Area Transit Auth., 819 F.2d 1151 (D.C. Cir. 1987).�����������4.37 Schattner v Girard, Inc., 668 F.2d 1366 (D.C. Cir. 1981).���������������������������������������������������������4.37 Scherer v Equitable Life Assurance Soc’y, 347 F.3d 394 (2d Cir. 2003).���������������������������������������1.61 Scherk v Alberto-​Culver Co., 417 US 506 (1974).�����������������������������������������������������������������������5.57 Schimmels, In re, 127 F.3d 875 (9th Cir.1997).�������������������������������������������������������������������������1.78 Semtek Int’ l Inc. v Lockheed Martin Corp. 531 US 497 (2001). �������������������������������������������������1.59 Shaffer v Heitner, 433 US 186 (1977).���������������������������������������������������������������������������������������1.53 Sheinfeld v Leeds, 201 Fed.Appx. 998 (5th Cir. 2006).������������������������������������������������������������ 4.46 Smith v Bayer Corp. 564 US _​_​(2011), 131 S. Ct. 2368 (16 June 2011).������������������� 1.66, 1.73, 1.79 Smith v Securities & Exch. Commn., 129 F.3d 356 (6th Cir. 1997).�������������������������������������������1.57 Smithkline Beecham Biologicals, S.A. v Biogen, Inc., 1996 WL 209897 (S.D.N.Y. 1996). ��������������������������������������������������������������������������������������4.152–4.155, 4.177 Sonera Holding B.V. v Çukurova Holding A.Ş., No. 12-​4280-​c v (2d Cir. Apr. 25, 2014) (available at http://​f.datasrvr.com/​fr1/​514/​43669/​Sonera_​v_​Cukurova.pdf).�������������������5.10 Souffront v La Compagnie Des Sucreries de Porto Rico, 217 US 475 (1910).���������������������������������1.76 Southern Pacific R. Co. v United States, 168 US 1 (1897). �����������������������������������������������1.47, 2.102 State of Arizona v State of California, 530 US 1 (2000).�������������������������������������������������������������1.61 Steelmet, Inc. v Caribe Towing Corp. 747 F.2d 689 (C.A. Fla. 1984).�����������������������������������������4.47 Sue Klau Enter. Inc. v Am. Fidelity Fire Ins., Co., 551 F.2d 882 (1st Cir. 1977).�������������������������4.37 Sullivan v Am. Airlines, Inc., 613 F.Supp. 226 (S.D.N.Y. 1985). �����������������������������������������������4.49 Tahoe-​Sierra Pres. Council, 322 F.3d. 1064 (9th Cir. 2003).�����������������������������������������������������1.78 Taylor v Sturgell, 553 U.S. 880 (2008).����������������������������������������������������������� 1.48, 1.61, 1.79, 1.80 TermoRio SA ESP v Electrificadoria Dela Atlantico SA ESP et al., 421 F. Supp. 2d 87 (D.D.C.2006).�����������������������������������������������������������������������������������������������������������������5.61 TermoRio SA ESP and LeaseCO Group LLC v Electranta SP et al., 487 F. 3d 928 (D.C. Cir. 2007).�������������������������������������������������������������������������������������������������������������5.61 United States ex rel. Eisenstein v. City of New York, 556 US _​_​_​, _​_​_​, 129 S. Ct. 2230, 173 L. Ed. 2d 1255 (2009)�����������������������������������������������������������������������������������������������1.73 United States v Mendoza 464 US 154 (1984).���������������������������������������������������������������������������1.48 United States v Moser 266 US 236 (1924).���������������������������������������������������������������������������������1.65 United States v Sioux Nation, 448 US 371 (1980).���������������������������������������������������������������������1.61 United States v Stauffer Chem. Co. 464 US 165 (1984).�������������������������������������������������������������1.65 Universal American Barge Corp v J-​Chem, Inc., 946 F.2d 1131 (5th Cir. 1991).�������������������������4.49 U.S. Plywood Corp. v Hudson Lumber Co., 127 F.Supp. 489 (S.D.N.Y. 1954).���������������������������4.49 Vandenberg v Superior Court of Sacramento County, 982 P.2d 229 (Cal. Sup. Ct. 1999).�����������4.47 Venture Global Engineering LLC v Satyam Computer Services Ltd., No. 12-​2200, 2013 WL 4863265 (6th Cir. 2013).���������������������������������������������������������������������������������1.62 Witkowski v Welch, 173 F.3d 192 (3d Cir. 1999). ���������������������������������������������������������������������4.47 Wolf v Gruntal & Co., Inc., 45 F.3d 524 (1st Cir. 1995). �����������������������������������������������������������1.62

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TABLE OF LEGISL ATION

A.  INTER NATIONA L TR E ATIES A ND CON V ENTIONS Convention for the Conservation of Southern Bluefin Tuna of 10 May 1993 ����������������������������������2.122 Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (New York Convention)����� 2.43, 4.105–​4.109, 4.110, 5.10, 5.53, 5.95, 5.99, 6.27, 6.44, 6.45, 6.146, 6.151, 6.152, 6.160, 6.162, 6.218 Art I(2)������������������������������������������������ 6.143 Art II���������������������4.107, 4.109, 6.52, 6.134 Art II(3)������������������6.26, 6.28, 6.130, 6.131 Art III ���������������������������� 4.107, 4.109, 5.68, 6.171, 6.181, 6.185, 6.216 Art V��������������������������������������� 6.163, 6.244 Art V(1)�����������������������������������6.220, 6.226 Art V(1)(a)������������� 5.57, 6.166, 6.175, 6.185 Art V(1)(e)��������������������������������6.156, 6.157 Art V(2)����������������������������������������������6.221 Art V(2)(a)������������������������������������������ 6.166 Hague Convention on Choice of Court Agreements of 30 June 2005����������������� 2.02, 2.03, 2.07, 2.42–​2.57, 2.130, 5.10, 5.76 Art 5(1) ������������� 2.15, 2.45, 2.46, 2.49, 2.50 Art 5(2) �������������������������������2.15, 2.46, 2.47 Art 5(3)(b)��������������������������������������������2.47 Art 6 ����������������������������������������������������2.48 Art 6(a) ������������������������������������������������2.49 Art 6(b)������������������������������������������������2.50 Art 6(c) and (d)�������������������������������������� 2.51 Art 6(e)������������������������������������������������� 2.51 Art 8(1) ������������������������������������������������ 2.55 Art 8(2) ������������������������������������������������ 2.55 Art 8(3) ������������������������������������������������ 2.57 Art 9 ���������������������������������������������������� 2.52 Art 9(a) ������������������������������������������������ 2.55 Art 9(f) and (g) ��������������������������� 2.53, 2.54 Art 31����������������������������������������������������2.44

Statute of the International Court of Justice of 24 October 1945 (ICJ Statute) Art 36(6)����������������������������������������������2.90 Art 38 �������������������������������������������������� 5.63 Art 38(1)(c) �����������������������2.66, 2.67, 2.131 Art 41������������������������������������������ 2.81, 2.82 Art 48 ��������������������������������������������������2.80 Art 59������������������������2.70, 2.71, 2.72, 2.74, 2.78, 2.80, 2.104, 2.107 Art 60 �����������������������2.70, 2.71, 2.72, 2.74, 2.77, 2.78, 2.80, 2.87, 2.89, 2.90 Statute of the International Tribunal for the Law of the Sea of 10 December 1982 Art 33 ��������������������������������������������������2.73 Art 33(2) �������������������������������������������� 2.107 Statute of the Permanent Court of International Justice of 13 December 1920����������������������������2.66 United Nations Convention on the Law of the Sea of 16 November 1994 (UNCLOS)������������������������������������2.122 B. INTER NATIONA L PR INCIPLES A ND MODEL L AWS ALI/​U NIDROIT Principles of Transnational Civil Procedure���������2.03, 2.07, 2.58–​2.65, 2.130, 4.131, 5.104, 6.13, 6.75 Principle 28.2���������������������� 2.60, 2.61, 2.62 Principle 28.3����������������������2.60, 2.62, 2.63 UNCITRAL Model Law on International Commercial Arbitration 1985 ��������� 4.18, 4.93– ​4.104, 5.54, 5.95, 6.144, 6.154 Art 5 ���������������������������������������������������� 5.55 Art 16(1) ��������������������������������������5.55, 5.57 Art 17H���������������������������������������������� 6.193 Art 19���������������������������������������������������� 5.55 Art 28 �������������������������������������������������� 5.58

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Table of Legislation UNCITRAL Model Law on International Commercial Arbitration 1985 (cont.): Art 31���������������������������������������������������� 4.94 Arts 34 to 36 ���������������������������������������� 5.55 Art 34 ������������������������������������������������ 6.185 Art 35(1) ��������������������������� 4.91, 4.95, 5.113 Art 36(1)(a)(v) �������������������������������������� 4.93 C.  EUROPE A N TR E ATIES A ND CON V ENTIONS Agreement between the European Community and the Kingdom of Denmark on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters of 1 July 2007�������������������������2.02 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 27 September 1968 (Brussels Convention)����������� 2.02, 4.145 Art 21������������������������� 2.26, 2.27, 2.28, 2.29 Art 25��������������������������������������������������� 2.17 Art 26 ��������������������������������������������������2.39 Art 27 �������������������������������������������������� 2.16 Art 27(3) �����������������������������2.18, 2.19, 2.20 Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, signed in Lugano on 30 October 2007 (Revised Lugano Convention), OJ L 339, 21.12.2007, p. 3������2.02, 2.03, 2.09, 6.128, 6.143 Art 1 ���������������������������������������������������� 6.52 Art 26(1) ���������������������������������������������� 6.52 Art 27(1) ����������������������������������� 6.52, 6.134 Art 28(1) ���������������������������������������������� 6.52 Art 28(4)���������������������������������������������� 6.52 Art 33(1) �������������������������������������������� 6.134 Art 34 ������������������������������������������������ 6.134 Art 34(1) �������������������������������������������� 6.134 Art 35(3) �������������������������������������������� 6.134 European Convention on Human Rights of 4 November 1950 Art 34 ��������������������������������������������������2.73 Art 35(2)(b)������������������������������������������2.73 Art 46(1) ����������������������������������������������2.73 European Convention on International Commercial Arbitration of 21 April 1961���������������������������������� 4.110

Treaty on the Functioning of the European Union Art 355��������������������������������������������������2.02 D.  EUROPE A N U NION R EGUL ATIONS Council Regulation (EC) No. 44/​2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I Regulation), OJ L 12, 16.01.2001, p. 1��������2.02, 2.03, 2.07, 2.09–​2.41, 2.42, 2.45, 2.52, 2.54, 2.57, 2.130, 5.10, 6.08, 6.76, 6.116 Art 1 ���������������������������������������������������� 6.52 Art 23 ��������������������������������������������������2.49 Art 25���������������������������������������������������2.33 Art 26 ��������������������������������������������������2.33 Art 27 ����������������������� 2.11, 2.12, 2.14, 2.21, 2.23, 2.26, 2.27 Art 27(1) ���������������������������������������������� 2.11 Art 28 ����������������2.11, 2.12, 2.14, 2.21, 2.47 Art 28(3) ���������������������������������������������� 2.11 Art 32 ������������������������������������������2.17, 2.36 Art 33 �����������������������������������������2.36, 2.37 Art 33(1) ����������������������������� 2.37, 2.55, 6.52 Art 34 �������������������������������� 2.16, 2.23, 2.37 Art 34(1) ���������������������������������������������� 6.52 Art 34(3)������������������� 2.12, 2.13, 2.14, 2.15, 2.18, 2.21, 2.22, 2.27 Art 34(4)����������������������������2.12, 2.13, 2.14, 2.15, 2.27, 2.32, 2.54 Art 35(1) ���������������������������������������������� 6.52 Art 35(3) ���������������������������������������������� 6.52 Art 36(1) �������������������������������������������� 6.134 Art 45(1) �������������������������������������������� 6.134 Art 45(3) �������������������������������������������� 6.134 Council Regulation (EU) No. 1215/​2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast Brussels I Regulation), OJ L 351, 20.12.2012, p. 1 ����������������2.02, 2.09, 2.10, 6.53 Recital 12(3) ������������������������������� 6.27, 6.28 Recital 20����������������������������������������������2.49 Recital 21������������������������������������� 2.02, 2.11 Art 2 ���������������������������������������������������� 2.17

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Table of Legislation Art 25(1) ����������������������������������������������2.49 Art 27 �����������������������������������������2.33, 2.34 Art 28 �����������������������������������������2.33, 2.34 Art 31(2) and (3)����������������������������������� 2.15 Arts 33 and 34�������������������������������������� 2.15 Art 45(1)(c) and (d)�������������������������������� 2.13 E .  OTHER R EGIONA L CON V ENTIONS A ND TR E ATIES Amman Arab Convention on Commercial Arbitration 1987 Art 35�������������������������������������������������� 4.113 Inter-​A merican Convention on International Commercial Arbitration 1975 (Panama Convention) Art 4 �������������������������������������������������� 4.112 North American Free Trade Agreement (NAFTA) 1994 Art 1126(2) ������������������������������������������ 5.10 Organization for the Harmonization of Business Law in Africa (OHADA) Treaty on the Harmonization of Business Law in Africa 1993 Art 25������������������������������������������������� 4.113 Organization for the Harmonization of Business Law in Africa (OHADA) Uniform Act on Arbitration 1999 Art 23 ������������������������������������������������ 4.113 F.  NATIONA L LEGISL ATION A ND CODES Austria Arbitration Act 2006 Art 607 ������������������������������������������������ 4.16 Belgium Judicial Code 1985 Art 1717(4)��������������������������������������������5.60 Judicial Code 1998 Art 1703���������������������������������������������� 6.154 Judicial Code 2013 Art 1713(9) ��������������������������������4.16, 6.154 Art 1716���������������������������������������������� 6.154 Art 1718��������������������������������������� 5.59, 5.60 Brazil Arbitration Law 9.307 of 1996 Art 31���������������������������������������������������� 4.16

France Code Civil������������������������������������������������ 1.89 Art 1351�������������������������� 1.93, 1.100, 1.105, 1.107, 1.110, 1.116, 1.118, 1.119, 1.121, 1.123, 1.124 Art 1484����������������������������������������������� 1.93 Art 2044 ���������������������������������������������� 1.93 Art 2052����������������������������������������������� 1.93 Code de Procédure Civile����������������1.89, 1.121 Art 4 ������������������������������������������ 1.96, 1.117 Art 25��������������������������������������������������� 1.94 Art 74���������������������������������������������������� 1.99 Art 95 ��������������������������������������1.108, 1.109 Art 125������������������������������������������������ 1.165 Art 455������������������������������������������������ 1.101 Art 455(2) ������������������������������������������ 1.100 Art 480 ���������������������������� 1.95, 1.96, 1.100, 4.56, 4.58 Art 482 ������������������������������������������������ 1.97 Art 500 ������������������������������������������������ 1.90 Art 501�������������������������������������������������� 1.90 Art 544(1) �������������������������������������������� 1.98 Art 1476������������������������������������������������4.66 Art 1482������������������������������������������������ 4.58 Art 1484���������������������4.16, 4.55, 4.56, 4.57, 4.58, 4.66, 6.154 Art 1484(1) ������������������������������������������ 4.55 Art 1506������������������������������������������������4.62 Art 1506(4) ������������������������������������������ 4.55 Art 1509������������������������������������������������6.36 Art 1511������������������������������������������������ 5.58 Art 1520����������������������������������������4.67, 5.61 Art 1520(1)��������������������������������������������4.68 Art 1520(3) ������������������������������������������4.69 Art 1520(4) ������������������������������������������ 4.70 Art 1520(5) ������������������������������������������ 4.71 Art 1522������������������������������������������������ 5.59 Germany Zivilprozessordnung (ZPO) Art 1051(2)����������������������������������5.58, 5.113 Art 1055������������������������������������������������ 4.16 Italy Arbitration Act 2006 Art 824 bis������������������������������������������ 6.154 Netherlands Arbitration Act 2015 Art 1059(1)������������������������������������������� 4.16 Code of Civil Procedure Art 1054(2) ������������������������������������������ 5.58

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Table of Legislation Panama Décret-​loi No. 5 (8 July 1999) Art 36 �������������������������������������������������� 5.59 Peru Arbitration Act 2008 Art 63(8) ���������������������������������������������� 5.59 Spain Arbitration Act 2011 ������������������������������ 4.160 Art 38(2)(a) ���������������������������������������� 4.160 Art 43 �������������������������������������������������� 4.16 Ley de Enjuiciamiento Civil (Code of Civil Procedure) Art 20(3)�������������������������������������������� 4.160 Sweden Arbitration Act 1999 s 51�������������������������������������������������������� 5.59 Switzerland Code de Procédure Civile������������������������ 1.130 Art 58(1) ���������������������������������������������� 6.95 Art 59�������1.128, 1.129, 1.133, 1.134, 1.135, 1.136, 1.137, 1.138, 1.139, 1.143, 1.150, 1.151 Art 59(2)(e) ������������������������������ 1.129, 1.165 Art 60 ������������������������������������������������ 1.165 Arts 232 to 236 ���������������������������������� 1.130 Art 236������1.133, 1.136, 1.143, 1.146, 1.148, 1.150, 1.156, 1.161, 1.165, 6.100 Art 241(2) ������������������������������������������ 1.136 Art 257������������������������������������������������ 1.139 Art 315������������������������������������������������ 1.128 Art 315(1)�������������������������������������������� 1.128 Art 325������������������������������������������������ 1.128 Art 325(1) ������������������������������������������ 1.128 Concordat regarding domestic arbitration 1969������������������������������������������������ 4.127 Law of civil procedure of the canton of Geneva���������������������������������������� 4.127 Private International Law Act 1987 Arts 25 to 27 �������������������������������������� 6.128 Art 178(2) �������������������������������������������� 5.57 Art 182(2) ��������������������������������������������6.36 Art 183(2) ������������������������������������������ 6.194 Art 186��������������������������������������������������4.84 Art 186(1bis) ���������������������6.54, 6.55, 6.188 Art 187�������������������������������������������������� 5.58 Art 187(1)�������������������������������������������� 5.113 Art 188���������������������������������4.76, 4.77, 4.80 Art 189��������������������������������������� 4.76, 6.146 Art 190��������������������������������������������������4.77 Art 190(1) ��������������������������4.16, 4.72, 4.77, 4.80, 4.81, 6.154

Art 190(2)(a) ����������������������������������������4.88 Art 190(2)(b)���������������������� 4.88, 4.89, 4.90 Art 190(2)(c) to (e)��������������������������������4.88 Art 190(2)(e) �������������������������������4.88, 4.89 Art 190(3) �����������������������������������4.80, 4.88 Art 190(8) �������������������������������������������� 4.81 Art 190(9) and (10) ������������������������������4.82 Art 192�������������������������������������������������� 5.59 Art 194�������������������������������������������������� 4.74 Procedural law of the canton of Zurich���������������������������������������� 4.128 Rules of International Arbitration 2012 Art 11���������������������������������������������������� 5.10 Art 26 �������������������������������������������������� 4.79 Art 32 �������������������������������������������������� 4.79 Art 32(3) �������������������������������������������� 4.104 Art 35/​36����������������������������������������������4.90 Tunisia Arbitration Code 1993 Art 78(6)���������������������������������������������� 5.59 United Kingdom Arbitration Act 1996 s 28 ���������������������������������������������������� 5.113 s 33(1)(b) ����������������������������������������������6.36 s 34 ������������������������������������������������������6.36 s 42(1) ������������������������������������������������ 6.194 s 46(3) �������������������������������������������������� 5.58 s 58(1) ����������������������������������������� 4.21, 4.30 United States Constitution Art IV(1) ����������������������������������������������6.08 Art VI(1) ����������������������������������������������4.33 Federal Arbitration Act (FAA)������������������4.32 9 USC §13��������������������������������������������4.33 Restatement of the Law of Judgments §§41 and 45������������������������������������������ 1.58 Restatement of the Law (Second) of Judgments��������� 1.48, 1.63, 1.68, 1.71, 1.72, 1.80, 1.81, 4.37 §1���������������������������������������������������������� 1.51 §2(1)(a) ������������������������������������������������ 1.52 §2(1)(b)������������������������������������������������ 1.52 §§4 to 10���������������������������������������������� 1.53 §10(2) ��������������������������������������������������1.60 §12��������������������������������������������������������1.60 §13��������������������������������������� 1.55, 1.56, 4.37 §14�������������������������������������������������������� 1.57 §15������������������������������������������������������ 1.165 §17�������������������������������������������������������� 1.50 §17(3)���������������������������������������������������� 1.65 §24������������������������������������������������������� 1.63 §24(2) �������������������������������������������������� 1.63

xxxiv

Table of Legislation §27�����������������������������������������������1.65, 1.69 §28 ������������������������������������������������������ 1.70 §29������������������������������������������������������� 1.85 §34(1) �������������������������������������������������� 1.73 §34(3) �������������������������������������������������� 1.71 §36 ������������������������������������������������������ 1.74 §39�������������������������������������������������������� 1.76 §40 ������������������������������������������������������ 1.81 §§41 et seq �������������������������������������������� 1.82 §§43 et seq�������������������������������������������� 1.83 §52�������������������������������������������������������� 1.83 §§57 et seq �������������������������������������������� 1.83 §83(2) �������������������������������������������������� 4.50 §84 �������������������������������������4.37, 4.38, 4.45 §84(1) ����������������������������������������� 4.44, 4.45 §84(2) ��������������������������������������������������4.40 §84(3) �������������������������������������������������� 4.50 §84(4) ����������������������������������������� 4.42, 4.51 Restatement of the Law (Third) of International Commercial Arbitration §4-​9���������������������������������������������4.36, 4.44 §4-​9(c)��������������������������������������������������4.43 §4-​9(d)��������������������������������������������������4.44 §4-​10��������������������������4.36, 4.49, 4.53, 6.84 §4-​10(b)������������������������������������������������ 4.49 §4-​10(c)������������������������������������������������ 4.54 §4-​10(d)(ii) ������������������������������������������4.46 §4-​10(d)(iii)������������������������������������������ 4.54 US Code 28 USC §1738����������������������������� 4.33, 6.08 G.  A R BITR ATION RULES Belgian Centre for Arbitration and Medication (CEPANI) Arbitration Rules 2013 Arts 9 to 12 ������������������������������������������ 5.10 Art 32(1) �������������������������������������������� 4.100 Cairo Regional Centre for International Commercial Arbitration (CRCICA) Arbitration Rules 2011 Art 34(2)���������������������������������������������� 4.97 Art 34(3)�������������������������������������������� 4.104 China International Economic and Trade Arbitration Commission (CIETAC) Arbitration Rules 2012 Art 47��������������������������������������������������� 4.97 International Centre for Dispute Resolution (ICDR) International Dispute Resolution Procedures 2014

Art 30(1) ������������������������������������4.97, 4.104 International Chamber of Commerce (ICC) Rules of Arbitration 2012 Arts 7 to 10 ������������������������������������������ 5.10 Art 15(1)���������������������������������������������� 4.160 Art 19������������������������������������������� 5.58, 6.36 Art 21(1)������������������������������������������������ 5.58 Art 25(2) ��������������������������������� 4.104, 4.127 Art 28(6)����������������������������������4.129, 4.131 Art 30(4)�������������������������������������������� 4.160 Art 34(6)�������������������������������������������� 4.100 London Court of International Arbitration (LCIA) Arbitration Rules 1998 Art 22(1)(h)������������������������������������������ 5.10 Art 26(2)�������������������������������������������� 4.104 Art 26(7)���������������������������������������������� 4.98 Art 26(9)���������������������������������������������� 4.98 London Court of International Arbitration (LCIA) Arbitration Rules 2014�������������������������������������� 6.216 Art 14���������������������������������������������������� 5.58 Art 22(3) ���������������������������������������������� 5.58 Art 22(ix) and (x)���������������������������������� 5.10 Art 26(8) ����������������������������������� 4.104, 6.76 Netherlands Arbitration Institute (NAI) Arbitration Rules 2010 Art 41��������������������������������������������������� 5.10 Art 51��������������������������������������� 4.102, 4.104 Singapore International Arbitration Centre (SIAC) Arbitration Rules 2013 Art 28.9������������������������������������������������ 4.98 Stockholm Chamber of Commerce (SCC) Arbitration Rules 2010 Art 32(2) ���������������������������������������������� 4.98 Art 36(1) �������������������������������������������� 4.104 Art 40 ������������������������������������������������ 4.102 UNCITRAL Arbitration Rules 2010���������������������������� 4.127, 4.169 Art 17(1)��������������������������������������� 5.58, 6.36 Art 23(1) ���������������������������������������������� 5.57 Art 34(2)���������������������������������������������� 4.97 Art 34(3)�������������������������������������������� 4.104 Art 35(1) ���������������������������������������������� 5.58 World Intellectual Property Organization (WIPO) Arbitration Rules 2014 Art 64(b)������������������������������������4.99, 4.102

xxxv

LIST OF TER MS AND ABBR EV I ATIONS

AAA ab initio ad hoc AFDI AJIL ALI ATF BC

American Arbitration Association from the beginning to this; formed for or concerned with one specific purpose Annuaire Français de Droit International American Journal of International Law The American Law Institute Decision of the Tribunal Fédéral (Supreme Court; Switzerland) 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters BCLR British Columbia Reports CCSBT 1993 Convention for the Conservation of Southern Bluefin Tuna CEPANI Centre for Arbitration and Mediation (Belgium) cf conferre (compare) CH-​CPC Code de Procédure Civile (Code of Civil Procedure, Switzerland) CIETAC China International Economic and Trade Arbitration Commission Com Cas Commercial Cases contra in contrast/​opposition to; against CRCICA Cairo Regional Center for International Commercial Arbitration Doug KB Douglas’ Reports, King’s Bench DR Decisions and Reports of the European Court of Human Rights EAA 96 English Arbitration Act of 1996 EC European Council ECHR European Convention on Human Rights (Convention for the Protection of Human Rights and Fundamental Freedoms as amended by Protocol No. 11) ECJ Court of Justice of the European Union ECR Reports of the Court of Justice of the European Union ed. editor or edition or edited by eds. editors EFTA European Free Trade Association e.g. exempli gratia (for example) et seq. et sequentes or et sequentia (and the following) etc. et cetera (and so forth) F Federal Reporter (United States) FAA Federal Arbitration Act (United States) fasc. bundle F-​CC Code Civil (Civil Code, France) F-​CPC Code de Procédure Civile (Code of Civil Procedure, France) FCR Federal Court Reports (Australia) FF Feuilles fédérales (Switzerland)

xxxvii

List of Terms and Abbreviations fn Footnote F. Supp. Federal Supplement (United States) Hare Hare’s Reports, Chancery ibid. in the same place ICC International Chamber of Commerce ICDR International Centre for Dispute Resolution ICJ International Court of Justice ICSID International Centre for Settlement of Investment Disputes IDI Institut de Droit International i.e. id est (that is) ILA International Law Association ILM International Legal Materials ILO International Labour Organization ILOAT International Labour Organization Administrative Tribunal ILR International Law Reports in limine litis at the start of the procedure inter alia among other things ITLOS International Tribunal for the Law of the Sea JDI Journal du Droit International JR Judgement Regulation (EC Regulation No. 44/​2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) LCIA London Court of International Arbitration Lloyd’s Rep Lloyd’s Law Reports ML Model Law on International Commercial Arbitration (UNCITRAL) mutatis mutandis  with respective differences taken into consideration NAI Netherlands Arbitration Institute no./​nos number/​numbers p./​pp. page/​pages PCA Permanent Court of Arbitration PCIJ Permanent Court of International Justice PILA Private International Law Act (Switzerland) PWC PriceWaterhouseCoopers RCADI Recueil des cours (Academie de Droit International) Rev. arb. Revue de l’arbitrage RIAA Reports of International Arbitral Awards, United Nations SCC Stockholm Chamber of Commerce Ser. A PCIJ Documents, Series A (Judgments) Ser. A/​B PCIJ Documents, Series A/​B (Judgments and Advisory Opinions) Ser. B PCIJ Documents, Series B (Advisory Opinions) SIA School of International Arbitration at Queen Mary and Westfield College, University of London SIAC Singapore International Arbitration Centre SLR Singapore Law Review SRIA Swiss Rules of International Arbitration UNCITRAL United Nations Commission on International Trade Law UNCLOS United Nations Convention on the Law of the Sea

xxxviii

List of Terms and Abbreviations UNIDROIT International Institute for the Unification of Private Law US United States Reports USC United States Code v versus (against) Vol. Volume WIPO World Intellectual Property Organization YCA Yearbook Commercial Arbitration ZPO Zivilprozessordnung (Germany)

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The Moving Finger writes; and, having writ, Moves on: nor all your Piety nor Wit Shall lure it back to cancel half a Line, Nor all your Tears wash out a Word of it. Omar Khayyám

xl

INTRODUCTION

A . Literature Review  B. Aim of this Research  C . Methodology 

. Scope of this Research  D E. Terminology 

0.07 0.14

0.21 0.22

0.15

We are not final because we are infallible, but we are infallible only because we are final. Justice Robert H. Jackson

International arbitration is widely considered to be the principal method of dispute 0.01 resolution for international commercial disputes. Every year international arbitration institutions report increasing activity and new arbitration institutions are established ‘to catch this wave of new business’.1 As a consequence of this ever-​growing tendency of parties to submit their com- 0.02 mercial disputes to international arbitral tribunals, international commercial arbitration has become increasingly complex. Today international commercial transactions and the disputes to which they give rise regularly involve multiple parties, contracts, and issues.2 One aspect of this growing complexity is the increasing number of multi-​fora disputes; that is, disputes which (or aspects of which) are tried in two or more fora.3 When disputes involve multiple parties, contracts, or 1  Alan Redfern, Martin Hunter, Nigel Blackaby, and Constantine Partasides, Law and Practice of Internaitonal Commercial Arbitration (5th ed. 2009), para. 1.01. See also Geoff Nicholas and Joanna Luker, Jurisdictional comparison, in Arbitration World (J. William Rowley QC ed., 2004), p. 6. 2  On the issue of ‘multiparty, multicontract, and multi-​issue’ arbitrations see, in particular, Bernard Hanotiau, Complex Arbitrations (2005) (cited as Complex Arbitrations). A growth in multiparty cases has been observed over recent years. E.g. the International Chamber of Commerce (ICC) observed a continuing increase in multiparty cases in 2014, with the number of multiparty cases accounting for one-​third of all cases (ICC, 2014 Statistics, ICC International Court of Arbitration Dispute Resolution Bulletin (2015), p. 8). The number of cases involving multiple contracts has also increased (see, e.g., Anne Marie Whitesell and Eduardo Silva-​Romero, Multiparty and Multicontract Arbitration: Recent ICC Experience, Complex Arbitrations—​Perspectives on their Procedural Implications, ICC International Court of Arbitration Bulletin, Special Supplement (2003), p. 7). 3   Michael Schneider, Multi-​Fora Disputes, 6(2) Arbitration International 101 (1990). See also Manuel Liatowitsch and Martin Bernet, Probleme bei parallelen Verfahren vor staatlichen Gerichten und vor Schiedsgerichten, Internationales Zivilprozess-​und Verfahrensrecht IV (2005), p. 142.

1

Introduction issues, conflicts concerning the proper forum to deal with such disputes are likely to arise. Sometimes it may simply be impossible to bring such multiparty, multicontract, or multi-​issue arbitrations to one single forum. Thus, the same or a related dispute might be brought before an arbitral tribunal and a national court or before different arbitral tribunals. 0.03 Difficult questions may arise from this situation: if a national court renders a deci-

sion on the jurisdiction of the arbitral tribunal, would the arbitrators be bound by the prior decision or could they decide anew whether they have jurisdiction? If the arbitrators are bound by a prior national court judgment denying arbitral jurisdiction, the parties’ arbitration agreement may be frustrated. On the other hand, if the arbitrators are not bound by the prior judgment and decide that there is a valid arbitration agreement, parallel court and arbitration proceedings on the merits may ensue. This may result in a waste of valuable resources and contradictory decisions. The parallel enforcement in different countries of such contradictory decisions may give rise to even further problems. To avoid such results, should international commercial arbitral tribunals be bound by a prior national court judgment on the merits of the dispute? If so, under which conditions and to what extent? Would the answers to the above questions be different if the prior decisions were rendered not by a national court but by another (or the same) arbitral tribunal?

0.04 The above questions all concern the finality of national court judgments and arbi-

tral awards; they all raise issues of res judicata before an international commercial arbitral tribunal. Arbitrators will find little guidance as to how to efficiently resolve these issues in international commercial arbitration law and practice in its current state. However, the finality of decisions is fundamental in any legal system as it ensures fairness, efficiency, certainty, and predictability in the dispute resolution process. This applies with increasing force in international commercial arbitration in that arbitral tribunals are confronted more and more often with res judicata issues. Adequate solutions for dealing with such res judicata issues in international commercial arbitration must therefore be found.

0.05 The way in which res judicata issues are currently dealt with differs from one arbitral

tribunal to another. This might create feelings of uncertainty and unpredictability among arbitration users which is potentially harmful for international commercial arbitration. Parties to arbitration proceedings expect to be treated fairly and equally, especially since at the end of the arbitration there will be a final and binding arbitral award determining their legal rights, and this award will be enforceable virtually worldwide.4 Pre-​established res judicata principles will provide the fairness, certainty, and predictability that arbitration users expect. They will give

4  William W. Park, The Procedural Soft Law of International Arbitration: Non-​ Governmental Instruments, in Pervasive Problems in International Arbitration (Loukas A. Mistelis and Julian D.M. Lew QC ed., 2006), paras 7-​23 and 7-​33.

2

A. Literature Review guidance to international commercial arbitrators, especially in cases where the participants to the arbitration come from different legal backgrounds, have different expectations as to how the proceedings should be conducted, or have never previously participated in an international commercial arbitration. The central thesis underlying this research is that transnational principles of res 0.06 judicata should be elaborated for international commercial arbitral tribunals. One of the main difficulties of this solution is to determine the content of these principles. However, this solution is justified for several reasons. First, it is warranted because of the differences among domestic laws regarding res judicata and the difficulties surrounding the formulation of appropriate conflict-​of-​laws rules. As will be discussed in Chapter 5, none of the possible applicable laws—​that is, the law of the place of arbitration, the law of the place where the first decision was rendered, or the law governing the merits of the dispute—​appear to have an undisputable interest in governing res judicata before international commercial arbitral tribunals. Secondly, this solution would respect the autonomy of international commercial arbitration by avoiding inappropriate analogies with litigation. Finally, this solution provides guidance and ensures a certain degree of fairness, certainty, and predictability.

A.  Literature Review The subject of res judicata before international arbitral tribunals has been discussed 0.07 in several articles.5 In particular, the International Law Association (ILA) has worked on the subject. 5  See, e.g., Stavros Brekoulakis, The Effect of an Arbitral Award and Third Parties in International Arbitration: Res Judicata Revisited, 16(1) American Review of International Arbitration 177 (2005); Gary B. Born, International Commercial Arbitration (2014), pp. 3732 et seq.; Norah Gallagher, Parallel Proceedings, Res Judicata and Lis Pendens: Problems and Possible Solutions, in Pervasive Problems in International Arbitration (Loukas A. Mistelis and Julian D.M. Lew QC ed., 2006), pp. 329 et seq.; Hanotiau, Complex Arbitrations, pp. 239 et seq.; Bernard Hanotiau, The Res Judicata Effect of Arbitral Awards, Complex Arbitrations—​ Perspectives on their Procedural Implications, ICC International Court of Arbitration Bulletin, Special Supplement (2003), pp. 45 et seq.; Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001 (2004), pp. 17 et seq.; David Howell, Issue Estoppel Arising out of Foreign Interlocutory Court Proceedings in International Arbitration, 20(2) Journal of International Arbitration 153 (2003); Richard W.  Hulbert, Arbitral procedure and the preclusive effect of awards in international commercial arbitration, 7 International Tax & Business Lawyer 155 (1989); Charles Jarrosson, L’autorité de la chose jugée des sentences arbitrales, 8 Procédures, August 2007, Etude 17; Florian Kremslehner, The Arbitration Procedure—​Lis pendens and res judicata in International Commercial Arbitration, in Austrian Arbitration Yearbook (Christian Klausegger et al. ed., 2007), pp. 127 et seq.; Vaughan Lowe, Res Judicata and the Rule of Law in International Arbitration, 8 African Journal of International Law 38 (1996); Andreas F. Lowenfeld, Arbitration and Issue Preclusion: A View from America: Arbitral Tribunals or State Courts—​Who Must Defer to Whom?, ASA Special Series No. 15 (2001), pp. 55 et seq.; Pierre Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, in Liber Amicorum Claude Reymond, Autour de l’arbitrage

3

Introduction 0.08 In 2006 the ILA International Commercial Arbitration Committee adopted six

Recommendations on res judicata for international arbitrators. The Recommenda­ tions are based on two reports on res judicata and arbitration presented at the ILA Berlin Conference in 2004 and the ILA Toronto Conference in 2006 respectively.6

0.09 The Interim Report on res judicata and arbitration begins with a conceptual intro-

duction of the doctrine of res judicata followed by a presentation of situations in which res judicata issues may arise in international arbitration. The Interim Report then examines and compares the doctrine in different domestic laws and international law. The third part of the Interim Report briefly analyses the doctrine of res judicata in international arbitration law and practice. Finally, in the fourth part of the Report, key issues concerning the application of res judicata in arbitration are raised.

0.10 The Final Report on res judicata and arbitration explains the scope and comments

on the Recommendations.

0.11 The scope of the ILA Recommendations is limited. They ‘concern the effect of an

international commercial arbitral award upon further or subsequent arbitration proceedings between the same parties’.7 In particular, they concern the situation where res judicata issues arise between different international commercial arbitral tribunals, as well as within the same arbitration. However, the Recommendations

(2004), pp. 185 et seq.; Andrea Pinna, L’autorité de la chose jugée invoquée devant l’arbitre. Point de vue sous le prisme de l’ordre juridique français, 3 Cahiers de l’arbitrage 697 (2010); Luca G. Radicati di Brozolo, Res Judicata: Post Award Issues, ASA Special Series No. 38 (Pierre Tercier ed., 2011), pp. 127 et seq. ; Miguel Temboury Redondo, Preliminary Judgments, Lis Pendens and Res Iudicata in Arbitration Proceedings, in Liber Amicorum Bernardo Cremades (M.Á. Fernández-​ Ballesteros and David Arias ed., 2010), pp. 1131 et seq.; Christophe Seraglini, Brèves remarques sur les Recommendations de l’Association de Droit International sur la litispendance et l’autorité de la chose jugée en arbitrage, Rev. arb., No. 4 (2006), pp. 909 et seq.; Audley Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, Arbitral Procedure at the Dawn of the New Millennium, Reports of the International Colloquium of CEPANI, 15 October 2004 (2005), pp. 263 et seq; G. Richard Shell, Res judicata and collateral estoppel effects of commercial arbitration, 35 UCLA Law Review 623 (1988); Christer Söderlund, Lis pendens, res judicata and the issue of parallel judicial proceedings, 22(4) Journal of International Arbitration 301 (2005); Andreas Stier, Arbitral & Judicial Decision: Preclusive Effects of an International Arbitral Award, 15 American Review of International Arbitration 321 (2004); François-​X avier Train, L’autorité positive de la sentence arbitrale, Cahiers de l’arbitrage 115 et seq. (2006); V.V. Veeder, Issue Estoppel, Reasons for Awards and Tansnational Arbitration, Complex Arbitrations—​Perspectives on their Procedural Implications, ICC International Court of Arbitration Bulletin, Special Supplement (2003), pp. 73 et seq. 6 ILA, Interim Report on Res Judicata and Arbitration, Berlin Conference (2004), available at http://​w ww.ila-​hq.org and in 25(1) Arbitration International 35 (2009); ILA, Final Report on Res Judicata and Arbitration and Resolution No. 1/​2006, Toronto Conference (2006), available at http://​w ww.ila-​hq.org and in 25(1) Arbitration International 67 (2009) (cited as Final Report). See also Seraglini, pp. 909 et seq.; Filip De Ly and Audley Sheppard, The International Law Association (ILA) International Commercial Arbitration Committee Reports on Lis Pendens and Res Judicata, 25(1) Arbitration International 1 (2009); Denis Bensaude, The International Law Association’s Recommendations on Res Judicata and Lis Pendens in International Commercial Arbitration, 24(2) Journal of International Arbitration 415 (2007). 7 ILA, Final Report, para. 9.

4

C. Methodology do not deal with the relationship between national courts and arbitral tribunals and they apply only to international commercial arbitration, to the exclusion of international investment arbitration. The ILA Recommendations are transnational in nature and designed for inter­ 0.12 national commercial arbitration. Therefore, within their scope, the Recommenda­ tions cover only those aspects of res judicata in international commercial arbitration where the Committee considered that transnational rules could be developed. Those aspects where the Committee felt that the development of transnational rules is premature and reference to conflict rules is more appropriate are not covered by the Recommendations.8 The ILA reports and Recommendations on res judicata and arbitration do not 0.13 constitute a comprehensive study of the subject of res judicata before international commercial arbitral tribunals. They leave a number of questions unanswered, such as the question of the law governing res judicata or the question of the res judicata effect of prior national court judgments on arbitral proceedings. They have been described as ‘intentionally low key’ and ‘a first shot at elaborating solutions to the problem at issue’,9 or ‘une oeuvre inachevée’.10

B.  Aim of this Research The purpose of this research is to investigate whether and how the doctrine of res 0.14 judicata should be applied by international commercial arbitral tribunals in their relations with other international commercial arbitral tribunals or national courts and within the arbitral proceedings pending before them. The aim is to demonstrate that res judicata issues in international commercial arbitration should not be governed by any particular domestic law designed for the relations between domestic courts. The ultimate goal is to identify transnational principles of res judicata adapted to the nature of international commercial arbitration. The principles identified in this research will take the form of guidelines for international commercial arbitrators. Their aim will be to incite the creation of a coherent international commercial arbitration practice for matters of res judicata.

C. Methodology This research will seek to achieve its aim in two stages: Part I examines and com- 0.15 pares the doctrine of res judicata in litigation and Part II deals with the doctrine   See ibid., paras 5 et seq. and 28.   Radicati di Brozolo, p. 146. 10  Seraglini, p. 917. 8 9

5

Introduction of res judicata in international commercial arbitration. The reasons behind this approach are outlined below. 0.16 One aim of this research is to investigate whether and how the res judicata doctrine

as developed in litigation should apply in international commercial arbitration. This can only be done after examining how the doctrine of res judicata is applied in litigation, in both a domestic and international law setting.

0.17 Part I commences by determining how the doctrine is applied in domestic laws.

This is the logical starting point given that the res judicata concept originally came into being in a domestic setting.11 Chapter 1 examines the requirements and effects of a res judicata in different domestic laws. It will reveal similarities and differences regarding the res judicata doctrine between domestic laws. This will serve the aim of this research in several ways. First, it will give a clear understanding of the doctrine of res judicata which is at the heart of this research. In particular, it will clarify the doctrine’s meaning and purpose. Secondly, it will establish that there is no uniform doctrine of res judicata. In Part II of this research, this will be used as an argument to support the transnational approach towards res judicata and against the application of any particular domestic res judicata rules in international commercial arbitration. As will be seen, one of the main sources of the problem of res judicata in international commercial arbitration lies in the differences among domestic laws with respect to res judicata. Thirdly, the similarities between domestic res judicata rules indicate the existence of some generally accepted principles. This will serve as a source of inspiration; it will help to determine the content of transnational res judicata principles for international commercial arbitration.

0.18 The research will compare the domestic laws of England, the United States, France,

and Switzerland. These laws were chosen for several reasons: first, they constitute major representatives for two of the most important legal families; that is, the common law system on the one hand and the civil law system on the other hand. In addition, within the civil law family, France represents the Romanic law system, while Switzerland represents the Germanic law system. Secondly, the legal systems of England, the United States, France, and Switzerland are all highly developed and are thus comparable as between each other. Thirdly, they all enjoy leading positions in the field of international commercial arbitration.

0.19 After the comparison of domestic laws, Chapter 2 will proceed to examine the

res judicata doctrine in international law. The analysis will cover both private and public international law. The aim will be to determine how the domestic law doctrine has been introduced and is applied in international law; that is, outside its original domestic law setting. This may serve as an inspiration for how to introduce the res judicata doctrine into international commercial arbitration. It will also help to determine the content of a general principle of res judicata in international 11

  Söderlund, p. 302.

6

E. Terminology law. In private international law, attempts have been made to harmonize rules of civil procedure, including res judicata. These general principles and attempts at harmonization will be a useful source of inspiration for the determination of res judicata principles for international commercial arbitration. Part II of this research will examine whether and how the doctrine of res judicata 0.20 should apply in international commercial arbitration. Chapter 3 will demonstrate the existence of res judicata issues in international commercial arbitration by identifying situations in which such issues may arise before international arbitral tribunals. The purpose is to demonstrate the reality and magnitude of the phenomenon of res judicata in international commercial arbitration and to identify the setting in which res judicata issues arise before international arbitral tribunals. Chapter 4 will analyze the current situation and its consequences to show that the occurrence of res judicata issues in international commercial arbitration constitutes a problem that needs to be solved. Chapter 5 will then discuss the proper approach to res judicata before international commercial arbitral tribunals. It will demonstrate that transnational principles of res judicata should be elaborated. Finally, Chapter 6 will seek to formulate such principles.

D.  Scope of this Research This research will take the perspective of an international commercial arbitral tri- 0.21 bunal in circumstances where the same dispute or matter has already been decided by the same arbitral tribunal or by another international commercial arbitral tribunal or national court. Due to its limited scope, this research will not analyse the perspective of a national court confronted with a prior arbitral award. Likewise, it will not cover international investment arbitration.

E. Terminology As the doctrine of res judicata varies among domestic laws and international law in 0.22 its interpretation and application, so also the terminology may vary from one jurisdiction to another. It is therefore essential to clarify the sense in which the term ‘res judicata’ will be used in this research. In this book the term ‘res judicata’ will receive a broad meaning, covering all of the 0.23 various binding effects of a prior national court judgment or arbitral award in arbitration proceedings.12 This means that the term ‘res judicata’ will cover both the 12   See Eliahu Harnon, Res Judicata and Identity of Actions, 1 Israel Law Review 539 (1966); Yuval Sinai, The Downside of Preclusion: Some Behavioral and Economic Effects of Cause of Action Estoppel in Civil Actions, 56(3) McGill Law Journal 673, 678 (2011).

7

Introduction conclusive and preclusive effects of a prior judgment or award. Hence, it will cover the positive effect of res judicata, allowing a claimant to rely on a previous decision to further the development of its case, and the negative effect of res judicata, allowing the defendant to stop the reopening of a matter which has already been decided in previous proceedings. It also means that the term will cover not only the plea of cause of action estoppel (claim preclusion), but also the pleas of issue estoppel (issue preclusion) and abuse of process, which are known in some common law countries, but are generally unknown in civil law countries. The context or use of more specific terminology will make clear when reference is made to res judicata in such broad terms or, more specifically, to cause of action estoppel (claim preclusion), issue estoppel (issue preclusion), or another related doctrine. 0.24 While it is useful for reasons of simplicity and convenience to use the term ‘res

judicata’ in this broad sense, it is important to set out the limits of this term and distinguish res judicata from similar concepts. The final ILA report distinguishes res judicata from • the doctrine of precedent or stare decisis—​that is, invoking previous decisions rendered between different parties as persuasive precedent;13 • correction of prior decisions rendered between the same parties in order to have an error in the decision corrected; • interpretation of decisions rendered between the same parties in order to obtain a clarification of the meaning and scope of such decisions; • supplementation of decisions rendered between the same parties in order to obtain an additional decision regarding claims formulated during the proceedings but not dealt with in the decision; • revision of decisions rendered between the same parties on the basis of facts discovered after the rendering of the decision that were unavailable at the time of rendering of the decision and which the party invoking the facts was unaware of and could not reasonably be expected to have been aware of at the time the decision was made; • remission of arbitral awards rendered between the same parties to the arbitral tribunal for reconsideration in order to avoid partial or complete setting aside.14

0.25 In addition, it is useful to distinguish res judicata from enforcement which can

be defined as ‘[t]‌he act or process of compelling compliance with a law, mandate, command, decree, or agreement’.15 Res judicata and enforcement therefore pursue

13  For details, see also Robert C. Casad and Kevin M. Clermont, Res Judicata (2001), pp. 13–​16. 14 ILA, Final Report, para. 16. From a US point of view, see also Casad and Clermont, pp. 13–​27. 15  Black’s Law Dictionary (9th ed. 2009).

8

E. Terminology different objectives.16 The objective of res judicata is not to allow the prevailing party to obtain compliance with a decision, if need be through enforcement proceedings brought before the public authorities. Rather, it seeks to establish finality and avoid the undue and wasteful duplication of costly proceedings with the resulting risk of the coexistence of contradictory decisions within the same legal order. This said, res judicata and enforcement are interrelated; they are ‘two sides of the same coin’.17 The existence of a judgment that has res judicata effects usually is a condition precedent to enforcement. This means that a judgment is enforceable only against those parties that are bound by the decision that is res judicata.18 This does not mean, however, that res judicata and enforceability describe the same effect. Both effects implement the authoritative determination of a decision. However, unlike res judicata, the enforcement of a judgment often requires a court order (exequatur)19 that compels compliance with the judgment.20 Finally, the doctrine of res judicata must also be distinguished from the related 0.26 doctrine of lis pendens. Lis (alibi) pendens literally means a ‘law suite pending (elsewhere)’.21 It may be described as a situation of parallel proceedings, namely a ‘situation in which parallel proceedings, involving the same parties and the same cause of action, are continuing in two different [fora] at the same time’.22 Like the doctrine of res judicata, the doctrine of lis pendens seeks to avoid the coexistence of contradictory decisions within the same legal order. Similar to the doctrine of res judicata, it further seeks to avoid costly parallel proceedings and oppressive litigation tactics.23 The policy considerations underlying the res judicata and lis pendens doctrines are therefore broadly the same, albeit that the two doctrines apply at chronologically different stages of the proceedings: while lis pendens applies when two identical actions are pending in parallel between the same parties before two different fora, res judicata intervenes later, after one court or tribunal has already rendered a final decision and the same matter between the same parties is pending or brought for relitigation in further or other proceedings. This includes situations 16  Mélina Douchy-​Oudot, Autorité de la chose jugée—​Autorité de la chose jugée au civil sur le civil, in JurisClasseur—​Procédure Civile, fasc. 554 and JurisClasseur— ​Civil Code, fasc. 20, 13 November 2013, para. 6. 17  Brekoulakis, p. 185. 18  The reverse is not necessarily true. As will be seen in further detail later, under the laws of some countries, a national court judgment may have res judicata effects without however being enforceable. 19  Brekoulakis, p. 185. 20  On the distinction between res judicata and enforceability see also Roger Perrot and Natalie Fricéro, Autorité de la chose jugée, in JurisClasseur—​Procédure Civile, fasc. 554, para. 6. 21 ILA, Final Report on Lis Pendens and Arbitration, Toronto Conference (2006), para. 1.2, available at http://​w ww.ila-​hq.org and in 25(1) Arbitration International 3 (2009) (cited as Final Report on Lis Pendens and Arbitration). 22  See ILA, Final Report on Lis Pendens and Arbitration, para. 1.2, with citation of a quote by James Fawcett, in his 1994 Report to the International Academy of Comparative Law on Declining Jurisdiction in Private International Law. 23 ILA, Final Report on Lis Pendens and Arbitration, para. 1.4.

9

Introduction of parallel state court and/​or arbitration proceedings where one court or tribunal has already rendered a decision, and the res judicata effect of that decision is then invoked in the other, parallel (arbitration) proceedings. It may also include subsequent sets of proceedings where the res judicata effect of a prior state court judgment or arbitral award is later invoked in subsequent arbitration proceedings. Finally, a res judicata situation may arise within one and the same arbitration proceedings where the res judicata effect of a prior partial award is invoked at a later stage of the same arbitration proceedings.

10

Part I THE DOCTR INE OF R ES JUDICATA IN LITIGATION Important though the issues may be, how extensive so ever the evidence, whatever the eagerness for further fray; society says: ‘We have provided courts in which your rival contentions have been heard. We have provided a code of law by which they have been adjudged. Since judges are fallible human beings, we have provided appellate courts which do their own fallible best to correct errors. But in the end you must accept what has been decided. Enough is Enough. And the law echoes: res judicata, the matter is adjudged’. Lord Simon of Glaisdale

Literally translated, the Latin term res judicata means ‘a matter adjudged’. The full PI.01 maxim is res judicata pro veritate accipitur which means ‘a matter adjudged is taken as truth’.1 As noted by Barnett, the doctrine of res judicata is of ancient origin and application: recognized by the Roman jurists,2 as well as in ancient Hindu texts and Greek custom, the doctrine reflects ‘a wisdom that is for all time’.3 There exists a certain ‘core of common agreement’4 on the res judicata doctrine. PI.02 The general idea underlying the doctrine is that a particular matter once settled by a judgment, decree, award, or other determination, must be regarded as final;5 the matter cannot be relitigated again between the persons bound by the decision.6 1  Yuval Shany, The Competing Jurisdictions of International Courts and Tribunals (2003) , n. 5, p. 22. 2  See also K.R. Handley, Res Judicata (4th ed. 2009), paras 27.01 et seq. 3   Peter R. Barnett, Res Judicata, Estoppel, and Foreign Judgments (2001), para. 1.12. 4   Iain Scobbie, Res Judicata, Precedent and the International Court:  A  Preliminary Sketch, 20 Australian Year Book of International Law 299, 301 (1999). 5  Norah Gallagher, Parallel Proceedings, Res Judicata and Lis Pendens:  Problems and Possible Solutions, in Pervasive Problems in International Arbitration (Loukas A. Mistelis and Julian D.M. Lew QC ed., 2006), para. 17-​11. 6   Handley, para. I.01.

The Doctrine of Res Judicata in Litigation Today, this general principle is well established in common law and civil law countries and is sometimes considered inherent to all legal systems.7 It is widely recognized as a general principle of law in the sense of Article 38(1)(c) of the ICJ Statutes.8 PI.03 The doctrine of res judicata generally applies only where a given matter falls for de-

cision twice within the same legal context.9 Generally, this means that the doctrine applies only where the parties and the questions at issue are identical in two sets of proceedings. Where this is the case a decision that qualifies as a res judicata is both conclusive and preclusive in further or other proceedings. It is conclusive because it is final and binding upon the parties. A party may invoke an earlier decision in further proceedings to develop its case (positive res judicata effect). It is preclusive because it bars the relitigation of a matter that has already been finally decided in a prior decision (negative res judicata effect).10

PI.04 The res judicata doctrine provides for the finality of decisions with the aim of

avoiding lengthy and wasteful repetitions of proceedings leading to legal uncertainty and, perhaps, irreconcilable decisions. This need for finality was pertinently expressed by Andrews: Without finality of decision, litigants and indeed the legal system as a whole would be exposed to many hazards: that a dispute might continue to drag on; greater legal expense and delay might result; scarce judge-​time might be spent re-​hearing the matter; inconsistent decisions might follow; litigation would cease to be a credible means of settling disputes; the victorious party in the first case would be deprived of the legitimate expectation that the first action would not be merely a dress rehearsal for further contests.11 7  Christoph Schreuer and August Reinisch, Legal Opinion prepared for UNCITRAL Arbitration Proceedings—​Quantum Proceedings, CME Czech Republic BV (The Netherlands) v The Czech Republic, 20 June 2002, p. 4; Barnett, para. 1.12; Walther J. Habscheid, Quelques questions fondamentales concernant l’autorité de la chose jugée en droit comparé, in Liber Amicorum Adolf F. Schnitzer, Vol. 61 (1979), p. 179; Abdelhamid El Ouali, Effets juridiques de la sentence internationale (1984), p. 73 (‘L’autorité de la chose jugée est un principe dont n’ importe quelle organisation judiciaire, rudimentaire soit-​elle, ne peut se passer’); Gates v Mortgage Loan and Insurance Agency, Inc., 200 Ark 276, 285 (‘The doctrine of res judicata is a principle of universal jurisprudence forming part of the legal systems of all civilized nations. It may be said to inhere in them all as an obvious rule of expediency and justice’). 8  Bin Cheng, General Principles of Law as Applied in International Courts and Tribunals (1953, repr. 2006), p. 336; Bernard Hanotiau, Complex Arbitrations (2005), p. 239; August Reinisch, The Use and Limits of Res Judicata and Lis Pendens as Procedural Tools to Avoid Conflicting Dispute Settlement Outcomes, 3(1) Law and Practice of International Courts and Tribunals 37, 44 (2004); Jean-​Marie Vulliemin, Jugement et sentence arbitrale, 60 Études suisses de droit international (1990), paras 412 et seq. 9  Vaughan Lowe, Res Judicata and the Rule of Law in International Arbitration, 8 African Journal of International Law 38, 40 (1996). 10 International Law Association (ILA), Final Report on Res Judicata and Arbitration and Resolution No. 1/​2006, Toronto Conference (2006), para. 15, available at http://​w ww.ila-​hq.org and in 25(1) Arbitration International 67 (2009). See also Stavros Brekoulakis, The Effect of an Arbitral Award and Third Parties in International Arbitration: Res Judicata Revisited, 16(1) American Review of International Arbitration 177, 183 et seq. (2005). 11  Neil Andrews, English Civil Procedure (2003), p. 942.

12

The Doctrine of Res Judicata in Litigation The doctrine of res judicata is generally considered to be based on a public and a PI.05 private interest.12 The public interest requires that there be an end to litigation to ensure general security and public good. It is in the interest of society that the courts work in a way that is efficient and economic. As overburdened courts are presently having difficulty giving litigants even one day in court, allowing litigants a second day is a luxury that cannot be afforded.13 Furthermore, the public interest requires the avoidance of inconsistent judgments as inconsistencies may undermine the credibility of the courts and diminish respect and obedience of court judgments.14 It does not generally matter whether the decision is correct in law or in fact. A competent court has the jurisdiction to decide wrongly, as well as correctly, and its decisions are final and binding unless corrected on appeal.15 The private interest is to protect the individual. It ensures that no person shall be PI.06 tried more than once on the same matter.16 It is difficult to give a general description of the res judicata doctrine that goes be- PI.07 yond the above. The following two chapters will reveal the differences that exist between legal systems with regard to the res judicata doctrine. Chapter  1 will compare the res judicata doctrine in different domestic laws. Chapter 2 will then examine how the res judicata doctrine is applied in international law.

12  Interest res publicae ut finis litium sit (‘it is in the public interest that there should be an end to litigation’) and nemo debet bis vexari pro una et eadem causa (‘no one should be proceeded against twice for the same cause’) (ILA, Interim Report on Res Judicata and Arbitration, Berlin Conference (2004), p. 3, available at http://​w ww.ila-​hq.org and in 25(1) Arbitration International 35 (2009); Andrews, pp. 941 et seq.; Handley, para. 1.10; Robert Von Moschzisker, Res Judicata, 38(3) Yale Law Journal 299 (1929)). 13  Charles Alan Wright, Law of Federal Courts (5th ed. 1994), p. 721 with reference to National Treasury Employees Union v I.R.S., 765 F.2d 1174, 1176 (D.C. Cir. 1985). 14  Eliahu Harnon, Res Judicata and Identity of Actions, 1 Israel Law Review 539, 543 et seq. (1966). 15  Handley, para. 1.14; Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001 (2004), p. 17. According to Lord Goff ‘res judicata is founded upon the public interest in the finality of litigation rather than the achievement of justice as between individual litigants’ (The Indian Grace [1993] AC 410, 415). 16  Harnon, p. 543.

13

1 THE DOCTR INE OF R ES JUDICATA IN DOMESTIC L AWS

A . Common Law 

1.04 1.05 1.47

B. Civil Law 

1.87

1. England  2. United States 

1. France  2. Switzerland 

C . Conclusion 

1.89 1.127 1.159

It has been said that ‘[t]‌oday, the res judicata doctrines of most Western societies 1.01 are congruent’.1 However, while it is true that most domestic res judicata rules prevent the same claimant from bringing identical claims against the exact same respondent in successive proceedings, 2 beyond this point there are important differences and these differences also exist among domestic laws of Western societies. This chapter will analyse and compare the res judicata doctrine as applied in com- 1.02 mon and civil law countries, the differences among domestic laws regarding res judicata being particularly marked between common law and civil law countries.3 However, the differences among domestic res judicata laws are by no means limited to the common law/​civil law divide; they exist amongst civil law countries, as well as amongst common law countries. One aim of this chapter is to introduce different concepts of the res judicata doc- 1.03 trine and to convey a deeper understanding of the doctrine in different domestic laws. Another aim is to show that there is currently no uniform doctrine of res judicata among domestic laws.   Hans Bagner, How to Avoid Conflicting Awards—​The Lauder and CME Cases, 5(1) Journal of World Investment & Trade 31 (2004). 2 International Law Association (ILA), Interim Report on Res Judicata and Arbitration, Berlin Conference (2004), p.  3, available at http://​w ww.ila-​hq.org and in 25(1) Arbitration International 35 (2009) (cited as Interim Report). 3 Stavros Brekoulakis, The Effect of an Arbitral Award and Third Parties in International Arbitration: Res Judicata Revisited, 16(1) American Review of International Arbitration 182 (2005). 1

15

Chapter 1:  Res Judicata in Domestic Laws

A.  Common Law 1.04 The doctrine of res judicata is well established in common law jurisdictions. The

following analysis will examine the res judicata doctrine first under English law (1.) and then under US law (2.). 1. England

1.05 In England4 judgments may give rise to several res judicata pleas, namely the plea of

cause of action estoppel, issue estoppel, former recovery, or abuse of process. While each of these pleas has its own conditions regarding the subject matter that can be precluded, they all presuppose a judgment that qualifies as a res judicata.5 In other words, only judgments that present the constituent elements of a res judicata may have res judicata effects in further proceedings. In addition, such res judicata effects can only be relied upon if the parties or privies in the further proceedings are the same as in the proceedings which gave rise to the judgment.6

1.06 The following analysis will introduce each of the constituent elements of a res judi-

cata (a.), the effects to which a res judicata may give rise (b.), and the requirement of party identity (c.).

a. Constituent elements 1.07 In order to have res judicata effects a judgment or, more broadly speaking, a decision must be judicial in character and have been pronounced by a judicial tribunal with jurisdiction over the parties and the subject matter. In addition, the decision must be final and conclusive and on the merits.7 1.08 A judicial decision  A  judicial decision for res judicata purposes is a decision

which determines a question of law, fact, or both law and fact.8 This can be any judicial adjudication, including judgments, orders, decrees, sentences, bankruptcy adjudications, judicial declarations, and arbitral awards.9 It is of no importance whether the judgment is right or wrong.10

1.09 A judicial tribunal  A judicial tribunal is a tribunal that exercises judicial func-

tions according to the law of the country where it is situated, whether this tribunal 4   While the following analysis focuses on English law, it also includes some references to other Commonwealth common law legal systems which derive historically from English law. 5   Peter R. Barnett, Res Judicata, Estoppel, and Foreign Judgments (2001), paras 1.14 et seq. 6   Ibid., para. 3.01. 7   Ibid., para. 1.18; K.R. Handley, Res Judicata (4th ed. 2009), paras 1.01 and 2.01 et seq. 8   Barnett, para. 1.24. 9   Handley, para. 2.09. 10   Diag Human SE v The Czech Republic [2014] EWHC 1639 (Comm), paras 53, 60, and 61; Good Challenger Navegante SA v Metalexportimport SA (The Good Challenger) [2003] EWCA Civ 1668, para. 54; Watt (formerly Cater) v Raghib Ahsan [2007] UKHL 51, para. 33; In the matter of Surety

16

A. Common Law is permanent or only vested with temporary authority to determine a particular dispute or group of disputes. It is irrelevant whether the tribunal is a superior court, a civil or criminal court, or is even called a court or a tribunal.11 A judicial tribunal with jurisdiction over the parties and the subject matter The 1.10 general rule is that a judicial decision can only become res judicata if it was rendered by a tribunal with jurisdiction over the parties and the subject matter.12 If the tribunal exceeds its jurisdiction, either by determining matters outside its jurisdiction or by making orders in excess of its powers, its decision, in whole or in part, cannot become res judicata.13 However, there is a presumption in favour of the jurisdiction of superior courts, which have general jurisdiction. Their decisions are generally not void for lack of jurisdiction.14 By contrast with inferior courts, which have only limited jurisdiction, the presumption is the other way.15 A judgment pronounced by an inferior court without jurisdiction is a nullity whether or not so declared by a court with appellate or supervisory jurisdiction.16 A party invoking the res judicata effect of a prior judgment must allege and prove that it was within the jurisdiction of the (inferior) court.17 A final and conclusive decision  To operate as a res judicata a decision must be 1.11 final and conclusive for the purposes of res judicata.18 This is the case when the subject matter in question was raised and argued before the tribunal such that it cannot be reopened in that same court by further proceedings.19 A judgment can Guarantee Consultants Limited and in the matter of the Insolvency Act 1986, Ian Oakley Smith, Dan Scharzmann v QBE Insurance (Europe) Limited, Markel International Insurance Company Limited, Templeton Insurance Limited [2010] EWHC 3172 (Ch) with reference at para. 33 to Mulkerrins v Price Waterhouse Coopers [2003] 1 WLR 1937. 11  Handley, para. 2.02; Barnett, para. 1.19. 12  Ibid., para. 2.16. 13  Handley, para. 4.01. See also Bon Groundwork Ltd v Foster [2012] EWCA Civ 252. 14  Handley, paras 4.03 and 4.06 with reference to Isaacs v Robertson [1985] AC 97, 102–​ 3; Cameron v Cole (1944) 68 CLR 571, 589, 590–​1; Strachan v Gleaner Co. Ltd [2005] 1 WLR 3204, 3211–​14, PC (‘An order of a judge without jurisdiction was obviously vulnerable but it was not wholly without effect. It had to be obeyed unless and until it was set aside. The Supreme Court of Jamaica, like the High Court in England, was a superior court of unlimited jurisdiction, namely that it had jurisdiction to determine the limits of its own jurisdiction. Whenever a judge made an order he must be taken implicitly to have decided that he had jurisdiction to make it. If he was wrong, his error could be corrected by the Court of Appeal. However, he did not exceed his jurisdiction by making the error, and a judge of a co-​ordinate jurisdiction did not have the power to correct it. In the instant case, if Walker J had made an error his decision could be reversed by the Court of Appeal. However, unless and until reversed, his decision was res judicata’). 15  Handley, para. 4.07. 16  Ibid., para. 20.07. 17 The same applies to arbitral awards (ibid., para. 4.12, quoting Christopher Brown Ltd v Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe Registrierte GmbH [1954] 1 QB 8, 12–​13). 18 See Handley, paras 5.01 et seq.; Adrian Zuckerman, Zuckerman on Civil Procedure: Principles of Practice (2nd ed. 2006), para. 24.71. 19  Barnett, para. 1.30. The test of finality is more stringent in the case of former recovery than in the case of estoppel. In the case of cause of action and issue estoppel ‘it is necessary that the matter should have been raised and controverted before the earlier tribunal and shall have been clearly, and

17

Chapter 1:  Res Judicata in Domestic Laws generally no longer be altered by the court that rendered it when it is perfected by formal entry. At this point it becomes res judicata.20 A decision that is provisional or subject to revision by the court which pronounced it is not final for res judicata purposes.21 1.12 A decision on the merits  Only a decision that was rendered ‘on the merits’ may

become res judicata.22 The meaning of this was clarified in The Sennar (No. 2) where Lord Diplock said: It is often said that the final judgment . . . must be ‘on the merits’. The moral overtones which this expression tends to conjure up may make it misleading. What it means in the context of judgments delivered by courts of justice is that the court has held that it had jurisdiction to adjudicate on an issue raised in the cause of action to which the particular set of facts gives rise, and that its judgment on that cause of action is one that cannot be varied, reopened or set aside by the court that delivered it or any other court of co-​ordinate jurisdiction although it may be subject to appeal to a court of higher jurisdiction.23

1.13 In the same case, Lord Brandon of Oakbrook further stated:

Looking at the matter negatively a decision on procedure alone is not a decision on the merits. Looking at the matter positively a decision on the merits is a decision which establishes certain facts proved or not in dispute, states what are the relevant principles of law applicable to such facts and expresses a conclusion with regard to the effect of applying those principles to the factual situation concerned.24 1.14 Accordingly, a decision ‘on the merits’ is generally a decision that finally determines

the issue submitted to the court. In The Sennar (No. 2) this issue was whether an exclusive jurisdiction agreement bound the claimant to bring its claim in Sudan. Even though this issue could have been considered as procedural in nature, it was because the prior court had finally decided the issue submitted to it that it was held capable of giving rise to issue estoppel.25 finally, decided by it’ (Eastwood & Holt v Studer (1926) 31 Com Cas 251, 256). In the case of former recovery the decision must ‘finally declare or determine the defendant’s liability for an ascertained amount leaving nothing to be judicially determined to fix the amount recoverable and render the judgment effective and capable of execution’ (Handley, para. 5.02). 20  Ibid., para. 5.03. See also In the matter of Surety Guarantee Consultants Limited and in the matter of the Insolvency Act 1986, Ian Oakley Smith, Dan Scharzmann v QBE Insurance (Europe) Limited, Markel International Insurance Company Limited, Templeton Insurance Limited [2010] EWHC 3172 (Ch) with reference at para. 21 to Enron (Thrace) Exploration v Clapp [2005] EWCA Civ 1511. According to Blackstone’s Civil Practice 2009 (Stuart Sime and Derek French ed., 2008), a judgment in civil proceedings takes effect from the day it is given or made (para. 4.2). 21  Nouvion v Freeman (1889) 15 App Cas 1, HL; Colt Industries Inc. v Sarlie (No. 2) [1996] 1 WLR 1287, CA. 22  Handley, para. 6.01. 23  DSV Silo-​und Verwaltungsgesellschaft mbH v Owners of The Sennar and 13 other ships, The Sennar (No. 2) [1985] 1 WLR 490, 494, HL. 24 Ibid., 499. 25  Dicey, Morris, and Collins, The Conflict of Laws (15th ed. 2012), para. 14-​035. See also Zuckerman, para. 24.71 according to whom a decision ‘on the merits’ is generally a decision

18

A. Common Law In Desert Sun Loan Corp. v Hill26 the Court of Appeal held that a decision on a 1.15 procedural—​that is, a non-​substantive—​issue could also be rendered ‘on the merits’ where: (i) there was express submission of the procedural or jurisdictional issue to the earlier court, (ii) the specific issue had been raised before and decided by that court, and (iii) caution was exercised in relation to practical considerations, such as whether the issue was or should have been fully aired before the earlier court. The court noted that in practice a decision on purely procedural and non-​substantive issues will only rarely be rendered ‘on the merits’ for res judicata purposes.27 That said, it emerges from the decisions in The Sennar (No. 2) and Desert Sun Loan Corp. v Hill that what is decisive for purposes of issue estoppel is whether the prior court clearly and finally decided an issue submitted to it for its determination. Characterizing the issue so decided as being substantive rather than procedural appears unnecessary.28 A decision on the issue of jurisdiction may give rise to issue estoppel.29 There is, 1.16 however, authority to suggest that dismissals for want of jurisdiction are not themselves decisions on the cause of action thus dismissed and therefore not ‘on the merits’.30 b. Effects The effects associated with the doctrine of res judicata are cause of action estoppel, 1.17 issue estoppel, former recovery, and abuse of process. The first three preclusive pleas are part of the traditional res judicata doctrine which 1.18 requires that the subject matter determined in the earlier decision is identical to the subject matter in the other proceedings. While cause of action estoppel and issue estoppel both aim to avoid contradiction between the res judicata and the further proceedings, former recovery aims to prevent reassertion of the same cause of action.31 that finally determines a party’s substantive rights. It is a final decision that disposes of the matter, other than on purely procedural grounds. 26  [1996] 2 All ER 847, CA. 27  For examples of decisions that do not meet the ‘on the merits’ requirement, see Barnett, para. 2.46. 28  Dicey, Morris, and Collins, para. 14-​035. 29  Desert Sun Loan Corp. v Hill [1996] 2 All ER 847, 858, 863, CA; Barnett, para. 2.46; Zuckerman, para. 24.60. See also Watt (formerly Carter) v Raghib Ahsan [2007] UKHL 51. 30  Barnett, para. 2.46. See also Handley, para. 2.15, quoting Upendra Nath Bose v Lall [1940] AIR (PC) 222, 225 (‘The res judicata here was the lack of jurisdiction . . . not the reason for that decision. A Court which declines jurisdiction cannot bind parties by its reasons for declining jurisdiction: such reasons are not decisions, and are certainly not decisions by a court of competent jurisdiction. It would indeed be strange if on a dispute as to the jurisdiction of a Court to try an issue, that Court by its reasons for holding that it had no jurisdiction, could, on the principle of res judicata decide and bind the parties upon the very issue it was incompetent to try’); Dicey, Morris, and Collins, para. 14-​030 with reference to Relfo Ltd v Varsani [2009] EWHC 2297 (Ch) (not challenged on appeal: Varsani v Relfo Ltd [2010] EWCA Civ 560, [2011] 1 WLR 1402). 31  Handley, para. 19.01.

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Chapter 1:  Res Judicata in Domestic Laws 1.19 Abuse of process is also referred to as the extended doctrine of res judicata. It applies

in cases where the subject matter in the other proceedings has not been rendered res judicata by the earlier proceedings.32

1.20 Cause of action estoppel  A cause of action has been defined as ‘a factual situ-

ation, the existence of which entitles one person to obtain from the court a remedy against another person’.33 It has further been said to consist of ‘all the facts and circumstances necessary to give rise to a right to relief’.34 All claims which arise from the same event and rely on the same evidence make up one cause of action.35 Accordingly, when the same facts give rise to more than one breach of a single contract, there is a composite breach of contract and only one cause of action.36 The question whether there is identity of causes of action between two sets of proceedings is therefore a matter of substance.37

1.21 The term ‘cause of action estoppel’ was coined by Diplock LJ in Thoday v Thoday:

[cause of action estoppel] is that which prevents a party to an action from asserting or denying, as against the other party, the existence of a particular cause of action, the non-​existence or existence of which has been determined by a court of competent jurisdiction in previous litigation between the same parties. If the cause of action was determined to exist, i.e., judgment was given upon it, it is said to be merged in the judgment, or, for those who prefer Latin, transit in rem judicatam. If it was determined not to exist, the unsuccessful plaintiff can no longer assert that it does; he is estopped per rem judicatam.38 1.22 Diplock LJ emphasized the aim to avoid contradiction. A party pleading cause of

action estoppel alleges that the entire cause of action has already been finally and conclusively determined in the other proceedings. The party must establish that the same claim was rendered res judicata by the earlier decision and that it is this res judicata that is contradicted in the further proceedings.39

1.23 For cause of action estoppel to apply, all that is necessary is a final and conclusive

decision on the merits of the claim rendered between the same parties or their privies.40 Where these requirements are met, the plea of cause of action estoppel provides an absolute bar to relitigation in respect of all points decided in the earlier

  Ibid., para. 26.01.   Ibid., para. 4.86, with references, namely to Lord Diplock in Letang v Cooper [1965] 1 QB 232, 242G–​243A. 34 ILA, Interim Report, p. 7. For details on the notion of ‘cause of action’, see Handley, paras 7.05–​7.5; Barnett, paras 4.86–​4.101; Johannes Landbrecht, Teil-​Sachentscheidungen und Ökonomie der Streitbeilegung (2012), pp. 143–​8. 35 ILA, Interim Report, p. 7. For details, see Landbrecht, pp. 145–​6. 36  Handley, para. 7.12. 37  Ibid., para. 7.12. 38  Thoday v Thoday [1964] P 181, 197, CA. See also Dicey, Morris, and Collins, para. 14-​030. 39  Barnett, para. 4.18. 40  Ibid., para. 1.39. See also North West Water Ltd v Binnie & Partners [1990] 3 All ER 547, 551. 32 33

20

A. Common Law proceedings, unless it can be shown that the earlier decision was obtained by fraud or collusion.41 Issue estoppel  The plea of issue estoppel prevents the relitigation of a particular 1.24 issue of fact or law, or of fact and law, which the prior decision necessarily established as the legal foundation for its conclusion.42 Issue estoppel extends only to issues that were actually addressed and determined, 1.25 and only if the issues were necessary and fundamental to the earlier decision.43   Neil Andrews, English Civil Procedure (2003), para. 40.13; Zuckerman, para. 24.65.   Handley, para. 8.01; Barnett, para. 1.40; Landbrecht, pp. 148–​9. See also Arnold v National Westminster Bank plc [1991] 2 AC 93, 105; Yukos Capital SARL v OJSC Rosneft Oil Company [2011] EWHC 1461 (Comm), para. 53 (‘The issues which are necessary to a decision in a particular case will depend on the matters in issue in that case. It cannot be answered in general or abstract terms. One test of whether a finding is fundamental is whether the decision could stand without that particular finding . . . If it could not do so then it can be said to be fundamental to the decision’). See also P&O Nedlloyd BV v Arab Metals Co. and others [2006] EWCA Civ 1717, paras 23–​4. For comparison, see also decision of the High Court of Australia in Blair v Curran (1939) 62 CLR 464, 531–​3, HCA. In this case, Dixon J said: ‘[a]‌judicial determination directly involving an issue of fact or of law disposes once and for all of the issue, so that it cannot be raised [again] between the same parties. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification for its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commenced or restrained or that rights be declared. The distinction between res judicata and issue estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order. Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order. In the phraseology of Coleridge J. in R. v. Inhabitants of the Township of Hartington Middle Quarter, the judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous. In the phraseology of Lord Shaw, “a fact fundamental to the decision arrived at” in the former proceedings and “the legal quality of the fact” must be taken as finally and conclusively established (Hoystead v. Commissioner of Taxation). But matters of law or fact which are subsidiary or collateral are not covered by the estoppel. Findings, however deliberate and formal, which concern only evidentiary facts and not ultimate facts forming the very title to rights give rise to no preclusion. Decisions upon matters of law which amount to no more than steps in a process of reasoning tending to establish or support the proposition upon which the rights depend do not estop the parties if the same matters of law arise in subsequent litigation’. 43  Zuckerman, para. 24.67. On the issue of whether a determination made in a prior judgment was fundamental, see also case law cited in fn 42. See, however, Jacob Van de Velden, The ‘Cautious Lex Fori’ Approach to Foreign Judgments and Preclusion, 61(2) International and Comparative Law Quarterly 519 (2012) at n. 8: ‘Hamblen J [in Yukos Capital SARL v OJSC Rosneft Oil Company [2011] EWHC 1461 (Comm)] emphasised that “[t]‌he issue must be necessary for the decision” for it to found an estoppel. But this is the wrong test. It is respectfully submitted that English law differentiates, not between various categories of issues (some necessary, others collateral), but between questions that qualify as “issue” and those that do not. The proper test then involves asking, not 41

42

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Chapter 1:  Res Judicata in Domestic Laws Issues which are merely subsidiary or collateral are not covered by issue estoppel.44 Further, the issues in the other or subsequent proceedings must be identical to those determined in the earlier decision45 and that decision must qualify as a res judicata; that is, it must be a final and conclusive decision on a claim.46 The parties to the two proceedings must be the same or their privies.47 However, the causes of action in the two proceedings may be entirely different.48 1.26 Ordinarily, a particular issue will be rendered res judicata as part of a final decision

on a claim.49 In Thoday v Thoday Diplock LJ explained:

There are many causes of action which can only be established by proving that two or more different conditions are fulfilled. Such causes of action involve as many separate issues between the parties as there are conditions to be fulfilled by the plaintiff in order to establish his cause of action; and there may be cases where the fulfilment of an identical condition is a requirement common to two or more different causes of action. If in litigation upon one such cause of action any of such separate issues as to whether a particular condition has been fulfilled is determined by a court of competent jurisdiction, . . . neither party can, in subsequent litigation between one another upon any cause of action which depends upon the fulfilment of the identical condition, assert that the condition was fulfilled if the court has in the first litigation determined that it was not, or deny that it was fulfilled if the court in the first litigation determined that it was. 50

whether the question of partiality and dependence addressed by the Amsterdam Court of Appeal was a “necessary issue”, but whether it was an “issue” at all, since only findings on issues can give rise to an issue estoppels’. 44  Good Challenger Navegante SA v Metalexportimport SA [2003] EWCA Civ 1668. See also Dicey, Morris, and Collins, para. 14-​032 with references cited. 45  See decision of the Court of Appeal in Yukos Capital SARL v OJSC Rosneft Oil Company [2012] EWCA Civ 855. The Court of Appeal allowed an appeal by Rosneft in relation to issue estoppel against the High Court’s decision in Yukos Capital SARL v OJSC Rosneft Oil Company [2011] EWHC 1461 (Comm). The Court of Appeal held that the issue in dispute before the English courts (i.e. whether the Russian annulment decisions were partial and dependent and whether they should not be recognized in England as a matter of English public policy) was not the same as before the Dutch courts, the issue of ‘public policy’ or ‘public order’ being inevitably different in each country. 46  Barnett, para. 5.03. 47  The core requirements for the creation of an issue estoppel were succinctly set out in Lord Brandon of Oakbrook’s judgment in The Sennar (No. 2) [1985] 1 WLR 490, HL, at 499: ‘in order to create an [issue estoppel], three requirements have to be satisfied. The first requirement is that the judgment in the earlier action relied on as creating an estoppel must be (a) of a Court of competent jurisdiction, (b) final and conclusive and (c) on the merits. The second requirement is that the parties (or privies) in the earlier action relied on as creating an estoppel, and those in the later action in which that estoppel is raised as a bar, must be the same. The third requirement is that the issue in the later action, in which the estoppel is raised as a bar, must be the same issue as that decided by the judgment in the earlier action’. See also Yukos Capital SARL v OJSC Rosneft Oil Company [2011] EWHC 1461 (Comm), paras 42 et seq.; Dicey, Morris, and Collins, para. 14-​032 with references cited. 48  Zuckerman, para. 24.48. 49  Barnett, para. 5.04. 50  Thoday v Thoday [1964] P 181, 197, CA.

22

A. Common Law There may be an exception to issue estoppel when the injustice of not allowing 1.27 the matter to be relitigated outweighs the hardship of the opponent of losing the benefit of the earlier findings.51 Normally, issue estoppel may be overcome only in two types of situations: first, where the party against whom issue estoppel is pleaded shows that further material, relevant to the correct determination of an issue in the earlier proceedings, has become available to it and that it could not by reasonable diligence have adduced this material during the earlier proceedings. Secondly, where there has been a material change in the law since the findings were made.52 Former recovery  Former recovery prevents a party in whose favour a final deci- 1.28 sion has been rendered from recovering a second decision against the same party based on the same cause of action.53 The cause of action for which the first decision was given is said to have merged in that judgment: transit in rem judicatam. The party’s claim or cause of action is extinguished by the first decision. It ceases to exist and cannot be invoked in further proceedings.54 Like cause of action estoppel, former recovery presupposes a final and conclusive 1.29 decision on a cause of action. The cause of action and the parties must be the same in both proceedings. However, former recovery operates only against the party in whose favour relief has been granted by the earlier decision. The successful party is precluded from reasserting the same claim against the same party in order to obtain further relief. By contrast, cause of action estoppel can be raised by or against any party to the prior proceedings, as it does not merely seek to prevent reassertion; it has the broader aim of avoiding contradiction of a cause of action that is res judicata.55 Abuse of process: the rule in Henderson v Henderson  Where the subject mat- 1.30 ter of the controversy has not already been rendered res judicata by an earlier decision, a party may still prevent litigation of that matter by pleading abuse of process. For abuse of process to be successful it is necessary that the subject matter could 1.31 and should have been rendered res judicata by the earlier decision had the parties, with all due diligence, brought the matter before the prior tribunal.56 While the 51 See Yukos Capital SARL v OJSC Rosneft Oil Company [2011] EWHC 1461 (Comm), paras 59 et seq. 52  Zuckerman, para. 24.69. See also ILA, Interim Report, p.  8; Blackstone’s, para. 4.4; McIlkenny v Chief Constable of the West Midlands [1980] 1 QB 283, CA; Arnold v National Westminster Bank plc [1991] 2 AC 93, [1991] 3 All ER 41, HL. 53  Handley, para. 19.01. 54  Ibid., para. 19.02; Barnett, paras 1.37 and 1.41. 55  Ibid., paras 1.41 et seq.; Handley, para. 19.01 (in cases of cause of action estoppel ‘that which must not be controverted is a proposition of law or finding of fact. In cases of former recovery what is not allowed is a second proceeding for the same relief ’). 56  Barnett, para. 1.46; Zuckerman, para. 24.78.

23

Chapter 1:  Res Judicata in Domestic Laws abuse of process doctrine is normally invoked in other, further proceedings, this is not a requirement. In Tannu v Moosajee the court expressly recognized that, even though ‘unusual’, the abuse of process doctrine could apply to the later stages of the same proceedings.57 1.32 The abuse of process doctrine is based on the general rule of public policy according

to which a claimant must bring forward its entire case in one action.58 The doctrine thus seeks to promote procedural economy.59 While bringing a claim or defence that could and should have been brought in other proceedings may in and of itself be abusive, an abuse of process is much more obvious in the presence of an additional element, such as dishonesty or unjust harassment.60

1.33 While it is generally said that the application of the abuse of process doctrine by the

courts is discretionary, it may be more accurately described as a balancing exercise in that the court must balance the conflicting interests of the parties and consider the wider public interest. The party pleading abuse of process has to convince the court that, in the particular case at hand, it would be just to deny the opponent the opportunity to raise an issue that has not been determined by a prior decision.61

1.34 Abuse of process is also known as the rule in Henderson v Henderson. In this case,

Wigram V-​C said:

where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of a matter which might have been brought forward as part of the subject in contest, but which was not brought forward only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation and which the parties, exercising reasonable diligence, might have brought forward at the time.62 57  Tannu v Moosajee [2003] EWCA Civ 815. In this sense, see also Seele Austria GmbH Co. v Tokio Marine Europe Insurance Limited [2009] EWHC 255 (TCC). By contrast, it was held that the abuse of process doctrine does not prevent late amendments to a party’s pleadings (Ruttle Plant Hire Ltd v Secretary of State for the Environment [2007] EWHC 1773 (TCC)). 58  Zuckerman, para. 24.80; De Crittenden v Bayliss [2005] EWCA Civ 1425; Barrow v Bankside Members Agency Ltd [1996] 1 WLR 257. 59 See Landbrecht, p. 153. 60  Johnson v Gore Wood and Co. [2002] 2 AC 1. See also Landbrecht, p. 155; Blackstone’s, para. 33.14. 61  Zuckerman, para. 24.59. In this context it is worth noting the words of Lowry CJ in Shaw v Sloan: ‘The entire corpus of authority of issue estoppel is based on the theory that it is not an abuse of process to relitigate a point where any of the . . . requirements of the doctrine is missing’ (Shaw v Sloan [1982] NI 393, 397). 62  Henderson v Henderson (1843) 3 Hare 100, 115. The rule that a party will not be permitted to raise an issue that it could and should have raised in an earlier proceeding ante-​dates Henderson v Henderson: see Smith v Johnson (1812) 15 East 213. For details on Henderson and abuse of process, see Barnett, paras 6.01 et seq. See also Handley, paras 26.03–​26.04; Landbrecht, pp. 150–​2.

24

A. Common Law In Barrow v Bankside Members Agency Ltd and another Sir Thomas Bingham MR 1.35 explained the rule in the following terms: It is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on for ever and that a defendant should not be oppressed by successive suits when one would do. That is the abuse at which the rule is directed.63

In Henderson v Henderson the rule was expressed in terms of res judicata. Today, 1.36 the rule is referred to as the ‘extended’ doctrine of res judicata. It rests upon the same considerations as the doctrine of res judicata, namely that there should be an end to litigation and that a party should not be tried twice in the same matter. However, since the rule only applies in cases where the subject matter in question has not already been rendered res judicata the reference to the res judicata doctrine is avoided.64 Since the decision of the House of Lords in Johnson v Gore Wood & Co.65

  Barrow v Bankside Members Agency Ltd and another [1996] 1 WLR 257, 260, CA.   Barnett, paras 1.46 and 6.18 et seq.; Handley, paras 26.01 et seq.; Andrews, paras 40.34 and 40.60. 65  Johnson v Gore Wood & Co. [2002] 2 AC 1 (‘Henderson v Henderson abuse of process, . . . although separate and distinct from cause of action and issue estoppel, has much in common with them’). Johnson v Gore Wood & Co. approved Bradford & Bingley Building Society v Seddon [1999] 1 WLR 1482, CA. See also Sweetman v Nathan [2003] EWCA Civ 1115. In Dexter Limited v Vlieland-​ Boody [2003] EWCA Civ 14, Clarke LJ pertinently summarized the abuse of process principles as set out in Johnson v Gore Wood & Co.: ‘i) Where A has brought an action against B, a later action against B or C may be struck out where the second action is an abuse of process. ii) A later action against B is much more likely to be held to be an abuse of process than a later action against C. iii) The burden of establishing abuse of process is on B or C or as the case may be. iv) It is wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. v) The question in every case is whether, applying a broad merits based approach, A’s conduct is in all the circumstances an abuse of process. vi) The court will rarely find that the later action is an abuse of process unless the later action involves unjust harassment or oppression of B or C. Proposition ii) above seems to me to be of importance because it is one thing to say that A should bring all his claims against B in one action, whereas it is quite another thing to say that he should bring all his claims against B and C (let alone against B, C, D, E, F and G) in one action. There may be many entirely legitimate reasons for a claimant deciding to bring an action against B first and, only later (and if necessary) against others. Those reasons include, for example, the cost of proceeding against more than one defendant, especially where B is apparently solvent and the case against B seems stronger than against others. More defendants mean more lawyers, more time and more expense. This is especially so in large commercial disputes. It by no means follows that either the public interest in efficiency and economy in litigation or the interests of the parties, including in particular the interests of C, D and E, is or are best served by one action against them all. It seems to me that the courts should be astute to ensure that it is only in a case where C can establish oppression or an abuse of process that a later action against C should be struck out. I could not help wondering whether the defendants in this case would have given their lawyers the same instructions on the question whether they should have been sued in the first action if they had been asked before that action began as they have given now that a later action has been begun. It is clear from the speeches of both Lord Bingham and Lord Millett that all depends upon the circumstances of the particular case and that the court should adopt a broad merits based approach, but it is likely that the most important question in any case will be whether C, D, E or any other new defendant in a later action can persuade the court that the action against him is oppressive. It seems to me to be likely to be a rare case in which he will succeed in doing so’. See also Aldi Stores Ltd v WSP Group Plc & Ors [2007] EWCA Civ 1260 (where the court allowed the 63

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Chapter 1:  Res Judicata in Domestic Laws the rule is associated with the doctrine of abuse of process66 rather than with the doctrine of res judicata. c. The same parties 1.37 The rules that settle who can take advantage of, or be bound by, a res judicata depend on whether the judgment relied on is a ‘judgment in personam’ or a ‘judgment in rem’.67 Judgments in rem determine the status of a person or thing and operate against the whole world. By contrast, judgments in personam determine the rights and liabilities between the parties to the proceedings.68 The following analysis concerns only judgments in personam. 1.38 The res judicata effects of a judgment are limited by the doctrines of privity and

mutuality. According to the doctrine of privity only the parties or privies to the proceedings which gave rise to the res judicata can benefit or be bound by it in further proceedings. The parties must be identical in all proceedings or privies to the parties in the previous proceedings. No third person can rely on the effects of a res judicata or be bound by it.69 The doctrine of mutuality applies in cases of cause of action or issue estoppel and requires that the estoppel is mutual. This means that ‘each party in the subsequent proceedings must have been party or privy to the earlier proceedings, and must claim or defend in the subsequent proceedings in the same right as they, or those to whom they are privy, claimed or defended in the earlier’.70

1.39 While the doctrine of mutuality has been partially rejected in the United States71

it remains the rule in England.72

1.40 Parties  The parties to the proceedings are the individuals or entities named on

the record of the proceedings as litigants.73 The parties in the other or subsequent

parties a measure of freedom within the boundaries of appropriate case management) and Gladman Commercial Properties v Fisher Hargreaves Proctor and others [2013] EWCA Civ 1466; Stuart v Linde and others [2008] EWCA Civ 2; Andrew Henley v Shelley Bloom [2010] EWCA Civ 202 (which build on the dicta in the Aldi decision). 66  The ILA has described the doctrine of abuse of process in the following terms: ‘subsequent proceedings should be precluded if it is necessary for a court to prevent a misuse of its procedure in the face of unfairness to another party, or to avoid the risk that the administration of justice might be brought into disrepute among right-​thinking people. [It] rests upon the inherent power of the court to prevent misuse of its procedure even though a party’s conduct may not be inconsistent with the literal application of procedural rules . . . Its application is wholly discretionary’ (ILA, Interim Report, p. 8). 67  On the new category of judgments in bankruptcy and insolvency proceedings, see Handley, paras 9.02 et seq. 68  Barnett, para. 3.02. 69  Ibid., para. 3.04. 70  Ibid., para. 3.05. 71  See paras 1.84 et seq. 72  Hunter v Chief Constable of the West Midlands [1982] AC 529, HL; cf McIlkenny v Chief Constable of the West Midlands [1980] 1 QB 283, CA. See also Handley, para. 9.05. 73 ILA, Interim Report, p. 9.

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A. Common Law proceedings must claim or defend in the same capacity as in the prior proceedings. A party who litigates in a different capacity is in law a separate person and a prior decision does not bind him or her personally or in another capacity.74 In some cases individuals or entities not named as parties on the record of the pro- 1.41 ceedings may still be deemed parties for res judicata purposes. Deemed parties are different to privies. While deemed parties are parties in their own right, privies acquire privity through the right, title, or interest of another party.75 Deemed parties include those who intervene and take an active part in the 1.42 proceedings,76 third and subsequent parties who become parties to the proceedings between the prior parties,77 and those who insist on being added as a party and obtain an order to that effect.78 Furthermore, a court can look behind the record to identify the ‘real’ party.79 Accordingly, those who direct another person to pursue litigation on their behalf may also be deemed parties. Privies  A privy is a person or entity ‘upon whom all the rights and obligations 1.43 of any legal entity devolve, including the right to the benefit of, or the obligation to be bound by, a res judicata’.80 There are three categories of privy: privy in blood, title, or interest.81 Privies in 1.44 blood include ancestors and heirs. Privies in title include any person who succeeds to the rights or liabilities of a party upon death or insolvency.82 A privy in interest has some kind of interest, legal or beneficial, in the previous or other litigation or its subject matter.83 The requirements for privity in interest are highly fact-​dependent. They have been succinctly expressed in the following terms: There must be an examination of the parties’ interests, as well as the existence of a sufficient degree of identification between the parties, before it is just to hold that a decision in respect of one party should be binding in proceedings to which another is party. Moreover, the interest in the previous litigation or its subject matter must be legal or beneficial: a mere curiosity or concern in the litigation or some interest in the outcome is not sufficient.84   Handley, para. 9.22; Barnett, para. 3.10.   Barnett, para. 3.18. 76  By contrast, those who have an interest in the dispute and a right to intervene, but who stand by and allow the litigation to be conducted by others, do not become parties. A person must actively intervene for the ‘same party’ requirement to be met (see Handley, para. 9.12). Such persons may, however, under certain circumstances be considered as privies (see fn 90). 77 See Handley, para. 9.11. 78  Barnett, para. 3.17. 79  Handley, para. 9.14. For more details on parties to decisions in personam, see ibid., paras 9.01 et seq. 80  Barnett, para. 3.20. 81  See, generally, Handley, paras 9.38 et seq. 82  Barnett, para. 3.21. 83  On the notion of privity in interest, see, generally, Handley, paras 9.43 et seq. 84  Barnett, para. 3.22. See also Johnson v Gore Wood & Co. [2002] 2 AC 1, 32 where Bingham LJ cited a statement by Megarry J in Gleeson v J. Wippell & Co. Ltd [1977] 1 WLR 74

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Chapter 1:  Res Judicata in Domestic Laws 1.45 There is privity in interest if a person acts on a decision in litigation and claims

under the party entitled to it. 85 Privity in interest has also been held to exist between a trustee and a beneficiary where the trustee sues for the benefit of the beneficiary. 86 By contrast, no privity in interest exists between a licensee and a licensor of intellectual property rights if sued in separate proceedings by the same claimant 87 or between a company and its shareholders, even if the shareholders have a controlling interest. 88 Furthermore, persons with separate but identical interests in the same question are not privies; members of a class have their own interest and are not privies of each other. 89

1.46 Some courts have contemplated extending the category of privity of interest.90

However, it has been strongly suggested that ‘there is no basis for extending privity of interest to include cases where the interest is merely a financial right or interest in the previous action’.91

510, 515: ‘[I]‌t seems to me that the substratum of the doctrine is that a man ought not to be allowed to litigate a second time what has already been decided between himself and the other party to the litigation. This is in the interest both of the successful party and of the public. But I cannot see that this provides any basis for a successful defendant to say that the successful defence is a bar to the plaintiff suing some third party, or for that third party to say that the successful defence prevents the plaintiff from suing him, unless there is a sufficient degree of identity between the successful defendant and the third party. I do not say that one must be the alter ego of the other: but it does seem to me that, having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party. It is in that sense that I would regard the phrase “privity of interest”’. The test in Glesson was also applied in Secretary of State for Business, Innovation and Skills v Potiwal [2012] EWHC 3723 (Ch). 85  Barnett, para. 3.23. 86  Churchill & Sim v Goddard [1937] 1 KB 92; Gleeson v J. Wippell & Co. [1977] 1 WLR 510. See also Young v Murphy [1996] 1 VR 279, 285–​7 (Supreme Court of Victoria, Australia). 87  Mecklermedia Corp. v DC Congress GmbH [1998] Ch 40. 88  Baratok Ltd v Epiette Ltd [1998] 1 BCLC 283, CA. 89  Handley, para. 9.49. 90  See, e.g., House of Spring Gardens Ltd v Waite and others [1991] 1 QB 241, CA. In this case, Stuart-​Smith LJ invoked ‘justice and common sense’ in order to preclude a third defendant who was not a party to the prior proceedings from alleging that the earlier decision was obtained by fraud (‘All three defendants were joint tortfeasors . . . The judgment against them was joint and several. If the . . . action to set aside [the] judgment had succeeded, [it] would have been set aside in toto . . . Mr. McLeod was well aware of those proceedings. He could have applied to be joined in them, and no one could have opposed his application. He chose not to do so . . . he was content to sit back and leave others to fight the battle, at no expense to himself. In my judgment that is sufficient to make him privy to the estoppels . . .’). The decision in House of Spring Gardens Ltd v Waite and others was approved by Latham LJ in Powell v Wiltshire [2004] EWCA Civ 534, [2005] QB 117, 126 and by Lewison J in Thomas and Agnes Carvel Foundation v Carvel [2007] EWHC 1314 (Ch), [2008] Ch 395, 407. See also Dicey, Morris, and Collins, para. 14-​033; K.R. Handley, Some Overlooked Aspects of the Res Judicata Doctrine, 127 Law Quarterly Review 83 (2011) and Carl Zeiss (No. 2) [1967] 1 AC 853, HL. 91  Barnett, para. 3.25 with reference to Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (1993) 43 FCR 510 (Federal Court of Australia).

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A. Common Law 2. United  States In the United States the doctrine of res judicata is broadly similar to the doctrine 1.47 in England, albeit that it varies between states.92 US res judicata law has been described as ‘an almost entirely judge-​made body of law’,93 the belief being that ‘in general it is just too complex a subject for successful codification’.94 In Southern Pacific R. Co. v United States the US Supreme Court expressed the classic statement of the res judicata rule in the following terms: The general principle announced in numerous cases is that a right, question, or fact distinctly put in issue, and directly determined by a court of competent jurisdiction, as a ground of recovery, cannot be disputed in a subsequent suit between the same parties or their privies; and even if the second suit is for a different cause of action, the right, question or fact once so determined must, as between the same parties or their privies, be taken as conclusively established, so long as the judgment in the first suit remains unmodified. This general rule is demanded by the very object for which civil courts have been established, which is to secure the peace and repose of society by the settlement of matters capable of judicial determination. Its enforcement is essential to the maintenance of social order, for the aid of judicial tribunals would not be invoked for the vindication of rights of person and property if, as between parties and their privies, conclusiveness did not attend the judgments of such tribunals in respect of all matters properly put in issue and actually determined by them.95

Even if not binding, the US Supreme Court embraces the Restatement of the Law 1.48 (Second) of Judgments as stating the basic federal law on res judicata.96 In the Restatement (Second) the doctrine of res judicata covers both claim and issue preclusion.97 Each of these concepts in turn is made up of two preclusive effects. Claim preclusion covers merger (that is, the extinguishment of a claim in a judgment rendered in favour of the claimant98) and bar (that is, the extinguishment of a claim

92  Audley Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, Arbitral Procedure at the Dawn of the New Millennium, Reports of the International Colloquium of CEPANI, 15 October 2004 (2005), p. 270. 93  Robert C. Casad and Kevin M. Clermont, Res Judicata (2001), p. 5. 94 Ibid., p. 6. 95  Southern Pacific R. Co. v United States, 168 US 1, 48–​9 (1897). 96  See, e.g., New Hampshire v Maine, 532 US 742, 749–​50 (2001); Baker by Thomas v General Motors Corp., 522 US 222, 234 n. 5 (1998); Migra v Warren City School District Board of Education et al., 465 US 75, 77 n. 1 (1984); United States v Mendoza 464 US 154, 158 n. 3 (1984). See also Casad and Clermont, pp.  6–​7; Christopher Klein, Lawrence Ponoroff, and Sarah Borrey, Principles of Preclusion and Estoppel in Bankruptcy Cases, 79 American Bankruptcy Law Journal 839, 844 (2005). 97 ALI, Restatement of the Law (Second), Judgments, Vol. 2, as adopted and promulgated on 12 June 1980, p. 131. This terminology was adopted by the US Supreme Court in Taylor v Sturgell, 553 US 880, 893 (2008). It is important to note that the terminology varies. Some cases and commentators refer to claim preclusion as ‘res judicata’ and to issue preclusion as ‘collateral estoppel’. On terminology, see Casad and Clermont, pp. 9–​12. See also Alary Corp. v Sims (In re Associated Vintage Group), 283 BR 549, 554–​5 (Bankr. 9th Cir. 2002). 98 ALI, Restatement (Second), Judgments, §18.

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Chapter 1:  Res Judicata in Domestic Laws in a judgment rendered in favour of the respondent).99 Issue preclusion encompasses both direct and collateral estoppel. In cases of direct estoppel, the claim in the subsequent proceedings is the same as in the prior proceedings. By contrast, in cases of collateral estoppel, the claim in the subsequent proceedings is different to the claim in the prior proceedings.100 1.49 The following analysis will cover the doctrine of res judicata in federal law and only

as regards in personam judgments. After determining the constituent elements of a res judicata (1.), the analysis will examine the judgment’s res judicata effects (2.). Finally, it will analyse the requirement of party identity, including the possibility of extending the res judicata doctrine to third parties (3.).

a. Constituent elements 1.50 The application of the res judicata doctrine presupposes a valid and final personal judgment.101 1.51 A valid judgment  A valid judgment must meet the following requirements: the

parties must have been given adequate notice of the proceedings and an opportunity to be heard, and the judgment must have been rendered by a court with territorial and subject matter jurisdiction.102 It is generally considered that the existence of an error in the judgment is irrelevant to its res judicata effects.103

1.52 The notice to the parties must be adequate104 and be transmitted in a way that ‘in

ordinary circumstances is reasonably certain to convey actual notice’105 to the persons concerned or their representative.106

1.53 §§4 to 10 of the Restatement (Second) cover the territorial jurisdiction require-

ment. According to the Supreme Court’s decisions in International Shoe Co. v Washington107 and Shaffer v Heitner,108 it is both sufficient and necessary that there be ‘minimum contacts’ between the state where the court is situated and the parties or the transaction. However, the observance of the territorial jurisdiction requirement may generally be waived by a party.109  Ibid., §19.   Ibid., p. 131. The term ‘collateral estoppel’ is commonly used in the general meaning of ‘issue preclusion’. See, e.g., Casad and Clermont, p. 10; Richard L. Marcus, Martin H. Redish, and Edward F. Sherman, Civil Procedure—​A Modern Approach (1989), p. 948. 101 ALI, Restatement (Second), Judgments §17; Moncur v Agricredit Acceptance Co (In re Moncur), 328 BR 183, 187–​8 (Bankr. 9th Cir. 2005). 102 ALI, Restatement (Second), Judgments, §1. 103  Contra: Yuval Sinai, Reconsidering Res Judicata: A Comparative Perspective, 21 Duke Journal of Comparative & International Law 353, 379–​80 (2011) with references cited. 104 ALI, Restatement (Second), Judgments, §2(1)(a). 105 Ibid., p. 35. 106  Ibid., §2(1)(b) and p. 35. 107  International Shoe Co. v Washington, 326 US 310, 316 (1945). 108  Shaffer v Heitner, 433 US 186 (1977); ALI, Restatement (Second), Judgments, p. 57. 109  See ALI, Restatement (Second), Judgments, pp. 31 et seq. 99

100

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A. Common Law The subject matter jurisdiction describes the authority of a court to decide a given 1.54 type of legal controversy.110 All courts in the US federal system have limited subject matter jurisdiction. It exists only where it is expressly or impliedly consigned to them.111 An objection to subject matter jurisdiction generally may be made at any time during an action, even on appeal, and may even be made after the judgment has become final. Traditionally, a judgment rendered without subject matter jurisdiction was always ‘void’ and could never become res judicata.112 Today it is only in exceptional circumstances that a lack of subject matter jurisdiction can be invoked after a judgment has been rendered for the purpose of holding the judgment to be a nullity.113 A final judgment  According to §13 of the Restatement (Second), ‘[t]‌he rules 1.55 of res judicata are applicable only when a final judgment is rendered’. The Restatement (Second) further describes the requirement in the following terms: when res judicata is in question a judgment will ordinarily be considered final in respect to a claim (or a separable part of a claim . . .) if it is not tentative, provisional, or contingent and represents the completion of all steps in the adjudication of the claim by the court, short of any steps by way of execution or enforcement that may be consequent upon the particular kind of adjudication. Finality will be lacking if an issue of law or fact essential to the adjudication of the claim has been reserved for future determination, or if the court has decided that the plaintiff should have relief against the defendant of the claim but the amount of the damages, or the form or scope of other relief, remains to be determined.114

While the finality test is applied strictly in cases of claim preclusion, it is relaxed 1.56 in cases of issue preclusion requiring the prior adjudication to be ‘sufficiently firm to be accorded conclusive effect’.115 The issue must have been adequately deliberated and the decision on the issue must not be tentative. That the parties were fully heard on the issue, that the court supported its decision with a reasoned opinion, and that the decision was subject to appeal or was in fact reviewed on appeal are factors supporting finality for the purposes of issue estoppel. The question is whether the decision on a particular issue is procedurally definite and not whether the court had doubts in reaching its decision.116 For the purposes of res judicata a judgment becomes final on the day it is rendered.117 1.57

  See ibid., §§11 and 12.   Ibid., p. 108. 112  Ibid., pp. 116 et seq. 113  Ibid., pp. 32 and 120 et seq. 114  Ibid., pp. 132 et seq. According to the US Supreme Court, a final judgment is one that ‘ends the litigation on the merits and leaves nothing for the court to do but execute the judgment’ (Catlin v United States, 324 US 229, 233 (1949)). 115 ALI, Restatement (Second), Judgments, §13. 116  Ibid., p. 136; Charles Alan Wright, Law of Federal Courts (5th ed. 1994), p. 725. 117 ALI, Restatement (Second), Judgments, §14. See also Coover v Saucon Valley School District et al., 955 F. Supp. 392, 412 (E.D. Pa. 1997); Smith v Securities & Exch. Commn., 129 F.3d 110 111

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Chapter 1:  Res Judicata in Domestic Laws 1.58 A judgment on the merits?  Under the first Restatement of the Law of Judgments

only a final judgment on the merits could give rise to claim preclusion.118 The Restatement (Second) no longer uses the terminology ‘on the merits’ because of its misleading connotation.119

1.59 The modern rule of claim preclusion requires: (i) that the claims in both sets of

proceedings are based on the same transaction, (ii) that the procedure in the prior proceedings (including the possibility of appeal) did not exclude an opportunity to present the matter advanced in the further proceedings, and (iii) that the judgment was not a dismissal without prejudice120 or was not based on some other ground that would allow further proceedings to be brought. What is essential is not that the first judgment determined the merits of the claim after proceedings on the substantive issues, but that the parties to the prior proceedings had a fair opportunity to get to the proceedings on the merits.121

1.60 Decisions on the issue of territorial122 and subject matter jurisdiction123 may be-

come res judicata.124

b. Effects 1.61 A  party to a prior judgment may raise the pleas of claim preclusion and issue preclusion.125 Unlike English law, US law does not distinguish a separate plea of 356, 362 n. 7 (6th Cir. 1997) (‘The fact that Smith has an appeal of that judgment pending does not deprive the judgment of res judicata effect’). 118 ALI, Restatement of the Law, Judgments, as adopted and promulgated on 15 May 1942, §§41 and 45. 119  Ibid., p. 161. 120  In federal courts a dismissal requested by the claimant is ordinarily without prejudice. An involuntary dismissal usually operates as a judgment on the merits. In both cases, the court may order otherwise (see Fleming James Jr., Geoffrey C. Hazard Jr., and John Leubsdorf, Civil Procedure (2001), §11.16, p. 703). 121  Ibid., §11.16, p. 702; Wright, p. 723. See also Semtek Int’ l Inc. v Lockheed Martin Corp., 531 US 497 (2001) for an interpretation of the meaning of ‘operates as an adjudication upon the merits’ in Rule 41(b) Federal Rule of Civil Procedure. 122 ALI, Restatement (Second), Judgments, §10(2) and pp. 103 et seq. 123  Ibid., §12 and pp. 116 et seq. 124  See also Durfee v Duke, 375 US 106, 113–​16 (1963). 125  Claim and issue preclusion are affirmative defences under Rule 8(c) Federal Rules of Civil Procedure. Both pleas must therefore be raised or risk being waived (Taylor v Sturgell, 553 US 880, 908 (2008); State of Arizona v State of California, 530 US 1, 15 (2000). See also Sinai, Reconsidering Res Judicata, p. 363). Some courts will, however, raise res judicata on their own motion. See, e.g., Lacroix et al. v Marshall County, Missippi, 2011 US App LEXIS 2250*13 (‘“Generally, res judicata is an affirmative defense that must be pleaded, not raised sua sponte.” There are two exceptions to this general rule. The first, which applies to “actions [that] were brought before the same court,” does not apply here. “The other exception involves the situation in which all relevant data and legal records are before the court and the demands of comity, continuity in the law, and essential justice mandate judicial invocation of the principles of res judicata”’); Scherer v Equitable Life Assurance Soc’y, 347 F.3d 394, 398 n. 4 (2d Cir. 2003) (‘[A]‌court is free to raise [the res judicata] defense sua sponte, even if the parties have seemingly waived it’); O’Connor v Pierson, 568 F.3d 64, 68 n. 2 (2d Cir. 2009) (‘[A] court has authority to invoke the doctrine of res judicata on its own initiative, even when the defense has been waived’); Salahuddin v Jones, 992 F.2d 447, 449 (2d Cir. 1993) (‘The

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A. Common Law abuse of process. However, claim preclusion achieves similar results, encompassing an element of abuse of process. Claim preclusion  Claim preclusion prevents a party from relitigating a claim 1.62 or cause of action that was, or could have been,126 determined in prior proceedings by a court of competent jurisdiction in a final and valid judgment.127 Case law and scholarly writings offer a variety of definitions of the term ‘cause of 1.63 action’, causing a certain amount of uncertainty and inconsistency in the application of the claim preclusion doctrine.128 This is why the older term ‘cause of action’ was replaced by the term ‘claim’.129 However, there is no clear definition either of the term ‘claim’. Since the adoption of the Restatement (Second), the concept of ‘claim’ is defined broadly in terms of ‘transaction’.130 According to §24(1) a ‘claim’ for purposes of claim preclusion comprises all rights of the claimant to remedies against the respondent with respect to all or any part of a single transaction, or series of connected transactions, out of which the action arose.131 However, there is no precise definition of the term ‘transaction’. According to the Restatement failure of a defendant to raise res judicata in answer does not deprive a court of the power to dismiss a claim on that ground’). See also State of Arizona v State of California, 530 US 1, 17 (2000) with reference to United States v Sioux Nation, 448 US 371, 432 (1980) (‘Most notably, “if a court is on notice that it has previously decided the issue presented, the court may dismiss the action sua sponte, even though the defense has not been raised. This result is fully consistent with the policies underlying res judicata: it is not based solely on the defendant’s interest in avoiding the burdens of twice defending a suit, but is also based on the avoidance of unnecessary judicial waste”’). See also Sinai, Reconsidering Res Judicata, n. 72 with references cited. 126 See Venture Global Engineering LLC v Satyam Computer Services Ltd, No. 12-​2200, 2013 WL 4863265 (6th Cir. 2013). In this case, the US Court of Appeal held that the doctrine of wrongful concealment may defeat a claim preclusion defence. The Court of Appeal did not accept that Venture Global Engineering ‘should have’ brought its claims against Satyam in the prior (arbitration) proceedings, because Satyam had wrongfully concealed the facts on which such claims would have been based. The defence of claim preclusion did not therefore apply to bar the claims in the subsequent proceedings. 127  See, e.g., Commissioner v Sunnen, 333 US 591, 597 (1948) (‘The rule provides that when a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to the suit and their privies are thereafter bound, not only as to every matter which was offered and received to sustain the claim or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose’). See also Allen v McCurry, 449 US 90, 94 (1980); Kremer v Chemical Construction Corp., 456 US 461, 467 n. 6 (1982). Furthermore, see Wolf v Gruntal & Co., Inc., 45 F.3d 524, 527 (1st Cir. 1995) (‘Unlike collateral estoppel (issue preclusion), res judicata (claim preclusion) normally bars (i) relitigation of claims actually asserted in a tribunal of competent jurisdiction, . . . and (ii) litigation of claims that arose from the same set of operative facts and could have been raised in the prior proceeding’); Brody v Hankin, 299 F. Supp. 2d 454, 458 (E.D. Pa. 2004) (‘Res judicata applies to all claims actually brought or which could have been brought in a prior action regardless of whether they were asserted or determined in the prior proceeding’). Claim preclusion has been described as a ‘use it or lose it’ rule (M&M Stone Co. v Hornberger, 2009 US Dist. LEXIS 91577*28). 128 Sinai, Reconsidering Res Judicata, p. 364 with references cited. 129  Casad and Clermont, pp. 10 and 62. 130  Ibid., p. 62; Sinai, Reconsidering Res Judicata, p. 359; Klein, Ponoroff, and Borrey, p. 848. 131  The Ninth Circuit test to determine a ‘claim’ for the purposes of the merger and bar doctrines is: (i) whether rights or interests established in the prior judgment would be destroyed or impaired by prosecution of the second action, (ii) whether substantially the same evidence is presented in the two actions, (iii) whether the two suits involve infringement of the same rights, and (iv) whether the

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Chapter 1:  Res Judicata in Domestic Laws (Second), the term must be interpreted pragmatically, paying heed to the facts of the case.132 The formulation defines a process rather than an absolute concept:133 What factual grouping constitutes a ‘transaction’, and what groupings constitute a ‘series’, are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage.134 1.64 In order to maximize the efficiency of judicial proceedings, the rule in §24 aims

to avoid ‘splitting’ a single claim. Accordingly, claim preclusion is also referred to as ‘the rule against splitting a single cause of action’.135 A claim is understood as a logical unit or entity of facts which all describe a certain transaction and that unit may not be split. The claimant is precluded from presenting matters related to the same claim or transaction in subsequent proceedings, even though those matters were not raised and determined in the other proceedings.136 It is in this respect that claim preclusion resembles the English rule in Henderson v Henderson.

1.65 Issue preclusion  Issue preclusion prevents the relitigation of an issue of fact or

law.137 The basic requirements of issue preclusion have been succinctly summarized as follows: (1) the issues in both proceedings must be identical; (2) the issue must have been actually litigated and decided in the prior proceeding; (3)  the prior proceeding

two suits arise out of the same transactional nucleus of facts. The test cannot be applied mechanically and no one criterion is dispositive. However, the ‘most important’ criterion is the ‘transactional nucleus of facts’. This requires a pragmatic case-​by-​case analysis that is central to Restatement (Second), Judgments §24. See Alary Corp. v Sims (In re Associated Vintage Group), 283 BR 549, 557–​8 (Bankr. 9th Cir. 2002), with reference to Harris v Jacobs, 621 F.2d 341, 343 (9th Cir. 1980); Costantini v Trans World Airlines, 681 F.2d 1199, 1201–​2 (9th Cir. 1982); Robertson v Isomedix, Inc. (In re Int’ l Nutronics), 28 F.3d 965, 969 (9th Cir. 1994). 132  In this sense, see also Casad and Clermont, pp. 66–​7. 133  Wright, p. 724. 134 ALI, Restatement (Second), Judgments, §24(2). See also Gary B. Born, International Commercial Arbitration (2009), p.  3751, with references, in particular Expert Elec. Inc. v Levine, 554 F.2d 1227, 1234 (2d Cir. 1977) (‘before res judicata can attach and conclusive effect be given the Appellate Division determination, it must be found that the causes of action raised in the state and subsequent federal actions, and the nucleus of facts which underlay them, were identical. . . . The crucial element underlying all of these standards is the factual predicate of the several claims asserted. For it is the facts surrounding the transaction or occurrence which operate to constitute the cause of action, not the legal theory upon which a litigant relies’); Edcare Mgt, Inc. v Delisi, 50 A.3d 448, 451 (D.C. App. 2012) (‘If there is a common nucleus of facts, then the actions arise out of the same cause of action’). See also Sinai, Reconsidering Res Judicata, p. 359; Alary Corp. v Sims (In re Associated Vintage Group), 283 BR 549, 557–​8 (Bankr. 9th Cir. 2002). 135 Sinai, Reconsidering Res Judicata, pp. 359 and 372 with references. 136  Ibid., pp. 359–​60; Klein, Ponoroff, and Borrey, p. 851. 137 ALI, Restatement (Second), Judgments, §§17(3) and 27; Antonio Gidi, Issue Preclusion Effect of Class Certification Orders, 63 Hastings Law Journal 1023, 1026 (2012) with references cited; United States v Stauffer Chem. Co., 464 US 165, 170–​1 (1984). But see United States v Moser, 266 US 236, 242 (1924) where the US Supreme Court suggests that the primary purpose of issue preclusion is to avoid the relitigation of issues of fact, not law.

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A. Common Law must have afforded a full and fair opportunity for the litigation of the issue; (4) the issue must have been necessary to support the outcome of the action; (5) there must have been a valid and final judgment on the merits; and (6) the defendant could foresee that the issue would later be used against her in a different proceeding.138

Regarding the ‘same issue’ requirement, it is worth mentioning the US Supreme 1.66 Court decision in Smith v Bayer Corp.139 This case involved the US Anti-​Injunction Act, in particular the Act’s ‘relitigation exception’ that permits a federal court to enjoin state court proceedings to prevent the state court from deciding a claim or issue that has already been decided by a federal court. According to the Supreme Court, the purpose of this exception is to implement ‘well-​recognized concepts’ of claim and issue preclusion. Because ‘issuing an injunction under the relitigation exception is resorting to heavy artillery’, the Supreme Court found that preclusion must be ‘clear beyond peradventure’. Applying ordinary rules of issue preclusion, the Court of Appeal for the Eigth Circuit had concluded that the ‘same issue’ requirement was met because the state rule invoked before the state court was sufficiently similar to the federal rule on which the federal court’s prior decision was based. The Supreme Court disagreed. Upholding its decision in Chick Kam Choo v Exxon,140 the Supreme Court found that comparing the wording of the applicable rules was ‘the right place to start’ the analysis of the ‘same issue’ requirement, ‘but not the end’. The question of the ‘applicable legal standard’ remained. For the Supreme Court, where, as in the present case, the state court and the federal court interpret a similar rule differently, they apply different legal standards and are thus deciding different issues. Accordingly, the Supreme Court concluded that the ‘same issue’ requirement was not met.141 Unlike claim preclusion, issue preclusion does not prevent inquiry into matters 1.67 that could have been but were not actually raised and determined in prior proceedings. It bars the relitigation only of those issues that were in fact raised and determined in prior proceedings.142 Furthermore, the relitigation of an issue of fact or law is only precluded if the de- 1.68 termination of that issue was essential to the prior judgment. According to the Restatement (Second), the appropriate question is whether the issue was recognized by the parties and the court as necessary to the first judgment.143   Gidi, pp. 1026–​7 with references cited.   Smith v Bayer Corp., 564 US_(2011), 131 S. Ct. 2368 (16 June 2011). 140  Chick Kam Choo v Exxon, 486 US 140 (1988). 141  See also B&B Hardware, Inc. v Hargis Industries, Inc., No. 10-​3137 (8th Cir. 2013). In this case, the US Court of Appeals for the Eighth Circuit held that the ‘same issue’ requirement for issue preclusion was not met because the prior court had applied a different test to determine the issue of ‘likelihood of confusion’ for the purposes of trademark infringement. 142 ALI, Restatement (Second), Judgments, p. 256; James Jr., Hazard Jr., and Leubsdorf, §11.17, p. 703; Klein, Ponoroff, and Borrey, p. 842. See also Cromwell v County of Sac, 94 US 351, 352 (1876). 143 ALI, Restatement (Second), Judgments, p. 261. 138 139

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Chapter 1:  Res Judicata in Domestic Laws 1.69 Issue preclusion may be invoked whether or not the claims in both sets of proceed-

ings are identical.144 Likewise, it may be invoked by persons who were not parties to the proceedings having given rise to the prior decision.145

1.70 There are several exceptions to the general rule of issue preclusion. They regard

the quality and circumstances of both proceedings146 and include the inability of one party to appeal the first judgment, changes in the legal context, differences in the quality or extent of the procedures followed in the two courts, differences in burdens of proof, and lack of an adequate opportunity or incentive to obtain a full and fair adjudication in the prior proceedings.147

c. The same parties 1.71 While the general rule is that only parties can benefit from or be bound by a res judicata,148 in several situations the doctrine of res judicata may also apply to ‘privies’; that is, persons who were not parties to the proceedings giving rise to the res judicata. The terms ‘privy’ or ‘privity’ are ambiguous in US law as they have been variously defined. It is for this reason that the Restatement (Second) avoids their use.149 They are, nonetheless, widely used in case law and by commentators. 1.72 The following analysis will determine which persons may be bound by or benefit

from a judgment in US law. Since the term ‘privy’ is used in US law, it is useful to explain this notion. For reasons of clarity, after introducing the notions of parties and privies, this analysis will set out the situations in which, under the Restatement (Second), non-​parties may be bound by a res judicata. Finally, the doctrine of mutuality as applied in US law will be examined.

1.73 Parties  According to §34(1) Restatement (Second) ‘[a]‌person who is named as

a party to an action and subjected to the jurisdiction of the court is a party to the action’. According to the US Supreme Court, ‘[i]n general, [a] “party” to litigation is “[o]ne by or against whom a lawsuit is brought”’ or one who ‘become[s] a party by intervention, substitution, or third-​party practice’.150 Accordingly, parties are

 Ibid., §27.   See paras 1.84 et seq. 146 ILA, Interim Report, p. 12. 147  See ALI, Restatement (Second), Judgments, §28. 148  Ibid., §34(3); Wright, p. 726. 149  Ibid., pp. 13 et seq. 150  Smith v Bayer Corp., 564 US _​_​(2011), 131 S. Ct. 2368 (16 June 2011) with reference to United States ex rel. Eisenstein v. City of New York, 556 US _​_​_​, _​_​_​, 129 S. Ct. 2230, 2234, 173 L. Ed. 2d 1255 (2009) and Karcher v May, 484 US 72, 77, 108 S. Ct. 388, 98 L. Ed. 2d 327 (1987). In Smith v Bayer Corp. the US Supreme Court opined that a non-​named class member would probably not be considered a party to the class action litigation before the class is certified and certainly not once certification is denied. The Supreme Court went further holding that where certification is denied, a non-​named class member would also not be bound by a prior judgment ‘under principles of non-​party preclusion’. In other words, such a non-​named class member would not be considered a privy. 144 145

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A. Common Law those who are named parties and who appear or are validly served with process in the proceedings, as well as those who intervene.151 For the doctrine of res judicata to apply a party must claim or defend in the same 1.74 legal capacity in both proceedings.152 In addition, the res judicata doctrine applies only to determinations reached between parties who stand in an adversarial relation to each other. A res judicata generally does not bind co-​claimants or co-​defendants as against each other.153 Sometimes the real parties in interest are not those whose names appear as litigants 1.75 on the record of the proceedings. The persons denominated as parties are merely nominal parties. They are usually not bound by the judgment, because their names are essentially ‘irrelevant decoration’.154 However, a nominal party may be bound by a res judicata if he permitted his name to be used and if this led the opposing party reasonably to believe that the nominal party was, in fact, the real party in interest.155 Where the named party is merely a nominal party another person is controlling 1.76 the proceedings. As will be seen later, such a person who controls or substantially participates in the control of the proceedings is treated as a party.156 Privies  The term ‘privity’ expresses the general idea that persons who are not 1.77 parties to proceedings, but who are connected with the proceedings in their interests, may be bound by or benefit from a judgment as if they were parties. Under the first Restatement of Judgments the word ‘privy’ included non-​parties: (i) who control the proceedings, (ii) whose interests are represented by a party to the proceedings, and (iii) successors in interest to those having derivative claims.157 In modern case law the term ‘privity’ has an extremely flexible meaning.158 A person 1.78 is considered ‘in privity’ with a party if the relation between them is such that

  James Jr., Hazard Jr., and Leubsdorf, §11.7, p. 681.  ALI, Restatement (Second), Judgments, §36. 153  James Jr., Hazard Jr., and Leubsdorf, §11.7, p. 683. By contrast, in England res judicata may operate between defendants (see Handley, paras 9.08 et seq.). 154  James Jr., Hazard Jr., and Leubsdorf, §11.7, p. 682. 155  ALI, Restatement (Second), Judgments, p. 371. 156  Ibid., §39 and p. 382. See also Montana v United States, 440 US 147 (1979); Souffront v La Compagnie Des Sucreries de Porto Rico, 217 US 475 (1910). A person controls proceedings if he has an effective choice as to the legal theories and proofs to be advanced on behalf of the party. He must also have control over the opportunity to appeal the judgment. It is not sufficient merely to help to finance the proceedings, to give advice, or to appear as amicus curiae (ALI, Restatement (Second), Judgments, p. 384). 157 ALI, Restatement, Judgments, p. 389. 158  Headwaters Inc., Forest Conservation Council v US Forest Service, 382 F.3d 1025, 1030 (9th Cir. 2004); Tahoe-​Sierra Pres. Council Inc., 322 F.3d 1064, 1081–​2 (9th Cir. 2003); Akhenaten v Najee, LLC, 544 F. Supp. 2d 320, 328 (S.D.N.Y. 2008) (‘The doctrine of privity . . . is to be applied with flexibility. . . . [T]‌here is no bright line rule as to whether privity exists for res judicata purposes. Rather, a finding of privity . . . depends on whether, under the circumstances, the interests of the 151

152

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Chapter 1:  Res Judicata in Domestic Laws the judgment involving the party may justly be conclusive on the non-​party.159 Federal courts have deemed several relationships sufficiently close to justify a finding of ‘privity’: First, a non-​party who has succeeded to a party’s interest in property is bound by any prior judgment against the party. Second, a non-​party who controlled the original suit will be bound by the resulting judgment. Third, federal courts will bind a non-​party whose interests were represented adequately by a party in the original suit. In addition, ‘privity’ has been found where there is a ‘substantial identity’ between the party and nonparty, where the nonparty ‘had a significant interest and participated in the prior action,’ and where the interests of the nonparty and party are ‘so closely aligned as to be virtually representative.’ Finally, a relationship of privity can be said to exist when there is an ‘express or implied legal relationship by which parties to the first suit are accountable to non-​parties who file a subsequent suit with identical issues’.160 1.79 Despite the flexible interpretation of the term ‘privity’, the US Supreme Court has

repeatedly ‘“emphasize[d]‌the fundamental nature of the general rule” that only parties can be bound by prior judgments’.161 Therefore, the Supreme Court takes a ‘constrained approach to nonparty preclusion’.162

1.80 Non-​parties affected by a res judicata pursuant to t he Restatement (Second) The

Restatement (Second) gives three categories of situations in which persons who were not parties to the prior proceedings may be affected by the res judicata.163 These situations resemble the modern, flexible notion of ‘privity’ in US case law.

1.81 First, under the Restatement (Second) a non-​party may be precluded in relation

to issues determined in proceedings between others if he was involved in the proceedings in a way that justifies denying him the opportunity to relitigate the matters determined in the judgment. This is the case where the non-​party actually controlled the proceedings or substantially participated in the control of the proceedings.164 This is also the case where a non-​party agreed (explicitly or impliedly) to be bound by issues determined in the proceedings.165 It may concern the [defendant] were adequately represented [in the earlier action]’ (citing Amalgamated Sugar Co. v NL Indus., Inc., 825 F.2d 634, 640 (2d Cir. 1987))). 159  James Jr., Hazard Jr., and Leubsdorf, §11.23, p. 714. See also Headwaters Inc., Forest Conservation Council v US Forest Service, 382 F.3d 1025, 1030. 160  Headwaters Inc., Forest Conservation Council v US Forest Service, 382 F.3d 1025, 1030 quoting Tahoe-​Sierra Pres. Council, 322 F.3d 1064, 1082 and In re Schimmels, 127 F.3d 875, 881 (9th Cir. 1997). 161  Smith v Bayer Corp., 564 US_​ (2011), 131 S. Ct. 2368 (16 June 2011) with reference to Taylor v Sturgell, 553 US 880, 898 (2008). 162  Taylor v Sturgell, 553 US 880, 898 (2008). 163  See also Wright, p. 727. In Taylor v Sturgell, 553 U.S. 880, 894–​6 (2008) the US Supreme Court distinguished six categories of situations where non-​parties may be bound by a res judicata. These six categories largely correspond to the three (more broadly framed) categories in the Restatement (Second). 164  See paras 1.76 et seq. 165 ALI, Restatement (Second), Judgments, §40.

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A. Common Law determination of a claim, including all potential issues therein, or may be limited to issues actually litigated.166 The second category of situations covers non-​parties who were represented by a 1.82 party in prior or other proceedings. Such non-​parties are precluded from both claims and issues determined in the proceedings.167 Finally, a non-​party standing in one of a variety of substantive legal relationships 1.83 with a party may be bound by a judgment affecting that party. Such legal relationships also correspond to the modern US notion of ‘privity’. They may exist, for example, between a predecessor and a successor as owner of interests in property,168 between a bailee and a bailor,169 or between an indemnitor and an indemnitee.170 The doctrine of mutuality  The doctrine of mutuality171 has been partially 1.84 rejected in US law. While mutuality is still a requirement for claim preclusion, it no longer applies in cases of issue preclusion. This means that a party is precluded from relitigating an issue in further or other proceedings with another person, even if that person was a complete stranger to the prior proceedings.172 US law considers that there is no reason why an issue that was raised and deter- 1.85 mined in prior proceedings should not be treated as settled as against a party or his privy, unless he lacked a full and fair opportunity to litigate the issue in the prior proceedings or there are other circumstances that justify affording him an opportunity to relitigate the issue.173 However, this rule only precludes the relitigation of issues that the party would have been precluded from relitigating with an opposing party.174 The rule may be applied defensively or offensively. If applied offensively, it allows 1.86 a claimant (who was not a party to the prior proceedings) in further proceedings to bring a claim based on issues determined in the prior proceedings and the defendant (who was a party to the prior proceedings) will be precluded from relitigating such issues.175 By contrast, it applies defensively if the defendant in the other proceedings invokes issue preclusion to bar the claimant’s action.176

  Ibid., p. 390.   Ibid., §§41 et seq. 168  Ibid., §§43 et seq. 169 Ibid., §52. 170  Ibid., §§57 et seq. 171  See para. 1.38. 172  Parklane Hosiery Co. v Shore, 439 US 322, 327–​8 (1979). See also Cutter v Town of Durham, 411 A.2d 1120, 1121 (N.H. 1980); Georgia-​Pacific, et al. v Four-​U-​Packaging, Inc., No. 11-​4394 (6th Cir. 2012). 173 ALI, Restatement (Second), Judgments, §29. 174  Ibid., p. 292. 175 ILA, Interim Report, p. 12. 176  Georgia-​Pacific, et al. v Four-​U-​Packaging, Inc., No. 11-​4394 (6th Cir. 2012) with reference to McAdoo v Dallas Corp., 932 F.2d 522, 523 (6th Cir. 1991). 166 167

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Chapter 1:  Res Judicata in Domestic Laws

B.  Civil Law 1.87 The doctrine of res judicata is also firmly established in civil law countries. French

and Swiss law recognize only one plea of res judicata. As will be discussed later, this plea does not generally cover the common law plea of issue estoppel or issue preclusion, but applies only to claims. Likewise, there is no plea of abuse of process, though civil procedural law may subscribe to a doctrine of abuse of rights.177

1.88 The doctrine of res judicata will be examined first in French law (1.) and then in

Swiss law (2.). 1. France

1.89 In France the doctrine of res judicata is referred to as ‘autorité de chose jugée’.

It is codified in the French Code de Procédure Civile (F-​CPC) and the Code Civil (F-​C C).

1.90 ‘Autorité de chose jugée’ must be distinguished from ‘ force de chose jugée’. A judg-

ment obtains autorité de chose jugée when it is rendered, whether or not a means of recourse is available against the judgment.178 From this moment, the judgment has res judicata effects; it is final and the matter decided cannot be relitigated again between the same parties. By contrast, a judgment obtains force de chose jugée only when no ordinary means of recourse with suspensive effect, such as appeal proceedings, can be brought against it. From this moment, the judgment, in addition to having res judicata effects, is also enforceable.179 Hence, while force de chose jugée relates to a judgment’s enforceability, autorité de chose jugée relates to the binding nature of a judgment. When a judgment is no longer subject to any rights of recourse (ordinary or extraordinary) it is traditionally said to be ‘irrévocable’.180

177 ILA, Interim Report, p. 14; Florian Kremslehner, The Arbitration Procedure—​ Lis pendens and res judicata in International Commercial Arbitration, in Austrian Arbitration Yearbook (Christian Klausegger et al. ed., 2007), p. 139. 178  Mélina Douchy-​Oudot, Autorité de la chose jugée—​Autorité de la chose jugée au civil sur le civil, in JurisClasseur—​Procédure Civile, fasc. 554 and JurisClasseur— ​Civil Code, fasc. 20, 13 November 2013, paras 66–​70. 179  See Articles 500 F-​CPC (in free translation: ‘(1) The judgment, which is not subject to any means of recourse with suspensive effect, will have “ force de chose jugée”. (2) The judgment, which is subject to such means of recourse, will have the same authority on the expiration of the time-​limit for such means of recourse, if no means of recourse has been brought within that time-​limit’) and 501 F-​CPC (in free translation: ‘The judgment is enforceable, subject to the following requirements, from the moment it has “ force de chose jugée”, unless the debtor enjoys the benefit of a period of grace or the creditor enjoys the benefit of a provisional enforcement’). 180  Roger Perrot and Natalie Fricéro, Autorité de la chose jugée, in JurisClasseur—​Procédure Civile, fasc. 554, para. 65; Jacques Héron and Thierry Le Bars, Droit Judiciaire Privé (4th ed. 2010), para. 349, n. 171; Douchy-​Oudot, para. 66.

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B. Civil Law The following analysis will determine the constituent elements (a.) and effects of a 1.91 res judicata in French law (b.). It will then examine the requirements that must be met for the res judicata doctrine to apply (c.). a. Constituent elements Res judicata effects attach to a judgment that determines a legal dispute between 1.92 parties in a way that is final and conclusive. Only the dispositive part of the judgment may have res judicata effects. A judgment  A ‘judgment’ for res judicata purposes may be broadly defined as a 1.93 judicial decision.181 Any judicial adjudication, including arbitral awards,182 qualifies as a judgment for res judicata purposes. It is of no importance whether the judgment is correct; an error in the judgment, whether a procedural irregularity or an error of law (even a violation of public policy183), does not prevent it from having res judicata effects.184 A determination of a legal dispute between parties  The doctrine of res judi- 1.94 cata applies only to what is called ‘décisions contentieuses’.185 The judgment must decide a legal dispute between the parties. A decision rendered in the absence of a legal dispute does not become res judicata. For instance, this is the case when a court renders a ‘décision gracieuse’,186 for example when it is asked by a party to authorize a certain measure. Such decisions on non-​contentious matters do not become res judicata and may be rescinded or modified if the circumstances in which they were rendered change.187 However, a consent decree (‘ jugement

181  Under French law settlement agreements (‘compromises’) within the meaning of Article 2044 F-​CC have res judicata effects between the parties. According to Article 2052 F-​CC, ‘Compromises have, between the parties, the authority of res judicata of a final judgment’. However, the res judicata effect of such compromises is not identical to that of judgments and is not governed by Article 1351 F-​CC (Douchy-​Oudot, para. 12, with reference; Landbrecht, p. 214). 182  It has been submitted that arbitral awards are not equivalent to judicial acts. For a discussion of this controversy, see Claire Debourg, Les contrariétés de décisions dans l’arbitrage international (2012), paras 409 et seq., pp. 346 et seq. See also Sylvain Bollée, Les méthodes du droit international privé à l’épreuve des sentences internationales (2004), paras 49 et seq., pp. 36 et seq. As will be seen later, regardless of the legal nature, French law expressly grants arbitral awards res judicata effects as per Article 1484 F-​CPC (see paras 4.55 et seq.). 183  Roger Perrot and Natalie Fricéro, Autorité de la chose jugée (Mise à jour), in JurisClasseur—​ Procédure Civile, fasc. 554, 26 June 2008 (cited as Mise à jour), para. 17; Douchy-​Oudot, para. 21 with references cited. 184  Perrot and Fricéro, paras 11 et seq.; Xavier Henry, Méga Code Civil 2009 (8th ed. 2008), paras 14 et seq., p. 2088; Douchy-​Oudot, paras 18–​24. 185 See Henry, paras 1 bis et seq., pp. 2087 et seq.; Perrot and Fricéro, Mise à jour, para. 25; Douchy-​Oudot, paras 25–​9 with references cited. 186  According to Article 25 F-​CPC, ‘[t]‌he judge rules upon non-​c ontentious matters, in absence of a dispute, where an action is referred to him that the law requires, due to the nature of the matter or the capacity of the petitioner, that he must examine it’. 187  Perrot and Fricéro, paras 25 et seq.; Henry, para. 2, p. 2087. Contra: Héron and Le Bars, para. 352; Claude Brenner, Les décisions dépourvues d’autorité de chose jugée, 8 Procédures, August 2007, Etude 13.

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Chapter 1:  Res Judicata in Domestic Laws d’expédient’) is considered a décision contentieuse for res judicata purposes, even though the court is not asked to decide a dispute between the parties but merely to approve the parties’ settlement agreement.188 1.95 A final and conclusive judgment  A judgment is final and conclusive when it

disposes of a legal dispute in a way that puts an end to the court’s jurisdiction over the dispute.189 Such a judgment becomes res judicata on the matter it decides from the time of its pronouncement,190 even though it has not been notified to the parties.191 The fact that means of recourse may be brought against the judgment has no impact on its res judicata effects; while the suspensive effects of appeal proceedings suspend the judgment’s enforceability, they do not suspend its res judicata effects.192

1.96 A judgment on the merits  Article 480 F-​CPC defines a judgment ‘on the mer-

its’ as ‘a judgment which decides in its operative part the whole or part of the main issue, or one which rules upon a procedural plea, a plea seeking a plea of non-​admissibility or any other interlocutory application’.193 Article 480 F-​CPC provides that such judgments on the merits have res judicata effects with regard to the dispute they determine. It further specifies that the ‘main issue’ is the subject matter of the dispute as determined by the respective claims of the parties.194

1.97 Interlocutory decisions (so-​ called ‘ jugements avant dire droit’)195 (such as the

appointment of experts or the authorization for a party to submit witness evidence), as well as interim orders (such as conservatory measures)196 do not generally have res judicata effects ‘on the main issue’.197 This means that they may not be   Douchy-​Oudot, paras 32–​4 with references cited.   See Perrot and Fricéro, para. 56. 190  Article 480 F-​CPC; Perrot and Fricéro, Mise à jour, para. 1-​1. 191  Serge Guinchard and Frédérique Ferrand, Procédure civile—​Droit interne et droit communautaire (29th ed. 2008), para. 226. 192  Ibid., para. 226. See also para. 1.90 on the distinction between ‘autorité de chose jugée’ and ‘ force de chose jugée’. 193  In addition to decisions on the (non-​)admissibility of an action, it is generally admitted that judgments ruling on a plea of lack of jurisdiction may have res judicata effects pursuant to Article 480 F-​CPC (Douchy-​Oudot, paras 60–​61 with references cited). For details on the notion of the decision covered by Article 480 F-​CPC, see ibid., paras 54–​97; Héron and Le Bars, para. 343; Guinchard and Ferrand, para. 218. 194  See Article 480 F-​ CPC which refers to Article 4 F-​CPC. According to Article 4 F-​CPC ‘[t]‌he subject-​matter of the dispute is determined by the respective claims of the parties. The originating process and the defence submissions define such claims. However, the subject-​matter of the dispute may be modified by the interlocutory claims where they relate to the initial claims by a sufficient link’. 195  Article 482 F-​CPC states: ‘[t]‌he judgment which is limited in its holding to giving a direction or a provisional order shall not carry, on the main issue, the authority of res judicata’. See also Douchy-​Oudot, paras 72–​7; Brenner. 196  Article 488 F-​CPC states: ‘A summary procedure order will not become, on the main issue, res judicata. It may be modified or withdrawn by way of summary procedure only in the event of new supervening circumstances’. On the effects of interim orders, see Douchy-​Oudot, paras 84–​97. 197  Ibid., paras 72–​7; ILA, Interim Report, p. 14. 188 189

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B. Civil Law relied upon during proceedings on the merits of the dispute.198 However, they are binding and cannot be reconsidered by the judge who rendered them, unless new facts emerge that change the basis on which they were rendered.199 Sometimes a provisional decision contains in its operative part—​that is, the 1.98 dispositif—​a final determination of parts of ‘the main issue’ in dispute.200 Because such decisions comprise final elements (‘éléments définitifs’) and provisional or interlocutory elements (‘éléments avant dire droit’) they are called ‘ jugements mixtes’. The part of the dispositif that contains the determination of the main issue is final and conclusive for the purposes of res judicata. However, the part of the dispositif that is provisional does not become res judicata, and only has the provisional authority given to provisional decisions.201 A judicial tribunal with jurisdiction over the parties and the subject matter? It 1.99 is generally considered that a judgment may have res judicata effects even if it was rendered by a tribunal lacking jurisdiction, and this holds true even if the provision on jurisdiction that was violated by the tribunal was of a public policy nature;202 the tribunal creates its own jurisdiction.203 What this means is that a party contesting the jurisdiction of the tribunal must raise the lack of jurisdiction in limine litis; it is not considered ex officio.204 If the party does not challenge the judgment rendered despite the lack of jurisdiction in appeal proceedings, the judgment obtains force de chose jugée. The lack of jurisdiction will be covered and the parties will have to comply with the judgment.205 The scope of res judicata  As a general rule, the res judicata effect of a judgment 1.100 is limited to its operative part.206 The reasons underlying the judgment generally do not have res judicata effects.

  Perrot and Fricéro, para. 73.   Bernard Hanotiau, Complex Arbitrations (2005), para. 531. See also Douchy-​Oudot, paras 75–​7; Guinchard and Ferrand, para. 218. 200  According to Article 544 (1) F-​CPC: ‘Judgments that decide, in their operative part, a part of the main issue and give a preparatory inquiry or interim measure may immediately be appealed against in the same way as judgments that rule upon the whole of the main issue’. 201  Douchy-​Oudot, paras 78–​83; Guinchard and Ferrand, para. 218; Henry, para. 10, p. 2088. 202  Douchy-​Oudot, para. 19 with references cited. 203  Perrot and Fricéro, para. 18; Guinchard and Ferrand, para. 226; Héron and Le Bars, para. 342; Walther J. Habscheid, Quelques questions fondamentales concernant l’autorité de la chose jugée en droit comparé, in Liber Amicorum Adolf F. Schnitzer, Vol. 61 (1979) (cited as L’autorité de la chose jugée en droit comparé), p. 186. 204  Article 74 F-​CPC. 205  Héron and Le Bars, para. 342; Guinchard and Ferrand, para. 226. 206  Article 1351 F-​CC states in relevant part: ‘The force of res judicata takes place only with respect to what was the subject matter of a judgment’. See also Article 480 F-​CPC (‘The judgement which decides in its operative part the whole or part of the main issue, or one which rules upon the procedural plea, a plea seeking a plea of non-​admissibility or any other interlocutory application, will, from the time of its pronouncement, become res judicata with regard to the dispute which it determines’) and Article 455(2) F-​CPC (‘[The judgment] pronounces the decision in the form of 198 199

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Chapter 1:  Res Judicata in Domestic Laws 1.101 The dispositif of a judgment contains the court’s decision on the matters in

dispute.207 It becomes res judicata with respect to issues which were specifically raised and determined in adversarial proceedings. No res judicata effect attaches to matters which were not raised during the proceedings, even though the court rendered a decision on them. No res judicata effect attaches to matters which were raised during the proceedings but which were not decided in the dispositif by the court.208

1.102 As a general rule, the reasons underlying the judgment do not have res judicata

effect. While the reasons may be relied upon to interpret the dispositif and to specify the meaning and scope of the court’s judgment, they do not have res judicata effect.209

1.103 A distinction has traditionally been drawn between ‘motifs décisoires’ and ‘motifs

décisifs’. The term ‘motifs décisoires’ describes reasons which decide parts of the dispute, but which are not contained in the dispositif. The Cour de cassation has held that such motifs décisoires may have res judicata effects if, due to a clerical error, the judge’s decision was not formally restated in the dispositif and therefore only appears in the judgment’s reasoning.210 The term ‘motifs décisifs’ describes reasons which constitute the necessary foundation of the dispositif. In the past, case law also granted res judicata effects to these motifs décisifs. In recent years, however, a stricter approach has been followed by the courts211 and scholars212 granting res judicata effects only to the dispositif of a judgment, to the exclusion of all reasons, whether they are décisoires or décisifs.213 operative part’). See also Douchy-​Oudot, para. 100, with reference cited; Debourg, para. 485, p. 401, with references cited. 207  Article 455 F-​CPC (quoted in fn 207). 208  See Douchy-​Oudot, paras 101–​6; Perrot and Fricéro, paras 99 et seq.; Perrot and Fricéro, Mise à jour, para. 100. 209  Douchy-​Oudot, para. 107; Landbrecht, p. 212. On the debate concerning the extension of res judicata effects to a judgment’s reasons, see Debourg, paras 486–​7, pp. 401–​5. 210  See Douchy-​Oudot, para. 109, with references; Debourg, para. 486, pp. 402–​3, with references. See, however, Héron and Le Bars, para. 353. 211  Cour de cassation, 3 February 2011, X v Y and Z (no. 09-​71.179); Cour de cassation, 13 March 2009, M. Antoine X v M. Claude Y, no. 08-​16.033. See also Isabelle Deprés, Code de Procédure Civile 2011 (102nd ed. 2010), para. 55, pp. 372 et seq.; Weiller, Laura, L’extension du principe de la concentration des fondements juridiques à l’arbitrage, note sous Cass. civ. 1er, 28 May 2008, Rev. arb., No. 3 (2008), p. 471, with reference to case law: Cour de cassation, 7 May 2008, Procédures, July 2008, No. 201; Cour de cassation, 13 July 2006, Bull. civ., II, No. 208; Cour de cassation, 22 November 2005, Bull. civ., I, No. 425; Cour de cassation, 31 March 2004, Bull. civ., IV, No. 64. 212  See Weiller, p. 471 with references cited. According to Héron and Le Bars (paras 354 et seq.) and Guinchard and Ferrand (para. 221) reasons forming the necessary foundation of the dispositif should have negative res judicata effects. However, they should not have any positive res judicata effect. According to Jaques Héron (Localisation de l’autorité de la chose jugée ou rejet de l’autorité positive de la chose jugéé?, in Nouveaux Juges, Nouveaux Pouvoirs? Mélanges en l’honneur de Roger Perrot (1996), paras 2 et seq.), by relying on a prior decision’s reasoning to interpret its dispositif and to specify its meaning and scope, courts are really giving res judicata effects to the prior decision’s reasons in practice. 213 See Debourg, para. 486, p. 403, with references; Douchy-​Oudot, para. 114, with references; Landbrecht, p. 212.

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B. Civil Law The res judicata effect of implicit decisions (that is, decisions on matters which a 1.104 court had to determine to render the judgment expressly stated in the dispositif ) is controversial. Because these decisions are implicitly contained in the judgment’s dispositif, it has been submitted that they are covered by the judgment’s res judicata effects.214 However, some courts have adopted a strict position and do not give res judicata effects to implicit decisions.215 b. Effects Traditionally, a judgment that has res judicata effects may give rise to preclusive and 1.105 conclusive effects.216 First, such a judgment precludes either party from relitigating a claim decided in the judgment’s dispositif. This so-​called negative effect of the res judicata doctrine is unanimously accepted in French law; it is governed by Article 1351 F-​CC. The positive res judicata effect is controversial in French law. It provides that the 1.106 prior determination of a particular matter positively imposes itself in other proceedings, even though they involve a different claim. If the court in subsequent or other proceedings has to decide an issue that has already been decided in a prior judgment, the court is bound by the prior determination and must implement it in its decision.217 The positive res judicata effect in France has been compared to the common law concept of issue estoppel; it is considered that the issues covered by the positive res judicata effect will most often be found in the reasons of a prior decision.218 The positive res judicata effect is rarely dealt with by the courts and it is not generally 1.107 accepted by legal commentators. It has been argued that the positive res judicata effect is nothing more than a consequence of the negative res judicata effect; that is, the right to invoke a prior decision in further proceedings.219 Similarly, some authors have denied the existence of a positive res judicata effect on the ground that in reality the positive res judicata effect is simply the substantive effect of a judgment.220 There is currently no provision in French law that expressly confirms

214  Douchy-​Oudot, paras 116–​22; Perrot and Fricéro, paras 115 et seq.; Perrot and Fricéro, Mise à jour, para. 115; Deprés, para. 47, p. 371; Henry, para. 22, p. 2089. 215 See, e.g., Cour d’appel de Paris, 18 November 2004, S.A. Thalès Air Defense v G.I.E. Euromissile et al., JDI, No. 2 (2005), comment by Alexis Mourre, A propos des articles V et VII de la Convention de New York et de la reconnaissance des sentences annullées dans leur pays d’origine: où va-​t-​on après les arrêts Termo Rio et Putrabali, Rev. arb., No. 2 (2008), pp. 363 et seq., 377. See also Landbrecht, p. 213. 216  Thomas Clay, L’arbitre (2001), para. 102. 217  Héron and Le Bars, para. 345; Douchy-​Oudot, para. 2. 218  Héron and Le Bars, para. 347. It will be seen later that in Switzerland the positive res judicata effect is interpreted in a narrower way, covering only decisions included in the dispositif of a prior judgment, to the exclusion of any reasons (see para. 1.147). 219 See Clay, para. 102. 220  On this discussion, see Bollée, para. 260, p. 182, with references. However, for Bollée the positive res judicata effect is an external attribute, which is conferred on a judgment by a rule of procedure. As such, the positive res judicata effect cannot be equated to a judgment’s substantive effects

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Chapter 1:  Res Judicata in Domestic Laws the positive res judicata effect of judgments, akin to Article 1351 F-​CC. It is generally considered that Article 1351 F-​CC only provides for the negative res judicata effect.221 1.108 However, the positive res judicata effect seems to exist in French law, 222 for ex-

ample in Article 95 F-​CPC. According to this Article ‘[w]‌here the judge, while deciding on the issue of jurisdiction, resolves the merits at issue on which jurisdiction depends, his decision will become res judicata in relation to the merits at issue.’

1.109 Article 95 F-​CPC appears to embrace the positive res judicata effect. However,

the Cour de cassation is opposed to a general recognition of the positive res judicata effect. By refusing to afford res judicata effect to the reasoning of a judgment, the Cour de cassation has created a further obstacle to the positive res judicata effect: issues decided in the reasoning, even if they form the basis of the judgment’s dispositif, can no longer operate as a res judicata and positively impose themselves in subsequent proceedings.223

c. Requirements for the application of the doctrine of res judicata 1.110 A judgment may give rise to negative res judicata effects only where the parties, the cause and the object are identical in both proceedings. This triple identity test is set out in Article 1351 F-​CC which states in the relevant part: ‘It is necessary that the thing claimed be the same; that the claim be based on the same grounds; that the claim be between the same parties and brought by them and against them in the same capacity’. 1.111 If one of these three elements is not identical, the prior judgment will not have

negative res judicata effects in other proceedings.224

1.112 By contrast, a judgment may have positive res judicata effects—​to the extent that

such effects are recognized under French law—​even where the identity between the two sets of proceedings is only partial: while the parties must still be identical, the cause and the object in both proceedings may be different.225

1.113 Identity of parties  As a general rule, the res judicata doctrine applies only if the

parties are the same and act in the same legal capacity in both proceedings.226

(Bollée, paras 260–​1, pp. 182–​3). French law distinguishes between ‘autorité de chose jugée’ and ‘efficacité’ of a judgment. The concept of ‘efficacité substantielle’ describes the fact that a judgment transforms the substantive legal relationship between the parties and is to be applied between them as a special rule of law (Landbrecht, pp. 216–​17). 221  Héron and Le Bars, para. 346. 222  See ibid., para. 346; Landbrecht, p. 232. 223  Héron and Le Bars, para. 346. 224  Perrot and Fricéro, para. 126. 225  Ibid., para. 2; Héron and Le Bars, paras 345 et seq. 226  On the requirement of ‘same legal capacity’, see Douchy-​Oudot, paras 129–​52; Perrot and Fricéro, paras 145 et seq.

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B. Civil Law Consequently, third parties are generally not bound by the res judicata effects of a judgment.227 The parties are the individuals or entities who appear in the proceedings as liti- 1.114 gants:  those who have initiated the proceedings, who have been called upon to defend themselves, or who intervened and took part in the proceedings.228 Furthermore, the res judicata effect extends to a party’s ‘ayant cause’; that is, universal successors, such as in the case of a legal merger, or successors having a specific title, such as an assignee.229 To extend the circle of persons bound by a decision the Cour de cassation has devel- 1.115 oped the concept of ‘représentation’.230 This means that persons who were validly represented in the proceedings are treated as parties and are bound by the judgment.231 The concept of representation has been interpreted widely to include situations where the representation was implicit or even purely fictitious.232 Representation has been admitted where a person has common interests with a party to the proceedings. This is the case, for example, for co-​debtors who are jointly liable. To the extent that a co-​debtor is considered to represent the interests of the other co-​debtors, a decision rendered against or in favour of one of them may bind or benefit the others.233 The same is true for creditors who are considered to be represented by their debtors,234 or a surety who is considered to be represented by the principal debtor.235 Identity of object  Article 1351 F-​CC requires that ‘the thing claimed be the 1.116 same’ in both proceedings; there must be identity of objects. This requirement has led to difficulties in practice due to uncertainties surrounding the meaning of the term ‘object’. In addition, courts use the term differently, depending on whether they examine the scope of a judge’s mandate or the ‘identity of object’ requirement for res judicata purposes.236 In the Code de Procédure Civile the ‘object’ of a dispute is generally determined by 1.117 the parties’ claims as defined by the entirety of the parties’ submissions.237 It has

  Ibid., para. 148.   Douchy-​Oudot, para. 133; Perrot and Fricéro, para. 132. 229  Héron and Le Bars, para. 339; ILA, Interim Report, p. 16. See also Henry, paras 48 et seq., p. 2092; Perrot and Fricéro, paras 143 et seq.; Douchy-​Oudot, paras 145–​6. 230 See Héron and Le Bars, para. 340; Perrot and Fricéro, para. 140. 231  See Douchy-​Oudot, paras 137–​4 6; Perrot and Fricéro, para. 136. 232  Douchy-​Oudot, para. 141; Perrot and Fricéro, para. 140. 233 Douchy-​ Oudot, para. 143; Perrot and Fricéro, para. 141; Henry, para. 50, p.  2092; Debourg, para. 516, p. 428. See also Cour d’appel de Paris, 10 March 2005, SA Sucres et Denrées v Société Multitrade Cairo, Rev. arb., No. 2 (2006), pp. 456 et seq. 234  Douchy-​Oudot, para. 144; Perrot and Fricéro, para. 142. 235  Ibid., para. 141 (the solution appears to be different under English law. See Handley, para. 9.27). 236  Douchy-​Oudot, para. 156; Perrot and Fricéro, para. 154. 237  According to Article 4 F-​CPC ‘(1) The subject matter of the dispute [object] is determined by the respective claims of the parties. (2) The originating process and the defence submissions define 227

228

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Chapter 1:  Res Judicata in Domestic Laws been submitted that the term should have no legal ‘colouring’ or significance, leaving the task of applying the law to the judge alone, who should not be bound by the parties’ legal characterization of the ‘object’.238 1.118 In the Code Civil, Article 1351 F-​CC uses the term ‘the thing claimed’ instead of

the term ‘object’. When examining the ‘identity of object’ requirement, the courts determine whether the parties in both proceedings ask for substantially the same thing 239 and whether they assert the same rights.240 There can be identity of the thing claimed only where a party asserts the same right over substantially the same thing.241 Many scholars generally define the ‘object’ as the result sought by the claimant.242

1.119 Courts consider that under Article 1351 F-​CC the ‘object’ generally covers only the

final result reached in the dispositif of a decision, to the exclusion of decisions on preliminary issues. The res judicata doctrine does not bar a court in other proceedings to decide the same issue again where the final thing claimed is not identical in both proceedings.243 Accordingly, under Article 1351 F-​CC the term ‘thing claimed’ is not equivalent to the term ‘issue’.244 While this principle is not generally and absolutely recognized in the case law,245 it stands to confirm that Article 1351 F-​CC covers only the negative res judicata effect.

1.120 In addition to the uncertainties surrounding the meaning of the term ‘object’, a

further uncertainty was introduced by the Cour de cassation’s decision rendered on 28 May 2008 in Sté G. et A. Distribution SARL v Sté Prodim SAS,246 a case which has, however, largely remained in isolation. The case concerned domestic arbitration247 in which the Cour de cassation held that in bringing an action a

such claims. However, the subject matter of the dispute [object] may be modified by the interlocutory claims where they relate to the initial claims by a sufficient link’. See also Douchy-​Oudot, para. 156; Perrot and Fricéro, para. 154. 238  See Douchy-​Oudot, para. 156; Perrot and Fricéro, para. 154; Landbrecht, p. 219. 239  Douchy-​Oudot, paras 157–​9. 240  Ibid., paras 160–​2 . 241  Ibid., para. 160; Perrot and Fricéro, paras 154 et seq.; Henry, para. 24, p. 2089; Debourg, para. 548, p. 444. 242  Debourg, para. 548, p. 444 with references. 243  See Perrot and Fricéro, paras 161 et seq. 244  Ibid., para. 162. 245  See ibid., para. 163. 246  Cour de cassation, 28 May 2008, Sté G et A Distribution SARL v Sté Prodim SAS, Rev. arb., No. 3 (2008), pp. 461 et seq. The Cour d’appel de Paris confirmed this decision in Cour d’appel de Paris, 18 March 2010, Société Prodim SAS v Société G et A Distribution, Rev. arb., No. 2 (2010), pp. 345 et seq. See also Cour d’appel de Pau, 22 February 2011, Société Carrefour proximité France v SARL Falco et fils, Rev. arb., No. 1 (2011), p. 287 (‘l’appelante ne peut ignorer qu’ il incombe au demandeur de presenter dans la meme instance toutes les demandes fondées sur la meme cause et qu’ il ne peut invoquer dans une instance postérieure un fondement juridique qu’ il s’ était abstenu de soulever en temps utile’). 247  See also para. 4.61.

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B. Civil Law claimant must present all claims (‘demandes’) which are based on the same cause. Therefore, according to this case, in order to bar further proceedings, a strict identity of objects does not seem to be required. For the doctrine of res judicata to apply it would thus suffice that a certain claim could and should have been brought in the first proceedings.248 The position of the Cour de cassation in Prodim, precluding parties from raising claims which they could have relied upon in the first proceedings but failed to do so, echoes the English rule in Henderson v Henderson, as well as the US doctrine of claim preclusion. Identity of cause  Article 1351 F-​CC provides that the claims in both proceed- 1.121 ings must be based on the same grounds;249 they must be supported by the same reasons.250 In other words, the causes must be identical.251 The ‘same cause’ requirement has also given rise to difficulties in practice, because 1.122 there is no uniform definition of the term ‘cause’. It has sometimes been defined as the legal rule or principle on which a party’s claim is based. At other times, the term has been described as the set of facts supporting a claim, independent of the rule or principle of law invoked by the parties, the law being the prerogative of the judge. Still others have defined the term as both the factual and legal basis of the claim.252 Because of the uncertainty of how the notions of ‘cause’ and ‘object’ must 1.123 be defined, it is often difficult in practice to distinguish the requirements of identity of cause and identity of the thing claimed under Article 1351 F-​CC. Therefore, it has been suggested that these two requirements should be replaced by a single requirement, namely that of identity of the ‘question at issue’ (‘question litigieuse’ or ‘matière litigieuse’). 253 While this suggestion has not yet been followed in the case law, 254 it often appears that the triple identity test is not rigorously applied by the courts, leading to a blurring of the line between the two requirements. 255   For a critical comment on this case, see Debourg, paras 550–​69, pp. 448–​64.   By contrast, there is no express mention of the term ‘cause’ in the F-​CPC (see Douchy-​Oudot, para. 168). 250  Debourg, para. 548, p. 445 quoting Henri Motulsky, Pour une delimitation plus precise de l’autorité de la chose jugée en matière civile, in Ecrits (2010), pp. 201 et seq. (‘la cause serait le fondement de cette demande, les “raisons qui étayent la prétention”’). 251  See, generally, Douchy-​Oudot, paras 166 et seq.; Perrot and Fricéro, paras 178 et seq. 252  See Douchy-​Oudot, para. 167; Perrot and Fricéro, para. 165; Debourg, para. 548, p. 445; Pierre Mayer, Réflexions sur l’autorité negative de chose jugée, in Mélanges dédiés à la mémoire du Doyen Jaques Héron (2008) (cited as Réflexions sur l’autorité négative de chose jugée), paras 12 et seq. According to Mayer, the cause constitutes an abstract category (‘catégorie abstraite’) and must be determined with regard to the content of the claim. The cause thus defined extends to other facts and rules than those relied upon in the first proceedings, as long as they form part of the same category (para. 13). See also Landbrecht, pp. 220–​6. 253  See Douchy-​Oudot, para. 128, with references cited; Perrot and Fricéro, para. 127. 254  See Douchy-​Oudot, para. 128; Perrot and Fricéro, para. 127. 255  Landbrecht, p. 218, with references. 248 249

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Chapter 1:  Res Judicata in Domestic Laws 1.124 In addition, the ‘same cause’ requirement under Article 1351 F-​CC has been

further called into question following the Cesareo case.256 In this case the Cour de cassation determined the cause only with regard to the set of facts underlying the new claim, 257 to the exclusion of the legal grounds.258 The court held that a claimant must invoke all possible legal grounds for his claim when bringing the first action. If the claimant fails to do so he may not rely on the ‘same cause’ requirement and the res judicata doctrine may bar subsequent proceedings with regard to the same claim arising out of the same set of facts, but based on a different legal ground.259 It has been suggested that the Cesareo decision means abandoning the traditional triple identity test, essentially depriving the identity of cause requirement of its meaning.260 However, the better view may be that following the Cesareo case the identity of cause requirement is limited to the set of facts underlying a claim.261 Hence, the doctrine of res judicata may bar further proceedings where the same claim based on the same facts is brought again between the same parties acting in the same capacity even if the legal ground invoked in the subsequent proceedings is different, unless the right or new legal ground invoked in the other proceedings as the basis of the claim arose only after the first judgment was rendered.262

1.125 The Cour de cassation has since confirmed (albeit with some nuance263) its deci-

sion in Cesareo and extended it to defendants.264 As will be seen later, the Cour de cassation has also extended this decision to arbitration.265 256  Cour de cassation (assemblée plénière), 7 July 2006, Cesareo v Cesareo (‘Gilbert Cesareo ne pouvait être admis à contester l’ identité de cause des deux demandes en invoquant un fondement juridique qu’ il s’ était abstenu de soulever en temps utile’). See Debourg, para. 549, pp. 446–​8. 257  Héron and Le Bars, para. 336. See also Debourg, para. 549, p. 447, with references cited at n. 342; Landbrecht, p. 228. 258 See Debourg, para. 549, pp. 446–​8. 259 In Cesareo the Cour de cassation had to decide whether two actions brought by the same claimant against the same defendant seeking payment for works allegedly carried out without remuneration were based on the same cause. In the first action the claimant brought a claim for deferred wages. When this claim was dismissed the claimant brought an action for unjust enrichment. The court held that both claims were based on identical causes because each requested payment for works carried out without payment. See also Rapport Magendie of 24 May 2008, Célérité et qualité de la justice devant la Cour d’appel, pp. 45 et seq. 260  François Grandsard, Le regard du praticien, 8 Procédures, August 2007, Etude 15; Héron and Le Bars, para. 336. See also Eric Loquin, De l’obligation de concentrer les moyens à celle de concentrer les demandes dans l’arbitrage, Rev. arb., No. 2 (2010), para. 9; Mayer, Réflexions sur l’autorité negative de chose jugée, para. 18; Debourg, para. 549, pp. 446–​7. 261  Landbrecht, p. 229. 262  See Douchy-​Oudot, para. 180 with references cited. 263 See, e.g., Cour de cassation (2e Ch. Civ.), 10 June 2010, Frot Barbier v Deplebain et al., no. 09-​67.172: JurisData no. 2010-​008925: the parties may resubmit a claim if the right or legal ground on which it is based arose only after the first judgment was rendered. 264 See Debourg, para. 542, p. 441, with references. See also Héron and Le Bars, para. 335-​1 with reference to Cour de cassation, 13 February 2008, M. Jorge X v société civile immobilière du 24 rue des Petites Ecuries, no. 06-​22.093; Cour de cassation, 12 November 2008, no. 08-​10.138. 265  See paras 4.60 et seq.

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B. Civil Law Similar to its position in Prodim, by imposing on the parties an obligation to 1.126 raise all possible legal grounds underlying their claim in the first action (the so-​c alled ‘obligation de concentration des moyens’), the position of the Cour de cassation in Cesareo also echoes the abuse of process element present in the English rule in Henderson v Henderson, as well as the US doctrine of claim preclusion. 2. Switzerland In Switzerland res judicata is referred to as ‘materielle Rechtskraft’, ‘autorité de chose 1.127 jugée’ (or ‘ force de chose jugée au sens matériel’) and ‘autorità di giudicato’. As in France, a distinction is drawn between autorité de chose jugée and force de 1.128 chose jugée (or ‘ force de chose jugée au sens formel ’; ‘ formelle Rechtskraft’; ‘entrata in forza di cosa giudicata’). A judgment has force de chose jugée when it is ‘final’; that is, enforceable. It is not or no longer possible to bring ordinary means of recourse with suspensive effect against the decision. 266 By contrast, a decision has autorité de chose jugée when it is ‘binding’; the decision may not be reopened in further or other proceedings between the same parties. 267 As in France, while force de chose jugée relates to rights of recourse and a judgment’s enforceability, autorité de chose jugée relates to the content and binding nature of a judgment. However, unlike in France, in Switzerland a judgment does not obtain autorité de chose jugée from the moment it is rendered, but when it obtains force de chose jugée. 268

266  See Article 315(1) of the Swiss Code de Procédure Civile (CH-​C PC), which deals with the suspensive effects of an appeal: ‘The legal effect and enforceability of those parts of the contested decision to which the applications in the appeal relate shall be suspended’. It emerges from Article 315(1) CH-​CPC that an appeal may be brought against parts of a judgment’s dispositif. In accordance with Article 315(1) CH-​CPC, the judgment will acquire force de chose jugée with respect to the part of the dispositif that is not challenged by way of appeal (François Bohnet, Jacques Haldy, Nicolas Jeandin, Philippe Schweizer, and Denis Tappy, Code de procedure civile commenté (2011), ad Article 315 CH-​CPC, paras 2–​3, p. 1260). By contrast, Article 325(1) CH-​CPC, which deals with objections, provides as follows: ‘The objection does not suspend the legal effect and enforceability of the contested decision’. Because an objection does not generally have any suspensive effects, the possibility of bringing an objection does not prevent the judgment from acquiring ‘ force de chose jugée’ and therefore becoming enforceable (Bohnet, Haldy, Jeandin, Schweizer, and Tappy, ad Article 325 CH-​CPC, paras  3–​4, p.  1283). See also Hans Ulrich Walder-​R ichli and Béatrice Grob-​A ndermacher, Zivilprozessrecht (5th ed. 2009), para. 1, p.  272; Bernhard Berger and Franz Kellerhals, Internationale und interne Schiedsgerichtsbarkeit in der Schweiz (3rd ed. 2014), para. 1629. 267  Karl Spühler, Annette Dolge, and Myriam Gehri, Schweizerisches Zivilprozessrecht (2010), para. 193, p.  159; Fabienne Hohl, Procédure civile—​ Tome I Introduction générale (2001), paras 1264 and 1289; Berger and Kellerhals, para. 1629. 268  Hohl, para. 1321; Habscheid, L’autorité de la chose jugée en droit comparé, p. 188; Adrian Staehelin, Daniel Staehelin, and Pascal Grolimund, Zivilprozessrecht (2008), para. 9, p. 412;

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Chapter 1:  Res Judicata in Domestic Laws However, while a judgment generally acquires autorité de chose jugée and force de chose jugée at the same time, these two notions describe different concepts. 1.129 In Switzerland the doctrine of res judicata pertains to procedure.269 Pursuant to

Article 59(2)(e) of the Swiss Code de Procédure Civile (CH-​CPC), a Swiss court will not consider a case if the same subject matter has already been decided in a decision that has res judicata effects; that is, a ‘legally binding decision’.270 While the absence of such a prior decision is a procedural requirement, the Code de Procédure Civile does not define the term ‘legally binding decision’.

1.130 The doctrine of res judicata is part of federal law.271 The res judicata doctrine is

not codified in federal law, but is expressed in the decisions of the Swiss Federal Tribunal and legal authorities.272

1.131 The following analysis will cover the constituent elements (a.) and effects of a de-

cision that has res judicata effects (b.), as well as the requirements that must be met for the res judicata doctrine to apply in Swiss federal law (c.).

a. Constituent elements 1.132 Under Swiss law, a judgment on the merits that finally determines a legal dispute between the parties may have res judicata effects. Only the dispositive part of the judgment acquires res judicata effects.

Bohnet, Haldy, Jeandin, Schweizer, and Tappy, ad Article 59 CH-​CPC, para. 105, p. 178; Thomas Sutter-​Somm, Franz Hasenböhler, and Christoph Leuenberger, Kommentar zur Schweizerischen Zivilprozessordnung (ZPO) (2013), ad Article 59 CH-​CPC, para. 39, p. 479. 269  Walther J. Habscheid, Schweizerisches Zivilprozess-​und Gerichtsorganisationsrecht (2nd ed. 1990) (cited as Schweizerisches Zivilprozess-​und Gerichtsorganisationsrecht), para. 475; Isaak Meier, Schweizerisches Zivilprozessrecht (2010), p. 239; Spühler, Dolge, and Gehri, paras 196 et seq., p. 160; Staehelin, Staehelin, and Grolimund, para. 8, p. 412; Paul Oberhammer, Ad Article 236 S-​CPC, in ZPO—​Schweizerische Zivilprozessordnung (Paul Oberhammer, Tanja Domej, and Ulrich Haas ed., 2nd ed. 2014), paras 30–​1, pp. 1069–​70; ATF 121 III 474, 477; decision of the Federal Tribunal, République de Pologne v Saar Papier Vertriebs-​GMbH et tribunal arbitral CCI Zurich, 20 September 2000, para. 3.a, ASA Bulletin (2001), pp. 487 et seq. 270  Article 59 CH-​CPC reads in relevant part: ‘(1) The court shall consider an action or application provided the procedural requirements are satisfied. (2) Procedural requirements are in particular the following: . . . (e) the case is not already the subject of a legally-​binding decision’. See also ATF 121 III 475, para. 2; Federal Tribunal decision 4A_​603/​2011; Federal Tribunal decision 4A_​ 496/​2012, para. 3; Federal Tribunal decision 4A_​545/​2013; Federal Tribunal decision 4A_​508/​ 2013 (ATF 140 III 278), para. 3.4. 271  Federal Tribunal decision 4C.82/​2 006, para. 3.1; ATF 125 III 241, 242; ATF 121 III 474, 476. 272  The unified Swiss Code of Civil Procedure, which entered into force on 1 January 2011 to replace the 26 codes of civil procedure of the cantons, does not codify the res judicata doctrine. The federal law doctrine will continue to be unwritten law (see Message of the Swiss Federal Council for the Swiss Federal Code of Civil Procedure, 28 June 2006, FF 2006 6841, ad Articles 232 to 236, p. 6953, available at http://​w ww.ofj.admin.ch).

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B. Civil Law A judgment  Judgments and any other judicial adjudications equivalent to a 1.133 judgment may acquire res judicata effects.273 It is of no importance whether or not the judgment is correct.274 A judgment on the merits  As a general rule, only judgments on the merits have 1.134 res judicata effects.275 A judgment is on the merits for res judicata purposes when a court renders a decision on the substance of a claim; that is, whether or not the claim is well-​founded in law.276 It is established in Swiss legal scholarship and case law that a judgment rendered on a partial claim (‘Teilklage’; ‘action partielle’) has res judicata effects like a judgment on the merits deciding the totality of the claim. However, a judgment rendered on a partial claim produces res judicata effects only for that part of the claim that was the subject matter of the judgment, even if the entirety of the claim was examined by the court when rendering its decision.277 Furthermore, a decision is on the merits for purposes of res judicata when a court 1.135 dismisses a claim for lack of evidence or because the claim, even though it is sufficiently identified, is not sufficiently substantiated.278 Where a Swiss court refuses to consider a claim on the ground that the proced- 1.136 ural requirements are not met,279 it renders a procedural judgment (‘ jugement processuel’). The question whether such judgments may have res judicata effect is controversial. However, the Federal Tribunal has confirmed that decisions on the admissibility of a claim may have res judicata effects, such res judicata effects being, however, strictly limited to the object of the judgment; that is, whether or not the 273  Habscheid, Schweizerisches Zivilprozess-​ und Gerichtsorganisationsrecht, para. 481; Jean-​Marie Vulliemin, Jugement et sentence arbitrale, 60 Études suisses de droit international (1990), para. 191; Sutter-​Somm, Hasenböhler, and Leuenberger, ad Article 59 CH-​CPC, para. 38, p. 479. For a list of decisions capable of becoming res judicata, see Meier, p. 240. 274  Habscheid, Schweizerisches Zivilprozess-​ und Gerichtsorganisationsrecht, para. 501; Oberhammer, ad Article 236 CH-​CPC, para. 33, pp. 1070–​1. 275  Federal Tribunal decision 4C.82/​2006, para. 3.3; ATF 121 III 474, 477; Hohl, para. 1317. See also Staehelin, Staehelin, and Grolimund, paras 10 et seq., pp. 413 et seq. 276 Decision of the Federal Tribunal 4C.82/​ 2006, para. 3.3; Bohnet, Haldy, Jeandin, Schweizer, and Tappy, ad Article 59 CH-​CPC, paras 108–​9, pp. 178–​9. 277  ATF 125 III 8 = SJ 1999 I, p. 273 (‘Il faut rappeler avant tout que n’acquiert force de chose jugée que le jugement qui se prononce sur le bien-​fondé d’une prétention et dans le cadre duquel les arguments soulevés par les parties ont été analysés au fond . . . En d’autres termes, l’effet de la chose jugée n’ intervient que dans la mesure où le droit invoqué dans la seconde procédure a déjà été examiné dans la première décision. . . . Doctrine et jurisprudence s’accordent à admettre que le jugement prononcé sur une action partielle (Teilklage) n’a force de chose jugée que pour la partie de la créance qui a fait l’objet de la décision, même si l’ensemble de la prétention a été examiné pour statuer’). See also Bohnet, Haldy, Jeandin, Schweizer, and Tappy, ad Article 59 CH-​CPC, para. 114, p. 180; Berger and Kellerhals, para. 1655. 278  ATF 115 II 187, para. 3-​b; Spühler, Dolge, and Gehri, para. 202, p. 161; Meier, p. 240; Bohnet, Haldy, Jeandin, Schweizer, and Tappy, ad Article 59 CH-​CPC, para. 109, p. 179. 279  The procedural requirements for bringing an action in civil proceedings are set out in a non-​ exhaustive list in Article 59 CH-​CPC.

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Chapter 1:  Res Judicata in Domestic Laws procedural requirements for bringing the action were met.280 Moreover, under Swiss law a claimant’s withdrawal of its action, whereby it abandons its prayer for relief, has res judicata effect (‘désistement d’action’).281 By contrast, there is generally no res judicata effect where the claimant merely puts an end to the court proceedings, and is thus not prevented, in principle, from bringing its action anew (‘désistement d’ instance’).282 1.137 By contrast, purely procedural decisions (‘décisions procédurales’) are generally not

‘on the merits’ and, therefore, do not become res judicata.283 Hence, procedural orders and decisions dealing only with the administration of the case do not become res judicata.284 Furthermore, a court renders a procedural decision where it dismisses a claim because the claimant’s allegations and submissions are insufficient to the point where the claim is not identifiable.285

1.138 Likewise, interim and conservatory measures do not generally have res judicata

effects. This means that while these measures are provisionally binding on the parties until they are rescinded or modified, the judge deciding the merits of the dispute is not bound by prior provisional measures.286 However, because interim and conservatory measures are binding on the parties until they are rescinded or modified, namely due to a change in circumstances, it has been said that they have ‘relative’ res judicata effects.287

1.139 Judgments rendered in summary proceedings have res judicata effects only to

the extent that they finally decide a matter. Provisional judgments have no res judicata effects in further ordinary proceedings. 288 In the new Swiss Code of Civil Procedure this is illustrated by Article 257 CH-​CPC which provides for special summary proceedings in ‘clear cases’. Where the facts are not disputed or may be readily established and the legal situation is clear, a claimant will

280  ATF 115 II 187, para. 3-​ a; ATF 134 III 467, para. 3.2; decision of the Federal Tribunal 4C.429/​1995, para. 3-​b and 4A_​374/​2014, para. 4.3.2.2. See also Habscheid, Schweizerisches Zivilprozess- und Gerichtsorganisationsrecht, para. 482; Bohnet, Haldy, Jeandin, Schweizer, and Tappy, ad Article 59 CH-​CPC, para. 112, p. 179; Oberhammer, ad Article 236 CH-​CPC, para. 37, p. 1072 (with references cited). 281  Article 241(2) CH-​CPC (‘A settlement, acceptance of the claim or withdrawal of the action has the same effect as a binding decision’). See also decision of the Federal Tribunal 4A_​374/​2014, para. 4.3.2.2. 282  Federal Tribunal decision 4A_​374/​2014, para. 4.3.2.2. 283  Spühler, Dolge, and Gehri, para. 205, p. 161. 284  Ibid., para. 207, p. 162; Vulliemin, para. 190. 285  Bohnet, Haldy, Jeandin, Schweizer, and Tappy, ad Article 59 CH-​ CPC, para. 109, p. 179. 286  Hohl, para. 1319; Vulliemin, para. 189. 287  ATF 127 III 496, para. 3a; Bohnet, Haldy, Jeandin, Schweizer, and Tappy, ad Article 59 CH-​CPC, para. 118, p. 180. 288  Sutter-​ Somm, Hasenböhler, and Leuenberger, ad Article 59 CH-​CPC; para. 44, p. 481; Bohnet, Haldy, Jeandin, Schweizer, and Tappy, ad Article 59 CH-​CPC, para. 118, p.  180; Hohl, para. 1319; Spühler, Dolge, and Gehri, para. 204, p.  161; Habscheid, Schweizerisches Zivilprozess- und Gerichtsorganisationsrecht, para. 481.

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B. Civil Law have the possibility of obtaining a final judgment in summary proceedings and this judgment will have full res judicata effects even in further ordinary proceedings. 289 A final and binding decision  To have res judicata effects a decision must be 1.140 ‘binding’ (‘verbindlich’; ‘obligatoire’); neither the parties nor a court in other or further proceedings may call the decision into question.290 Given that a decision obtains autorité de chose jugée only when it has force de chose 1.141 jugée, a decision must also be ‘final’ in order to have res judicata effect. As stated earlier, this is the case when it is no longer possible to bring ordinary means of recourse with suspensive effect against the decision.291 A judicial tribunal with jurisdiction over the parties and the subject matter? As 1.142 in France, it has been submitted that a decision may become res judicata even if rendered by a tribunal lacking jurisdiction.292 The scope of res judicata  Only the dispositif of a judgment has res judicata 1.143 effects;293 no res judicata effect attaches to the reasons underlying the judgment, even if they constitute the necessary foundation of the dispositif.294 The reasoning of the judgment may be taken into consideration in order to inter- 1.144 pret the meaning and scope of the dispositif. In particular, the reasoning may be examined to determine whether the claim in the other or further proceedings is identical to the claim in the prior proceedings.295 The reasons may also be examined to determine whether the prior judgment was on the merits or procedural.296 No res judicata effect attaches to the determinations of preliminary issues in the 1.145 prior judgment. Likewise, the res judicata effect of the dispositif does not cover implicit decisions.297 289  Spühler, Dolge, and Gehri, para. 204, p. 161; Bohnet, Haldy, Jeandin, Schweizer, and Tappy, ad Article 59 CH-​CPC, para. 119, p. 180. See also Federal Tribunal decision 4A_​141/​ 2013, para. 2.2.2. (concerning the lis pendens doctrine). 290  Federal Tribunal decision 4C.314/​2004, para. 11; Federal Tribunal decision 4C.82/​2006, para. 3.3; Federal Tribunal decision 5C.242/​2003, para. 2.1. 291  See para. 1.128. 292 Habscheid, L’autorité de la chose jugée en droit comparé, p.  186; Max Guldener, Schweizerisches Zivilprozessrecht (3rd ed. 1979), p. 387. 293  Walder-​R ichli and Grob-​A ndermacher, para. 19, p. 275; Meier, p. 241. 294  Bohnet, Haldy, Jeandin, Schweizer, and Tappy, ad Article 59 CH-​CPC, para. 123, p. 181; Oberhammer, ad Article 236 CH-​CPC, para. 49, p. 1077 (with references cited); Habscheid, Schweizerisches Zivilprozess- und Gerichtsorganisationsrecht, para. 489. 295  ATF 121 III 474, para. 4-​a ; decision of the Federal Tribunal 4C.82/​2006, para. 3.3; decision of the Federal Tribunal 4C.314/​2004, para. 1.3. 296  According to the Federal Tribunal, when determining whether a prior judgment is on the merits or procedural a court must only consider the contents of the prior judgment. The denomination of the prior judgment is of no importance (Federal Tribunal decision 4C.82/​2006, para. 3.4; ATF 115 II 187, para. 3-​b). 297  ATF 121 III 474, 478.

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Chapter 1:  Res Judicata in Domestic Laws 1.146 Swiss law provides for two exceptions to the general rule that only the dispositif

of a judgment has res judicata effects.298 The first exception applies in the case of set-​off.299 The decision on set-​off only appears in a judgment’s reasoning. However, it is widely accepted that the res judicata effect of the dispositif covers the decision on set-​off, whether the court admits or dismisses the claim for set-​off.300 The second exception applies where the dispositif of a judgment of reference expressly states that the appeal is admitted according to the reasoning of the judgment. In this case, the reasons have res judicata effect and the court to which the case is referred must base its new judgment on the reasoning of the judgment of reference.301

b. Effects 1.147 A judgment that has res judicata effects is binding upon the parties and courts in other proceedings. Swiss law recognizes both a negative and a positive res judicata effect. This means that the same claim cannot be brought again in other proceedings (negative res judicata effect). This includes contradictory claims or claims contained in the claim decided in the prior proceedings. It also means that the res judicata constitutes the final and binding determination of a preliminary issue in the further proceedings. If the court in further proceedings has to decide a preliminary issue that has already been decided in the dispositif of a prior judgment, the court is bound by the prior judgment and must implement it in its judgment (positive res judicata effect).302 1.148 The doctrine of res judicata precludes only the relitigation of claims and not of

issues due to the strict limitation of any res judicata effects to the dispositif of the judgment.

c. Requirements for the application of the doctrine of res judicata 1.149 The doctrine of res judicata applies only if the ‘parties’ and the ‘subject matter in dispute’ are identical in both proceedings. 1.150 Identity of parties  As a general rule, the res judicata effect of a judgment extends

only to the parties and their successors, including both universal and singular

  Hohl, paras 1312 et seq.  See, generally, Berger and Kellerhals, para. 1654; Walder-​ R ichli and Grob-​ Andermacher, paras 23 et seq., pp. 276 et seq.; Oberhammer, ad Article 236 CH-​CPC, para. 50, p. 1078 (with references). 300  Meier, p. 242; Habscheid, Schweizerisches Zivilprozess- und Gerichtsorganisations­ recht, paras 496 et seq.; Spühler, Dolge, and Gehri, paras 200 et seq., pp. 160 et seq.; Guldener, p. 369. According to some commentators, the court’s decision rejecting the claim for set-​off does not become res judicata (see, e.g., Walder-​R ichli and Grob-​A ndermacher, para. 27, p. 278). 301  Hohl, para. 1314. 302  Ibid., paras 1289 et seq.; Habscheid, Schweizerisches Zivilprozess- und Gerichts­ organisationsrecht, paras 485 et seq.; Spühler, Dolge, and Gehri, paras 194 et seq., p. 159; Oberhammer, ad Article 236 CH-​CPC, paras 39–​46, pp. 1074–​6. See also ATF 121 III 474, 478; Federal Tribunal decision 4A_​496/​2012, para. 3.1. 298 299

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B. Civil Law successors.303 The parties’ respective roles in the proceedings may change.304 Furthermore, for there to be identity of parties for the purposes of res judicata, it is irrelevant whether the prior proceedings involved other parties in addition to the parties in the further proceedings. What matters is that the parties in the further proceedings were also parties in the prior proceedings.305 A  judgment generally has no res judicata effect for third persons. There are, 1.151 however, exceptions to this rule. One such exception applies in the case of ‘Prozessstandschaft’.306 In this case, although the person denominated as a party conducts the proceedings in his own name (for example, the executor of a will), he does not act for himself but in the capacity of a representative for a third person (for example, an heir). The res judicata effects of the judgment extend to the third 303  Staehelin, Staehelin, and Grolimund, para. 15, p. 415; Oberhammer, ad Article 236 CH-​CPC, paras 55–​6, pp. 1082–​3; Federal Tribunal decision 4A_​545/​2013, in which the Federal Tribunal confirmed that an heir can rely on the res judicata effects of a prior judgment to which the deceased was a party. 304  Bohnet, Haldy, Jeandin, Schweizer, and Tappy, ad Article 59 CH-​ CPC, para. 132, p. 183. 305  Federal Tribunal decision 4A_​508/​2013 (ATF 140 III 278), para. 4.2.1. It is worthy of note that in this decision the Federal Tribunal raised the question whether, in exceptional circumstances, a more flexible approach with respect to the party identity requirement would be justified. In this case, a prosecutor, acting on behalf of the state, brought court actions in that state against parties A (a company owned by the state in question) and B. In these court actions, the prosecutor sought to have declared invalid an additional agreement ‘AA1’ concluded between A and B. The prosecutor thereby effectively intervened in the dispute opposing A and B with respect to the validity of AA1. Ultimately, the state’s Supreme Court (ruling in favour of state-​owned company A) found AA1 to be null and void. B then brought ICC arbitral proceedings in Zurich against A based on an arbitration agreement contained in the main contract concluded between A and B. Before the arbitral tribunal, B requested the arbitral tribunal to declare AA1 valid. The arbitral tribunal accepted jurisdiction, decided that AA1 was valid, and ordered A to make a payment to B. A challenged the award before the Swiss Federal Tribunal, arguing that in disregarding the res judicata effects of the state’s Supreme Court decision, the arbitral tribunal had violated Swiss procedural public policy. In its award, the arbitral tribunal had held that it was not bound by the state’s Supreme Court decision because the parties in the state court proceedings were not identical to the parties in the arbitration. The state prosecutor, who was a party in the state court proceedings, was not bound by the arbitration agreement and therefore not a party in the arbitration. The Federal Tribunal agreed with A’s argument that, based on a formalistic approach, there was party identity because A and B were parties to both the state court proceedings and the arbitration proceedings. The fact that the prosecutor was a party to the state court proceedings but not in the arbitration was irrelevant. However, the Federal Tribunal questioned whether in the exceptional circumstances of this case it would be justifiable to look beyond the formal requirement of party identity and to consider the role effectively played by the parties in the two sets of proceedings so that a formalistic application of the party identity requirement would not result in an undue preclusion of further arbitration proceedings. In particular, it might be appropriate to consider the fact that a third party had participated in the state court proceedings, the legal status of that third party (i.e. a representative of the state), its motives for intervening in the proceedings (i.e. defending the state’s interests), and its relations with one or other party in the arbitration (i.e. one of the parties being state-​owned). However, the Federal Tribunal ultimately left the question open as, in any event, there was no identity of subject matter. Therefore, the arbitral tribunal had correctly rejected the res judicata defence. 306  Staehelin, Staehelin, and Grolimund, para. 15, p. 415; Berger and Kellerhals, para. 1652; Bohnet, Haldy, Jeandin, Schweizer, and Tappy, ad Article 59 CH-​CPC, para. 134, p. 183.

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Chapter 1:  Res Judicata in Domestic Laws person although not a party to the proceedings.307 Another exception applies where persons who were involved in the disputed legal relationship—​but not in the proceedings—​declare in advance that they agree to be bound by the judgment.308 1.152 Identity of subject matter in dispute  The doctrine of res judicata applies only

if there is identity of the subject matter in dispute (‘Streitgegenstand’; ‘object du litige’) in the two sets of proceedings.309

1.153 There are divergent views on what constitutes the subject matter of a dispute. It has

been submitted by some scholars that the subject matter of a dispute is comprised of the legal rule relied upon by a party as the legal basis of the claim. According to others, the subject matter of a dispute is defined by the relief sought in the parties’ submissions. Still others suggest that the subject matter of a dispute comprises both the parties’ claims and the set of facts relied upon in support of the claims.310

1.154 For several years the Federal Tribunal has consistently held that the subject matter

in dispute comprises both the parties’ claims or counterclaims and the totality of the facts underlying such claims or counterclaims. In the past, the Federal Tribunal has held, albeit less consistently, that the parties’ claims must also be based on the same legal grounds (or ‘cause’; ‘Rechtsgrund’).311 Some scholars have observed that the meaning attributed by the Federal Tribunal to the term ‘Rechtsgrund’ is unclear.312 Indeed, the decisions of the Federal Tribunal (particularly those drafted in French or Italian) have not always mentioned the identity of cause requirement.313

1.155 In an unpublished decision of 1 May 1997, the Federal Tribunal clarified that

the notion of Rechtsgrund must not be understood as the legal rule relied upon by a party in support of a claim, but in the sense of ‘Entstehungsgrund’; that is, the cause for the claim’s existence.314 Relying on this decision, the Federal Tribunal held that, in principle, a reference to a claim’s underlying ‘cause’ is not necessary, the identity of subject matter being determined by reference to the parties’

307 See Habscheid, Schweizerisches Zivilprozess- und Gerichtsorganisationsrecht, para. 509. 308  ATF 89 II 429, 435. 309 Federal Tribunal decision 4C.314/​ 2004, para. 1.3; ATF 123 III 16, 18; ATF 121 III 474, 477; ATF 125 III 241, 242. See also Habscheid, Schweizerisches Zivilprozess- und Gerichtsorganisationsrecht, para. 492; Hohl, paras 1298 et seq. 310 See Habscheid, Schweizerisches Zivilprozess- und Gerichtsorganisationsrecht, paras 492 et seq.; Walder-​R ichli and Grob-​A ndermacher, paras 46 et seq., pp. 282 et seq.; Spühler, Dolge, and Gehri, paras 1 et seq., pp. 121 et seq.; Meier, pp. 200 et seq. 311  In ATF 123 III 16, 19 the Federal Tribunal held that there is identity of subject matter where the same claim, based on the same legal ground and set of facts, is resubmitted to the court for adjudication (‘Eine abgeurteilte Sache liegt vor, wenn der streitige Anspruch mit einem schon rechtskräftig beurteilten identisch ist. Dies trifft zu, falls der Anspruch dem Richter aus demselben Rechtsgrund und gestützt auf denselben Sachverhalt erneut zur Beurteilung unterbreitet’). See also Meier, pp. 201 et seq. 312  See, e.g., Meier, p. 204. 313  See Federal Tribunal decision 4A_​496/​2012, para. 3.2.1 (ATF 139 III 126); Federal Tribunal decision 4A_​508/​2013 (ATF 140 III 278), para. 3.3. 314  Federal Tribunal decision 4C.384/​1995, referred to in Federal Tribunal decision 4A_​496/​ 2012 (ATF 139 III 126), para. 3.2.3.

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B. Civil Law claims or counterclaims and the facts underlying such claims or counterclaims.315 Accordingly, there is identity of the subject matter where the same claims or counterclaims are based on the same set of facts. The legal arguments that a party may have invoked in support of its claim or counterclaim are not relevant for determining the res judicata effects of a prior decision and, in particular, whether there is identity of subject matter between two sets of proceedings.316 When determining whether there is identity of the subject matter in dispute, the 1.156 second tribunal has to take into consideration the totality of the facts underlying the claims in the first proceedings, including all the facts the first judge could not have considered, either because they were not relied upon, because they were not raised in a proper and timely fashion, or because they were not sufficiently proven.317 This means that a party may not bring a new action in respect of the same dispute by relying on facts that it did not but could and should have invoked during the first proceedings.318 However, the party may bring a new action with respect to new facts; that is, facts that have arisen after the moment up until the party could have validly invoked new facts in the first proceedings.319 For there to be identity of the subject matter in dispute, the claims in both sets 1.157 of proceedings must be substantially, not literally, the same. In this regard, the Federal Tribunal has consistently held that it is neither necessary nor important that the claims made in the submissions are expressed in the same terms in both proceedings . . . A  new action will have an identical subject-​matter in dispute if the new claim was contained in the claim already decided, if it was simply the opposite of the decided claim, or if it arises only as a preliminary matter, whereas it constituted the main issue in the first proceedings . . . 320 315  Decision of the Federal Tribunal 4A_​496/​2012 (ATF 139 III 126), paras 3.2.2 and 3.2.3 (with references). The Federal Tribunal confirmed this decision in 4A_​508/​2013 (ATF 140 III 278), para. 3.3. See also Stephen V. Berti, Zur materiellen Rechtskraft nach schweizerischem Zivilprozessrecht, in Festschrift zum schweizerischen Juristentag (Bommer and Berti ed., 2011), p. 236. In this regard it should be noted that in 2002 the Federal Tribunal had already applied a broad definition of ‘identity of subject matter in dispute’ with regard to lis pendens. In an effort to avoid the risk of contradictory judgments, it found that an action to determine the non-​existence of a right (‘action en constat negative’) had the same subject matter as an action to establish compensation rights (‘action condamnatoire’), provided that they are based on the same set of facts and oppose the same parties (see ATF 128 III 284, para. 3b (‘Si elles opposent les mêmes parties et portent sur le même complexe de faits, une action négatoire et une action condamnatoire doivent ainsi être considérées comme identiques au sens de l’art. 35 LFors. . . . [L]‌a coexistence des deux actions crée un risque de décisions contradictoires. Or, l’art. 35 LFors, qui tend précisément à éviter des jugements contradictoires, doit être interprété de manière à écarter un tel risque’)). 316  Berger and Kellerhals, para. 1650. 317  ATF 116 II 738 paras 2b and 3. See also Federal Tribunal decisions 4A_​508/​2013 (ATF 140 III 278), para. 3.3; 5A_​438/​2007, para. 2.1.1; 5A_​337/​2008, para. 4.1. 318 Oberhammer, ad Article 236 CH-​CPC, para. 52, pp. 1079–​80. 319  Federal Tribunal decision 4A_​508/​2013 (ATF 140 III 278), para. 3.3, with references. 320  Federal Tribunal decision 5A_​337/​2008, para. 4.1. (‘L’ identité de l’objet du litige s’entend au sens matériel; il n’est cependant pas nécessaire, ni même déterminant, que les conclusions soient formulées de manière identique . . . Le Tribunal Fédéral a admis que, même si elle s’en écarte par son intitulé, une

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Chapter 1:  Res Judicata in Domestic Laws 1.158 Finally, it should be noted that so far the Swiss Federal Tribunal has not suggested

that there should also be identity of the subject matter in dispute where a new claim could and should have been brought in the prior proceedings, akin to the rule in Henderson v Henderson. In addition, the Federal Tribunal has not so far recognized the existence in Swiss law of an ‘obligation de concentration des moyens’,321 akin to the concept developed by the French courts following the Cesareo case.322

C. Conclusion 1.159 The analysis of the laws of England, the United States, France, and Switzerland

shows that the doctrine of res judicata is not applied uniformly in domestic laws. Differences exist not only between common law and civil law countries, but also among countries belonging to the same legal tradition. While on a general level domestic laws on res judicata reveal a common core, as is often the case ‘the devil is in the detail’.

1.160 The scope and application of the doctrine of res judicata varies from one country

to another. The scope of the doctrine is generally wider in common law countries than in civil law countries, encompassing issue preclusion in addition to claim preclusion. It was observed by Brekoulakis that [i]‌n common law countries, the res judicata doctrine prevents the relitigation not only of claims, but also of issues, factual and legal, adjudicated in the prior judgment. From this it appears that common law countries consider that a judgment represents a judicial record of what actually happened with regard to the dispute. Res judicata in this sense carries a fact-​finding value. It is considered as a means of evidence, as an authoritative determination of the whole ‘story’ of the dispute. In contrast, in civil law countries, the res judicata doctrine is normally confined to the claims rather than the issues determined in a judgment. The prevailing view is to separate res judicata from any fact-​finding power. A  judicial determination is regarded as fallible by nature and, in that sense, can only determine the legal consequences of what seems to have happened rather than determine what actually happened, that is, the facts. Parties are thus free to relitigate facts determined in a judgment simply because res judicata does not bear any evidentiary significance.323

nouvelle conclusion aura un objet identique à celle déjà jugée, si elle était déjà contenue dans celle-​ci, si elle est simplement son contraire ou si elle ne se pose qu’ à titre préjudiciel, alors que, dans le premier procès, elle se posait à titre principal . . . ’). 321  See, however, Pierre-​Yves Tschanz, ad Article 186 PILA, in Commentaire Romand—​L oi sur le droit international privé, Convention de Lugano (Andreas Bucher ed., 2011), paras 59–​60. 322  One may question, however, whether the Federal Tribunal’s clarification that a reference to a claim’s underlying ‘cause’ is not necessary—​the identity of subject matter being determined only by reference to the parties’ claims or counterclaims and their underlying set of facts—​might give rise to an ‘obligation de concentration des moyens’. 323  Brekoulakis, pp. 182 et seq.

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C. Conclusion The wider common law approach rests on the premise that one court should be as 1.161 capable as any other of resolving the issues in dispute. It is motivated by reasons of procedural fairness, economy, and efficiency and the concern to avoid contradictory decisions.324 A wide approach to res judicata might encourage the parties to dispose of their entire dispute in a single lawsuit and to treat that lawsuit more seriously and carefully.325 By contrast, the narrower civil law approach is motivated first and foremost by the concern that the importance of a legal action and a specific issue raised in that action could differ widely in relation to another legal action; a party might not invest as much effort in one particular issue in the first litigation because of the relative insignificance of either the issue or the claim. The situation could be radically different in another action. The granting of res judicata effects to a decision’s reasons could thus lead to results that were unforeseen by the parties. This in turn could lead to a greater willingness by the parties extensively to dispute each and every issue raised, thereby leading to ‘litigation to the death’326 of issues that might otherwise never have been litigated at all.327 It has been said that another reason underlying the civil law approach is that a narrow, more formalistic application of the res judicata doctrine is easier to realize in practice, as the wider approach frequently entails great difficulties regarding the precise delineation of the limits of the res judicata effects.328 In addition, while civil law countries recognize the abuse of rights doctrine, they 1.162 do not distinguish the abuse of process doctrine which, in some common law countries, prevents a party from raising a subject matter that was not but could and should have been brought by that party during prior proceedings.329 However, as has been seen, in recent years the courts in France have given a broader interpretation to the notion of identity of disputes. In particular, French case law has developed an obligation de concentration des moyens, barring subsequent proceedings where the same claim between the same parties is based on the same facts but on a different legal ground. In Switzerland, the Federal Tribunal has not so far recognized the existence of an obligation de concentration des moyens. Future events

324  Casad and Clermont, p. 113 (‘The doctrine of issue preclusion rests on the premise that one court should be as capable as any other to resolve the issues in dispute. Once a judgment resolves the issues after the adversary system of adjudication has run its full and fair course, the issues should not again be open to dispute by the same parties in any court. Issue preclusion not only accords with the dictates of fairness but also serves the interests of economy of judicial effort, fosters the certainty and stability of repose, and tends to prevent the anomalous situation, so damaging to public faith in the judicial system, of two authoritative but conflicting answers being given to the very same question’). Héron, para. 12; Sinai, Reconsidering Res Judicata, pp. 360–​6. 325  Casad and Clermont, p. 31. 326 Ibid., p. 34. 327 Oberhammer, ad Article 236 CH-​CPC, para. 53, pp. 1080–​1; Christer Söderlund, Lis pendens, res judicata and the issue of parallel judicial proceedings, 22(4) Journal of International Arbitration 301, 302 (2005); Meier, p. 241; Héron, para. 13. 328 Oberhammer, ad Article 236 CH-​CPC, para. 53, p. 1080. 329 ILA, Interim Report, p. 14; Brekoulakis, pp. 182 et seq.

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Chapter 1:  Res Judicata in Domestic Laws will determine whether such an obligation will arise based on a broad definition of the subject matter in dispute. 1.163 The analysis has shown that the requirements that must be met for the res judi-

cata doctrine to apply vary from one jurisdiction to another. Although it is widely required that there must be identity of parties and questions at issue, there are several differences in the definitions of the notions of ‘parties’, ‘question at issue’, or ‘object’ and ‘cause’. These notions are often applied and interpreted differently between domestic laws and even between courts and scholars within a same jurisdiction. They generally appear to be interpreted more broadly in common law jurisdictions where the binding effects of a judgment commonly extend to a wider category of persons who are not parties but are closely related to the dispute. Likewise, in common law jurisdictions the cause of action is interpreted more broadly and pragmatically in light of the entire dispute to comprise all claims based on substantially the same facts and evidence, whether or not they were brought in prior proceedings.330

1.164 It has also been shown that the moment when a judgment becomes res judicata may

vary from one country to another. In England a judgment becomes res judicata when perfected by formal entry.331 In the United States332 and France333 it becomes res judicata when it is rendered. In Switzerland a judgment becomes res judicata when it may no longer be contested.334

1.165 Finally, in Switzerland the doctrine of res judicata is part of procedural public

policy 335 and courts must consider res judicata issues ex officio.336 While in France the res judicata doctrine is not an issue of public policy, French courts may (but do not have to) consider res judicata issues ex officio.337 Therefore, under French law   See Kremslehner, pp. 134 et seq.   See para. 1.11. 332  See para. 1.57. 333  See para. 1.95. 334  See paras 1.140 et seq. 335  See, e.g., Federal Tribunal decision 4A_​ 508/​2013 (ATF 140 III 278), para. 3.1; Federal Tribunal decision 4A_​392/​2010, para. 6.2.1; Federal Tribunal decision 4A_​386/​2010, para. 9.3; Federal Tribunal decision 4A_​490/​2009, para. 2.1 (ATF 136 III 345); Federal Tribunal decision 4P.98/​2005, para. 5.1; AFT 128 III 191, 194; AFT 127 III 279, 283. 336  ATF 112 II 268, para. I.1.a (but see Federal Tribunal decision 4A_​374/​2014, para. 4.3.1); Oberhammer, ad Article 236 CH-​CPC, para. 65. See also Articles 59(2)(e) and 60 CH-​CPC. 337  Until 2005 French courts were not allowed to consider the res judicata doctrine ex officio. However, on 1 January 2005 the décret of 20 August 2004 came into force. This décret modifies Article 125 F-​CPC; French courts may now consider res judicata issues ex officio, without however being under an obligation to do so. This modification seeks to promote public interest in procedural economy and efficiency. Thus, the doctrine of res judicata is no longer considered as serving only the private interests of the parties. However, the doctrine of res judicata is not generally considered to be part of public policy, except where the res judicata effect of a prior decision within the same court proceedings is concerned and where the parties do not have the freedom to dispose of their rights. See Douchy-​Oudot, paras 187–​201; Charles Jarrosson, L’autorité de la chose jugée des sentences arbitrales, 8 Procédures, August 2007, Etude 17; Cyril Nourissat, L’autorité de la chose jugée des décisions de la CJCE, 8 Procédures, August 2007, Etude 20. 330 331

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C. Conclusion it should be possible for a party to waive a res judicata defence. In England338 and the United States339 res judicata must generally be raised and pleaded by the parties. Therefore, it appears that under these laws res judicata is not a matter of public policy and is deemed to be waived if not raised.340 The existing differences between domestic laws on res judicata render its appli- 1.166 cation in international arbitration problematic. Even if it were admitted that the wholesale application of domestic res judicata rules was possible and appropriate to coordinate jurisdictions between different arbitral tribunals or between arbitral tribunals and state courts, an effective application of domestic res judicata rules in international arbitration would require the formulation either of generally accepted res judicata principles or of a generally accepted conflict-​of-​laws rule. Chapter 5 will discuss the appropriateness of these last two approaches in further detail. With regard to the formulation of generally accepted res judicata principles, guid- 1.167 ance could be sought in international law. It will thus be useful to analyse the res judicata doctrine in international law.

 See Handley, paras 18.03 et seq.  ALI, Restatement (Second), Judgments, §15. 340 Bernard Hanotiau, The Res Judicata Effect of Arbitral Awards, Complex Arbitrations—​ Perspectives on their Procedural Implications, ICC International Court of Arbitration Bulletin, Special Supplement (2003), p. 51; ILA, Interim Report, p. 15. See also section 58(1) of the English Arbitration Act 1996, according to which arbitral awards have res judicata effect, ‘[u]‌nless otherwise agreed by the parties’. See, however, Landolt (Phillip Landolt, Modernised EC Competition Law in International Arbitration (2006)), according to whom ‘[u]nder English law, res judicata is a principle of public policy’ (para. 8-​16, with references). 338 339

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2 THE DOCTR INE OF R ES JUDICATA IN INTER NATIONA L L AW

A . Private International Law 

1. The Brussels I Regulation  2. The Hague Convention on Choice of Court Agreements  3. The ALI/​U NIDROIT Principles of Transnational Civil Procedure 

B. Public International Law 

2.06 2.09

2.66 1. Constituent elements  2.76 2. Effects  2.99 3. Requirements for the application of the doctrine of res judicata  2.105

2.42 2.58

C . Conclusion 

2.131

2.01 The problem of multiple proceedings and conflicting judgments arises not only in

domestic law, but also in international law. As was seen in the previous chapter, in domestic laws the doctrine of res judicata is designed to deal with this problem at the jurisdiction level: broadly speaking, a court seized of a dispute which has already been decided in prior or other proceedings will be barred from exercising jurisdiction again over the same dispute. In international law, the problem is dealt with differently depending on whether it arises in the private or public international law context.

2.02 In private international law, the problem has long been dealt with individu-

ally in domestic private international law Acts and various bilateral conventions. However, striking differences existed between such Acts and conventions. In the last few decades there have been several attempts to coordinate efforts to find multilateral, uniform solutions. In Europe, the Brussels I Regulation,1 1  Council Regulation (EC) No. 44/​2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ L 12, 16.01.2001, p. 1. Achieving the review process of the EC Regulation No. 44/​2001, on 12 December 2012 the Recast Brussels I Regulation No. 1215/​2012 was adopted. It applies to court proceedings in the EU from 10 January 2015 (see Council Regulation (EU) No. 1215/​2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), OJ L 351, 20.12.2012, p. 1). The avoidance of concurrent proceedings and conflicting judgments will remain one of the primary objectives of the Recast Brussels I Regulation (see Recital 21 of the Recast Brussels I Regulation; Guido Carducci, The New EU Regulation 1215/​2012 of 12 December 2012 on Jurisdiction and International Arbitration, 29(3) Arbitration International 467, 467–​8 (2013).

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Chapter 2:  Res Judicata in International Law which largely superseded the Brussels Convention2 and applies in all EU countries (including Denmark 3), and the Revised Lugano Convention, 4 which binds Switzerland, Norway, Iceland, and the EU Member States, seek to avoid multiple proceedings and conflicting judgments among Member States by unifying rules on jurisdiction and the recognition and enforcement of judgments. Globally a similar attempt, albeit much more restricted in scope, has been made by the adoption of the Hague Convention on Choice of Court Agreements. In 2004, the American Law Institute (ALI) and the International Institute for the Unification of Private Law (UNIDROIT) proposed transnational principles of civil procedure. Neither the Brussels I Regulation and Revised Lugano Convention nor the 2.03 Convention on Choice of Court Agreements expressly refer to the doctrine of res judicata. By contrast, the ALI/​U NIDROIT Principles of Transnational Civil Procedure contain a provision on res judicata. These instruments, whether or not they contain express res judicata provisions, all seek to deal with the issue of multiple proceedings and conflicting judgments through the coordination of different legal systems by means of uniformity and harmonization of solutions. As such, they all provide inspiration for how res judicata issues may be dealt with outside the domestic law context. In particular, they are useful for the development of res judicata principles for the coordination of international arbitral tribunals and state courts in relation to the efficient exercise of their jurisdiction. In public international law, a uniform doctrine of res judicata has largely been 2.04 developed on the basis of domestic res judicata rules. Thus, the public international law doctrine of res judicata also constitutes a useful source of inspiration for the development of transnational res judicata principles for international arbitration. The following analysis will first examine how the problem of multiple proceedings 2.05 and conflicting judgments is dealt with in private international law (A.). It will then analyse how the doctrine of res judicata is currently applied in public international law by international courts and tribunals (B.).

2  Brussels Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters. The Brussels Convention continues to apply with respect to those territories of EU Member States that fall within its territorial scope and that are excluded from the Brussels I Regulation pursuant to Article 355 of the Treaty on the Functioning of the European Union. 3  While the Brussels I Regulation is not directly applicable to Denmark, it has effectively been extended to Denmark by a separate agreement between the EU and Denmark which entered into force on 1 July 2007. 4  Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, signed in Lugano on 30 October 2007, OJ L 339, 21.12.2007, p. 3.

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Chapter 2:  Res Judicata in International Law

A.  Private International Law 2.06 Private international law seeks to coordinate different legal systems.5 It aims to

ensure the coexistence of different legal systems, namely in view of achieving an ‘international harmonization of solutions’ (‘l’ harmonie internationale des solutions’).6 In this context private international law has been described as a ‘tool for the management of legal diversity’.7

2.07 Attempts to find harmonized solutions to the issue of multiple proceedings

and conflicting judgments must be viewed in the context of this overriding purpose of the coordination of different legal systems. 8 It is in this vein that the Brussels I Regulation, the Hague Convention on Choice of Court Agreements, and the ALI/​U NIDROIT Principles of Transnational Civil Procedure all regulate and coordinate the relations between domestic courts belonging to different jurisdictions.

2.08 It has been said that ‘[o]‌n the level of [private] international law, res judicata

might not be absolutely necessary. The law of the jungle might work, because each nation has a zone of autonomous operation. But especially today, with ever-​ increasing globalization, a sensible international order requires an international law on the application of res judicata’.9 It is in this vein that this research seeks to demonstrate that international commercial arbitration requires transnational principles of res judicata. More specifically, one objective is to demonstrate that res judicata issues arising before international arbitrators should not be governed by any particular domestic law, but by transnational standards, namely in order to ensure the harmonious coexistence of international arbitral tribunals with courts and tribunals belonging to the same or a different legal system. The private international law instruments mentioned previously constitute attempts to find such standards. This section will examine these instruments in the order listed. 1. The Brussels I Regulation

2.09 The Brussels I Regulation and the Revised Lugano Convention have essentially

the same content. Furthermore, the Recast Brussels I Regulation should bring no

5 See Claire Debourg, Les contrariétés de décisions dans l’arbitrage international (2012), para. 89, pp. 68–​70, with references cited. 6  Ibid., para. 89, p. 69, citing Henry Batiffol, Aspects philosoquiques du droit international privé (2002), para. 96, p. 212. 7  Debourg, para. 89, p. 68, citing Dominique Bureau and Horatio Muir Watt, Droit international privé, Tome 1 (2nd ed. 2010), para. 14, p. 19 (‘Le droit international privé est conçu comme “un instrument de gestion de la diversité des droits”’). 8  Debourg, para. 89, p. 70. 9  Robert C. Casad and Kevin M. Clermont, Res Judicata (2001), p. 5.

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A.  Private International Law substantial change for the purposes of res judicata. The emphasis of the following analysis will be on the provisions of the Brussels I Regulation, as the case law and scholarly opinions expressed thereon should continue to apply with respect to the equivalent provisions in the Recast Brussels I Regulation. The Brussels I Regulation aims to provide for the free movement of judgments 2.10 between EU Member States. To achieve this aim the Regulation imposes unified rules of conflict of jurisdiction that prescribe which Member State has jurisdiction over particular matters. The Regulation further facilitates the recognition and enforcement of judgments rendered in the Member States.10 Multiple proceedings and conflicting judgments are contrary to the aim of the 2.11 Regulation.11 Articles 27 and 28 of the Brussels I Regulation (Articles 29 and 30 of the Recast Brussels I Regulation) seek to prevent identical or related proceedings being brought in parallel before the courts of different Member States. While Article 27 provides for the application of the lis pendens doctrine,12 Article 28 concerns related actions.13 Articles 27 and 28 seek not only to uphold the proper administration of justice 2.12 and economy of procedure, but also to avoid courts in different Member States from rendering irreconcilable judgments. They are designed to preclude, as far as possible and from the outset, the possibility of a situation where the recognition of a judgment would be refused on the ground that it is irreconcilable with another judgment.14 This ground for non-​recognition is provided in Article 34 of the Brussels I Regulation (Article 45 of the Recast Brussels I Regulation). 10  Note that the Recast Brussels I Regulation further facilitates the recognition and enforcement of Member State judgments. According to the press release accompanying the Recast Brussels I Regulation ‘[t]‌he recast regulation will substantially simplify the system put in place by “Brussels I” as it will abolish exequatur, i.e. the procedure for the declaration of enforceability of a judgment in another member state. According to the new provisions, a judgment given in a member state will be recognised in the other member states without any specific procedure and, if enforceable in the member state of origin, will be enforceable in the other member states without any declaration of enforceability’. 11  See also Recital 21 of the Recast Brussels I Regulation. 12  Like the res judicata doctrine, the lis pendens doctrine applies only in the case of ‘proceedings involving the same cause of action and between the same parties’ (Article 27(1) of the Brussels I Regulation; Article 29(1) of the Recast Brussels I Regulation). 13  Article 28(3) of the Brussels I Regulation (Article 30(3) of the Recast Brussels I Regulation) states: ‘For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.’ 14 ECJ, Maersk Olie & Gas A/​S v Firma M. de Haan en W. de Boer, Case C-​39/​02, 14 October 2004, 2004 ECR, p. I-​9657, para. 31; ECJ, Overseas Union Insurance Ltd and Deutsche Ruck UK Reinsurance Ltd and Pine Top Insurance Company Ltd v New Hampshire Insurance Company, Case C-​351/​89, 27 June 1991, 1991 ECR, p. I-​3317, para. 16; ECJ, Gubisch Maschinenfabrik KG v Giulio Palumbo, Case 144/​86, 8 December 1987, 1987 ECR, p. 4861, para. 8. See also Burkhard Hess, Thomas Pfeiffer, and Peter Schlosser, Report on the Application of Regulation Brussels I in the Member States, Study JLS/​C4/​2005/​03, Final Version September 2007, para. 403, available at http://​ ec.europa.eu/​civiljustice/​news/​docs/​study_​application_​brussels_​1_​en.pdf.

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Chapter 2:  Res Judicata in International Law According to Article 34(3) and (4), a judgment given in a Member State shall not be recognized 3. if it is irreconcilable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought; 4. if it is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed.15 2.13 The general idea underlying Article 34(3) and (4) is to avoid the existence of two

irreconcilable judgments in one and the same Member State.16 According to the Report of the Committee of Experts for the Brussels Convention, ‘[t]‌here can be no doubt that the rule of law in a State would be disturbed if it were possible to take advantage of two conflicting judgments’.17

2.14 In the past, Article 34(3) and (4) has been rarely applied and of minor practical

importance as Articles 27 and 28 of the Brussels I Regulation have usually been sufficient to avoid irreconcilable judgments.18 A review of case law has shown that Articles 27 and 28 have been generally respected and largely succeeded in preventing conflicting judgments.19

2.15 It is likely that Article 34(3) and (4) (Article 45(1)(c) and (d) of the Recast Brussels I

Regulation) will be of even less practical importance in the future, namely with the entry into force of the Recast Brussels I Regulation, which widens the scope of the lis pendens and related actions rules. Article 31(2) and (3) of the Recast Brussels I Regulation deals with the specific case where one of the Member State courts seized is a court chosen in a choice-​of-​court agreement. The court not chosen must stay the proceeding until such time as the chosen court declines jurisdiction. It must decline jurisdiction where the chosen court’s jurisdiction under the choice-​of-​court agreement is established.20 Articles 33 and 34 of the Recast Brussels I Regulation further widen the geographical scope of the lis pendens and related actions rules in that they allow (on a discretionary basis) the courts of a Member State to stay and eventually dismiss the proceedings, where the court of a third state has already been seized either of proceedings involving the same cause of action between the same parties or of a related action. 15  Cf Article 45(1)(c) and (d) of the Recast Brussels I Regulation. It is worth noting that, unlike Article 34 of the Brussels I Regulation, Article 45 of the Recast Brussels I Regulation specifies that the recognition of a judgment shall be refused “[o]‌n the application of any interested party”. 16  Hélène Gaudemet-​Tallon, Compétence et Exécution des Jugements en Europe—​ Règlement No. 44/​2001, Conventions de Bruxelles et de Lugano (3rd ed. 2002), para. 419. 17  P. Jenard, Report on the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters (Signed at Brussels, 27 September 1968), P. Jenard (Rapporteur), Official Journal of the European Communities, No. C 59, 5 March 1979, p. 45. 18 Ibid., p. 45. 19  Hess, Pfeiffer, and Schlosser, para. 563. 20  Cf Article 5(1) and (2) of the Convention on Choice of Court Agreements (see paras 2.46–​2 .48).

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A.  Private International Law Given its minor practical importance, the Court of Justice of the European Union 2.16 (ECJ) has had only a few occasions on which to clarify the meaning of Article 27 of the Brussels Convention, which is almost identical to Article 34 of the Brussels I Regulation and Article 45 of the Recast Brussels I Regulation. In Solo Kleinmotoren GmbH v Bloch, the ECJ held that the term ‘judgment’ must 2.17 be defined pursuant to Article 25 of the Brussels Convention21 (Article 32 of the Brussels I Regulation and Article 2 of the Recast Regulation) according to which ‘“judgment” means any judgment given by a court or tribunal of a Contracting State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as the determination of costs or expenses by an officer of the court’. The ECJ decided that a settlement is not a judgment within the meaning of 2.18 Article  27(3) of the Brussels Convention. A  judgment within the meaning of Article 27(3) of the Brussels Convention or Article 34(3) of the Regulation must be a decision of a judicial—​not contractual—​nature.22 Furthermore, in Italian Leather SpA v WECO Polstermöbel GmbH & Co., the ECJ 2.19 specified that the term ‘judgment’ has general application and is not limited to judgments on substantive issues. Accordingly, decisions on interim measures may be ‘judgments’ for the purposes of Article 27(3) of the Brussels Convention.23 In Gothaer Allgemeine Versicherung AG et al. v Samskip GmbH, the ECJ further stated that the term ‘judgment’ must be interpreted broadly and autonomously to cover judgments by which the court of a Member State declines jurisdiction on the basis of a jurisdiction clause, irrespective of how that judgment is categorized under the law of another Member State, in particular even though the judgment is classified as a ‘procedural judgment’ under that law.24 In Hoffmann v Krieg, the ECJ held that ‘[i]‌n order to ascertain whether the two 2.20 judgments are irreconcilable within the meaning of Article 27(3), it should be examined whether they entail legal consequences that are mutually exclusive’.25 The irreconcilability thus lies in the effects of the judgments.26

21 ECJ, Solo Kleinmotoren GmbH v Emilio Bloch, Case C-​414/​92, 2 June 1994, 1994 ECR, p. I-​2237, paras 14–​15. See also ECJ, Realchemie Nederland v Bayer CropScience AG, Case C-​406/​09, 18 October 2011, 2011 ECR, p. I-​9773, para. 38. 22 ECJ, Solo Kleinmotoren GmbH v Emilio Bloch, paras 18 and 25. See also Gaudemet-​Tallon, para. 420, p. 342. 23 ECJ, Italian Leather SpA v WECO Polstermöbel GmbH & Co., para. 41. See also ECJ, Gothaer Allgemeine Versicherung AG et al. v Samskip GmbH, Case C-​456/​11, 15 November 2012, para. 24, with references. 24 ECJ, Gothaer Allgemeine Versicherung AG et al. v Samskip GmbH, paras 22–​32. 25 ECJ, Horst Ludwig Martin Hoffmann v Adelheid Krieg, Case 145/​86, 4 February 1988, 1988 ECR, p. 645, para. 22. 26  Jan Kropholler, Europäisches Zivilprozessrecht (7th ed. 2002), para. 49, pp. 410 et seq. See also ECJ, Italian Leather SpA v WECO Polstermöbel GmbH & Co., para. 44.

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Chapter 2:  Res Judicata in International Law 2.21 Article 34(3) of the Brussels I Regulation (Article 45(1)(c) of the Recast Brussels I

Regulation) does not apply where proceedings are still pending in the Member State where recognition is sought;27 the judgments must both have been rendered. The question which judgment was rendered first is of no importance; the judgment rendered in the Member State where recognition is sought prevails over the foreign judgment.28

2.22 Two judgments may entail legal consequences that are mutually exclusive and thus

be irreconcilable within the meaning of Article 34(3), even though they were not rendered on the same subject matter29 and even if the judgment rendered in the Member State where recognition is sought concerned a subject matter outside the scope of the Regulation.30

2.23 However, the two judgments must have been rendered between the same parties. The

term ‘same parties’ has the same meaning as in Article 27 of the Brussels I Regulation (Article 29 of the Recast Brussels I Regulation) on lis pendens and must be interpreted independently. A successor in title is considered a ‘party’ for purposes of Article 34 of the Regulation (Article 45 of the Recast Brussels I Regulation).31

2.24 In Tatry v Maciej Rataj, the ECJ held that ‘the question whether the parties are the

same cannot depend on the procedural position of each of them in the two actions, and that the plaintiff in the first action may be the defendant in the second’.32

2.25 The ECJ further held that the requirement of party identity is met even where only

some of the parties were identical in both proceedings.33 This means that a judgment can be refused recognition partially; that is, to the extent to which the parties to both judgments are the same.

2.26 Finally, in the Drouot case the ECJ held that parties, although formally not identical,

may nevertheless be deemed to be the same party if there is such a degree of identity between the interests of them that a judgment delivered against one of them would have the force of res judicata against the other. In this case the ECJ had to decide whether an insurer and its insured must be considered to be the same party for the purposes of lis pendens (Article 21 of the Brussels Convention). It held in relevant part: It is certainly true that, as regards the subject-​matter of two disputes, there may be such a degree of identity between the interests of an insurer and those of its insured

  Gaudemet-​Tallon, para. 420.   Kropholler, para. 54, p. 412. It has been suggested that Article 34(3) is not in line with Articles 27 and 28 of the Regulation as it gives preference to a judgment given without respecting the lis pendens of the same lawsuit in another Member State (see Hess, Pfeiffer, and Schlosser, para. 564). 29  Kropholler, para. 49, p. 410. 30  See ECJ, Hoffmann v Krieg, para. 17; Gaudemet-​Tallon, para. 420. 31  Kropholler, para. 52, p. 411. 32 ECJ, Tatry v Maciej Rataj, Case C-​406/​92, 6 December 1994, 1994 ECR, p. I-​5439, para. 30. 33  Ibid., paras 33 et seq. 27

28

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A.  Private International Law that a judgment delivered against one of them would have the force of res judicata as against the other. That would be the case, inter alia, where an insurer, by virtue of its right of subrogation, brings or defends an action in the name of its insured without the latter being in a position to influence the proceedings. In such a situation, insurer and insured must be considered to be one and the same party for the purposes of the application of Article 21 of the Convention. On the other hand, application of Article 21 cannot have the effect of precluding the insurer and its insured, where their interests diverge, from asserting their respective interests before the courts as against the other parties concerned.34

Unlike Article 34(3), Article 34(4) (Article 45(1)(d) of the Recast Brussels I 2.27 Regulation) requires that the judgments were rendered on the same cause of action. The term ‘cause of action’ is the same as in Article 27 of the Brussels I Regulation (Article 21 of the Brussels Convention; Article 29 of the Recast Brussels I Regulation). The term ‘cause of action’ within the meaning of Article 21 of the Brussels 2.28 Convention was clarified by the ECJ in Gubisch Maschinenfabrik KG v Giulio Palumbo, Tatry v Maciej Rataj, Maersk Olie & Gas A/​S v Firma M. de Haan en W. de Boer, and Gantner Electronic GmbH v Basch Exploitatie Maatschappij BV.35 The term ‘cause of action’ as developed in these cases is characterized by its broad scope: two proceedings involve the same cause of action if the same subject matter ‘lies at the heart of the two actions’.36 This is known as the so-​called ‘central issue theory’ (‘Kernpunkttheorie’). In Tatry v Maciej Rata the ECJ noted that even though the English version of 2.29 Article 21 of the Brussels Convention does not expressly distinguish between the concepts of ‘object’ and ‘cause’, the term ‘cause of action’ should be construed in the same manner as other language versions in which that distinction is made. The ECJ held that ‘the “cause of action” comprises the facts and the rule of law relied on as the basis of the action’.37

34 ECJ, Drouot assurances SA v Consolidated metallurgical industries (CMI industrial sites), Protea assurance and Groupement d’ intérêt économique (GIE) Réunion européenne, Case C-​351/​96, 19 May 1998, 1998 ECR, p. I-​3075, paras 19 et seq. See also Molnlycke Health Care AB et al. v BSN Medical Ltd et al. [2009] EWHC 3370 (Pat) (‘A mandatory stay of English proceedings pending resolution of foreign proceedings under Regulation 44/​2001 art. 27 would only arise where the parties were identical and indissociable. Where foreign proceedings had been issued against a patentee, but not the exclusive licensee of the patent, English proceedings against both of them would not be stayed under art. 27 as the licensee had been granted a specific right which was additional to the right which the patentee continued to hold, so that its interests were different and the parties were not, accordingly, identical and indissociable’). 35 ECJ, Gantner Electronic GmbH v Basch Exploitatie Maatschappij BV, Case C-​111/​01, 8 May 2003, 2003 ECR, p. I-​4207. 36  Hess, Pfeiffer, and Schlosser, para. 406; ECJ, Gubisch Maschinenfabrik KG v Giulio Palumbo, para. 16. 37 ECJ, Tatry v Maciej Rataj, para. 38.

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Chapter 2:  Res Judicata in International Law 2.30 Concerning the object, the ECJ stated that ‘[t]‌he “object of the action” . . . means

the end the action has in view’.38

2.31 Applying this definition of the term ‘cause of action’, the ECJ concluded that an

action seeking to have the defendant held liable for causing loss and ordered to pay damages has the same cause and object as earlier proceedings brought by that defendant seeking a declaration that he is not liable for that loss.39

2.32 Under Article 34(4) of the Brussels I Regulation (Article 45(1)(d) of the Recast

Brussels I Regulation) the conflict between two irreconcilable judgments is resolved in favour of the ‘earlier judgment’, meaning the judgment that was rendered first in time; only the ‘earlier judgment’ may be recognized.40

2.33 The Brussels I Regulation does not address the problem of multiple proceedings

and irreconcilable judgments in terms of the doctrine of res judicata as applied in the domestic law context. There is no provision in the Regulation directly and expressly precluding a court in a Member State from deciding a dispute that has already been decided in prior proceedings between the same parties in another Member State. The Brussels I Regulation does not direct the courts of a Member State to decline jurisdiction or admissibility in such an event. 41 Moreover, under the recognition and enforcement scheme of the Brussels I Regulation, judgments must be recognized by a Member State regardless of their res judicata status in the Member State where they were rendered. 42 It thus appears that under the Brussels I Regulation the res judicata effects of a judgment are not a primary concern. Indeed, the aim of the Regulation is to facilitate as far as possible the free movement of judgments and, therefore, to remove as many obstacles as possible to a judgment’s recognition and enforcement. 43

2.34 The Regulation prevents multiple proceedings and resulting irreconcilable judg-

ments through strict rules of jurisdiction and a wide application of Article 27 on

  Ibid., para. 40.   Ibid., para. 44. 40  Kropholler, para. 56, p. 413. 41  See Articles 25 and 26 of the Brussels I Regulation and Articles 27 and 28 of the Recast Brussels I Regulation. 42  Jenard, pp. 43–​5 (‘Recognition must have the result of conferring on judgments the authority and effectiveness accorded to them in the State in which they were given. The words “res judicata” which appear in a number of conventions have expressly been omitted, since judgments given in interlocutory proceedings and ex parte may be recognized, and these do not always have the force of res judicata. . . . It is not necessary that the foreign judgment should have become res judicata. . . . The Committee preferred a form of wording which does not decide whether the judgment should have become res judicata or should merely be final and conclusive, and left this question to the discretion of the court in which recognition is sought’). 43  Peter R. Barnett, Res Judicata, Estoppel, and Foreign Judgments (2001), paras 7.14–​7.18; Georges A.L. Droz, La Cour de justice des Communautés Européennes et les conflits de juridictions à l’ intérieur du Marché Commun, 23 Annuaire français de droit international 902, 905 (1977). 38 39

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A.  Private International Law lis pendens and Article 28 on related actions. During the travaux préparatoires of the Brussels Convention it was considered that the application of the lis pendens and related actions rules would suffice greatly to reduce the occurrence of irreconcilable judgments.44 Indeed, as was mentioned earlier, Articles 27 and 28 have been generally respected in practice with the result that parallel proceedings leading to irreconcilable judgments are a rare occurrence.45 However, it is submitted that the Brussels I Regulation secures the res judicata 2.35 effects of judgments recognized under the Regulation implicitly and, more precisely, systemically; that is, by means of the entire system set in place by the Regulation. According to Barnett, such a systemic approach to res judicata is supported by the following features of the Regulation: (i) the jurisdiction of the court that rendered the judgment is based on the direct rules of jurisdiction set forth in the Regulation, (ii) that court’s jurisdiction cannot be reviewed at the recognition and enforcement stage, (iii) recognition under the Regulation is virtually automatic, and (iv) such automatic recognition applies to all judgments within the scope of the Regulation.46 This view appears to be supported by the ECJ in Gothaer Allgemeine Versicherung 2.36 AG et al. v Samskip GmbH, where the ECJ founded the res judicata concept on the principle of mutual trust underlying the Brussels I Regulation: By its third question the referring court asks, in essence, whether Articles 32 and 33 of Regulation No 44/​2001 must be interpreted as meaning that the court before which recognition is sought of a judgment by which a court of another Member State has declined jurisdiction on the basis of a jurisdiction clause is bound by the finding—​made in the grounds of a judgment, which has since become final, declaring the action inadmissible—​regarding the validity of that clause. . . . If a court of the Member State of origin, in the assessment of its own jurisdiction, has held such a jurisdiction clause to be valid, it would in principle be contrary to the principle of mutual trust between the courts of the European Union to allow a court of the Member State in which recognition is sought to review that very same issue of validity.47

Furthermore, it is submitted that the Brussels I Regulation provides for the appli- 2.37 cation of the res judicata doctrine implicitly by means of Article 33(1), which provides for the automatic recognition of judgments rendered under the Regulation (Article  36(1) of the Recast Brussels I  Regulation).48 According to Barnett, Article 33(1) clearly intends to prevent the relitigation in a Member State of a cause of action that has already been finally determined between the same parties in

 Jenard, p. 45.   See para. 2.14. 46  Barnett, paras 7.21–​7.25. 47 ECJ, Gothaer Allgemeine Versicherung AG et al. v Samskip GmbH, paras 33 and 36. 48  In this sense, see also ECJ, Gothaer Allgemeine Versicherung AG et al. v Samskip GmbH, paras 33 et seq. 44 45

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Chapter 2:  Res Judicata in International Law another Member State.49 Indeed, the Regulation directs the courts of a Member State to recognize a final and binding decision rendered in another Member State, unless a final and binding decision has already been rendered (or is recognizable) in the Member State where recognition and enforcement is sought. Therefore, in the absence of such a pre-​existing judgment, exercising jurisdiction over a dispute that has already been finally decided in another Member State would constitute a violation of a Member State’s obligations under Articles 33 and 34 of the Brussels I Regulation.50 In addition, if the courts of a Member State were to exercise jurisdiction in such circumstances, their judgment would not be recognizable in the Member States in which the prior judgment was rendered or recognized. The exercise of jurisdiction would thus run counter to the Regulation’s underlying objective of ensuring as far as possible the free movement of judgments, the avoidance of irreconcilable judgments, and the good administration of justice. 2.38 Admitting that the Brussels I Regulation recognizes the doctrine of res judicata im-

plicitly or systemically raises the question of the scope and extent of the res judicata effects of judgments rendered under the Regulation, as well as of the law governing the res judicata effects of a prior judgment in subsequent proceedings.

2.39 According to Jenard ‘[r]‌ecognition must have the result of conferring judgments

the authority and effectiveness accorded to them in the State in which they were given’.51 This suggests that a judgment rendered in one Member State should be accepted in the recognizing Member State with the original preclusive effects it would have in the country in which it was rendered.52 This was also the approach adopted by the ECJ in Hoffmann v Krieg.53 Barnett, however, suggests that while

49 See Barnett, paras 7.58 et seq. and 9.13. In this sense, see also ECJ, Jozef De Wolf v Harry Cox BV, Case 42/​76, 30 November 1976, 1976 ECR, p. 1759. In this case, it was suggested that a judgment falling within the scope of the Brussels Convention will ‘automatically have the force of res judicata throughout the territory of the Community, with effect from the date on which judgment was given in the first State [such that] . . . the authority of the foreign judgment prevents a fresh application concerning the same subject-​matter being brought by the same parties before the courts of another Contracting State’ (citation reported in Barnett, para. 7.53). See further Droz, p. 906 (‘Le dire du juge dans un pays cristallise la situation juridique dans l’ensemble des autres pays. . . . L’autorité de chose jugée dans un Etat contractant devenant immédiate dans les autres Etats contractants, on ne pouvait, au niveau de la mise à exécution du jugement, que suivre la pente ainsi tracée’. In free translation: ‘The findings of a judge in one state crystallize the legal situation in all other states. . . . With the res judicata effects of a judgment rendered in one Member State being immediately recognized in the other Member States, the path thus traced also had to be followed at the enforcement stage’). 50  In this sense, see also ECJ, De Wolf v Cox BV, p. 1759 and Droz, p. 915. 51 Jenard, p. 43. 52  In this sense, see also D. Lasok and P.A. Stone, Conflict of Laws in the European Community (1987), pp. 289 et seq. 53 ECJ, Hoffmann v Krieg, p. 645 (‘A foreign judgment which has been recognised by virtue of Article 26 of the Convention must in principle have the same effects in the State in which enforcement is sought as it does in the State in which judgment was given’). See also ECJ, Amministrazione dell’Economia e delle Finanze and Agenzia delle Entrate v Fallimento Olimpiclub Srl, Case C-​2/​08, 3 September 2009, 2009 ECR, p. I-​7501, para. 24 (‘In the absence of Community legislation in this area, the rules implementing the principle of res judicata are a matter for the national legal order, in

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A.  Private International Law the Regulation seems implicitly to require the extension of cause of action preclusive effects, the same does not hold true with respect to issue preclusion and abuse of process. According to Barnett, a court in the recognizing state may afford issue preclusive effects to a foreign judgment, even if it was rendered in a Member State that does not know the doctrine of issue estoppel.54 Similarly, with respect to abuse of process, Barnett argues that it is a preclusive plea only in the sense that the recognizing court exercises its discretion to prevent its own process from being abused, thereby precluding the party that invoked it. The plea reposes entirely in the discretion of the recognizing court.55 A recognizing court, applying its abuse of process doctrine, may preclude a party from raising a subject matter which could and should have been raised in earlier proceedings in another Member State. In recent years, the ECJ appears to have followed an autonomous approach with 2.40 respect to res judicata. For instance, in Gothaer Allgemeine Versicherung AG et al. v Samskip GmbH it held that ‘the requirement of the uniform application of European Union law means that the specific scope of that restriction must be defined at European Union level rather than vary according to different national rules on res judicata’.56 The ECJ then went on to specify that under this EU concept of res judicata, the res 2.41 judicata effects of a judgment must extend not only to its operative part, but also to its reasons: [T]‌he concept of res judicata under European Union law does not attach only to the operative part of the judgment in question, but also attaches to the ratio decidendi of that judgment, which provides the necessary underpinning for the operative part and is inseparable from it . . . [G]iven that the common rules of jurisdiction applied by the courts of the Member States have their source in European Union law, more specifically in Regulation No 44/​2001, and given the requirement of uniform application . . ., the concept of res judicata under European Union law is relevant for determining the effects produced by a judgment by which a court of a Member State has declined jurisdiction on the basis of a jurisdiction clause. Thus, a judgment by which a court of a Member State has declined jurisdiction on the basis of a jurisdiction clause, on the ground that that clause is valid, binds the courts of the other Member States both as regards that court’s decision to decline jurisdiction, contained in the operative part of the judgment, and as regards the finding on the validity of that clause, contained in the ratio decidendi which provides the necessary underpinning for that operative part.57

accordance with the principle of the procedural autonomy of the Member States. However, those rules must not be less favourable than those governing similar domestic actions (principle of equivalence); nor may they be framed in such a way as to make it in practice impossible or excessively difficult to exercise the rights conferred by Community law (principle of effectiveness)’). 54  Barnett, paras 7.75 et seq. 55  Ibid., para. 7.95. 56 ECJ, Gothaer Allgemeine Versicherung AG et al. v Samskip GmbH, para. 39. 57  Ibid., paras 40–​1, with reference to ECJ, P & O European Ferries (Vizcaya) and Diputación Foral de Vizcaya v Commission, Joined Cases C-​4 42/​03P and C-​471/​03P, 1 June 2006, 2006 ECR, p. I-​4845 and ECJ, Artegodan v Commission, Case C-​221/​10P, 19 April 2012, 2012 ECR, p. I-​0000.

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Chapter 2:  Res Judicata in International Law 2. The Hague Convention on Choice of Court Agreements 2.42 The Convention on Choice of Court Agreements was adopted by the Hague

Conference on Private International Law on 30 June 2005 with the aim of making choice-​of-​court agreements as effective as possible.58 In so doing, it seeks to ensure, first, that the chosen court hears the dispute when proceedings are brought before it; secondly, that any other court before which proceedings are brought refuses to hear the dispute; and, thirdly, that the judgment of the chosen court is recognized and enforced.59 To achieve its aims, the Convention, like the Brussels I Regulation, adopts uniform rules on jurisdiction and on recognition and enforcement of foreign judgments.

2.43 The Convention considers the relationship between a court chosen by an exclusive

choice-​of-​court agreement and a court not chosen, thus resembling the relationship between arbitral tribunals (chosen by an arbitration agreement) and state courts. Indeed, the Convention on Choice of Court Agreements was drafted with the 1958 New York Convention in mind, with the hope of achieving for choice-​ of-​court agreements and the resulting judgments what the New York Convention accomplishes for arbitration agreements and the resulting arbitral awards.60

2.44 The Convention entered into force on 1 October 2015 in 28 states (Mexico and

all Member States of the European Union, except Denmark). Pursuant to Article 31 of the Convention, at least two ratifications were needed for the Convention to enter into force. The Convention has been signed but not yet ratified by the United States and Singapore.61

2.45 Like the Brussels I Regulation, the Convention does not expressly adopt the doc-

trine of res judicata. Furthermore, unlike the Brussels I  Regulation, it heavily restricts the application of the lis pendens doctrine. Indeed, Article 5 of the Convention expressly precludes the chosen court from applying the doctrine of lis pendens to decline jurisdiction in favour of a court in another state. The Convention thereby ensures that only the chosen court will decide the dispute covered by the 58  The Convention on Choice of Court Agreements concluded more than a decade of negotiations. Following a request from the United States, the initial project was to negotiate a worldwide convention on jurisdiction and the recognition and enforcement of foreign judgments. A preliminary draft convention was prepared; however, the text left many problems unresolved. When it became clear that some countries could not agree to the convention being considered, it was decided to scale down the objective to a convention on choice-​of-​court agreements in commercial cases. For details on the history of this Convention, see, e.g., Wagner, Rolf, Das Haager Übereinkommen vom 30.6.2005 über Gerichtsstandsvereinbarungen, 73 Rabels Zeitschrift für ausländisches und internationals Privatrecht 100, 102 et seq. (2009); Trevor C. Hartley and Masato Dogauchi, Explanatory Report on the Convention of 30 June 2005 on Choice of Court Agreements (2007), pp. 16–​17, available at http://​w ww.hcch.net. 59  Hartley and Dogauchi, para. 1, p. 21. 60  Ibid., para. 1, p. 21. 61  The status table of the Convention is available at http://​w ww.hcch.net/​index_​en.php?act= conventions.status2&cid=98.

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A.  Private International Law choice-​of-​court agreement. According to Article 5(1), ‘[t]‌he court or courts of a Contracting State designated in an exclusive choice-​of-​court agreement shall have jurisdiction to decide a dispute to which the agreement applies, unless the agreement is null and void under the law of that State’. Article 5(1) thus firmly grounds the exclusive jurisdiction of the chosen court. The 2.46 chosen court must decide the dispute unless it considers the agreement null and void pursuant to its lex fori. This obligation to decide the dispute is corroborated by Article 5(2), in accordance with which ‘[a]‌court that has jurisdiction under paragraph 1 shall not decline to exercise jurisdiction on the ground that the dispute should be decided in a court of another State’. According to the Explanatory Report on the Convention on Choice of Court 2.47 Agreements, a court may consider that the dispute should be decided in a court of another state on the basis of forum non conveniens or lis pendens. To this one could add the rule on related actions as set forth in Article 28 of the Brussels I Regulation (Article 30 of the Recast Brussels I Regulation). Article 5(2) of the Convention precludes resort to these doctrines if the court in whose favour the proceedings would be stayed or dismissed is in another state.62 This is justified by the legitimate expectation of the parties to have their chosen court decide the dispute.63 To avoid parallel proceedings before a chosen court and another court, Article 6 2.48 of the Convention obliges any courts not chosen, but nonetheless seized of the dispute, to suspend or dismiss proceedings that are covered by an exclusive choice-​ of-​court agreement, unless a) the agreement is null and void under the law of the State of the chosen court; b) a party lacked the capacity to conclude the agreement under the law of the State of the court seised; c) giving effect to the agreement would lead to a manifest injustice or would be manifestly contrary to the public policy of the State of the court seised; d) for exceptional reasons beyond the control of the parties, the agreement cannot reasonably be performed; or e) the chosen court has decided not to hear the case.

Pursuant to Article 6(a), the court not chosen must assess the validity of the 2.49 choice-​ of-​ court agreement under the law of the chosen court. Likewise, Article 5(1) directs the chosen court to examine the validity of the choice-​of-​ court agreement pursuant to the same law. This choice-​of-​law rule was included to ensure uniform results 64 in order to avoid contradictory decisions and to prevent 62  Ibid., paras 132–​4, p. 44. The Convention does not prevent a chosen court from declining jurisdiction in favour of another court within the same state (Article 5(3)(b) Convention on Choice of Court Agreements; Catherine Kessedjian, La Convention de La Haye du 30 juin 2005 sur l’ élection de for, 3 Journal du Droit International 813 (2006), para. 38). 63  Kessedjian, para. 37. 64  Ronald A. Brand and Paul M. Herrup, The 2005 Hague Convention on Choice of Court Agreements (2008), p. 81.

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Chapter 2:  Res Judicata in International Law positive and negative conflicts of jurisdiction.65 The reference in the Convention to the law of the country of the chosen court includes choice-​of-​law rules.66 This should not cause major problems as both the chosen court and the court not chosen will apply the same choice-​of-​law rules to determine the law governing the validity of the choice-​of-​court agreement. 2.50 Article 6(b) of the Convention prescribes the court not chosen to examine the par-

ties’ capacity to conclude the choice-​of-​court agreement in application of its own lex fori. While Article 5(1) does not expressly prescribe the chosen court to examine the parties’ capacity to conclude the agreement, it is considered that the provision includes lack of capacity since a lack of capacity would render the choice-​of-​court agreement null and void.67 Hence, the chosen court and the court not chosen will both apply their own lex fori, including choice-​of-​law rules,68 with the resulting risk that the courts will assess the capacity of the parties under different laws and reach different conclusions on the issue.69

2.51 The exceptions in Article 6(c) and (d) of the Convention may also give rise to par-

allel proceedings. However, the risk of parallel proceedings under these provisions is small as these exceptions will only rarely arise in practice.70 No issue of parallel proceedings will arise under Article 6(e) as it concerns the case where the chosen court has declined to exercise its jurisdiction.

2.52 Where parallel proceedings cannot be avoided and where, as a consequence, con-

flicting judgments are rendered, the Convention on Choice of Court Agreements seeks to prevent the recognition or enforcement of two conflicting judgments in the same contracting state by the same means as the Brussels I Regulation. According to Article 9 of the Convention: Recognition or enforcement may be refused if—​ . . .  f) the judgment is inconsistent with a judgment given in the requested State in a dispute between the same parties; or

65  See also Recital 20 and Article 25(1) of the Recast Brussels I Regulation. Like Article 5(1) of the Convention on Choice of Court Agreements, but unlike Article 23 of the Brussels I Regulation of 22 December 2000, the Recast Brussels I Regulation now expressly provides for the application of the law of the country of the chosen court. According to Article 25(1) ‘[i]‌f the parties, regardless of their domicile, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that Member State. Such jurisdiction shall be exclusive unless the parties have agreed otherwise’ (emphasis added). 66  Hartley and Dogauchi, para. 125, p. 43. The same applies under the Recast Brussels I Regulation pursuant to its Recital 20. 67  Hartley and Dogauchi, para. 126, p. 43 and para. 149, p. 47. 68  Ibid., para. 150, p. 47. 69  On Article 6(b), see Brand and Herrup, pp. 90 et seq. 70  Kessedjian, paras 43 et seq.

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A.  Private International Law g) the judgment is inconsistent with an earlier judgment given in another State between the same parties on the same cause of action, provided that the earlier judgment fulfils the conditions necessary for its recognition in the requested State.

The wording of Article 9(f) and (g) is similar, but not identical, to Article 34(3) 2.53 and (4) of the Brussels I Regulation (Article 45(1)(c) and (d) of the Recast Brussels I Regulation). In particular, Article 9 of the Convention uses the term ‘inconsistent’ instead of ‘irreconcilable’. The Convention does not define the terms ‘inconsistent judgments’ or ‘another 2.54 State’. It is not certain whether an application of Article 9(g) and (f) requires two judgments to be merely ‘conflicting and contradictory’ or whether they must be ‘irreconcilable’, meaning that they give rise to mutually exclusive legal consequences.71 It is equally uncertain whether in Article 9(g) the term ‘another State’ refers solely to another non-​contracting state or also to another contracting state as in Article 34(4) of the Brussels I Regulation (Article 45(1)(d) of the Recast Brussels I Regulation). While the Convention does not contain a provision on res judicata, for the same 2.55 reasons as those set forth earlier with respect to the Brussels I Regulation, the res judicata doctrine appears to be recognized implicitly by the Convention.72 Similarly to Article 33(1) of the Brussels I Regulation (Article 36(1) of the Recast Brussels I Regulation), Article 8(1) of the Convention stipulates an obligation to recognize a judgment given by a court of a contracting state designated in an exclusive choice-​of-​court agreement.73 According to the Explanatory Report, Recognition means that the court addressed gives effect to the determination of the legal rights and obligations made by the court of origin . . . the court addressed accepts that judgment as determining the issues before it . . . For example, if the 71  A distinction between ‘irreconcilable’ and ‘conflicting and contradictory’ is made under the Brussels I Regulation. See ECJ, Tatry v Maciej Rataj, cited at fn 32, paras 54 et seq. 72  See paras 2.34 et seq. 73  Like the Brussels I Regulation, the Convention on Choice of Court Agreements excludes any review of the judgment’s merits at the recognition and enforcement stage (Article 8(2) of the Convention). With respect to jurisdiction, Article 8(2) of the Convention states that ‘the court addressed shall be bound by the findings of fact on which the court of origin based its jurisdiction, unless the judgment was given by default’. According to the Explanatory Report, ‘[Article 8(2)] applies to findings of fact that relate to the formal or substantive validity of the [choice-​ of-​court] agreement, including the capacity of the parties to conclude it. Thus, when the court addressed is applying, e.g., Article 8(1) and has to determine whether the court of origin was “designated in an exclusive choice of court agreement”, it will have to accept findings of fact made by the court of origin. It will not, however, have to accept its legal evaluation of those facts’ (Hartley and Dogauchi, para. 166, p. 50). Article 8(2) must, however, be read in conjunction with Article 9(a) of the Convention according to which the court addressed is bound by the chosen court’s positive decisions on jurisdictions. Hence, concerning jurisdiction, the court addressed is not only bound by the findings of fact under Article 8(2), but also by the (positive) legal evaluation of the court of origin as to the validity of the choice-​of-​court agreement (Hartley and Dogauchi, para. 169, p. 51 and n. 205). According to the Explanatory Report, ‘the purpose of this is to avoid conflicting rulings on the validity of the agreement among different Contracting States: they are all required to apply the law of the State of the chosen court, and they must respect any ruling on the point by that court’ (Hartley and Dogauchi, para. 183, p. 54).

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Chapter 2:  Res Judicata in International Law court of origin held that the defendant did not owe any money to the plaintiff, the court addressed may simply recognise this finding. Therefore, if the plaintiff sues the defendant again on the same claim before the court addressed, the recognition of the foreign judgment will be enough to dispose of the case.74 2.56 Accordingly, recognition means giving res judicata effects to the foreign judgment. 2.57 Article 8(3) of the Convention further specifies that the judgment shall be rec-

ognized ‘if it has effect in the State of origin’, meaning if it is ‘legally valid and operative’.75 Like the Brussels I Regulation, the Convention on Choice of Court Agreements does not therefore answer the question of the scope and extent of the res judicata effects of judgments rendered under the Convention, as well as of the law governing the res judicata effects of a prior judgment in subsequent proceedings. The same comments as those made on this point in relation to the Brussels I Regulation should also apply with respect to the Convention.76 3. The ALI/​U NIDROIT Principles of Transnational Civil Procedure

2.58 In 2004 UNIDROIT and ALI adopted the Principles of Transnational Civil

Procedure with the aim of contributing to worldwide harmonization of civil procedure. Bridging the gap between common law and civil law traditions by combining attributes of both legal families, the Principles seek to reduce uncertainties and anxieties related to litigation under unfamiliar procedural systems.77

2.59 The negotiations of the ALI/​U NIDROIT Principles were strongly influenced

by the advanced development of procedural rules in international and domestic arbitration.78 While the Principles were designed to be applied by domestic courts, the commentary to the preamble of the Principles makes clear that the Principles may apply in international arbitration: ‘These Principles are equally applicable to international arbitration, except to the extent of being incompatible with arbitration proceedings, for example, the Principles related to jurisdiction, publicity of proceedings, and appeal’.

2.60 The Principles contain a provision on res judicata which could provide guidance

to international commercial arbitral tribunals in their relations with other arbitral tribunals or state courts. Principles 28.2 and 28.3 provide: 28.2 In applying the rules of claim preclusion, the scope of the claim or claims decided is determined by reference to the claims and defenses in the parties’ pleadings, including amendments, and the court’s decision and reasoned explanation.

  Hartley and Dogauchi, para. 170, p. 51 and n. 206.   Ibid., para. 171, p. 51. 76  See para. 2.40. 77  Rolf Stürner, The Principles of Transnational Civil Procedure, 69 Rabels Zeitschrift für ausländisches und internationals Privatrecht 201, 204 (2005). 78  Ibid., p. 213. 74

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A.  Private International Law 28.3 The concept of issue preclusion, as to an issue of fact or application of law to facts, should be applied only to prevent substantial injustice.

Principle 28.2 emphasizes the importance of the parties’ pleadings in determining 2.61 the scope of the parties’ claims for the purposes of res judicata. The intention of the drafters was to give the parties as much freedom as possible to determine the scope of their dispute themselves and to establish clarity and certainty about the scope of earlier disputes and their significance for subsequent proceedings in the field of international litigation.79 Principles 28.2 and 28.3 follow the civil law approach to res judicata as applied in 2.62 continental Europe, providing for limited claim preclusion and excluding, in principle, issue preclusion. Issue preclusion may be invoked only in exceptional cases when the relitigation of certain factual or legal issues would be clearly abusive.80 The accompanying commentary refers only to the concept of issue preclusion. It 2.63 states: Under Principle 28.3, issue preclusion might be applied when, for example, a party has justifiably relied in its conduct on a determination of an issue of law or fact in a previous proceeding. A broader scope of issue preclusion is recognized in many common-​law systems, but the more limited concept in Principle 28.3 is derived from the principle of good faith, as it is referred to in civil-​law systems, or estoppel in pais, as the principle is referred to in common-​law systems.

The restrictive approach by the ALI/​U NIDROIT Principles towards the doctrine 2.64 of res judicata was explained by Stürner: This sparing solution takes into account that the judges of a court recognizing a foreign judgment would need to have remarkably good knowledge of foreign law if they had to determine the scope of a claim or issue preclusion according to the common law model. Such knowledge would generally require intensive and expensive expert assessment, which nonetheless may not always be available or reliable. All this speaks well for a more modest solution casting the formal claims for relief as a relatively clear and uncomplicated standard.81

Finally, it is worth noting that in October 2013 the European Law Institute (ELI) 2.65 and the UNIDROIT organized a ‘First Explanatory Workshop’ to discuss the possibility of a joint project on European rules of civil procedure, in particular whether the ALI/​U NIDROIT Principles should be adapted to the European context and whether European rules of civil procedure should be developed. The workshop included a discussion of the issues of lis pendens and res judicata.82 Furthermore,   Ibid., p. 250.   Ibid., pp. 250 et seq. 81  Ibid., p. 251. 82  Gilles Cuniberti, The ELI-​ UNIDROIT Project:  From Transnational Principles to European Rules of Civil Procedure—​1st Exploratory Workshop, 22 October 2013, available at http://​conflictoflaws.net/​2013/​t he-​eli-​unidroit-​project-​from-​transnational-​principles-​to-​european-​rules-​of-​civil-​ procedure-​1st-​exploratory-​workshop/​. 79

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Chapter 2:  Res Judicata in International Law in November 2014 a joint meeting of the members of the Steering Committee and working groups was held at the seat of UNIDROIT in Rome. Preliminary reports were discussed and two further working groups, one of which on Lis Pendens and Res Judicata, were set up.83

B.  Public International Law 2.66 According to most scholars, the doctrine of res judicata constitutes a general

principle of law, imported into public international law by virtue of Article 38(1)(c) of the Statute of the International Court of Justice (ICJ). 84 This view appears to originate in a statement by Lord Phillimore who, during the deliberations of the Advisory Committee of Jurists appointed by the Council of the League of Nations in 1920 to prepare the Statute of the Permanent Court of International Justice (PCIJ), pointed out ‘that the general principles . . . were these which were accepted by all nations in foro domestico, such as certain principles of procedure, the principle of good faith, and the principle of res judicata, etc.’85

2.67 This opinion was expressly endorsed by Judge Anzilotti in his dissenting opinion

in the Chorzów Factory (Interpretation) case in 1927:

[I]‌t appears to me that if there be a case in which it is legitimate to have recourse, in the absence of conventions and custom, to ‘general principles of law recognized by civilized nations’, mentioned in No. 3 of Article 38 of the Statute, that case is assuredly the present one. Not without reason was the binding effect of res judicata expressly mentioned by the Committee of Jurists entrusted with the preparation of a plan for the establishment of a Permanent Court of International Justice, amongst the principles included in the above-​mentioned article.86

83  For more details on this project, see the European Law Institute’s website at http://​w ww. europeanlawinstitute.eu/​projects/​current-​projects-​c ontd/​a rticle/​f rom-​t ransnational-​principles-​ to-​european-​rules-​of-​civil-​procedure/​?tx_​ttnews%5BbackPid%5D=179508&cHash=f55b9b037 51e4ae4f928b654d7329d96. 84  See, e.g., Iain Scobbie, Res Judicata, Precedent and the International Court:  A  Preliminary Sketch, 20 Australian Year Book of International Law 299 (1999); August Reinisch, The Use and Limits of Res Judicata and Lis Pendens as Procedural Tools to Avoid Conflicting Dispute Settlement Outcomes, 3(1) Law and Practice of International Courts and Tribunals 37, 44 (2004); Bin Cheng, General Principles of Law as Applied in International Courts and Tribunals (1953, repr. 2006), p. 336; Bernard Hanotiau, Complex Arbitrations (2005), p. 239; Hermann Mosler, General Principles of Law, in Encyclopedia of Public International Law, Vol. 2 (1999), p. 522; Ian Brownlie, Principles of Public International Law (6th ed. 2003), p. 18; Sir Hersch Lauterpacht, The Development of International Law by the International Court (1958), pp. 325 et seq. 85  Citation reported in Johan G. Lammers, General Principles of Law Recognized by Civilized Nations, in Essays on the Development of the International Legal Order (Frits Kalshoven, Pieter Jan Kuyper, and Johan G. Lammers ed., 1980), p. 59. 86 PCIJ, Interpretation of Judgments Nos 7 and 8 (The Chorzów Factory), Dissenting Opinion by M. Anzilotti, Ser. A., No. 13, p. 27. See also the advisory opinion of the ICJ of 13 July 1954

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B.  Public International Law More recently, some scholars have referred to the doctrine of res judicata 2.68 as a rule of customary international law. This was explained by Shany in the following terms: The legally binding nature of the [res judicata] rule can be attributed to the centuries-​old practice of attributing a ‘final and binding’ effect to arbitral awards and other international judicial decisions and to the practice of recognizing the validity of judgments as manifested in numerous international instruments, including the constitutive instruments of most major international courts and tribunals. Furthermore, one can identify a general tendency on the part of states to comply with judicial decisions (which has sometimes been described as a ‘culture of compliance’) or at least not to openly challenge them. The existence of such widespread practice and concomitant sense of legal obligation has been noted in the writing of jurists and in a number of judicial decisions. All of these are strong indications that the two conditions required for conferring the status of an international custom upon the res judicata rule—​extensive and consistent practice over time and opinio juris—​have been satisfied.87

Therefore, either by virtue of customary international law or general principles 2.69 of law, the doctrine of res judicata is a binding rule of public international law. 88 This means that it can be applied by international courts and tribunals even in the absence of express wording, unless the intent to negate the application of the rule is clearly expressed. 89 The doctrine of res judicata has been repeatedly applied by various international courts and tribunals, 90 including

on The Effect of Awards of Compensation Made by the United Nations Administrative Tribunal where the ICJ referred to the res judicata doctrine as a ‘well-​e stablished and generally recognized principle of law’ (ICJ Reports 1954, p. 53). In Waste Management Inc. v Mexico (Mexico’s Preliminary Objection), the ICSID tribunal stated: ‘There is no doubt that res judicata is a principle of international law, and even a general principle of law within the meaning of Article 38(1)(c) of the Statute of the International Court of Justice’ (ILM, Vol. 41 (2002), pp. 1315 et seq., para. 39). In the Trail Smelter Arbitration, the arbitral tribunal stated: ‘[t]‌h at the sanctity of res judicata attaches to a final decision of an international tribunal is an essential and settled rule of international law’ (Trail Smelter Case, 11 March 1941, RIAA, Vol. 3, p. 1950). In the Laguna del Desierto Arbitration the arbitral tribunal noted: ‘A judgment having the authority of res judicata is judicially binding on the parties to the dispute. This is a fundamental principle of the law of nations repeatedly invoked in the jurisprudence, which regards the authority of res judicata as a universal and absolute principle of international law’ (Dispute Concerning the Course of the Frontier Between BP 62 and Mount Fitzroy (Argentina v Chile), 21 October 1994, ILR, Vol. 113, p. 43). 87  Yuval Shany, The Competing Jurisdictions of International Courts and Tribunals (2003), p. 245 (cited as Competing Jurisdictions), p. 245. See also William S. Dodge, National Courts and International Arbitration:  Exhaustion of Remedies and Res Judicata Under Chapter Eleven of NAFTA, 23 Hastings International & Comparative Law Review 357, 365 (2000); Leonardo Nemer Caldeira Brant, L’autorité de la chose jugée en droit international public (2003), pp. 29 et seq. 88  Shany, Competing Jurisdictions, p. 246; International Law Association (ILA), Interim Report on Res Judicata and Arbitration, Berlin Conference (2004), p. 18, available at http://​w ww. ila-​hq.org and in 25(1) Arbitration International 35 (2009). 89  Shany, Competing Jurisdictions, p. 254. 90  See, in particular, ibid., pp. 247 et seq.

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Chapter 2:  Res Judicata in International Law the PCIJ, 91 the ICJ, 92 the ECJ, 93 and several international arbitral tribunals applying international law.94 91  See, e.g., PCIJ, The ‘Société Commerciale de Belgique’, 15 June 1939, Ser. A/​B., No. 78, pp. 160 et seq. 92  See, e.g., ICJ, Case Concerning the Arbitral Award Made by the King of Spain on 23 December 1906 (Honduras v Nicaragua), 18 November 1960, ICJ Reports 1960, pp. 192 et seq.; ICJ, The Effect of Awards of Compensation Made by the United Nations Administrative Tribunal, cited at fn 86; ICJ, Request for Interpretation of the Judgment of 11 June 1998 in the Case Concerning the Land and Maritime Boundary between Cameroon and Nigeria (Cameroon v Nigeria), Preliminary Objections, 25 March 1999, ICJ Reports 1999, p. 39; ICJ, Maritime Delimitation and Territorial Questions between Qatar and Bahrain (Qatar v Bahrain), Merits, Dissenting Opinion by Judge Torres Bernárdez, 16 March 2001, ICJ Reports 2001, para. 303; ICJ, Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v Serbia and Montenegro), 26 February 2007, available at http://​w ww.icj-​cij.org. 93  The ECJ has relied upon the doctrine of res judicata to declare actions inadmissible in cases that have already been decided in previous judgments although the ECJ’s Rules of Procedure do not expressly refer to the doctrine of res judicata. See, e.g., ECJ, Mrs Emilia Gualco (née Barge) v High Authority of the European Coal and Steel Community, Case 14/​64, 1965 ECR, p. 51; ECJ, Hoogovens Groep v Commission, Cases 172 and 226/​83, 1985 ECR, p. 2831; ECJ, France v Parliament, Cases 358/​85 and 51/​86, 1988 ECR, p. 4846, 4849–​50. See also ECJ, Jean Reynier and Piero Erba v Commission of the European Economic Community, Cases 79/​63 and 82/​63, 9 July 1964, 1964 ECR, p. 259 (‘The force of res judicata prevents rights confirmed by a judgment of the Court from being disputed anew. Since the Community is a single entity, it is inconceivable that judgment of the court which has the force of res judicata with regard to an institution—​in this case the Commission—​ should not have the same force with regard to the Community as a whole’); ECJ, Rosemarie Kapferer v Schlank & Schick, GMBH, Case C-​243/​04, 16 March 2006, 2006 ECR, p. I-​2585, para. 20 (‘In that regard, attention should be drawn to the importance, both for the Community legal order and national legal systems, of the principle of res judicata. In order to ensure both stability of the law and legal relations and the sound administration of justice, it is important that judicial decisions which have become definitive after all rights of appeal have been exhausted or after expiry of the time-​limits provided for in that connection can no longer be called into question’); ECJ, Gerhard Köbler v Republik Österreich, Case C-​224/​01, 30 September 2003, 2003 ECR, p. I-​10239, para. 38. On the scope of the res judicata effect of ECJ judgments, see, e.g., ECJ, Italian Republic v Commission of the European Communities, Case C-​281/​89, 19 February 1991, 1991 ECR, p. I-​00347, para. 14 (‘It must be observed that the principle of res judicata extends only to the matters of fact and law actually or necessarily settled by a judicial decision’); ECJ, Gothaer Allgemeine Versicherung AG et al. v Samskip GmbH, para. 40, with reference to ECJ, P & O European Ferries (Vizcaya) and Diputación Foral de Vizcaya v Commission, and ECJ, Artegodan v Commission (‘[T]‌he concept of res judicata under European Union law does not attach only to the operative part of the judgment in question, but also attaches to the ratio decidendi of that judgment, which provides the necessary underpinning for the operative part and is inseparable from it’). On the requirements for the application of the res judicata doctrine, see, e.g., ECJ, France v Monsanto Company and Commission of the European Communities, Case 248/​99P, 8 January 2002, 2002 ECR, p. I-​1, para. 37 (‘the objection of res judicata presupposes that the action alleged to be inadmissible and the action culminating in the decision having the force of res judicata are between the same parties, have the same subject matter and are based on the same cause of action’). See also Cyril Nourissat, L’autorité de la chose jugée des décisions de la CJCE, 8 Procédures, August 2007, Etude 20; Michael Reiling, Streitgegenstand und Einrede der ‘res judicata’ im Direktklageverfahren vor den Gemeinschaftsgerichten, 5 Europäische Zeitschrift für Wirtschaftsrecht 136 (2002); K.P.E. Lasok, The European Court of Justice—​Practice and Procedure (2nd ed. 1994), pp. 219 et seq. 94  See, e.g., PCA, Pious Fund of the California (United States v Mexico), 14 October 1902, The Hague Court Reports, p. 5; PCA, Trail Smelter Case, cited at fn 86; PCA, Laguna del Desierto Arbitration, cited at fn 86; Waste Management Inc v Mexico (Mexico’s Preliminary Objection), cited at fn 86; Amco Asia Corp. v Indonesia (Resubmission: Jurisdiction), ILM, Vol. 27 (1988), pp. 1281 et seq.

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B.  Public International Law There is an immediate foundation for the doctrine of res judicata in the ICJ Statute. 2.70 Articles 59 and 60 provide: Article 59 The decision of the Court has no binding force except between the parties and in respect of that particular case. Article 60 The judgment is final and without appeal. In the event of dispute as to the meaning or scope of the judgment, the Court shall construe it upon the request of any party.

Articles 59 and 60 are supplemented by Article 94(2) of the Rules of the ICJ accord- 2.71 ing to which ‘[t]‌he judgment shall be read at a public sitting of the Court and shall become binding on the parties on the day of the reading. These provisions cover the generally acknowledged characteristics and effects of a 2.72 res judicata. Article 59 expresses the relative authority of a judicial decision, extending only to the parties to the dispute. Article 60 determines the force or formal value of the res judicata; that is, the particular effectiveness attached to it as definitive and not subject to review.95 Other international instruments, such as the Statutes of the International Tribunal 2.73 for the Law of the Sea (ITLOS) or the European Convention on Human Rights (ECHR), also contain similar provisions on res judicata.96 The res judicata provisions contained in international instruments have been inter- 2.74 preted and supplemented by international courts and tribunals drawing on general international law.97 95  Philippe Couvreur, The Effectiveness of the International Court of Justice in the Peaceful Settlement of International Disputes, in The International Court of Justice—​Its Future Role After Fifty Years (A.S. Muller, D, Raič, and J.M. Thuránszky ed., 1997), p. 100; Shabtai Rosenne, The Law and Practice of the International Court 1920–​2005, Vol. 3—​Procedure (4th ed. 2006), para. III.391, p. 1599 (cited as Vol. 3). 96  Article 33 of the ITLOS Statute: ‘(1) The decision of the Tribunal is final and shall be complied with by all the parties to the dispute. (2) The decision shall have no binding force except between the parties in respect of that particular dispute. (3) In the event of dispute as to the meaning or scope of the decision, the Tribunal shall construe it upon the request of any party’; Article 35(2)(b) of the ECHR: ‘the [European] Court [of Human Rights] shall not deal with any application submitted under Article 34 that . . . is substantially the same as a matter that has already been examined by the Court or has already been submitted to another procedure or international investigation or settlement and contains no relevant new information’; and Article 46(1) of the ECHR: ‘The High Contracting Parties undertake to abide by the final judgment of the Court in any case to which they are parties’ (on the res judicata effect of judgments of the European Court of Human Rights, see, e.g., Natalie Fricéro, L’autorité de chose jugée des decisions de la CEDH, 8 Procédures, August 2007, Etude 21. For further examples, see Chester Brown, A Common Law of International Adjudication (2007), p. 154, n. 4. 97  As regards Articles 59 and 60 of the ICJ Statute, see Scobbie, p. 304. See also dissenting opinion of Judge Anzilotti in the Chorzów Factory (Interpretation) case, cited at fn 86. Judge Anzilotti clearly based his interpretation of Articles 59 and 60 on general principles, referring to ‘a well-​k nown principle’ (p. 25) and ‘a generally accepted rule which is derived from the very conception of res judicata’ (p. 26). Judge Anzilotti further expressly stated that he ‘relied upon principles obtaining in civil

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Chapter 2:  Res Judicata in International Law 2.75 The public international law doctrine of res judicata is generally similar to the doc-

trine in domestic laws. Therefore, the following analysis will begin by introducing the constituent elements of a res judicata in public international law (1.), and then examine the effects of a res judicata (2.). Finally, the requirements that must be met for the res judicata doctrine to apply will be determined (3.). The main focus of the analysis will be on the systems of the PCIJ and the ICJ.98 1. Constituent elements

2.76 A res judicata in public international law is a final judgment rendered by an inter-

national court or tribunal of a judicial nature and of competent jurisdiction.

a. A judgment 2.77 Article 60 of the ICJ Statute provides that judgments of the ICJ are final and without appeal. A judgment within the meaning of Article 60 is a decision that brings the dispute to an end. It is the last formal step in the resolution of the dispute before the ICJ.99 2.78 By contrast, Article 59 of the ICJ Statute uses the word ‘decision’ instead of ‘judg-

ment’. These words have the same meaning for the purposes of res judicata;100 ‘judgments’ and ‘decisions’ within the meaning of Articles 59 and 60 may become res judicata.

2.79 Any judgment of the ICJ, independently of its nature, may become res judicata.101

This includes purely declaratory judgments.102

2.80 By contrast, orders or advisory opinions may not become res judicata. Article 48

of the ICJ Statute gives the Court the general power to make orders for the conduct of the case.103 In the Free Zones case, the PCIJ held that ‘in contradistinction procedure’ as Article 59 ‘clearly refers to a traditional and generally accepted theory in regard to the material limits of res judicata’ (p. 27). 98  For cases in which other permanent international courts and tribunals have addressed the issue of res judicata, see Shany, Competing Jurisdictions, pp. 251 et seq. 99  Rosenne, Vol. 3, para. III.391, p. 1598. 100  Ibid., para. III.391, p. 1603. 101  Brant, p. 68. 102  See PCIJ, Case Concerning Certain German Interests in Polish Upper Silesia (the Merits), Ser. A, No. 7, p. 19. See also PCIJ, Interpretation of Judgments Nos 7 and 8 (The Chorzów Factory), cited at fn 86, p. 20 (‘the intention of [a declaratory judgment] is to ensure recognition of a situation at law, once and for all and with binding force as between the Parties; so that the legal position thus established cannot again be called in question in so far as the legal effects ensuing there from are concerned’); ICJ, Case concerning the Northern Cameroons (Cameroon v United Kingdom), Preliminary Objections, 2 December 1963, Dissenting Opinion of Judge Ben a Don, ICJ Reports 1963, p. 196 (‘[A declaratory judgment] puts a final end to the dispute with force of res judicata; it is binding on the Parties, which can never again raise the same question before the Court’). 103  Article 48 of the ICJ Statute provides: ‘The Court shall make orders for the conduct of the case, shall decide the form and time in which each party must conclude its arguments, and make all arrangements connected with the taking of evidence’.

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B.  Public International Law to judgments . . ., orders made by the Court . . . have no “binding” force (Article 59 of the Statute) or “final” effect (Article 60 of the Statute) in deciding the dispute brought by the Parties before the Court’.104 The PCIJ’s ruling in the Free Zones case must, however, be limited to interlocu- 2.81 tory decisions other than provisional measures rendered pursuant to Article 41 of the ICJ Statute. This means that only interlocutory decisions made to regulate the conduct of the parties during the proceedings lack binding force and final effect. In the LaGrand judgment the ICJ unambiguously stated that ‘orders on provi- 2.82 sional measures under Article 41 have binding effect’.105 The ICJ President Gilbert Guillaume corroborated the Court’s ruling in his speech to the General Assembly when presenting the ICJ report 2000/​2001: [F]‌or the first time in its history, the Court took the opportunity to give a clear ruling on the effect of provisional measures . . . pursuant to Article 41 of its Statute. . . . Thus there is no longer any room for doubt: the provisional measures indicated as a matter of urgency by the Court for the purpose of safeguarding the rights of the parties are binding on them.106

Advisory opinions do not qualify as res judicata.107 However, they have been 2.83 invoked in subsequent cases where the same point has arisen for decision.108 For instance, in the Certain German Interests in Polish Upper Silesia (Merits) case 109 the PCIJ had to consider the weight to be given to the advisory opinion concerning German Settlers in Poland.110 Furthermore, in the preliminary objections phase of the South West Africa cases111 the ICJ had to consider the effect of the advisory opinion concerning the International Status of South West Africa.112

104 PCIJ, Case of the Free Zones of Upper Savoy and the District of Gex, 1929 PCIJ, Ser. A, No. 22. p. 13. 105 ICJ, LaGrand Case (Germany v United States of America), 27 June 2001, ICJ Reports 2001, para. 109. 106  Speech by President Gilbert Guillaume, 30 October 2001, A/​56/​PV.32, pp. 6 et seq. 107 ICJ, Interpretation of Peace Treaties with Bulgaria, Hungary and Romania, Advisory Opinion, 30 March 1950, ICJ Reports 1950, p. 71 (‘The Court’s reply is only of an advisory character: as such, it has no binding force’); Brant, pp. 41 and 69; Constanze Schulte, Compliance with Decisions of the International Court of Justice (2004), pp. 14 et seq. 108  Scobbie, p. 312. See also Étienne Grisel, Res judicata: l’autorité de la chose jugée en droit international, Mélanges Georges Perrin (1984), pp. 143 et seq. 109  Cited at fn 102. 110  Certain Questions Relating to Settlers of German Origin in the Territory ceded by Germany to Poland, Advisory Opinion, 10 September 1923, PCIJ, Ser. B, No. 6. 111 ICJ, South West Africa Cases (Ethiopia and Liberia v South Africa), Preliminary Objections, 21 December 1962, 1962 ICJ Reports, p. 319. 112 ICJ, International Status of South West Africa, Advisory Opinion, 11 July 1950, 1950 ICJ Reports, p. 128.

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Chapter 2:  Res Judicata in International Law b. A judicial court or tribunal 2.84 To qualify as a res judicata a judgment must be rendered by a judicial court or tribunal. This follows from the ICJ’s advisory opinion on the Effects of Awards of Compensation Made by the United Nations Administrative Tribunal. The ICJ had to decide whether the UN General Assembly was bound by an award of compensation made by the UN Administrative Tribunal. The ICJ held that because the functions of the UN Administrative Tribunal were of a judicial and not an advisory nature, its judgments were res judicata.113 c. A tribunal of competent jurisdiction 2.85 It has been submitted that only a judgment rendered by a tribunal of competent jurisdiction may become res judicata,114 as a lack or excess of competence is a cause of nullity of a final judgment.115 2.86 International courts and tribunals generally have jurisdiction only over matters

submitted to them for decision by the parties.116 In the advisory opinion concerning the Polish Postal Service in Danzig, the PCIJ had to decide whether there was already in force between the parties a binding decision that restricted the Polish postal service to operations within its premises located at Heveliusplatz and confined the use of the Polish postal service to Polish authorities and offices. The PCIJ held that there was no such prior binding decision because the issues in question had not been submitted to the High Commissioner, who had rendered the prior decision, and the instruments on which the jurisdiction of the High Commissioner was based gave him no authority to render a final and binding decision on matters not submitted to him.117

d. A final decision 2.87 To become res judicata a judgment must be final and without appeal.118 The matter must be ‘finally disposed of for good’.119 The judgment becomes res judicata on the day of the public reading.120

113  ICJ, Advisory Opinion on The Effect of Awards of Compensation Made by the United Nations Administrative Tribunal, cited at fn 102, p. 53 (‘According to a well-​established and generally recognized principle of law, a judgment rendered by such a judicial body is res judicata and has binding force between the parties to the dispute’). 114  Cheng, p. 337. 115  Ibid., p. 357. However, it will be seen at paras 2.90 and 2.91 that the ICJ has held that positive rulings on jurisdiction may have res judicata effect, which should usually bar the reconsideration of the issue of jurisdiction, even if the decision was wrong. 116  Brant, pp. 130 and 133. 117 PCIJ, Polish Postal Service in Danzig, Advisory Opinion, 16 May 1925, Ser. B, No. 11, p. 26. 118  Article 60 of the ICJ Statute. 119 ICJ, Barcelona Traction Light and Power Company, Ltd (New Application) (Belgium v Spain) (Preliminary Objections), 1964 ICJ Reports, p. 20. 120  Article 94(2) of the ICJ Rules.

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B.  Public International Law e. A judgment on the merits? The res judicata effect of a judgment is not strictly limited to judgments which finally de- 2.88 termine the merits of a claim after proceedings on the substantive issues of the dispute. However, a judgment that does not deal with the merits of the claim does not become res judicata as to those merits.121 By contrast, if a tribunal, when deciding on its jurisdiction, is required to determine an issue touching on the merits, the tribunal’s determination of this issue will be res judicata between the parties in ensuing proceedings on the merits.122 In the Corfu Channel (Compensation) case, the ICJ held that the decision by which 2.89 an international court or tribunal accepts its jurisdiction is final and binding and acquires the force of res judicata:123 [T]‌he Albanian Government disputed the jurisdiction of the Court with regard to the assessment of damages. The Court may confine itself to stating that this jurisdiction was established by its Judgment of April 9th, 1949; that, in accordance with the Statute (Article 60) . . . that Judgment is final and without appeal, and that therefore the matter is res judicata.124

This was confirmed by the ICJ in the case concerning the Application of the 2.90 Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v Serbia and Montenegro): The Court will however observe that the decision on questions of jurisdiction, pursuant to Article 36, paragraph 6, of the Statute, is given by judgment, and Article 60 of the Statute provides that ‘[t]‌he judgment is final and without appeal’, without distinguishing between judgments on jurisdiction and admissibility, and judgments on the merits.125

A decision by which an international court or tribunal merely denies its jurisdic- 2.91 tion generally does not prevent a party from submitting the same dispute to another tribunal which may have jurisdiction.126 f. The scope of res judicata The question arises as to whether the res judicata effect of a judgment in public 2.92 international law extends only to its dispositif or also to some of its reasons. In Amco Asia Corp v Indonesia (Resubmission: Jurisdiction), the tribunal held: It is by no means clear that the basic trend in international law is to accept reasoning . . . as part of what constitutes res judicata.

121  In the Trail Smelter Arbitration the arbitral tribunal held: ‘a decision merely denying jurisdiction can never constitute res judicata as regards the merits of the case at issue’ (cited at fn 86, p. 1953). 122  Hanotiau, para. 520. 123  Shabtai Rosenne, The Law and Practice of the International Court 1920–​2005, Vol. II—​Jurisdiction (4th ed. 2006), para. II.214, p. 804. 124 ICJ, The Corfu Channel Case (Compensation) (United Kingdom of Great Britain and Northern Ireland v People’s Republic of Albania), 15 December 1949, 1949 ICJ Reports, p. 248. 125 ICJ, Application of the Convention on the Prevention and Punishment of the Crime of Genocide, cited at fn 92, para. 117, pp. 44 et seq. 126  Cheng, pp. 337 et seq.

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Chapter 2:  Res Judicata in International Law . . . So far as international law practice is concerned, authors have not been able to show a clear trend towards the acceptance of reasons as res judicata.127 2.93 In his dissenting opinion in the Chorzów Factory (Interpretation) case Judge

Anzilotti contended that only the dispositif of a judgment becomes res judicata. Reasons may be relied upon only to interpret the dispositif and to specify the meaning and scope of the court’s decision: [I]‌t is certain that the binding effect attaches only to the operative part of the judgment and not to the statement of reasons. The grounds of a judgment are simply logical arguments, the aim of which is to lead up to the formulation of what the law is in the case in question. And for this purpose there is no need to distinguish between essential and non-​essential grounds, a more or less arbitrary distinction which rests on no solid basis and which can only be regarded as an inaccurate way of expressing the different degree of importance which the various grounds of a judgment may possess for the interpretation of its operative part. When I say that only the terms of a judgment are binding, I do not mean that only what is actually written in the operative part constitutes the Court’s decision. On the contrary, it is certain that it is almost always necessary to refer to the statement of reasons to understand clearly the operative part and above all to ascertain the causa petendi. But, at all events, it is the operative part which contains the Court’s binding decision and which, consequently, may form the subject of a request for an interpretation.128

2.94 However, in recent years a wider approach appears to be preferred, attributing

res judicata effects to reasons which constitute the necessary foundation of the dispositif.129 In the Channel Arbitration between the United Kingdom and France, the Permanent Court of Arbitration (PCA) held: The Court of Arbitration considered it to be well settled that in international proceedings the authority of res judicata, that is the binding force of the decision,

  Amco Asia Corp. v Indonesia (Resubmission: Jurisdiction), cited at fn 94, paras 32 and 38.  PCIJ, Interpretation of Judgments Nos 7 and 8 (The Chorzów Factory), Dissenting Opinion by M. Anzilotti, cited at fn 86, p. 24. 129  See D.W. Bowett, Res Judicata and the Limits of Rectification of Decisions by International Tribunals, 8 African Journal of International and Comparative Law 577 (1996); Abdelhamid El Ouali, Effets juridiques de la sentence internationale (1984), pp. 74 et seq.; ILA, Interim Report, p. 22; Cheng, pp. 348 et seq.; Christoph Schreuer and August Reinisch, Legal Opinion prepared for UNCITRAL Arbitration Proceedings, CME Czech Republic BV (The Netherlands) v The Czech Republic, The Partial Award of September 13, 2001, paras 67 et seq.; Brant, p. 172; Shany, Competing Jurisdictions, p. 28 with reference to ECJ, Italian Republic v Commission of the European Communities, cited at fn 93, para. 14; ECJ, Lenz v Commission, Case C-​277/​95, 28 November 1996, 1996 ECR, p. I-​6109, 6125; ECJ, Limburgse Vinyl Maatschappij NV v Commission, Cases T-​305–​7, 313–​16, 318, 325, 328–​29, and 335/​94, 1999 ECR, p. II-​931, 972; ECJ, Asteris v Commission, Cases 97, 99, 193 and 215/​86, 1988 ECR, p. 2181, 2208; ECJ, Gothaer Allgemeine Versicherung AG et al. v Samskip GmbH, para. 40. See also ICJ, Territorial and Maritime Dispute (Nicaragua v Colombia), Application by Honduras for Permission to Intervene, 4 May 2011, paras 66–​70. This case involved a dispute between Nicaragua and Colombia consisting of ‘a group of related legal issues subsisting’ between the two states ‘concerning title to territory and 127

128

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B.  Public International Law attaches in principle only to the provisions of its dispositif and not to its reasoning. In the opinion of the Court, it is equally clear that, having regard to the close links that exist between the reasoning of a decision and the provisions of its dispositif, recourse may in principle be had to the reasoning in order to elucidate the meaning and scope of the dispositif. . . . Furthermore, if findings in the reasoning constitute a condition essential to the decision in the dispositif, these findings are to be considered as included amongst the points settled with binding force in the decision.130

While the PCA first affirmed the rule that res judicata effects attach only to a deci- 2.95 sion’s dispositif, it clearly conferred res judicata effect to reasons which are essential to the decision’s dispositif. It must be added, however, that the dispositif in question was essentially a list of coordinates defining the boundary. The dispositif merely spelt out the principles of law which constituted the true res judicata and which were contained in the reasoning of the PCA.131 In the Channel Arbitration the PCA also held that in the case of contradiction 2.96 between reasons constituting the necessary foundation of the dispositif and the dispositif itself, the statement that best expresses the arbitral tribunal’s intention must

maritime delimination’ in the western Caribbean. On 10 June 2010, Honduras filed an application for permission to intervene in the case. The question arose whether Honduras had an interest of a legal nature which could be affected by the Court’s decision in the main proceedings between Nicaragua and Colombia. To answer this question, the Court had to determine whether and to what extent the prior 2007 Judgment rendered by the ICJ in the Territorial and Maritime Dispute case between Nicaragua and Honduras had already finally determined certain rights of Honduras with respect to the ‘delimitation area’ in the Caribbean Sea now in dispute between Nicaragua and Colombia. According to Nicaragua, the res judicata effect of the 2007 Judgment prevented Honduras from intervening in the proceedings between Nicaragua and Colombia. In particular, Honduras was precluded from reopening, under the cover of the intervention, delimitation issues already decided by the 2007 Judgment. Honduras argued that the 2007 Judgment had not finally determined the entire Caribbean Sea boundary between Nicaragua and Honduras and some issues were still to be resolved with respect to the respective rights of Honduras, Colombia, and Nicaragua in the area. In particular, the determinations made in the reasoning of the 2007 Judgment were not covered by that Judgment’s res judicata effect, which attaches only to its dispositif. Even though the ICJ does not state as much in express terms, it appears to suggest that reasons which constitute ‘an essential step leading to the dispositif of [the] judgment’ are covered by the judgment’s res judicata effect. The ICJ confirmed that a judgment’s operative part ‘indisputably has the force of res judicata’. It then added that the reasoning in question in the 2007 Judgment ‘was an essential step leading to the dispositif of that Judgment’ and ‘[w]‌ithout such reasoning, it may be difficult to understand why the Court did not fix an endpoint in its decision. With this reasoning, the decision made by the Court in its 2007 Judgment leaves no room for any alternative interpretation’. See also ICSID, RSM Production Corporation and others v Grenada, cited at fn 145, para. 7.1.2, where the tribunal held that the doctrine of collateral estoppel is now established as a general principle of law applicable by international courts and tribunals. 130 PCA, Case Concerning the Delimitation of the Continental Shelf Between the United Kingdom of Great Britain and Northern Ireland and the French Republic (Interpretation of the Decision of 30 June 1977), 14 March 1978, RIAA, Vol. 18, para. 28, p. 295. This is also in line with the decision of the Franco-​Venezuelan Mixed Claims Commission (1902) in Company General of the Orinoco Case, 10 RIAA, p. 276 (‘Every matter and point distinctly in issue in said cause, and which was directly based upon and determined in said decree, and which was its ground and basis, is concluded by the judgment’). 131  Bowett, p. 578.

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Chapter 2:  Res Judicata in International Law prevail.132 This further confirms the allegation that reasons which are the necessary foundation of a decision have res judicata effect.133 2.97 The Iran–​US Claims Tribunal seems to have gone even further, holding that a

decision’s reasons have res judicata effect where ‘those reasons are relevant to the actual decision on the question at issue’.134

2.98 Moreover, in the award of 25 August 2014 rendered in the case Apotex Holdings

Inc., Apotex Inc. v United States of America, the tribunal, constituted under Chapter Eleven of the North American Free Trade Agreement (NAFTA) and acting under Additional Facility Rules of the International Centre for Settlement of Investment Disputes (ICSID), examined the question whether the doctrine of res judicata in international law includes the broader concept of or akin to issue estoppel.135 It found that this was the case, identifying instances where such a broad concept had been applied by international courts and tribunals.136 In particular, it found that ‘where there is a question regarding the extent of a prior decision or award’s res judicata effect, international tribunals regularly look to the prior tribunal’s reasons and indeed also to the parties’ arguments, in order to determine the scope of what was finally decided in that earlier proceeding’.137

2. Effects 2.99 In the Société Commerciale de Belgique case the PCIJ said: ‘Recognition of an award

as res judicata means nothing else than recognition of the fact that the terms of that award are definitive and obligatory’.138

2.100 From this it has been inferred that a res judicata in public international law has

both a negative and a positive effect. The negative effect is that which is res judicata is definitive. The judgment is final and the same matter may not be disputed again between the same parties.139 The positive effect is that which is res judicata is obligatory. The judgment is binding upon the parties and they must execute it as it stands.140 132 PCA, Case Concerning the Delimitation of the Continental Shelf Between the United Kingdom of Great Britain and Northern Ireland and the French Republic (Interpretation of the Decision of 30 June 1977), cited at fn 130, para. 36, p. 299. 133  See Elisabeth Zoller, Observations sur la révision et l’ interprétation des sentences arbitrales, 24 Annuaire Français de Droit International 327, 344 (1978); Brant, pp. 129 and 175. 134  Iran–​US Claims Tribunal, Partial Award No. 601-​A 3/​A8/​A9/​A14/​B61-​F T Full Tribunal, 17 July 2009, para. 115. 135  ICSID Case ARB(AF)/​12/​1 in Apotex Holdings Inc., Apotex Inc. v United States of America, Award of 25 August 2014, para. 7.17. 136  Ibid., paras 7.18 et seq. 137  Ibid., para. 7.30. 138  See PCIJ, Société Commerciale de Belgique, 15 June 1939, cited at fn 91, p. 175. 139  Cheng, p. 337; Hanotiau, para. 516. 140 PCIJ, Société Commerciale de Belgique, 15 June 1939, cited at fn 91, p. 176. See also Reinisch, p. 45.

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B.  Public International Law The precise preclusive nature of decisions rendered by international courts and tribu- 2.101 nals is not clear.141 It is accepted that the public international law doctrine of res judicata applies only with regard to issues that were actually determined by the international court or tribunal. No preclusive effect attaches to issues raised in the proceedings but glossed over by the decision.142 It is also clear that the public international law doctrine of res judicata prevents the relitigation of claims. It is less clear, however, whether the doctrine also prevents the relitigation of issues. International courts and tribunals do not ordinarily deal with issue preclusion explicitly, using only the terminology of res judicata.143 However, it now appears widely accepted that findings contained in the reasoning 2.102 and constituting the necessary foundation of a judgment may have res judicata effects.144 It may therefore be argued that issue preclusion exists in public international law to the extent that the res judicata effect of a judgment covers reasons.145 Finally, international law recognizes a doctrine of abuse of process, but it is rarely 2.103 applied.146 According to Lowe, the doctrine of abuse of process in international public law: indicates that a tribunal should decline to exercise jurisdiction in a range of circumstances where the action is rendered vexatious. These include cases where the

  Shany, Competing Jurisdictions, p. 253.   Ibid., pp. 27 et seq. 143  According to Lowe, while only using the terminology of res judicata, it seems that international courts and tribunals also apply issue preclusion principles to final determinations of fact and law by previous tribunals (Vaughan Lowe, Res Judicata and the Rule of Law in International Arbitration, 8 African Journal of International Law 38, 42 (1996)). In this sense, see also the Award in ICSID Case ARB(AF)/​12/​1 in Apotex Holdings Inc., Apotex Inc. v United States of America, Award of 25 August 2014, paras 7.18 et seq. In this Award, the tribunal stated that ‘[i]‌t is clear that past international tribunals have applied forms of issue estoppel, without necessarily using the term’ (para. 7.18). It then identified past cases where the issue estoppel doctrine had been applied. 144  See paras 2.93 et seq. 145  See, in particular, the Award in ICSID Case ARB(AF)/​12/​1 in Apotex Holdings Inc., Apotex Inc. v United States of America, Award of 25 August 2014, paras 7.18 et seq. Moreover, in December 2010 the ICSID tribunal in RSM Production Corporation and others v Grenada held that ‘[i]‌t is also not disputed that the doctrine of collateral estoppel is now well established as a general principle of law applicable in the international courts and tribunals such as this one’ (ICSID Case No. ARB/​10/​6, Award, 10 December 2010, para. 7.1.2.). It is, however, difficult to subscribe to this statement. In support of this statement, the ICSID tribunal referred to para. 30 of Amco Asia Corp. v Republic of Indonesia (Resubmission: Jurisdiction), where the tribunal cited the following passage from the Company General of the Orinoco Case: ‘The general principle announced in numerous cases is that a right, question or fact distinctly put in issue and distinctly determined by a court of competent jurisdiction as a ground for recovery, cannot be disputed’ (Hague Court Reports (1916), 226; RIAA, Vol. X, p. 276). The French–​ Venezuelan Commission itself quoted this passage from the US Supreme Court’s decision in Southern Pacific R. Co. v United States (168 US 1 (1897)) (also referred to by the ICSID tribunal). However, as was seen above, in paras 32 and 38 of Amco Asia Corp. v Republic of Indonesia (Resubmission: Jurisdiction) the tribunal expressly held that it is by no means an accepted principle of international law that the res judicata effect of a judgment extends to its reasons (see para. 2.93). See also Norah Gallagher, Parallel Proceedings, Res Judicata and Lis Pendens: Problems and Possible Solutions, in Pervasive Problems in International Arbitration (Loukas A. Mistelis and Julian D.M. Lew QC ed., 2006), para. 17-​15. 146 ILA, Interim Report, p.  22; Vaughan Lowe, Overlapping Jurisdiction in International Tribunals, 20 Australian Year Book of International Law, 191, 202 (1999). 141

142

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Chapter 2:  Res Judicata in International Law purpose of the litigation is to harass the defendant, or the claim is frivolous or manifestly groundless, or the claim is one which could and should have been raised in earlier proceedings. This doctrine arises not from the fact of multiple proceedings but rather from the inherently vexatious nature of the particular proceedings in the forum.147 2.104 There appears to be no case where the ICJ has declared inadmissible a claim on

the basis of the abuse of process doctrine, in particular on the express ground that the claim constituted an abuse of the Court’s procedures.148 However, there are investment treaty arbitrations where ICSID tribunals have found claims to constitute an abuse of process. For example, it seems that this was done for the first time in Phoenix Action Ltd v The Czech Republic, where the tribunal held that it must ‘prevent an abuse of the system of international investment protection under the ICSID Convention, in ensuring that only investments that are made in compliance with the international principle of good faith and do not attempt to misuse the system are protected’.149

3. Requirements for the application of the doctrine of res judicata 2.105 In public international law the doctrine of res judicata applies only where there

is identity of parties and questions at issue.150 The requirement of identity of the question at issue has sometimes been subdivided into the object and the cause of the claim.151 In the Chorzów Factory (Interpretation) case, Judge Anzilotti, interpreting Article 59 of the ICJ Statute, said: ‘[W]‌e have here the three traditional elements for identification, persona, petitum, causa petenti, for it is clear that “that particular case” (le cas qui a été decidé) covers both the object and the grounds of the claim.’152

 Lowe, Overlapping Jurisdiction in International Tribunals, pp. 202–​3.   John Gaffney, Abuse of Process in Investment Treaty Arbitration, 11 Journal of World Investment and Trade 515, 521 (2010). 149  Phoenix Action Ltd v The Czech Republic, ICSID Case No. ARB 06/​5, Award, 15 April 2009, para. 113. For a discussion of this and other cases that apply the abuse of process doctrine in investment treaty arbitration, see Gaffney, pp. 515 et seq.; Eric de Brabandere, ‘“Good Faith”, “Abuse of Process” and the Initiation of Investment Treaty Claims’, 3(3) Journal of International Dispute Settlement 609 (2012). 150  In the Matter of the S.S. Newchwang (Great Britain v United States), Claim No. 21, 9 December 1921, AJIL (1922), Vol. 16, p. 324 (‘It is a well established rule of law that the doctrine of res judicata applies only where there is identity of the parties and of the question at issue’). In the Pious Fund case, the PCA applied the doctrine of res judicata because there was ‘not only identity of parties to the suit, but also identity subject matter’ (PCA, Pious Fund of the California, cited at fn 94, p. 5). See also ICSID, Compañia de Aguas del Aconquija SA and Vivendi Universal SA v Argentine Republic, Decision on Jurisdiction, 14 November 2005, para. 72. 151  Instead of these two sub-​c ategories, Shany suggests that a clearer description would be that ‘identity of issues’ is met if the competing claims address the same fact pattern (transaction) and the same legal claims (Shany, Competing Jurisdictions, p. 25). 152 PCIJ, Interpretation of Judgments Nos 7 and 8 (The Chorzów Factory), Dissenting Opinion by M. Anzilotti, cited at fn 86, p. 23. 147

148

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B.  Public International Law The tribunal in the Trail Smelter Arbitration held that ‘There is no doubt that in 2.106 the present case, there is res judicata. The three traditional elements for identification: parties, object and cause are the same.’153 Accordingly, the application of the res judicata doctrine traditionally requires the 2.107 triple identity of parties, object, and cause.154 In addition, both proceedings must be conducted before international courts or tribunals: the doctrine of res judicata applies only between courts and tribunals belonging to the same legal order.155 a. Identity of parties Article 59 of the ICJ Statute expressly provides that ‘[t]‌he decision of the Court has 2.108 no binding force except between the parties . . .’.156 Likewise, the identity of parties requirement is clearly stated in almost all of the international precedents.157 The question whether there is identity of parties ultimately depends on the degree 2.109 of formality applied in ascertaining ‘identity’.158 While some international courts and tribunals have applied a strict ‘formal identity’ standard,159 others have applied the more flexible standard of ‘essentially the same parties’.160 The identity of parties requirement may lead to difficult questions, in particular 2.110 in cases of arbitration involving a state on one side and a private party on the other side. The question may arise whether the holding company of an investor operating through various subsidiaries is identical to its other corporate manifestations. It may be questioned whether a legally separate entity of a corporate group may be

  Trail Smelter Case, cited at fn 86, p. 1952.   Brown, p. 155. Certain international courts and tribunals, as well as several scholars, have questioned the accuracy of the division between petitum and causa petenti, arguing that the triple identity test should be replaced by a two-​part test of identity of parties and questions at issue. On this discussion, see, e.g., the Award in ICSID Case ARB(AF)/​12/​1 in Apotex Holdings Inc., Apotex Inc. v United States of America, Award of 25 August 2014, paras 7.15–​7.16. 155  With regard to the requirements for the application of the issue preclusion doctrine, the tribunal in RSM Production Corporation and others v Grenada held that ‘a finding concerning a right, question or fact may not be relitigated (and, thus, is binding on a subsequent tribunal), if, in a prior proceeding: (a) it was distinctly put in issue; (b) the court or tribunal actually decided it; and (c) the resolution of the question was necessary to resolving the claims before that court or tribunal’ (ICSID, RSM Production Corporation and others v Grenada, cited at fn 145, para. 7.1.1). While the parties must be identical in both proceedings, the cause and object may be different. 156  See also Article 33(2) of the ITLOS Statute; El Ouali, p. 83 with reference to other international instruments. 157  Cheng, p. 340; Reinisch, p. 55. 158  Yuval Shany, Regulating Jurisdictional Relations Between National and International Courts (2007), p. 133 (cited as Regulating Jurisdictional Relations). 159  See, e.g., CME v Czech Republic, on which see paras 2.112 et seq. 160  See, e.g., ECHR, Cereceda Martin v Spain, Case 16358/​9 0, 12 October 1992, DR Vol. 73, pp. 120 et seq. For more detail on the identity of parties requirement in public international law, see Shany, Regulating Jurisdictional Relations, pp. 133 et seq.; Yuval Shany, Similarity in the Eye of the Beholder, Contemporary Issues in International Arbitration and Mediation, The Fordham Papers 2007 (Arthur W. Rovine ed., 2008), pp. 128 et seq. 153

154

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Chapter 2:  Res Judicata in International Law regarded as an identical party or at least sufficiently closely related for the application of the res judicata doctrine.161 2.111 In the CME v Czech Republic case, the arbitral tribunal had to decide whether

an earlier award rendered between Ronald Lauder and the Czech Republic constituted a res judicata in the dispute before it. The tribunal held that this was not the case, inter alia, because the claimants in each arbitration were different, even though Mr Lauder was the controlling shareholder of CME. The tribunal stated in relevant terms: Only in exceptional cases, in particular in competition law, have tribunals or law courts accepted a concept of a ‘single economic entity’, which allows discounting of the separate legal existences of the shareholder and the company, mostly, to allow the joining of a parent of a subsidiary to an arbitration. Also a ‘company group’ theory is not generally accepted in international arbitration (although promoted by prominent authorities) and there are no precedents of which this Tribunal is aware for its general acceptance. In this arbitration the situation is even less compelling. Mr. Lauder, although apparently controlling CME Media Ltd., the Claimant’s ultimate parent company, is not the majority shareholder of the company and the cause of action in each proceeding was based on different bilateral investment treaties. This conclusion accords with established international law.162

2.112 The tribunal in the CME v Czech Republic case relied on the formal distinction be-

tween the controlling shareholder and the controlled company. The same approach was followed by the Svea Court of Appeal, the Swedish court where the partial award rendered in the same case on 13 September 2001 was challenged.163

2.113 ICSID tribunals have on occasions followed an economic approach with regard

to jurisdiction, taking a ‘realistic attitude’164 when identifying the party on the investor’s side. They look for the actual foreign investor and are unimpressed by the fact that the consent agreement only names a subsidiary.165 It has been argued that if such an economic approach is accepted for jurisdictional purposes it should also apply for the purposes of res judicata to avoid individual companies of a corporate group (constituting a single economic entity) availing themselves of the possibility of endlessly relitigating the same dispute under the disguise of separate legal identities.166   Reinisch, pp. 55 et seq.  United Nations Commission on International Trade Law (UNCITRAL), CME Czech Republic BV v The Czech Republic, Final Award, 14 March 2003, paras 435 et seq. 163  Svea Court of Appeal, 15 May 2003, The Czech Republic v CME Czech Republic BV, Case No. T 8735-​01, pp. 97 et seq. (‘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’). 164  Christoph Schreuer, The ICSID Convention: A Commentary (2nd ed. 2009), ad Article 25, para. 329. 165  Schreuer, ad Article 25, para. 329; Reinisch, pp. 57 et seq. 166  Reinisch, p. 59; ILA, Interim Report, p. 21. 161

162

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B.  Public International Law b. Identity of object The identity of objects requirement relates to the remedies sought. The same type 2.114 of relief must be sought in both proceedings.167 International courts and tribunals have sometimes applied the broader standard of 2.115 substantial identity of objects. In the Chen (No. 2) case, the International Labour Organization Administrative Tribunal (ILOAT) held that a claim relating to premature retirement was precluded by the res judicata doctrine because in an earlier judgment the tribunal had dismissed the claimant’s claim against the refusal of the World Health Organization (WHO) to renew his contract and the subsequent application was substantially the same.168 A broad approach has also sometimes been applied by arbitral tribunals to avoid 2.116 ‘claim splitting’.169 In these cases claimants were barred from raising closely related claims in subsequent proceedings that they could have raised in a prior proceeding.170 In the Delgado case before the US–​Spanish Claims Commission, a first claim was 2.117 brought for damages against Spain for seizure of property in Cuba. This claim was denied by an umpire in 1876. Subsequently, another claim was brought by the same claimant for the value of the property seized. The umpire dismissed the claim on grounds of res judicata holding: [e]‌ven if the claimant did not at the time of the former case ask indemnity of the commission for the value of the lands, the claimant had the same power to do so as other claimants in other cases where it has been done, and he can not have relief by a new claim before a new Umpire.171

In the Machado case, the first claim was brought for damages arising from the 2.118 seizure of a house. In the second claim, the restoration of the house, as well as rent and damages for its detention, were claimed. The umpire before whom the second claim was brought dismissed it regarding both claims as identical: that the questions whether this claim No. 129 is a new one, or the same as No. 3 does not depend upon whether the items included be the same in both cases, but 167  Reinisch, p. 62; Brant, p. 117. See also ICSID, Helnan International Hotels A/​S v The Arab Republic of Egypt, Award of 3 July 2008, paras 128–​30. In this case, the tribunal compared the claimant’s prayers for relief submitted in the ‘Cairo Arbitration’ and the ICSID arbitration. It then held: ‘The comparison of the respective claims and counterclaims in each of the proceedings shows that even if the subject matter of the disputes is the same, i.e. the Management Contract, the relief sought is not identical, although it is globally aiming at the same result: allowing HELNAN to continue to be in charge of the management of the Shepard Hotel, obliging the owner of the Hotel to renovate it and obtaining compensation for alleged damages’. 168 ILOAT, Chen (No. 2), Judgment No. 547 (1983) (reported in Reinisch, p. 64). 169  See Reinisch, pp. 62 et seq. 170  Dodge, p. 366. 171  Delgado Case (1881), reported in John Bassett Moore, History and Digest of the International Arbitrations to Which the United States Has Been a Party, Vol. 3 (1898), p. 2199.

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Chapter 2:  Res Judicata in International Law that the test is whether both claims are founded on the same injury, that the only injury on which claim No. 129 is founded is the seizure of a certain house; that this same injury was alleged as one of the foundations for claim No. 3, and that in consequence claim No. 129, as being part of an old claim, can not be presented as a new claim under a new number.172 2.119 In both cases the US–​Spanish Claims Commission followed a broad approach

regarding the identity of object. The Commission regarded the entire claim as settled by the first proceedings regardless of whether or not the various and separate items contained in the claim had all been presented.173

c. Identity of cause 2.120 The cause is the foundation relied upon by the claimant in support of a claim. To determine the cause of a claim one has to ask why the claimant is asking for the relief sought.174 More specifically, the cause is often described as a claim’s legal foundation. There is thus identity of cause if the same rights and legal arguments are relied upon in both proceedings.175 2.121 In theory, proceedings brought under formally different legal grounds may

be considered to be based on different causes for the purposes of res judicata.176 Accordingly, res judicata would not apply where the same claimant seeks the same relief against the same respondent, basing its claim in one case on customary international law and, in the other case, on a treaty provision. It would also not apply if a same party based identical claims on provisions contained in different treaties.

2.122 Such an application of the identity of cause requirement has been criticized as

it may lead to the duplication of proceedings which are in reality substantively identical.177 According to the critics, it would be artificial to consider two legal grounds which contain the same legal rule as different causes for the purposes of res judicata.178 It would appear more appropriate to look at the specific rules relied upon and to examine how far they are substantively identical.179 If the same rule is reflected in different legal instruments, identity of the cause should be admitted.180

2.123 This approach has some foundation in international practice. In the Southern Bluefin

Tuna case an arbitral tribunal under UNCLOS had to decide whether a dispute

  Machado Case (1880), reported in Bassett Moore, p. 2194.   Cheng, p. 344. 174  Brant, pp. 117 et seq. 175 Reinisch, p. 62. 176 ILA, Interim Report, p. 20; Walid Ben Hamida, L’Arbitrage Transnational Face à un Désordre Procédural:  la Concurrence des Procédures et les Conflits de Jurisdictions, 3(3) Transnational Dispute Management, April 2006, para. 85. 177  See, e.g., Reinisch, pp. 64 et seq.; Ben Hamida, paras 84 et seq. 178 Reinisch, p. 64. 179 Ibid., p. 71. 180  Ibid., pp. 64 et seq. 172 173

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B.  Public International Law about Japanese fishing practices was to be settled under the 1993 Convention for the Conservation of Southern Bluefin Tuna (CCSBT) or under UNCLOS. The tribunal decided that the dispute was to be settled under the CCSBT and declined jurisdiction. The tribunal also pronounced itself on the question of the identity of the dispute over fishing practices, which can be viewed under the rules of the CCSBT and UNCLOS: [T]‌he Parties to this dispute . . . are the same Parties grappling not with two separate disputes but with what in fact is a single dispute arising under both Conventions. To find that, in this case, there is a dispute actually arising under UNCLOS which is distinct from the dispute that arose under the CCSBT would be artificial.181

The tribunal considered that there was only one dispute despite the fact that it was 2.124 based on two different treaties. The tribunal reached this decision even though the treaties in question were fairly different; they related, however, to the same factual background.182 Other international tribunals have followed a stricter approach. In the Mox Plant 2.125 case between the United Kingdom and Ireland, the ITLOS held that ‘the application of international rules on interpretation of treaties to identical or similar provisions of different treaties may not yield the same results, having regard to, inter alia, differences in the respective contexts, objects and purposes, subsequent practice of parties and travaux préparatoires.’183 This statement by the ITLOS supports the approach which considers claims 2.126 brought under different legal grounds to be based on different causes.184 It was relied upon by the arbitral tribunal in the CME case in support of its decision that claims brought under separate bilateral investment treaties (BITs), concerning the same alleged acts of expropriation, constitute different causes for the purposes of res judicata.185 The tribunal in the CME case stated that ‘The two arbitrations are based on differing bilateral investment treaties, which grant comparable investment protection, which, however, is not identical. . . . Because the two bilateral investment treaties create rights that are not in all respects exactly the same, different claims are necessarily formulated.’186

181  Southern Bluefin Tuna case (Australia and New Zealand v Japan), Award on Jurisdiction and Admissibility, 4 August 2000, ILM, Vol. 39 (2000), pp. 1359 et seq., para. 54. 182  See Reinisch, pp. 66 et seq. 183 ITLOS, The Mox Plant Case (Ireland v United Kingdom), Request for Provisional Measures, Order of 3 December 2001, para. 51. 184  Contra: Reinisch, pp. 68 et seq. 185  See also ICSID, Helnan International Hotels A/​S v The Arab Republic of Egypt, Award of 3 July 2008, para. 130. The tribunal held that there was no identity of causes of action: while the relief sought in the prior ‘Egyptian Arbitration’ was based on a contract, the relief sought in the ICSID arbitration was based on a treaty. 186 UNCITRAL, CME Czech Republic BV v The Czech Republic, Final Award, 14 March 2003, paras 432 et seq.

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Chapter 2:  Res Judicata in International Law d. Identity of facts? 2.127 Although, traditionally, the identity test in public international law requires the triple identity of parties, object, and cause, it was seen earlier that certain international courts and tribunals, as well as several scholars, have questioned the adequacy of the division between petitum and causa petenti, arguing that the triple identity test should be replaced by a two-​pronged test of identity of parties and questions at issue.187 2.128 Moreover, in practice, the identity of the set of facts underlying a claim plays an

important role; there appears to be a tendency to focus on the facts underlying the claims in order to determine whether two disputes are identical.188 According to Shany, rather than applying the two sub-​categories of identity of object and cause, a clearer description would be that there is ‘identity of issues’ if the competing claims address the same fact-​pattern (transaction) and the same legal claims.189

e. Identity of legal order 2.129 The doctrine of res judicata generally applies only between international courts and tribunals; that is, between tribunals operating within the same legal order.190 The 187  See, e.g., the Award in ICSID Case No. ARB(AF)/​12/​1 in Apotex Holdings Inc., Apotex Inc. v United States of America, Award, 25 August 2014, paras 7.15–​7.16, with references. See also Schreuer and Reinisch, para. 45 (‘The distinction between the “object” and the “grounds” of a claim is clearly made in international case-​law. International tribunals have also been aware of the risk that if they use too restrictive criteria of identity of “object” and “grounds”, the doctrine of res judicata would rarely apply: if only an exactly identical relief sought (object) based on exactly the same legal arguments (grounds) in a second case would be precluded as a result of res judicata, then litigants could easily evade this by slightly modifying either the relief requested or the grounds relied upon’). 188  See in particular Reinisch, pp. 70 et seq. 189  Shany, Competing Jurisdictions, p. 25. 190  See, generally, Reinisch, pp. 51 et seq. See also arbitral award rendered in Affaire des Chemins de fer de Bužau-​Nehoiasi (Germany v Romania), 7 July 1939, RIAA, Vol. III, p. 1836 (‘En général, les décisions nationales et internationales se meuvent dans les sphères différentes. Au regard des Etats étrangers, les décisions des tribunaux nationaux sont moins des jugements que de simples manifestations de l’activité étatique, pareilles dans leur principe à celles de tout autre organ de l’Etat. C’est dans l’ordre interne seulement que l’autorité de la chose jugée par un tribunal national trouve son application’). See also ICSID, Helnan International Hotels A/​S v The Arab Republic of Egypt, Award of 3 July 2008. In this case, the ICSID tribunal had to determine whether and to what extent a national award rendered in Cairo under Egyptian law (namely on contract claims) could operate as a res judicata in the ICSID proceedings on treaty claims. In other words, the question was whether a ‘national res judicata may be relied upon in . . . international proceedings and, if so, to what extent’ (para. 123). The tribunal held that national courts or private arbitral tribunals, on the one hand, and international courts or tribunals, on the other hand, are not part of the same legal order. As a consequence, ‘a decision by a national court or a private arbitral tribunal cannot be opposed as res judicata to the admissibility of an action filed with an international arbitral tribunal . . . On the other hand, an international tribunal must accept the res judicata effect of a decision made by a national court within the legal order where it belongs’. Accordingly, in the opinion of the ICSID tribunal, a national court decision or arbitral award on contract claims cannot operate as a res judicata to bar the jurisdiction of an ICSID tribunal on treaty claims, because these decisions are not part of the same legal order. However, the national decision has res judicata effects within its own national legal order. Therefore, the ICSID tribunal, when applying the law of that national legal order (here Egyptian law), must respect the res judicata effect of the national decision with regard to final determinations on the relevant national law.

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C. Conclusion same legal order comprises international law. It is understood broadly and includes tribunals established under treaties and mixed arbitral tribunals adjudicating disputes between private parties and states.191 It is generally considered that a domestic judgment cannot constitute a res judicata 2.130 in relation to international courts and tribunals.192 This is because disputes brought before tribunals from different legal orders are generally not of the required degree of similarity for the doctrine of res judicata to apply.193 However, more recently it has been argued that the doctrine of res judicata could apply between domestic courts and international courts and tribunals. First, if the regulated interactions are not organized in a hierarchical manner and, secondly, if the judicial bodies involved in jurisdictional interactions are authorized to apply the doctrine of res judicata either with direct reliance on international law or on domestic law rules that mirror international law in their substance.194 This will be discussed in further detail later with regard to the relations between international arbitral tribunals and domestic courts.195

C. Conclusion The previous analysis has shown how the doctrine of res judicata as developed in 2.131 domestic laws has been transposed into international law. In private international law, the Brussels I  Regulation and the Hague 2.132 Convention on Choice of Court Agreements do not contain express provisions on res judicata.196 However, an attempt to develop a transnational res judicata doctrine has been made by the ALI/​U NIDROIT Principles of Transnational Civil Procedure. These principles provide for the application of the doctrine of res judicata as developed mainly in civil law countries.197 In public international law, the doctrine of res judicata resembles the doctrine in 2.133 domestic laws. The res judicata doctrine was introduced into public international law by operation of Article 38(1)(c) of the ICJ Statute; that is, as a principle accepted by all nations in foro domestico. This suggests that there is a generally accepted concept of res judicata in domestic laws. However, as was seen in Chapter 1, important

 ILA, Interim Report, p. 19.   Shany, Competing Jurisdictions, p.  254; Shany, Regulating Jurisdictional Relations, pp.  160 et seq.; Brownlie, pp.  50 et seq.; PCIJ, Case Concerning Certain German Interests in Polish Upper Silesia (the Merits), cited at fn 102, p. 20. 193  Shany, Regulating Jurisdictional Relations, p. 3. See also Brownlie, p. 50; ICSID, Helnan International Hotels A/​S v The Arab Republic of Egypt, Award of 3 July 2008, para. 124. 194 See Shany, Regulating Jurisdictional Relations, pp. 125 et seq. 195  See paras 5.65 et seq. 196  See paras 2.09 et seq. 197  See paras 2.59 et seq. 191

192

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Chapter 2:  Res Judicata in International Law differences exist among domestic laws, particularly regarding the effects attached to a decision that is res judicata and the requirements that must be met in order for the res judicata doctrine to apply. These differences among domestic laws surface in public international law. Although the doctrine is well established in public international law, uncertainties exist, particularly in those areas where there are divergences between domestic laws. Different international courts and tribunals have applied different standards to assess the similarity between two disputes. Furthermore, uncertainties were observed regarding the extent to which the doctrine of res judicata may cover issue preclusion in addition to claim preclusion. 2.134 The application of the doctrine of res judicata by international courts and tribu-

nals has been sporadic and not always consistent.198 While this may be explained by the uncertainties surrounding res judicata in international law, it also appears to denote a certain readiness on the part of some international courts to depart from strict res judicata rules as developed and applied in the domestic context. International courts appear more willing to apply a flexible approach. As will be discussed in further detail in Part II, such a readiness to depart from strict domestic res judicata rules in favour of more flexible rules, can also be observed in international arbitration case law.199

2.135 On the basis of the previous findings it is now necessary to investigate whether and

how the doctrine of res judicata as developed in the context of litigation may or should be applied in international commercial arbitration.

  Shany, Competing Jurisdictions, pp. 253 et seq.   See paras 4.122 et seq.

198 199

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Part II THE DOCTR INE OF R ES JUDICATA IN INTER NATIONA L COMMERCI A L AR BITR ATION Si l’ordre est le plaisir de la raison, le désordre est le délice de l’ imagination. Paul Claudel

Would it be advisable for international arbitral tribunals to apply domestic res PII.01 judicata rules developed for litigation? Should they apply the res judicata rules of a particular domestic law and, if so, which one? Or should they apply a transnational res judicata doctrine, detached from any particular domestic law? Alternatively, arbitral tribunals could deal with res judicata issues as they deem appropriate in the circumstances of each particular case and any problems of conflicting judgments or awards could then be dealt with at the recognition and enforcement stage. These are some of the questions that will be addressed in Part II, the aim of which PII.02 is to determine how international commercial arbitral tribunals should deal with res judicata issues. Before attempting to propose any answers to the above questions, it is necessary PII.03 to identify the problem. Indeed, adequate solutions may only be found once it has been established that res judicata constitutes a problem in international commercial arbitration and once the characteristics of that problem have been identified. Chapter 3 will identify situations in which res judicata issues may arise before international commercial arbitral tribunals. Chapter 4 will then investigate how res judicata issues are currently dealt with in international commercial arbitration law and practice. It will be seen that the current way of dealing with these issues remains insufficient.

The Doctrine of Res Judicata in International Commercial Arbitration PII.04 After the existence and characteristics of the problem have been established, it

will be possible to investigate how arbitral tribunals should address res judicata issues. Chapter 5 will determine the appropriate approach to the problem of res judicata in international commercial arbitration. It will examine whether arbitral tribunals should apply the litigation concept of res judicata as applied by domestic and international courts and tribunals. The chapter will investigate to what extent an analogy between litigation and international commercial arbitration is possible and appropriate for the purposes of res judicata. Finally, Chapter 6 will suggest solutions to the problem of res judicata in international commercial arbitration.

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3 R ES JUDICATA ISSUES AR ISE IN INTER NATIONA L COMMERCI A L AR BITR ATION

A . Issues of Res Judicata Between International Commercial Arbitral Tribunals and State Courts  3.04 B. Issues of Res Judicata Between Different International Commercial Arbitral Tribunals  3.09

C . Issues of Res Judicata Before the Same Arbitral Tribunal  D. Conclusion 

3.17 3.20

This chapter will determine situations in which res judicata issues arise before inter- 3.01 national commercial arbitral tribunals. The aim is to determine the reality and magnitude of the phenomenon of res judicata in international commercial arbitration. In particular, the aim is to show that res judicata issues may (and do) frequently arise before international commercial arbitral tribunals in various situations. Due to the growing importance and complexity of international arbitration, it is likely that the occurrence of res judicata issues in international commercial arbitration practice will increase even further. The phenomenon of res judicata in international arbitration is not, therefore, of merely academic interest. To the contrary, it constitutes a real problem that remains largely unresolved and this research may thus contribute to finding solutions to the problem. The International Law Association’s (ILA) Interim Report on res judicata and arbi- 3.02 tration stated that issues of res judicata arise before international arbitral tribunals in a myriad of different situations. These situations can be divided into four categories, based on the nature of the court or tribunal having rendered the first final and binding decision. According to the report, issues of res judicata arise: (i) between arbitral tribunals and state courts, (ii) between different arbitral tribunals, (iii) within the same arbitration proceedings between a partial and a final award, and (iv) between supranational courts or tribunals and arbitral tribunals.1 The 1

 ILA, Interim Report on Res Judicata and Arbitration, Berlin Conference (2004), pp. 3 et seq.,

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Chapter 3:  International Arbitration fourth category mainly concerns investment protection treaty cases.2 Since the scope of this research is limited to international commercial arbitration, the following analysis will only cover the first three categories. 3.03 In this chapter the term ‘issues of res judicata’ will be used broadly to describe situ-

ations in which a particular issue or dispute which has already been determined in court or arbitration proceedings, or within the same arbitration proceedings, arises again before an international commercial arbitral tribunal. The term will refer to situations where a party might want to rely upon a prior award or judgment arguing that the arbitral tribunal is bound by the prior determination of a particular issue or dispute. This presupposes that a prior decision (award or judgment) has already been rendered and that an international commercial arbitral tribunal is asked to decide a claim or issue already decided in that prior decision. It also presupposes that the arbitral tribunal before which the res judicata effect of the prior decision is invoked would have jurisdiction (or at least consider itself to have jurisdiction) over the claim or issue to be decided.

A.  Issues of Res Judicata Between International Commercial Arbitral Tribunals and State Courts 3.04 In international commercial arbitration issues of res judicata perhaps arise most

commonly between state courts and arbitral tribunals.3 However, in practice it should be rare for an arbitral tribunal to be faced with the question of the res judicata effect of a prior judgment rendered on precisely the same facts and cause of action and between the same parties. This is because the substantive issues before the arbitral tribunal will usually be covered by the parties’ arbitration agreement

available at http://​w ww.ila-​hq.org and in 25(1) Arbitration International 35 (2009). See also Audley Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, Arbitral Procedure at the Dawn of the New Millennium, Reports of the International Colloquium of CEPANI, 15 October 2004 (2005), p. 274 (cited as The Scope and Res Judicata Effect of Arbitral Awards); Antonio Crivellaro, Consolidation of arbitral and court proceedings in investment disputes, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M.  Cremades and Julian D.M. Lew ed., 2005), p.  86; Pierre Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, in Liber Amicorum Claude Reymond, Autour de l’arbitrage (2004), pp. 195 et seq. 2 See, in particular, Audley Sheppard, Res judicata and estoppel, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M. Cremades and Julian D.M. Lew ed., 2005), p. 221. Outside the scope of investment protection treaty cases, international commercial arbitral tribunals may have to consider the res judicata effect of prior judgments of the Court of Justice of the European Union (ECJ) and the European Convention on Human Rights (ECHR). 3 ILA, Interim Report, p. 4; Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 275; Crivellaro, p. 86. See also Claire Debourg, Les contrariétés de décisions dans l’arbitrage international (2012), para. 225.

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A.  Issues Between Tribunals and State Courts and will not therefore previously have arisen before a national court.4 Where arbitral tribunals are faced with a res judicata issue it is usually with respect to prior findings of fact or determinations of particular issues forming part of a larger whole. Thus, in most cases what is called upon to be decided overlaps to a certain degree with what has already been decided in a prior award or judgment.5 Res judicata situations may typically arise where a state court has rendered a prior 3.05 decision regarding the arbitral tribunal’s jurisdiction. State courts and arbitral tribunals will usually closely examine their jurisdiction and scrutinize the validity of a potential arbitration agreement, the intentions of the parties, and the coverage of the agreement.6 While in most cases the state court and arbitral tribunal will probably reach the same conclusion, in some cases the question will arise whether the arbitral tribunal is bound by the court’s prior determinations regarding the jurisdiction of the arbitral tribunal.7 4  Gary B. Born, International Commercial Arbitration (2009), p. 2916. However, such a situation may arise, e.g., where a party brings proceedings on the merits before a state court in order to frustrate the arbitration or to maximize its chances of success. A party may file proceedings on the merits before a state court in a favourable jurisdiction to attempt to ensure that an award will not be enforceable in that state. The party having initiated the court proceedings may rely before the arbitral tribunal on the binding force of the state court’s decision over the entire dispute (ILA, Interim Report, p. 4; Kaj Hobér, Parallel arbitration proceedings—​Duties of the arbitrators, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M. Cremades and Julian D.M. Lew ed., 2005), p. 243). It is also possible to envisage the parties concluding an arbitration agreement after the resolution of the dispute by a state court. It should be noted, however, that the parties waive their right to invoke the res judicata effect of the prior judgment in the arbitration proceedings (Phillip Landolt, Modernised EC Competition Law in International Arbitration (2006), p. 245; Mayer, p. 195, n. 26). 5  Landolt, pp. 242 et seq. 6  Andrea Schulz, The Future Convention on Exclusive Choice of Court Agreements and Arbitration, Preliminary Document No. 32 of June 2005 for the attention of the Twentieth Session of June 2005, p. 4, available at http://​w ww.hcch.net. 7  See, e.g., Cairo Regional Center for International Commercial Arbitration (CRCICA) Case No. 67/​1995. In this case, the dispute arose out of a contract between A and B and contained an arbitration agreement providing for CRCICA arbitration. A obtained a judgment from the courts in Egypt holding that the contract in dispute was one of agency and that, according to Egyptian law, such disputes are not arbitrable. When B initiated CRCICA arbitration proceedings, A raised lack of jurisdiction arguing that the judgment of the Egyptian courts operated as a res judicata in the arbitration. See also Deutsche Schachtbau-​und Tiefbohrgesellschaft mbH v Ras Al Khaimah National Oil Co. and another appeal [1987] 2 All ER 769. In this case, a dispute arose out of an oil exploration agreement concluded between Deutsche Schachtbau-​und Tiefbohrgesellschaft mbH (DST) and Ras Al Khaimah National Oil Co. (Raknoc). In March 1979, DST initiated ICC arbitration proceedings in Geneva based on the arbitration agreement contained in the oil exploration agreement. In April 1979 Raknoc instituted proceedings in the court of R’as Al Khaimah for the rescission of the agreement on the ground that it had been obtained by misrepresentation and also for damages. Conflicting decisions ensued from the arbitration and court proceedings: DST succeeded in the arbitration and Raknoc succeeded in the litigation. See also Fomento de Construcciones y Contratas SA v Colon Container Terminal SA (DTF 127 III 279). Parallel proceedings were brought before the courts in Panama and before an ICC arbitral tribunal in Geneva. The question was whether Colon Container Terminal SA (CCT) had accepted the jurisdiction of the Panamanian courts by not timeously raising lack of jurisdiction based on an arbitration agreement. The arbitral tribunal ruled that it had jurisdiction over the dispute. However, two months after the award was rendered, the Supreme Court of Panama

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Chapter 3:  International Arbitration 3.06 Res judicata situations also commonly arise where a state court has rendered a prior

decision on interim measures8 as state courts and arbitral tribunals usually have concurrent jurisdiction with regard to interim measures.9 Such a res judicata issue arose in the International Chamber of Commerce (ICC) Case No. 4126 of 198410 and in A v Z, Order No. 5 of 2 April 2002.11 In both cases the arbitral tribunal had to decide whether a party could seek interim relief in the arbitration despite the fact that an identical or similar request for relief had previously been denied by a state court.

3.07 Other situations where there can be an overlap between the prior determinations

of a court and an arbitral tribunal involve the positive res judicata effect and issue estoppel. These situations typically arise where a state court has decided a particular issue, either as a preliminary or a principal issue, and the same issue is later raised again between the same parties before an arbitral tribunal.12 The question is whether the arbitral tribunal is bound by the court’s prior determinations and should integrate them in its award.13

3.08 Similar questions arise in complex disputes involving multiple parties or

contracts.14 For instance, the possible preclusive effects of a prior judgment on subsequent arbitration proceedings in such a situation were discussed in ICC Case No. 6363. In this case, a first contract was concluded in 1978 between A and B. The contract contained an arbitration clause providing for ICC arbitration in Zurich. A second contract was concluded in 1980 between A and C. In the 1980 contract A assigned its rights and obligations towards B to C, including A’s right to receive royalties from B. When B refused to pay royalties, C initiated court proceedings against B. After the state court dismissed C’s claim, A initiated ICC arbitration proceedings against B claiming payment of unpaid royalties. B invoked the res judicata effect of the prior court decision. The arbitral tribunal had to decided that CCT had raised lack of jurisdiction too late and that therefore the Panamanian courts had jurisdiction to hear the dispute. The Fomento case illustrates the situation where an arbitral tribunal and a state court both render conflicting decisions on jurisdiction on an identical dispute. If both proceedings continue in parallel, issues of res judicata may arise before the arbitral tribunal. See also ICC Case No. 6363, 1991; ICC Case No. 6535, 1992. 8  Landolt, p. 243. 9  See, in particular, Ali Yeşilirmak, Provisional Measures in International Commercial Arbitration (2005), paras 3-​20 et seq. See also Jean-​François Poudret and Sébastien Besson, Comparative Law of International Arbitration (2007), paras 611 et seq. 10  ICC Case No. 4126, 1984, Collection of Arbitral Awards (1974–​1985) (Sigvard Jarvin and Yves Derains ed. 1990), pp. 511 et seq. 11 ICC, A v Z, Order No. 5, 2 April 2002, regarding Claimant’s request for interim relief, ASA Bulletin, Vol. 21, No. 4 (2003), pp. 810 et seq. 12  For examples, see Debourg, paras 255 et seq. 13  Mayer, pp. 197 et seq. 14  See David W. Rivkin, The impact of parallel and successive proceedings on the enforcement of arbitral awards, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M. Cremades and Julian D.M. Lew ed.,

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B.  Issues Between Arbitral Tribunals decide whether the prior judgment rendered between C and B could operate as a res judicata in arbitration proceedings between A and B, what the content of this res judicata was, and against whom it applied.15

B.  Issues of Res Judicata Between Different International Commercial Arbitral Tribunals The situation where res judicata issues arise between two international commer- 3.09 cial arbitral tribunals resembles the situation where an international commercial arbitral tribunal has to determine the res judicata effects of a prior judgment: most situations will involve a certain overlap with issues now before the arbitral tribunal and issues previously decided by another arbitral tribunal.16 As before, this overlap may concern the arbitral tribunal’s jurisdiction. The arbitral 3.10 tribunals will scrutinize the validity and coverage of the arbitration agreement, as well as the intention of the parties. In most cases the tribunals will agree that only one of the clauses is valid (for example, because it has been superseded by the other, 2005), p. 270; Hobér, pp. 248 et seq; Crivellaro, p. 81; Michael Schneider, Multi-​Fora Disputes, 6(2) Arbitration International 101, 102 et seq. (1990). 15  See also ICC Case No. 9787, 1998, Yearbook Commercial Arbitration, Vol. XXVII (A.J. van den Berg ed., 2002), pp. 181 et seq. In this case the possible impact of parallel court proceedings on arbitration proceedings was discussed. A buyer, a Chinese manufacturer, entered into a series of contracts with a seller, a US company. When disputes arose, the buyer initiated an ICC arbitration claiming damages. The seller counterclaimed for payment. After the initiation of the ICC arbitration, buyer’s counsel initiated court proceedings in the United States against seller’s counsel. Neither buyer nor seller were parties in the US court proceedings. Nevertheless, the seller raised lack of jurisdiction before the arbitral tribunal on the ground that the arbitration and court proceedings were congruent, i.e. that both the US court and the arbitral tribunal would be required to rule upon the same issues of fact and law. The arbitral tribunal had to determine whether the US court proceedings affected the jurisdiction of the arbitral tribunal under the parties’ arbitration agreement. 16  Florian Kremslehner, The Arbitration Procedure—​Lis pendens and res judicata in International Commercial Arbitration, in Austrian Arbitration Yearbook (Christian Klausegger et al. ed., 2007), pp. 142 and 151–​2 . Issues of res judicata have arisen between two different international commercial arbitral tribunals on several occasions. The underlying facts of these arbitrations are not always reported with sufficient detail, meaning that it is not always possible to determine under which category of situations these awards may fall. See, e.g., ICC Case No. 6233, 1992, Yearbook Commercial Arbitration, Vol. XX (A.J. van den Berg ed., 1995), pp. 58 et seq. (the claimant entered into several contracts with the respondent: these contracts gave rise to two ICC arbitrations, one resulting in an award against the respondent to pay certain sums to the claimant, and another against the claimant to pay certain amounts to the respondent. The claimant requested a newly composed arbitral tribunal to interpret the two awards. Before the newly constituted arbitral tribunal the respondent invoked the res judicata effect of the prior awards); ICC Case No. 5901, 1989, award reported by Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001 (2004), p. 19 (res judicata issues arose between two awards rendered by the first arbitral tribunal with its seat in Switzerland and by the second arbitral tribunal with its seat in France).

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Chapter 3:  International Arbitration more recent one17) or covers the dispute at issue.18 It seems that the intention of the parties, as interpreted by the tribunals, is a generally strong (and often sufficient) guideline for the tribunals. It is only in rare cases that both tribunals will interpret two agreements to cover the same subject matter between the same parties and both tribunals will assume that the clause conferring jurisdiction on it does prevail over the other clause.19 In such a situation, the question arises whether an arbitral tribunal is bound by the prior determinations regarding jurisdiction of another tribunal. 3.11 This question arose in ICC Case No. 3383 of 1979, 20 a case in which the parties

initiated different arbitrations based on different arbitration agreements in order to arbitrate a dispute arising out of the same legal relationship. The Belgian party initiated arbitration proceedings based on an ICC arbitration clause. The Iranian party objected to the jurisdiction of the ICC tribunal on the grounds that the ICC rules of arbitration were contrary to applicable Iranian law. During the first hearing the parties concluded a new arbitration agreement renouncing the ICC arbitration and constituting an ad hoc arbitral tribunal which had to render an arbitral award within three months. When the ad hoc tribunal decided to prolong its mandate, the Iranian party refused to continue to participate in the arbitration, arguing that the arbitral tribunal had no power to prolong its mandate without the formal agreement of the parties. After the ad hoc tribunal decided that it did not have the power to continue the arbitration, the Belgian party initiated new ICC proceedings based on the original ICC arbitration agreement. The new ICC tribunal had to decide whether it was bound by the prior award of the ad hoc tribunal. In particular, it had to decide whether the prior award had finally determined that there was a valid arbitration agreement providing for ad hoc arbitration, thereby excluding the existence of a valid ICC arbitration agreement.21

17  See, e.g., the underlying dispute in Arthur Andersen Business Unit Member Firms v Andersen Consulting Business Unit Member Firms. Different standard contracts concluded between the various entities of Andersen contained contradictory arbitration agreements. Parallel ICC and ad hoc arbitration proceedings were initiated based on these conflicting agreements. The Swiss Federal Tribunal put an end to the debate on the tribunals’ jurisdiction by upholding the ICC tribunal’s decision according to which the most recent arbitration agreement would govern all disputes (Decision of the Federal Tribunal, 8 December 1999, ASA Bulletin, Vol. 18, No. 3 (2000), pp. 546 et seq.). 18  According to Mayer, arbitral tribunals do not generally like to question the awards of other tribunals (Mayer, p. 196, n. 29). 19  Schulz, pp. 4 et seq. (on the comparable situation opposing a court chosen by an exclusive choice-​of-​court agreement and an arbitral tribunal). 20  See also ICC Case No. 5423, 1987, Collection of Arbitral Awards (1986–​1990) (Sigvard Jarvin, Yves Derains, and Jean-​Jacques Arnaldez ed., 1994), pp. 339 et seq. (an arbitral tribunal with its seat in Paris had to decide on the validity of an arbitration agreement. The tribunal held that the agreement was null and void, but only with regard to ICC arbitration. An arbitral tribunal subsequently seized of the dispute might have to decide if and to what extent it is bound by the prior ICC award on the partial nullity of the arbitration agreement). 21 Similarly, res judicata issues may arise where the same parties initiate different arbitrations based on different arbitration agreements in order to arbitrate disputes arising out of a closely related

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B.  Issues Between Arbitral Tribunals Res judicata issues can also arise in situations involving the positive res judicata 3.12 effect and issue estoppel. This may occur if one party brings new arbitration proceedings on the ground that a prior award did not exhaust all the differences existing between the parties.22 In PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA,23 Persero brought two subsequent Singapore International Arbitration Centre (SIAC) arbitration proceedings in relation to an almost identical dispute. In the second arbitration, Persero raised an issue which had not been covered in the first arbitration. The second arbitral tribunal held that Persero was estopped from raising the issue in the second arbitration because it could and should have raised it in the first arbitration. In response, Persero brought an action before the courts of Singapore requesting the setting aside of the second SIAC award on the ground that the second arbitral tribunal had made findings inconsistent with the first award. Persero argued that the second SIAC tribunal was bound by the findings in the prior SIAC award. Thus, the question before the Singaporean courts was whether the first SIAC award gave rise to issue estoppel in the second SIAC proceedings.24 Similarly, res judicata issues involving the positive res judicata effect and issue es- 3.13 toppel may arise between two different arbitral tribunals where an amendment to a claim or a counterclaim cannot be brought before the constituted arbitral tribunal, for example because of late filing, and must hence be brought in parallel arbitration proceedings.25 Likewise, the parties may sometimes have to bring more than one arbitration in 3.14 relation to the same factual situation. For instance, under some insurance policies, claims against the same insurance company under different policies must be brought before different arbitral tribunals.26 In Aegis v European Re27 Aegis initiated two separate arbitrations against European Re based on the same arbitration agreement. The arbitrations concerned two separate disputes arising under

legal relationship. Such situations may arise in disputes involving multiple contracts relating to the same business or project, e.g. distribution contracts and ensuing sales relationships (ILA, Interim Report, pp. 3 et seq.). It is not infrequent for different arbitration clauses, in particular with different places of arbitration, to be inserted in successive contracts related to the same construction project (Schneider, p. 102). 22 ILA, Interim Report, p. 4; Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 274. See also Robert Merkin, Arbitration Law (2004), para. 18.129. 23  High Court, 20 October 2005, PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2006] 1 SLR 197; Court of Appeal, 1 December 2006; PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR 597. 24  See also the situation underlying Cour de cassation, 28 May 2008, Sté G. et A. Distribution SARL v Sté Prodim SAS, Rev. arb., No. 3 (2008), pp. 461 et seq.; Iran–​US Claims Tribunal, Case No. A33, Award of 9 September 2004. 25 ILA, Interim Report, p. 4; Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 274. 26 Ibid. 27  Associated Electric and Gas Insurance Services Ltd (Aegis) v European Reinsurance Company of Zurich (European Re) [2003] 1 WLR 1041.

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Chapter 3:  International Arbitration the same reinsurance contract and out of the same underlying facts. Both disputes concerned European Re’s obligation to indemnify Aegis. European Re won the first arbitration and sought to rely on the first award in the second arbitration, raising a plea of issue estoppel. 3.15 Res judicata issues may arise between two different international commercial ar-

bitral tribunals in the case of disputes involving multiple parties, for example disputes involving an employer, a contractor, and a subcontractor. An employer may wish to initiate an arbitration against a contractor for the faulty performance of one of the subcontractors. The contractor, in turn, may wish to commence an arbitration against the subcontractor relying on the back-​to-​back liability of the subcontractor under the agreement with the contractor.28 Chain sales contracts also typically involve multiple parties and may give rise to related disputes being brought before different arbitral tribunals.29

3.16 A question of issue estoppel between two awards rendered in different arbitrations

between different parties arose in Sun Life Assurance Co. of Canada et al. v The Lincoln National Life Insurance Co.30 The English Court of Appeal had to decide whether an award between A and B may give rise to issue estoppel in a subsequent, separate arbitration on a related dispute between B and C. The claimant in the second arbitration, C, contended that the first arbitral tribunal had finally determined the position between A and B and that B could not go back on that position as against C in the second arbitration. The second arbitral tribunal, however, had decided to depart from the prior determinations of the first arbitral tribunal. The Court of Appeal had to decide whether the second arbitral tribunal was free to do so.31 28  Hobér, p. 248. See also Chamber of National and International Arbitration of Milan, Case No. 1491, 20 July 1992. In this case a dispute arose out of a subcontract concluded between a subcontractor and a main contractor. Following the embargo against Iraq, the main contractor terminated the subcontract. The subcontractor initiated arbitration proceedings against the main contractor. The question arose whether the arbitrator was prevented from deciding on the effects of the embargo on the main contract, due to the fact that the arbitrator had no jurisdiction over the main contract. The arbitrator held that, although it had no jurisdiction over the main contract, it could rule on the effects of the embargo on the main contract as a preliminary issue. The arbitrator also stated that a different arbitral tribunal seized of the dispute relating to the main contract could reconsider and reach a different conclusion on the issue of the effects of the embargo on the main contract. 29  See, e.g., ICC Case Nos 2745 and 2762, 1977. See also Bernard Hanotiau, Complex Arbitrations (2005), para. 547. 30  Sun Life Assurance Co. of Canada, American Phoenix Life and Reassurance Co., Phoenix Home Life Mutual Insurance Co. v The Lincoln National Life Insurance Co. [2005] 1 Lloyd’s Rep 606. 31  See also ICC Case No. 7061, 1997; ICC Case No. 8023, 1995, award reported by Hascher, p. 21; ICC Case No. 7438, 1994, award reported by Hascher, pp. 19 and 22. Concerning sports arbitration, see Court of Arbitration for Sport (CAS), Dieter Baumann v International Olympic Committee (IOC), National Olympic Committee of Germany and International Amateur Athletic Federation (IAAF), Award, 22 September 2000, CAS ad hoc Division (O.G. Sydney 2000) 2000/​06, Recueil des sentences du TAS/​Digest of CAS Awards II 1998–​2000 (Matthieu Reeb ed., 2002),

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C.  Issues Before the Same Arbitral Tribunal

C.  Issues of Res Judicata Before the Same Arbitral Tribunal Issues of res judicata may also arise within one and the same arbitration, for ex- 3.17 ample between partial and final awards. The question whether the arbitral tribunal is bound by its prior partial award might prove problematic if new evidence comes to light questioning the correctness of some findings contained in the prior partial award.32 The question of the res judicata effect of a prior partial award on issues to be decided 3.18 at a later stage of the arbitration proceedings has arisen in several arbitrations, for example in ICC Case No. 3267 of 1984.33 A dispute arose out of a construction subcontract concluded between a Mexican construction company and a Belgian company. During the first few months of performance under the contract the Mexican company failed to meet various milestones and the Belgian company made deductions from the instalment payments. After both companies gave notice of termination of the contract, the Mexican company initiated arbitration proceedings against the Belgian company. A fundamental issue in this arbitration was to determine which of the two notices of termination was effective. A partial award was rendered in favour of the Mexican company. In the ensuing arbitration proceedings, the arbitral tribunal had to decide if and to what extent it was bound by its prior partial award. A res judicata issue may also arise where an arbitral tribunal is asked to reconsider 3.19 or interpret its prior partial or final award. The res judicata doctrine will impose limits on the arbitral tribunal’s power to reconsider or interpret its prior awards.34

pp. 633 et seq. Baumann brought CAS proceedings requesting the CAS to: (i) set aside a prior IAAF decision banning Baumann for a period of two years, (ii) set aside a prior IOC decision revoking Baumann’s accreditation, and (iii) determine that Baumann would be eligible to compete in the Sydney Olympic Games. Before the CAS, the IAAF raised lack of jurisdiction arguing that its arbitration panel had already issued a final and binding determination of the dispute. The CAS had to decide whether the IAAF decision was binding on Baumann who had not been a party in the IAAF proceedings. 32 ILA, Interim Report, p. 3; Mayer, p. 200. 33  See also ICC Case No. 2858, 1996, award reported by Hascher, p.  30; United Nations Commission on International Trade Law (UNCITRAL), Antoine Biloune and Marine Drive Complex Ltd v Ghana Investments Centre and the Government of Ghana, Awards of 27 October 1989 and 30 June 1990, Yearbook Commercial Arbitration, Vol. XIX (A.J. van den Berg ed., 1994), pp. 11 et seq.; UNCITRAL, Wintershall AG, International Ocean Resources Inc, Veba Oel AG, Deutsche Schachtbau-​und Tiefbohrbesellschaft mbH, Gulfstream Resources Canada Ltd v The Government of Qatar, Partial Award of 5 February 1988 and Final Award of 31 May 1988, Yearbook Commercial Arbitration, Vol. XV (A.J. van den Berg ed., 1990), pp. 30 et seq. 34  See, e.g., UNCITRAL, Antoine Biloune and Marine Drive Complex Ltd v Ghana Investments Centre and the Government of Ghana; UNCITRAL, Wintershall AG, International Ocean Resources Inc, Veba Oel AG, Deutsche Schachtbau-​und Tiefbohrbesellschaft mbH, Gulfstream Resources Canada Ltd v The Government of Qatar.

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Chapter 3:  International Arbitration

D. Conclusion 3.20 The previous analysis shows that issues of res judicata arise in international com-

mercial arbitration; it shows that the phenomenon of res judicata before international commercial arbitral tribunals is real.

3.21 As was seen, international commercial arbitral tribunals may have to deal with

issues of res judicata in different situations. While it appears that arbitrators most often have to decide on the res judicata effect of a prior court decision, res judicata issues may also arise between arbitral awards rendered by the same or a different arbitral tribunal. Furthermore, it was seen that within each of the delineated categories res judicata issues may arise in a variety of different situations.

3.22 This chapter has shown that res judicata issues have arisen in numerous arbitra-

tions. Many more cases exist. Due to the growing complexity of international disputes it is to be expected that the number of multiple proceedings will further increase in the future. Because of the proliferation of multiple proceedings and an increasing bifurcation of arbitration proceedings, the number of cases in which arbitrators will have to deal with res judicata issues will also increase.

3.23 On the basis of this conclusion, it is now necessary to examine whether the occur-

rence of res judicata issues before international commercial arbitral tribunals constitutes a problem. For this it is necessary to examine how res judicata issues are currently dealt with in international commercial arbitration law and practice and whether there is a need to elaborate additional rules or guidelines to deal with the phenomenon of res judicata in international commercial arbitration.

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4 R ES JUDICATA IN INTER NATIONA L COMMERCI A L AR BITR ATION—​ A PROBLEM

A . Interests at Stake Due to the Occurrence of Res Judicata Issues in International Commercial Arbitration  1. Waste of resources  2. Undue burden on the winning party in the first proceedings  3. Risk of inconsistent decisions 

B. How are Res Judicata Issues Currently Dealt With in International Commercial Arbitration Law and Practice? 

4.03 4.04

1. International commercial arbitration law  2. International commercial arbitration practice 

4.05 4.06

C . Conclusion 

4.12 4.14 4.122 4.188

Issues of res judicata arise in international commercial arbitration in a multitude 4.01 of situations. So what? The question arises whether the occurrence of res judicata issues in international commercial arbitration constitutes a problem that needs to be dealt with. This question in turn raises three sub-​questions. –​ What are the possible consequences of the occurrence of res judicata issues in international commercial arbitration? Expressed differently, what interests are at stake? –​ How are res judicata issues currently dealt with in international commercial arbitration law and practice? –​ Is the way in which international commercial arbitral tribunals currently deal with res judicata issues satisfactory? The aim of this chapter is to demonstrate that the phenomenon of res judicata 4.02 in international commercial arbitration constitutes a problem. To do so, this chapter will answer the three questions raised above in the order listed. The conclusion will show that the way in which res judicata issues are currently dealt with is insufficient.

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Chapter 4:  Arbitration—A Problem

A.  Interests at Stake Due to the Occurrence of Res Judicata Issues in International Commercial Arbitration 4.03 In its 2003 resolution concerning the use of the doctrine of forum non conveniens

and anti-​suit injunctions, the Institut de Droit International stated that ‘[p]‌arallel litigation in more than one country between the same, or related, parties in relation to the same, or related, issues should be discouraged’1 as it ‘may lead to injustice, delay, increased expense, and inconsistent decisions’.2 As will be seen later, the same holds true for duplicate proceedings. Repetitions of proceedings may entail various negative consequences not only for the parties, but also for the international arbitration process as a whole. 1. Waste of resources

4.04 Duplicate proceedings draw heavily on judicial resources. The parties are required

to invest considerable amounts of time, money, and effort in proceedings which they have already been through, without there being a good reason to suppose that the further proceedings will lead to a more accurate decision than the first.3 Similarly, although the arbitrators will, of course, be remunerated for their task, they are nevertheless required to invest unnecessary time and effort in determining already settled issues.4 Hence, the accepted principles of judicial efficiency and procedural economy are put into question. 2. Undue burden on the winning party in the first proceedings

4.05 Duplicate proceedings also put an additional burden on the party who prevailed

in the first proceedings and who is unwillingly exposed to further arbitration proceedings. The losing party in the first proceedings might try to relitigate the same dispute before an international arbitral tribunal. Such repetition of proceedings seems inherently unfair and runs contrary to the established principle of ne bis in idem according to which a party should not have to defend itself twice for the same action. It would expose the party who prevailed in the first proceedings to major inconvenience, such as having to preserve evidence for an indefinite period

1  Institut du Droit International (IDI), The principles for determining when the use of the doctrine of forum non conveniens and anti-​suit injunctions is appropriate, Resolution, Session of Bruges 2003, para. 3, p. 2, available at http://​w ww.idi-​iil.org. 2  Ibid., para. d, p. 1. 3  Yuval Shany, The Competing Jurisdictions of International Courts and Tribunals (2003), pp. 155 and 164; Robert C. Casad and Kevin M. Clermont, Res Judicata (2001), pp. 29–​31. See also A v Z, Order No. 5, 2 April 2002, regarding Claimant’s request for interim relief, ASA Bulletin, Vol. 21, No. 4 (2003), pp. 815 et seq. 4  Shany, p. 156.

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A.  Interests at Stake of time.5 Such a scenario would put the principles of procedural fairness and legal certainty at stake.6 3. Risk of inconsistent decisions The duplication of proceedings creates a risk of inconsistent decisions. It has been 4.06 submitted that the coexistence of inconsistent decisions ‘could seriously undermine the very existence of the arbitral process’.7 The coexistence of multiple and possibly inconsistent decisions carries with it 4.07 various negative consequences.8 –​ It undermines the finality of decisions. If parties can repeatedly relitigate the same dispute, the dispute might remain unresolved indefinitely; the parties will have no incentive to comply with any decision rendered.9 The very purpose of the adjudication system finally to determine the legal rights between the parties and put an end to the dispute would be put into question. –​ The occurrence of inconsistent decisions undermines fairness, frustrating the parties’ legitimate expectation that identical cases will be treated alike. It has been submitted that, inasmuch as justice requires that like cases be treated alike, the occurrence of inconsistent decisions violates the parties’ right to justice and threatens the Rule of Law itself.10 –​ The credibility of both sets of proceedings is undermined. The rendering of inconsistent decisions may give the impression that the application of the law is not objective and dependent on the strength of the legal argument but, rather, subjective and dependent on the identity of the judges or arbitrators.11 –​ The effectiveness of both proceedings is brought into question.12 In particular, the rendering of inconsistent decisions may weaken the effectiveness of the 5  Shany, p. 164; Eliahu Harnon, Res Judicata and Identity of Actions, 1 Israel Law Review 539, 545 (1966); Allen D. Vestal, Rationale of Preclusion, 9 St Louis University Law Journal 29, 34 (1964). 6  Kaj Hobér, Parallel arbitration proceedings—​D uties of the arbitrators, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M. Cremades and Julian D.M. Lew ed., 2005), p. 247 (cited as Parallel arbitration). 7  Norah Gallagher, Parallel Proceedings, Res Judicata and Lis Pendens: Problems and Possible Solutions, in Pervasive Problems in International Arbitration (Loukas A.  Mistelis and Julian D.M. Lew QC ed., 2006), para. 17-​1. 8  For a brief overview of the negative consequences of contradictory decisions, see Claire Debourg, Les contrariétés de décisions dans l’arbitrage international (2012), para. 15. 9  Shany, p. 164. See also David W. Rivkin, The impact of parallel and successive proceedings on the enforcement of arbitral awards, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M. Cremades and Julian D.M. Lew ed., 2005), p. 271. 10  Vaughan Lowe, Res Judicata and the Rule of Law in International Arbitration, 8 African Journal of International Law 38, 47 et seq. (1996). 11  Shany, p. 285. 12  Ibid., p. 124.

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Chapter 4:  Arbitration—A Problem second arbitration because the courts of the seat of the arbitration could set aside the award on the ground that it is inconsistent with another decision previously rendered, recognized, or recognizable in the same state.13 It may also be difficult or even impossible for the parties to obtain the enforcement of an award that is inconsistent with another decision in the enforcement state.14 Even if enforcement is obtained, the parallel enforcement of inconsistent decisions in different countries is equally unsatisfactory. In such situations, the parties’ dispute cannot be said to have been effectively resolved. –​ The rendering of inconsistent decisions undermines legal certainty and predictability. The parties should be able to expect as much predictability and certainty as possible, given that, at the end of the proceedings, there will be a final and binding decision determining their legal rights. –​ The ability of the law to provide effective guidance and the process of developing clear normative standards are also at stake.15 4.08 Accordingly, inconsistent decisions rendered by international commercial arbitral

tribunals put into question the predictability, certainty, effectiveness, credibility, and fairness of international commercial arbitration. A high degree of uncertainty as to the direction of arbitration case law might undermine the parties’ confidence in international commercial arbitration and discourage them from referring disputes to arbitration.16 After two conflicting awards had been rendered in the CME and Lauder arbitrations, counsel for the Czech Republic described the situation as ‘absolutely ludicrous, and highly regrettable for the fact that it makes the law look so stupid’. He added: ‘It makes one appreciate how uncertain the arbitral process is. You have to conclude that arbitration is too hazardous—​you must go to a national court [where] . . . you can get mistakes corrected by an appeal.’17 It should be noted that counsel for the Czech Republic had rejected five alternative offers from the claimant to consolidate the two arbitration proceedings and thereby avoid the risk of inconsistent awards. The words of counsel for the Czech Republic are nevertheless alarming and raise great concern for the reputation of the international arbitration process.18

4.09 The existence of inconsistencies may be beneficial to adjudication systems in gen-

eral, and international arbitration in particular, as inconsistencies may promote the development of the law in the long run. It has been argued that inconsistent legal   Bernard Hanotiau, Complex Arbitrations (2005), para. 543.  In Fomento de Construcciones y Contratas SA v Colon Container Terminal SA the Swiss Federal Tribunal held that the coexistence of two contradictory decisions rendered with regard to the same dispute and between the same parties would violate public policy (ATF 127 III 279, para. 2b). 15  Shany, p. 117. 16  Ibid., p. 124. 17  Quotes reported in Charles N. Brower I, Charles H. Brower II, and Jeremy K. Sharpe, The Coming Crisis in the Global Adjudication System, 19(4) Arbitration International 415, 428 (2003). 18  Ibid., p. 428. 13

14

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B.  Arbitration Law and Practice pronunciations bring controversial questions to the fore and encourage debate and brainstorming which might spur legislation on the matter. After a certain amount of debate, the inconsistencies become narrowed down and a solution emerges that might become jurisprudence constante. Furthermore, inconsistencies encourage cross-​fertilization and might compel judicial bodies to improve their methods of operation and quality of work in order to attract more business.19 However, the arguments against inconsistent decisions seem to outweigh the argu- 4.10 ments in favour of them, in particular in res judicata situations stricto senso where the same matter, arising out of the same set of facts, has already been decided between the same parties in other proceedings.20 In the long run, inconsistencies cannot be tolerated as the parties could otherwise lose confidence in the adjudication system and avoid using it. Furthermore, while arbitral tribunals are certainly involved in the academic process of developing international arbitration law, the arbitrators’ primary task is not an academic one, but a practical one. Their task is to resolve a given dispute fairly and efficiently. The parties are seeking the resolution of a particular dispute. They are not looking for an opportunity to contribute, at their own expense, to the development of the law.21 Nor do they owe a duty to the arbitration community or are required ‘to help make the world a better place’.22 The interests at stake due to the occurrence of res judicata issues before inter- 4.11 national commercial arbitral tribunals are of major importance. They should be safeguarded for international commercial arbitration to preserve its legitimacy and reputation as an effective adjudication system.

B.  How are Res Judicata Issues Currently Dealt With in International Commercial Arbitration Law and Practice? Before attempting to find solutions to the problem of res judicata before inter- 4.12 national commercial arbitral tribunals, it is important to examine the current state of law and practice. The dual objective of this analysis is to determine not only what is provided for, but also the limits of and gaps in international commercial

  On this ‘progress through catastrophe’ argument, see Shany, pp. 122 et seq.   Shany, p. 124. On the distinction between inconsistent decisions and inconsistent jurisprudence, see Debourg, para. 45. In international arbitration, the existence of an arbitral jurisprudence appears to be more and more widely recognized. The existence of an arbitral legal order has also been argued. Therefore, the existence of an inconsistent jurisprudence in international arbitration may create a degree of uncertainty beyond the strict res judicata context. 21  Alan Redfern, Martin Hunter, Nigel Blackaby, and Constantine Partasides, Law and Practice of International Commercial Arbitration (5th ed. 2009), para. 1-​113. 22  Remark made on 18 November 2008 by Prof Radicati di Brozolo in the OGEMID email discussion entitled ‘Thoughts on an Arbitration Database’, available at http://​w ww.transnational-​ dispute-​management.com. 19

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Chapter 4:  Arbitration—A Problem arbitration law and practice with respect to res judicata. The outcome of this investigation will determine the starting point and delineate the search for possible solutions. 4.13 The following analysis will first examine how res judicata issues are currently dealt

with in international commercial arbitration law (1.). It will then investigate how the law is applied and supplemented by international commercial arbitration practice (2.). 1. International commercial arbitration law

4.14 International commercial arbitration law comprises various rules from different

sources, namely domestic arbitration laws, arbitration rules of arbitration institutions, and international arbitration conventions. In addition to this ‘hard law’, it is worth mentioning arbitration ‘soft law’; that is, non-​binding professional guidelines, which may have considerable persuasive authority.23 The following analysis will examine these sources in the order mentioned to determine whether and to what extent they deal with res judicata issues arising before international commercial arbitral tribunals.

a. Domestic arbitration laws 4.15 Domestic arbitration laws frequently state the general principle that arbitral awards have res judicata effects. This principle is today generally accepted through virtually all common law and civil law jurisdictions.24 However, as will be seen later, domestic arbitration laws do not usually go beyond affirming this general principle. 4.16 The res judicata effect of awards is provided for expressly in the arbitration laws of

some civil law countries, for example France,25 the Netherlands,26 Austria,27 and Spain.28 In Belgium29 and Germany,30 the arbitration laws provide that arbitral awards have the same effect between the parties as a final and binding court decision, and in Switzerland an award is ‘final from its notification’.31 23 See Gabrielle Kaufmann-​ Kohler, Soft Law in International Arbitration:  Codification and Normativity, Journal of International Dispute Resolution 1, 2 (2010). 24  Audley Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, Arbitral Procedure at the Dawn of the New Millennium, Reports of the International Colloquium of CEPANI, 15 October 2004 (2005), p. 275 (cited as The Scope and Res Judicata Effect of Arbitral Awards); Hanotiau, para. 538; Mauro Rubino-​Sammartano, International Arbitration Law and Practice (2nd ed. 2001), pp. 787 et seq. See also Julian D.M. Lew, Loukas A. Mistelis, and Stefan M. Kröll, Comparative International Commercial Arbitration (2003), paras 24-​1 et seq. 25  Article 1484 F-​CPC. 26  Article 1059(1) Dutch Arbitration Act 2015. 27  Article 607 Austrian Arbitration Act 2006. 28  Article 43 Spanish Arbitration Act 2011. 29  Article 1713(9) Belgian Judicial Code 2013. 30  Article 1055 German Zivilprozessordnung (ZPO). A similar provision is contained in Article 31 of the Brazilian Arbitration Law 9.307 of 1996. 31  Article 190(1) PILA.

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B.  Arbitration Law and Practice While in common law countries arbitration laws may not always provide explicitly 4.17 for the res judicata effect of arbitral awards, it will be seen later that in England and the United States awards are generally considered to have res judicata effect.32 The courts in India, Australia, and New Zealand have also confirmed that awards have res judicata effect.33 The United Nations Commission on International Trade Law (UNCITRAL) 4.18 Model Law on International Commercial Arbitration also considers arbitral awards to have res judicata effect by providing that awards shall be recognized as binding. The following analysis will examine in more detail the arbitration laws of England, 4.19 the United States, France, and Switzerland, as well as the UNCITRAL Model Law. England  In England it has long been established that the doctrine of res 4.20 judicata applies to arbitral awards.34 It has been held since at least 1783 that awards can justify a plea of cause of action estoppel and issue estoppel.35 The English Arbitration Act 1996 does not contain a provision expressly pro- 4.21 viding that awards have res judicata effects in the same way as court judgments.36 However, section 58(1) of the Arbitration Act 1996 provides that awards are final and binding: ‘Unless otherwise agreed by the parties, an award made by the tribunal pursuant to an arbitration agreement is final and binding both on the parties and on any persons claiming through or under them.’ English courts have long since held that awards are final and binding on the parties 4.22 and operate in the same way between them as court judgments.37 It is considered that the traditional doctrine of res judicata applies to arbitration as it does to litigation.38 There must be a final award on the merits pronounced by a tribunal of competent jurisdiction. In addition, the award must be rendered or recognized in England.39 32  Gary B. Born, International Commercial Arbitration (2009), pp. 2895 and 2904 et seq.; Jack J. Coe Jr., International Commercial Arbitration (2001), p. 299. 33 International Law Association (ILA), Interim Report on Res Judicata and Arbitration, Berlin Conference (2004), p. 11, available at http://​w ww.ila-​hq.org and in 25(1) Arbitration International 35 (2009). 34 Mark Beeley and Hakeem Seriki, Res Judicata:  Recent Developments in Arbitration, 8(4) International Arbitration Law Review 111 (2005). 35 ILA, Interim Report, p. 10 with reference to Doe d Davy v Haddon (1783) 3 Doug KB 310. See also Cummings v Heard (1869) LR 4 QB 669, 672. 36  Peter Schlosser, Arbitral Tribunals or State Courts—​Who Must Defer to Whom?, ASA Special Series No. 15 (2001), p. 21; Born, p. 2904. 37  Robert Merkin, Arbitration Law (2004), para. 18.128 with reference to Pitcher v Rigby (1821) 9 Price 79; Imperial Gas Light & Coke Co. v Broadbent (1859) 7 HL Cas 600; Caledonian Railway Co. v Turcan [1898] AC 256. 38  David Joseph QC, Jurisdiction and Arbitration Agreements and their Enforcement (2005), para. 15-​70; Hanotiau, para. 540. See also Lord Denning MR in Fidelitas Shipping Co. Ltd v V/​O Exportchleb [1966] 1 QB 630, 641 (‘Like principles [i.e. cause of action and issue estoppel] apply to arbitration’). 39 ILA, Interim Report, p. 10.

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Chapter 4:  Arbitration—A Problem 4.23 As with a judgment, an award extinguishes an earlier cause of action. The extin-

guished claim is merged into the award and the winning party’s rights are replaced by the right to seek enforcement of the award.40 Either party is thus prevented from pursuing the decided claim again at a later stage of the arbitration or in other proceedings.41 The parties cannot assert or deny the existence or non-​existence of the claim in other proceedings.42

4.24 English courts apply the doctrine of cause of action estoppel narrowly. They apply

it only where the same claim (requiring the same elements of proof) is applied to the same facts and where the same time period is involved.43 Cause of action estoppel applies only to claims actually referred to arbitration; the original cause of action remains in existence with regard to all matters excluded from a prior arbitral tribunal’s jurisdiction.44 In addition, declaratory awards do not extinguish the original cause of action and do not confer any right of enforcement on the winning party. If the losing party does not comply with the award, the winning party will have to bring separate judicial proceedings on the original cause of action, relying on the award as conclusive evidence of its right.45

4.25 An award may give rise to issue estoppel. The award is binding with respect to issues

that were necessarily resolved by the award;46 the parties cannot contradict the

40  Merkin, para. 18.128; Born, p. 2905 with reference to F.J. Bloemen Pty Ltd v Council of the City of Gold Coast [1973] AC 115, PC. 41  David St John Sutton and Judith Gill, Russell on Arbitration (23rd ed. 2007), para. 6-​176 with reference to Westland Helicopters Ltd v Al-​Hejailan [2004] 2 Lloyd’s Rep. 523; Fidelitas Shipping Co. Ltd. v V/​O Exportchleb [1965] 1 Lloyd’s Rep 223, CA; Siporex Trade SA v Comdel Commodities Ltd [1986] 2 Lloyd’s Rep 428; Noble Assurance Co. v Gerling-​Konzern General Insurance Co. [2007] EWHC 253 (Comm). See also Sir Michael J. Mustill and Stewart C. Boyd, The Law and Practice of Commercial Arbitration in England (2nd ed. 1989), p. 409 (cited as Law and Practice) and Lord Michael J. Mustill and Stewart C. Boyd, Commercial Arbitration, Companion Volume to the Second Edition (2001), paras 409–​14, p. 209 (cited as Companion). 42  Sutton and Gill, para. 6-​ 176; Mustill and Boyd, Law and Practice, p.  409 and Mustill and Boyd, Companion, paras 409–​14, p. 209. 43  Born, pp. 2905 et seq. with reference to Henry Boot Constr. Ltd v Alstom Combined Cycles Ltd [2005] EWCA Civ 814, CA; Soteriou v Ultrachem [2004] All ER (D) 278 (Apr) (QB). 44  Merkin, para. 18.129; Sutton and Gill, para. 6-​177. 45  Merkin, para. 18.130; Sutton and Gill, para. 6-​177. 46  It is worth noting here the rule in Conquer v Boot [1928] 2 KB 336, which has been extended to arbitration in Telfair Shipping Corporation v Inersea Carriers SA, The Caroline P [1983] 2 Lloyd’s Rep 351. According to the rule in Conquer v Boot the parties are precluded from resubmitting any issues that were within the scope of the first arbitration, whether or not those issues were expressly raised. It applies to any issue falling within the terms of the reference to the arbitral tribunal, whether or not those issues were discussed or ruled upon by the tribunal (see LIDL GmbH v Just Fitness Limited [2010] EWHC 39 (Ch)). While the rule in Conquer v Boot may therefore be said to constitute a particular aspect of the rule in Henderson v Henderson (Pierre Mayer, L’obligation de concentrer la matière litigieuse s’ impose-​t-​elle dans arbitrage international?, 2 Cahiers de l’arbitrage 413, 418 (2011) (cited as L’obligation de concentrer la matière litigieuse s’ impose-​t-​elle dans l’arbitrage international?)), it may also be viewed as extending the scope of an issue estoppel to issues that were not expressly ruled upon by the arbitral tribunal, even though they were covered by its terms of reference.

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B.  Arbitration Law and Practice earlier findings of the tribunal on these issues in further proceedings.47 The applicability of the traditional doctrine of issue estoppel to arbitral awards was confirmed by Diplock LJ in Fidelitas Shipping Co. Ltd v V/​O Exportchleb: Issue estoppel applies to arbitration as it does to litigation. The parties having chosen the tribunal to determine the disputes between them as to their legal rights and duties are bound by the determination by that tribunal of any issue which is relevant to the decision of any dispute referred to that tribunal.48

The question whether the rule in Henderson v Henderson49 applies to awards has 4.26 been controversial among scholars. According to Mustill and Boyd: ‘it is doubtful whether the rule in Henderson v Henderson applies to issues which are outside the scope of the matters referred to the arbitrator even though they fall within the terms of the arbitration agreement.’50 According to Veeder the rule in Henderson v Henderson should not apply to awards in 4.27 England because it would be illogical to consider the absence of a decision and reasons in a first award as a ground for refusing new arguments in subsequent proceedings.51 However, several other commentators have suggested that the rule in Henderson v 4.28 Henderson may apply to awards under English law.52 English courts have held that the rule in Henderson v Henderson applies to ar- 4.29 bitration, albeit with some limitations.53 In particular, due to the consensual

47  Merkin, para. 18.132; Sutton and Gill, para. 6-​ 176; Mustill and Boyd, Law and Practice, p. 413; and Mustill and Boyd, Companion, paras 409–​14, p. 209. 48  Fidelitas Shipping Co. Ltd v V/​O Exportchleb [1966] 1 QB 630, 644. See also People’s Insurance Company of China, Hebei Branch; China National Feeding Stuff Import/​Export Corporation v Vysanthi Shipping Co. Ltd (The ‘Joanna V’) [2003] 2 Lloyd’s Rep 617, 628; Associated Electric and Gas Insurance Services Ltd v European Reinsurance Co. of Zurich [2003] 1 WLR 1041, 1049 (‘The [first] award has conferred upon [European Re] a right which is enforceable by later pleading an issue estoppel. It is a species of the enforcement of the rights given by the [first] award just as much as would be a cause of action estoppel’); Svenska Petroleum Exploration AB v Government of the Republic of Lithuania and another (No. 2) [2006] EWCA Civ 1529. 49  Henderson v Henderson (1843) 3 Hare 100. 50  Mustill and Boyd, Law and Practice, p. 413 and Mustill and Boyd, Companion, paras 409–​14, p. 209. 51  V.V. Veeder, Issue Estoppel, Reasons for Awards and Transnational Arbitration, Complex Arbitrations—​P erspectives on their Procedural Implications, ICC International Court of Arbitration Bulletin, Special Supplement (2003), p.  75. See also Peter R. Barnett, Res Judicata, Estoppel, and Foreign Judgments (2001), pp. 225 et seq.; ILA, Interim Report, p. 11. 52  See, e.g., Sutton and Gill, para. 6-​176 with reference to, inter alia, Henderson v Henderson (1843) 3 Hare 100; Fidelitas Shipping Co. Ltd v V/​O Exportchleb [1965] 1 Lloyd’s Rep 223, CA; and Arnold v National Westminster Bank [1991] 3 All ER 41, nn. 56 and 57; Merkin, para. 18.132. See also Mayer, L’obligation de concentrer la matière litigieuse s’ impose-​t-​elle dans l’arbitrage international?, p. 418 with reference to Telfair Shipping Corporation v Inersea Carriers SA, The Caroline P [1983] 2 Lloyd’s Rep 351. 53  Nomihold Securities Inc. v Mobile Telesystems Finance SA [2012] EWHC 130 (Comm), at para. 42 (with references cited). In LIDL GmbH v Just Fitness Limited [2010] EWHC 39 (Ch), it was held that the rule in Conquer v Boot [1928] 2 KB 336 applies in arbitration to the extent that any

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Chapter 4:  Arbitration—A Problem nature of arbitration, the rule may apply in relation to an earlier arbitration only if all parties to the subsequent proceedings (or their privies) have also been parties to the previous one,54 whereas the traditional principle of Henderson v Henderson can apply where the parties to the earlier and subsequent proceedings are different.55 4.30 As a general rule, under English law awards take effect from the date on which they

are made.56 Awards are generally only effective with regard to the parties and any persons claiming through or under them.57 This is the case even if the parties to the arbitration have agreed that the award should bind third parties.58 However, a third party may agree to be bound by an award.59

4.31 In Sun Life Assurance Co. of Canada v The Lincoln National Life Insurance Co. the

question arose whether an award may be conclusive as between a party to the award and a third party who seeks to rely on it.60 The Court of Appeal confirmed the applicability of the mutuality doctrine: under English law a party may not rely in further proceedings on a prior award to which it was not a party.61

4.32 United States  In the United States there is no federal statute providing for the

res judicata effect of arbitral awards. The Federal Arbitration Act (FAA) does not even state that awards are binding upon the parties. However, both claim

claims falling within the scope of a tribunal’s terms of reference cannot be raised in subsequent proceedings, regardless of whether or not the tribunal ruled on them in the first arbitration. The rule in Conquer v Boot may be described as a particular aspect of the rule in Henderson v Henderson. It obliges the parties to raise all their potential claims in the first arbitral proceedings. See, however, Aegis v European Re where the Privy Council expressed doubts as to the applicability of the Henderson v Henderson rule holding that it ‘may fall on the other side of the line’ (Associated Electric and Gas Insurance Services Ltd v European Reinsurance Company of Zurich [2003] 1 WLR 1041, 1050, para. 16). Ultimately it did not decide the matter as the question was irrelevant to its decision. 54  Nomihold Securities Inc. v Mobile Telesystems Finance SA [2012] EWHC 130 (Comm), para. 42 with reference to Sun Life Assurance Co. of Canada v Lincoln National Life Insurance Co. [2004] EWCA Civ 1660; Michael Wilson & Partners Ltd v Sinclair and others [2012] EWHC 2560 (Comm), paras 45 et seq. 55  Nomihold Securities Inc. v Mobile Telesystems Finance SA [2012] EWHC 130 (Comm), at para. 42 with reference to Dexter v Vieland-​Boddy [2003] EWCA Civ 14, para. 49. 56  Sutton and Gill, para. 6-​164. 57  Section 58(1) of the English Arbitration Act 1996. See also Gbangbola v Smith and Sherriff Ltd [1998] 3 All ER 730, 738 (‘That finding is by virtue of section 58(1) of the Arbitration Act final and binding on the parties if not challenged (and it has not been) and it is binding on the arbitrator as much as the parties’). 58  Andrew Tweeddale and Keren Tweeddale, Arbitration of Commercial Disputes (2005), para. 30.18; Bruce Harris, Rowan Planterose, and Jonathan, Tecks, The Arbitration Act 1996 (3rd ed. 2007), p. 280. 59  Sutton and Gill, para.6-​183. 60  See Beeley and Seriki, pp. 111 et seq. 61  Sun Life Assurance Co. of Canada v The Lincoln National Life Insurance Co. [2005] 1 Lloyd’s Rep 606, 630–​1.

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B.  Arbitration Law and Practice and issue preclusion are generally considered to apply with respect to arbitral awards.62 Awards have preclusive effects before and after they have been confirmed by a 4.33 court.63 If an award is confirmed by a court under the FAA it becomes a judgment of the court and, as such, acquires the same preclusive effects as any other civil judgment of a US federal district court.64 Such a judgment is also entitled to recognition and preclusive effects in other states under the federal Full Faith and Credit Statute.65 This means that a judicially confirmed award, through the confirming judgment, is res judicata to the same extent in all states of the United States.66 Unconfirmed awards are not covered by the federal Full Faith and Credit provi- 4.34 sions, which deal with the preclusive effects of federal judgments, or by general rules of preclusion applicable to court judgments.67 In McDonald v City of West Branch the US Supreme Court decided that federal courts are not required by statute to give res judicata effects to an unconfirmed award and that any rule of preclusion for unconfirmed awards is necessarily ‘judicially fashioned’.68 Even though courts are not expressly authorized by statute to give preclusive effects to unconfirmed arbitral awards (and despite the existence of US state law suggesting that unconfirmed awards have no preclusive effects), US courts have developed and applied ‘judicially fashioned’ rules of preclusion to unconfirmed awards.69 Judicially fashioned preclusion rules for arbitral awards are built on US claim and 4.35 issue preclusion standards developed for judgments.70 This is generally in conformity with the Restatement of the Law (Second) of Judgments which states in §84(1): ‘a valid and final award by arbitration has the same effects under the rules

62  Born, p. 3747; Coe, p. 299; Andreas F. Lowenfeld, Arbitration and Issue Preclusion: A View from America: Arbitral Tribunals or State Courts—​Who Must Defer to Whom?, ASA Special Series No. 15 (2001), p. 56; Hanotiau, para. 540; G. Richard Shell, Res judicata and collateral estoppel effects of commercial arbitration, 35 UCLA Law Review 623, 640 et seq. (1988); ILA, Interim Report, p. 12. See also ALI, Restatement (Third), International Commercial Arbitration (Tentative Draft No. 2, 2012), §§4-​9 and 4-​10, with references. 63  Born, p. 3747; Shell, pp. 642 et seq. 64  FAA, 9 USC §13; Born, pp. 3747–​8. 65  Born, p. 3748; Shell, p. 643. See 28 USC §1738 (1964) (‘Such Acts, records and judicial proceedings or copies thereof, so authenticated, shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State, Territory or Possession from which they are taken’); Article VI, Section 1 US Constitution (‘Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state’); ALI, Restatement (Second), Judgments, §18, pp. 155–​6. 66  Magnolia Petroleum Co. v Hunt, 320 US 430, 438 (1943) (‘From the beginning this Court [the US Supreme Court] has held that these provisions [Article VI, Section 1 US Constitution and 28 USC §1738] have made that which has been adjudicated in one state res judicata to the same extent in every other’). 67  Born, p. 3748. 68  McDonald v City of West Branch, 466 US 284, 288 (1984). 69  Born, p. 3749, with references. 70  Ibid., p. 3749.

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Chapter 4:  Arbitration—A Problem of res judicata, subject to the same exceptions and qualifications, as a judgment of a court’. 4.36 The application of preclusion rules to arbitral awards appears widely established

in US case law, with courts generally applying the traditional doctrines of claim and issue preclusion in cases where a party attempts to relitigate a claim or issue already determined in a prior arbitral award.71 However, it has been observed that this practice is ‘less the result of any principled analysis of arbitral preclusion than of the largely irreflective extension of judicially fashioned preclusion doctrine to the arbitral context’.72 Such a ‘principled analysis of arbitral preclusion’ is currently conducted by the American Law Institute (ALI), whose Restatement (Third) US Law of International Commercial Arbitration will cover the preclusive effect of international arbitral awards.73

4.37 Regarding claim preclusion, US courts have consistently held that a ‘claim’ previ-

ously decided in an arbitral award cannot be relitigated between the same parties.74

71 See ibid., pp.  3749 et seq. with references; Shell, pp.  640 et seq.; Richard W.  Hulbert, Arbitral procedure and the preclusive effect of awards in international commercial arbitration, 7 International Tax & Business Lawyer 155, 174 et seq (1989). See also MACTEC Inc. v Gorelick, 427 F.3d 821, 831 (10th Cir. 2005); Greenblatt v Drexel Burnham Lambert, Inc., 763 F.2d 1352, 1360 (11th Cir. 1985); Manion v Nagin, 394 F.3d 1062, 1067 (8th Cir. 2005) (‘An arbitration award counts as a final judgment for collateral estoppels’); Freecharm Limited v Atlas Wealth Holdings Corporation, Atlas One Holdings LLC, Daniel Kalb, Paul Weiss, Jorge Kalb, Napoleon Aponte, 2012 WL 6029136 (11th Cir. 2012). On the traditional doctrines of claim and issue preclusion in US law, see paras 1.47 et seq. 72  Gerard J. Sanders, Rethinking Arbitral Preclusion, 24 Law and Policy in International Business 101, 102 (1992–​1993). See also Shell, pp. 658 et seq. (‘The review of cases . . . demonstrates that the courts have widely applied traditional res judicata and collateral estoppel doctrine to cases in which preclusion is asserted on the basis of a prior arbitration award. On the basis of traditional preclusion analysis, courts frequently bar relitigation of both claims and issues previously adjudicated in arbitration. However, courts rarely justify their decision to allow such preclusion. Many opinions imply simply that it is “fair” to limit a litigant to one full hearing on a matter. In essence, the courts seem to feel that arbitration is sufficiently like litigation to apply the same rules of preclusion to both types of proceedings’). 73  See ALI, Restatement (Third), International Commercial Arbitration (Tentative Draft No. 2, 2012), §§4-​9 and 4-​10 on claim preclusion and issue preclusion. This Tentative Draft No. 2 of 16 April 2012 was approved at the 2012 Annual Meeting. 74  See, e.g., FleetBoston Financial Corp. v Alt, 638 F.3d 70, 79 (1st Cir. 2011), with references (‘ALT essentially seeks another bite at the apple after it submitted the relevant claims to arbitration; after the panel issued a “full and final” arbitral award that it refused to modify at ALT’s request; after ALT failed to pursue the various available avenues for clarifying, vacating, or modifying that award; and even after the ALT claimants further ratified the award by accepting payments made on October 12, 2007 that constituted “full and final payment of the arbitration awards granted on September 12, 2007.” We conclude ALT is not entitled to this second chance. . . . This conclusion is consistent with the doctrine of res judicata, specifically claim preclusion, and is in service of that doctrine’s “dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation”’); Bancol y Cia. S. en C. v Bancolombia SA, 280 F. Appx. 85, 86 (2d Cir. 2008). See also ALI, Restatement (Third), International Commercial Arbitration (Tentative Draft No. 2, 2012), §4-​9. On the notion of ‘claim’ in US law, see paras 1.63–​1.64.

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B.  Arbitration Law and Practice Furthermore, most US courts have held that the doctrine of claim preclusion bars the relitigation of claims that were not but could and should have been brought in the prior arbitration proceedings.75 Under the Restatement (Second) of Judgments, arbitral awards have claim preclusive effect under the same conditions and qualifications as court judgments. If awards ‘were not treated as the equivalent of a judicial adjudication for purposes of claim preclusion, the obligation to arbitrate would be practically illusory’.76 The Restatement (Second) of Judgments specifies that an arbitral award may have 4.38 claim preclusive effects in subsequent proceedings only if the award has become final. Whether an award is final is determined in accordance with §13 of the Restatement containing the finality requirements for judgments.77 An award that has been set aside or does not meet the requirements for recognition is not final for the purposes of res judicata.78 Furthermore, arbitral awards have claim preclusive effects only for the parties to 4.39 the arbitration proceedings or their privies, the notion of ‘privies’ being applied broadly to cover persons or entities related to the parties or who would have had an opportunity to participate in the previous arbitration proceedings.79 §84 of the Restatement (Second) contains exceptions to the general applicability 4.40 of the doctrine of claim preclusion to awards. According to §84(2), ‘[a]‌n award by arbitration with respect to a claim does not preclude relitigation of the same or a related claim based on the same transaction if a scheme of remedies permits assertion of the second claim notwithstanding the award regarding the first claim.’ According to Born, this means that where Congress has guaranteed a judicial right 4.41 of action for a federal claim—​that is, where the claim is not arbitrable—​arbitral awards may not give rise to claim preclusion.80 Furthermore, §84(4) provides that ‘[i]‌f the terms of an agreement to arbitrate limit 4.42 the binding effect of the award in another adjudication or arbitration proceeding, the extent to which the award has conclusive effect is determined in accordance with that limitation.’ 75 See Born, p. 3751 with references. See also Lewis v Circuit City Stores, Inc., 500 F.3d 1140, 1147 (10th Cir. 2007); Sanders v Washington Metropolitan Area Transit Auth., 819 F.2d 1151, 1157 (D.C. Cir. 1987); Norris v Grosvenor Mktg Ltd, 803 F.2d 1281, 1286 (2d Cir. 1986); Rudell v Comprehensive Accounting Corp., 802 F.2d 926 (7th Cir. 1986); Schattner v Girard, Inc., 668 F.2d 1366, 1368 (D.C. Cir. 1981); Sue Klau Enter. Inc. v Am. Fidelity Fire Ins., Co., 551 F.2d 882 (1st Cir. 1977). See also Mayer, L’obligation de concentrer la matière litigieuse s’ impose-​t-​elle dans l’arbitrage international?, p. 418, with references. 76 ALI, Restatement (Second), Judgments, §84, p. 288. 77  Ibid., §84, p. 290. 78  Born, pp. 3750–​1. 79  Ibid., p. 3752, with references. 80  Ibid., p. 2898.

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Chapter 4:  Arbitration—A Problem 4.43 Accordingly, if the parties exclude the application of the doctrine of claim preclu-

sion in their arbitration agreement, such agreement will be respected and the award will not operate as a res judicata in further proceedings.81

4.44 As was stated earlier, US courts generally apply to arbitral awards the same claim

preclusion rules, ‘subject to the same exceptions and qualifications’, as those developed for court judgments, in conformity with §84(1) of the Restatement (Second) of Judgments. This approach has been criticized in the Restatement (Third) US Law of International Commercial Arbitration (Tentative Draft No. 2, 2012), on the ground that ‘while judgments and arbitral awards are both presumptively enforceable and can preclude further litigation, the conditions and qualifications applicable to claim preclusion in the two settings are different’.82 The Tentative Draft No. 2 of 2012 proposes the following claim preclusion rule for international commercial arbitration: A court precludes relitigation of a claim that was previously adjudicated in an international arbitral award to the extent that the party seeking preclusive effect demonstrates that the award: (a) is entitled to recognition under this Chapter; (b) involves the same parties and the same claim as required by the law of the court in which claim preclusion is sought; and (c) barring relitigation of the claim is consistent with the arbitration agreement and the reasonable expectations of the parties.83

4.45 With respect to issue preclusion, the traditional doctrine generally also applies to ar-

bitral awards.84 This is in conformity with the Restatement (Second) of Judgments, which states in relevant part: there is good reason to treat the determination of the issues in an arbitration proceeding as conclusive in a subsequent proceeding, just as determinations of a court

81  Ibid., pp. 3752–​3, with references, in particular Anderson v Beland, 672 F.3d 113, 133 (2d Cir. 2011) (‘Given the contractual nature of arbitration, it can be argued that the preclusive effect of either a judicial judgment or an arbitration award on a subsequent arbitration should depend on what the parties agreed to. And then the court will decide as a matter of interpretation of the parties’ agreement to arbitrate whether the arbitrators can ignore a prior judicial judgment’); IDS Life Ins. Co. v Royal Alliance Ass’n, Inc., 266 F.3d 645, 651 (7th Cir. 2001) (‘But we emphasize that any claims arising out of the dispute giving rising to this litigation, the dispute the arbitrators were asked to resolve and we think did resolve, are closed to further litigation by the principles of res judicata and collateral estoppel. Closed to litigation; not necessarily to arbitration. Although res judicata and collateral estoppel usually attach to arbitration awards . . ., they do so (if they do so) as a matter of contract rather than as a matter of law. The preclusive effect of the award is as much a creature of the arbitration contract as any other aspect of the legal-​dispute machinery established by such a contract’). See also ALI, Restatement (Third), International Commercial Arbitration (Tentative Draft No. 2, 2012), §4-​9(c) (‘A court precludes relitigation of a claim that was previously adjudicated in an international arbitral award to the extent that the party seeking preclusive effect demonstrates that the award . . . (c) barring relitigation of the claim is consistent with the arbitration agreement and the reasonable expectation of the parties’). 82 ALI, Restatement (Third), International Commercial Arbitration (Tentative Draft No. 2, 2012), §4-​9, comment d. 83  Ibid., §4-​9. 84 ALI, Restatement (Second), Judgments, §84(1); Born, p. 2899. Contra: Sanders, pp. 101 et seq.

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B.  Arbitration Law and Practice would be so treated. When arbitration affords opportunity for presentation of evidence and argument substantially similar in form and scope to judicial proceedings, the award should have the same effect on issues necessarily determined as a judgment has.85

US courts have applied the doctrine of issue preclusion to arbitral awards in cases 4.46 where the same issue, essential to the previous dispute’s outcome, has already been raised and actually decided in the prior arbitration proceedings and where the party against whom issue preclusion is raised had a full and fair opportunity to arbitrate the issue in the arbitration proceedings.86 The doctrine of issue preclusion has been applied to awards in situations where only 4.47 the party against whom issue preclusion is raised was a party, or in privity with a party, to the prior arbitration.87 However, it has been submitted that even though the offensive application of issue preclusion to arbitral awards is permitted, US

 ALI, Restatement (Second), Judgments, §84, pp. 289 et seq.   Born, pp. 3755–​6 with references. See also ALI, Restatement (Third), International Commercial Arbitration (Tentative Draft No. 2, 2012), §4-​10, comment d(ii) (‘Despite the variations, issue preclusion in U.S. courts can be said generally to entail four core requirements. First, the parties must have been given a full and fair opportunity to litigate the relevant issue. Second, the issue whose relitigation would be precluded must have been actually decided in the previous adjudication. Third, resolution of the issue must have been essential to the previous adjudication. And, fourth, the party against whom preclusion is sought must have been a party, or in privity with a party, to that adjudication. These core requirements, as defined, modified, or supplemented by forum law, must be satisfied in order for a finding in an award to have issue preclusive effect’). See also Sheinfeld v Leeds, 201 Fed. Appx. 998, 999–​1000 (5th Cir. 2006); Jacobson v Fireman’s Fund Ins. Co., 111 F.3d 261, 267–​8 (2d Cir. 1997); Pryner v Tractor Supply Co., 109 F.3d 354, 361 (7th Cir. 1997); Norris v Grosvenor Mktg Ltd, 803 F.2d 1281, 1286–​7 (2d Cir. 1986); Barnes v Oody, 514 F. Supp. 23 (E.D. Tenn. 1981); Maidman v O’Brien, 473 F. Supp. 25 (S.D.N.Y. 1979). See also B-​S Steel of Kansas, Inc. v Texas Industries, Inc., 439 F.3d 653, 662–​7 (10th Cir. 2006); F. Hoffmann-​La Roche Ltd. v Qiagen Gaithersburg, Inc., 730 F. Supp. 2d 318, 328–​9 (S.D.N.Y. 2010). In this case, the District Court for the Southern District of New York was seized of an action to vacate an arbitral award on the ground that the arbitral tribunal had manifestly disregarded the law, namely by disregarding the collateral estoppel effects of a prior award of the International Centre for Dispute Resolution (ICDR). The court held that ‘an arbitration decision may effect collateral estoppel in a later litigation or arbitration if the proponent can show “with clarity and certainty” that the same issues were resolved. . . . A party is collaterally estopped if (1) the identical issue was raised in a previous proceeding; (2) the issue was actually litigated and decided in the previous proceeding; (3) the party had a full and fair opportunity to litigate the issue; and (4) the resolution of the issue was necessary to support a valid and final judgment on the merits.’ The court further held that if the arbitral tribunal had simply ignored the prior ICDR award or even questioned that award’s conclusions, the court would have serious reservations about the validity of the award in question. However, there is no manifest disregard of the law where the arbitral tribunal simply erred in its collateral estoppel analysis, namely where the arbitrators had recognized the appropriate governing standard but then erroneously applied that standard to the facts before them. 87  Witkowski v Welch, 173 F.3d 192 (3d Cir. 1999); Ritchie v Landau, 475 F.2d 151, 155–​6 (2d Cir. 1973). In Steelmet, Inc. v Caribe Towing Corp. the court admitted the general applicability of ‘offensive collateral estoppel’ to arbitral awards (‘Offensive use of collateral estoppel is no longer prohibited’). However, the court ultimately denied the application of offensive collateral estoppel on the ground that the burden of proof was allocated differently in the two proceedings (747 F.2d 689, 694 (C.A. Fla. 1984)). See also Shell, p. 653. 85

86

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Chapter 4:  Arbitration—A Problem courts are reluctant to extend the preclusive effects of an award beyond the parties to the arbitration proceedings.88 4.48 As with claim preclusion, an arbitral award may have issue preclusive effects only if

the award is final and binding.

4.49 It has been submitted that the doctrine of issue preclusion is more difficult to apply

to awards than the doctrine of claim preclusion. For instance, it has been argued that because arbitrators frequently do not explain the basis of their decision it is difficult for a court subsequently seized to determine which issues the arbitrators had to resolve to make their award.89 However, most US courts have rejected the argument that procedural differences between arbitration and litigation prevent the application of issue preclusion rules to arbitral awards.90 The Restatement (Third) US Law of International Commercial Arbitration (Tentative Draft No. 2, 2012) also provides that issue preclusion applies in relation to international arbitral awards, while at the same time acknowledging that ‘the availability of issue preclusion based on a prior arbitral award is less straightforward, and the requirements for establishing that an issue in an arbitral award is entitled to preclusive effect are more complex’.91

4.50 The Restatement (Second) of Judgments names several exceptions to the gen-

eral applicability of issue preclusion rules to awards. §84(3) of the Restatement (Second) provides: A determination of an issue in arbitration does not preclude relitigation of that issue if: (a) According preclusive effect to a determination of the issue would be incompatible with a legal policy or contractual provision that the tribunal in which the

88  Born, p. 3757 citing Vandenberg v Superior Court, 982 P.2d 229, 239 (Cal. Sup. Ct. 1999). The California Supreme Court refused to apply offensive collateral estoppel. However, the court admitted that ‘[t]‌he predominant view is that unless the arbitral parties agreed otherwise, a judicially confirmed private arbitration award will have collateral estoppel effect, even in favor of nonparties to the arbitration, if the arbitrator actually and necessarily decided the issue sought to be foreclosed and the party against whom estoppel is invoked had full incentive and opportunity to litigate the matter’. See also In re Neopharm, Inc. Securities Litigation, 2007 WL 625533, at *6 (N.D. Ill. 2007) (‘Ultimately, the court has discretion in determining whether to apply offensive collateral estoppel, especially based on an unconfirmed arbitration decision’); Fireman’s Fund Ins. Co. v Cunningham Lindsey Claims Management, Inc., 2005 WL 1522783, at *4 (E.D.N.Y. 2005) (‘Furthermore, plaintiff hopes to use the Phase II award to make an argument for non-​mutual offensive collateral estoppel. And while an arbitration decision’s preclusive effect may be employed in this manner . . ., it is significant to note that such a use of collateral estoppel is markedly more difficult to invoke than other applications of the doctrine’). 89  Shell, pp. 650 et seq. See also Universal Am. Barge Corp. v J-​Chem, Inc., 946 F.2d 1131 (5th Cir. 1991). 90 See Born, p. 3755 with references. See also In re Khaligh, 506 F.3d 956, 957 (9th Cir. 2007); In re Khaligh, 338 BR 817, 828–​32 (9th Cir. BAP 2006); I. Appel Corp. v Katz, 1999 WL 287370 (S.D.N.Y. 1999); Sullivan v Am. Airlines, Inc., 613 F. Supp. 226, 230–​1 (S.D.N.Y. 1985); Kamakazi Music Corp. v Robbins Music Corp., 534 F. Supp. 69, 80–​1 (S.D.N.Y. 1982); Barnes v Oody, 514 F. Supp. 23, 24–​5 (E.D. Tenn. 1981); US Plywood Corp. v Hudson Lumber Co., 127 F. Supp. 489, 494–​5 (S.D.N.Y. 1954). 91 ALI, Restatement (Third), International Commercial Arbitration (Tentative Draft No. 2, 2012), §4-​10, comment b.

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B.  Arbitration Law and Practice issue subsequently arises be free to make an independent determination of the issue in question, or with a purpose of the arbitration agreement that the arbitration be specifically expeditious; or (b) The procedure leading to the award lacked the elements of adjudicatory procedure prescribed in §83(2).

Furthermore, the Restatement (Second) of Judgments states several circum- 4.51 stances that would justify not giving issue preclusive effects to arbitral awards. For instance, the doctrine of issue preclusion should not apply to an award where the arbitration procedure was very informal.92 Likewise, issue preclusion may be inappropriate with respect to issues of law in cases where arbitrators are allowed to apply principles of law other than those that would be applied by a court adjudicating the same dispute.93 In addition, in accordance with §84(4), if the parties provide in their arbitration agreement that the award shall not give rise to issue preclusion such an agreement will be upheld by the courts.94 Moreover, some US courts have refused to give issue preclusive effects to prior 4.52 awards where the award was either unreasoned or did not clearly dispose of the factual or legal issues.95 Furthermore, where non-​arbitrable claims are involved, the US Supreme Court has held in Dean Witter Reynolds, Inc. v Byrd that ‘it is far from certain that arbitration proceedings will have any preclusive effect on the litigation of nonarbitrable federal claims’.96 The Supreme Court further held that federal courts have the discretion to protect federal interests by determining the preclusive effects to be given to an award, including denying any preclusive effects to an award.97 Finally, the Restatement (Third) US Law of International Commercial Arbitration 4.53 (Tentative Draft No. 2, 2012) suggests the following issue preclusion rule for international commercial arbitration: A court precludes relitigation of a specific issue of fact or law made by an international arbitral award if: (a) the award is entitled to recognition under this Chapter; (b) the award satisfies the requirements for issue preclusion prescribed for an arbitral award by the law of the forum in which such recognition is sought; and (c) barring relitigation of the issue is consistent with the arbitration agreement and the reasonable expectations of the parties.98

 ALI, Restatement (Second), Judgments, §84, p. 289.   Ibid., §84, p. 291. 94 See Born, p. 3758. 95  Ibid., p. 3757, with references. 96  Dean Witter Reynolds, Inc. v Byrd, 470 US 213, 223 (1985). 97  Ibid. See also Lowenfeld, pp. 59 et seq. Given the diminished role of non-​a rbitrability of claims in US arbitration law the scope of this exception is small. 98 ALI, Restatement (Third), International Commercial Arbitration (Tentative Draft No. 2, 2012), §4-​10. 92 93

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Chapter 4:  Arbitration—A Problem 4.54 §4.10(c) is noteworthy in that it grants courts ‘substantial discretion in deciding

whether to grant issue preclusion based on a prior award and make that determination on a case-​by-​case basis’,99 taking into consideration the parties’ reasonable expectations and, in particular, the fact that parties to an international arbitration may come from a country that does not recognize the doctrine of issue preclusion. The Restatement (Third) US Law of International Commercial Arbitration (Tentative Draft No. 2, 2012) provides that to assess the parties’ expectations in relation to issue preclusion, a court properly considers: (a) the standards and practices regarding issue preclusion in the place where the parties are domiciled, have their principal place of business, or regularly conduct activities related to the dispute, (b) any relevant industry practices or terms in the parties’ arbitration agreement that may indicate expectations regarding the effect of arbitral findings on subsequent claims, (c) any indications from the arbitral record that reflect the parties’ expectations regarding the issue preclusive effect of the award, insofar as the confidentiality of the arbitral proceedings allows, (d) the extent to which the law of the seat of arbitration has an established policy on issue preclusion and the parties may have considered that policy in selecting the arbitral seat, and (e) any other factor properly taken into account in assessing whether a grant of preclusion would be consistent with the parties’ agreement and reasonable expectations.100

4.55 France  Article 1484(1) of the French Code de Procédure Civile (F-​CPC) provides

that ‘the arbitral award, from the moment that it has been given, will become res judicata with respect to the dispute that it has determined’. As per Article 1506(4) F-​CPC, Article 1484 F-​CPC applies to both domestic and international arbitral awards.

4.56 Because the wording of Article 1484 F-​CPC is similar to the wording of Article 480

F-​CPC,101 it may be argued that the res judicata doctrine applies to awards in essentially the same way as it applies to judgments.102 Indeed, the applicability of the res judicata doctrine to awards is subject to essentially the same triple identity test103

  Ibid., §4-​10, comment d(iii).   Ibid., §4-​10, comment d(iii). For a critical opinion, see Born, p. 3759. 101  Article 480 F-​CPC states in relevant part: ‘The judgment which decides in its holdings all or part of the main issue . . . shall from the time of its pronouncement, become res judicata with regard to the dispute which it determines’. 102  According to Jarrosson (Charles Jarrosson, L’autorité de la chose jugée des sentences arbitrales, 8 Procédures, August 2007, Etude 17), even if the wording of Articles 1476 (now Article 1484 F-​CPC) and 480 F-​CPC is similar and even if in practice awards generally have the same preclusive effects as judgments, ‘chose arbitrée’ and ‘chose jugée’ are not identical; the chose arbitrée of awards presents several particularities relating to the consensual nature of arbitration, the lack of formality in arbitration, and the fact that awards are not attached to a particular legal order. See also Vincent Chantebout, Note—​26 March 2009, Cour d’appel de Paris (1re Ch. C), 3 Revue de l’Arbitrage 533, 536, para. 12 (2010). 103  Jarrosson. Debourg observes that while the requirement of party identity is generally recognized and applied by international arbitral tribunals, some arbitral tribunals have taken a few liberties with the French notion of party identity (Debourg, para. 516, pp. 427–​8). See also decision of the Cour d’appel de Paris, 26 March 2009, Société Papillon Group Corporation v République Arabe 99

100

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B.  Arbitration Law and Practice and awards are generally afforded the same preclusive effects as judgments.104 In a decision rendered by the Tribunal de grande instance of Chaumont and confirmed by the Cour d’appel de Dijon, it was held that ‘[a]‌n arbitral award is without any doubt a judicial act which is rendered by a private judge to whom the parties have submitted their dispute by mutual agreement and which is given by national law the same effects as a court judgment.’105 Article 1484 F-​CPC does not define the term ‘award’ and, hence, does not specify 4.57 the type of award that may become res judicata. The general rule is that all decisions that can be properly qualified as awards may have res judicata effects.106 It has been submitted that awards are final decisions107 of arbitrators on all or part of the dispute submitted to them, whether they concern the merits of the dispute, jurisdiction, or a procedural issue leading them to end the proceedings.108 Provisional or preliminary awards do not have res judicata effects.109 de Syrieet autres, Rev. arb., No. 3 (2010), pp. 525–​32. In this case, the Cour d’appel found that the doctrine of res judicata could not apply because there was no party identity. The prior award on jurisdiction rendered between three parties could not have res judicata effect in a subsequent arbitration proceeding in which the question of the binding effect of one of the three parties was again raised. The Cour d’appel found that because there were three parties in the first arbitration, but only two parties in the second arbitration (due to the fact that the third party refused to sign the terms of reference in the second arbitration), the party identity requirement was not met. For a critical comment on this decision, see Chantebout. 104 Jarrosson; Born, p. 3765. 105  Tribunal de grande instance de Chaumont, 31 January 2002/​C our d’appel de Dijon, 23 April 2002, JDI, Vol. 2 (2003), pp. 459 et seq. (free translation of the original French version). 106 Jarrosson. 107  The question of the legal nature of arbitral awards, namely whether they may be considered as genuine decisions, is controversial. For a discussion of this controversy, see Debourg, paras 409 et seq., pp. 346 et seq. See also Sylvain Bollée, Les méthodes du droit international privé à l’épreuve des sentences internationales (2004) (paras 49 et seq., pp. 36 et seq.), according to whom arbitral awards are more properly considered as judicial facts (‘ faits juridiques’), rather than judicial acts. 108  Philippe, Fouchard, Emannuel Gaillard, and Berthold Goldman, International Commercial Arbitration (1999), para. 1353; Jarrosson, with references. 109  Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001 (2004), p. 28; Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 279; Mélina Douchy-​Oudot, Autorité de la chose jugée—​Autorité de la chose jugée au civil sur le civil, in JurisClasseur—​ Procédure Civile, fasc. 554 and JurisClasseur— ​Civil Code, fasc. 20, 13 November 2013, para. 15, with references. See also Cour d’appel de Paris, 29 April 2003, Société nationale des pétroles du Congo v Société Total Fina Elf E&P Congo, JDI, Vol. 2 (2004), pp. 511 et seq. The Cour d’appel held that the ICC pre-​a rbitral referee procedure does not qualify as an arbitration procedure. Provisional measures issued by a pre-​a rbitral referee are of a contractual nature and have only ‘autorité de la chose convenue’. See also Cour de cassation, 28 October 1987, SARL Bureau Qualitas et Conte v Viet et Boudy, Rev. arb., No. 1 (1988), pp. 149 et seq. The court held that the res judicata effect of an award may not extend to issues decided in the award, and even the dispositif, that do not relate to the dispute between the parties. The res judicata effect of an award does not cover the amount of the arbitrators’ fees fixed in the award, because it is not part of the subject matter in dispute between the parties. See also S.A.J. & P. Avax v Société Tecnimont SPA AS, Reims Cour d’appel, Case No. 10/​02888, 2 November 2011. The Cour d’appel de Reims held that a decision by the ICC dismissing a request for challenging the chairman of an arbitral tribunal is an administrative

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Chapter 4:  Arbitration—A Problem 4.58 The general rule is that the res judicata effect of an award extends only to its

dispositif.110 However, it may not always be possible strictly to apply this rule to arbitral awards. Unlike Article 480 F-​CPC, Article 1484 F-​CPC does not provide that the dispute is determined in the dispositif of the award. Furthermore, Article 1482 F-​CPC does not require that the award pronounces the arbitrators’ decision in the form of a dispositif. Hence, awards need not necessarily contain a dispositif.111 Accordingly, the Cour de cassation has held that res judicata effects should be given to the arbitral tribunal’s determinations, even if formally contained in the reasons of the award, where the tribunal, after having analysed a given issue, has clearly rendered a decision on the issue.112 International arbitral tribunals sitting in France also appear to follow a more relaxed approach with respect to the general rule that the res judicata effect of an award should only attach to its dispositif.113

4.59 French law grants awards substantially the same preclusive effects as judgments.

With regard to the negative res judicata effect, it is clear that a valid award bars further proceedings against the same opponent seeking the resolution of the same dispute based on the same grounds.114

4.60 The question has been raised whether under French law arbitral awards bar further

proceedings between the same parties even with respect to legal grounds and claims

decision without res judicata effects. In addition, the court held that the challenge of an arbitrator before an arbitration institution and the review of an award before a supervisory court in annulment proceedings do not have the same object. 110  See, e.g., Cour de cassation, 26 January 2011, L’Institut national de la santé et de la recherche médicale (INSERM) v Fondation Letten F.  Saugstad, no.  09-​10.198; Cour d’appel de Paris, 28 February 2008, Société Liv Hidravlika DOO c SA Diebolt, Rev. arb., No. 4 (2008), pp. 712 et seq. See also Jarrosson. 111  Debourg, para. 488, pp. 405–​6. Debourg observes that sometimes arbitral awards do not clearly distinguish between reasons and the dispositif. At times, final decisions that should have res judicata effect may be contained in the award’s reasons. Conversely, an award’s dispositif may contain elements that should not have any res judicata effect, e.g. the arbitral tribunal’s determination with respect to the arbitrators’ fees. Similarly, it is not certain that formulas in the dispositif such as ‘all other requests for relief are dismissed’ should always have res judicata effect. 112  Cour de cassation, 25 March 1999, Acquier v Faure, Rev. arb., No. 2 (1999), pp. 311 et seq. See also Cour d’appel de Pau (Ch. 2, sect. 1), 22 February 2011, Société Carrefour proximité France v SARL Falco et fils (Rev. arb., No. 1 (2011), p. 288) (‘Il en résulte que l’autorité de la chose jugée ne se concentre pas dans le dispositif de la sentence mais que partie du dispositif peut être disséminé dans les motifs. En matière arbitrale, il convient de retenir une conception large de l’autorité de la chose jugée’); Cour d’appel de Paris, 2 October 2012, S.A. Cevede et autres v S.A. Coopérative de commerçants détaillants ‘Système U’ Centrale Régionale Est, Rev. arb., No. 4 (2012), pp. 868 et seq. (‘Aucune disposition réglementaire n’ impose que la sentence soit énoncée sous forme de dispositif en sorte que formant un tout, elle est revêtue de l’autorité de la chose jugée relativement à l’ensemble des chefs de demande sur lesquels elle statue, fussent-​ils évoqués dans les seuls motifs, le tribunal arbitral s’ étant en l’espèce expliqué sur les raisons de la condamnation solidaire de deux des recourantes au paiement de l’ indemnité contractuelle prévue à l’article 19-​14 du Règlement intérieur et l’ayant expressément prononcée en page 49 de sa décision’). See also Yves Strickler, Note—​Cour de Cassation (1er ch. Civ.), 12 April 2012, Société Carrefour c/​société Codis Aquitaine et autre, Rev. arb., No. 1 (2013), para. 6, pp. 125–​6. 113  Debourg, para. 490, pp. 406–​8. 114  Cour d’appel de Paris, 18 December 1985, X v A et autres, Rev. arb., No. 2 (1988), p. 330.

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B.  Arbitration Law and Practice that were not, but could and should have been, brought in the first arbitration.115 This was suggested by the decision of the Cour d’appel de Paris in SA Thalès Air Défense v GIE Euromissile.116 The Cour d’appel held that considerations of procedural good faith and honesty may bar a party from raising claims (‘demandes’) in subsequent arbitration proceedings that were not, but could and should have been, raised in the first arbitration proceeding. The Cour d’appel did not found this principle on res judicata but on good faith and honesty in proceedings.117 In line with the decision in Thalès, the Cour de cassation held that the ‘principe 4.61 de concentration’ should apply to arbitration. In Sté G. et A. Distribution SARL v Sté Prodim SAS the Cour de cassation, based this time on res judicata, held that a claimant must present all demandes which are based on the same cause when bringing an action.118 It thereby not only extended its jurisprudence in Cesareo to arbitration, but slightly modified it: the parties’ obligation to submit all legal grounds underlying a claim is coupled with an obligation to submit all claims in the same arbitral proceeding.119 It is important to note that the decision in the Prodim case concerned domestic 4.62 arbitration. Doubts have been expressed by scholars120 and in case law121 as

  See Jarrosson.   Cour d’appel de Paris, 18 November 2004, SA Thalès Air Défense v GIE Euromissile, Rev. arb., No. 3 (2005), pp. 751 et seq. 117  Rev. arb., No. 3 (2005), p. 533 (‘Considérant que si la loyauté et la bonne foi procédurale dans l’arbitrage international imposent bien aux parties de faire connaître leurs demandes le plus tôt possible, et notamment au stade de l’acte de mission où sont récapitulées les prétentions sur lesquelles portera l’ instruction de manière à éviter qu’une demande qui aurait pu et dû être soulevée ne le soit par la suite dans un but dilatoire ou par simple negligence, la question de la sanction de cette obligation de concentrer les demandes dans la même instance se pose pour un second procès au fond devant l’arbitre . . .’). 118  Cour de cassation, 28 May 2008, Sté G. et A. Distribution SARL v Sté Prodim SAS, Rev. arb., No. 3 (2008), pp. 461 et seq. The Cour d’appel de Paris confirmed this decision in Cour d’appel de Paris, 18 March 2010, Société Prodim SAS v Société G. et A. Distribution, Rev. arb., No. 2 (2010), pp. 345 et seq. See also Cour d’appel de Pau, 22 February 2011, Société Carrefour proximité France v SARL Falco et fils (Rev. arb., No. 1 (2011), p. 287) (‘l’appelante ne peut ignorer qu’ il incombe au demandeur de presenter dans la même instance toutes les demandes fondées sur la meme cause et qu’ il ne peut invoquer dans une instance postérieure un fondement juridique qu’ il s’ était abstenu de soulever en temps utile’). 119  Debourg, para. 543, pp. 441–​2; Douchy-​Oudot, para. 15. In a more recent case the Cour de cassation limited the principle of concentration to a concentration of legal grounds, not claims (Cour de Cassation, (1ère Ch. civ.), 12 April 2012, Société Carrefour v société Codis Aquitaine et autre, Rev. arb., No. 1 (2013), pp. 121 et seq. (‘Il incombe au demandeur de présenter dès l’ instance relative à la première demande l’ensemble des moyens qu’ il estime de nature à fonder celle-​ci’)). It has therefore been suggested that in both domestic arbitration and litigation, the principle is now generally limited to a concentration of legal grounds (Strickler, para. 8, p. 127). 120  See, e.g., Debourg, paras 544 et seq., pp. 442 et seq.; Eric Loquin, De l’obligation de concentrer les moyens à celle de concentrer les demandes dans l’arbitrage, Rev. arb., No. 2 (2010), pp. 201 et seq.; Mayer, L’obligation de concentrer la matière litigieuse s’ impose-​t-​elle dans arbitrage international?, pp. 413 et seq.; Anne-​Marie Lacoste, The Duty to Raise all Arguments Related to the Same Facts in a Single Proceeding: Can We Avoid a Second Bite at the Cherry in International Arbitration?, 2 Cahiers de l’Arbitrage 349 (2013). 121  See, e.g., Cour d’appel de Paris, 5 May 2011, SARL Somercom v SARL TND Gida Ve Temizlik Mad Dagtim A.S., No. 10-​5314, Rev. arb., No. 4 (2011), p. 1093. In this case, the Cour 115

116

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Chapter 4:  Arbitration—A Problem to the applicability of this solution to international arbitrations in relation to Article 1506 F-​CPC. For instance, it has been argued that the principe de concentration does not pertain to procedure, but rather to the organization and good administration of justice. Furthermore, the desirability of applying a principle of concentration of claims in international arbitration has been questioned. For instance, it has been submitted that granting res judicata effects to virtual decisions on claims that could have been, but were not, raised and decided in a prior award would undermine the principle of party autonomy, by overlooking the parties’ intention not to submit a specific claim to the first arbitral tribunal. Indirectly, it could result in a violation of the arbitral tribunal’s mandate and jurisdiction over the dispute and constitute a form of ultra petita.122 Imposing an obligation to submit all claims in the first action would place a heavy burden on the parties to an international arbitration, considering that the scope of the dispute and the corresponding limits of the tribunal’s mandate are fixed early on in the proceedings, with limited possibilities for later amendments.123 Finally, it could be argued that this would result in a violation of the parties’ right to be heard.124 4.63 In line with the critical approach as to the applicability of the principe de concen-

tration in international arbitration, several international arbitral tribunals with a seat in France have rejected the applicability of this principle in international arbitration. For instance, the arbitral tribunal in the second Marriott arbitration stated that there is no legal principle similar to the English rule in Henderson v Henderson in international arbitration.125

d’appel firmly rejected the applicability in international arbitration of the principle of concentration of claims and legal grounds in the following terms: ‘Le principe de concentration des moyens qui fait obligation à la partie qui saisit le tribunal arbitral de regrouper ses demandes au titre d’un même contrat dans une seule et même instance, est inapplicable dans l’ordre international ’. Lacoste (p. 367) offers the following translation: ‘the duty to raise all arguments, which compels the party who introduces an action before an arbitral tribunal to raise all claims arising out of a contract in a single proceeding, is inapplicable in the international order’. See also Cour d’appel de Paris, 3 February 2011, Département de commercialisation du pétrole—​Petroleum Marketing Department (Sytrol) v SARL Babanapht, No. 08.20951, Rev. arb., No. 1 (2011), pp. 284–​5 and No. 2 (2011), pp. 468–​72. 122  Debourg, para. 564, pp. 454–​5. 123  Ibid., para. 565, pp. 455–​7. 124  Ibid., para. 566, pp. 457–​8. 125  See decision of the Cour d’appel de Paris in Marriott v Jnah (reported in 4 Cahiers de l’arbitrage 1172 (2010)) (‘[il n’y a pas] de théorie juridique applicable en matière d’arbitrage international qui soit similaire à la théorie anglaise Henderson c/​Henderson, laquelle imposerait à JNAH de brûler toutes ses munitions dans une meme procedure d’arbitrage’). See also the arbitral award rendered in the second Thalès/​Euromissiles arbitration, where the arbitral tribunal also rejected the applicability of a principle of concentration in French international arbitration law (ICC Case No. 13808, reported in Mayer, L’obligation de concentrer la matière litigieuse s’ impose-​t-​elle dans arbitrage international?, pp. 417–​19 and Luca Radicati di Brozolo, Res Judicata: Post Award Issues, ASA Special Series No. 38 (Pierre Tercier ed., 2011), pp. 139–​40). See also ICC Case No. 13254 of 2011, reported by Radicati di Brozolo, pp. 140–​1.

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B.  Arbitration Law and Practice With regard to the positive res judicata effect of awards, it is considered that a party 4.64 may invoke a prior award in further court or arbitration proceedings and request that the determination of the prior award be implemented in the decision of the second court or arbitral tribunal.126 Awards become res judicata from the moment they are rendered. However, French 4.65 law has yet to define when an international award is ‘rendered’.127 If the award is set aside or refused recognition or enforcement the award cannot have res judicata effects in France.128 It has been submitted that Article 1476 F-​CPC (now Article 1484 F-​CPC), in 4.66 that it confirms the res judicata effect of arbitral awards, is mandatory as it concerns the functioning of the French judicial system. The parties may not provide otherwise.129 However, while French courts (and, a priori, arbitral tribunals) may (but do not have to) consider res judicata issues ex officio, this does not mean that res judicata is considered to be part of public policy. Therefore, the parties can validly waive their right to raise a res judicata defence.130 Awards rendered in violation of the doctrine of res judicata may be challenged 4.67 under Article 1520 F-​CPC.131 It has been submitted that the parties should be able to invoke Article 1502(1) 4.68 F-​CPC (now Article 1520(1) F-​CPC) claiming that the arbitrators rendered an award in the absence of an arbitration agreement.132 The argument is based on the premise that an arbitral tribunal is rendered functus officio once the award is rendered. If the tribunal reconsiders the same dispute in violation of res judicata, it acts without a jurisdictional basis and the award may be challenged.133 However, in 2010 the Cour d’appel de Paris rejected this argument based on the former Article 1502(1) F-​CPC. It held that the question whether a party can submit a claim to arbitration in the presence of a prior award rendered by a different arbitral tribunal between 126  François-​X avier Train, L’autorité positive de la sentence arbitrale, Cahiers de l’arbitrage 115 (2006). Jarrosson; Andrea Pinna, L’autorité de la chose jugée invoquée devant l’arbitre. Point de vue sous le prisme de l’ordre juridique français, 3 Cahiers de l’arbitrage 697 (2010), para. 7. 127  Denis Bensaude, French Code of Civil Procedure (Book IV), Article 1476 [Res judicata effects of awards], Concise International Arbitration (Loukas A. Mistelis ed., 2010), p. 892. 128  Jean-​L ouis Delvolvé, Gerald H. Pointon, and Jean Rouche, French Arbitration Law and Practice (2nd ed. 2009), para. 341; Fouchard, Gaillerd, and Goldman, para. 1419; Jean Robert, L’arbitrage: droit interne, droit international privé (6th ed. 1993), para. 316. See also Tribunal de commerce de Nanterre, 5 September 2001, Société Technip France v Société Banque extérieure d’Algérie et autres, Rev. arb., No. 2 (2002), pp. 455 et seq. 129  Fouchard, Gaillerd, and Goldman, para. 1419. 130  Debourg, para. 519, with references. 131  Hascher, pp. 28 et seq.; Jarrosson. See also Pinna, paras 41 et seq. 132  Article 1520(1) F-​CPC allows the annulment of the award if the tribunal ‘has mistakenly declared itself to have or not to have jurisdiction’. 133  Cour d’appel de Paris, 25 June 1982, Société Grainex v Société Cargill, Rev. arb., No. 3 (1983), pp. 344–​5. The arbitral tribunal was entitled to accept jurisdiction to reconsider the dispute because the arbitration agreement reserved the right of the parties to resubmit their dispute to arbitration.

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Chapter 4:  Arbitration—A Problem the same parties and based on the same arbitration agreement pertains to the admissibility of the claim. According to the Cour d’appel, the question does not concern the existence of a valid arbitration agreement between the parties.134 4.69 The parties may rely on Article 1520(3) F-​CPC, claiming that the arbitral tribunal

did not render its award in accordance with the mandate conferred upon it.135 The parties may argue that the arbitrators violate their mandate if they reconsider a matter that has already been settled in a prior award136 or judgment.137 However, according to Debourg, this ground should be admissible only if the duplication of the proceedings leads to contradictory decisions.138

4.70 Furthermore, it has been submitted that the parties may invoke Article 1520(4)

F-​CPC, claiming that the arbitral tribunal violated their right to be heard in contradictory proceedings, namely where an arbitral tribunal refuses to decide a matter or accept new evidence on the ground that the matter has already been finally decided, if that matter was not distinctly raised and determined in the prior proceedings.139

4.71 Finally, the parties may invoke Article 1520(5) F-​CPC, claiming that an award

rendered in violation of the doctrine of res judicata is contrary to public policy. However, because the mere violation of the doctrine of res judicata is not generally considered to be contrary to public policy,140 for there to be a violation of public policy an award must be irreconcilable with another award or judgment.141

134  Cour d’appel de Paris, 9 September 2010, Marriott International Hotels, RG no. 09/​13550, Cab. Arb. 2011, No. 2, p. 413. See also Rapp. Paris, 17 November 2011, REN, Rev. arb. (2011), p. 1104; Debourg, para. 434, with references. 135  Chantebout, para. 9, pp. 535–​6; Debourg, para. 435, with references. 136  See, e.g., Cour d’appel de Paris, 2 April 1998, Société Technip v Société Asmidal, Rev. arb., No. 4 (1999), pp. 821 et seq. The court held that the arbitrators had simply clarified the terms of their prior partial award by designating the issues already decided and the issues not yet decided. In doing so, the arbitrators had not exceeded their mandate (see extract reported by Hascher, n. 44); Cour d’appel de Paris, 16 February 1995, Alama El Radi Khalil Ali Darwish v Société Huure Oy, Rev. arb. (1996), p. 128 (see extract reported by Hascher, n. 45). 137  See Hascher, p. 29 with reference to Cour d’appel de Paris, 29 April 1986, Polyfrance Imma v Sporprom Service BV; Cour d’appel de Paris, 16 April 1996, Gallay v Fabricated Metal, Rev. arb., No. 4 (2001), pp. 805 et seq. 138  Debourg, para. 435. 139  Hascher, p. 29 with reference to Cour d’appel of Paris, 12 January 1996, Gouvernement de l’Etat du Qatar v Crighton Ltd, Rev. arb., No. 3 (1996), pp. 428 et seq. 140  See, e.g., Jarrosson; Hascher, p. 29, with references. 141  See, in particular, Debourg, paras 436–​ 9, with references. See also Mayer, L’obligation de concentrer la matière litigieuse s’ impose-​t-​elle dans l’arbitrage international?, p. 416; Jarrosson; Chantebout, paras 9–​10, p. 536. See also Cour d’appel de Paris, 10 March 2005, SA Sucres et denrées v Scté Multitrade Cairo, Rev. arb. (2006), p. 458; Cour d’appel de Paris, 11 May 2006, Groupe Antoine Tabet v Républic du Congo, Rev. arb. (2007), p. 101 (in the Tabet case, the court confirmed that a contradiction of decisions amounts to a violation of public policy, whether the contradiction occurs between awards rendered by different arbitral tribunals or between awards rendered within the same arbitration); Cour d’appel de Paris, 9 September 2010, Marriott v Jnah development, 4 Cahiers de l’arbitrage 1171 (2010).

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B.  Arbitration Law and Practice Switzerland  In Switzerland international arbitration is functionally equivalent 4.72 to litigation, provided it meets certain minimum procedural requirements.142 As with court judgments, awards are judicial acts and have res judicata effects. Article 190(1) of the Private International Law Act (PILA) provides that an ‘award is final from the time when it is communicated’ to the parties.143 Finality here is equivalent to res judicata.144 The Federal Tribunal has expressed the view that the principles governing the res 4.73 judicata effects of Swiss court judgments apply mutatis mutandis to the res judicata effects of international arbitral awards rendered in Switzerland.145 Hence, in Switzerland international arbitral awards have the same res judicata effects as Swiss court judgments. The same premise also applies with respect to foreign arbitral awards. The Federal 4.74 Tribunal has confirmed that in Switzerland the res judicata principles applicable to foreign court judgments also apply to foreign arbitral awards. Moreover, while the Federal Tribunal acknowledges that a foreign decision’s res judicata effects derive from the law of the country where it was rendered, it has held that a foreign decision may not have further res judicata effects than a decision rendered in Switzerland. Accordingly, even though a foreign decision’s res judicata effects may extend to the decision’s underlying reasons pursuant to the law of the country where it was rendered, in Switzerland those res judicata effects will be recognized only with respect to the decision’s dispositif.146

142 Stephen V.  Berti and Anton K.  Schnyder, Ad Article 190 PILA, in International Arbitration in Switzerland (Stephen V. Berti ed., 2000), para. 2, p. 571. 143  According to case law and unanimous legal doctrine, the term ‘final’ in Article 190(1) PILA implies that an award is both enforceable and has res judicata effects by operation of law. (See, e.g., Bernhard Berger and Franz Kellerhals, Internationale und interne Schiedsgerichtsbarkeit in der Schweiz (3rd ed. 2014), para. 1630; Jean-​François Poudret and Sébastien Besson, Comparative Law of International Arbitration (2007), para. 853; ATF 117 Ia 166, c.5a.) 144  Andreas Bucher and Pierre-​Yves Tschanz, International Arbitration in Switzerland (1988), para. 264; Georg von Segesser Dorothée Schramm, Swiss Private International Law Act (Chapter 12), Article 190 [Finality, setting aside: principle], in Concise International Arbitration (Loukas A. Mistelis ed., 2010), p. 955; Manuel Arroyo, Ad Article 190 PILA, in Arbitration in Switzerland—​The Practitioner’s Guide (Manuel Arroyo ed., 2013), para. 2. 145  See ATF 128 III 191, para. 4a where the Federal Tribunal applied Swiss law to determine the scope of the res judicata effects of an international arbitral award rendered in Switzerland. This approach was confirmed in Federal Tribunal decision 4A_​633/​2014, 29 May 2015, para. 3.2.4. In this case, the Federal Tribunal specified (at para. 3.2.5) that there is no legal basis under Swiss law for the application of the broader notion of res judicata as set forth in the ILA reports and Recommendation on res judicata and arbitration. See also Berger and Kellerhals, para. 1657; Gerhard Walter, Wolfgang Bosch, and Jürgen Brönnimann, Internationale Schiedsgerichtsbarkeit in der Schweiz (1991), ad Articles 187–​190(1) PILA, p. 204. See also Federal Tribunal decision 4A_​ 508/​2013 (ATF 140 III 278), para. 3.2. 146 Federal Tribunal decision 4A_​ 633/​ 2014, 29 May 2015, paras 3.2.3–​ 3.2.5; Federal Tribunal decision 4A_​508/​2013 (ATF 140 III 278), para. 3.2; Federal Tribunal decision 4A_​ 508/​2010, para. 3.3. See also Paolo Michele Patocchi and Cesare Jermini, Ad Article 194 PILA, in International Arbitration in Switzerland (Stephen V. Berti ed., 2000), para. 136; Adrian Staehelin, Daniel Staehelin, and Pascal Grolimund, Zivilprozessrecht (2008), para. 24.

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Chapter 4:  Arbitration—A Problem 4.75 Swiss law does not define the term ‘arbitral award’. However, it is broadly accepted

that awards are judicial acts that definitively decide a substantive or procedural matter, be it a preliminary question or a primary issue.147

4.76 The notion of ‘arbitral award’ generally covers full final awards which dispose of

all the claims and counterclaims submitted to the arbitrators in full, as well as partial final awards in which the arbitral tribunal definitively decides a quantitatively limited part of the claim submitted to it or only a part of the total amount claimed, the remainder being the subject of a subsequent award.148

4.77 The notion of ‘arbitral award’ should also cover interim or preliminary awards.149

While interim awards determine a specific procedural or substantive issue, they do not constitute final decisions on a formal request. They determine a preliminary substantive question (for example, the validity of a contract, leaving the issue of termination to a later decision) or a procedural exception (for example, jurisdiction or the defence of res judicata) en route to the final decision.150 More precisely, they determine these issues in such a way that the arbitral proceedings may continue.151

4.78 Genuine procedural orders and decisions relating exclusively to provisional or con-

servatory measures are not awards.152

4.79 The distinction between final and interim awards is essential for res judicata pur-

poses:  all final awards become res judicata pursuant to Article 190(1) PILA.153 Hence, only full final and partial final awards may become res judicata, to the exclusion of interim or preliminary awards.154 Preliminary or interim awards do not

  Berger and Kellerhals, para. 1454.   Marcus Wirth, Ad Article 188 PILA, in International Arbitration in Switzerland (Stephen V. Berti ed., 2000), para. 6; Pierre Lalive, Jean-​François Poudret, and Claude Reymond, Le droit de l’arbitrage interne et international en Suisse (1989), ad Article 188 PILA, paras 3–​4; Berger and Kellerhals, paras 1683–​9. 149  Berger and Kellerhals, para. 1454; Wirth, ad Article 189 PILA, para. 2; Bucher and Tschanz, para. 255. See also Fouchard, Gaillerd, and Goldman, para. 1357. 150 Wirth, ad Article 188 PILA, paras 7 and 10; Christoph Liebscher, The Healthy Award (2003), p. 136. On the distinction between full final, final partial, and interim awards, see also Gabrielle Kaufmann-​Kohler and Antonio Rigozzi, Arbitrage International (2nd ed. 2010), paras 671a et seq.; Christoph Müller, Swiss Case Law in International Arbitration (2nd ed. 2010), pp. 210 et seq.; Lalive, Poudret, and Reymond, ad Article 188 PILA, paras 3 et seq.; Poudret and Besson, para. 731. 151  Berger and Kellerhals, para. 1531. 152  Bucher and Tschanz, para. 255; Berger and Kellerhals, para. 1455; Ramon Mabillard, Ad Article 183 PILA, in Basler Kommentar, Internationales Privatrecht (Heinrich Honsell, Nedim Peter Vogt, Anton K. Schnyder, and Stephen V. Berti ed., 3rd ed. 2013), para. 10; Sébastien Besson, Swiss Rules of International Arbitration (Tobias Zuberbühler, Christoph Müller, and Philipp Habegger ed., 2005), ad Article 32 SRIA, para. 14, p. 286. 153  Berger and Kellerhals, paras 1642 et seq.; Müller, p. 222; ATF 128 III 191, 194. 154  Federal Tribunal decision 4A_​458/​2009, 10 June 2010, ASA Bulletin, Vol. 3 (2010), p. 520. The Federal Tribunal confirmed that partial awards bind the arbitral tribunal which has rendered them, as well as the parties to the extent that they have not challenged the partial awards. See also Kaufmann-​Kohler and Rigozzi, paras 694c et seq. 147

148

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B.  Arbitration Law and Practice obtain res judicata effects, but they are binding on the arbitral tribunal during the further course of the proceedings.155 It is widely accepted that procedural orders and provisional measures do not have res judicata effects.156 Awards on jurisdiction may be final if the arbitral tribunal decides that it lacks 4.80 jurisdiction.157 Such negative awards on jurisdiction may have res judicata effects.158 By contrast, an award by which an arbitral tribunal accepts jurisdiction over at least some aspects of the dispute is considered an interim award.159 As was seen earlier, interim awards do not generally have res judicata effect, but are binding on the arbitral tribunal in the ongoing conduct of the arbitration.160 However, as per Article 190(3) PILA, positive awards on jurisdiction can (and must) be challenged immediately before the Federal Tribunal.161 They thus enjoy a special status in that they are treated like final awards for the purposes of annulment proceedings.162 Therefore, like a negative award on jurisdiction, a positive award on jurisdiction that was not challenged or was upheld by the Federal Tribunal has conclusive and preclusive effects, akin to res judicata effects.163 Awards have res judicata effects from the moment they are notified to the parties.164 4.81 This res judicata effect becomes absolute if the parties do not bring annulment proceedings in a timely manner or if the annulment action is dismissed. The award loses its res judicata effects if it is set aside.165 Like Swiss court judgments, arbitral awards rendered in Switzerland have posi- 4.82 tive and negative res judicata effects. A positive res judicata effect means that final determinations made in the dispositif of the award are binding in further court or 155  ATF 128 III 191. See also Berger and Kellerhals, para. 1645; Bernard Corboz, Le recours au Tribunal fédéral en matière d’arbitrage international, Semaine Judiciaire, Part II (Doctrine), Vol. 1 (2002), p. 19; Wirth, ad Article 188 PILA, paras 22–​3; Berti and Schnyder, ad Article 190 PILA, paras 20 and 23; Müller, p. 212; Besson, ad Article 32 SRIA, para. 18; Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 279. 156  Poudret and Besson, para. 728; Berger and Kellerhals, para. 1647; Christian Oetiker, Swiss Rules of International Arbitration (Tobias Zuberbühler, Christoph Müller, and Philipp Habegger ed., 2005, repr. 2010), ad Article 26 SRIA, para. 30. 157 Besson, ad Article 32, para. 9, p. 285; Lalive, Poudret, and Reymond, ad Article 188 PILA, para. 4, p. 406; Müller, p. 229. 158  Bucher and Tschanz, para. 276. 159 Besson, ad Article 32 SRIA, para. 9; Daniel Girsberger and Nathalie Voser, International Arbitration in Switzerland (2008), para. 962. 160  Poudret and Besson, paras 728 and 731. 161  Kaufmann-​Kohler and Rigozzi, para. 671e; Berger and Kellerhals, paras 1693–​4. 162  Poudret and Besson, paras 479 and 731. 163  Ibid., paras 479 and 731; Berger and Kellerhals, paras 705 and 729; Markus Schott and Maurice Courvoisier, Ad Article 186 PILA, in Basler Kommentar Internationales Privatrecht (Heinrich Honsell, Nedim Peter Vogt, Anton K.  Schnyder, and Stephen V.  Berti ed., 3rd ed. 2013), para. 125. See also Stefanie Pfisterer and Anton K. Schnyder, Internationale Schiedsgerichtsbarkeit (2010), p. 48. 164 Article 190(1) PILA; Berger and Kellerhals, para. 1641; Girsberger and Voser, para. 1022. 165  Berti and Schnyder, ad Article 190 PILA, para. 8.

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Chapter 4:  Arbitration—A Problem arbitration proceedings between the same parties or their successors. A negative res judicata effect bars further proceedings in an identical matter.166 4.83 If an identical court action is brought in Switzerland, such action would be met by

a res judicata defence. Because the absence of a prior ‘legally binding decision’ constitutes a requirement for the admissibility of the action,167 the Swiss court seized of the matter would have to consider the res judicata issue ex officio.168 By contrast, the Swiss Federal Tribunal left open the question whether an arbitral tribunal seated in Switzerland must also raise ex officio the res judicata effect of a previous decision invoked before it, given the public policy nature of the res judicata doctrine under Swiss law.169

4.84 The res judicata effect of an award is limited to its dispositif. In other words, an

award may operate as a res judicata in further proceedings only to the extent and in the form in which the arbitral tribunal’s decision is expressed in the dispositif.170 However, the reasons may be taken into account to determine the exact sense, nature, and scope of the award’s dispositif.171

4.85 The limitation of an award’s res judicata effects to the contents of its dispositif means

that an award may become res judicata only with respect to those claims or parts of a claim that were actually decided in the award’s dispositif. Hence, where a party has restricted its action in the first proceedings to part of its total claim, the res judicata effects of the decision rendered on the partial claim do not go beyond the relevant part of the total claim that was the subject matter of the case. Therefore, an arbitral tribunal in further proceedings will not be barred from considering other or further prayers for relief that were left undetermined in the prior award.172  Ibid., ad Article 190 PILA, paras 9–​10.   See para. 1.129. 168  Federal Tribunal decision, 20 September 2000, République de Pologne v Saar Papier Vertriebs-​ GmbH et tribunal arbitral CCI Zurich, ASA Bulletin (2001), pp. 487 et seq., para. 3b; Berti and Schnyder, ad Article 190 PILA, para. 12; Müller, p. 194. 169  Federal Tribunal decision 4A_​374/​2014, 26 February 2015, para. 4.3.1. 170  Federal Tribunal decision 4A_​633/​2014, 29 May 2015, para. 3.2.4, with references; Berger and Kellerhals, para. 1653. See, however, Pierre-​Yves Tschanz, Commentaire Romand—​L oi sur le droit international privé, Convention de Lugano (Andreas Bucher ed., 2011), ad Article 186 PILA, paras 59–​60. According to that author, Swiss law recognizes the principle of concentration (‘principe de la concentration des moyens’) in that the res judicata effects of an award extend to those claims, defences, and objections that are impliedly and necessarily covered by the parties’ claims decided in the award, even though such claims, exceptions, and objections were not expressed in the parties’ prayers for relief and were not decided in the award’s dispositif. 171  ATF 128 III 191, para. 4a; Müller, p. 222. 172  ATF 128 III 191, para. 4a. In this case, an arbitral tribunal seated in Switzerland had decided in a first partial award that the claimant, a legal entity, had standing in the arbitration. In its final award, the arbitral tribunal first accepted jurisdiction but then concluded that the claimant had no legal existence and therefore could not be a party in the arbitration. The tribunal thus ceased the arbitration on the ground that the claimant was a non-​existent legal entity. The Federal Tribunal was seized of an annulment action on the ground that the arbitral tribunal had disregarded the res judicata effect of the partial award by denying the legal existence of the claimant in the final award and ending the arbitration. The Federal Tribunal held that the arbitral tribunal had not disregarded 166 167

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B.  Arbitration Law and Practice Furthermore, the res judicata effects of a prior award do not bar a new claim, although arising from the same cause of action, if it is based on relevant new facts; that is, facts that only came into existence after the first decision was rendered and which caused the new claim to arise.173 Arbitral tribunals seated in Switzerland have to observe the res judicata effects 4.86 of prior Swiss awards and court judgments without restriction and of prior foreign awards and judgments, provided they may be recognized in Switzerland; prior formal recognition and enforcement proceedings are not required.174 The Federal Tribunal has held that ‘it seems to be accepted today that an arbitral tribunal may not disregard the principle of res judicata by invoking its particular nature’.175 An arbitral tribunal violates procedural public policy if it renders an award without 4.87 taking into account the res judicata effect of a prior award or judgment between the same parties, or if it departs in its final award from the findings expressed in a previous partial award deciding a preliminary issue on the merits.176 The Federal Tribunal held that it has full powers to review a challenged award with respect to an alleged violation of res judicata and that it will not uphold the challenged award solely because it contains a careful analysis of the prior decision’s res judicata effects.177 A res judicata defence entails the inadmissibility of new proceedings and not 4.88 a lack of jurisdiction of the new tribunal. The Federal Tribunal has held that an arbitral tribunal that admits its jurisdiction despite the existence of a prior award or judgment in an identical matter does not violate Article 190(2)(b) PILA, according to which an award may be set aside ‘where the arbitral tribunal has wrongly declared itself to have  . . . jurisdiction’. In such a situation the only possible ground for setting aside the award is a violation of public policy pursuant to Article 190(2)(e) PILA.178 This means that an interim award on jurisdiction cannot be challenged in annulment proceedings before the Federal the res judicata effect of the partial award because the issue of the legal existence of the claimant and its capacity to be a party in the arbitration had not been decided in the partial award, even though the arbitral tribunal, in deciding in the partial award that the claimant had standing to bring the claim, must have assumed the legal existence of the claimant; Berger and Kellerhals, para. 1655. See also para. 1.134. 173  Berger and Kellerhals, paras 1655–​6, with references. 174  Federal Tribunal decision 4A_​633/​2014, 29 May 2015, para. 3.2.2; Federal Tribunal decision 4A_​374/​2014, 26 February 2015. See also Berger and Kellerhals, paras 1660–​4. 175  ATF 127 III 279, para. 2c/​bb. 176  Federal Tribunal decisions 4A_​633/​2014, 29 May 2015, para. 3.2.2; 4A_​508/​2013 (ATF 140 III 278), para. 3.1; 4A_​490/​2009, para. 2.1; 4P.4/​2007, para. 5.1; ATF 127 III 279, para. 2b; ATF 128 III 191, para. 4a. See also Müller, pp. 211 et seq. and 303 et seq.; Poudret and Besson, para. 816. 177  Federal Tribunal decision 4A_​508/​2013 (ATF 140 III 278), para. 3.4. 178  Federal Tribunal decision, 20 September 2000, République de Pologne v Saar Papier Vertriebs-​ GmbH et tribunal arbitral CCI Zurich, para. 3b (cited at fn 169).

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Chapter 4:  Arbitration—A Problem Tribunal on the ground that the arbitral tribunal has violated the res judicata effects of a prior award or judgment. Indeed, according to the Federal Tribunal, preliminary and interim awards can be challenged only on the grounds identified in Articles 190(2)(a) (irregular composition of the arbitral tribunal) and (b) (wrongful acceptance of jurisdiction).179 Therefore, a violation of public policy within the meaning of Article 190(2)(e) PILA can only be relied upon to challenge full or partial final awards. However, it is worth noting that several Swiss scholars have criticized the Federal Tribunal’s case law, considering that a party should be able to challenge a preliminary or interim award based on Article 190(3) PILA by invoking any of the grounds listed in Article 190(2)(c) to (e) PILA, insofar as the plea under Article 190(2)(a) or (b) PILA is not manifestly inadmissible or manifestly unfounded.180 4.89 In addition, the Federal Tribunal held that when considering a res judicata

issue under Article 190(2)(e) PILA regard may be had to case law concerning Article  190(2)(b) PILA, given the relationship between the issues of jurisdiction and res judicata: where an arbitral tribunal renders an award on a claim that has already been finally decided in a prior judgment with res judicata effects, it ultimately exercises a jurisdiction (‘competence matérielle’) that it does not have. For the Federal Tribunal, this is so even if the arbitral tribunal has accepted jurisdiction on the basis of a valid arbitration agreement, thus making it impossible to consider the arbitral tribunal as lacking jurisdiction in reliance on Article 190(2)(b) PILA.181

4.90 Finally, an arbitral tribunal violates the doctrine of res judicata if it reconsiders its

award when responding to a request for correction or interpretation of the award. It has been submitted that in such a situation the tribunal exceeds its jurisdiction and a party can request the annulment of the interpretation or correction pursuant to Article 190(2)(b) PILA.182

4.91 UNCITRAL Model Law on International Commercial Arbitration The

UNCITRAL Model Law (ML) adopts the general principle that awards have res judicata effects between the parties. Article 35(1) ML states that ‘[a]‌n arbitral award, irrespective of the country in which it was made, shall be recognized as

179  ATF 130 III 755, para. 1.2.2; Federal Tribunal decision 4A_​633/​2014, 29 May 2015, para. 2.4.2. See also Berger and Kellerhals, para. 1696. 180  Berger and Kellerhals, para. 1696; Kaufmann-​Kohler and Rigozzi, para. 717. 181  Federal Tribunal decision 4A_​ 508/​2013 (ATF 140 III 278), para. 3.4. See also Federal Tribunal decision 4A_​633/​2014, 29 May 2015, para. 2.4.2. But see ATF 127 III 279, para. 2b. In this case the Federal Tribunal appears to state that the granting of a res judicata defence entails the lack of jurisdiction of the second judge (‘quant à l’autorité de la chose jugée, ce principe interdit au juge de connaître d’une cause qui a déjà été définitivement tranchée; ce mécanisme exclut définitivement la compétence du second juge’). 182  Marc Veit, Swiss Rules of International Arbitration (Tobias Zuberbühler, Christoph Müller, and Philipp Habegger ed., 2005, repr. 2010), ad Article 35/​36 SRIA, para. 18, p. 314.

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B.  Arbitration Law and Practice binding . . .’ The travaux préparatoires specify that the phrase ‘shall be recognized as binding’ refers to the res judicata effect of awards. The Model Law leaves many questions open with regard to the res judicata effect of 4.92 awards. The requirements that must be met for an award to become res judicata and the extent of the preclusive effects of an award that is res judicata are not specified by either the text of the Model Law or the travaux préparatoires. There is no indication as to whether the res judicata effects of an award are limited to its dispositif or may extend to its reasoning. During the elaboration of the Model Law several attempts were made to further 4.93 define the phrase ‘shall be recognized as binding’. Several proposals were made to indicate the exact point in time from which an award is binding. The Commission ultimately followed a suggestion made by the Soviet Union regarding the point at which foreign awards become binding,183 which stated: ‘[a]‌s regards foreign arbitral awards, that question would have to be answered, in conformity with the rule laid down in article 36(1)(a)(v), by the law of the State in which, or under the law of which, the award was made.’184 The question of when a domestic award—​that is, an award made in the country 4.94 where recognition or enforcement is sought—​becomes binding was debated by the Commission in connection with Article 31 ML which concerns the form and content of an award. Three possible dates were suggested: (i) the date the award was made, (ii) the date the award was received by either the party against whom it was being invoked or the last party to receive notification, or (iii) the date the period for setting aside the award expired.185 Because no agreement could be reached, no provision specifying the date when an award becomes final was ultimately included. For the same reason, the Model Law does not contain any definition of the term 4.95 ‘award’ for the purposes of Article 35(1) or otherwise. Both the Working Group and the Commission considered including a general definition of the term ‘award’ in Article 2 ML. However, no agreement on an acceptable general definition could be reached. The Working Group considered the following proposal: ‘award’ means a final award which disposes of all issues submitted to the arbitral tribunal and any other decision of the arbitral tribunal which finally determine[s]‌ any question of substance or the question of its competence or any other question 183  See Sixth Secretariat Note, analytical compilation of government comments, A/​C N.9/​263 (19 March 1985), reported in Howard M. Holtzmann and Joseph E. Neuhaus, A Guide to The UNCITRAL Model Law on International Commercial Arbitration—​Legislative History and Commentary (1989), para. 2, p. 1037. 184  Commission Report, A/​40/​17 (21 August 1985), reported in Holtzmann and Neuhaus, para. 312, p. 1051. 185  Holtzmann and Neuhaus, ad Article 31, para. 35, p. 842. See also Commission Report, A/​40/​17 (21 August 1985), reported in ibid., para. 256, p. 865. For the discussion, see Summary Record, A/​CN.9/​SR.328-​329, 333, reported in Holtzmann and Neuhaus, paras 25 et seq. and 857 et seq.

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Chapter 4:  Arbitration—A Problem of procedure but, in the latter case, only if the arbitral tribunal terms its decision an award.186 4.96 While there was wide support for the first part of the definition (up to the word

‘substance’), serious concerns were expressed with regard to the second part, in particular that concerning decisions on questions of procedure. Ultimately, the Working Group decided not to include a definition in the Model Law and invited the Commission to consider the matter. The Commission also left the term undefined.187

b. Institutional arbitration rules 4.97 Many institutional arbitration rules provide that awards are ‘final and binding’ on the parties. For example, Article 34(2) of the 2010 UNCITRAL Arbitration Rules states that ‘[a]‌ll awards shall be made in writing and shall be final and binding on the parties. The parties shall carry out all awards without delay’.188 4.98 Article 26(9) of the 1998 London Court of International Arbitration (LCIA)

Arbitration Rules contains a similar rule. Article 26(7) further specifies that the arbitral tribunal has the power to ‘make separate awards on different issues at different times’ and that such awards ‘have the same status and effect as any other award made by the Arbitral Tribunal’.

4.99 Variations of the phrase ‘final and binding’ exist in other institutional rules. For

example, according to Article 64(b) of the 2014 World Intellectual Property Organization (WIPO) Arbitration Rules an award is ‘effective and binding’ on the parties.

4.100 Finally, some institutional rules use only the word ‘binding’. For instance, Article

34(6) of the 2012 International Chamber of Commerce (ICC) Rules of Arbitration states that ‘[e]‌very award shall be binding on the parties’.189

4.101 While all these provisions confirm the positive res judicata effect of awards, they

do not give any guidance with respect to the awards’ negative res judicata effects.190 However, it has been suggested that by agreeing to arbitration pursuant to such

186  Fifth Working Group Report, A/​C N.9/​246 (6 March 1984), reported in Holtzmann and Neuhaus, para. 192, pp. 164–​5. 187  Holtzmann and Neuhaus, ad Article 2, pp. 153–​4. 188  See also Article 30(1) of the 2014 International Centre for Dispute Resolution (ICDR) International Dispute Resolution Procedures; Article 34(2) the 2011 Cairo Regional Centre for International Commercial Arbitration (CRCICA) Arbitration Rules, Article 28.9 of the 2013 SIAC Arbitration Rules, Article 40 of the 2010 Stockholm Chamber of Commerce (SCC) Arbitration Rules; Article 32(2) of the 2012 Swiss Rules of International Arbitration; and Article 47 of the 2012 China International Economic and Trade Arbitration Commission (CIETAC) Arbitration Rules. 189 See also Article 51 of the 2010 Netherlands Arbitration Institute (NAI) Arbitration Rules; Article 32(1) of the 2013 Belgian Centre for Arbitration and Medication (CEPANI) Arbitration Rules. 190 Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 277.

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B.  Arbitration Law and Practice institutional arbitration rules, the parties accept the negative res judicata effect of any valid award.191 Some rules state the date when an award becomes res judicata.192

4.102

The provisions referred to in the preceding paragraphs make no further specifica- 4.103 tions with regard to the res judicata effects of awards; institutional arbitration rules generally provide no guidance as to how arbitral tribunals should deal with res judicata issues, save for general rules prescribing arbitral tribunals to act within the boundaries of their jurisdiction and in accordance with the applicable law.193 The scope of the res judicata effect of awards rendered pursuant to the institutional 4.104 rules mentioned earlier is not clear. It is unclear whether the res judicata effect of such awards is limited to the award’s dispositif. Many institutional arbitration rules prescribe that an award shall state the reasons upon which it is based.194 It has been submitted that with regard to awards rendered under such institutional rules, the reasoning necessarily underlying the award’s dispositif should be covered by its res judicata effect. In this vein, it has been suggested that future versions of these rules could expressly implement the doctrine of issue estoppel by prescribing that the parties are presumed to have agreed to be bound in further proceedings by the reasons which form the necessary basis of the dispositif.195 The LCIA has followed this suggestion: on 1 October 2014 the new LCIA Arbitration Rules became effective. Article 26(8) of the 2014 LCIA Arbitration Rules provides that ‘every award (including reasons for such award) shall be final and binding on the parties’. c. International commercial arbitration conventions There are several international conventions on international commercial arbitra- 4.105 tion, most importantly the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Given its importance, the primary focus of the following analysis will be on the New York Convention. 1958 New York Convention on Recognition and Enforcement of Foreign 4.106 Arbitral Awards  The New York Convention does not contain any particular rules of preclusion for international arbitral awards. Furthermore, it is widely

 ILA, Interim Report, p. 23.   Articles 51 NAI Arbitration Rules and Article 40 of the 2010 SCC Arbitration Rules provide that an award is binding from the day it is rendered. According to Article 64(b) of the 2014 World Intellectual Property Organization (WIPO) Arbitration Rules an award is binding from the date it is communicated by the Centre. 193 ILA, Interim Report, p. 23; Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 277. 194 See, e.g., Article 25(2) of the 2012 ICC Arbitration Rules; Article 34(3) of the 2010 UNCITRAL Arbitration Rules; Article 30(1) of the 2014 ICDR International Dispute Resolution Procedures; Article 26(2) of the 2014 LCIA Arbitration Rules; Article 34(3) of the 2011 CRCICA Rules; Article 36(1) of the 2010 SCC Arbitration Rules; and Article 32(3) of the 2012 SRIA. 195  Veeder, pp. 78 et seq.; ILA, Interim Report, p. 23. 191

192

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Chapter 4:  Arbitration—A Problem considered that the New York Convention does not apply (at least directly) to arbitral tribunals.196 Even if its provisions must be considered by international arbitral tribunals, the Convention does not give them much guidance on how to deal with res judicata issues, whether arising out of a prior arbitral award or a prior court judgment. 4.107 However, Article III of the New  York Convention prescribes that ‘[e]‌ ach

Contracting State shall recognize arbitral awards as binding . . .’ This confirms the general principle that arbitral awards have res judicata effect, albeit that the New York Convention does not provide a definition of the types of awards that must be recognized as binding. Furthermore, it has been underlined that Article II of the New York Convention, which requires contracting states to give effect to arbitration agreements, ‘is a fundamental underpinning of the undertaking of States to further arbitration and spells out the obligation to provide final and binding resolution of disputes submitted to arbitration and, consequently, to avoid multiple proceedings’.197

4.108 According to Born, the New York Convention must be understood as prescribing

international standards that ensure the binding character of awards and that preclude national courts from denying res judicata effects to arbitral awards.198 In particular, Article III ‘provides for a broad, constitutional statement of principle that must be elaborated by national courts and arbitral tribunals’.199 It requests contracting states to afford at least the same, and arguably even greater, res judicata effects to awards as granted to court judgments.200

4.109 Born submits that Article III of the New York Convention should provide for a

broad res judicata doctrine, akin to the doctrine known in common law jurisdictions. The res judicata effect of the award should cover all claims arising out of a dispute, whether or not they were asserted during the arbitration proceedings. All claims that were within the scope of the arbitration agreement and that were

 See Poudret and Besson, para. 185.   Radicati di Brozolo, p. 134. 198  Born, p. 3745 (‘Where the parties have agreed to resolution of their disputes in a single, centralized forum, specifically to avoid the costs and delays of multiplicitous litigations in national courts, the Convention’s requirement that Contracting States recognize such agreements, and the resulting awards, implies even broader principles of preclusion than national court judgments which rest on a structural premise of multiple possible forums and proceedings. Indeed, a substantial argument can be made that presumptively broader preclusion rules are required, as between the parties, for international arbitral awards than for national court judgments. The precise contours of the international preclusion rules applicable in particular cases is to be developed by national courts in light of general principles of international law and the parties’ expectations in particular cases. Fundamental to this analysis, however, is the obligation to treat arbitral awards no less favorably, insofar as preclusive effects are concerned, than national court judgments, and to give effect to the terms and objectives of the parties’ agreement to arbitrate’). 199  Born, p. 3744. 200  Ibid., p. 3745. 196 197

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B.  Arbitration Law and Practice related to the affirmative claims asserted in the arbitration should be covered by the res judicata effect of the award.201 Other multilateral international commercial arbitration conventions  The 1961 4.110 European Convention on International Commercial Arbitration does not contain any rule providing for the binding effect of awards. This might be explained by the fact that the Convention only sought to supplement the New York Convention.202 The 1975 Inter-​A merican Convention on International Commercial Arbitration 4.111 (the Panama Convention) affords awards the same effect as judgments. Article 4 states that ‘[a]‌n arbitral decision or award that is not appealable under the applicable law or procedural rules shall have the force of a final judicial judgment’. Similarly, Article 25 of the Organization for the Harmonization of Business Law 4.112 in Africa (OHADA) Treaty on the Harmonization of Business Law in Africa provides: ‘Award pronounced in compliance with the stipulations provided herein shall have final and conclusive authorities in the territory of each Contracting State as judgments delivered by their national courts.’203 Finally, the 1987 Amman Arab Convention on Commercial Arbitration does 4.113 not contain any rule concerning the binding effects of arbitral awards. It only states that the supreme court of each contracting state must give leave to enforce to awards of the arbitral tribunal.204 d. International arbitration ‘soft law’: The ILA reports and Recommendations on res judicata and arbitration As was seen earlier, based on two reports, in 2006 the ILA adopted six Recommen­ 4.114 dations on res judicata for international arbitrators.205 These Recommendations have been well received by international arbitration practitioners (and scholars) as a useful guide to assist them in addressing res judicata issues. They have been considered in a number of cases.206 However, some arbitral tribunals have expressed reluctance 201  Ibid., pp. 3745–​ 6. See also Radicati di Brozolo, who considers that Articles II and III of the New York Convention call for an ‘autonomous and relatively broad approach to res judicata in relation to arbitral awards even before national courts, which would seem to go beyond the narrow and formalistic notions that traditionally apply in continental systems’ (p. 135). According to Börner (Andreas Börner, Article III, in Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York Convention (Herbert Kronke, et al. ed., 2010), p. 115), Article III may provide for collateral estoppel (‘an arbitral award may be seen as having res judicata effect on third parties that seek to relitigate the issue resolved by the tribunal, at least until one of the parties to the award succeeds in having the award judicially modified’). 202  Lew, Mistelis, and Kröll, para. 26-​23. 203  See also Article 23 of the 1999 OHADA Uniform Act on Arbitration (‘As soon as the award is made, the dispute so settled is res judicata’). 204 Article 35. 205  See paras 0.07 et seq. 206  Filip De Ly and Audley Sheppard, The International Law Association (ILA) International Commercial Arbitration Committee Reports on Lis Pendens and Res Judicata, 25(1) Arbitration International 1, 2 (2009).

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Chapter 4:  Arbitration—A Problem with respect to the application of the ILA Recommendations on res judicata, in particular the legal basis on the ground of which such Recommendations could be applied, preferring to apply domestic res judicata principles instead.207 The ILA reports and Recommendations will be discussed in further detail in Chapters 5 and 6. e. Conclusion 4.115 As this review has shown, the provisions in national arbitration laws, institutional arbitration rules, and international arbitration conventions generally do not go beyond stating the general principle that awards are binding upon the parties. 4.116 The provisions in national arbitration laws usually do not specify either the require-

ments that must be met for an award to become res judicata or the specific effects of an award that is res judicata. National courts in common law and civil law jurisdictions seem to consider awards as equivalent to judgments with respect to res judicata 208 and generally apply very similar res judicata rules to awards as to those applied to judgments. As a consequence, the doctrine of res judicata as applied to awards varies from country to country.

4.117 National arbitration laws and courts have devoted only scant attention to the role

of international commercial arbitration conventions, in particular the New York Convention, or other sources of international commercial arbitration law in determining res judicata rules for awards.209 Res judicata rules for awards are almost entirely based on domestic litigation rules. While this is understandable, it is nevertheless surprising given the fact that awards are increasingly rendered and recognized according to international standards.210 It is interesting to note that the applictation of domestic litigation rules to international arbitral awards does

207  See, e.g., the unpublished ad hoc award rendered in 2007 under the UNCITRAL Arbitration Rules and reported by Kaj Hobér, Res Judicata and Lis Pendens in International Arbitration, in Collected Courses of The Hague Academy of International Law, Vol. 366, pp. 259–​62 (cited as Res Judicata and Lis Pendens), pp. 259–​62. In this case, after a lengthy discussion on the law governing res judicata, the arbitral tribunal, seated in Stockholm, stated: ‘the Tribunal needs to say a word about the ILA Recommendation. This is a forward-​looking documing aiming to introduce changes in international law and practice. There is no indication that it has been made part of Swedish law. The Tribunal holds that it is bound to apply Swedish law rather than international principles of res judicata applicable in international commercial arbitration.’ See also the Swiss Federal Tribunal decision 4A_​633/​2014, 29 May 2015, para. 3.2.5. The Federal Tribunal upeld an arbitral award rendered in Switzerland in which the arbitral tribunal did not apply the broader notion of res judicata as set forth in the ILA Reports and Recommentations. The Federal Tribunal held that Swiss law applies to determine the scope of the res judicata effects of an international arbitral award rendered in Switzerland and that there is no legal basis under Swiss law for the application of the ILA Reports and Recommendation on res judicata and arbitration. 208  Shany, p. 166. 209  Born, p. 3741. 210 Stavros Brekoulakis, The Effect of an Arbitral Award and Third Parties in International Arbitration: Res Judicata Revisited, 16(1) American Review of International Arbitration 177, 207 (2005).

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B.  Arbitration Law and Practice not appear to have been the result of a thorough analysis of arbitral preclusion. It is often carried out without examining whether, and to what extent, the analogy between litigation and arbitration is appropriate.211 The analysis of institutional arbitration rules and international arbitration conven- 4.118 tions has shown that these international instruments give no particular guidance to arbitral tribunals on how to deal with res judicata issues arising before them. International commercial arbitral tribunals faced with res judicata issues must an- 4.119 swer several important questions,212 of which the following are examples. –​ Which law governs res judicata in international arbitration proceedings? –​ Which requirements must be met for the res judicata doctrine to apply and how must these requirements be interpreted? –​ Which type of decision may operate as res judicata in arbitration proceedings? –​ Is it necessary to determine whether a prior foreign judgment or award may be recognized or enforced at the place of arbitration? Are separate recognition or enforcement proceedings before state courts required? –​ To what extent should reasons be given res judicata effect? –​ Should a party be precluded from raising issues that were not, but could and should have been, brought in the prior proceedings? If so, how should one assess what issues ought to have been brought in the prior proceedings? –​ Even if a prior award or judgment meets all the requirements for having res judicata effect, are there any exceptional circumstances preventing the application of res judicata? –​ What effects may be given to a prior award or judgment that does not have res judicata effect? –​ Must arbitral tribunals consider res judicata issues ex officio? –​ What are the consequences of a failure to give the requisite res judicata effects to a prior decision? International commercial arbitration law does not give answers to these questions. 4.120 Domestic rules of res judicata designed for litigation are the most detailed set of 211  See para. 4.36. See also Born, p. 3775. But see the Fomento decision of the Swiss Federal Tribunal. The court first stated the litigation rules of res judicata and lis pendens and then examined whether different rules should apply where the second court seized is an arbitral tribunal with its seat in Switzerland. The Federal Tribunal acknowledged that, given the private nature of arbitration, arbitral tribunals should not always be treated in the same way as state courts. However, it held that since awards may be enforced in the same way as judgments there is the same interest in avoiding inconsistent decisions within the same jurisdiction. Further, arbitral tribunals may not invoke their particular nature to avoid applying res judicata rules. The court concluded that an arbitral tribunal with its seat in Switzerland must apply the same rules as a Swiss court placed in the same situation (ATF 127 III 279, para. 2c). 212 See Audley Sheppard, Res judicata and estoppel, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M. Cremades and Julian D.M. Lew ed., 2005), pp. 219 et seq. (cited as Res judicata and estoppel), pp. 229 et seq.; ILA, Interim Report, pp. 25 et seq.; Radicati di Brozolo, pp. 129–​30.

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Chapter 4:  Arbitration—A Problem rules. Extended to arbitral awards they provide answers to some of the questions raised above. However, the appropriateness of applying domestic litigation rules of res judicata in international commercial arbitration is uncertain. This question will be examined in the following chapter. 4.121 The question that arises now is how international commercial arbitral tribunals

currently deal with res judicata issues in the absence of any particular rules provided by international arbitration law. It is necessary to examine arbitration case law to look for an established arbitration practice or trend among arbitral tribunals that might fill some of the gaps left by international commercial arbitration law. 2. International commercial arbitration practice

4.122 While res judicata issues arise more and more often before international commer-

cial arbitral tribunals, there are relatively few published awards in which the res judicata effects of a prior judgment or award were considered by an arbitral tribunal. On several occasions only extracts of the award were published making it impossible to define the precise situation in which the res judicata issue arose or to draw meaningful conclusions as to how the arbitral tribunal dealt with the res judicata issue. Furthermore, from a review of arbitration case law it does not appear that arbitrators make any meaningful distinction between whether a prior decision was a judgment or an award, but seem to treat judgments and awards similarly for the purposes of res judicata. For this reason, the following analysis will not draw this distinction.

4.123 The result of the review of arbitration case law is that, in general, no established

practice or trend may be discerned from publicly available awards with respect to most res judicata questions. As with international commercial arbitration law, arbitration practice does not go much further than affirming the general principle that awards have res judicata effects. This principle is well established in practice. There also appears to be broad agreement on the general principle that the doctrine of res judicata applies only where the triple identity test is met. However, there is disagreement on how to interpret the notions of parties, cause, and object.

4.124 Some of the most relevant awards with regard to res judicata will be examined in

the following sections. This will show that different arbitral tribunals have dealt with res judicata issues differently; proposing different solutions to the same or similar problems.

4.125 First, the review will investigate which law or rules of law international commer-

cial arbitral tribunals have applied to res judicata issues (a.). It will then look at the requirements that international arbitral tribunals consider ought to be met in order for the doctrine of res judicata to apply (b.). Thirdly, it will investigate whether international commercial arbitral tribunals have afforded prior decisions broad or narrow res judicata effects, including whether arbitral tribunals have given 152

B.  Arbitration Law and Practice res judicata effects only to a prior decision’s dispositif or also to its reasons and to matters that were not, but could and should have been, brought in earlier proceedings (c.). Fourthly, the analysis will investigate whether there are circumstances in which arbitral tribunals have refused to apply the res judicata doctrine, even though the requirements for its application were met (d.). Finally, it will determine whether and to what extent arbitral tribunals have granted preclusive effects to prior judgments or awards although they did not qualify as res judicata (e.). a. Which law governs res judicata issues in arbitration proceedings? No clear choice-​of-​law rule has crystallized from international commercial ar- 4.126 bitration practice. Surprisingly, arbitral tribunals have afforded the question of the proper law governing res judicata relatively little consideration. If the tribunal determined a particular law or rules of law to govern res judicata, it rarely explained the reasons behind its choice of law.213 Most arbitral tribunals applied domestic res judicata rules designed for litigation to 4.127 determine the effects of a prior award or judgment. This is consistent with the origins of preclusion rules in domestic litigation and the application of domestic preclusion rules to awards by state courts.214 In most cases, the domestic law applied was the law of the place of arbitration.215 However, the tribunals rarely explained why they considered the domestic litigation rules of the place of arbitration to be 213  In this sense, see also Pierre Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, in Liber Amicorum Claude Reymond, Autour de l’arbitrage (2004), p. 188; Debourg, para. 505, p. 418. 214  Born, pp. 3775–​6. It may also be explained by international arbitrators’ reluctance to adopt more innovative solutions (e.g. by reference to transnational law) whenever they are able to cloak their decisions in more traditional terms, which seem more likely to ensure the awards’ enforceability (see Pierre Lalive, Transnational (or Truly International) Public Policy and International Arbitration, in Comparative Arbitration Practice and Public Policy in Arbitration, ICCA Congress Series, 1986, Vol. 3 (Pieter Sanders ed., 1987), paras 100b et seq.). 215  Hascher, p. 18. See, e.g., the award rendered in the second Thalès/​Euromissiles arbitration, namely ICC Case No. 13808, 2008 (reported by Radicati di Brozolo, pp.128–​9 and 139–​40 and Mayer, L’obligation de concentrer la matière litigieuse s’ impose-​t-​elle dans l’arbitrage international?, pp. 417–​18). In this case, the arbitral tribunal rejected an autonomous, transnational approach to res judicata (‘aussi attractive que puisse paraître une method “autonome” ou autrement “transnationale” . . . ’) and applied French law, which was the law of the seat of the first and the second arbitration. See also the unpublished ad hoc award rendered in 2007 under the UNCITRAL Arbitration Rules, reported by Hobér, Res Judicata and Lis Pendens, pp. 259–​62. In this case the arbitral tribunal, seated in Stockholm, concluded after a lengthy discussion as to the law governing res judicata that it was ‘bound to apply Swedish law rather than international principles of res judicata applicable in international commercial arbitration’. See also ICC Case No. 13507 (the sole arbitrator, sitting Barcelona, noted that neither the ICC Arbitration Rules nor the Spanish Arbitration Act dealt with the res judicata effect of the withdrawal of a claim. The sole arbitrator then sought guidance in the Spanish Code of Civil Procedure); ICC Case Nos 2745 and 2762, 1977, Collection of ICC Arbitral Awards (1974–​1985) (Siegvard Jarvin and Yves Derains ed., 1990), pp. 325 et seq. (the arbitral tribunal applied the ‘French and Belgian notion of res judicata’. The seat of the arbitration was in France. The first award had also been rendered in France. The arbitral tribunal specified that this choice of law was independent of the law governing the merits, which was Belgian law. It seems

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Chapter 4:  Arbitration—A Problem applicable.216 Arbitral tribunals sometimes invoked the traditional rationale that res judicata must be characterized as procedural and, therefore, be governed by the law of the seat.217 4.128 Frequently, the law of the place of arbitration was also the law of the country where

the first decision was rendered,218 the law governing the merits, or the law relied upon by the parties.219 In these cases, it is often impossible to ascertain in which category the particular law was applied, or whether the tribunal intended to apply one particular law or several different laws cumulatively. In ICC Case No. 7438 of 1994,220 the arbitral tribunal sitting in Zurich applied the procedural law of the canton of Zurich. The sole arbitrator based its choice of law on three considerations. First, the arbitration clause provided for arbitration in Zurich. Secondly, the agreement concerning the place of arbitration was confirmed in the terms of reference. Thirdly, the seat of the first arbitral tribunal was also in Zurich and the first award was also rendered there. According to Hascher, the arbitrator’s reasoning

that the tribunal determined French law to govern res judicata as the law of the seat of the arbitration. The tribunal noted that the parties had submitted their dispute to arbitration in France and to French procedural law. It is important to note that in 1977, when the second arbitration took place, in the absence of an express choice of law it was presumed that by choosing France as the arbitral seat the parties also impliedly chose French procedural law. This presumption was abandoned with the law reform of 1981); ICC Case No. 3540, 1980 (reported by Hascher, p. 18) (after stating that res judicata issues are matters of procedure, the arbitral tribunal applied the law of civil procedure of the canton of Geneva, because there were no res judicata rules provided for in either the ICC Rules or the Swiss Concordat on arbitration); ICC Case No. 5901, 1989 (reported by Hascher, p. 19 and Horacio A. Grigera Naón, Choice-​of-​law Problems in International Commercial Arbitration, 289 Recueil des Cours de l’Académie de Droit international 168 (2001) (the arbitral tribunal first stated that res judicata was a question of procedure and that before a state court the applicable conflict-​of-​laws rule would normally designate the lex fori to govern res judicata issues. The arbitral tribunal then admitted that arbitral tribunals do not have a lex fori. Nevertheless, the tribunal applied French law to res judicata because it was the law of the seat of arbitration and the award might be challenged before the French courts. The tribunal added that ‘it is obviously natural to look to the laws of France, particularly since the law of arbitration of France makes specific reference to the “res judicata” effects or “autorité de la chose jugée” of arbitration awards’); ICC Case No. 7438, 1994 (reported by Hascher, p. 19); ICC Case No. 8023, 1995 (reported by Hascher, pp. 21–​2) (the arbitral tribunal applied French law which was the law of the seat of arbitration, the law governing the merits, and the law relied upon by the parties); CRCICA Case No. 67/​1995, Award, 11 August 1996, Arbitral Awards of the Cairo Regional Centre for International Commercial Arbitration (M.E. Alam Eldin ed., 2000), pp. 153 et seq. (the arbitral tribunal applied the law of the respondent’s state, i.e. Egyptian law, to res judicata. Egypt was the place of arbitration and the place where the first judgment was rendered. In addition, Egyptian law governed the merits. All three arbitrators were of Egyptian nationality); ICC Case 10574, 2000 (reported by Grigera Naón, p. 171) (the arbitral tribunal sitting in London looked exclusively at section 32 of the English Civil Jurisdiction and Judgments Act 1982 to determine if it would grant res judicata effects to a US federal court judgment). 216 Hascher, p. 19. 217  See, e.g. ICC Case No. 3540, 1988; ICC Case No. 5901, 1989. See also ILA, Interim Report, pp. 14 and 26. 218  See, e.g., ICC Case Nos 2745 and 2762, 1977; ICC Case No. 7438, 1994; CRCICA Case No. 67/​1995. 219  ICC Case No. 8023, 1995; CRCICA Case No. 67/​1995. 220 Hascher, p. 19.

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B.  Arbitration Law and Practice leads him to believe that the arbitrator intended to apply the law of the place of arbitration and the law of the place where the first award was rendered cumulatively. In some cases, the arbitral tribunal has applied the law governing the merits or the 4.129 law relied upon by the parties to res judicata. However, where the law governing the merits was applied to res judicata issues, it is again difficult to ascertain in which category that law was applied. Indeed, in those cases either the arbitral seat was also located in the country the law of which had been chosen to govern the merits, or the parties had relied on the law governing the merits in support of their submissions on res judicata.221 The tribunals sometimes reverted to the false conflict technique, demonstrating 4.130 that their conclusions regarding res judicata would have been the same in the application of a different legal source. In ICC Case No. 5901 of 1989, the tribunal decided that French law—​that is, the law of the seat of the arbitration—​should govern the question whether and to what extent a prior Swiss award may have res judicata and collateral estoppel effects in a subsequent arbitration seated in France. The arbitral tribunal added that French res judicata rules were entirely consistent with Swiss res judicata rules222 and international arbitral precedents applying both civil and common law provisions. In particular in more recent years, several arbitral tribunals have tried to avoid 4.131 the strict application of domestic res judicata rules, seemingly taking into account the autonomous nature of international arbitration.223 In ICC Case No. 13509 of 2006 the arbitral tribunal, seated in Paris, held that it had great freedom in determining the law governing res judicata. French law would merely constitute a source of inspiration, without being binding upon the tribunal, even though the

221  Ibid., p. 20. See also ICC Case No. 6293, 1990 (reported by Hascher, p. 20) (the arbitral tribunal referred to Article 28(6) of the 1998 ICC Arbitration Rules but its reasoning was based almost exclusively on New York State law which was the law governing the merits and the only law relied upon by the parties); ICC Case No. 10027, 2000 (reported by Hascher, p. 20) (the parties agreed that res judicata should be governed by the law governing the merits, which was New York law. The arbitral tribunal therefore had to apply the law governing the merits, although it considered res judicata to be a matter of procedure rather than substance. In the present case, New York law governed both the merits and the procedure. Hence, the question whether res judicata is a matter of procedure or substance was of no practical importance). 222  Swiss law was the law of the place where the first award was rendered and the law governing one of the disputed contracts. 223  See, however, ICC Case No. 13808, 2008, where the arbitral tribunal applied French law to the issue of res judicata because the prior award was ‘part’ of the French legal order. As reported by Radicati di Brozolo, ‘faced with arguments that relied also on alleged solutions “retenues dans le domaine de l’arbitrage international et du commerce international” and on academic writings, the tribunal paid little heed to “les vue imaginative de certains experts” on the grounds that both the earlier award and the one to be rendered were “integrated” in the French legal order, “aussi attractive que puisse paraître une ‘méthode autonome’ ou autrement transnationale”’. The tribunal also dismissed arguments based on comparative law, the ALI/​International Institute for the Unification of Private Law (UNIDROIT) Principles on International Civil Procedure, as well as the ILA Recommendations on res judicata (see Radicati di Brozolo, p. 139).

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Chapter 4:  Arbitration—A Problem seat of the arbitration was in France, the first award was rendered in France, the law governing the merits in both arbitrations was French law, and both parties to the arbitration relied on French law with regard to res judicata. The tribunal noted that, in these circumstances, it would be appropriate to look at French rules of res judicata, always pointing out that it was not bound by French law on res judicata.224 The tribunal, the reasoning of which was based essentially on French law, eventually rejected the res judicata argument on the ground that the requirements for res judicata were not met. Furthermore, the tribunal, which was authorized to rule as amiable compositeur, specified that its decision was fair and just.225 4.132 Some arbitral tribunals based their solution entirely on international arbitration

law. In ICC Case No. 3383 of 1979, when deciding whether the prior award had finally determined that there was a valid agreement providing for ad hoc arbitration, the ICC tribunal did not specify the law governing res judicata, nor did it base its reasoning on any particular legal basis. Instead, the tribunal based its reasoning on the premise that prior awards must be considered final and binding in subsequent arbitral proceedings, unless successfully challenged before the competent domestic courts. The tribunal granted the prior ad hoc award absolute res judicata effects: it is obviously not for this arbitrator to operate as an appeal body over the decisions of other arbitral tribunals—​including those preceding the final award on the merits—​which, by definition, are rendered in last instance. Considering, therefore, that where the parties have the power . . . to challenge before the competent authorities arbitral awards which they consider to be flawed, it is not within the powers of another arbitrator to put such awards in question. It is therefore for this arbitrator to simply take notice of the decisions rendered by the ad hoc arbitral tribunal . . . in particular the decision in which the arbitral tribunal declared itself competent and accepted the mission conferred upon it by the parties pursuant to the arbitration agreement . . .226

4.133 Accordingly, the tribunal held that arbitral tribunals are bound by prior awards, as

long as their validity was not challenged before the supervisory courts. It further held that the ad hoc tribunal was validly constituted by its own decision to accept   ICC Case No. 13509, 2006, 4 Journal du droit international 1205 (2008).   See also ICC Case No. 8023, 1995 (reported by Hascher, pp. 21 et seq.); ICC Case No. 6293, 1990 (the tribunal referred to Article 28(6) of the 1998 ICC Arbitration Rules which, according to the tribunal, expressed the general principle that arbitral awards have res judicata effect). In Wintershall AG et al. v The Government of Qatar the tribunal referred to Article 1059 of the Dutch Arbitration Act 1986 to ascertain that partial final awards have res judicata effect. It then cited the claimant’s submissions according to which the ‘principle of res judicata prevents the re-​ opening of necessarily decided points . . .’ (Wintershall AG, International Ocean Resources Inc, Veba Oel AG, Deutsche Schachtbau-​und Tiefbohrbesellschaft mbH, Gulfstream Resources Canada Ltd v The Government of Qatar, Partial Award of 5 February 1988 and Final Award of 31 May 1988, Yearbook Commercial Arbitration, Vol. XV (A.J. van den Berg ed., 1990), pp. 30 et seq., para. 83). 226  ICC Case No. 3383, 1979, Collection of ICC Arbitral Awards (1974–​ 85) (Sigvard Jarvin and Yves Derains ed., 1990), p. 396. 224

225

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B.  Arbitration Law and Practice jurisdiction and concluded that ‘the constitution of this new arbitral tribunal, expressly independent of the ICC Court of Arbitration, is sufficient in itself to permit the conclusion that the original arbitration agreement providing for ICC arbitration was modified’.227 The tribunal corroborated this conclusion by stressing that the modification of the 4.134 original arbitration agreement in favour of ad hoc arbitration was ‘above all’ the result of the ‘common intention’ of the parties which was unambiguously expressed in the new agreement in which the parties expressly renounced ICC arbitration. The tribunal therefore underlined that the conclusion to grant res judicata effect to the prior ad hoc award was in line with the parties’ arbitration agreement.228 The readiness on the part of arbitral tribunals to depart from a mechanical appli- 4.135 cation of domestic res judicata rules is further illustrated by ICC Case No. 4126 of 1984. In this case the arbitral tribunal was requested to issue interim relief similar to that which a state court had previously refused to grant. The tribunal first held that the parties in the court proceedings were not identical to the parties in the arbitration. Nevertheless, the tribunal held that ‘it is nonetheless the case that the object of the request now advanced before the arbitral tribunal is essentially identical to that judged in that procedure. . . . [The party to both procedures is, therefore,] bound by the decision of the Court of Appeal . . .’229 The tribunal further reasoned that, even if the party identity requirement was not 4.136 met and, hence, a strict rule of ne bis in idem could not apply, the rules of good procedural order in an important number of countries including those of the European Communities do not prevent any less a party to an arbitration from availing itself, for a request that is essentially identical and again presented as a request for interim relief . . ., of the successive possibilities offered by state jurisdictions . . . without there being an objective change in circumstances.230   Ibid., p. 396.   See also ICC Case No. 6233, 1992 (reported by Hascher, p. 21). The arbitral tribunal seemingly relied on the autonomous nature of international arbitration when dealing with res judicata. In relation to the law governing the interpretation of prior awards, the tribunal held that, even though the seat of the arbitration was in Abidjan, ‘in light of the autonomy of the arbitral clause’, it would not be appropriate to apply the provisions of the code of civil procedure of the Ivory Coast, which only dealt with the interpretation of judgments, but not awards. It further held that ‘[t]‌he arbitral tribunal is of the opinion that arbitral tribunals, and not State courts, have jurisdiction to interpret arbitral awards. This power is based on the arbitral clause itself, the purpose of which is to bar the jurisdiction of State courts; nothing authorizes the limitation of the effects of the arbitral clause when the subject of the dispute is the interpretation of the award rendered on the basis of this clause’ (para. 6). 229 ICC Case No. 4126, 1984, Collection of Arbitral Awards (1974–​ 1985) (Sigvard Jarvin and Yves Derains ed., 1990) (English translation quoted by Eric Schwartz, The Practices and Experience of the ICC Court, in Conservatory and Provisional Measures in International Arbitration (1993), p. 57. See also Born, p. 3777). 230 ICC Case No. 4126, 1984. See also ICC Case No. 3267, 1984, Yearbook Commercial Arbitration, Vol. XII (A.J. van den Berg ed., 1987), p. 89 (‘[T]‌he binding effect of its first award is not limited to the contents of the order thereof adjudicating or dismissing certain claims, but that it 227

228

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Chapter 4:  Arbitration—A Problem 4.137 Finally, in some cases the arbitral tribunal appears to base its conclusions on gen-

eral res judicata principles detached from any particular legal system.231

4.138 It has been submitted that arbitral tribunals—​‘as law and practice stand today’—​

must apply the law of the place of arbitration to res judicata issues.232 However, there does not appear to be an established practice among international commercial arbitral tribunals to apply the law of the place of arbitration. National arbitration laws are virtually silent with regard to res judicata. While it is true that arbitral tribunals have frequently applied the domestic res judicata rules of the place of arbitration, several tribunals have applied different laws or rules of law. In addition, most arbitral tribunals that have applied res judicata rules of the place of arbitration have done so without justifying that choice of law. Moreover, the rationale of some tribunals to apply domestic res judicata rules of the arbitral seat on the basis that res judicata is a procedural matter to be governed by the law of the forum is flawed. It disregards today’s general understanding that international commercial arbitral tribunals have no lex fori. Modern arbitration laws have generally abandoned the presumption that, in the absence of a choice by the parties regarding procedure, the domestic procedural law of the country of the arbitral seat should apply.233

4.139 It has also been submitted that there is a tendency on the part of arbitral tribunals

to avoid an unduly mechanical application of domestic preclusion rules and to adopt instead pragmatic approaches that further the objectives of the parties’ arbitration agreement. It was said that these tribunals are formulating ‘sui generis international preclusion principles’234 which respect the presumptive desire of the parties to resolve all of their disputes in a single, centralized proceeding.235

4.140 It is possible to observe a readiness among international commercial arbitral tri-

bunals to depart from a mechanical application of domestic preclusion rules in favour of more autonomous rules, in particular in more recent years. Such readiness

extends to the legal reasons that were necessary for such order, i.e. to the ratio decidendi of such award. Irrespective from the academic views that may be entertained on the extent of the principle of res judicata on the reasons of a decision, it would be unfair to both parties to depart in a final award from the views held in the previous award, to the extent they were necessary for the disposition of certain issues’). 231  See, e.g., ICC Case No. 6363, 1991, Yearbook Commercial Arbitration, Vol. XVII (A.J. van den Berg ed., 1992), pp. 186 et seq. The arbitral tribunal was silent on the question of the law governing res judicata. It appears that the tribunal applied general res judicata principles, in particular the triple identity test. See also CAS, Dieter Baumann v International Olympic Committee (IOC), National Olympic Committee of Germany and International amateur Athletic Federation (IAAF), CAS ad hoc Division (O.G. Sydney 2000) 2000/​06, Recueil des sentences du TAS/​ Digest of CAS Awards II 1998–​2000 (Matthieu Reeb ed., 2002), pp. 633 et seq. The CAS Panel did not specifically determine the law governing res judicata. However, the Panel stated that it would determine the dispute, inter alia, pursuant to ‘general principles of law and the rules of law, the application of which it deems appropriate’. 232 Sheppard, Res Judicata and Estoppel, p. 231. 233  See also paras 5.24 et seq. 234  Born, p. 3776. 235  Ibid., p. 3777.

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B.  Arbitration Law and Practice to adopt a more pragmatic and flexible approach has already been observed in public international law.236 However, as has been underlined, ‘as always with arbitral practice, it is difficult to know exactly how widespread any particular approach is and whether one may be in the presence of a significant uniformity of trend’.237 The review of arbitral case law has shown a great diversity in the laws and principles 4.141 applied to res judicata with many tribunals relying on domestic res judicata rules designed for judgments. Furthermore, it has been observed that the arbitrators’ readiness to depart from a strict construction of res judicata according to the conception of a given national law may be a function of the degree of ‘transnationality’ of the arbitration and the underlying dispute. Where the level of transnationality is limited, the arbitrators may be more averse to departing from the tenets of the legal system to which the situation is tied.238 Therefore, it remains to be seen whether the trend towards flexible and pragmatic international arbitration res judicata principles will further crystallize and establish itself in the future. b. Which res judicata requirements must be met before international commercial arbitral tribunals? While some arbitral tribunals have applied the applicable res judicata requirements 4.142 in the same way as state courts,239 several tribunals have interpreted the requirements in a more flexible and pragmatic way, taking into consideration the circumstances of the particular case. Order No. 5 of 2 April 2002 constitutes an example for both a strict application of do- 4.143 mestic res judicata rules and an attempt to find a pragmatic solution to safeguard the interests at stake. The ICC tribunal with its seat in Geneva stated expressly that it would apply the same test with respect to res judicata as a Swiss court. It held that ‘it is settled law by now that an arbitral tribunal sitting in an international arbitration in Switzerland must apply the same rules as would a Swiss court in matters of res judicata’.240 The arbitral tribunal was compelled to follow this approach by the Federal 4.144 Tribunal’s ruling in the Fomento decision, which the arbitrators considered to be ‘in and of itself debatable’.241 The tribunal held that because the requirements under Swiss law were not met the res judicata doctrine did not apply and could not prevent the claimant from requesting that the tribunal grant the same interim

  See para. 2.135.   Radicati di Brozolo, p. 138. 238  Ibid., p. 138. 239  See, e.g., CRCICA Case No. 67/​ 1995. In this case, the arbitral tribunal closely followed Egyptian law and determined that the prior judgment could not operate as a res judicata in the subsequent arbitration because the court which rendered the judgment did not have jurisdiction to make the ruling pursuant to Article 203/​5 of the Egyptian Law of Civil and Commercial Procedures. 240 ICC, A v Z, Order No. 5, 2 April 2002, regarding Claimant’s request for interim relief, ASA Bulletin, Vol. 21, No. 4 (2003), p. 815. 241  Order No. 5, 2 April 2002, p. 815. 236 237

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Chapter 4:  Arbitration—A Problem relief as the one previously denied by a New York court. Nevertheless, the tribunal denied the claimant’s request based on the principles of judicial efficiency and procedural economy, as well as a lack of sufficient protective interest of the claimant. The tribunal reasoned that [i]‌t is not opportune to allow an applicant to repeat, against the will of the opposing party, costly and time consuming proceedings which the parties already went through before another judicial body. There is no sufficient protective interest . . . on the part of the applicant if the request is the same, the facts and evidence relied upon are essentially the same, the legal tests to be applied in deciding the matter are the same, and the principles of due process were observed in the first proceedings. Under these circumstances, it cannot be reasonably asked either from the arbitrators or from the applicant’s opponent to go through the same matter again. The wish of the applicant to obtain a more favourable ruling, understandable as it is, can by itself not constitute a sufficient protective interest.242 4.145 It is often considered a requirement for the application of the res judicata doctrine

that the prior judgment or award may be entitled to recognition in the country of the place of arbitration.243 While arbitral tribunals seem ready to assess the ‘recognizability’ of prior judgments, they appear reluctant to pronounce themselves on the validity of prior awards. In Order No. 5 the tribunal rejected the res judicata defence on the ground that the prior judgment of the New York court could not be recognized in Switzerland.244 By contrast, in ICC Case No. 3383 of 1979 the tribunal refused to rule on the validity of a prior award which had not been challenged before the supervisory courts. In the commentary accompanying the award it was contended that the second arbitral tribunal has no power to examine whether the first award would be capable of recognition in the country of the place of arbitration, since that would allow the second tribunal to rule on the first tribunal’s jurisdiction and on the regularity of the first arbitration proceedings, which would be outside the second tribunal’s jurisdiction.245

4.146 In many cases, the arbitral tribunals did not examine whether a prior award or

judgment would be recognized in the country of the arbitral seat or elsewhere. The tribunals merely determined whether there was identity of parties, cause, and object in both proceedings.246 In the majority of the awards examined, the tribunals

  Ibid., pp. 815 et seq.  Sheppard, Res Judicata and Estoppel, p. 232. 244  See also ICC Case Nos 2475 and 2767, 1977. In this case, the arbitral tribunal decided that a prior judgment of the Brussels Court of Appeal should operate as a res judicata in the arbitration because it was covered by the 1968 Brussels Convention which required all its contracting states to recognize judgments rendered in any of the other contracting states. The tribunal held that since the courts of the parties’ countries of origin would be bound by the judgment, the parties should not be allowed to avoid the judgment in the arbitration. 245  ICC Case No. 3383, 1979, p. 398. 246  See, e.g., CRCICA Case No. 67/​1995; ICC Case No. 6363, 1991 (‘Where there is, cumulatively, identity as regards parties, subject matter of the dispute petitum, and causa petendi, between a prior judgment and a new claim, the new claim is barred by the principle of res judicata. . . . A discrepancy 242 243

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B.  Arbitration Law and Practice which applied domestic res judicata rules did not refer to any legal authorities or case law, in some cases even legislation, defining and specifying the meaning of the triple identity test under the relevant domestic law. Rather, they interpreted the notions of parties, cause, and object in a more pragmatic and intuitive way, which they considered to be appropriate in the case at hand.247 As a result, in some cases the tribunals applied the res judicata requirements in a way that did not entirely correspond to the requirements under the relevant domestic law.248 Accordingly, while there appears to be a general understanding in international commercial arbitration practice as to the applicability of the triple identity test, there is no generally accepted way of applying and interpreting the triple identity test. ICC Case No. 6293 of 1990 illustrates this flexible approach. The tribunal applied 4.147 New York law to res judicata. However, the tribunal specified that whatever the requirements under New York law, the doctrine of res judicata seeks to prevent the reconsideration between the same parties of an issue that has already been decided in a final and binding judgment or award. According to the tribunal, the doctrine of res judicata applies if a claim is essentially identical to a claim previously decided, whatever the requirements under the applicable law. The tribunal thereby appeared to apply the triple identity test as a generally accepted principle which applies independently of the applicable law.249 Concerning in particular the requirement of party identity, the more flexible 4.148 approach is illustrated by ICC Case No. 8023 of 1995 where the arbitral tribunal held that the parties were bound by a prior award, even though they were not strictly identical to the parties in the first arbitration. The arbitral tribunal had determined French law to govern res judicata pursuant to which the doctrine generally applies only where the parties in both proceedings are identical and act in the same legal capacity.250 between any one of the elements of a current claim and a past judgment comprising a res judicata is enough to defeat a defense based on res judicata’); ICC Case No. 4126, 1984; ICC Case No. 7438, 1994; ICC Case No. 6293, 1990. 247 Hascher, p. 24. 248  See ibid., pp. 21 and 24. 249  See also CAS, Dieter Baumann v International Olympic Committee (IOC) et al., where the arbitral tribunal seems to have applied the doctrine of res judicata, including the triple identity test, as a general principle of law. 250   See also ICC Case No. 4126, 1984. In this case, the arbitral tribunal considered a party to be ‘bound’ by a prior award to which it was not a party on the ground that the new request was ‘essentially identical’ to that decided in the prior procedure; in ICC Case No. 6363, 1991 the tribunal examined the party identity requirement under both a strict and a flexible standard. The respondent argued that a prior decision was binding on both of its opponents in the arbitration, i.e. claimant and Middle Eastern company on whose behalf the claimant acted. The claimant argued that it was not bound by the prior decision because it was not a party to the prior proceedings. The tribunal rejected the respondent’s argument based on res judicata on the ground that there was no party identity. Applying first a strict test, it held that the claimant, who was not a party to the prior proceedings, was ‘in law and fact’ a separate person from Middle Eastern company, which was a named party to the prior proceedings. The tribunal, applying a more flexible standard, then held that the

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Chapter 4:  Arbitration—A Problem 4.149 Arbitral tribunals have not given much consideration to the identity of cause and

object requirements.251

4.150 Concerning the doctrine of issue preclusion, the American Arbitration Association

(AAA) tribunal in the arbitration between Smithkline Beecham Biologicals SA (Smithkline) and Biogen Inc. (Biogen) had to determine whether the issues before it were identical to the issues determined in a prior UNCITRAL arbitration. The disputes before the AAA and UNCITRAL tribunals arose out of two licence agreements. The first licence agreement granted Smithkline a licence for the United States (the ‘US Licence’). The second agreement granted a licence for the rest of the world, apart from Japan (the ‘International Licence’). The International Licence provided for UNCITRAL arbitration in London. The US Licence provided for AAA arbitration in New York.

4.151 Smithkline commenced arbitration proceedings against Biogen in London for

the International Licence. The London tribunal rendered an award in favour of Smithkline in 1992. In 1993 Smithkline submitted the same claim in AAA arbitration proceedings in New York with respect to the US Licence. After the London award was affirmed on appeal, Smithkline invoked the doctrine of collateral estoppel in the AAA arbitration.

4.152 The AAA tribunal rejected Smithkline’s collateral estoppel plea holding that

the issues in question were not identical to the issues determined in the prior UNCITRAL award because ‘[t]‌he Parties have entered into two different agreements . . . containing two different arbitration clauses, providing for arbitration in two different forums relating to two different sets of rights’.252

4.153 The tribunal added that the UNCITRAL tribunal could not have rendered

a decision on the US Licence since it did not have jurisdiction over the US licence agreement. After a full hearing on the merits, the AAA tribunal ruled in Biogen’s favour.

claimant’s involvement alongside the Middle Eastern company in the prior proceedings was not sufficient to make the claimant a party to the prior decision. 251  See, e.g., ICC Case No. 9800, 2000, Collection of ICC Arbitral Awards (2001–​2007) (Jean-​Jacques Arnaldez, Yves Derains, and Dominique Hascher ed., 2009), pp. 659 et seq.; ICC Case No. 7438, 1994 (reported by Hascher, pp. 19 et seq.). According to Hascher (p. 22), rather than a question of res judicata, the problem in ICC Case No. 7438 concerned the question of the rational link between the successive claims, one of which being accessory to the other. On the subject matter identity requirement, see also CAS, Dieter Baumann v International Olympic Committee (IOC) et al. The CAS held that the primary issue before it was whether or not the removal of Baumann’s accreditation to compete in the Olympic Games in Sydney by the IOC was well founded. It decided that the subject matter was not the same as in the prior proceedings before the IAAF Arbitration Panel, in which the IAAF placed a two-​year ban from competition on Baumann. See also Case No. A33 before the Iran–​US Claims Tribunal (132-​A 33-​FT), Awards of the Full Tribunal, 9 September 2004, Yearbook Commercial Arbitration, Vol. XXX (A.J. van den Berg ed., 2005), pp. 279 et seq. 252 See Smithkline Beecham Biologicals, S.A. v Biogen, Inc., 1996 WL 209897 (S.D.N.Y. 1996)*7.

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B.  Arbitration Law and Practice A similar approach was followed in ICC Case No. 7061 of 1997. The case involved 4.154 four separate arbitration proceedings arising from the same project. One central issue in each arbitration was the existence of deceit at the time the agreements were concluded. The claimant raised a plea of issue estoppel, relying on a prior award rendered in one of the other arbitrations, in which the tribunal had recognized the existence of deceit, had declared the contract at issue void, and had ordered respondent to pay damages to claimant. The arbitral tribunal adapted the ‘issue estoppel’ test to the international arbitration context. As reported by Hanotiau, it rejected the plea of issue estoppel on the grounds that the parties were not the same in the two cases; that the arbitration in question took place on the basis of a different supply contract and arbitration agreement, albeit with the seat of arbitration in the same city; that the applicable law was also different, and that it could not be assumed that the same evidence was equally available to both arbitral tribunals.253

Finally, some arbitral tribunals considered the type of decision that may become res 4.155 judicata. While it appears to be well established that prior judgments and awards (including partial awards) on the merits may operate as res judicata in subsequent arbitration proceedings, the situation is not clear with respect to prior decisions on jurisdiction and decisions granting or refusing interim relief in aid of arbitration proceedings. Arbitral tribunals are divided on the question whether prior decisions on juris- 4.156 diction are binding on the tribunal. In ICC Case No. 3383 of 1979 the tribunal afforded absolute res judicata effects to a prior award on jurisdiction.254 By contrast, in several cases where arbitral tribunals were confronted with anti-​ 4.157 arbitration injunctions issued by a state court, the tribunals refused to consider themselves bound by the prior jurisdictional determinations of the courts, situated both inside and outside the country of the place of arbitration. The arbitral tribunals generally held that prior determinations by a court relating to the jurisdiction of the arbitral tribunal could not have any effect on the arbitration proceedings.255  See Hanotiau, para. 551.   See paras 4.132 et seq. See also ICC Case No. 6535, 1992, Collection of Arbitral Awards (1991–​1995) (Jean-​Jacques Arnaldez, Yves Derains, and Dominique Hascher ed., 1997), pp. 495–​500. 255 See Born, pp. 3783–​4 with references, in particular, unidentified ICC Case, reported in Yves Derains and Eric Schwartz, A Guide to the ICC Rules of Arbitration (2nd ed. 2005), para. 155, p. 106; ICC Case No. 10623, 2001, ASA Bulletin, Vol. 21, No. 1 (2003), pp. 82 et seq.; ICC Case No. 5294, 1988, Yearbook Commercial Arbitration, Vol. XIV (A.J. van den Berg ed., 1989), pp. 137 et seq.; ICC Case No. 4862, 1986, Collection of ICC Arbitral Awards (1986–​1990) (Sigvard Jarvin, Yves Derains, and Jean-​Jacques Arnaldez ed., 1994), pp. 508–​9. See also The Republic of Kazakhstan v Istil Group Inc. (No. 3) [2007] EWHC 2729 (Comm). An LCIA tribunal sitting in London accepted jurisdiction over a dispute despite a prior judgment of the Paris Commercial Court in which the court established that there was no applicable arbitration agreement. Given the sovereign immunity of the Republic of Kazakhstan before the French courts, the Paris court directed the parties to litigate in Kazakhstan. Disregarding this ruling, Istil commenced LCIA proceedings in London and the tribunal accepted jurisdiction. The tribunal proceeded to 253

254

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Chapter 4:  Arbitration—A Problem 4.158 Concerning provisional measures, it is not clear whether arbitral tribunals will al-

ways afford res judicata effects to a prior court decision granting or denying interim relief. Only a few published awards deal with this question. In ICC Case No. 4126 of 1984 the arbitral tribunal seemed to be of the opinion that prior interim measures may generally have res judicata effects in subsequent arbitration proceedings. The tribunal decided that the party whose request for interim relief was previously denied by a state court could not bring an essentially identical request again before the arbitral tribunal, because it was ‘bound’ by the prior court decision.256

4.159 In Order No. 5 of 2 April 2002 the tribunal was more cautious. It held that the

principles of judicial efficiency and procedural economy prevented a party from requesting that the arbitral tribunal grant the same interim relief as the one previously denied by a state court. However, it expressed doubts as to whether the doctrine of res judicata applies to provisional measures as a matter of principle.257 Since the requirements for res judicata were not met, the question was left open.

4.160 In addition, it is worth noting that in ICC Case No. 13507, the arbitral tribunal,

seeking guidance from the Spanish Code of Civil Procedure, found that a decision on the withdrawal of a claim in international arbitration does not have any res judicata effects, holding in relevant part that: The ICC Rules do not address the question of whether the express unilateral withdrawal of claims by the claimant has res judicata effects or not. A withdrawal of claims resulting from the application of Art. 30(4) of the ICC Rules for lack of payment of the advance on arbitral costs is without prejudice, but such withdrawal may only occur after the ICC Court Secretary General has proceeded as provided for in such Article, which has not happened so far in this case. The Spanish Arbitration Act does not address this question either. Only Art. 20(3) of the Spanish Ley de Enjuiciamiento Civil (Code of Civil Procedure) regarding the withdrawal of court actions provides guidance to settle this issue. . . . Clearly, this provision indicates that a withdrawal of a claim with the respondent’s consent or without its opposition terminates the proceedings to which the withdrawal relates without res judicata effects. It has been found above that First Respondent has not opposed the withdrawal of Claimant’s claims in terms of Art. 38(2)(a) of the Spanish Arbitration Act and has, indeed, acquiesced such withdrawal. Second Respondent did expressly refuse to pronounce itself or comment on the withdrawal of Claimant’s claims, as stated by Second Respondent in its Second Respondent First Letter and, for that

make an award on liability and ordered Kazakhstan to pay a certain amount of money to Istil. This award on liability was set aside by the English Commercial Court, inter alia, on the ground that it violated the doctrine of issue estoppel. The LCIA tribunal was bound by the final decision of the Paris court in which it had finally established that there was no valid arbitration agreement ([2006] EWHC 448 (Comm)). Istil sought to pursue the LCIA arbitration on the ground that the first partial award on jurisdiction was still effective and not affected by the annulment of the award on liability. The High Court disagreed and granted an anti-​a rbitration injunction restraining Istil from pursuing the LCIA arbitration. 256  See paras 4.135 et seq. 257  Order No. 5, 2 April 2002 (see paras 4.143 et seq.), p. 815 (‘Whatever the correct legal position on the question of res judicata . . . of provisional remedies in international matters . . .’).

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B.  Arbitration Law and Practice reason, has not advanced any opposition or objection to such withdrawal. Such being the case, having in mind the letter and spirit of Art. 20(3) of the Spanish Ley de Enjuiciamiento Civil and the powers vested in arbitral tribunals by Art. 15(1) of the ICC Rules, the Sole Arbitrator finds that the withdrawal of Claimant’s claims is without prejudice and deprived of res judicata effects.258

For the sake of completeness it should be mentioned that it has been held that only 4.161 final decisions may operate as res judicata, to the exclusion of preliminary decisions. This was held in ICC Case No. 3267 of 1984 in the context of a prior partial award rendered in the same arbitral proceedings. The arbitrator refused to extend the res judicata effects of the prior partial award to preliminary issues, holding in relevant part: the arbitral tribunal made clear in other parts of its first award that the views expressed therein on certain other aspects of the case were of a preliminary nature only and without prejudice to its final decision. On such aspects, the arbitral tribunal holds itself entirely free to adopt other views with the benefit of further evidence and investigations.259

c. To what extent have international arbitral tribunals afforded res judicata effects to prior decisions? With respect to the scope of res judicata, arbitral tribunals generally appear to 4.162 apply the relevant law in the same way as courts. Arbitral tribunals which applied domestic laws generally applied the law strictly, usually without reference to any domestic legal authorities, case law, or legislation. Accordingly, the scope of the res judicata effects afforded to prior judgments and awards varies depending on the domestic law applied by the arbitral tribunals. While some tribunals granted broad res judicata effects, including to reasons, others strictly limited the res judicata effects to the prior decision’s dispositif. No particular international arbitration practice with respect to the scope of res 4.163 judicata emerges from arbitration case law. There does not appear to be a tendency to adopt a more flexible and pragmatic approach, as was observed with respect to the requirements for res judicata. The issue of the scope of the res judicata effects of a prior award was addressed in 4.164 ICC Case Nos 2745 and 2762 of 1977. A first arbitral tribunal with its seat in France had ordered a German company to pay damages to a Belgian company on the ground that there was no case of force majeure. The second arbitral tribunal, which also had its seat in France, applied the French and Belgian notion of res judicata to determine the res judicata effects of the prior award. It held that those reasons 258  ICC Case No. 13507, Company X (Spain) v Company Y (Switzerland), Company Z, in liquidation (Switzerland), Final Award, Yearbook Commercial Arbitration, Vol. XXXV (A.J. van den Berg ed., 2010), pp. 164–​5. See also Swedish Chamber of Commerce (SCC) Case 24 of 2002 reported in 2 Stockholm Arbitration Report (2004) and by Hobér, Res Judicata and Lis Pendens. 259  See para. 3.18.

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Chapter 4:  Arbitration—A Problem which constitute the necessary foundation of the dispositif are covered by the res judicata effect of the decision. Since the finding of the first tribunal that there was no force majeure was essential for its decision on damages, it was res judicata and the existence of force majeure could not, therefore, be argued again before the second tribunal. 4.165 The tribunal in ICC Case No. 8023 of 1995 also applied French law and held that

res judicata covers not only the dispositif of the first award, but also those reasons that form the dispositif ’s necessary foundation. The tribunal further held that the res judicata effects of the first award attached not only to the necessary reasons expressly pronounced in clear and unambiguous terms, but also to the findings necessarily implied in the first award. By contrast, the tribunal ruled that it was not precluded by the doctrine of res judicata from deciding issues that were not determined, expressly or impliedly, in the first award.260

4.166 In ICC Case No. 7438 of 1994 the arbitral tribunal was faced with a prior award

in which the first arbitral tribunal had rejected all of the other claims made by the respondents. The tribunal examined the reasons of the first award to determine whether a certain issue, namely the frustration of the contract as a result of events linked to the Iranian revolution, was covered by the first award’s res judicata effect. The arbitral tribunal held that since the issue had not been decided in the first award (not even implicitly), it was not covered by the award’s res judicata effect. Accordingly, the arbitral tribunal in Case No. 7438, applying the procedural law of the canton of Zurich, adhered to the Swiss law rule that the res judicata effect of a decision attaches only to its dispositif, to the exclusion of reasons. In conformity with Swiss law, the arbitrator referred to the reasoning only to determine the meaning and scope of the dispositif of the first award.261

4.167 There are few published awards in which arbitral tribunals applied the extended

doctrine of res judicata and have afforded res judicata effects to issues that were not, but could and should have been, decided in the first proceedings. One example is the second Singapore International Arbitration Centre (SIAC) award between Dexia Bank and Persero. As was seen earlier, in the second SIAC arbitration Persero raised an issue which had not been covered in the first arbitration. The second SIAC tribunal denied jurisdiction over the merits of the dispute. Relying on the rule in Henderson v Henderson, the tribunal held that the second SIAC arbitration constituted a misuse of process since Persero could and should have raised the issue in the first SIAC arbitration.262   See Hascher, pp. 23–​4.   See ibid., p. 23. 262  See para. 3.12. See also unidentified ICC case reported in ILA, Interim Report, p. 25. At issue was the res judicata effect of a prior ICC award before another ICC tribunal. According to the ILA, ‘a tribunal sitting in France but applying New York law found that the claimant should have asserted its present claim by way of counterclaim or defence in earlier ICC proceedings and that having had a full and fair opportunity to do so and, not having done so, was now barred from bringing a second 260 261

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B.  Arbitration Law and Practice It is useful to draw attention to some examples where a flexible and pragmatic 4.168 approach was adopted with respect to the scope of res judicata. For instance, in ICC Case No. 3267 the sole arbitrator had to determine the res judicata effects of his prior partial award. The arbitrator granted res judicata effects to the reasons constituting the necessary foundation of the dispositif on the ground that it would be unfair to the parties to depart in a final award from such determinations made in the prior partial award. The arbitrator, who was authorized by the parties to decide as amiable compositeur, departed from Swiss law, which was the law of the place of arbitration and according to which the res judicata effect of a decision is strictly limited to the dispositif. The tribunal did so ‘irrespective from the academic views’ held on this issue.263 Finally, in an arbitral award rendered in Sweden, the tribunal indicated that it 4.169 would be possible under certain circumstances to give res judicata effects to a prior award’s reasons, even under Swedish law which follows the traditional civil law approach: Has the issue of advance payments already been finally determined in the First Arbitration? Respondent has taken the position that the sum of the relevant advance payments has been determined in the First Arbitration and that this determination is binding. According to Respondent, it does not matter that the determination was made in the reasons of the First Award, rather than in the dispositive part of the award. Claimant has submitted that the sum of advance payments set out in the First Award was not the result of a trial of facts by the tribunal, but of a stipulation made between parties, which could have binding effect only in the First Arbitration and not in any subsequent action regarding the advance payments. The point arising from the advances in the First Arbitration was not the magnitude of the advance payments, but the question if there had been sufficient fulfilment of the Contract by Claimant to entitle Claimant, in principle, to damages or penalty for breach of contract by Respondent. Thus, the determinations made respecting the advance payments in the reasons of the First Award are incidental and not fundamental. The sum of the advance payments made was not fundamental to

action seeking relief inconsistent with the earlier award’. The tribunal applied the US doctrine of claim preclusion which prevents the relitigation in subsequent proceedings of matters which were not but could and should have been brought in the earlier proceedings. See also the arbitral awards in Radicati di Brozolo, pp. 139 et seq., in particular ICC Case No. 13808 of 2008 (in this case, the arbitral tribunal seemingly applied French law and, in particular, the ‘principe de concentration’) and ICC Case No. 13254 of 2011 (according to Radicati di Brozolo, in this case the arbitral tribunal investigated whether an obligation of concentration was provided for by the parties’ arbitration agreement, the arbitration rules or other elements of procedure, the parties’ agreement, or the arbitral tribunal’s directions in the first arbitration. However, the arbitral tribunal could not find a basis for the obligation of concentration in these sources). See, however, the second award underlying the decision of the Cour d’appel de Paris in Marriott v Jnah (reported in 4 Cahiers de l’arbitrage 1172 (2010)), where the arbitral tribunal stated that there is no legal principle similar to the English rule in Henderson v Henderson in international arbitration (‘[il n’y a pas] de théorie juridique applicable en matière d’arbitrage international qui soit similaire à la théorie anglaise Henderson c/​Henderson, laquelle imposerait à JNAH de brûler toutes ses munitions dans une même procédure d’arbitrage’). 263  Relevant passages of the award are cited at fn 231.

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Chapter 4:  Arbitration—A Problem the First Award. It was merely a threshold issue on the way to awarding a sum to Claimant for breach of contract. This Tribunal does not find that the magnitude of Claimant’s advance payments has been finally determined in the First Arbitration. It is accepted that Claimant’s, and the First Tribunal’s, concern was merely to establish Claimant’s entitlement in principle to penalties for breach of contract.264

d. In what circumstances have international commercial arbitral tribunals denied res judicata effects to prior decisions that were res judicata? 4.170 The question arises whether there are any circumstances under which arbitral tribunals have denied res judicata effects to a prior award or judgment, even though all requirements for the application of the res judicata doctrine were met. 4.171 While there are only a few published awards addressing this issue, it appears

that arbitral tribunals acknowledge that fraud may constitute an exception to res judicata. In Antoine Biloune and Marine Drive Complex Ltd (MDCL) v Ghana Investments Centre (GIC) and the Government of Ghana, the UNCITRAL tribunal first rendered a partial award holding that it had jurisdiction over the dispute and declaring that the Government of Ghana had expropriated MDCL’s assets and Mr Biloune’s interest in MDCL. The tribunal then rendered a final award on damages and costs. The respondents requested that the tribunal reconsider its prior partial award.

4.172 The tribunal declared that the partial award was final and binding on the parties.

However, applying customary principles of international law, the tribunal held that it would exceptionally reconsider its prior partial award if it was shown by credible evidence that the tribunal had been the victim of fraud and that its determinations in the previous award were based on false testimony. The tribunal held in relevant part: Nevertheless, a court or Tribunal, including this international arbitral Tribunal, has an inherent power to take cognisance of credible evidence, timely placed before it, that its previous determinations were the product of false testimony, forged documents or other egregious ‘fraud on the tribunal’ . . . Certainly if such corruption or fraud in the evidence would justify an international or a national court in voiding or refusing to enforce the award, the Tribunal also, so long as it still has jurisdiction over the dispute, can take necessary corrective action . . . The present Tribunal would not hesitate to reconsider and modify its earlier award were it shown by credible evidence that it had been the victim of fraud and that its determinations in the previous award were the product of false testimony.265 264  Unpublished ad hoc award rendered in 2007 under the UNCITRAL Arbitration Rules, reported by Hobér, Res Judicata and Lis Pendens, pp. 278–​9. 265 UNCITRAL, Antoine Biloune and Marine Drive Complex Ltd v Ghana Investments Centre and the Government of Ghana, Awards of 27 October 1989 and 30 June 1990, Yearbook Commercial Arbitration, Vol. XIX (A.J. van den Berg ed., 1994), pp. 11 et seq., paras 33–​4. See also Cour d’appel de Paris, 17 June 2010, SARL African Petroleum Consultants (APC) v Société Nationale de Raffinage (SONARA), Rev. arb., No. 3 (2010), pp. 671 et seq.; Cour de Cassation, Fougerolle v Procofrance, 25 May 1992, Rev. arb. (1993), p. 91.

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B.  Arbitration Law and Practice e. What effects have international commercial arbitral tribunals afforded to prior decisions that were not res judicata? There are several published awards in which arbitral tribunals have given some 4.173 effects to a prior decision, even though it did not qualify as res judicata. This was typically done in situations where the prior decision involved a case that was not identical but was closely connected to the case before the arbitral tribunal. The effects given to such prior decisions varied among arbitral tribunals. While some tribunals considered themselves bound by a prior decision that was not res judicata, others were more cautious holding that they would take the prior decision into consideration. As was seen earlier, in ICC Case No. 4126 of 1984 the tribunal refused to grant a 4.174 request for interim relief that had previously been denied by a state court. Because the object of both proceedings was ‘essentially identical’ and because there was no change in circumstances, the tribunal concluded that the party to both proceedings was bound by the prior court decision. The tribunal based its decision on the principle of good procedural order instead of the doctrine of res judicata.266 This decision was endorsed by the ICC tribunal in Order No. 5 of 2 April 2002. Because the judgment on interim relief could not be recognized in Switzerland it could not operate as a res judicata in the ICC arbitration. Nevertheless, the ICC tribunal refused to reconsider the claimant’s request for interim relief for reasons of judicial efficiency and procedural economy.267 In ICC Case No. 6363 of 1991 the arbitral tribunal was slightly more cautious. 4.175 It concluded that a prior court judgment could not operate as a res judicata in the ICC arbitration, because there was no identity of parties. Nevertheless, the arbitral tribunal held that it could not ignore the prior judgment holding in relevant part: A discrepancy between any one of the elements of a current claim and a past judgment comprising a res judicata [i.e. identity of parties, cause and subject matter] is enough to defeat a defense based on res judicata. Enough has been said to show that the [court] decision is res judicata between [C]‌and [B], but not as between [A] and [B]. This does not mean that the Decision can be ignored. Parts of it represent an authoritative ruling on the position of [C] country law on certain matters that may be relevant in this case.268

In ICC Case No. 7061 the tribunal reached a similar result. The tribunal held 4.176 that it was not bound by the prior award because the parties were not identical in the two proceedings. In addition, the prior arbitration had taken place on the basis of a different contract and arbitration agreement, the applicable law was

  See paras 4.135 et seq.   See paras 4.146 et seq. 268  ICC Case No. 6363, 1991, Yearbook Commercial Arbitration, Vol. XVII (A.J. van den Berg ed., 1992), para. 43. 266 267

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Chapter 4:  Arbitration—A Problem different, and the evidence available to both tribunals was also different. The tribunal concluded: This arbitration tribunal is not bound by the X award; nor are the parties to these arbitration proceedings. There can be no issue estoppel. Nonetheless, it provides a helpful analysis of the common factual background to this dispute. Accordingly, we have borne its findings and conclusions in mind, whilst taking care to reach our own conclusions on the materials submitted by these parties in these proceedings.269 4.177 Likewise, the American Arbitration Association (AAA) tribunal in the arbitra-

tion between Smithkline and Biogen rejected Smithkline’s collateral estoppel plea. However, the AAA tribunal decided to admit the prior UNCITRAL award as evidence: The issues submitted in the present arbitration are not precluded by the prior arbitral decision and judgment referred to above. . . . Nevertheless, we will allow into evidence in the instant matter the UK arbitral decision, the ensuing judgment(s) and the evidentiary submissions made in those proceedings, for such persuasive value as they may have.270

4.178 The awards examined in the previous paragraphs show that arbitral tribunals

have afforded some effects to prior decisions that were not res judicata, if the case in which the prior decision was rendered was closely connected to the case before the arbitral tribunal. The survey has also shown that the effects afforded to the prior decisions varied in their intensity. While some arbitral tribunals considered themselves bound by a prior decision, others would only take the prior decision into consideration. The survey could not establish that the intensity of the effects attached to the prior decision were proportional to the closeness of the link between the prior and subsequent proceedings. The arbitrators appeared to grant the effects they considered appropriate in the circumstances of the case.

f. Conclusion 4.179 In light of these findings it may be concluded that only a few established principles emerge from international commercial arbitration practice with respect to res judicata. These principles may be summarized as follows: –​ prior final judgments and awards (including partial awards) rendered on the merits may operate as res judicata in further arbitral proceedings; –​ the doctrine of res judicata generally applies only if there is identity of parties, cause, and object in both proceedings; –​ an arbitral tribunal may reconsider a prior decision, even though it qualifies as res judicata, if the prior decision was obtained by fraud;   Case reported by Hanotiau, para. 551.  See Smithkline Beecham Biologicals, S.A. v Biogen, Inc., 1996 WL 209897 (S.D.N.Y. 1996)*7 et seq. See also Born, p. 3747, with references cited at n. 79. 269 270

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C. Conclusion –​ where a prior decision does not qualify as res judicata, an arbitral tribunal seized of a closely related case may grant such persuasive effects to the prior decision as it deems appropriate in the circumstances of the case. In addition, the review of arbitration case law has shown that there appears to be a 4.180 tendency among arbitral tribunals to apply and interpret the triple identity test in an intuitive, pragmatic, and flexible way. Apart from the above, there appears to be no established practice with respect to res 4.181 judicata in international commercial arbitration practice. In particular, the issues discussed in the following paragraphs. No clear choice-​of-​law rule concerning the law governing res judicata before 4.182 international commercial arbitral tribunals emerges from case law. While in recent years there appears to be an increased readiness among international commercial arbitral tribunals to depart from a strict, mechanical application of national res judicata rules, the survey has shown that arbitral tribunals generally apply a variety of different laws or rules of law to res judicata, ranging from different domestic laws to general principles of law, sometimes without substantiating the choice of law. There are no established rules among international commercial arbitral tribunals 4.183 with respect to res judicata requirements. There appears to be no generally accepted standard for the application or interpretation of the triple identity test. There is no established practice among arbitral tribunals on the question of the 4.184 binding effect of prior awards or judgments on jurisdiction. There appears to be no established rule on the question whether prior decisions on 4.185 interim relief may operate as res judicata. There is no particular rule with regard to the scope of the res judicata effects to be 4.186 afforded to prior decisions. Accordingly, save for the few exceptions listed above, no clear res judicata rules 4.187 emerge from international commercial arbitration practice to fill the multiple gaps left open by international commercial arbitration law.

C. Conclusion The first section of this chapter has shown that the occurrence of res judicata 4.188 issues puts several important interests into question and may potentially harm the very existence of the arbitral process. The enforceability of awards ranks among the top reasons of major international corporations for choosing international arbitration. By contrast, the expense and length of time taken to resolve disputes are among the most commonly cited disadvantages of international 171

Chapter 4:  Arbitration—A Problem arbitration.271 The rendering by arbitral tribunals of awards inconsistent with prior decisions may frustrate the enforceability of the awards. Furthermore, the unnecessary duplication of proceedings may make the dispute resolution process longer and more costly for the parties. This could dissuade parties from submitting their disputes to international arbitration. 4.189 International commercial arbitration law and practice, in their current state, do

not deal with the problem of res judicata satisfactorily. According to Sheppard ‘res judicata in the context of international arbitration is presently in a no man’s land, with considerable uncertainty as to its appropriate application’.272 The findings made in this chapter confirm this observation.

4.190 International commercial arbitration ‘hard law’ does not give guidance to inter-

national arbitral tribunals on how to deal with res judicata issues. National courts generally extend traditional litigation rules of res judicata to international arbitration without examining whether this is desirable.

4.191 Likewise, international commercial arbitral tribunals typically look at domestic

litigation rules to govern res judicata issues. Hence, the effects of national court judgments in subsequent arbitral proceedings depend on different and sometimes conflicting regulations of different national jurisdictions. The same holds true for arbitral awards because awards are commonly treated like judgments with respect to their res judicata effects.273 Arbitral tribunals frequently apply the domestic law of the arbitral seat to determine the effects of an award. While this approach is consistent with the traditional rationale followed by some state courts that res judicata issues are matters of procedure and should therefore be governed by the lex fori, it is not the appropriate approach for international commercial arbitral tribunals. Whatever the domestic law applied, as will be discussed in Chapter 5, it is doubtful whether a wholesale transposition of domestic preclusion rules to international commercial arbitration is desirable.

4.192 The review of arbitration case law has shown that, absent a clear and well-​

established choice-​of-​law rule, arbitral tribunals apply a variety of different laws or rules of law to res judicata issues. There are also no clear and generally accepted rules with respect to many issues, such as the requirements for and the scope of res judicata.

271  PWC/​SIA, International Arbitration: Corporate attitudes and practices 2006, pp. 6 et seq., available at http://​w ww.pwc.co.uk. Other primary reasons for choosing international arbitration to resolve disputes were the flexibility of procedure, the privacy the process provides, and the parties’ ability to select the arbitrators. See also White & Case LLP/​SIA, 2015 International Arbitration Survey: Improvements and Innovations in International Arbitration, pp. 6–​7, available at http://​w ww.arbitration.qmul.ac.uk/​research/​2015/​. 272 Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 265. 273  Brekoulakis, p. 205.

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C. Conclusion In summary, the way in which res judicata issues are currently dealt with in inter- 4.193 national commercial arbitration varies not only among legal systems, but also among arbitral tribunals. This lack of uniformity may well contradict the parties’ intention when choosing international arbitration to establish a single international dispute resolution mechanism that will efficiently resolve their dispute by a final and binding award, which will be enforceable in most countries. The lack of uniformity may also lead to uncertainty, as well as unfair and unpredictable results, if it enables the losing party to relitigate the dispute. Indeed, the disappointed party may be tempted to take advantage of the lack of uniformity in order to relitigate the dispute in whatever forum it can find that has the least effective preclusion rules and the widest jurisdiction rules.274 This result would be unsatisfactory, not only for the parties but also for the international arbitration process as a whole. Based on these facts, it can be concluded that the occurrence of res judicata issues 4.194 before international commercial arbitral tribunals can potentially give rise to serious problems that are not currently dealt with satisfactorily. There is thus a need to find appropriate solutions. It has been said that the most challenging issue is not to recognize that there is a 4.195 problem, but rather to find ways (if any) open to international commercial arbitral tribunals for dealing with the problem and which do not at the same time conflict with other fundamental principles of international commercial arbitration.275 The challenge of the remaining chapters will be to find and formulate such ways.

  Born, p. 3770.  Hobér, Parallel arbitration, p. 244.

274

275

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5 SE ARCH FOR AN APPROPR I ATE APPROACH

A . Possible Approaches to Res Judicata Before International Commercial Arbitral Tribunals  5.04 1. 2. 3. 4.

Arbitral autonomy  Conflict-​of-​laws approach  Comparative law approach  Transnational approach 

International Commercial Arbitration 

5.37 1. Analogy between international commercial arbitration and domestic litigation for res judicata purposes  5.39 2. Sources of transnational res judicata principles  5.95 3. Legal basis for the application of transnational res judicata principles  5.105

5.05 5.14 5.27 5.31

B. The Appropriate Approach: Transnational Res Judicata Principles for

C . Conclusion 

5.114

5.01 ‘“Would you tell me, please, which way I ought to go from here?”—​“That depends

a good deal on where you want to get to”, said the Cat’.1

5.02 Unlike Alice in Wonderland, our objective is not simply to get ‘SOMEWHERE’.

As we concluded at the end of the preceding chapter, our objective is to find efficient and effective ways of dealing with the problem of res judicata in international commercial arbitration. Therefore, we must begin with a search for the path that will lead to such solutions. In other words, we must begin by finding an appropriate approach to the problem of res judicata in international commercial arbitration.

5.03 This chapter will begin by discussing different possible approaches (A.). It will then

explain why the problem of res judicata should be dealt with by transnational res judicata principles (B.).

1   Dialogue between Alice and the Cheshire Cat in Chapter VI (Pig and Pepper) of Alice’s Adventures in Wonderland by Lewis Carroll (1865).

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A.  Possible Approaches to Res Judicata

A.  Possible Approaches to Res Judicata Before International Commercial Arbitral Tribunals The following analysis will examine four possible approaches to res judicata before 5.04 international commercial arbitral tribunals, namely arbitral autonomy (1.), the conflict-​of-​laws approach (2.), the comparative law approach (3.), and the transnational approach (4.). 1. Arbitral autonomy It has been said that the doctrine of res judicata is ‘one of the most sophisticated, 5.05 technical and overregulated doctrines in national civil procedure’.2 However, an important feature of international arbitration is the wide degree of autonomy granted to parties and arbitrators. The regulation of res judicata issues in international commercial arbitration could put this flexibility at risk and make the arbitral process more similar to litigation, which is precisely what the parties seek to avoid by concluding an arbitration agreement. This could hold true not only for binding rules, but also for non-​binding guidelines which are sometimes so widely and rigorously applied by arbitrators as though they are binding.3 For years, there have been warnings against a worrying trend of imitating the technicality and formality of domestic court proceedings.4 It may be argued that adopting detailed res judicata rules for international com- 5.06 mercial arbitration goes against the modern trend of not imposing any procedural constraints on international arbitrators, but to let them create norms and conduct the arbitration in a way they deem appropriate in the circumstances of the

2 Stavros Brekoulakis, The Effect of an Arbitral Award and Third Parties in International Arbitration: Res Judicata Revisited, 16(1) American Review of International Arbitration 177, 182 (2005). 3  See William W. Park, The Procedural Soft Law of International Arbitration: Non-​G overnmental Instruments, in Pervasive Problems in International Arbitration (Loukas A.  Mistelis and Julian D.M. Lew QC ed., 2006), paras 7-​4 et seq. (cited as Procedures Soft Law); Gabrielle Kaufmann-​Kohler, Soft Law in International Arbitration: Codification and Normativity, Journal of International Dispute Resolution 1, 2 (2010). 4  See, e.g., Pierre Lalive, Nouveaux regards sur le droit international privé, aujourd’ hui et demain, 1-​2 Revue Suisse de Droit International et de Droit Européen 3, 13 (1994), according to whom international arbitration suffers from excessive ‘ juridicisation’ or ‘processualisation’; Bruno Oppetit, Philosophie de l’arbitrage commercial international, 4 Journal du Droit International 811, 818 (1993) (cited as Philosophie de l’arbitrage commercial international) uses the term ‘ juridictionnalisation’ to describe the phenomenon of arbitration proceedings becoming more cumbersome and formalistic; Philippe Fouchard, L’arbitrage commercial international (1965), para. 258 (cited as L’arbitrage commercial international) (‘N’est-​il pas cependant paradoxal que l’arbitrage, qui se veut un mode souple, non formaliste, de règlement des litiges en vienne à s’aligner sur la procédure judiciaire au point d’adopter ses dispositions les plus draconiennes? La crainte de procédés dilatoires ne devrait pas pousser trop loin la réglementation arbitrale, au point de la rendre aussi difficile à supporter que les procédures juridictionnelles’). See also Park, Procedural Soft Law, para. 7-​18.

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Chapter 5:  Search for an Appropriate Approach particular case.5 Based on considerations of procedural economy, mutual respect, and comity, on the ‘ je ne sais quoi of justice that leads to innovative and clever compromises’,6 arbitral tribunals could decide whether and to what extent they are bound by prior judgments or awards in the specific circumstances of each case. Any inconsistent decisions rendered in this process could be dealt with in annulment or recognition and enforcement proceedings, thereby avoiding two contradictory decisions from being recognized or enforced within the same country. 5.07 Such ‘ad hoc solutions’, however, do not appear appropriate.7 In the absence of pre-​

established rules or practices with respect to res judicata, there is great uncertainty and unpredictability for arbitration users, namely whether, under what conditions and to what extent a prior arbitral award or court judgment will have res judicata effect in further arbitration proceedings. While parties coming from a civil law legal background might not expect an arbitral tribunal to give issue preclusive effect to a prior decision, this might very much be expected by parties from a common law legal background. Similarly, a party coming from a civil law country might not expect to be bound by a prior decision in subsequent proceedings against a party that was not a party to the first proceeding. Furthermore, a party might be surprised to find that it could and should already have brought a particular claim in previous proceedings and is now precluded from doing so before the arbitral tribunal. With respect to this risk of uncertainty and unpredictability, Park has pertinently stated: The dark side of [arbitrator] discretion lies in the discomfort that a litigant may feel when arbitrators make up the rules as they go along, divorced from any precise procedural canons set in advance. . . . Discretion may not be objectionable within a close-​k nit community . . . or when everyone shares or accepts a common legal culture . . . However, in a heterogeneous transaction with parties, lawyers and arbitrators from disparate places, anxiety rather than comfort may result from a level of arbitrator discretion that permits an arbitrator to make critical procedural decisions after he or she has sized up the parties and the controversy.8

5.08 Because the parties’ rights and obligations will be determined by a final and bind-

ing award, the parties will expect to be treated fairly and equally. They might also expect that the arbitration is conducted according to the ‘regular way to do things’.9 Because the doctrine of res judicata, albeit differing from one country to another, exists today in virtually all jurisdictions and is recognized either as a rule of customary international law or as a general principle of law,10 it can be assumed

5  Pierre Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, in Liber Amicorum Claude Reymond, Autour de l’arbitrage (2004), p. 190 (cited as Litispendance, connexité et chose jugée dans l’arbitrage international). 6  William W. Park, Arbitration’s Protean Nature: The Value of Rules and the Risks of Discretion, 19(3) Arbitration International 279, 281 (2003) (cited as Arbitration’s Protean Nature). 7 Park, Procedural Soft Law, para. 7-​4 6. 8 Park, Arbitration’s Protean Nature, p. 285. 9 Park, Procedural Soft Law, paras 7-​23 and 7-​33. 10  See paras 2.67 et seq.

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A.  Possible Approaches to Res Judicata that the parties will expect arbitrators to apply this doctrine where certain requirements are met. This is also in line with international commercial arbitration law and practice. It is generally considered that res judicata principles apply in arbitration proceedings, even though there is uncertainty as to how they should be applied. In this situation, where parties and lawyers with different backgrounds and experiences expect the doctrine of res judicata to apply, but have different expectations as to how it should be applied, the application by arbitrators of ad hoc principles of res judicata, which were not announced to the parties in advance, may surprise and disappoint the parties’ expectations, leading to feelings of procedural unfairness and injustice.11 Dealing with the problem of contradictory decisions only at the annulment or 5.09 recognition and enforcement level is problematic as it could lead to wasteful duplication of proceedings and to decisions that cannot be recognized and enforced abroad. This is particularly problematic in international arbitration where enforcement of the arbitral award is typically sought in a country other than the country of the place of arbitration. Dealing with contradictory arbitral awards and court judgments at the recognition 5.10 and enforcement stage might be feasible if there were efficient mechanisms to avoid parallel and duplicate proceedings between arbitral tribunals and state courts, as well as between different arbitral tribunals. However, arbitration practice shows with enough frequency that parallel and duplicate proceedings can be brought before different arbitral tribunals or before an arbitral tribunal and a state court. Unlike under the system of the Brussels I Regulation and the Hague Convention on Choice of Court Agreements, there are no uniform rules on jurisdiction in international commercial arbitration; there is no consensus concerning the law governing the validity of an arbitration agreement. Rules on lis pendens and related actions cannot resolve the problem of parallel proceedings in the ‘decentralised and non-​hierarchic field’12 of international arbitration.13 Furthermore, under   In this sense, see Park, Arbitration’s Protean Nature, pp. 282–​3.   Kaj Hobér, Parallel arbitration proceedings—​Duties of the arbitrators, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M. Cremades and Julian D.M. Lew ed., 2005), p. 243 (cited as Parallel arbitration). 13  Julian D.M. Lew, Parallel proceedings in international arbitration—​Challenges and realities, in Parallel State and Arbitration Procedures in International Arbitration, Dossiers—​ ICC Institute of World Business Law (Bernardo Cremades and Julian Lew ed., 2005), p. 311 (cited as Parallel proceedings in international arbitration); Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, pp. 191 et seq.; Hobér, Parallel arbitration, p. 253; David W. Rivkin, The impact of parallel and successive proceedings on the enforcement of arbitral awards, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M. Cremades and Julian D.M. Lew ed., 2005), p. 295. See also ILA Reports and Recommendations on lis pendens and arbitration which strongly endorse the principle of Kompetenz-​Kompetenz and generally recommend arbitral tribunals seized of a dispute to proceed with the arbitration if they consider themselves to be prima facie competent, regardless of any other pending court or arbitration proceedings involving the same (or substantially the same) 11

12

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Chapter 5:  Search for an Appropriate Approach the New York Convention, there is no automatic recognition of arbitral awards among Member States, akin to the recognition and enforcement system under the Brussels I Regulation. This is illustrated by the emerging rule in US law, according to which a US court must have personal jurisdiction over the award debtor or his or her property to recognize and enforce a foreign arbitral award under the New York Convention.14 5.11 It is worth noting that until recently the intervention or joinder of additional par-

ties and the consolidation of related arbitration and court proceedings, as well as related arbitration proceedings, could generally only be achieved with the consent of all parties involved.15 However, in more recent years, several arbitral institutions parties and questions at issue. As noted by the ILA, however, in some circumstances, e.g. related proceedings where there is a common issue but not identical parties, it might be right as a matter of justice and case management for arbitral tribunals to suspend their proceedings pending the outcome of the other proceedings (Filip De Ly and Audley Sheppard, The International Law Association (ILA) International Commercial Arbitration Committee Reports on Lis Pendens and Res Judicata, 25(1) Arbitration International 1, 2 (2009)). 14  Ank Santens and Damien, Nyer, Difficulties Enforcing New York Convention Awards in the U.S. Against Non-​U.S. Defendants: Is the Culprit Jurisprudence on Jurisdiction, the Three-​Year Time Bar in the Federal Arbitration Act, or Both?, 23 December 2009, available at http://​k luwerarbitrationblog. com/​blog/​2 009/​12/​23/​d ifficulties-​enforcing-​new-​york-​c onvention-​awards-​i n-​t he-​u s-​a gainst-​ non-​u s-​defendants-​is-​t he-​culprit-​jurisprudence-​on-​jurisdiction-​t he-​t hree-​year-​t ime-​bar-​in-​t he-​ federal-​a rbitration-​act-​or-​bot. E.g., in 2014 the US Court of Appeals for the Second Circuit blocked the enforcement of a USD 932 million arbitral award rendered by an International Chamber of Commerce (ICC) tribunal in Switzerland against Turkey’s Cukurova Holding on the ground that it lacked jurisdiction because Cukurova did not have sufficient contacts in New York to render it ‘at home’ there (see Sonera Holding B.V. v Çukurova Holding A.Ş., No. 12-​4280-​c v (2d Cir. 25 Apr. 2014), available at http://​f.datasrvr.com/​fr1/​514/​43669/​Sonera_​v_​Cukurova.pdf). Although the circumstances were somewhat exceptional, in 2014 in the Irish case of Yukos Capital v Tomskneft the court suggested that the recognition and enforcement of a foreign arbitral award under the New York Convention requires a sufficient link to the enforcement state pursuant to the ordinary jurisdiction rules of that state. In this case, the actual purpose of the enforcement request was not to obtain the execution of the arbitral award in Ireland, but rather to use the Irish enforcement decision in support of enforcement proceedings in another country, where the ‘real’ execution should take place (Yukos Capital SARL v OAO Tomskneft VNK [2014] IEHC 115) (for a brief comment on this case, see Deyan Draguiev, Exorbitant Jurisdiction in the Enforcement of Arbitral Awards. Some Limits: Yukos Capital v. Tomskneft, 5 May 2014, available at http://​k luwerarbitrationblog.com/​blog/​ 2014/​05/​05/​e xorbitant-​jurisdiction-​i n-​t he-​enforcement-​of-​a rbitral-​awards-​some-​l imits-​y ukos-​ capital-​v-​tomskneft). 15  Gabrielle Kaufmann-​Kohler, Laurence Boisson de Chazournes, Victor Bonnin, and Makane Moïse Mbengue, Consolidation of Proceedings in Investment Arbitration:  How can Multiple Proceedings Arising from the Same or Related Situations be Handled Efficiently?, 21(1) ICSID Foreign Investment Law Review 59 (2006); Bernardo M. Cremades and Ignacio Madalena, Parallel Proceedings in International Arbitration, 24(4) Arbitration International 507, 532 (2008); Antonio Crivellaro, Consolidation of arbitral and court proceedings in investment disputes, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M. Cremades and Julian D.M. Lew ed., 2005), p. 82; Hobér, Parallel arbitration, pp. 254 et seq.; Rivkin, p. 290; Lew, Parallel proceedings in international arbitration, p. 310; Dominic Roughton, Double Trouble—​The Problem of Duplicative Proceedings in International Arbitration, 22 July 2002, available at http://​w ww.herbertsmith.com, p. 2. See also Cour d’appel de Paris, 16 November 2006, Société Empresa de Telecomunicaciones de Cuba SA v SA Telefonica Antillana et SNC Banco Nacional de Commercio Exterior, Rev. arb., No. 1 (2008), pp. 109 et seq. (an award rendered in Paris was annulled because the arbitral tribunal consolidated

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A.  Possible Approaches to Res Judicata have revised their rules, providing for more efficient and effective mechanisms for joinder, intervention, and consolidation.16 Finally, it also cannot be an appropriate solution simply to wait for the ‘spon- 5.12 taneous emergence of transnational rules’, as this would require a great deal of time and the confidentiality of arbitral awards would make it difficult to monitor developments.17 Therefore, res judicata guidelines should be elaborated for international commercial arbitral tribunals. Such guidelines would have the benefit of pre-​establishing a protocol before the proceedings begin,18 thereby providing the certainty and predictability that arbitration users expect. They can provide guidance on ‘repeat-​offender trouble spots’,19 such as res judicata, without imposing unduly rigid rules on all aspects of the arbitral process. Adopting guidelines, instead of binding rules, would have the additional benefit of not disturbing the endorsement by arbitration institutions and national arbitration laws of procedural flexibility and party autonomy.20 In addition, considering the many gaps with respect to res judicata in international commercial arbitration law and the lack of an established arbitration practice in this area, the adoption of binding res judicata rules for international arbitration appears premature. Guidelines may help to incite the creation of a coherent international arbitration practice that could ultimately lead to the codification of res judicata rules. As was seen in Chapters 3 and 4, the res judicata issues arising before international 5.13 arbitral tribunals are generally similar to the issues arising in litigation. The occurrence of res judicata issues in international arbitration raises similar policy considerations as in litigation. Furthermore, awards are usually considered to be two related arbitration proceedings between the same parties, but based on different contracts containing different arbitration clauses, without the consent of the parties). Historically, consolidation, joinder, and intervention provisions were rare in international arbitration instruments. Under Article 41 of the Netherlands Arbitration Institute (NAI) Arbitration Rules and Article 22.1(h) of the 1998 London Court of International Arbitration (LCIA) Arbitration Rules a third party may be joined in the arbitration as a party only if it agrees to be joined. Pursuant to Article 1126(2) of the North American Free Trade Agreement (NAFTA), Chapter 11, where a tribunal is satisfied that different claims have a question of law or fact in common, the tribunal may, in the interests of fair and efficient resolution of the claims, and after hearing the disputing parties, order consolidation and assume jurisdiction over all or some of the claims, hearing all of them together. This provision allows for consolidation upon request by a disputing party and not ex officio. 16  See, generally, Gary B. Born, International Commercial Arbitration (2009), pp. 2596–​613. See also Article 11 of the 2012 Swiss Rules of International Arbitration. The court, respectively the arbitral tribunal, has authority to decide the question of consolidation and joinder, after consulting the parties and taking into consideration the circumstances of the case. See also Articles 7 to 10 of the 2012 ICC Rules; Article 22(ix) and (x) of the 2014 LCIA Arbitration Rules; Articles 9 to 12 of the 2013 Belgian Centre for Arbitration and Mediation (CEPANI) Arbitration Rules. 17  Luca Radicati di Brozolo, Res Judicata: Post Award Issues, ASA Special Series No. 38 (Pierre Tercier ed., 2011), p. 145. 18 Park, Procedural Soft Law, para. 7-​38. 19  Ibid., para. 7-​31. 20  See ibid., paras 7-​22 et seq. According to Park, this homage to flexibility and party autonomy constitutes a marketing tool for arbitral institutions.

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Chapter 5:  Search for an Appropriate Approach functionally equivalent to judgments and are afforded essentially the same res judicata effects as judgments under different domestic laws.21 Thus, it appears appropriate to look at domestic litigation rules of res judicata as a source of inspiration. The degree to which it will be adequate to build on domestic res judicata rules will be discussed below. 2. Conflict-​of-​laws approach 5.14 Because the doctrine of res judicata may vary considerably among jurisdictions,

the question of the proper law governing res judicata in arbitration is clearly posed: which law will provide the criteria to verify that a prior award or judgment qualifies as a res judicata? Which law will determine the scope of the res judicata effect of the prior award or judgment in the arbitration proceedings? According to which law will the arbitrators assess whether there is identity of parties, cause, and object in both proceedings?

5.15 The conflict-​of-​laws approach consists in defining clear and generally accepted

conflict-​of-​laws rules allowing arbitrators to determine the law or laws governing res judicata. As discussed later, the conflict-​of-​laws approach is difficult and ultimately inappropriate to address the problem of res judicata before international commercial arbitral tribunals.

5.16 The determination of conflict-​of-​laws rules will depend on the characterization of

res judicata as being of a substantive or procedural nature. While there is wide support for the view that the doctrine of res judicata belongs to procedural law,22 the question remains controversial.23 In England, res judicata and estoppel have been described as rules of evidence. However, in Aegis v European Reinsurance, the Privy Council held that an issue estoppel was a substantive right.24 In the United States, 21  See paras 4.15 et seq. On the comparison of arbitral awards and judgments, see also Thomas Clay, L’arbitre (2001), paras 97 et seq. 22  See Walther J. Habscheid, Quelques questions fondamentales concernant l’autorité de la chose jugée en droit comparé, in Liber Amicorum Adolf F. Schnitzer, Vol. 61 (1979), pp. 180 et seq.; ILA, Interim Report on Res Judicata and Arbitration, Berlin Conference (2004), p. 26, available at http://​w ww.ila-​hq.org and in 25(1) Arbitration International 35 (2009); Audley Sheppard, Res judicata and estoppel, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M. Cremades and Julian D.M. Lew ed., 2005), p. 229 (cited as Res Judicata and Estoppel); Audley Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, Arbitral Procedure at the Dawn of the New Millennium, Reports of the International Colloquium of CEPANI, 15 October 2004 (2005), p. 283 (cited as The Scope and Res Judicata Effect of Arbitral Awards); Florian Kremslehner, The Arbitration Procedure—​Lis pendens and res judicata in International Commercial Arbitration, in Austrian Arbitration Yearbook (Christian Klausegger et al. ed., 2007), p. 134. 23 See Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p.  187; Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001 (2004), p. 20. 24  Associated Electric and Gas Insurance Services Ltd v European Reinsurance Co. of Zurich [2003] 1 WLR 1041, 1048, PC (‘The [first] award has conferred upon them a right which is enforceable by later pleading an issue estoppel. It is a species of the enforcement of the rights given by the [first]

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A.  Possible Approaches to Res Judicata res judicata has been described as ‘a component of the dispute on the merits’.25 In Switzerland, res judicata pertains to procedure.26 Finally, in France it appears to be widely accepted that in a purely domestic context the negative res judicata effect pertains to procedure. However, it has been suggested that the positive res judicata effect pertains to the merits.27 The International Law Association (ILA) Recommendations follow this French 5.17 approach. According to Recommendation No. 5, the award’s conclusive effect pertains more to the merits of the dispute on which a successful claimant may build further arbitration proceedings. By contrast, the award’s preclusive effect pertains more to procedure.28 The view that a decision’s conclusive effect pertains to the merits considers that 5.18 a final judicial decision creates a new substantive legal relationship between the parties. The other court or tribunal has to apply the earlier decision in the resolution of the dispute before it, akin to applying the law governing the merits. The prior decision is viewed as constituting a presumption of the truth with regard to the merits of the case to be determined in the new proceedings.29 By contrast, a

award just as much as would be a cause of action estoppel. It is true that estoppels can be described as rules of evidence or as rules of public policy . . . but that is to look at how estoppels are given effect to, not at what is the nature of the private law right which the estoppel recognises and protects’). See also K.R. Handley, Res Judicata (4th ed. 2009), paras 1.07 et seq. But see Jacob Van de Velden, The ‘Cautious Lex Fori’ Approach to Foreign Judgments and Preclusion, 61(2) International and Comparative Law Quarterly 519, 525 (2012). 25  See Jarrod Wong, Court or Arbitrator—​Who Decides Whether Res Judicata Bars Subsequent Arbitration Under the Federal Arbitration Act?, 46 Santa Clara Law Review 49, 69 (2005–​2006) with reference to National Union Fire Ins. Co. v Belco Petroleum Corp., 88 F.3d 129, 135–​6 (2d Cir. 1996) (‘[A]‌claim of preclusion is a legal defense to [the substantive claim]. As such, it is itself a component of the dispute on the merits. . . . It is as much related to the merits as such affirmative defenses as a time limit in the arbitration agreement or laches’). See also Chiron Corp. v Ortho Diagnostic System, Inc., 207 F.3d 1126, 1134 (9th Cir. 2000) (‘As with other affirmative defenses such as laches and statute of limitations, we agree with the Second Circuit that a res judicata defense is a “component” of the merits of the dispute and is thus an arbitrable issue’). In a decision dated 25 November 2013, the United States District Court of the Southern District of New York (SDNY) confirmed the ruling in National Union Fire Ins. Co. v Belco Petroleum Corp., holding that the preclusive effect, if any, of a first arbitration award is a defence pertaining to the merits of the dispute that is properly heard by the arbitral tribunal, not the state court. On this basis, the SDNY dismissed the claimant’s request to enjoin the second arbitration proceedings and granted the respondent’s request to compel arbitration (Citigroup, Inc. v Abu Dhabi Investment Authority, 13 Civ. 6073 (PKC)). 26  See paras 1.129 and 4.73. 27 See JurisClasseur Droit international, Fasc. 57-​10: Procédure civile et commerciale dans les rapports internationaux, Domaine de la ‘ lex fori’: l’action en justice, causes d’extinction de l’action en justice, chose jugée, paras 71 et seq.; JurisClasseur Droit international, Fasc. 582-​30: Procédure civile et commerciale dans les rapports internationaux, Domaine de la ‘ lex fori’:  jugement et voies d’execution, jugement, effets, paras 14 et seq. (cited as fasc. 582-​30); Johannes Landbrecht, Teil-​ Sachentscheidungen und Ökonomie der Streitbeilegung (2012), pp. 215–​16. 28 ILA, Final Report on Res Judicata and Arbitration and Resolution No. 1/​ 2006, Toronto Conference (2006), para. 66, available at http://​w ww.ila-​hq.org and in 25(1) Arbitration International 67 (2009) (cited as Final Report). 29  JurisClasseur Droit international, fasc. 582-​30, para. 14; Habscheid, p. 181.

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Chapter 5:  Search for an Appropriate Approach decision’s preclusive effect pertains purely to procedure because the objective is to put an end to a dispute and to avoid the unnecessary and wasteful duplication of proceedings.30 It is the result of the mere existence of the prior decision and the interdiction to reopen the matter.31 5.19 It is submitted that the better view would be to attribute both the positive and

negative res judicata effects of a decision to procedure, because they appear fundamentally identical in nature.32 Their objective appears to be the same; that is, to prevent the reopening of a matter already decided in prior proceedings.33 Both the negative and positive res judicata effects of a prior decision bar (at least partially) another court or tribunal from exercising its jurisdiction over the dispute.34 What is different is the degree of ‘identicalness’ of the subject matter in dispute in the proceedings. The negative res judicata effect prevents the reopening of a claim in further proceedings involving the same claim. By contrast, the positive res judicata effect prevents the reconsideration of a claim or an issue in further proceedings involving a different claim.35 The parties and the other court or tribunal are bound by a prior decision, not because it creates a new substantive legal relationship between the parties, but because of the procedural obligation imposed by the applicable res judicata principles.36

5.20 The question of the proper characterization of res judicata as pertaining to pro-

cedure or substance remains controversial. At this point, the question may be left open. For the reasons discussed later, the question of res judicata in international commercial arbitration should be governed by transnational principles, rather than any particular domestic law.37 The question will however resurface in the

  JurisClasseur Droit international, fasc. 582-​30, para. 30.   Pierre Mayer, Réflexions sur l’autorité négative de chose jugée, in Mélanges dédiés à la mémoire du Doyen Jaques Héron (2008), para. 7 with reference to Karl Binding, Strafrechtliche und Strafprozessuale Abhandlungen, Vol. 2 (1915), p. 326. 32  In this sense, see also Landbrecht, p. 37. 33  Jacques Héron and Thierry Le Bars, Droit Judiciaire Privé (4th ed. 2010), para. 345; Mélina Douchy-​Oudot, Autorité de la chose jugée—​Autorité de la chose jugée au civil sur le civil, in JurisClasseur—​Procédure Civile, fasc. 554 and JurisClasseur— ​Civil Code, fasc. 20, 13 November 2013, para. 2. See also Clay, para. 103; Habscheid, p. 184. See also Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 197, who points to the frequent confusion between the positive res judicata effect of a decision and its substantive effects (effet substantiel). According to Mayer, res judicata always seeks to prevent the relitigation of a matter that has already been decided. On the other hand, the mere right to rely on what was decided in a prior decision concerns that decision’s effet substantiel. The positive res judicata effect reinforces the effet substantiel. 34  Habscheid, pp. 184 et seq.; Clay, para. 104. 35  Héron and Le Bars, para. 345. 36  Habscheid, p. 182. 37  See paras 5.37 et seq. See also Hascher, pp. 25 et seq. See also ICC Case No. 9800, 2000, Collection of ICC Arbitral Awards (2001–​2007) (Jean-​Jacques Arnaldez, Yves Derains, and Dominique Hascher ed., 2009), p. 667. The commentary to ICC Case No. 9800 refers to ICC Case No. 12226, 2004, award reported in commentary to ICC Case No. 9800, 2000, Collection of ICC Arbitral Awards (2001–​2007) (Jean-​Jacques Arnaldez, Yves Derains, and Dominique Hascher ed., 2009) (‘le principe [de l’autorité de la chose jugée] apparient à l’ordre juridique international. Il s’ impose d’abord pour des motifs évidents de sécurité et d’ économie. Lorsqu’une autorité 30 31

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A.  Possible Approaches to Res Judicata discussion of the legal basis on which international commercial arbitrators may apply transnational res judicata principles.38 Independently of any qualification of res judicata, the final ILA report deter- 5.21 mined that the possible laws to govern res judicata in arbitration proceedings are: (i) the law of the place of arbitration of the tribunal before which the issue of res judicata arises, (ii) the law of the place where the first award (or judgment) was rendered, and (iii) the law governing the contract.39 There is widespread disagreement among arbitration scholars and practitioners as to which one of these laws should govern res judicata.40 It can also be argued that the law of the arbitral seat and the law of the country where the first decision was rendered should apply cumulatively.41 Another important question concerns the identity of the law that is designated 5.22 by the conflict-​of-​laws rule. Where the first decision was an award, the question arises whether the law of the place of the first arbitration should be understood as the national arbitration law of the first arbitral seat or the law governing the first arbitral procedure if it is different.42 The law governing the contract will generally designate the law governing the merits. However, it could also designate the law governing the arbitration agreement.43 None of the above-​mentioned laws has a clear and undisputable interest in 5.23 being applied. 44 Even the clear designation of a particular national arbitration law would be of little help since national arbitration laws generally give little guidance on how to deal with res judicata issues. 45 As was seen in the previous chapter, in the absence of res judicata rules in international commercial arbitration law, arbitral tribunals often applied domestic res judicata rules designed for litigation.

compétente, qu’ il s’agisse d’un juge ou d’un arbitre, a tranché définitivement une difficulté opposant deux parties, la décision qui est prise a pleine force juridique: “ le droit est dit”’). 38  See paras 5.105 et seq. 39 ILA, Final Report, para. 27. See also Hascher, pp. 18 et seq. 40 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 187; Christophe Seraglini, Brèves remarques sur les Recommendations de l’Association de Droit International sur la litispendance et l’autorité de la chose jugée en arbitrage, Rev. arb., No. 4 (2006), para. 5, p. 913; Claire Debourg, Les contrariétés de décisions dans l’arbitrage international (2012), paras 502–​3, pp. 416–​17. See also paras 4.126 et seq. 41  See Sheppard, Res Judicata and Estoppel, pp. 229 et seq.; Born, p. 2910. See also V.V. Veeder, Issue Estoppel, Reasons for Awards and Transnational Arbitration, Complex Arbitrations—​Perspectives on their Procedural Implications, ICC International Court of Arbitration Bulletin, Special Supplement (2003), p. 74. 42 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 187. See also Seraglini, para. 5. 43  Ibid., para. 5. 44  Ibid., para. 5. See also ILA, Final Report, para. 28; Radicati di Brozolo, pp. 132–​3. 45  See paras 4.14 et seq. See also Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, pp. 186 et seq.; Debourg, para. 506, p. 419.

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Chapter 5:  Search for an Appropriate Approach 5.24 The application by an arbitral tribunal of the domestic res judicata rules of the

arbitral seat appears to disregard the fact that international commercial arbitral tribunals have no lex fori. It is usually considered that an international arbitral tribunal does not have the same relation to the arbitral seat as a state court to its legal system.46 Commenting on the inappropriateness of applying the procedural law of the arbitral seat, Judge Lagergren made the following observation: One remarkable feature of [arbitration] . . . was that according to some systems of law the arbitrators were expected to apply as the law of the arbitration procedure the law of the place where the arbitration was held. In modern conditions of international business . . ., this often meant little more than hearings in an hotel room in a city which was convenient and accessible to all parties and witnesses: in such circumstances, the law of that place was surely of little relevance.47

5.25 The domestic procedural laws, substantive laws, and conflict-​of-​laws rules of the

place of arbitration do not usually apply in the same way in international commercial arbitration proceedings as they do in court proceedings held within the country of the arbitral seat.48 Consequently, the domestic res judicata rules of the place of arbitration should not also be merely and mechanically transposed to arbitral proceedings seated there.49

5.26 As a matter of principle, the wholesale application by arbitral tribunals of the do-

mestic res judicata rules of any particular country appears inappropriate.50 This is due to several differences between international commercial arbitration and domestic litigation. Domestic res judicata rules do not always properly take into account the nature and objectives of international arbitration.51 This point will be discussed further in the second section of this chapter.52

46  Born, pp. 3768–​9; Radicati di Brozolo, p. 132. See also discussion on the autonomy of international commercial arbitration, paras 5.49 et seq. 47  Extract reported by Emmanual Gaillard, Aspects philosophiques du droit de l’arbitrage international, 329 Recueil des Cours de l’Académie de Droit international 49, 147 (2007) (cited as Aspects philosophiques). 48  Born, p. 3769. On the autonomous determination by international commercial arbitral tribunals of the applicable law, independent of the law of the place of arbitration, see, e.g., Berthold Goldman, Les conflits de lois dans l’arbitrage international de droit privé, 109 Recueil des Cours de l’Académie de Droit international 347 (1963). See also Pierre Lalive, Les règles de conflit de lois appliqués au fond du litige par l’arbitre international siégeant en Suisse, Rev. arb. (1976), pp. 155 et seq. (cited as Les règles de conflit de lois); Jean-​Baptiste Racine, Réflexions sur l’autonomie de l’arbitrage commercial international, Rev. arb., No. 2 (2005), paras 16 et seq.; Gaillard, Aspects philosophiques, pp. 158 et seq. 49  Born, p. 3769. See also Brekoulakis, p. 207 (‘An international arbitration, by definition, has no national forum. Thus, the arbitration award is not the product of a particular national legal system, and, in any case, the seat of arbitration bears no relation to the effect of an arbitral award’); Richard W. Hulbert, Arbitral procedure and the preclusive effect of awards in international commercial arbitration, 7 International Tax & Business Lawyer 155, 193 (1989). 50 ILA, Final Report, para. 25. 51  Born, p. 3776. 52  See paras 5.39 et seq.

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A.  Possible Approaches to Res Judicata 3. Comparative law approach Another possible approach consists in comparing different domestic laws to deter- 5.27 mine generally accepted res judicata principles common to a majority of states. In the absence of specific res judicata rules in national arbitration laws, these general res judicata principles would be derived from domestic litigation laws.53 At first blush, the application of general res judicata principles derived from do- 5.28 mestic litigation laws appears appropriate in international commercial arbitration to govern the legal relationships between parties from different countries and legal backgrounds, as the parties will be familiar with these principles.54 Based on the ‘inter-​cultural’55 nature of the international arbitration community, it has been said that general principles of law derived from comparative domestic law are predestined to apply in international commercial arbitrations.56 In addition, where the parties have not chosen a law to govern res judicata, they will be less surprised by the application of general res judicata principles than by the application of a particular domestic law that they did not choose and that might not be in conformity with what is widely accepted.57 That said, it will be difficult to determine general res judicata principles that go be- 5.29 yond the common core delineated in the previous chapters.58 The scope of general res judicata principles common to most jurisdictions would be narrow.59 To find answers to more detailed res judicata questions, international arbitrators would have to revert to a particular domestic law and, as a matter of consequence, to the conflict-​of-​laws approach. Furthermore, the appropriateness of the wholesale transposition of a general res judicata doctrine developed for domestic litigation to international arbitral proceedings may be questioned. Such a ‘legal transplant’60 could arguably be a simple way to solve the problem of res judicata in international commercial arbitration. However, international commercial arbitration may not be similar enough to domestic litigation with respect to res judicata successfully to transplant domestic res judicata rules as such into the international commercial arbitration body.61 While a pure comparative law approach does not therefore appear entirely appro- 5.30 priate to deal with res judicata issues in international commercial arbitration, as   See Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, pp. 188 et seq.   Michel Virally, Un tiers droit?—​Réflexions théoriques, in Droit des relations économiques internationales (1982), p. 384. 55  Charles Jarrosson, La notion d’arbitrage (1987) (cited as La notion d’arbitrage), para. 1. 56  Virally, p. 384. 57 Gaillard, Aspects philosophiques, p. 113. 58  See paras PI.02 et seq. 59 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 188. 60  Alan Watson, Legal Transplants (1993), p. 21. 61 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 189. 53

54

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Chapter 5:  Search for an Appropriate Approach will be seen in the following section, general res judicata principles derived from comparative domestic law may resurface in the transnational approach as one of the sources of transnational rules of law. 4. Transnational approach 5.31 A fourth possibility is to formulate uniform, autonomous res judicata principles

that are better adapted to the particularities of international commercial arbitration than domestic rules created for litigation. This approach would seek to provide a uniform set of res judicata principles detached from any particular domestic law and take into consideration the nature and objectives of international commercial arbitration. This approach may best be described as the ‘transnational approach’.

5.32 At the outset it bears mentioning that there is no uniform definition of the terms

‘transnational rules of law’ or ‘transnational law’;62 the terminology varies considerably among scholarly writings and arbitral awards.63 For the purposes of this research, the term will cover rules of law that are neither purely domestic, nor purely international, but a hybrid of the two.64 Such transnational rules of law may be derived from multiple sources, for instance private codifications, international

62  According to a broad definition of transnational law, it is a ‘hybrid body of private and public, domestic and international law’ (blurring of categories) created by private and public actors (blurring of roles of actors) in a process of cross-​fertilization between different national legal systems and international law (blurring of sources) (Thomas Schultz, Transnational Legality:  Philosophical Reflections on International Arbitration (2014) (cited as Transnational Legality), with reference, inter alia, to Harold Hongju Koh, Transnational Public Law Litigation, 100 Yale Law Journal 2347, 2349 (1991); Harold Hongju Koh, Why Transnational Law Matters, 24 Pennsylvania State International Law Review 745 (2006) (cited as Why Transnational Law Matters); Philip C. Jessup, Transnational Law (1956), p. 2.). According to a narrower (systemic) understanding, transnational law is made up of autonomous legal systems beyond the state which cannot be reduced either to a domestic legal system or to international law as a legal system (autonomy always being relative, never absolute, and therefore admitting the possibility of collaboration with other legal systems, e.g. with regard to enforcement by national courts) (Schultz, Transnational Legality, with reference to Thomas Schultz, Some Critical Comments on the Juridicity of the Lex Mercatoria, 10 Yearbook of Private International Law 667 (2008); Thomas Schultz, eBay: un système juridique en formation?, 22 Revue du Droit des Technologies de l’Information 27 (2005); François Ost and Michel Van de Kerchove, De la pyramide au réseau (2002). See also Mayer (Pierre Mayer, L’autonomie de l’arbitre dans l’appréciation de sa propre compétence, 217-​V Recueil des Cours de l’Académie de Droit international 319 (1989), para. 71 (cited as L’autonomie de l’arbitre) according to whom the notion of ‘transnational law’ covers ‘toutes les versions proposées d’un tiers ordre juridique, coexistant avec les orders juridiques étatiques et avec le droit international ’). 63  The famous dialogue between Humpty Dumpty and Alice springs to mind: ‘“When I use a word”, Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean—​ neither more nor less.”—​“The question is,” said Alice, “whether you can make words mean so many different things.”—​“The question is,” said Humpty Dumpty, “which is to be master—​that’s all.”’ (Lewis Carroll, Through the Looking-​Glass, Chapter VI, Humpty Dumpty (1871)). 64 Koh, Why Transnational Law Matters, p.  745. See also Jessup (p.  2), according to whom transnational law is ‘all law which regulates actions or events that transcend national frontiers . . . [including] both public and private international law . . . [plus] other rules which do not wholly fit into such standard categories’.

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A.  Possible Approaches to Res Judicata arbitration case law, and international conventions, as well as general principles of law derived from comparative domestic law.65 The transnational approach is not without its difficulties. The main difficulty is 5.33 to determine the sources and content of transnational res judicata principles, as well as the legal basis on which such transnational principles may be applied by international commercial arbitral tribunals. However, there are several advantages to this approach. First, it would avoid the difficult conflict-​of-​laws approach. Secondly, it would avoid the application of a particular domestic law that might be unfamiliar to the parties and the arbitrators. Thirdly, the transnational approach would avoid inappropriate analogies between international arbitration and litigation. It would respect the nature and objectives of international arbitration, as well as the legitimate expectations of the parties with respect to the arbitration process. Fourthly, the transnational approach would provide guidance to arbitral tribunals. It would ensure more consistent solutions to res judicata which, in turn, would ensure a greater degree of efficiency, fairness, certainty, and predictability of the arbitration process. The adoption of the transnational approach has been widely supported by international commercial arbitration scholars and practitioners.66 The ILA decided to adopt a mixed model under which transnational rules on cer- 5.34 tain aspects of res judicata would be formulated and the remaining issues referred to domestic laws under acceptable conflict-​of-​laws rules. According to the ILA, at present the development of transnational rules is not feasible for all aspects of res judicata. For some aspects, such as the definition of awards that qualify as res judicata or the extension of res judicata effects to third parties in the application of a more lenient ‘identity of parties’ standard, the development of transnational rules is premature and, hence, reference to conflict-​of-​laws rules is more appropriate.67 However, the ILA considers the adoption of uniform transnational res judicata 5.35 rules to be generally preferable to the application of domestic laws. Wherever feasible, uniform transnational rules should be adopted, as this will bypass the difficult conflict-​of-​laws approach. Furthermore, transnational rules generally provide more satisfactory solutions assuring procedural efficiency and finality 65  Philippe Fouchard, Emmanuel Gaillard, and Berthold Goldman, International Commercial Arbitration (1999), para. 1447. 66  See, e.g., Hascher, pp. 25 et seq.; Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, pp. 190 et seq.; Seraglini, para. 8; Charles Jarrosson, L’autorité de la chose jugée des sentences arbitrales, 8 Procédures, August 2007, Etude 17, para. B.1.a (cited as L’autorité de chose jugée des sentences arbitrales); Born, pp. 3742 et seq. and p. 3776; Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 283; Radicati di Brozolo, pp. 143 et seq.; Bernhard Berger and Franz Kellerhals, Internationale und interne Schiedsgerichtsbarkeit in der Schweiz (3rd ed. 2014), paras 1666 et seq.; Brekoulakis, pp. 205 et seq.; Andreas Stier, Arbitral & Judicial Decision: Preclusive Effects of an International Arbitral Award, 15 American Review of International Arbitration 321, 325 (2004). 67 ILA, Final Report, para. 5. For a list of issues in relation to which ILA refrained from formulating transnational rules, see ibid., para. 7.

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Chapter 5:  Search for an Appropriate Approach than solutions provided by domestic law.68 This is due to the differences between international commercial arbitration and domestic litigation, as well as to the international character of arbitration. While domestic notions of res judicata are valid in a domestic setting, they are hardly appropriate in an international context.69 5.36 Based on the above, it is submitted that the transnational approach to res judicata

before international commercial arbitral tribunals should be adopted. However, before formulating any transnational res judicata principles, it is necessary to further substantiate this conclusion and to determine the exact modalities for this approach.

B.  The Appropriate Approach: Transnational Res Judicata Principles for International Commercial Arbitration 5.37 Protagonists of the transnational approach often submit that the application of

domestic res judicata rules is inappropriate because of the ‘differences between international commercial arbitration and domestic court dispute settlement, as well as . . . the international character of arbitration’;70 because of the limited analogy between the position of the judge and the position of the arbitrator;71 or because ‘national preclusion rules are designed for national court proceedings, and do not necessarily take into account the nature and objectives of the arbitral process’72 and arbitral tribunals are ‘not properly assimilated to the status of a national court at the arbitral seat’.73 In short, it is considered that the differences between international arbitration and domestic litigation render the wholesale application of domestic res judicata rules in international commercial arbitration proceedings inappropriate. Transnational res judicata principles that consider the particularities and objectives of international commercial arbitration must be formulated.

5.38 The following analysis will investigate whether, and to what extent, an analogy

between international commercial arbitration and domestic litigation is possible for res judicata purposes (1.). This will enable us to corroborate the conclusion that transnational res judicata rules should apply in international commercial arbitration and to determine the sources of such rules (2.).   Ibid., para. 27.   Ibid., para. 25. 70  Ibid., para. 25. See also Robert Briner, Preface, Complex Arbitrations—​Perspectives on their Procedural Implications, ICC International Court of Arbitration Bulletin, Special Supplement (2003), p. 5. 71 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 189. 72  Born, p. 3776. 73  Ibid., p. 3776. 68 69

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B.  The Appropriate Approach 1. Analogy between international commercial arbitration and domestic litigation for res judicata purposes The question whether, and to what extent, international commercial arbitration 5.39 can be equated to domestic litigation with respect to res judicata requires some introductory remarks on international commercial arbitration (a.). After looking at some of its fundamental features, the extent (or limits) of a possible analogy between international commercial arbitration and domestic litigation will become clear (b.). a. What is international commercial arbitration? There is no legal (or even a generally accepted74) definition of international com- 5.40 mercial arbitration.75 According to Jarrosson, ‘[a]‌rbitration is the institution by which a third party decides on a dispute between two or more parties by exercising the jurisdictional mandate conferred upon him by the latter’.76 Similarly, according to Poudret and Besson, ‘arbitration is a contractual form of 5.41 dispute resolution exercised by individuals, appointed directly or indirectly by the parties, and vested with the power to adjudicate the dispute in place of state courts by rendering a decision having effects analogous to those of a judgment’.77 There are no fundamental divergences between the various definitions given by 5.42 other scholars and, in particular, there is no definition which is peculiar to any given country.78 The resemblance between international commercial arbitration and domestic liti- 5.43 gation is apparent. A third party, the arbitrator, decides a dispute between two or more parties by a decision that is res judicata. This arbitrator is essentially a judge.79 Arbitrators and judges have the same status, even though the arbitrator acts in a private capacity, was chosen by the parties, and has a temporary mandate. The arbitrator is a private, chosen, and temporary judge, but nevertheless a judge ‘à part entière’.80

74  Gabrielle Kaufmann-​Kohler and Antonio Rigozzi, Arbitrage International (2nd ed. 2010), para. 20. 75  Jarrosson, La notion d’arbitrage, para. 779. 76  Ibid., para. 785 (English translation in Jean-​François Poudret and Sébastien Besson, Comparative Law of International Arbitration (2007), para. 2). See also Fouchard, Gaillard, and Goldman, para. 7; Bruno Oppetit, Sur le concept d’arbitrage, in Le droit des relations économiques internationales, Études offertes à Berthold Goldman (Fouchard, Kahn, and Lyon-​Caen ed., 1982), pp. 229 et seq. 77  Poudret and Besson, para. 3. See also Marcel Huys and Guy Keutgen, L’arbitrage en droit belge et international (2nd ed. 2006), para. 23; Albert Jan Van den Berg, The New York Arbitration Convention of 1958 (1981), p. 44. 78  Poudret and Besson, para. 2. See also Jarrosson, La notion d’arbitrage, para. 780. 79 See Clay, paras 73 et seq. 80  Ibid., para. 236. According to Jean-​Marie Vulliemin, Jugement et sentence arbitrale, 60 Études suisses de droit international (1990), the arbitrator is the ‘alter ego’ of the judge (para. 202). See, however, Sir Michael J. Mustill and Stewart C. Boyd, The Law and Practice of

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Chapter 5:  Search for an Appropriate Approach 5.44 The same holds true for the arbitrator’s and judge’s mandates. Their mandates

are not merely analogous, but ‘profoundly identical’.81 The mandates differ with respect to their sources. However, the fact that the arbitrator’s mandate is based directly on the parties’ arbitration agreement does not alter the conclusion that arbitrators exercise the same juridical mandate as judges.82 Furthermore, both judgments and awards share the same purpose—​finally to resolve a given dispute between the parties.83 As a matter of consequence (it would seem), national laws generally afford awards res judicata effects analogous to those of judgments.84 Whether, and to what extent, this is appropriate will be determined later in this research. For now, suffice it to say that the recognition by national laws of the res judicata effect of awards is evidence that international commercial arbitration is usually considered as functionally equivalent to domestic litigation.85

5.45 However, international commercial arbitration is not domestic litigation. While

it is a type of justice, it is not a national justice.86 According to Jarrosson, it would be both regrettable and erroneous to consider an arbitrator and a national court as identical on the sole basis that both exercise the same juridical mandate.87 When parties agree to submit their dispute to arbitration, their intention is to remove their dispute from the jurisdiction of domestic courts because domestic courts are ‘unacceptable, unsuitable or inappropriate for the case’.88 It would be pointless for parties to replace litigation with another dispute resolution mechanism identical to litigation. As was expressed by Clay, ‘si l’objectif est d’ être juge à la place du juge, l’arbitre perd sa raison d’ être’.89

5.46 It is not enough to assert that international commercial arbitration is not identical

to domestic litigation. The differences must affect the way in which res judicata issues should be dealt with before arbitral tribunals. The following section will look at some particularities of international commercial arbitration that may have an impact on res judicata in international commercial arbitration.

Commercial Arbitration in England (2nd ed. 1989), p. 223 (‘The analogy between arbitrator and judge is tempting, but if pressed too far can lead to false conclusions’). 81  Jarrosson, La notion d’arbitrage, para. 180. See also, e.g., Clay, para. 112, with references; Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 189; Vulliemin, para. 203; Kaufmann-​Kohler and Rigozzi, para. 24. 82  Jarrosson, La notion d’arbitrage, para. 175. 83  Vulliemin, para. 200. 84  See paras 4.15 et seq. For a discussion of the juridical nature of arbitral awards, see Debourg, paras 409 et seq., pp. 346 et seq. 85  Ibid., para. 415, p. 352. 86  It was said that international arbitration ‘étant une justice à part entière, n’est pas assimilable à la justice étatique’ (Racine, p. 305). 87  Charles Jarrosson, L’arbitrage et la Convention européenne des droits de l’ homme, Rev. arb. (1989), para. 35 (cited as L’arbitrage et la Convention européenne des droits de l’ homme). 88 Julian D.M. Lew, Achieving the Dream:  Autonomous Arbitration, 22(2) Arbitration International 179, 202 (2006) (cited as Achieving the Dream). 89  Clay, para. 62.

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B.  The Appropriate Approach b. Fundamental features of international commercial arbitration One characteristic that would justify a departure from domestic res judicata 5.47 rules in favour of transnational rules is that international commercial arbitration is to a certain degree autonomous from national legal orders. As will be seen in the following sections, several scholars have submitted that international commercial arbitration may even be considered as an arbitral legal order, founded on transnational law, that is separate, albeit not independent, from national legal orders. Besides being autonomous, international commercial arbitration may also be 5.48 described as a contractual and private form of dispute resolution. Furthermore, it may be said to be flexible, neutral, and confidential. International commercial arbitration is autonomous  Much has been written 5.49 on the subject of the autonomy of international commercial arbitration.90 The idea was famously expressed in 1963 by Goldman who asserted that ‘every investigation of a theory corresponding to the nature of international arbitration leads ineluctably to an autonomous, not a national, system’.91 In 1967, Mann took a diametrically opposed position asserting that ‘[i]‌n the 5.50 legal sense no international commercial arbitration exists. . . . [E]very arbitration is a national arbitration, that is to say, subject to a specific system of national law.’92 According to Mann, international arbitration cannot be autonomous. Arbitral tri- 5.51 bunals must be regarded as equivalent to the domestic courts of the arbitral seat. They are both ‘subject to the local sovereign’.93 Today the autonomy of international commercial arbitration is widely recognized. 5.52 However, ‘l’autonomie est affaire de degrés’.94 Different national laws recognize this autonomy to a greater or lesser extent. Furthermore, the autonomy of international commercial arbitration from national legal systems is never absolute.

90  See, e.g., Philippe Fouchard, L’autonomie de l’arbitrage commercial international, Rev. arb. (1965), pp. 99 et seq.; Goldman, pp. 347 et seq.; F.A. Mann, Lex Facit Arbitrum, in International Arbitration, Liber Amicorum for Martin Domke (1967), pp. 157 et seq.; Arthur Taylor Von Mehren, To What Extent is International Commercial Arbitration Autonomous?, in Le droit des relations économiques internationales (1987), pp. 215 et seq.; Mayer, L’autonomie de l’arbitre, pp. 319 et seq.; Racine, pp. 305 et seq.; Lew, Achieving the Dream, pp. 179 et seq.; Gaillard, Aspects philosophiques, pp. 51 et seq.; Jan Paulsson, Arbitration Unbound, 30 International and Comparative Law Quarterly 358 (1981); Antoine Kassis, L’autonomie de l’arbitrage commercial international (2005). 91  Goldman, p. 380 (English translation in Von Mehren, p. 217). As noted by Mann, the Greek scholar, Professor Fragistas, seems to have been the first to suggest that the parties may detach the arbitration from any national legal order and render it ‘supranational’ (see Mann, p. 158). 92  Ibid., p. 159. 93  Ibid., p. 162. 94  Racine, p. 308.

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Chapter 5:  Search for an Appropriate Approach 5.53 Racine has described the autonomy of international commercial arbitration as

‘notion expansioniste’;95 it has steadily increased over the past few decades.96 The 1958 New York Convention was ‘the beginning of internationalism in arbitration’,97 recognizing that arbitration agreements, proceedings, and awards would have their origin and seek to be effective in different jurisdictions. In line with this internationalism, the New York Convention reduced the role of the arbitral seat.98 According to Gaillard, the Convention clearly broke with the traditional conception considering international arbitration as equivalent to domestic litigation, drawing its legitimacy solely from the legal order of the arbitral seat.99

5.54 The United Nations Commission on International Trade Law (UNCITRAL)

Model Law was later adopted ‘in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice’.100 This need for improvement and harmonization was based on findings that national laws were often particularly inappropriate for international cases, in particular national laws that equated the arbitral process with court litigation.101

5.55 Salient features of the Model Law include the recognition of the doctrines of

Kompetenz-​Kompetenz and separability;102 the recognition of the doctrine of party autonomy;103 the limitation and delimitation of local court intervention in international arbitrations;104 and the recognition of the principle that awards must be recognized as final and binding, with limited grounds for when an award may be set aside or refused recognition or enforcement.105 Today these salient features are generally accepted rules of international arbitration. According to Lew, they constitute ‘a transnational law of international arbitration’ supporting ‘the autonomous nature of arbitration’.106

  Ibid., p. 305.   According to Fouchard ‘toute l’ évolution de l’arbitrage au cours des dernières décennies a consisté à renforcer son autonomie par rapport aux lois et aux juges des Etats’ (Philippe Fouchard, Commentary of ECJ, Municipality of Almelo and others v NV Energiebedrijf Ijsselmij, 27 April 1994 (Case C-​393-​92), Rev. arb., No. 3 (1995), p. 507). On the genesis of the autonomy concept, see, e.g., Roy Goode, The Role of the Lex Loci Arbitri in International Commercial Arbitration, 17(1) Arbitration International 19 (2001); Lew, Achieving the Dream, pp. 182 et seq. 97  Ibid., p. 189. See also Kaufmann-​Kohler and Rigozzi, para. 15. 98 Gaillard, Aspects philosophiques, pp. 86 et seq. 99  Ibid., p. 87. See also Lew, Achieving the Dream, pp. 187 et seq. 100  UNCITRAL Model Law on International Commercial Arbitration 1985—​ with amendments as adopted in 2006, General Assembly Resolution 40/​72 (11 December 1985), p. vii, available at http://​w ww.uncitral.org. 101 Explanatory Note by the UNCITRAL Secretariat on the Model Law on International Commercial Arbitration, available at http://​w ww.uncitral.org, paras 5 et seq. 102  Article 16(1) UNCITRAL Model Law (ML). 103 Article 19 ML. 104 Article 5 ML. 105  Articles 34 to 36 ML. 106 Lew, Achieving the Dream, p. 191. For more examples of principles that have acquired the ‘dignity’ of ‘common law of international arbitration’, see Pierre Lalive, Transnational (or Truly International) Public Policy and International Arbitration, in Comparative Arbitration Practice and Public Policy in Arbitration, ICCA Congress Series, 1986, Vol. 3 (Pieter Sanders ed., 1987), paras 133 et seq. (cited as Transnational (or Truly International) Public Policy). 95

96

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B.  The Appropriate Approach In light of this changing attitude towards international commercial arbitration, 5.56 new modern national arbitration laws were adopted. These laws recognize the autonomy of international commercial arbitration at all stages of the arbitration, namely the arbitration agreement, the arbitration procedure, and the award.107 First of all, the autonomy of international commercial arbitration manifests itself 5.57 at the stage of the arbitration agreement through the doctrines of Kompetenz-​ Kompetenz and separability. While the doctrine of Kompetenz-​ Kompetenz renders the arbitral tribunal autonomous from national courts, the doctrine of separability renders the arbitration agreement autonomous from the contract of which it forms part.108 In addition, the arbitration agreement has been rendered autonomous from the law governing the main contract.109 French scholars and case law have gone one step further and detached the arbitration agreement from any national law, applying instead transnational law to the arbitration agreement in the absence of an express choice of national law by the parties.110   Racine, pp. 311 et seq.   See, e.g., Article 16(1) ML and Article 23(1) of the 2010 UNCITRAL Arbitration Rules. 109  See, e.g., Article 178(2) Swiss Private International Law Act (PILA) (‘As regards its substance, an arbitration agreement shall be valid if it conforms either to the law chosen by the parties, or to the law governing the subject-​matter of the dispute, in particular the law governing the main contract, or if it conforms to Swiss law’); Article V(1)(a) of the New York Convention. 110  See, e.g., Hascher, p. 25; Mayer, L’autonomie de l’arbitre, paras 43 et seq.; Debourg, para. 92, pp. 72–​3, with references. See also first partial award of 26 June 2001 rendered by an ICC tribunal with its seat in Paris between Dallah Real Estate and Tourism Holding Company and the Government of Pakistan (‘Judicial as well as Arbitral case law now clearly recognise that, as a result of the principle of autonomy, the rules of law, applicable to an arbitration agreement, may differ from those governing the main contract, and that, in the absence of specific indication by the parties, such rules need not be linked to a particular national law . . ., but may consist of those transnational general principles which the Arbitrators would consider to meet the fundamental requirements of justice in international trade. . . . [I]‌n view of the autonomy of the Arbitration Agreement, the Tribunal believes that such Agreement is not to be assessed, as to its existence, validity and scope, neither under the laws of Saudi Arabia nor under those of Pakistan, nor under the rules of any other specific local law connected or not, to the present dispute. By reason of the international character of the Arbitration Agreement coupled with the choice, under the main Agreement, of institutional arbitration under the ICC Rules without any reference in such Agreement to any national law, the Tribunal will decide on the matter of its jurisdiction and on all issues relating to the validity and scope of the Arbitration Agreement and therefore on whether the Defendant is a party to such Agreement and to this Arbitration, by reference to those transnational general principles and usages reflecting the fundamental requirements of justice in international trade and the concept of good faith in business’; quoted in Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46, para. 33). See also Cour de cassation, 20 December 1993, Municipalité de Khoms El Mergeb v Dalico, Rev. arb., No. 1 (1994), p. 116 (‘[E]n vertu d’une règle matérielle du droit international de l’arbitrage, la clause compromissoire est indépendante juridiquement du contrat principal qui la contient directement ou par référence et que son existence et son efficacité s’apprécient, sous réserve des règles impératives du droit français et de l’ordre public international, d’après la commune volonté des parties, sans qu’il soit nécessaire de se référer à une loi étatique’). Outside France, see decisions of the US Supreme Court in Scherk v Alberto-​Culver Co. (417 US 506 (1974)) and Mitsubishi v Soler Chrysler Plymouth (473 US 614 (1985)). In Scherk the court accepted the validity of an arbitration clause, having regard to the international character of the contract, thereby excluding the restrictions imposed by the Security Exchange Act on arbitrability. In Mitsubishi the court held that, in antitrust matters, the principle of non-​arbitrability does not extend to international contracts (see Lalive, Transnational (or Truly International) Public Policy, para. 57). 107

108

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Chapter 5:  Search for an Appropriate Approach 5.58 International commercial arbitration also is autonomous with respect to the law

governing the procedure and the merits of the dispute.111 In fact, it is today almost universally accepted that arbitral tribunals cannot be constrained by the same rules as those governing domestic court proceedings.112 Under modern arbitration laws and institutional rules, in the absence of party choice, arbitral tribunals may generally conduct the procedure as they deem appropriate, subject to the safeguards of fundamental principles of procedure.113 Furthermore, the merits of the dispute may be governed by ‘rules of law’,114 including rules of non-​national origin, such as the lex mercatoria or transnational law.115

5.59 Finally, the autonomy of international commercial arbitration manifests itself at

the stage of the award, in that the grounds on which an arbitral award may be set aside (or refused recognition or enforcement) are strictly limited and are interpreted narrowly. It is particularly manifest where the parties may waive in advance all setting aside proceedings, as is currently possible, for instance, under Belgian,116 French,117 Panamanian,118 Peruvian,119 Swiss,120 Swedish,121 and Tunisian122 law.123

111  See Institut de Droit International (IDI), Arbitration Between States, State Enterprises, or State Entities, and Foreign Enterprises, Resolution, Session of Santiago de Compostela 1989, Article 6, available at http://​w ww.idi-​iil.org (‘The parties have full autonomy to determine the procedural and substantive rules and principles that are to apply in the arbitration. In particular, . . . these rules and principles may be derived from different national legal systems as well as from non-​national sources such as principles of international law, general principles of law, and the usages of international commerce’). See also Goode, p. 20; Gaillard, Aspects philosophiques, p. 94. On the autonomy of international commercial arbitration with respect to the law governing the merits and the procedure, see, in particular, Gaillard, Aspects philosophiques, pp. 145 et seq.; Racine, pp. 318 et seq. 112 Goode, p.  20. See also Von Mehren, pp.  220 et seq.; Lalive, Transnational (or Truly International) Public Policy, paras 36 et seq. 113  See, e.g., Article 19 of the 2012 ICC Rules; Article 17(1) of the UNCITRAL Arbitration Rules; Article 14 of the 2014 LCIA Arbitration Rules. 114  See, e.g., Article 1511 of the Code de Procédure Civile (F-​CPC); Article 1054(2) Dutch Code of Civil Procedure; Article 187 PILA; Article 21(1) of the 2012 ICC Arbitration Rules; Article 22(3) of the 2014 LCIA Arbitration Rules. 115  On the law applicable to the merits, including the application of non-​national rules of law, see Poudret and Besson, paras 676 et seq.; Julian D.M. Lew, Loukas A. Mistelis, and Stefan M. Kröll, Comparative International Commercial Arbitration (2003), paras 18-​1 et seq. It is worth noting that under some laws and institutional rules, the arbitral tribunal cannot apply non-​national rules of law without the consent of the parties (see, e.g., Article 1051(2) of the German Zivilprozessordnung (ZPO); section 46(3) of the English Arbitration Act 1996; Article 28 ML; Article 35(1) of the UNCITRAL Arbitration Rules). However, according to Lalive ‘modern practice clearly allows the arbitrator, . . . failing a choice by the parties, to disregard any State law’ and apply non-​national law, on the ground that the contract has its ‘closest connection’ with the international community of merchants (Lalive, Transnational (or Truly International) Public Policy, para. 165). 116   Article 1718 of the 2013 Judicial Code. 117   Article 1522 F-​CPC. 118   Article 36 Décret-​loi No. 5 (8 July 1999), published in Rev. arb., No. 3 (2005), p. 823. 119   Article 63(8) of the Peruvian Arbitration Act 2008. 120   Article 192 PILA. 121   Section 51 of the Swedish Arbitration Act 1999. 122   Article 78(6) of the Tunisian Arbitration Code 1993. 123 See Poudret and Besson, para. 457; Gaillard, Aspects philosophiques, pp. 119 et seq.

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B.  The Appropriate Approach In France, the opinion has even been voiced by Fouchard for abolishing annulment 5.60 proceedings before the courts of the arbitral seat on the ground that the award usually has no connection with the country of the seat.124 Fouchard submitted that the award is not part of the national legal order of the arbitral seat but is international125 and, therefore, should only be controlled by the courts of the country where recognition or enforcement is sought.126 Based on this conception that international arbitral awards are not part of any 5.61 national legal order but are international judicial acts, French courts do not automatically give effect to foreign court decisions annulling an international award. Since 1984 they have recognized and enforced awards previously annulled at the arbitral seat if they meet the requirements set out in Article 1520 F-​CPC.127 However, the French conception of the autonomous character of international awards has remained largely isolated.128 Only in a few cases rendered in

124  Philippe Fouchard, La portée internationale de l’annulation de la sentence arbitrale dans son pays d’origine, Rev. arb. (1997), para. 40 (cited as La portée internationale de l’annulation de la sentence arbitrale dans son pays d’origine) (‘pourquoi annuler une sentence si elle n’a pas à être exécutée dans ce pays?’). See also Article 1717(4) of the Judicial Code 1985 (‘The Belgian Court can take cognizance of an application to set aside only if at least one of the parties to the dispute decided in the arbitral award is either a physical person having Belgian nationality or residing in Belgium, or a legal person formed in Belgium or having a branch (une succursale), or some seat of operation (un siège quelconque d’opération) there’). However, in 1998, Article 1717(4) of the 1985 Judicial Code was modified to substitute the possibility of waiving setting aside proceedings for the exclusion of such proceedings (see also Article 1718 of the 2013 Judicial Code). 125 Fouchard, La portée internationale de l’annulation de la sentence arbitrale dans son pays d’origine, para. 40. See also Sylvain Bollée, Les méthodes du droit international privé à l’épreuve des sentences internationales (2004), para. 52, who contends that an award constitutes a ‘ fait juridique’ with universal existence. As a consequence, the award is not part of any national legal order (‘aucun ordre juridique étatique n’est fondamental pour la sentence’). However, according to Bollée, awards are also not part of any anational legal order. As a consequence, awards cannot qualify as judicial acts (para. 151). 126 Fouchard, La portée internationale de l’annulation de la sentence arbitrale dans son pays d’origine, para. 40. See also Racine, para. 36. 127  See, e.g., Cour de cassation, 9 October 1984, Pabalk Ticaret Limited Sirketi v Norsolor SA, Rev. arb. (1985), p. 431; Cour de cassation, 10 March 1993, Polish Ocean Line v Société Jolasry, Rev. arb. (1993), p. 258 (2nd case); Cour de cassation, 23 March 1994, Société Hilmarton v Société OTV, Rev. arb. (1994), pp. 327 et seq. The court held in relevant part: ‘La sentence rendue en Suisse était une sentence internationale qui n’ était pas intégrée dans l’ordre juridique de cet Etat, de sorte que son existence demeurait établie malgré son annulation et que sa reconnaissance en France n’ était pas contraire à l’ordre public international ’. This jurisprudence was followed by the Paris Cour d’appel on several occasions. See, e.g., Cour d’appel de Paris, 14 January 1997, République Arabe d’Egypte v Société Chromalloy Aero Services, JDI (1998), p. 750; Cour d’appel de Paris, 10 June 2004, Société Bargues Agro Industries v Société Young Pecan Company, Rev. arb. (2006), p. 154; Cour d’appel de Paris, 29 September 2005, Direction générale de l’aviation civile de l’Emirat de Dubai v Société International Bechtel, Rev. arb. (2006), p. 695; Cour d’appel de Paris, 18 January 2007, La société SA Lesbats et fils v Monsieur Volker le docteur Grub (cited by Gaillard, Aspects philosophiques, p. 117). See also Cour de cassation, 29 June 2007, Société PT Putrabali Adyamulia v Société Rena Holding et al, Rev. arb. (2007), pp. 645 et seq. See also Debourg, para. 170 et seq., pp. 140 et seq. 128   Alexis Mourre, A propos des articles V et VII de la Convention de New York et de la reconnaissance des sentences annullées dans leur pays d’origine: où va-​t-​on après les arrêts Termo Rio et Putrabali, Rev. arb., No. 2 (2008), p. 266.

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Chapter 5:  Search for an Appropriate Approach Belgium,129 Austria,130 the United States,131 and the Netherlands132 have courts accepted giving effect to awards previously annulled at the arbitral seat. 5.62 Several scholars, again mainly in France, have taken the idea of the autonomy

of international commercial arbitration a step further and submitted that international arbitration may be considered as an arbitral legal order, largely independent from national legal orders.133 For instance, according to Gaillard, a legal order is an 129  See, e.g., Brussels Tribunal of First Instance, 6 December 1988, Sonatrach v Ford, Bacon & Davis Inc., ASA Bulletin (1989), p. 213 (confirmed by the Brussels Court of Appeal, 9 January 1990, Journal des tribunaux (1990), p. 386). 130  See, e.g., Oberster Gerichtshof, 20 October 1993, Radenska v Kajo, Rev. arb. (1998), pp. 419 et seq. (confirmed by Oberster Gerichtshof, 23 February 1998, Radenska v Kajo, Rev. arb. (1999), pp. 385 et seq.). 131  See, e.g., Chromalloy Aeroservices v The Arab Republic of Egypt, 939 F. Supp. 907 (D.D.C. 1996). Since Chromalloy, US courts have consistently refused to recognize or enforce awards previously annulled at the arbitral seat: Baker Marine (Nig.) Ltd v Chevron (Nig.) Ltd, 191 F.3d 194 (2d Cir. 1999); Martin Spier v Calzaturificio Tecnica SpA, 71 F. Supp. 2d 279 (S.D.N.Y. 1999); TermoRio SA ESP v Electrificadoria Dela Atlantico SA ESP et al., 421 F. Supp. 2d 87 (D.D.C. 2006) (confirmed in TermoRio SA ESP and LeaseCO Group LLC v Electranta SP et al., 487 F.3d 928 (D.C. Cir. 2007)). However, according to TermoRio, the enforcement of previously annulled awards is still possible where the annulment decision itself violates US public policy. 132  See, e.g., Gerechtshof, Amsterdam, 28 April 2009, Yukos Capital v OAO Rosneft, YCA, Vol. XXXIV (2009), pp. 703 et seq. (upheld by the Dutch Supreme Court in OAO Rosneft v Yukos Capital. See Jacomijn Van Haersolte-​Van Hof, OAO Rosneft v. Yukos Capital, Supreme Court 25 June 2010, A contribution by the ITA Board of Reporters, 15 August 2010, available at http://​ www.kluwerarbitration.com). See also Hoge Raad, 26 October 1973, Société européenne d’ études et d’entreprises v République fédérale socialiste de Yougoslavie, Rev. arb. (1974), pp. 311 et seq. 133  See, e.g., Gaillard, Aspects philosophiques, pp. 51 et seq.; Emmanual Gaillard, L’ordre juridique arbitral:  réalité, utilité et spécificité, 55(4) McGill Law Journal 891 (2010) (cited as L’ordre juridique arbitral); Clay, paras 237 et seq.; Racine, pp. 335 et seq. See also Vulliemin, paras 382 et seq. Although not in express terms, Lew also appears to submit that there is an autonomous arbitral legal order (‘International arbitration exists in a sphere or domain independent of and separate from national laws and jurisdictions’) (Lew, Achieving the Dream, p. 203). According to Shany, the relation between arbitral tribunals and state courts is somewhere ‘in the middle’. Although strictly speaking they are not part of the same legal order, they still operate within the same polity, derive their authority from the same legal system and often apply the same law (Yuval Shany, The Competing Jurisdictions of International Courts and Tribunals (2003), p. 116 (cited as Competing Jurisdictions)). Contra: see, e.g., Poudret and Besson, para. 112 (‘Without entering into a philosophical debate, we consider that the parties’ will is necessarily based on a legal system from which it derives its validity. The lex arbitrii builds the foundation (Grundnorm) for the effectiveness of the arbitration agreement’); Goode, pp. 19 et seq.; Miguel Temboury Redondo, Preliminary Judgments, Lis Pendens and Res Iudicata in Arbitration Proceedings, in Liber Amicorum Bernardo Cremades (M.Á. Fernández-​Ballesteros and David Arias ed., 2010), para. 10. See also Bank Mellat v Helliniki Techniki SA [1984] 1 QB 291, 301 (‘Despite suggestions to the contrary by some learned writers under other systems, our jurisprudence does not recognise the concept of arbitral procedure floating in the transnational firmament, unconnected with any municipal system of law’); Coppée Lavalin & Voest-​Alpine v Ken-​Ren Chemicals [1994] 2 All ER 449, 458 (‘Transnationalism is a theoretical ideal which posits that international arbitration, at least as regards certain types of an arbitral institution arbitration, is a self-​contained judicial system, by its very nature separate from national systems of law, and indeed antithetical to them. I doubt whether in its purest sense the doctrine now commands widespread support . . . At all events it cannot be the law of England . . .’). In its Final Report the ILA did not discuss the question of the existence of an arbitral legal order since the ILA Recommendations on res judicata and arbitration do not cover the situation of arbitral tribunals faced with a prior state court judgment. The ILA simply states that

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B.  The Appropriate Approach autonomous and coherent system that disposes of its own legal sources.134 A legal order must be self-​regulating in the sense that its sources must allow the legal order to resolve all issues which it concerns and to coordinate its relations with other legal orders.135 Gaillard asserts that international commercial arbitration constitutes an arbitral legal order founded entirely on transnational law. This means that the legitimacy of international commercial arbitration is grounded on the collective recognition of international arbitration by national legal orders. The arbitral legal order results from the convergence of national laws. It is a transnational legal order that considers the tendencies flowing from the law and legal activities of the community of states.136 Gaillard stresses that the transnational law that constitutes the arbitral legal order 5.63 must be considered as a method rather than a list of rules.137 The method is the same as that under Article of the 38 of the Statutes of the International Court of Justice (ICJ) to determine general principles of law. A transnational rule does not have to be unanimously endorsed by all national laws. Rather, the ‘transnational law method’ consists in determining the dominant tendency among national laws. It is essentially a systematic use of comparative law.138 This method allows arbitral tribunals to resolve any issues arising before them. According to Gaillard, there is an arbitral legal order and arbitral tribunals must be considered as organs of that legal order. They render their awards in the name of their own legal order, and not in the name of any national legal order.139 The question arises whether and how the existence of an arbitral legal order would 5.64 affect the way in which res judicata issues should be dealt with by international commercial arbitral tribunals. For instance, it could be argued that international state courts and international arbitral tribunals ‘both belong to the same legal order since both are dealing with a relationship between the parties which is governed by private law (and not public international law)’. The ILA adds ‘to the extent that state courts or arbitral tribunals may infer indirect support from these Recommendations . . ., the requirement of the same legal order is to be interpreted as expressing the view that state courts and arbitral tribunals pertain to the same legal order and that this requirement is met’ (para. 35). 134 Gaillard, Aspects philosophiques, p. 95; Gaillard, L’ordre juridique arbitral, p. 896. See also Racine, para. 49. 135 Gaillard, Aspects philosophiques, pp. 112 (‘[U]‌n ensemble structuré de normes ou “système” n’est justiciable, selon nous, de la qualification d’ordre juridique que s’ il a vocation à répondre à l’ensemble des questions susceptibles de se poser à ses sujets et à concevoir ses sources et ses relations avec les autres ordres juridiques’) and 114 (‘Même cohérent et même complet, un ensemble de normes ne peut, à notre sens, être qualifié d’ordre juridique que s’ il est à même de penser ses sources et ses relations avec les autres ordres juridiques’). 136 Gaillard, Aspects philosophiques, paras 50 et seq. See also Clay, paras 258 et seq. 137 Gaillard, Aspects philosophiques, paras 54 and 61 et seq. 138  Ibid., para. 60. See also Oppetit, Philosophie de l’arbitrage commercial international, p. 817 (‘l’arbitrage commercial international, par son esprit d’ouverture comparatiste . . . et par la generalisation de son usage sur la base de principes assez largement acceptés d’organisation et de fonctionnement, tend de plus en plus à l’universalité, qui ne debouche d’ailleurs pas nécessairement sur l’uniformisation . . .  l’universalité réside dans la reconnaissance par tous de quelques principes et d’une méthode’). 139 Gaillard, Aspects philosophiques, paras 60 et seq.

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Chapter 5:  Search for an Appropriate Approach arbitral tribunals would render their awards not in the name of any particular state or even in the sole name of the parties, but in the name of the arbitral legal order, the coherence, efficacy, and efficiency of which the arbitrators must promote when resolving res judicata issues. Furthermore, if international arbitral awards draw their legitimacy and efficacy directly from the arbitral legal order, then their res judicata effects should also be determined by that legal order. In the same vein, if that arbitral legal order is founded on transnational law, then transnational rules of law should govern res judicata issues before international commercial arbitral tribunals, because accepting the existence of an arbitral legal order founded on transnational law is acknowledging that that legal order disposes of its own (transnational) sources to deal with res judicata issues. Finally, it could be questioned whether the res judicata doctrine would apply between state courts and international arbitral tribunals, given that the doctrine is traditionally said to apply only between courts and tribunals belonging to the same legal order.140 5.65 With respect to the applicability of the res judicata doctrine, it is submitted that

the doctrine must apply between international commercial arbitral tribunals and national state courts, even if the existence of an arbitral legal order is accepted. According to Shany, the res judicata doctrine applies between national and international courts; that is, between courts belonging to different legal orders, if ‘(1) the regulated interactions are not configured in a hierarchical manner; and (2) the judicial bodies involved in jurisdictional interactions are authorized to apply international jurisdiction-​regulating rules’.141

5.66 In relation to the first requirement, the res judicata doctrine applies only in a hori-

zontal context between parallel courts. Inferior court decisions do not usually bind superior courts.142 This requirement is met between international commercial arbitral tribunals and national courts. If recognized, the arbitral legal order would coexist in parallel with national legal orders.143 National courts and international commercial arbitral tribunals can be viewed as alternatives to one another.144 The same disputes or issues between the same parties may be submitted either before an international commercial arbitral tribunal or a national court. Indeed, ‘both are 140  See paras 2.130 et seq. See also ILA, Final Report, paras 29 and 34 et seq.; Rivkin, pp. 292 et seq.; William S. Dodge, National Courts and International Arbitration: Exhaustion of Remedies and Res Judicata Under Chapter Eleven of NAFTA, 23 Hastings International & Comparative Law Review 357, 367 (2000); Kaj Hobér, Res Judicata and Lis Pendens in International Arbitration, in Collected Courses of The Hague Academy of International Law, Vol. 366, pp. 263–​4 (cited as Res Judicata and Lis Pendens). 141  Yuval Shany, Regulating Jurisdictional Relations Between National and International Courts (2007), pp. 125 et seq. (cited as Regulating Jurisdictional Relations). See also Debourg, para. 95, p. 77 (‘l’opportunité d’une coordination du système arbitral avec les autres systems juridiques est réelle, même si l’on considère que l’arbitrage international forme un ordre juridique autonome’). 142  Shany, Regulating Jurisdictional Relations, p. 126. 143 See Clay, para. 265. 144 See Shany, Regulating Jurisdictional Relations, p. 126.

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B.  The Appropriate Approach dealing with a relationship between the parties which is governed by private law (and not by public international law)’.145 This means that there is no problem of ‘identicalness of disputes’146 between inter- 5.67 national commercial arbitration and domestic court proceedings. In public international law, it has been questioned whether disputes brought before tribunals belonging to different legal orders can ever possess the required degree of similarity for the doctrine of res judicata to apply; that is, whether the ‘same parties’ and ‘same issues’ test can ever be met.147 It is on this basis that it is often considered that a national judgment cannot constitute a res judicata before international courts and tribunals.148 However, because the same issues or disputes may arise between the same parties before international commercial arbitral tribunals and national courts, the res judicata doctrine should apply, even if they belong to different legal orders. The second requirement is also met as the applicability of the res judicata doc- 5.68 trine between international commercial arbitral tribunals and national courts is explicitly provided for by international commercial arbitration law and practice.149 Although Article III of the New York Convention does not contain detailed res judicata rules, it nevertheless provides for the application of the general principle by requiring national courts to consider arbitral awards as binding between the parties. The New York Convention therefore regulates the interactions between national courts and international commercial arbitral tribunals, inter alia, through the application of res judicata principles. Furthermore, as was seen in Chapter 4 , national courts and international commercial arbitral tribunals have continuously relied on the res judicata doctrine to consider whether they should be bound by prior awards or judgments. To the foregoing it might be added that the res judicata doctrine should apply be- 5.69 tween international commercial arbitral tribunals and national courts, because there is a need for coordination between international commercial arbitration and litigation, whether or not a separate arbitral legal order exists.150 Even if international commercial arbitration is largely self-​regulatory and operates to a great  ILA, Final Report, para. 35. See also Hobér, Res Judicata and Lis Pendens, p. 264.   Shany, Regulating Jurisdictional Relations, p. 144. 147  Ibid., p. 3 and p. 144. See also Ian Brownlie, Principles of Public International Law (6th ed. 2003), p. 50. 148  Shany, Competing Jurisdictions, p. 254; Brownlie, pp. 50 et seq.; PCIJ, Case Concerning Certain German Interests in Polish Upper Silesia (the Merits), cited in fn 148 p. 20. See Chapter 2, fn 102: PCIJ, Case Concerning Certain German Interests in Polish Upper Silesia (the Merits), Ser. A, No. 7. See also para. 2.84. 149  According to Shany, the doctrine of res judicata applies between national and international court judgments ‘when interactions between those courts have been explicitly or implicitly regulated in ways that confer res judicata status on those judgments or deprive them of a preclusive effect’ (Yuval Shany, Regulating Jurisdictional Relations, p. 161). 150  In this sense, see also Debourg, paras 95 et seq., pp. 76–​9. 145

146

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Chapter 5:  Search for an Appropriate Approach extent autonomously and independently, with only limited intervention by national arbitration laws and courts,151 international commercial arbitration is never entirely independent (or autonomous) from national legal orders. It needs their recognition and support.152 Admittedly, this does not compromise the existence of an arbitral legal order, given that a legal order does not necessarily have to be absolutely autonomous and self-​sufficient.153 5.70 Indeed, according to Santi Romano’s doctrine of the ‘plurality of legal orders’ (‘la

puralité des ordres juridiques’) there may be other legal orders besides the national legal order. Every legal order is an institution and every institution is therefore a legal order.154 An institution is defined as ‘tout être ou corps social’.155 The institution must exist; it must be a visible and permanent entity.156 It must also constitute a closed and autonomous entity. This does not mean that that entity or institution may not interact with other institutions. It may form a more or less integrated part of another institution and may even be subordinated to another legal order. Hence, the autonomy of an institution must not be absolute. While there are autonomous institutions that are perfectly self-​sufficient, others are less autonomous and cooperate with or depend on other institutions.157 Santi Romano uses the term ‘relevance’ to describe the relation between different legal orders; that is, to what extent one legal order takes another legal order into consideration. A legal order that is irrelevant to another legal order has no relation with the other legal order. For there to be relevance, the existence, content, and efficacy of one legal order must meet the requirements of the other legal order.158

5.71 Expressed in the words of Santi Romano, it may be said that an arbitral legal order

would not be in a situation of ‘irrelevance’ but relevance with regard to national legal orders. Such an arbitral legal order would ‘peacefully’159 coexist and cooperate with national legal orders. There are ‘gangways’,160 ‘contact points’,161 or ‘tentacles’162 between this arbitral legal order and national legal orders. These relations could be viewed as an illustration of Santi Romano’s relevance; as relations of collaboration between different legal orders.163 They need not necessarily be viewed as an integration of international commercial arbitration in a national legal order.   Racine, paras 45 et seq.  Lew, Achieving the Dream, p. 181. 153  Virally, p. 378. 154  Santi Romano, L’ordre juridique (1975), p. 19. 155 Ibid., p. 25. 156  Ibid., pp. 25 et seq. 157  Ibid., pp. 27 et seq. 158  Ibid. p. 106. 159 Bernardo M.  Cremades, Introduction, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M. Cremades and Julian D.M. Lew ed., 2005), p. 7. 160  Racine, para. 4. 161  Ibid., para. 4. 162 Lew, Achieving the Dream, p. 203. 163  Racine, para. 50. 151

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B.  The Appropriate Approach This situation of relevance would give rise to a need for coordination and co- 5.72 operation between international commercial arbitration and litigation to avoid contradictory decisions, akin to the coordination and cooperation between state courts from different jurisdictions. International commercial arbitral tribunals and state courts should apply res judicata principles, namely to ensure their peaceful coexistence with a view to achieving international harmonization of solutions. International commercial arbitration is contractual  The arbitration agree- 5.73 ment between the parties is the ‘foundation stone’ of international commercial arbitration.164 It is the foundation of the arbitral tribunal’s jurisdiction and of the validity of the award.165 The contractual foundation of international commercial arbitration distinguishes it from litigation. While the court’s power to adjudicate usually derives from statute,166 the source of the arbitral tribunal’s jurisdiction is contractual.167 This has several consequences for the treatment of res judicata issues. Even though res judicata is often qualified as an issue of admissibility rather than 5.74 jurisdiction,168 the problem of res judicata nevertheless presents itself to the arbitrators as a problem concerning their power to decide a given issue or dispute.169 International arbitrators, unlike judges, do not have a general power to adjudicate. Rather, they have a specific mandate to decide a particular dispute. This mandate is conferred upon them by the parties through the arbitration agreement, which means that the arbitrators must exercise their mandate in conformity with and within the boundaries of the arbitration agreement.

164  Alan Redfern, Martin Hunter, Nigel Blackaby, and Constantine Partasides, Law and Practice of International Commercial Arbitration (5th ed. 2009), para. 2-​01. 165  Poudret and Besson, para. 149. 166  Vulliemin, para. 91. 167 See Fouchard, L’arbitrage commercial international, p. 204 (‘ce qui distingue essentiellement un arbitre d’un juge, c’est l’origine de sa compétence: celle d’un juge découle de la loi, et s’ impose au justiciable; celle d’un arbitre provient uniquement de l’accord antérieur des deux parties en cause’). 168  See paras 4.88 and 4.89. See also Gretta L. Walters, Fitting a Square Peg into a Round Hole: Do Res Judicata Challenges in International Arbitration Constitute Jurisdictional or Admissibility Problems?, 29(6) Journal of International Arbitration 651, 665 et seq. (2012). On the distinction generally, see Jan Paulsson, Jurisdiction and Admissibility, in Global Reflections on International Law, Commerce and Dispute Resolution, Liber Amicorum in honour of Robert Briner (Gerald Aksen, Karl-​Heinz Böckstiegel, Michael J. Mustill, Paolo Michele Patocchi, and Anne Marie Whitesell ed., 2005), pp. 601 et seq. (cited as Jurisdiction and Admissibility). 169 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p.  189; Pierre Mayer, L’obligation de concentrer la matière litigieuse s’ impose-​t-​elle dans arbitrage international?, 2 Cahiers de l’arbitrage 413, 415 (2011). See also Christer Söderlund, Lis pendens, res judicata and the issue of parallel judicial proceedings, 22(4) Journal of International Arbitration 301, 305 (2005). See also Swiss Federal Tribunal decision 4A_​508/​2013 (ATF 140 III 278), para. 3.4. As was seen in para. 4.89, the Federal Tribunal held that where an arbitral tribunal renders an award on a claim that has already been finally decided in a prior judgment with res judicata effects, it ultimately exercises a jurisdiction (‘competence matérielle’) that it does not have.

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Chapter 5:  Search for an Appropriate Approach 5.75 When deciding whether and to what extent res judicata prevents them from exer-

cising their power to decide a given issue or dispute, the arbitrators may have to consider whether and to what extent this power exists under the arbitration agreement, namely by examining and interpreting the agreement. As was observed by Mayer, in certain circumstances they may find that the arbitration agreement does not (or no longer does) give them the power to decide the dispute or issue in question, or that this power exists in combination with another court’s or tribunal’s power to decide.170

5.76 Another consequence of the contractual foundation of international commer-

cial arbitration that may influence the way in which res judicata issues should be dealt with by international arbitrators pertains to what Mayer refers to as the lack of ‘interchangeability’ of arbitrators.171 In other words, international arbitrators, unlike judges, are not ‘interchangeable’. The jurisdiction of judges is based on a statute and exists independently of an agreement between the parties, except where it is based on a choice-​of-​court agreement. They exercise a public office and are a manifestation of state power.172 They exercise the same mandate and are interchangeable to the extent that they act within the boundaries of their jurisdiction. Since they are interchangeable, it does not matter which one of them decides the dispute.173 This applies even to judges from different jurisdictions.174

5.77 By contrast, international arbitral tribunals generally are not interchangeable.175

When concluding an arbitration agreement, the parties confer upon the arbitral tribunal the mandate to decide a particular dispute. Because parties have different preferences (for example, arbitration or state court proceedings, ad hoc arbitration or a specific arbitral institution, the seat of the arbitration, etc.176), they may decide to submit different disputes to different courts or tribunals in different places.177

5.78 Finally, as was noted previously, the parties’ arbitration agreement is not only the

foundation of the arbitral tribunal’s jurisdiction, but also of the award. Therefore, the effects of the award should also be determined in light of the arbitration agreement. In other words, the arbitration agreement thus constitutes ‘the proper frame of reference’178 for res judicata issues. When concluding an arbitration agreement, the parties generally agree to be bound by the awards rendered during the course 170 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 189. See also Cremades and Madalena, p. 539. 171 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, pp. 189 et seq. 172  Lew, Mistelis, and Kröll, para. 1-​8; Vulliemin, para. 91. 173 The relation between a court chosen by a forum-​ selection agreement and a court normally competent in the absence of a choice-​of-​court agreement should be reserved. As was seen in Chapter 2 , the Hague Convention on Choice of Court Agreements ensures that only the chosen court will decide the dispute covered by the agreement (see paras 2.43 et seq.). 174 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 190. 175  See also intervention by Reymond during the Débat du 7 février 2001 (Hascher, p. 38); Debourg, para. 266, p. 229. 176  Ibid., para. 266, p. 229. 177 Lew, Parallel Proceedings in International Arbitration, p. 311. 178  Born, p. 3769.

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B.  The Appropriate Approach of the arbitration and with respect to the dispute covered by the arbitration agreement. A contrario, the awards bind the parties by virtue and within the limits of their agreement.179 Therefore, arbitral tribunals should consider the arbitration agreement when dealing with res judicata issues. While the agreement will normally be silent with regard to res judicata, the agreement will ordinarily express expectations of finality, efficiency, and efficacy that must be taken into consideration.180 International commercial arbitration is private  International commercial ar- 5.79 bitration is based on a private arbitration agreement between the parties.181 On the basis of this private agreement, ‘private judges’—​that is, the arbitrators—​ render a private decision182—​that is, the award. A consequence of the private nature of international commercial arbitration is that 5.80 the arbitration agreement gives rise to private rights. With respect to res judicata, it has been submitted that the res judicata effect of an award is such a private right in that it results directly from the arbitration agreement;183 that is to say, the right to rely on the award in subsequent proceedings by virtue of the res judicata doctrine. When the parties conclude an arbitration agreement, their intention is to obtain the fair and final resolution of their dispute. This intention finally to resolve the dispute has been said to be ‘the purpose and very definition of an agreement to arbitrate’.184 The opinion that the res judicata effect of an award is a private right conferred on the par- 5.81 ties by the arbitration agreement is widely shared,185 but it is not generally accepted.186   Vulliemin, para. 263.   Born, p. 3769. See also Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 190; Radicati di Brozolo, p. 136; G. Richard Shell, Res judicata and collateral estoppel effects of commercial arbitration, 35 UCLA Law Review 623, 663 et seq. (1988). See also Premium Nafta Products Ltd and others v Fili Shipping Co. Ltd [2007] UKHL 40 (‘Only the agreement can tell you what kind of disputes [the parties] intended to submit to arbitration. But the meaning which parties intended to express by the words which they used will be affected by the commercial background and the reader’s understanding of the purpose for which the agreement was made. Businessmen in particular are assumed to have entered into agreements to achieve some rational business purpose and an understanding of this purpose will influence the way in which one interprets their language. . . . A proper approach to construction therefore requires the Court to give effect, so far as the language used by the parties will permit, to the commercial purpose of the arbitration clause’. According to Lord Hoffmann, the commercial purpose of the arbitration clause is that all disputes arising between the parties to the transaction should be finally and efficiently disposed of in the same forum, i.e. arbitration). 181  Lew, Mistelis, and Kröll, para. 1-​10. 182 Gaillard, Aspects philosophiques, p. 62. 183 See Born, pp. 3743 et seq. and 3769, with references. 184  Ibid., p. 3743. 185  See, e.g., ILA, Final Report, para. 68; Bernard Hanotiau, Complex Arbitrations (2005), p. 248; Jarrosson, L’autorité de chose jugée des sentences arbitrales; Born, pp. 3743 et seq. and 3769, with references; Shell, pp. 662 et seq. See also Associated Electric and Gas Insurance Services Ltd v European Reinsurance Co. of Zurich [2003] 1 WLR 1041, 1048, PC (‘It is true that [cause of action and issue] estoppels can be described as rules of evidence or as rules of public policy to stop the abuse of process by relitigation. But that is to look at how estoppels are given effect to, not at what is the nature of the private law right which the estoppel recognizes and protects . . .’). 186  E.g., in Switzerland res judicata is considered part of public policy and Swiss courts must consider res judicata issues ex officio. However, the Swiss Federal Tribunal left open the question 179

180

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Chapter 5:  Search for an Appropriate Approach 5.82 The fact that the parties usually bear the burden of multiple arbitration proceed-

ings supports the argument that res judicata is a private right. The state’s public interest is reduced to avoiding the costs and time related to the supportive and supervisory powers of the domestic courts.187 The parties generally bear the inconveniences of multiple arbitration proceedings. Therefore, one should look to the parties’ arbitration agreement to assess their willingness (or lack thereof) to bear the costs and inefficiencies resulting from the adjudication of a dispute that has already been decided by another court or tribunal.188

5.83 If the arbitration agreement and the award give rise to private rights, including

the award’s res judicata effect, then the parties should remain free to dispose of their private rights even after they have been determined in the arbitral award (or even in a court judgment), for instance by waiving them or entering into settlement agreements in respect of them, or by resubmiting them to a new arbitral tribunal.189 Moreover, if the res judicata effect of an award is a private right that derives directly from the arbitration agreement, then international arbitral tribunals would not have an obligation to consider res judicata issues ex officio.190 Based on the principle of party autonomy, this would be left to the parties, who would be allowed to waive the application of res judicata rules.191 Indeed, within the limits of the boundaries set by the lex arbitri, the parties have ultimate control over the arbitration and may determine its detail.192 Since the parties are allowed to control the proceedings and since the parties’ interests are primarily at stake, they should have their say with respect to res judicata.193 This should mean that res judicata as such would not form part of public policy.194 However, it should not necessarily mean that the coexistence within the same legal order of two contradictory, equal, and simultaneously enforceable decisions rendered between the same parties and with respect to the same subject matter would not be considered as violating that legal order’s public policy. whether an arbitral tribunal seated in Switzerland must also raise ex officio the res judicata effect of a previous decision invoked before it (see paras 1.165 and 4.82). The question arises whether public policy considerations can prevent the parties from waiving the res judicata effect of an arbitral award and starting a new arbitration or court proceedings in Switzerland. 187 ILA, Final Report, para. 68. 188  Born, p. 3769; Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 195, n. 26. 189 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 195, n. 26. 190  Söderlund, p. 304. 191 ILA, Final Report, para. 69; Söderlund, p. 304; Eric Loquin, De l’obligation de concentrer les moyens à celle de concentrer les demandes dans l’arbitrage, Rev. arb., No. 2 (2010), para. 50. 192  Lew, Mistelis, and Kröll, para. 1-​11. 193  In this sense, see Wolfgang Kühn, How to Avoid Conflicting Awards: The Lauder and CME Cases, 5(1) Journal of World Investment & Trade 7, 10 et seq. (2004); Radicati di Brozolo, p. 149. 194  In this sense, see also ILA, Final Report, para. 69.

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B.  The Appropriate Approach Other fundamental features of international commercial arbitration International 5.84 commercial arbitration may be described as being flexible, neutral, and confidential. These features may influence the way in which arbitral tribunals deal with res judicata issues. The flexibility of the arbitration procedure is a principal feature of international 5.85 commercial arbitration. While arbitral tribunals exercise the same task as national courts, the juridical framework is different in international commercial arbitration. It is usually more flexible, simpler, and closer to the parties.195 The parties are generally entitled to fix the arbitral procedure according to the needs of the particular case.196 It has been found that the flexibility of the arbitral procedure is one of the most widely recognized advantages of international arbitration.197 This speaks against the rigid application of domestic res judicata rules in international commercial arbitration. It also speaks against transnational res judicata rules that imitate the rigidity, technicality, and formality of domestic rules. The question arises to what extent transnational res judicata rules could or should usefully take into account the parties’ expectation of flexibility, for instance by allowing room for party autonomy with respect to issues of res judicata or by granting international commercial arbitral tribunals a certain freedom (‘liberté d’apprécitaion’198) when dealing with res judicata issues. In this respect, it must not however be forgotten that the res judicata doctrine’s underlying objective is to produce finality, legal certainty, and predictability, as well as fairness and procedural economy and efficiency.199 These policy considerations are promoted by the transnational approach, which is to provide where possible uniform rules, thereby ensuring more uniform and consistent solutions to res judicata issues which, in turn, would ensure a greater degree of efficiency, fairness, certainty, and predictability of the arbitration process.200 Granting international commercial arbitral tribunals broad discretionary powers with respect to res judicata might run counter to these policy considerations and instead produce rules and results that may vary from one arbitration to the other.201 International commercial arbitration may be said to be neutral in the sense that 5.86 it can be established in a neutral venue with no connection with either the parties or the dispute. This neutrality may enable arbitral tribunals to apply non-​national   Clay, para. 271.   Lew, Mistelis, and Kröll, para. 1-​16. 197  PWC/​SIA, International Arbitration: Corporate attitudes and practices 2006, p. 6, available at http://​w ww.pwc.co.uk. See also White & Case/​SIA, 2015 International Arbitration Survey: Improvements and Innovations in International Arbitration, p. 6, available at http://​w ww. arbitration.qmul.ac.uk/​research/​2015/​. 198 Jarrosson, L’autorité de chose jugée des sentences arbitrales. 199  See paras 4.03 et seq. 200  See paras 5.33 to 5.36. 201  In this sense, see Born, p. 3771. 195

196

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Chapter 5:  Search for an Appropriate Approach rules reflecting the nature and objectives of international commercial arbitration, as well as the expectations of the parties.202 It may also explain the arbitral tribunal’s loyalty to the parties. This distinguishes international arbitrators from judges who owe a duty to their state to safeguard the state’s laws and their underlying policies; they are the keepers of the state’s laws and values. The arbitrators, on the other hand, are the keepers of the parties’ interests.203 5.87 The fact that international arbitral tribunals owe their professional duty to the par-

ties may affect the way in which res judicata should be dealt with by the tribunals. This was expressed by Hobér in the following terms: [S]‌ubject to requirements of international public policy, however defined, the arbitrators have no obligations, and are not entitled to, take measures in the interest of other persons than the parties to the arbitration in question, even if such measures clearly would promote a sensible solution—​from a general point of view—​to problems that may have arisen through parallel or multiple proceedings. . . . Therefore, when discussing the options open to arbitrators and the duties of arbitrators to take measures to avoid undesirable effects of parallel or multiple proceedings one must always keep in mind [this limitation] on the powers of arbitrators. 204

5.88 The same idea was also expressed in ICC Case No. 10623 of 2001. This case did

not concern the res judicata effect of a prior award or judgment, but the question whether an arbitral tribunal is bound by an anti-​arbitration injunction issued by a court at the arbitral seat. However, the reasoning may apply mutatis mutandis in the res judicata context, in particular with regard to the question whether an international arbitral tribunal should be bound by a prior court decision concerning the jurisdiction of the arbitral tribunal. The arbitral tribunal held that it had discretion as to whether it should comply with the injunction. It decided not to suspend the arbitration on the ground that its primary duty was owed to the parties. The tribunal held in relevant part: An international arbitral tribunal is not an organ of the state in which it has its seat in the same way that a court of the seat would be. The primary source of the Tribunal’s powers is the parties’ agreement to arbitrate. An important consequence of this is that the Tribunal has a duty vis à vis the parties to ensure that their arbitration agreement is not frustrated. In certain circumstances, it may be necessary to decline to comply with an order issued by a court of the seat, in the fulfillment of the Tribunal’s larger duty to the parties. . . . The Tribunal owes a duty to the parties   Lew, Mistelis, and Kröll, para. 1-​23.   It could be argued that international arbitrators are part of a coherent system or even organs of an autonomous arbitral legal order. As such, they render their awards in the name of that arbitral legal order (see Gaillard, Aspects philosophiques, paras 60 et seq.). It follows from that line of argumentation that international arbitrators owe their professional loyalty not only to the parties, but to the arbitral legal order. They would be the keepers of the coherence, efficacy, and efficiency of the arbitral legal order (see also Debourg, para. 81, n. 149). 204 Hobér, Parallel arbitration, p. 250. 202 203

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B.  The Appropriate Approach to ensure that their agreement to submit disputes to international arbitration is rendered effective even where that creates a conflict with the courts of the seat of the arbitration.205

Finally, due to the private nature of international commercial arbitration, it is 5.89 often considered that arbitration is also confidential. This means that the existence of the arbitration, the subject matter, the evidence, the documents presented in the arbitration, and the arbitral tribunal’s decisions cannot be divulged to third parties.206 Where the parties in the second arbitration are not the same as those in the first arbitration, the confidentiality of the first arbitration could make it impossible for the second tribunal to take the first arbitration into account, even though both arbitrations are closely related.207 However, where the parties are the same, confidentiality should not constitute an obstacle to the application of res judicata principles. This was decided in Aegis v European Re where the Privy Council accepted a plea of issue estoppel, explicitly holding that any obligation of confidentiality does not apply as between the same parties in the second arbitration.208 In this case, Aegis obtained an injunction restraining European Re from divulging the first award in the second arbitration on the ground that it would breach the confidentiality of the first arbitration. The injunction was later discharged. The Privy Council refused to grant Aegis’s request to reinstate the injunction. It held that the purpose of the confidentiality agreement was to prevent the divulgation of materials which might be of value to persons with interests adverse to Aegis and European Re. However, ‘the otherwise legitimate use of an earlier award in a later, also private, arbitration between the same two parties would not raise the mischief against which the confidentiality agreement is directed’.209 The Privy Council held that a confidentiality agreement could not be construed so 5.90 as to prevent one party from relying upon a prior award against the other party: ‘If the winning party was precluded from referring to the award, it would be unable to enforce it, which would be fundamentally inconsistent with and frustrate the purpose of the arbitration.’210 c. Conclusion In relation to the res judicata effects of international arbitral awards, Jarrosson 5.91 said that, intuitively, one feels that the res judicata effect of arbitral awards must 205  ICC Case No. 10623, Award of 7 December 2001, ASA Bulletin, Vol. 21, No. 1 (2003), pp. 82 et seq., paras 128 and 138. 206  Lew, Mistelis, and Kröll, para. 1-​26. 207  Redfern, Hunter, Blackaby, and Partasides, para. 1-​113; Jarrosson, L’autorité de chose jugée des sentences arbitrales, para. B(1)(b); Hascher, p. 37. 208 Sheppard, Res Judicata and Estoppel, p. 235. 209  [2003] 1 All ER (Comm) 253, 258. 210 Ibid., 254.

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Chapter 5:  Search for an Appropriate Approach take into account the particularity of international commercial arbitration.211 The previous analysis of certain fundamental features of international commercial arbitration confirms this intuition. It has shown that several of these features influence the way in which international arbitral tribunals should deal with res judicata issues. 5.92 First, international commercial arbitration is autonomous from national legal

orders to the extent that several scholars even consider it as an arbitral legal order founded on transnational law. The autonomy of international commercial arbitration from national legal orders supports the application of transnational res judicata principles by international arbitral tribunals.

5.93 Such transnational res judicata principles should take into consideration several

characteristics of international commercial arbitration. Due to international arbitration’s contractual and private nature, and because international arbitral tribunals owe their professional duty primarily to the parties, arbitral tribunals should respect the parties’ agreements regarding res judicata.212 In the absence of specific party agreements, arbitral tribunals should in any case consider the parties’ legitimate expectations of finality, efficiency, and efficacy expressed explicitly or implicitly in the arbitration agreement. While the parties attach importance to the flexibility of arbitration proceedings, this should not result in the arbitral tribunals enjoying broad discretionary powers when dealing with res judicata issues as this may compromise the res judicata doctrine’s underlying objective of producing finality, legal certainty, and predictability.

5.94 However, it must not be forgotten that despite its particularities, international

commercial arbitration also bears a resemblance in several areas to domestic litigation with respect to res judicata,213 and important policy considerations underlying the res judicata doctrine apply both in international commercial arbitration and litigation. There remains a profound analogy between these two mechanisms of dispute resolution for the purposes of res judicata. 2. Sources of transnational res judicata principles

5.95 Whether or not the existence of an arbitral legal order is admitted, international

commercial arbitration disposes of its own sources. Indeed, the international arbitration community has continuously elaborated a vast body of autonomous rules. International commercial arbitration instruments, such as the New York Convention, the UNCITRAL Model Law and institutional arbitration rules, 211 Jarrosson, L’autorité de chose jugée des sentences arbitrales (‘Intuitivement, l’observateur sent que l’autorité de la chose jugée de la sentence ne pourra pas échapper à une certaine originalité, inhérente à cette forme particulière de justice qu’est l’arbitrage, qui se charactérise notamment par son origine conventionnelle et sa procédure peu formaliste’). 212  Radicati di Brozolo, p. 149. 213  See paras 5.43 et seq.

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B.  The Appropriate Approach procedural soft law formulated by professional organizations (to the extent that they reflect a general consensus), as well as an important international arbitration practice all bear witness to the existence of a common international commercial arbitration law.214 The existence of a ‘ jurisprudence arbitrale’ has been asserted by several scholars.215 In addition, the transnational law method described by Gaillard allows arbitral tribunals to elaborate new rules to deal with all issues arising before them.216 While international commercial arbitrations are also governed by national arbitration laws, today the influence of any particular national arbitration law on international arbitration is limited.217 International commercial arbitration law is characterized by its transnationality. 5.96 It is comprised of rules that are collectively recognized by the majority of states. International commercial arbitration law is transnational because it serves an international commercial arbitration community that is itself transnational. It is characterized by a lack of borders.218 The participants in an international arbitration are frequently from different jurisdictions with conflicting legal, cultural, political, and ethical systems.219 The arbitral seat is usually in a third jurisdiction. Furthermore, international commercial arbitrations are often subject to international arbitration rules and the merits are frequently resolved by reference to long and regulatory international contracts, as well as transnational commercial law.220 International commercial arbitration law and practice may therefore constitute a 5.97 primary source for transnational res judicata rules. In other words, international arbitral tribunals may examine international commercial arbitration law and practice to determine the effects to be given to prior awards and judgments. In Chapter 4 it was determined that international commercial arbitration law does 5.98 not provide any detailed res judicata rules for arbitral tribunals. Furthermore, save for a few exceptions, no clear res judicata rules emerge from international commercial arbitration practice. However, international arbitration law and practice 214  Racine, para. 48; Lew, Achieving the Dream, p.  196. See also Kaufmann-​Kohler and Rigozzi, para. 14. 215  See, e.g., Clay, paras 263 et seq.; Racine, para. 48; Mayer, L’autonomie de l’arbitre, pp. 426 et seq. See also interim award of 23 September 1982 in the Dow Chemical case (ICC Case No. 4131, 1982, Yearbook Commercial Arbitration, Vol. IX (A.J. van den Berg ed., 1982), p. 136 (‘The decisions of these tribunals progressively create caselaw which should be taken into account, because it draws conclusions from economic reality and conforms to the needs of international commerce, to which rules specific to international arbitration, themselves successively elaborated should respond’). 216  See para. 5.63. 217  See Kaufmann-​Kohler, p. 3 (‘The increased use of soft law in [international arbitration] is linked to globalization. Indeed, globalization has disempowered states and is increasingly less influential on the global scene. This disempowerment has weakened the functions traditionally fulfilled by states, including the operation of an adequate dispute resolution system’). 218  Clay, para. 262. 219  Lew, Mistelis, and Kröll, para. 1-​13. 220  Ibid., para. 4-​57.

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Chapter 5:  Search for an Appropriate Approach nevertheless lay down certain transnational standards for res judicata, which require arbitral tribunals to give certain res judicata effects to prior awards and judgments when certain requirements are met. 5.99 With respect to arbitral awards, the res judicata effect of awards forms an inherent

part of international commercial arbitration. It may even be said to constitute the objective of every arbitration.221 National arbitration laws and international commercial arbitration instruments require the recognition of the binding effects of awards. Article III of the New York Convention requires courts in contracting states to recognize awards as binding. Although the New York Convention is not directly applicable before international arbitral tribunals,222 it nevertheless establishes certain standards that arbitral tribunals must consider.

5.100 While international commercial arbitration law is generally silent on the res judi-

cata effects of prior judgments in international arbitrations, arbitration case law has shown on several occasions that prior judgments may have res judicata effects in arbitration proceedings and a failure to give res judicata effects to a prior judgment may result in the award being annulled or refused recognition or enforcement.223

5.101 The transnational res judicata rules to be applied by arbitral tribunals should be

developed in light of common international commercial arbitration law that derives from national arbitration legislation and court practice, as well as international commercial arbitration instruments, such as institutional arbitration rules and international arbitration conventions. The common international arbitration law may comprise rules and guidelines formulated by professional organizations to the extent that they enjoy general acceptance in international commercial arbitration practice.224 Transnational res judicata rules may also be developed in light of dominant tendencies emerging from international commercial arbitration practice.225 They should take into consideration the particularities and objectives of international commercial arbitration. In particular, they should pay close attention to the intentions and legitimate expectations of the parties. When choosing international arbitration, the parties will expect the final, fair, and efficient resolution of their dispute outside the realm of national courts. They will also expect a neutral arbitral tribunal free from the constraints of domestic laws and rigid procedures.   Born, p. 3745; Shell, p. 665.   Poudret and Besson, para. 72. 223  See Born who refers to several national court decisions rendered in France, Switzerland, and the United States (pp. 3774 et seq.). See also, e.g., the Cairo Regional Center for International Commercial Arbitration (CRCICA) Case No. 67/​1995, Award, 11 August 1996, Arbitral Awards of the Cairo Regional Centre for International Commercial Arbitration (M.E. Alam Eldin ed., 2000), pp. 153 et seq.; ICC Case No. 6363, 1991, Yearbook Commercial Arbitration, Vol. XVII (A.J. van den Berg ed., 1992), pp. 186 et seq.; ICC Case No. 6535, 1992, Collection of Arbitral Awards (1991–​1995) (Jean-​Jacques Arnaldez, Yves Derains, and Dominique Hascher ed., 1997), pp. 495 et seq 224  Born, p. 3771; Radicati di Brozolo, pp. 145 et seq. 225  See Gaillard, Aspects philosophiques, para. 118. 221

222

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B.  The Appropriate Approach But transnational res judicata rules for international commercial arbitration may 5.102 also usefully build on domestic res judicata rules designed for judgments. There are important similarities between international commercial arbitration and litigation with respect to res judicata. The policies of fairness, efficiency, upholding the integrity of the adjudication process, and effectuating the parties’ intentions apply in international arbitration, as well as in litigation.226 International commercial arbitration law and practice has developed not so much by the implementation of completely new and specific rules, but by the adaptation of traditional rules to new situations emerging from international commerce. Oppetit described this phenomenon as ‘acculturation juridique’.227 As mentioned earlier, general principles of law derived from comparative domestic 5.103 law constitute one of the several sources of transnational rules of law applied by international commercial arbitral tribunals.228 In addition, the application of such general principles derived from domestic res judicata rules appears a priori appropriate in international commercial arbitration.229 The parties will be familiar with transnational res judicata rules that are inspired by general domestic res judicata rules. It has been found that one of the most common explanations for avoiding transnational litigation is the parties’ anxiety about litigating under a foreign law before a court far from home, with a lack of familiarity with local court procedures and language.230 Formulating transnational res judicata rules inspired by domestic litigation rules would avoid the application of a foreign, unfamiliar, and possibly unexpected law to res judicata. At the same time, the parties would be familiar with the principles applied and the outcome would arguably be more foreseeable to the parties.231 In addition, due to the widespread recognition in national laws of the res judicata doctrine, the parties will probably expect the application of res judicata rules that resemble domestic res judicata rules to a certain degree. When choosing international commercial arbitration, parties do not generally seek to be judged differently than in court proceedings, in particular by the application of non-​legal principles based on morals and equity. They expect to be judged by the application of similar legal standards, albeit in a different legal environment. The exception is where the parties authorize the arbitral tribunal to act as amiable compositeur or ex aequo et bono.232

  Born, p. 3774. See also paras 4.04 et seq.  Oppetit, Philosophie de l’arbitrage commercial international, pp. 815 et seq. It has also been referred to as a ‘legal transplant’ (see para. 5.29). 228  See para. 5.32. 229  See para. 5.28. 230  PWC/​SIA, p. 5. See also White & Case/​SIA, 2015 International Arbitration Survey: Improvements and Innovations in International Arbitration, p. 6, available at http://​w ww.arbitration.qmul.ac.uk/​ research/​2015/​. 231 Gaillard, Aspects philosophiques, p. 113. 232  On the question whether parties in international arbitration seek to be judged in application of a jus naturalis, see Clay, pp. 222 et seq. 226 227

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Chapter 5:  Search for an Appropriate Approach 5.104 There appear to be no compelling reasons why international commercial ar-

bitral tribunals should not apply similar res judicata rules as national courts.233 Transnational res judicata rules for international arbitral tribunals could be inspired by the American Law Institute (ALI)/​International Institute for the Unification of Private Law (UNIDROIT) Principles of Transnational Civil Procedure which apply primarily in transnational commercial disputes and the aim of which is precisely to reduce uncertainties and anxieties related to litigation under unfamiliar procedural systems.234 Another (it was said the ‘most obvious’235) source of inspiration is the Brussels I Regulation, together with the case law of the Court of Justice of the European Union.236 Inspiration could also be sought in the public international law doctrine of res judicata which was developed on the basis of domestic res judicata rules.237 In any event, however, the extent to which transnational res judicata principles may build on domestic litigation rules on res judicata should be limited to avoid making arbitration look like litigation and compromising its flexibility. Domestic litigation rules on res judicata may provide ‘the starting point, not the end result, of analysis’.238 3. Legal basis for the application of transnational res judicata principles

5.105 The question arises as to whether and on which legal basis international commer-

cial arbitrators could apply transnational res judicata principles even in the absence of a corresponding choice of law by the parties.239

5.106 Based on the autonomy of international commercial arbitration, it may be argued

that arbitral tribunals are not required to apply any particular domestic res judicata rules, unless instructed to do so by the parties. A contrario, arbitral tribunals may apply transnational rules in the absence of an express choice of a national law by the parties.

5.107 According to Hascher, res judicata is a manifestation of the arbitrators’ judicial au-

thority (‘une manifestation du pouvoir juridictionnel de l’arbitre’240). This authority,

  Born, p. 3774.   See paras 2.59 et seq. 235 Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 265. 236  See paras 2.09 et seq. 237  See paras 2.67 et seq. 238  Born, p. 216 (‘it is true that the field of international arbitration draws essential doctrine and rules from contract law and from the law of civil procedure and judgments. But in many cases, particularly in international matters, these disciplines are at most analogies, providing the starting point, not the end result, of analysis. In all cases, it remains essential to categorize and treat arbitration as a distinctive and autonomous discipline, specially designed to achieve a particular set of objectives, which other branches of private international law fail satisfactorily to resolve’). 239  See Roger Alford, The ‘Transnational Approach’ of the ILA Recommendations on Res Judicata and Arbitration, Kluwer Arbitration Blog, 25 July 2009, available at http://​k luwerarbitrationblog.com. 240 Hascher, p. 25. 233

234

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B.  The Appropriate Approach in turn, is based on the common intention of the parties as expressed in the arbitration agreement. By reference to this common intention, the arbitrators may determine the existence and scope of their jurisdiction and, thus, the question of res judicata.241 As was seen earlier, it has been considered, in particular in France, that arbitration 5.108 agreements may be governed by transnational law in the absence of an express choice of national law by the parties.242 Hascher argues that it should be possible to adopt the same approach with respect to res judicata.243 This would be corroborated by the analysis of international commercial arbitration practice in Chapter 4 which has shown a certain readiness among arbitral tribunals, in particular in recent years, to replace the strict application of domestic res judicata rules with more pragmatic solutions that further the objectives of the parties’ arbitration agreement.244 Furthermore, according to Hascher, it appears to be accepted that the related doctrine of lis pendens is governed by the law governing the arbitration agreement, because lis pendens impacts on the agreement’s scope and efficacy.245 The same argument should apply to res judicata. If one adopts the opinion that arbitral tribunals do not have a lex fori and are not 5.109 organs of a state but of an arbitral legal order, then they are also not bound by any national system of private international law. According to Lalive, they should however be bound by transnational law, comprised of generally accepted principles.246 The doctrine of res judicata is widely recognized, either as a custom or a general principle of law. This means that res judicata principles are part of the transnational law that international arbitrators must apply, unless the parties have expressly chosen a national law to govern res judicata, or have waived the application of res judicata principles. According to Mayer, when determining the existence and scope of their jurisdic- 5.110 tion, international arbitrators are not bound to apply the rules of any legal order (national or otherwise). However, the arbitrators’ autonomy is limited by practical considerations, in particular the efficacy of their award.247 Another consideration is  Ibid., p. 25.   See para. 5.57. 243 Hascher, p. 25. 244  See para. 4.139. 245  Hascher, p.  25 with reference to ICC Case No. 6840, 1991, Collection of Arbitral Awards (1991–​1995) (Jean-​Jacques Arnaldez, Yves Derains, and Dominique Hascher ed., 1997), pp. 467 et seq. (‘L’autonomie juridique de la convention d’arbitrage entraîne la creation d’une règle matérielle spéciale aux termes de laquelle aucune concurrence ne peut intervener entre deux orders juridiques qui ne sont pas également competent’). 246 Lalive, Transnational (or Truly International) Public Policy, paras 43 et seq. and 152. See also Mitsubishi v Soler Chrysler Plymouth, 473 US 614, 636 (1985) (‘The international arbitral tribunal owes no prior allegiance to the legal norms of particular states; hence it has no direct obligation to vindicate their statutory dictates. The tribunal, however, is bound to effectuate the intentions of the parties’). 247 Mayer, L’autonomie de l’arbitre, paras 67 et seq. 241

242

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Chapter 5:  Search for an Appropriate Approach the advantage of creating transnational rules for international commercial arbitration and thereby to contribute to the harmonization of international commercial arbitration law.248 According to Mayer, res judicata should be governed by such rules.249 5.111 Admittedly, the above line of argument is not generally accepted. However, the

application of transnational res judicata rules is also supported by most modern national arbitration laws and institutional rules. As was seen earlier, modern arbitration laws and institutional rules do not generally require international arbitrators to apply any particular domestic law to the merits or procedure, but allow the application of non-​national rules of law.250

5.112 If (as is argued) res judicata pertains to procedure, 251 international arbitrators may

apply transnational res judicata rules because (in the absence of a party choice) they may generally conduct the procedure as they deem appropriate.252

5.113 However, the application of transnational res judicata principles may not always

be possible if res judicata is considered to pertain to substance. Under some arbitration laws and institutional rules, arbitrators cannot apply non-​national rules of law without the consent of the parties.253 Likewise, in the absence of party choice, arbitrators can sometimes apply non-​national law only if the dispute has its closest connection with that body of law.254 This has been held to be the case in exceptional circumstances where the contract in dispute is connected to several countries and it is impossible for the arbitrators to establish the ‘closest connection’ with any jurisdiction in particular.255

C. Conclusion 5.114 International commercial arbitral tribunals should generally be able to apply

transnational res judicata rules in the absence of an express choice of national law

  Ibid., paras 95 et seq.  Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, pp. 190 et seq. 250  See para. 5.58. 251  See para. 5.19. 252  See para. 5.58. 253  See, e.g., Article 1051(2) ZPO; section 46(3) of the EAA 1996; Article 28 ML; Article 35(1) of the 2010 UNCITRAL Arbitration Rules. It has been argued that the parties are presumed to have chosen transnational law if they have not expressly chosen a national law to govern their dispute (see Mayer, L’autonomie de l’arbitre, para. 73). Mustill refuted this suggestion in pertinent terms: ‘This striking proposition ignores the possibility that the choice of a national law was so obvious as not to be worth mentioning, or that the parties never thought about the matter at all. Moreover, even if the parties had in fact disagreed, there seems no warrant for inferring unanimity in favour of ruling out all potentially relevant national systems and substituting an anational system of which only the smallest minority of businessmen can ever have heard’ (Lord Michael J. Mustill, The New Lex Mercatoria: The First Twenty-​five Years, 4(2) Arbitration International 86, 101 (1988)). 254  See, e.g., Article 187(1) PILA. 255  Kaufmann-​Kohler and Rigozzi, para. 644; Mayer, L’autonomie de l’arbitre, para. 74. 248 249

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C. Conclusion by the parties. Complete arbitral autonomy, the conflict-​of-​laws approach, and a purely comparative law approach do not appear to be appropriate solutions satisfactorily to address res judicata issues before international arbitral tribunals. By contrast, the transnational approach is appropriate for several reasons. The transnational approach avoids inappropriate analogies between international commercial arbitration and litigation. Transnational res judicata rules may take into account the nature and objectives of international commercial arbitration, as well as the legitimate expectations of the parties. Particular attention should be paid to the parties’ arbitration agreement and to important expectations as to efficiency, flexibility, and finality. Finally, a coherent and harmonized approach towards res judicata before international arbitral tribunals could ensure more consistent solutions to res judicata. This in turn would provide an increased level of efficiency, fairness, certainty, and predictability in the arbitration process. International commercial arbitral tribunals should revert to the transnational 5.115 law method to determine res judicata principles. This means that international arbitrators should look for generally (not unanimously) accepted principles. Such general principles should be developed in light of international commercial arbitration law and practice. To the extent that they respect the particularities, nature, and objectives of international commercial arbitration, transnational res judicata rules for international arbitral tribunals also may usefully build on domestic res judicata rules.

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6 TR ANSNATIONA L R ES JUDICATA PR INCIPLES FOR INTER NATIONA L COMMERCI A L AR BITR A L TR IBUNA LS

1. Constituent elements of a res judicata  6.142 2. The scope of res judicata effects to be given to prior arbitral awards in international commercial arbitration proceedings  6.195 3. Requirements for the application of the res judicata doctrine  6.208 4. Conclusion  6.222

A . Res Judicata in Cases of Prior National Court Judgments Before International Commercial Arbitral Tribunals 

6.04 1. Constituent elements of a res judicata  6.16 2. The scope of res judicata effects to be given to national court judgments in international commercial arbitration proceedings  6.66 3. Requirements for the application of the res judicata doctrine  6.103 4. Conclusion  6.135

B. Res Judicata in Cases of Prior Arbitral Awards Before International Commercial Arbitral Tribunals 

C . Transnational Res Judicata Principles for International Commercial Arbitral Tribunals 

6.227 1. Transnational res judicata principles with respect to prior national court judgments  6.230 2. Transnational res judicata principles with respect to prior arbitral awards  6.239

6.139

6.01 The objective of this chapter is to identify res judicata principles for international

commercial arbitral tribunals based on transnational law. Given the lack of a universal res judicata doctrine and the uncertainty existing in international commercial arbitration law and practice as to how to deal with res judicata issues, a codification of transnational res judicata rules appears premature. The better approach seems to be to identify possible solutions in the form of guidelines to the problem of res judicata before international commercial arbitral tribunals. Ideally, a jurisprudence constante with respect to res judicata will emerge from international arbitration case law.

6.02 For the reasons discussed later, essentially the same res judicata principles should

apply to prior national court judgments and arbitral awards. Besides the advantage of simplicity, this reflects the current practice of international commercial arbitral 216

A.  Prior National Court Judgments tribunals, which treat judgments and awards alike for the purposes of res judicata.1 This solution is also justified by several similarities between international commercial arbitration and litigation with respect to res judicata. However, differences between international commercial arbitration and litigation 6.03 must be taken into consideration. In order better to take account of these differences, as well as for reasons of clarity, the following analysis will deal separately with res judicata issues arising out of prior judgments (A.) and awards (B.). After considering the constituent elements of a res judicata, the analysis will determine the scope of the res judicata effects to be given to prior judgments and arbitral awards and, finally, the requirements that must be met for prior judgments and awards to have res judicata effects in international commercial arbitration proceedings. Transnational res judicata principles for international commercial arbitral tribunals will be formulated in the conclusion to this chapter (C.).

A.  Res Judicata in Cases of Prior National Court Judgments Before International Commercial Arbitral Tribunals Before considering the constituent elements of a judgment capable of having res 6.04 judicata effects and the specific res judicata effects that such a judgment may have in international commercial arbitration proceedings, a preliminary remark should be made with respect to choice of law, in particular regarding the relevance of the national law of the country where the prior judgment was rendered. Chapter 5 concluded that international commercial arbitral tribunals should gen- 6.05 erally apply a transnational approach with respect to issues of res judicata. This general conclusion stands whether the prior decision is a national court judgment or an arbitral award as the underlying policy considerations of fairness, predictability, efficiency, and finality of the arbitration process are essentially the same. This is corroborated by arbitration practice. As was seen, international commercial arbitral tribunals do not seem to treat arbitral awards and judgments differently with respect to res judicata. That said, with regard to national court judgments, a distinction should be made 6.06 between the question whether a prior judgment constitutes a res judicata, on the one hand, and the preclusive effects to which it may give rise in an international commercial arbitration, on the other hand. As will be seen later, the law of the country where the national court judgment was 6.07 rendered may be relevant in determining whether the judgment constitutes a res judicata. Reference to that law is in line with the judgment’s origin in that national 1

  See para. 4.122.

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Chapter 6:  Transnational Principles legal order. The judgment having been rendered in the name of the state, the integrity of the rendering forum’s judicial system and that forum’s resources are also potentially affected by the subsequent arbitration proceedings.2 6.08 There are then two main approaches in transnational litigation to determine the

scope of the preclusive effects of a prior judgment in further proceedings in another country. According to the doctrine of extension of effects, a judgment must be accepted in the recognizing state with the original effects it would have in the state in which it was rendered. It is thus the law of the country where the first judgment was rendered that will determine the judgment’s preclusive effects in the further proceedings. The underlying rationale is that full faith and credit must be shown to judgments rendered in another state.3 Moreover, the application of the law of the rendering state to determine a judgment’s preclusive effects should preserve the integrity of the rendering state’s judicial system and that state’s resources.4 This appears to be the approach favoured (at least implicitly with regard to claim preclusion) under the Brussels I Regulation.5 It is also the approach adopted in the United States by the statute implementing the full faith and credit clause of the US Constitution.6

6.09 By contrast, according to the doctrine of equalization of effects, the effects of a for-

eign judgment are equalized with the effects that are obtainable before the courts of the recognizing state. This approach is based on the premise that the recognizing state has the right within its territory to afford the same preclusive effects to the recognized foreign judgment as it would give a corresponding national judgment. It has been justified by the fact that the res judicata defence can be described as a rule of evidence or as a principle of procedure designed to promote good faith in proceedings and procedural economy.7 Moreover, because the inefficiencies and

  Gary B. Born, International Commercial Arbitration (2009), p. 3768.   Peter R. Barnett, Res Judicata, Estoppel, and Foreign Judgments (2001), para. 7.10. 4  Born, p. 3768. 5  See para. 2.38. 6 D. Lasok and P.A. Stone, Conflict of Laws in the European Community (1987), p. 290 who refer to 28 USC (1964), §1738, implementing Article IV(1) of the US Constitution. 7  Barnett, para. 2.33; Colin Tapper, Cross & Tapper on Evidence (11th ed. 2007), p. 92; Born, p. 3768. See also Pierre Mayer and Vincent Heuzé, Droit International Privé (10th ed. 2010), para. 403; Jacob Van de Velden, The ‘Cautious Lex Fori’ Approach to Foreign Judgments and Preclusion, 61(2) International and Comparative Law Quarterly 519, 525 (2012). See also Associated Electric and Gas Insurance Services Ltd v European Reinsurance Co. of Zurich [2003] 1 WLR 1041, 1048, PC (‘It is true that estoppels can be described as rules of evidence . . .’). See also André Huet, Les Conflits de Lois en Matière de Preuve (1965), para. 126. According to that author, res judicata is governed exclusively by the lex fori of the court seized of the second proceedings. If res judicata was above all a presumption of truth, then the law of the country where the prior judgment was rendered would clearly have to govern res judicata. However, for Huet res judicata is less a presumption of truth than a means to put an end to proceedings and avoid inconsistent judgments. It is for the law of the country where the res judicata is invoked to determine whether and to what extent a prior foreign judgment may preclude subsequent proceedings in that country. In this sense, see also Sylvain Bollée, Les méthodes du droit international privé à l’épreuve des sentences internationales (2004), paras 337 and 345 et seq. 2 3

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A.  Prior National Court Judgments costs of relitigating a dispute are primarily borne by the state where relitigation is attempted, the law of that state should determine the preclusive effects of a prior foreign judgment.8 In England, the doctrine of equalization of effects applies at common law to foreign judgments recognized under the traditional rules.9 It is also the approach followed by the American Law Institute (ALI)/​International Institute for the Unification of Private Law (UNIDROIT) Principles of Transnational Civil Procedure.10 In Switzerland, the Federal Tribunal applies the concept of controlled takeover 6.10 of effects (‘kontrollierte Wirkungsübernahme’), combining the two approaches: a foreign judgment that may be recognized in Switzerland is generally equated to a Swiss judgment (equalization of effects). However, the law of the country where the foreign judgment was rendered will limit its preclusive effects in Switzerland, because a foreign judgment cannot have more or broader preclusive effects in Switzerland than it would in its country of origin. The recognition of a foreign judgment in Switzerland can only extend those preclusive effects to Switzerland that already existed under the law of the country where it was rendered; it cannot create any new preclusive effects (extension of effects).11 In international commercial arbitration, the effects to be given to a prior judg- 6.11 ment should be determined autonomously by transnational res judicata principles, taking into consideration the particularities and objectives of international commercial arbitration to ensure the efficiency, economy, and predictability of the arbitration process. In this sense, it may be said that international commercial arbitral tribunals should apply the doctrine of equalization of effects in that the preclusive effects of a judgment (or award) in further arbitration proceedings are determined by the international commercial arbitration system. As noted earlier, a national court judgment is part of the national legal order of 6.12 the country where it was rendered and that national legal order has the authority to specify which types of judgment can have res judicata effect and to what extent. The state has the authority to restrict the jurisdiction of its courts by prohibiting

  Born, p. 3768.   Barnett, para. 7.09. See also the House of Lords’ decision in Carl Zeiss Stiftung v Rayner & Keeler Ltd (No. 2) where the House of Lords confirmed that a foreign judgment can give rise to an issue estoppel where the traditional requirements of issue estoppel are met. However, it underlined that caution is required before granting issue preclusive effects to a foreign judgment, because it may be difficult for an English court to see whether the traditional requirements for issue estoppel have been fulfilled, namely whether a particular issue has been decided by the foreign court or whether a decision has formed the basis of a foreign judgment. Moreover, it might be unjust for a litigant to be estopped from bringing a case in England because he failed to do so in an earlier case of a trivial character abroad (see Dicey, Morris, and Collins, The Conflict of Laws (15th ed. 2012), para. 14.032). 10  Principle 30, comment P-​30B. 11  See Federal Tribunal decisions 4A_​508/​2010, para. 3.3 and 4A_​374/​2014, para. 4.2.2. See also para. 4.73. 8 9

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Chapter 6:  Transnational Principles them to reconsider matters that have already been finally decided by another court. However, this authority is limited to its territory.12 It fades once the judgment leaves the confines of the national legal order where it was rendered. At that point, the forum where relitigation is attempted, namely the international arbitration process, has the greater interest in determining the preclusive effects to be given to the judgment in accordance with its own interests and objectives. This is confirmed by the purpose underlying the res judicata doctrine, namely to promote procedural efficiency and economy and to avoid the wasteful repetition in the new forum of proceedings that the parties have already been through. 6.13 The full faith and credit argument cannot be relied upon to support the applica-

tion of the doctrine of extension of effects. This argument is often relied upon in federal structures, namely in the case of judgments rendered in sister states in the United States or within the system of the Brussels I Regulation.13 The full faith and credit argument is appropriate in these structures as they are built on mutual trust between sister states or Member States, as the case may be, as well as on the premise that the judges of sister or Member States are interchangeable. However, the same is not true in international commercial arbitration in that an arbitral tribunal seized of a particular dispute on the basis of an arbitration agreement cannot be considered as interchangeable with a state court.14

6.14 In addition, the doctrine of equalization of effects would ensure greater uni-

formity in the application of transnational res judicata principles by international arbitral tribunals. Under the doctrine of extension of effects, transnational res judicata principles would apply in conjunction with the domestic res judicata rules of the country where the prior judgment was rendered. By contrast, under the doctrine of equalization of effects international commercial arbitral tribunals would apply the same res judicata principles to determine a judgment’s preclusive effects no matter where it was rendered. Therefore, a prior judgment’s res judicata effects in international commercial arbitration proceedings would not vary depending on the country where the judgment was pronounced. The advantages would not only be greater uniformity and simplicity in the application of transnational res judicata rules, but also greater certainty and predictability for arbitration users.

6.15 Notwithstanding the points made in the previous paragraphs, to protect the effi-

cacy of their award, arbitral tribunals should take account of the law of the arbitral seat. Ignoring this law may prove imprudent in practice as it may lead to the setting aside of the award and thus constitute a waste of valuable resources.

12   Jean-​Marie Vulliemin, Jugement et sentence arbitrale, 60 Études suisses de droit international (1990), p. 50. 13   Barnett, para. 7.10. 14  See paras 5.76 et seq.

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A.  Prior National Court Judgments 1. Constituent elements of a res judicata As was seen in Chapter 1, there appears to be a certain consensus among the do- 6.16 mestic laws examined in this research on the constituent elements of a decision capable of having res judicata effects in subsequent proceedings, albeit that the precise definition of each constituent element may vary among domestic laws. Also, as was seen in Chapter 2, this consensus with respect to the constituent elements of a res judicata is broadly reflected in international law. Although expressed in different terms, a res judicata is usually a judicial decision rendered by a judicial court or tribunal that finally and conclusively determines a legal dispute between parties. It can, therefore, be argued that while the transnational law method determines the constituent elements of a national court judgment capable of having res judicata effects in further international commercial arbitration proceedings, reference to the law of the state where the judgment was rendered may be made to determine whether a certain constituent element exists in the particular case. a. A judicial decision Arbitral tribunals should normally be able to verify this element without major dif- 6.17 ficulties by reference to the law of the country where the judgment was rendered. As was seen in Chapters 1 and 2, a judicial decision can usually be described as any judicial adjudication that determines a legal dispute between the parties.15 b. A judicial tribunal In order to qualify as a res judicata, a judgment must generally be rendered by a ju- 6.18 dicial tribunal, which means that the court or tribunal must have the authority to decide a legal dispute by a final judgment. The law of the country where the prior court is located will determine whether this is the case. c. A final and binding decision A prior decision usually qualifies as a res judicata only if it is final and binding for 6.19 res judicata purposes.16 This finality requirement is expressed in different terms in different jurisdictions. However, finality usually means that the decision puts an end to the court’s jurisdiction over the decided matter. The decision is binding on the parties and cannot be reopened by further proceedings.17 While there appears to be some consensus on the meaning of the finality requirement, there is however no consensus on the precise moment when a decision becomes final and binding for res judicata purposes.18

  See paras 1.08, 1.93, 1.133, 2.17 et seq., and 2.78 et seq.   Walther J. Habscheid, Quelques questions fondamentales concernant l’autorité de la chose jugée en droit comparé, in Liber Amicorum Adolf F. Schnitzer, Vol. 61 (1979), p. 186. 17  See paras 1.11 et seq., 1.55 et seq., 1.95 et seq., 1.140 et seq., 2.88 et seq. 18  See para. 1.164. 15

16

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Chapter 6:  Transnational Principles 6.20 While English courts generally verify the res judicata status of a foreign judgment

by reference to English res judicata criteria, the requirement that the foreign judgment is final and conclusive is assessed with regard to the law of the country where the judgment was rendered. This was made clear by the House of Lords in Carl Zeiss (No. 2),19 where their Lordships ruled that a foreign judgment will only operate as a res judicata in England if it is final and conclusive before the foreign court that rendered it and according to the law of the country where it was pronounced; there is no provision in English law as to the finality of a foreign judgment in its country of origin.20 A similar solution prevails under Swiss law. While Swiss law defines the notion of a ‘final and conclusive decision’, it is the law of the country where the decision was rendered that determines whether the decision is final and conclusive as thus defined.21

6.21 This solution may also apply in international commercial arbitration. Subject to

an agreement by the parties, regard may be had to the law of the state where the prior judgment was pronounced to determine the moment at which the judgment becomes final and binding for res judicata purposes. It would not appear efficient for international commercial arbitral tribunals to grant preclusive effects to a prior judgment that is not final and binding and can still be altered in the country where it was rendered.22 Under the domestic laws analysed in this research, with the exception of Switzerland, the availability of ordinary means of recourse, such as appeal proceedings, does not generally have an impact on a judgment’s res judicata status.23

19  Carl Zeiss Stiftung v Rayner & Keeler Ltd (No. 2) [1967] 1 AC 853, HL. The House of Lords endorsed its decision in Nouvion v Freeman (1889) 15 App Cas 1, HL. In Carl Zeiss, Lord Reid said: ‘When we come to issue estoppel, I think that by parity of reasoning we should have to be satisfied that the issues in question cannot be relitigated in the foreign country. In other words it would have to be proved in this case that the courts of the German Federal Republic would not allow the re-​opening in any new case between the same parties of the issues decided by the Supreme Court in 1960, which are now said to found an estoppel here. There would seem to be no authority of any kind on this matter, but it seems to me to verge on absurdity that we should regard as conclusive something in a German judgment which the German courts themselves would not regard as conclusive. It is quite true that estoppel is a matter for the lex fori, but the lex fori ought to be developed in a manner consistent with good sense’. See also Naraji v Shelbourne MD and others [2011] EWHC 3298 (QB), para. 131; Merchant International Co. Ltd v Natsionalna Aktionerna Kompaniya Naftogaz Ukrayiny [2011] EWHC 1820 (Comm). 20 See Barnett, paras 2.35 et seq., in particular para. 2.41; Van de Velden, p. 525. 21 Stephen V.  Berti and Robert K.  Däppen, Ad Article 25 PILA, in Internationales Privatrecht (Heinrich Honsell, Nedim Peter Vogt, Anton K. Schnyder, and Stephen V. Berti ed., 2nd ed., 2007), para. 32. For a more nuanced view, see Andreas Bucher, Ad Article 25 PILA, Commentaire Romand—​L oi sur le droit international privé, Convention de Lugano, Basel 2011, para. 18. According to that author, while the assessment of the final and binding character of a foreign decision under Article 25 PILA may take ‘inspiration’ from the law of the country where the foreign judgment was rendered, such assessment is not dependent on such law, notwithstanding the wording of Article 29(1)(b) PILA. 22  In this sense, see also Peter Schlosser, Conflits entre jugement judiciaire et arbitrage, Rev. arb., No. 3 (1981), pp. 391 et seq. 23  See paras 1.11, 1.55 et seq., 1.95, and 1.140 et seq.

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A.  Prior National Court Judgments Ordinary means of recourse usually allow for a full review of the dispute, with re- 6.22 spect to both the facts and the law, and have suspensive effects in that the judgment in question may not be recognized or enforced. Subject to an agreement by the parties that the judgment is final and binding, it may thus be preferable to consider a prior national court judgment as final and binding once such ordinary means of recourse with suspensive effects are no longer available, in particular when the deadline for filing an appeal will expire or when a decision on the appeal is imminent. This may avoid inconsistent decisions being rendered. By contrast, it should generally be irrelevant for res judicata purposes if the prior judgment remains subject to extraordinary means of review.24 d. A judicial tribunal with jurisdiction over the parties and the subject matter? The question arises whether a national court judgment should have res judicata 6.23 effect in international commercial arbitration proceedings only if it was rendered by a court with jurisdiction over the parties and the subject matter. If so, the next question is in accordance with which law the court’s jurisdiction must be verified. In the rare situation where the prior judgment was rendered on exactly the same 6.24 facts and cause of action and between the same parties, the question whether the prior court had jurisdiction over the dispute overlaps with the arbitral tribunal’s decision on its own jurisdiction. If the arbitral tribunal decides that it has jurisdiction, then by the same token it also finds that the national court did not have jurisdiction.25 This, in turn, raises the question whether a national court judgment precludes the arbitral tribunal from examining its own jurisdiction. For the reasons set out later, it is submitted that international commercial arbitral tribunals should not be under a general duty to give preclusive effects to prior judgments on jurisdiction, unless there are compelling reasons for doing so, namely where this is in the interest of the parties and the speedy and efficient resolution of their dispute.26 If international commercial arbitral tribunals are generally not bound by a national 6.25 court’s decision on jurisdiction, then the question whether that court had jurisdiction is replaced by the arbitral tribunal’s determination of its own jurisdiction. This means that, rather than verifying the jurisdiction of the national court, the arbitral tribunal must determine its own jurisdiction. If the arbitral tribunal concludes that it has jurisdiction, it must then assess whether to exercise that jurisdiction. In general terms, it should do so if it is in the interests of the parties and the speedy and efficient resolution of their dispute. It may be argued that this is the case, a priori, 24  As will be seen later, this also reflects the solution suggested for determining the final and binding nature of prior arbitral awards (see paras 6.154 et seq.). 25  Pierre Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, in Liber Amicorum Claude Reymond, Autour de l’arbitrage (2004), p. 195 (cited as Litispendance, connexité et autorité de chose jugée dans l’arbitrage international). 26  See paras 6.41 et seq.

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Chapter 6:  Transnational Principles whenever there is a valid arbitration agreement, evidencing the parties’ intention to have their dispute finally resolved in arbitration proceedings, rather than by a national court. 6.26 If the judgment was rendered by a national court outside the arbitral seat, the

arbitral tribunal may conclude that the foreign judgment was rendered in violation of the arbitration agreement by reference to Article II(3) of the New York Convention (where the foreign court was in a contracting state of the Convention). As a result, the foreign court lacked international (or indirect) jurisdiction and its judgment cannot be recognized at the arbitral seat. By the same token, the foreign judgment cannot also preclude the arbitral tribunal from exercising its jurisdiction over the dispute.27

6.27 The issue is more difficult where the foreign court judgment falls under the

Brussels I Regulation. Paragraph 3 of Recital 12 of the recast version of the Brussels I Regulation reads as follows: where a court of a Member State, exercising jurisdiction under this Regulation or under national law, has determined that an arbitration agreement is null and void, inoperative or incapable of being performed, this should not preclude that court’s judgment on the substance of the matter from being recognised or, as the case may be, enforced in accordance with this Regulation. This should be without prejudice to the competence of the courts of the Member States to decide on the recognition and enforcement of arbitral awards in accordance with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1958 (‘the 1958 New York Convention’), which takes precedence over this Regulation.

6.28 Recital 12, paragraph 3 reserves the application of the New York Convention with

respect to the recognition and enforcement of arbitral awards. However, it does not do so with respect to national court judgments rendered on the merits of the dispute in disregard of an arbitration agreement and, thus, Article II(3) of the New York Convention. To the contrary, paragraph 3 of Recital 12 states that the Brussels I Regulation shall apply to the recognition and enforcement of court judgments on the merits which have been found not to be subject to a valid arbitration agreement by the courts of a Member State. Moreover, Article 45 of the recast Brussels I Regulation does not contain a ground for denying recognition and enforcement on the basis of a valid arbitration agreement. This means that the courts of a Member State called upon to recognize or enforce a foreign court judgment will not be allowed to review the international jurisdiction of the courts of other Member States on that basis. Therefore, it seems that a review of the application of Article II(3) of the New York Convention by the courts in another Member State would not be possible under the

27  This is the approach followed in Switzerland by the Swiss Federal Tribunal. See ATF 124 III 83.

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A.  Prior National Court Judgments recast version of the Brussels I Regulation.28 An arbitral tribunal seated in a Member State of the Brussels I Regulation might find that the foreign judgment can be recognized at the arbitral seat, notwithstanding the fact that it was rendered in violation of the arbitration agreement and Article II(3) of the Convention. In this situation, the arbitral tribunal might conclude that it would be contrary to the interests of the parties to exercise its jurisdiction and reconsider the merits of the dispute, given that the arbitral award will risk being set aside at the arbitral seat. A fortiori, reconsidering the dispute may not be in the interest of the parties and the 6.29 speedy resolution of their dispute where the courts at the arbitral seat have already rendered a final judgment on the merits of the dispute and there is no justifiable reason to believe that the court proceedings were manifestly abusive. Where a prior judgment was rendered between the same parties, and where the 6.30 dispute now before the arbitral tribunal overlaps only to a limited degree with what has already been decided in the judgment, the jurisdiction of the arbitral tribunal does not exclude the jurisdiction of the state court. Where the prior judgment was rendered in the same country as the arbitral seat, 6.31 the law of that country will determine whether the jurisdiction of the prior court is a constituent element of a res judicata and, if so, whether the court that rendered the first judgment had jurisdiction to do so. Where the prior judgment was rendered outside the country of the arbitral seat, it will generally suffice to verify the international jurisdiction of the prior court according to the private international law rules of the arbitral seat, without regard to the law of the country where the judgment was rendered. Where the prior national court judgment is foreign, the criteria to verify the res judicata status of a foreign judgment will often correspond to the criteria that must be met for the recognition of a foreign judgment.29 The court’s judgment will be recognized and have res judicata effect at the arbitral seat if the court had jurisdiction in the international sense. Whether the foreign court also had jurisdiction according to its lex fori is not usually regarded as material in the country of the arbitral seat.30

28  Gabrielle Kaufmann-​Kohler and Antonio Rigozzi, International Arbitration (3rd ed. 2015), para. 5.57; Louise Wilhelmsen, The Recast Brussels I Regulation and Arbitration: Revisited or Revised?, 30(1) Arbitration International 169, 176, 183–​4 (2014). 29  This is the case, e.g., in England. See Barnett, paras 2.01 et seq. For Switzerland, see Swiss Federal Tribunal decision 4A_​508/​2013 (ATF 140 III 278), para. 3.2., where the Federal Tribunal confirmed that a foreign state court decision that can be recognized in Switzerland will have res judicata effect vis-​à-​v is arbitral tribunals seated in Switzerland; Bernhard Berger and Franz Kellerhals, Internationale und interne Schiedsgerichtsbarkeit in der Schweiz (3rd ed. 2014), para. 1661. 30 For Switzerland, see Manuel Liatowitsch, Schweizer Schiedsgerichte und Parallelverfahren vor Staatsgerichten im In-​und Ausland (2002), pp. 75–​84; Berger and Kellerhals, para. 1662. For England, see Barnett, paras 2.18–​2.23. For France, see Mayer and Heuzé, paras 368 et seq.

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Chapter 6:  Transnational Principles e. A decision ‘on the merits’ 6.32 As was seen in Chapter 3, res judicata issues may arise with respect to: (i) prior judgments in an identical case involving the same dispute between the same parties, (ii) prior judgments in a different case, involving the same parties and an identical issue, (iii) prior judgments on jurisdiction, and (iv) prior judgments on interim measures. The question arises whether such judgments may have res judicata effects in arbitration proceedings; that is, whether they should be considered as ‘on the merits’ for res judicata purposes. 6.33 Prior judgments in an identical case  A prior national court judgment that fi-

nally disposes of the merits of the dispute in an identical case can undoubtedly be considered as ‘on the merits’ for res judicata purposes. Thus, it should in principle be able to have res judicata effect in arbitration proceedings. While this situation should be rare in practice, it may occur where the jurisdiction of the prior court is contested.31

6.34 As mentioned earlier, where the res judicata effect of a prior national court judgment

in the same case is invoked, the question of the arbitral tribunal’s own jurisdiction over the dispute is posed and whether it may exercise this jurisdiction.32 Again, a central question in this situation is whether the arbitral tribunal is bound by the prior court’s ruling on the existence and validity of the arbitration agreement.33

6.35 For the reasons stated previously, even if the arbitral tribunal were to consider that

it has jurisdiction over the dispute and that the parties have not waived their right to arbitration, where the prior judgment was rendered or can be recognized in the country of the arbitral seat, it might be contrary to the parties’ interests to reconsider the dispute if all the traditional res judicata requirements are met.34 Because an award rendered in this situation risks being set aside, reconsidering the dispute may prove to be a waste of time, money, and effort as most countries refuse to enforce an award that was annulled at the place of arbitration.

6.36 If the arbitral tribunal finds that it has jurisdiction and that the prior national court

judgment cannot be recognized at the arbitral seat, the judgment should not generally prevent the arbitral tribunal from reconsidering the dispute. However, the arbitral tribunal should in any event accord due deference to prior court judgments in an effort to promote procedural economy and efficiency and to avoid inconsistent results. As was seen in Chapter 4, this has been done by several International Chamber of Commerce (ICC) tribunals in situations where the tribunal found that the requirements for the application of the res judicata doctrine were not met.35

  See paras 3.04 et seq.   See paras 6.24 et seq. 33  See paras 6.41 et seq. 34  See paras 6.24 et seq. 35  See paras 4.173 et seq. 31

32

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A.  Prior National Court Judgments International arbitral tribunals may do so based on considerations of comity and the tribunals’ inherent authority to manage the proceedings in accordance with principles of justice and efficiency.36 In international commercial arbitration, this authority is often expressly provided for by national arbitration laws37 and institutional arbitration rules.38 It may be argued that considerations of coherence, efficiency, and international 6.37 commercial arbitration policy and comity may sometimes justify departing from a strict application of res judicata principles. If the arbitral tribunal concludes that it has jurisdiction over the dispute and that it would be in the interests of the parties to exercise this jurisdiction, then it would appear inconsistent for the arbitral tribunal to consider itself bound by the prior court judgment and to refuse to consider the dispute, always showing due deference to the determinations of the prior decision-​maker. While the arbitral tribunal will likely refuse to reconsider the case in the face of a prior judgment rendered or recognized at the arbitral seat, in some situations it may proceed to determine the dispute; for example, where it finds that the arbitration agreement is valid and that the prior judgment constitutes a manifestly abusive attempt to take the dispute out of the hands of the arbitrators. Because the parties generally bear the burden of multiple arbitration proceed- 6.38 ings, they should in principle be allowed to waive the res judicata effects of a

36  Yuval Shany, Regulating Jurisdictional Relations Between National and International Courts (2007), pp. 166 and 172 (cited as Regulating Jurisdictional Relations). This author advocates the application of the principle of comity in the context of competing jurisdictions of international courts and tribunals (‘According to [the principle of comity], . . . courts in one jurisdiction should show respect and demonstrate a degree of deference to the laws of other jurisdictions, including the decisions of judicial bodies operating in these jurisdictions. For instance, comity might justify the recognition of foreign judgments even in the absence of a formal judgment recognition treaty and may support reliance upon foreign court decisions as evidence of the law of their respective jurisdiction. The same principle . . . was invoked in situations of multiple proceedings to justify restraint in the exercise of jurisdiction and in the issuance of extraterritorial remedies, in order to minimize jurisdictional conflicts. There seems to be no compelling reason to restrict the application of the principle of comity to jurisdictional interactions involving domestic courts only. On the contrary, the same considerations supporting the application of the doctrine that can be found at the domestic level (e.g. courtesy, reciprocity, need to co-​ordinate multiple proceedings, and reluctance to facilitate evasion from applicable legal standards) apply, perhaps with greater force, in the international sphere, where courts and tribunals function under a common legal umbrella’. See Yuval Shany, The Competing Jurisdictions of International Courts and Tribunals (2003), pp. 260–​1 (cited as Competing Jurisdictions). The same author has submitted that ‘the notions of respect and courtesy represented by judicial comity imply that at a very bare minimum, courts should accord due consideration to the previous decisions of other national or international court[s]‌on the same issues and articulate reasons for deviating from those past decisions’ (Shany, Regulating Jurisdictional Relations, p. 181). 37  See, e.g., Article 182(2) of the Swiss Private International Law Act (PILA); sections 33(1)(b) and 34 of the English Arbitration Act (EAA) 1996; Article 1509 of the French Code de Procédure Civile (F-​CPC). 38  See, e.g., Article 19 of the ICC Arbitration Rules. See also Article 17(1) of the UNCITRAL Arbitration Rules.

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Chapter 6:  Transnational Principles court judgment and request the arbitral tribunal to reconsider the same dispute.39 However, the arbitral tribunal should verify that the parties have the right to waive the application of res judicata rules under the law governing the arbitration to avoid possible annulment proceedings against the award. This would be important where it is disputed whether the parties have waived the res judicata effects of a prior judgment rendered or recognized at the arbitral seat and one of them urges the arbitral tribunal to reconsider the dispute. If all parties request the arbitral tribunal to rearbitrate the case, they should normally bear the risk that the award will not be recognized or enforced in a country where the prior (contradictory) judgment was rendered or recognized. 6.39 Prior judgment in a different case  A prior judgment that finally disposes of the

merits of a dispute in a case that overlaps to a certain degree with the one before the arbitrators should, in principle, also be considered as ‘on the merits’ and be capable of operating as a res judicata in subsequent arbitration proceedings. As before, the arbitral tribunal should determine the existence and scope of its own jurisdiction and the extent to which the prior court judgment may preclude reconsideration of the case.

6.40 This raises the question of the scope of the res judicata effects that national court

judgments may have in international commercial arbitration, namely whether they may have positive res judicata effects or give rise to issue estoppel or abuse of process. This question will be examined in further detail below.40

6.41 Prior judgments on jurisdiction  Can a prior judgment on jurisdiction be con-

sidered as having res judicata effects in arbitration proceedings? This question arises where a national court has held, ‘on the merits’ and not merely on a prima facie basis, that there either is a valid arbitration agreement or that there is no such agreement.41 This may be the case, for example, where a national court accepts jurisdiction over a dispute on the basis that there is no valid arbitration agreement, that the arbitration agreement does not cover the dispute or the parties in question, or that it is inoperative, for instance because it has been terminated. Similarly, the question may arise in the case of a prior court’s declaratory judgment as to the existence or validity of the arbitration agreement.42 In these cases,

  See paras 5.82 et seq.   See paras 6.66 et seq. 41  Born, p. 3779. This means that no res judicata issue arises where a national court, based on a prima facie analysis, has held that there appears to be a valid arbitration agreement, where the court has stayed litigation as a matter of discretion, without rendering a decision on the validity of the arbitration agreement, or where it has held on the merits that there is a valid agreement to arbitrate the question of jurisdiction, leaving such jurisdictional decisions to the arbitrators. In all of these cases, the final resolution of the jurisdictional question is left to the arbitrators. Hence, these national court decisions cannot have res judicata effects in the arbitration proceedings (Born, pp. 3778–​9). 42  See ibid., pp. 3781 et seq. 39

40

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A.  Prior National Court Judgments the question is whether the prior judgment on jurisdiction has res judicata effect, barring the arbitral tribunal from examining its own jurisdiction. This question is controversial.43 It is delicate as there are serious arguments 6.42 both in favour and against granting preclusive effects to a prior judgment on jurisdiction.44 One may argue that a prior judgment on jurisdiction should have res judicata 6.43 effects in arbitration proceedings based on general res judicata principles, the applicability of which to international commercial arbitration is generally accepted.45 The arbitral tribunal’s decision on its own jurisdiction is not absolute, but is subject to subsequent judicial review by the supervisory courts in the arbitral seat or by the courts in the country where enforcement is requested. Moreover, courts are commonly considered to have the same power to rule on their own jurisdiction, and hence to examine the existence, validity, or applicability of the arbitration agreement, as arbitral tribunals. And there is no reason to presume that the court would not accurately assess its own jurisdiction and any jurisdictional issues regarding the arbitration agreement. Moreover, a party which does not consider itself bound by an arbitration agreement should not first be forced to seize an arbitral tribunal with a request for a declaration regarding the validity (or lack thereof) of the arbitration agreement and then commence proceedings before the competent court. According to this line of argumentation, the arbitral tribunal should give preclusive

43  Audley Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, Arbitral Procedure at the Dawn of the New Millennium, Reports of the International Colloquium of CEPANI, 15 October 2004 (2005), pp. 278 et seq. (cited as The Scope and Res Judicata Effect of Arbitral Awards). In Switzerland, Perret has argued that an arbitral tribunal is not bound by a prior judgment where the court accepts jurisdiction over the dispute after holding that the arbitration agreement is null and void (see François Perret, Parallel Actions Pending Before an Arbitral Tribunal and a State Court: The Solution under Swiss Law: Arbitral Tribunals or State Courts—​Who Must Defer to Whom?, ASA Special Series No. 15 (2001), pp. 68 and 77). According to others, if the judgment on jurisdiction was rendered in the country of the arbitral seat, the arbitral tribunal is bound by the judgment (Jean-​François Poudret, Concluding Remarks on Relationship Between State Courts and Arbitral Tribunals: Arbitral Tribunals or State Courts—​Who Must Defer to Whom?, ASA Special Series No. 15 (2001), p. 159; Pierre Lalive, Jean-​François Poudret, and Claude Reymond, Le droit de l’arbitrage interne et international en Suisse (1989), pp. 286 et seq. See also Andreas Bucher, L’examen de la compétence internationale par le juge suisse, Semaine Judiciaire—​ Doctrine, No. 5 (2007), p. 176). According to Bucher, if the judgment was rendered in a different country, the arbitral tribunal should examine its own jurisdiction. If it finds that it has jurisdiction according to the law governing the arbitration, it should proceed on the merits of the dispute. It is not bound by a prior judgment rendered by a court lacking international jurisdiction as its res judicata effects will not be recognized in Switzerland (Bucher, p. 191). On the position of the Federal Tribunal, see ATF 124 III 83 and Kaufmann-​Kohler and Rigozzi, paras 449a et seq. In England a prior judgment in which a court accepts jurisdiction after declaring the arbitration agreement null and void should be binding in arbitration proceedings. The court’s decision regarding the validity of the arbitration agreement is final and gives rise to issue estoppel in the arbitration (Born, pp. 2921 et seq.; Republic of Kazakhstan v Istil Group Inc. [2006] EWHC 448 (Comm), [2006] 2 Lloyd’s Rep 370, [2007] EWHC 2729 (Comm), [2008] 1 Lloyd’s Rep 382 (QB). 44 See Born, pp. 3779 et seq. 45  See paras 4.01 et seq.

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Chapter 6:  Transnational Principles effects to a prior court decision on jurisdiction under general res judicata principles if not doing so could lead to the annulment of the arbitral tribunal’s award in the arbitral seat. This would apply to prior jurisdictional decisions rendered by a court in the arbitral seat and to foreign court decisions, provided that the foreign court decision can be recognized in the arbitral seat. Indeed, the coexistence within the country of the arbitral seat of contradictory decisions on the jurisdiction of the arbitral tribunal would violate the public policy of the arbitral seat.46 6.44 By contrast, it has been argued by Born that no preclusive effects should be given

to prior court judgments on jurisdiction, regardless of whether the judgment was rendered in the country of the arbitral seat or elsewhere.47 This opinion rests on the arbitral tribunal’s autonomy from the courts of the arbitral seat and on the international character of the New York Convention, which imposes international obligations on its contracting states.

6.45 For Born, judgments which annul an award are not necessarily binding on the

arbitral tribunal or the courts of other countries, which may recognize and enforce annulled awards under the New  York Convention. And if the arbitral tribunal is not bound by the decisions of the annulment court, it is also not bound by the judgments on jurisdiction of the courts of the arbitral seat. 48 The courts at the arbitral seat have no absolute authority with respect to jurisdictional issues arising in an international arbitration. Rather, under the Convention, the courts of each contracting state have an independent, free-​standing obligation to consider the scope and effect of international arbitration agreements and to resolve those issues in accordance with the uniform international rules of formal and substantive validity of international arbitration agreements set forth in the Convention.49 Similarly, arbitral tribunals, charged with a mandate by the parties’ arbitration agreement, must consider ab initio the effect of the Convention on arbitral jurisdiction.50 If a valid arbitration agreement exists pursuant to the Convention, then a judgment on jurisdiction to the contrary (whether rendered by the courts at the arbitral seat or elsewhere) would not only be wrong but also an improper intrusion into matters reserved by the arbitration agreement for

46  This is the approach followed in Switzerland (see Berger and Kellerhals, paras 730–​1 and 1660–​4). See also Born, pp. 3779–​81; Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 202 (according to Mayer, an arbitral tribunal should be bound by a prior judgment rendered or recognized in the country of the arbitral seat. In this case, the second arbitral tribunal should decline jurisdiction over the dispute to avoid annulment of its award). 47 See Born, pp. 3781–​7. Born distinguishes between, on the one hand, judgments regarding the scope of the arbitration agreement, the termination or lapse of the agreement, or the waiver of an admitted right to arbitrate, and, on the other hand, judgments concerning the existence and validity of the agreement. According to Born, both types of jurisdictional judgments should not have any res judicata effects in arbitration proceedings. 48  Ibid., p. 3783. 49  Ibid., pp. 3783 and 3785. 50  Ibid., pp. 3783–​4.

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A.  Prior National Court Judgments determination by the arbitral tribunal. Born draws the conclusion that a judgment rendered in violation of the Convention, whether issued in an annulment context or otherwise, is illegitimate and not entitled to recognition and, as a result, to res judicata effects in arbitration proceedings. Born submits that prior judgments on jurisdiction should be relevant in an international arbitration as evidence only and arbitral tribunals should accord them due deference in an effort to minimize inconsistent outcomes. However, if the arbitrators conclude that the prior judgment is incorrect or denies arbitral jurisdiction on the basis of non-​a rbitrability or public policy, then the arbitral tribunal may disregard the prior judgment and reach a different conclusion. It is submitted that in application of general res judicata principles, prior court 6.46 judgments on jurisdiction may in theory have res judicata effects in arbitration proceedings, namely where such judgments have been issued ‘on the merits’ by the courts in the country of the arbitral seat or can be recognized in that country.51 Such judgments may commonly be considered as final and binding judicial decisions on the merits. However, in terms of international commercial arbitration policy, the better view appears to be that prior judgments on jurisdiction should not usually be binding on arbitral tribunals in order to strengthen the arbitral tribunal’s Kompetenz-​Kompetenz and protect the arbitration process from unjustified interferences by national courts and dilatory tactics designed to paralyse or avoid an arbitration that the parties have validly agreed. A party contesting the jurisdiction of the arbitral tribunal may validly seize the 6.47 courts at the arbitral seat directly with an action concerning the jurisdiction of the tribunal. The party may also in good faith initiate proceedings on the merits before a national court and obtain a judgment to the effect that the court, rather than the arbitral tribunal, has jurisdiction over the dispute. However, a prospective respondent in arbitration may attempt to gain an undue advantage by bringing the dispute before its own courts despite the existence of an arbitration agreement. The respondent may also obtain an anti-​a rbitration injunction on the ground

51  The question arises to what extent the res judicata doctrine can be applied consistently with respect to foreign court judgments on jurisdiction, at least when they are rendered outside the scope of application of the Brussels I Regulation or Lugano Convention. As will be seen later, it is often considered a requirement for the application of the res judicata doctrine that a foreign judgment be capable of recognition in the country of the other proceedings, which in turn usually requires that the foreign court had (international) jurisdiction to render the decision to be recognized. Arguably, this should generally not be the case where, under Article II of the New York Convention and the arbitral tribunal’s lex arbitri, the foreign court rendered its decision in violation of a valid arbitration agreement. Provided and to the extent that the international commercial arbitral tribunal can freely verify the existence of a valid arbitration agreement within the assessment of the recognizability of the foreign court judgment on jurisdiction, the question arises whether the foreign judgment on jurisdiction can be said to have res judicata effect in the arbitration proceedings, with the effect that the arbitral tribunal should be bound by and barred from reconsidering the jurisdictional issue finally decided in the foreign court judgment.

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Chapter 6:  Transnational Principles that the arbitration agreement is not valid. This ‘vexing problem’ was pertinently described by Paulsson: The subversion of an arbitration agreement is a grave matter. Instead of a neutral forum, the victim suddenly finds itself confronted by a jurisdiction which will judge its conduct according to a very different yardstick. Without even mentioning the unmentionable (corruption and xenophobia), everything is suddenly stacked in favour of the other side: language, procedure, practical convenience, ability to use one’s lawyers, cultural affinities with the decision-​maker . . . and the list goes on.52 6.48 In order to protect the international arbitration process against such scenarios, it

appears important to strengthen the arbitral tribunal’s autonomy from national courts. This can be achieved by strengthening the arbitral tribunals’ Kompetenz-​ Kompetenz, namely by allowing them to consider their jurisdiction and not be bound by the prior jurisdictional determinations of state courts, whether they are located in the country of the arbitral seat or elsewhere. In most cases, this should not pose a problem as courts and arbitrators should frequently reach the same conclusion with regard to arbitral jurisdiction, in particular where they are located in the same country.53

6.49 That said, arbitral tribunals cannot act ‘as if they did not belong to this world’.54

And while in theory they should be able to decide on their jurisdiction as if the prior judgment on jurisdiction had not been rendered,55 in practice they should not ignore but accord due deference to the prior jurisdictional determinations of national courts, in particular those of the courts at the arbitral seat, in an effort to promote procedural efficiency and economy and avoid inconsistent outcomes. Where a court at the arbitral seat finally decided that the arbitral tribunal does not have jurisdiction over the parties and the dispute, ‘it may be pointless, imprudent, or indeed unlawful’56 for the arbitral tribunal to act, absent other serious factors, in contradiction with the ruling, even if the arbitrators believe it to be wrong. This applies especially where the law of the arbitral seat clearly gives the court the authority to rule on the arbitral tribunal’s jurisdiction.57 If the arbitrators accept their jurisdiction despite the prior contradictory court ruling and proceed on the merits, their award will risk being set aside.

52  Jan Paulsson, Interference by National Courts, in The Leading Arbitrators’ Guide to International Arbitration (Lawrence W. Newman and Richard D. Hill ed., 2nd ed. 2008), p. 135. 53  Born, p. 3784. 54  Pierre Lalive, Transnational (or Truly International) Public Policy and International Arbitration, in Comparative Arbitration Practice and Public Policy in Arbitration, ICCA Congress Series, 1986, Vol. 3 (Pieter Sanders ed., 1987), para. 44. 55  Andrea Pinna, L’autorité de la chose jugée invoquée devant l’arbitre. Point de vue sous le prisme de l’ordre juridique français, 3 Cahiers de l’arbitrage 697, para. 6 (2010). 56  Paulsson, p. 125. 57  Ibid., p. 130.

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A.  Prior National Court Judgments Nevertheless, in certain situations international commercial arbitral tribunals 6.50 should be free to ignore the jurisdictional determinations of the courts at the arbitral seat, namely to fulfil their duty to the parties and ensure that the arbitration agreement is not frustrated. For example, this might be the case where the respondent in the arbitration is the state or state entity of the country of the arbitral seat. If the arbitrators have justifiable reasons to believe that the courts of the arbitral seat were used as an instrumentality of the respondent to avoid the arbitration, they should be entitled to ignore the court’s jurisdictional ruling. In these circumstances, the arbitrators may be justified in holding that the national courts were not entitled to interfere in the arbitration.58 Where the prior decision was rendered by a national court in a country other than 6.51 the arbitral seat, the arbitral tribunal should weigh the consequences of accepting its jurisdiction despite the prior judgment denying the arbitrators’ jurisdiction over the dispute, as the arbitral tribunal’s award may risk being refused recognition and enforcement in the country where the prior judgment was rendered or recognized. The arbitrators should also ensure that their refusal to give res judicata effects to the foreign judgment on jurisdiction will not impair their award’s efficacy at the place of arbitration as this may also result in the award being refused recognition and enforcement elsewhere. Where the national court and arbitral tribunal are located in different Member 6.52 States of the EU or the European Economic Area (EEA), the arbitrators will have to consider whether a prior court’s decision holding that there is no valid arbitration agreement is covered by the Brussels I Regulation or the Lugano Convention. Despite the arbitration exclusion in Article 1 of these instruments, the decision by the Court of Justice of the European Union (ECJ) in Allianz SpA v West Tankers Inc. made clear that the Brussels I Regulation applies to a Member State’s court decision on the merits of a civil or commercial dispute, in which the court accepted its jurisdiction and held preliminarily that there was no valid arbitration agreement.59 As a result, such decisions must be recognized 58  Ibid., p. 131; Born, p. 3783, with references cited at n. 276. For an illustration see, e.g., High Court, Dhaka, Himpurna California Energy Ltd v Republic of Indonesia, 5 April 2000, 15 Mealey’s Int Arb Rev (February 2000), pp. A1 et seq.; Supreme Court of Pakistan, HUBCO v WAPDA, 20 June 2000, Arbitration International, Vol. 16, No. 4 (2000), pp. 439 et seq.; ICC Case No. 10623, 2001, ASA Bulletin, Vol. 21, No. 1 (2003). These cases concern anti-​a rbitration injunctions. The reasoning may however apply, mutatis mutandis, in the res judicata context. 59 ECJ, Allianz SpA et al. v West Tankers Inc., Case C-​185/​07, 10 February 2009, 2009 ECR, p. I-​6 63 (‘If, because of the subject matter the dispute, that is, the nature of the rights to be protected in proceedings, such as a claim for damages, those proceedings come within the scope of Regulation No 44/​2001, a preliminary issue concerning the applicability of an arbitration agreement, including in particular its validity, also comes within its scope of application’). See also ECJ, Marc Rich & Co. AG v Società Italiana Impianti PA, Case C-​190/​89, 21 July 1991, 1991 ECR, p. I-​3855, para. 28; ECJ, Van Uden Maritime BV, trading as Van Uden Africa Line v Kommanditgesellschaft in Firma Deco-​Line and Another, Case C-​391/​95, 17 November 1998, 1998 ECR, p. I-​7091, para. 32.

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Chapter 6:  Transnational Principles in all other Member States, without the possibility of being able to review the prior court’s assessment of its jurisdiction, 60 including the prior court’s assessment of the validity of the arbitration agreement, 61 this notwithstanding the fact that the arbitration agreement would be valid according to the law of the place of arbitration.62 That said, under the second paragraph of Recital 12 of the recast terms of the Brussels I Regulation [a]‌ruling given by a court of a Member State as to whether or not an arbitration agreement is null and void, inoperative or incapable of being performed should not be subject to the rules of recognition and enforcement laid down in this Regulation, regardless of whether the court decided on this as a principal issue or as an incidental question. 6.53 Accordingly, it appears that Member State judgments on arbitral jurisdiction fall

outside the scope of the recast version of the Brussels I Regulation. As a result, there no longer appears to be an obligation for Member States automatically to recognize such judgments.

6.54 In light of the foregoing, a solution for international commercial arbitration could

be inspired by Article 186(1bis) PILA, according to which ‘[the arbitral tribunal] shall decide on its jurisdiction notwithstanding an action on the same matter between the same parties already pending before a State Court or another arbitral tribunal, unless there are serious reasons to stay the proceedings.’

60  Articles 33(1) and 35(3) of the Brussels I Regulation and Articles 26(1) and 28(4) of the Lugano Convention. A list of exceptions is provided in Article 35(1) of the Brussels I Regulation and Article 28(1) of the Lugano Convention. 61  Jan Kropholler, Europäisches Zivilprozessrecht (7th ed. 2002), p.  101, para. 46; Francesco Wicki, Lugano-​ Übereinkommen und Schiedsgerichtsbarkeit, in Three Essays on International Commercial Arbitration (2003), p. 312. 62 See decision of the English Court of Appeal in National Navigation Company v Endesa Generacion SA [2009] EWCA Civ 1397, para. 59 (‘A regulation judgment can however give rise to an issue estoppel as much in Arbitration proceedings excluded from the regulation as in any other proceedings in an English court’). This should not apply where the prior court’s judgment violates public policy (Article 34 (1) of the Judgment Regulation (JR) (EC Regulation No. 44/​ 2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters)/​A rticle 27(1) of the Lugano Convention). See, however, Hans Van Houtte, May Court Judgments that Disregard Arbitration Clauses and Awards be Enforced under the Brussels and Lugano Convention?, 13(1) Arbitration International 85, 90 (1997) (Van Houtte invokes a conflict between the Brussels and Lugano Conventions/​EC Regulation and the New York Convention. The recognition and enforcement of a judgment rendered in violation of Article II of the New York Convention could be considered as a violation of public policy); Hélène Gaudemet-​ Tallon, Compétence et Exécution des Jugements en Europe—​R èglement No. 44/​2001, Conventions de Bruxelles et de Lugano (3rd ed. 2002), para. 363 (according to Gaudemet-​ Tallon, a judgment should be considered as falling within the scope of the arbitration exclusion whenever there is a ‘serious’ debate regarding the existence of a valid arbitration agreement and lack of jurisdiction was raised in good faith by the respondent before the court that rendered the judgment. Because in these cases the judgment would not be covered by the EC Regulation/​Lugano Convention, the courts in the recognizing country would be allowed to review the international jurisdiction of the prior court and, thus, the jurisdiction of the arbitral tribunal. In this sense, see also Bernard Audit, Arbitration and the Brussels Convention, 9(1) Arbitration International 1

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A.  Prior National Court Judgments It is generally considered that the scope of this provision is limited to situations 6.55 of lis pendens and has no impact on the application of the res judicata principle by international arbitral tribunals, which remain under a duty to accept the res judicata effects of prior court decisions.63 However, it is also generally considered that the res judicata and lis pendens principles are ‘closely connected principles’ that ‘fulfill the same purpose’, namely to avoid the coexistence within a same country of contradictory decisions, and that it is thus ‘logical to treat [them] in the same manner’.64 It was on this premise that the Swiss Federal Tribunal based its decision in the Fomento65 case, which was the origin of the legislative reform that resulted in the adoption of Article 186(1bis) PILA. The res judicata principle addresses similar concerns as the lis pendens principle, but at a later stage of the proceedings, and the policy considerations underlying both principles are broadly comparable. One can therefore argue that the same policy considerations that have given rise to Article 186(1bis) PILA, namely to protect the effectiveness of the international arbitration process, should also apply with respect to res judicata to justify the application of the same solution to both lis pendens and res judicata situations. This would mean that international commercial arbitral tribunals would not have to give res judicata effects to prior judgments on jurisdiction, unless there are compelling reasons to do so, for instance where the courts at the arbitral seat have already rendered a final decision on arbitral jurisdiction and there is no reason to believe that the court proceedings were manifestly abusive. More generally, because the arbitral tribunal owes a professional duty to the parties, it can be argued that it may consider itself bound by a prior judgment on jurisdiction if that is in the interests of the parties and the speedy and efficient resolution of their dispute. Finally, as mentioned earlier and noted by Born, arbitral tribunals should in any 6.56 event accord due deference to the prior decisions of other decision-​makers, in an

(1993) (cited as Arbitration and the Brussels Convention); Sébastien Besson, Le sort et les effets au sein de l’Espace judiciaire européen d’un jugement écartant une exception d’arbitrage et statuant sur le fond, in Études de procédure et d’arbitrage en l’honneur de Jean-​François Poudret (Jacques Haldy et al. ed., 1999), pp. 343 et seq. (cited as Le sort et les effets au sein de l’Espace judiciaire européen d’un jugement écartant une exception d’arbitrage et statuant sur le fond). (According to Besson, when denying the existence of a valid arbitration agreement, the national court that rendered the prior judgment also decided on the material scope of application of the EC Regulation/​Lugano Convention. Because the material applicability of these instruments can be reviewed at the recognition and enforcement stage, the question of the arbitral jurisdiction can also be reconsidered at this point.) 63 See, e.g., Marco Stacher, Grenzen des Regelungsbereichs von Art. 186 Abs. 1bis IPRG, Schweizerische Zeitschrift für Zivilprozess-​und Zwangsvollstreckungsrecht 509 (2006), paras 43–​50; Sébastien Besson, The Relationship between Court and Arbitral Jurisdiction: the Impact of the New Article 186(1bis) PILS, in New Developments in International Commercial Arbitration 2007 (Christoph Müller ed., 2007), pp. 74–​5; Berger and Kellerhals, para. 1661. 64  ATF 127 III 279, 284. 65  ATF 127 III 279, 14 May 2001, Fomento de Construcciones y Contratas S.A. v Colon Container Terminal S.A.

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Chapter 6:  Transnational Principles effort to promote procedural economy and efficiency and to avoid inconsistent results.66 6.57 Prior judgments on provisional measures  Under most national laws and in-

stitutional arbitration rules, national courts have concurrent jurisdiction to issue provisional measures in aid of international commercial arbitration proceedings. Where a national court has granted or denied a request for provisional relief, an arbitral tribunal seized subsequently of the same request has to decide whether it is precluded by the prior court’s decision from reconsidering the request.

6.58 Interim or provisional measures, as the terms suggest, are intended to have provi-

sional effects pending the final resolution of the dispute. These measures are ordinarily not intended to have res judicata effects ‘in the conventional sense’,67 because they may be revised, reconsidered, modified, or revoked where the circumstances have changed or in accordance with new facts.68 However, provisional measures can be said to have at least some temporary preclusive effects in that the parties are bound by the measure until it is rescinded or modified and the court that rendered the measure cannot reconsider it, unless new facts emerge that change the basis on which it was rendered.69 Therefore, the question of the preclusive effects of a national court’s provisional measure in subsequent arbitration proceedings is posed.

6.59 That said, the question only arises where the arbitral tribunal is called upon to de-

cide in the same context as the national court, namely where the arbitral tribunal is requested to issue, lift, or alter a provisional measure that has previously been denied or granted by a national court. A court’s provisional measure cannot have res judicata effects with respect to the merits of the dispute before the arbitral tribunal, even if the court that rendered the measure considered issues relating to the merits, such as the likelihood of success on the merits. An arbitral tribunal deciding the merits of the dispute will not be bound by any determinations concerning the merits made by a national court in the provisional measure. The national court’s decision on provisional relief is limited in scope to questions regarding a prima facie claim, relevant to the requested measure. The arbitral tribunal, on the other hand, has exclusive jurisdiction over the merits of the dispute.70

6.60 Authority on the issue of the preclusive effect of a prior judgment on provisional

measures in international commercial arbitration proceedings is divided. As was seen earlier in this research, in ICC Case No. 4126 of 198471 and Order No. 5 of

  See para. 6.36; Born, pp. 3784.   Ali Yeşilirmak, Provisional Measures in International Commercial Arbitration (2005), para. 5-​63. 68  Ibid., para. 5-​63. 69  See, e.g., French and Swiss law (paras 1.97 and 1.138). 70  Born, p. 3788. 71  ICC Case No. 4126, 1984, Collection of Arbitral Awards (1974–​1985) (Sigvard Jarvin and Yves Derains ed., 1990), pp. 511 et seq. 66 67

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A.  Prior National Court Judgments 2 April 200272 the arbitral tribunal had to decide whether a party could seek provisional relief in the arbitration despite the fact that an identical or similar request for relief had previously been denied by a court. In both cases the arbitral tribunal considered the application of res judicata principles and ultimately refused to grant the request for provisional relief, albeit based on considerations of good procedural order and efficiency rather than res judicata.73 In ICC Case No. 4126, after finding that the party identity requirement was not met, the tribunal nevertheless denied the party’s request for interim relief based on ‘the rules of good procedural order’.74 Because the object of the new request was essentially identical to the object of the prior request and because there was no change in circumstances, the tribunal held that the party to both procedures was bound by the prior court decision denying the provisional measure. As was seen earlier, this decision was endorsed by the ICC tribunal in Order No. 5 of 2 April 2002.75 In line with these decisions, several commentators have argued that res judicata 6.61 principles should apply mutatis mutandis to prevent a party from filing the same application for provisional measures a second time before an arbitral tribunal, after its application has been rejected by a court, provided that the requirements for granting provisional relief are the same in both instances and the court first seized has complied with fundamental procedural guarantees. However, if a material change in circumstances has occurred since the national court’s decision on provisional measures, the arbitral tribunal should not be precluded from deciding the party’s application on provisional measures.76 Other commentators have argued that prior national court decisions granting pro- 6.62 visional relief should not have any preclusive effects before an international commercial arbitral tribunal seized of the same request. Because of the provisional nature of the measure, the arbitrators can review and alter the measures taken by national courts. Where there is a conflict between the provisional measures, the decision of the arbitral tribunal should prevail.77 This argumentation applies where a national court was seized of a request for provisional relief despite the existence of an arbitration agreement and, with particular force, where the arbitral tribunal has already been constituted and where the provisional relief requested from the national court is of the same kind as the relief ultimately sought from the arbitrators. 72 ICC, A v Z, Order No. 5, 2 April 2002, regarding Claimant’s request for interim relief, ASA Bulletin, Vol. 21, No. 4 (2003), pp. 810 et seq. 73  See paras 4.174 et seq. 74  See paras 4.135 et seq. for a quotation of the relevant passages in the award. 75  See paras 4.143 et seq. 76  Berger and Kellerhals, para. 1279; Jean-​François Poudret and Sébastien Besson, Comparative Law of International Arbitration (2007), para. 621, with references; Markus Wirth, Interim or Preventive Measures in Support of International Arbitration in Switzerland, ASA Bulletin, Vol. 18, Issue 1 (2000), p. 43. 77  Philippe Fouchard, Emmanuel Gaillard, and Berthold Goldman, International Commercial Arbitration (1999), para. 1330.

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Chapter 6:  Transnational Principles Because provisional measures can have a decisive impact on the outcome of a dispute, there is a risk that a court-​ordered provisional measure will take the dispute out of the hands of the arbitrators. To prevent this, the arbitral tribunal, which has exclusive jurisdiction over the merits of the dispute, should be able to alter a provisional measure previously granted by a national court if it considers this to be appropriate. In addition, the arbitral tribunal may have a much more complete factual and legal record of the case and may thus be best suited to decide the request for provisional measures. 6.63 According to yet another authority, arbitral tribunals should adopt a sui generis

analysis of preclusion issues in the context of provisional measures. Where a party’s request for provisional relief has been denied by a national court, it should not be allowed to renew its request before an arbitral tribunal. By contrast, the party that did not initiate the request for provisional measures before the national court should be allowed to apply to the arbitral tribunal to withdraw or revise a measure previously granted by the court.78

6.64 It is contended that arbitral tribunals should adopt this sui generis approach.

A party that was previously denied provisional relief before a national court on non-​jurisdictional grounds should not have a second bite at the cherry before the arbitrators. Unless there is a material change in circumstances, where the court proceedings respected fundamental principles of due process, the losing party usually has insufficient interest in repeating, against the will of the adverse party, proceedings which the parties have already been through. In these circumstances, the application of preclusion rules appears fully justified to prevent the wasteful and unnecessary reconsideration of the prior court decision. As seen previously, this approach is already followed by arbitral tribunals and is widely approved by commentators.

6.65 The question whether a party may apply to an international commercial arbi-

tral tribunal to have a provisional measure that has previously been granted by a national court lifted or altered is more difficult. Where a party has obtained provisional relief in aid of arbitration from a national court, over the objections of the adverse party, it can be argued that the court’s concurrent jurisdiction to issue provisional measures and the policy considerations of finality and efficiency justify the application of res judicata principles to preclude the arbitral tribunal from reconsidering the court’s decision.79 It is only where there has been a relevant change in circumstances between the time of the court decision and the subsequent application to an arbitral tribunal that the prior court’s decision on provisional measures should not have any preclusive effects in the arbitration. However,

  Born, pp. 3788 et seq.   Ibid., p. 3789. Born notes that where provisional relief was granted on an ex parte basis, there should be no preclusive effects from the resulting ex parte decision. 78 79

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A.  Prior National Court Judgments the better approach is to allow the party that did not request the provisional relief from a national court to apply to the arbitral tribunal to lift or alter a measure granted by the court. While the arbitral tribunal should always give due consideration to the court’s decision, it should have the authority to review the measure if it considers it to be appropriate. This approach better respects the arbitral tribunal’s position as the parties’ chosen mechanism for the resolution of their dispute.80 It also protects the arbitral tribunal’s jurisdiction over the merits by avoiding the risk that a court-​ordered provisional measure would take the dispute out of the hands of the arbitrators.81 2. The scope of res judicata effects to be given to national court judgments in international commercial arbitration proceedings Having determined the types of decisions that may have res judicata effects in inter- 6.66 national commercial arbitration proceedings, this section will examine the scope of the preclusive effects to be given to these decisions. Should these res judicata effects be limited to claim preclusive effects or also cover issue preclusive effects and abuse of process? As was seen earlier, the extent of the preclusive effects to be given to a national 6.67 court judgment should be determined by the policies underlying the res judicata doctrine, in light of the nature and objectives of international commercial arbitration. Put differently, it is for the international commercial arbitration system to determine a court judgment’s preclusive effects in accordance with its nature and objectives.82 This means that if policy considerations such as the finality, efficiency, economy, and predictability of the arbitration process so require, there should be no reason why a court judgment should not in principle have wide, common law-​style, preclusive effects in an international commercial arbitration. Moreover, given the contractual and private nature of international commercial arbitration, 83 there should be room for party autonomy with respect to issues of res judicata in that the parties themselves may agree, directly or indirectly, on how to deal with such issues, in particular whether and to what extent they will be bound in further arbitration proceedings by a prior court judgment (or arbitral award).84 The following analysis will consider the application in international commercial arbitration of the doctrines of claim preclusion (cause of action estoppel) (a.), issue preclusion (issue estoppel) (b.), and abuse of process (c.) with respect to national court judgments.

  Ibid., p. 3790.   In this sense, see Fouchard, Gaillard, and Goldman, para. 1330. 82   See paras 6.04 et seq. 83   See paras 5.73 et seq. and 5.79 et seq. 84   Luca Radicati di Brozolo, Res Judicata: Post Award Issues, ASA Special Series No. 38 (Pierre Tercier ed., 2011), p. 149. 80 81

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Chapter 6:  Transnational Principles a. Claim preclusion 6.68 The question of claim preclusion arises most often where a prior court judgment was rendered on the merits in a case involving a different claim than the one before the arbitral tribunal. This may occur in a situation where the same parties have concluded two or more related contracts, one without an arbitration clause or containing a choice-​of-​court agreement, and the other containing an arbitration clause. The national court may have rendered a judgment on claim X and claim X may then arise again before an arbitral tribunal seised of claim Y. The question is whether the arbitral tribunal is bound by the national court’s judgment on X. 6.69 Unless the parties agree otherwise, the arbitral tribunal seised of claim Y should

be bound by the prior judgment on claim X. The arbitral tribunal would normally have jurisdiction to decide question X as this preliminary issue is necessary for the resolution of question Y. However, because claim X was the main issue and not merely a preliminary issue in the prior court proceedings, the national court had a stronger interest in deciding X than the arbitral tribunal. Therefore, the parties’ interests in a speedy and efficient resolution of their dispute would command the arbitral tribunal to be bound by and to implement the court’s judgment.85

6.70 This solution is in line with the approach followed in domestic laws and public and

private international law. As was seen in Chapters 1 and 2, most domestic laws, as well as private and public international law, prevent the same parties from rearguing in further proceedings the same claim that has been decided in the operative part of a prior judgment.

6.71 Within the context of international commercial arbitral tribunals facing prior arbitral

awards,86 this solution is also confirmed by the final International Law Association (ILA) report and Recommendations on arbitration and res judicata.87 Indeed, the final ILA report and Recommendations go further in that they endorse a broad notion of claim preclusion under which res judicata is not only to be read from the dispositive part of the decision but also from its underlying reasoning.88 If it is clear from a prior arbitral award’s reasons that the dispositive part is to be interpreted in a way that bars further or subsequent arbitration proceedings, claim preclusion ought to follow for the sake of arbitral efficiency and finality. Giving res judicata effects to the prior award as well as its underlying reasons would prevent some evidence or legal argument regarding that cause of action being reargued.89

  See Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 198.   The ILA Final Report and Recommendations on Res Judicata do not deal with the relationship between state courts and arbitral tribunals (ILA, Final Report on Res Judicata and Arbitration and Resolution No. 1/​2006, Toronto Conference (2006), para. 11, available at http://​w ww.ila-​hq.org and in 25(1) Arbitration International 67 (2009) (cited as Final Report)). 87  See ILA Recommendation on Res Judicata No. 4.1 (para. 6.195); ILA, Final Report, para. 52. 88  See ILA Recommendation on Res Judicata No. 4.1 (para. 6.195); ILA, Final Report, para. 52. 89 ILA, Final Report, para. 52. 85

86

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A.  Prior National Court Judgments The question of adopting a broad notion of claim preclusion in international com- 6.72 mercial arbitration, giving res judicata effect not only to a prior court judgment’s dispositive part but also to the reasons that constitute its necessary foundation, is controversial. It overlaps with the question of issue preclusion; that is, giving preclusive effect to a particular issue of fact or law that was actually raised and decided in the reasons of an earlier judgment and the determination of that issue was essential or fundamental to the judgment. For the reasons set forth in the following section, it is submitted that the ILA’s approach with respect to claim and issue preclusion should be extended in international commercial arbitration to the relationship between national courts and arbitral tribunals, subject to the parties agreeing otherwise. b. Issue preclusion Authorities are divided on the question whether the doctrine of issue preclusion 6.73 should apply in international commercial arbitration. For instance, according to the ILA Final Report and Recommendations on arbitration and res judicata, based on considerations of procedural efficiency and finality, arbitral tribunals should grant preclusive effects to essential reasons that necessarily underlie a prior award and to issues of fact or law that were actually arbitrated and determined by the award, where that determination was essential or fundamental to the award.90 This endorsement of the common law concept of issue preclusion, at least insofar as international arbitral awards are concerned, has been approved by several practitioners and scholars.91 Conversely, it has been submitted by Mayer that, due to the lack of interchange- 6.74 ability between arbitral tribunals and national courts, it would not be appropriate in international commercial arbitration to give res judicata effects to reasons underlying prior court judgments,92 unless the parties agree otherwise. An arbitral tribunal seized of a particular dispute must be able to reach its own conclusions based on the parties’ submissions, without being bound by the determinations of particular issues of law or fact contained in the reasons of a prior judgment rendered in a different case between the same parties. An arbitral tribunal must be able to decide the dispute before it for its own reasons and based on its own opinions.93 90  Ibid., para. 56; ILA Recommendation on Res Judicata No. 4 (see para. 6.195) (as mentioned earlier at fn 86, the ILA Final Report and Recommendations on Res Judicata do not deal with the relationship between state courts and arbitral tribunals (ILA, Final Report, para. 11)). 91 See, e.g., Born, pp.  3767–​ 71; V.V. Veeder, Issue Estoppel, Reasons for Awards and Transnational Arbitration, Complex Arbitrations—​Perspectives on their Procedural Implications, ICC International Court of Arbitration Bulletin, Special Supplement (2003), pp. 73–​9; Bernard Hanotiau, Complex Arbitrations (2005), para. 549, with the references (‘It is however generally considered that res judicata extends to the reasons which are a necessary adjunct to the decision; that is to say, the ratio decidendi of the award. In other words, the fact that the latter is located in the body of the award rather than in its operative part is irrelevant’). More cautiously, see also Radicati di Brozolo, pp. 145–​8; Berger and Kellerhals, paras 1666–​71. 92  See Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, pp. 197 et seq. 93  Ibid., p. 198.

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Chapter 6:  Transnational Principles 6.75 It is submitted that the better view is to adopt the doctrine of issue preclusion in

international commercial arbitration, giving preclusive effect to the determination of a particular issue of fact or law that was actually raised and decided in the reasoning of an earlier judgment and the determination of that issue was essential or fundamental to that judgment. It is true that the doctrine of issue preclusion is not recognized on a worldwide basis. In particular, in civil law countries, such as France and Switzerland, the reasons underlying a judgment generally have no res judicata effect, even if they constitute the necessary foundation of the dispositif. The reasons may be considered only to interpret the meaning and scope of the dispositif.94 The ALI/​U NIDROIT Principles on Transnational Civil Procedure exclude the issue preclusion doctrine. Issue preclusion may be invoked only in exceptional cases when the relitigation of certain factual or legal issues would be clearly abusive.95 Moreover, it was seen in Chapter 4 that no established practice regarding the application of issue preclusion principles has so far emerged from international commercial arbitration case law.96

6.76 That said, it has been seen that today the issue preclusion principle appears to be

more and more widely applied. It is no longer limited to domestic laws of certain common law countries, but has been applied in public international law.97 It has also been applied by the ECJ in its application of the Brussels I Regulation.98 In addition, if not yet an established practice, at least a certain degree of readiness has been observed among international commercial arbitral tribunals to avoid the strict application of domestic res judicata rules and to take into account the nature and objectives of international commercial arbitration when dealing with res judicata issues.99 In particular, some arbitral tribunals have adopted a more flexible and pragmatic approach with respect to the scope of res judicata, applying issue preclusion principles in the interest of increased procedural economy and efficiency.100

6.77 As seen earlier, the narrow civil law approach is motivated first and foremost by

considerations of due process in that a party should not be bound in subsequent proceedings by the decisions contained in the reasons of a prior judgment that may have appeared to be of relative insignificance at the time of the first proceedings

94  See paras 1.102–​1.103 and 1.143–​1.144. It is worthy of note that, according to Héron, considering reasons to interpret and clarify a decision’s dispositif essentially has, as a result, to afford these reasons res judicata effects (Jacques Héron, Localisation de l’autorité de la chose jugée ou rejet de l’autorité positive de la chose jugéé?, in Nouveaux Juges, Nouveaux Pouvoirs? Mélanges en l’honneur de Roger Perrot (1996), para. 4). 95  See paras 2.61 et seq. 96  See paras 4.162 et seq. 97  See paras 2.95–​2 .99. 98  See paras 2.41–​2 .42. It should be noted that with respect to international arbitral awards, the broad notion of claim preclusion has also been adopted under Article 26.8 of the London Court of International Arbitration (LCIA) Arbitration Rules which came into effect in October 2014. 99  See paras 4.131 et seq. 100  See paras 4.168 et seq.

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A.  Prior National Court Judgments and thus received less attention. The granting of res judicata effects to a decision’s reasons could therefore lead to results that were unforeseen by the parties.101 Also, the fact that the importance of a specific issue could vary between legal actions seems to be of particular relevance in the relationship between national court and arbitration proceedings. Not granting issue preclusive effects to prior court judgments in arbitration proceedings may better respect the parties’ intention to submit a particular dispute to arbitration, to the exclusion of national courts. However, it is submitted that policy considerations of procedural economy and 6.78 efficiency of the arbitration process,102 the parties’ expectations regarding finality, and concern to avoid contradictory decisions militate in favour of giving res judicata effect to reasons that are the necessary foundation of an earlier judgment’s dispositif. It is in line with an increasingly recognized general interest to reduce the cost and increase the speed and efficiency of international arbitration proceedings, and to avoid abusive tactics and attempts to have an unjustified second chance of success.103 It is true that the application of the issue preclusion principle may raise issues of due 6.79 process. The question is whether a particular issue was actually raised and debated between the parties in the prior proceedings. Regarding reasons and decisions on issues that constitute the necessary foundation of a prior court judgment’s dispositif, the risk of violations of due process appears minor as it is likely that such reasons and issues were raised and seriously debated between the parties. Admittedly, the risk is not non-​existent as the applicable legal tests or rules on burden of proof may not be the same in both sets of proceedings. Moreover, a party that disagrees with a particular issue in a judgment’s reasons, independent of the judgment’s dispositif, might choose not to bring an appeal against that judgment and thus not fully litigate the particular issue.104 However, with respect to fundamental reasons that constitute the necessary foundation of a judgment’s dispositif the balance weighs in favour of finality, fairness, procedural economy and efficiency, and the consistency of the adjudication system. Allowing a party to relitigate a reason or issue that was essential to a judgment’s result not only brings into question that judgment’s foundation and coherence but also allows a party to relitigate an issue that has already been decided between the same parties in an earlier judgment and to obtain an arbitral award that is inconsistent with that judgment. Therefore, unless the parties   See para. 1.161.   As was seen earlier (para. 4.188), the 2006 PWC/​SIA survey and the 2015 White & Case LLP/​ SIA survey have shown that procedural economy and efficiency are important concerns of international arbitration users (PWC/​SIA, International Arbitration:  Corporate attitudes and practices 2006, available at http://​w ww.pwc.co.uk; White & Case/SIA, 2015 International Arbitration Survey: Improvements and Innovations in International Arbitration, available at http:// www.arbitration.qmul.ac.uk/research/2015/). 103  Radicati di Brozolo, p. 147, regarding the ILA’s Recommendation No. 5, which provides for an ‘obligation of concentration’. However, the same consideration applies with respect to issue preclusion. 104  Claire Debourg, Les contrariétés de décisions dans l’arbitrage international (2012), para. 487. 101

102

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Chapter 6:  Transnational Principles agree otherwise, the res judicata effect of a judgment should extent to essential reasons that constitute the necessary foundation of the judgment’s dispositif. 6.80 Accordingly, issue preclusion should generally apply where an arbitral tribunal

seized of a dispute has to decide preliminary issue X, and issue X has already necessarily been determined as a preliminary issue in the reasoning of a prior judgment in a different case between the same parties. In this situation, the arbitral tribunal does not have a greater interest than the national court in determining the particular preliminary issue. Their interest in the determination of the particular issue being equal, the above-​mentioned policy considerations weigh in favour of the arbitral tribunal being bound by determinations of essential issues of fact or law that were actually raised and determined between the same parties in the reasons of the earlier judgment.

6.81 However, the application of issue preclusion appears difficult where an arbitral

tribunal is seized of question Y as the main issue in the arbitration, and the same question has already been decided as a necessary preliminary issue in the reasons of a court judgment between the same parties involving a different claim. As noted earlier, this may occur if the same parties have concluded two or more related contracts, one without an arbitration clause or containing a choice-​of-​court agreement, and the other containing an arbitration clause. The question of the existence, validity, or performance of the second contract, which contains the arbitration clause, may arise as a necessary, preliminary issue before the national court in the determination of a claim arising out of the related first contract. Because the court decided the question as a preliminary issue, it did not have an equal, let alone greater, interest than the arbitral tribunal in deciding the question. On the contrary, if the arbitral tribunal was seized to determine question Y on the basis of a valid arbitration agreement, it has exclusive jurisdiction to decide that question, to the exclusion of the courts; the latters’ jurisdiction to determine preliminary issues that would normally fall outside their jurisdiction being reserved.

6.82 In this situation, given the lack of interchangeability between an international

commercial arbitral tribunal and a national court, it cannot be said that the national court is as entitled as the arbitral tribunal of resolving the question in dispute. Rather, the arbitral tribunal appears to have a greater interest than the national court in determining question Y. As a result, it should generally not be bound by the earlier court’s decision on a preliminary issue where the same issue arises as the main issue before the arbitrators.105

6.83 Not applying issue preclusion principles in this situation appears to be generally

in line with the private and contractual nature of international commercial arbitration and the parties’ intentions and expectations as expressed in the arbitration

  In this sense, see Hanotiau, paras 555–​6, with references.

105

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A.  Prior National Court Judgments agreement. Where the parties have concluded an arbitration agreement with respect to a dispute arising out of or in connection with a particular contract, namely question Y as a main issue, they presumably intended to have question Y finally determined by an arbitral tribunal, not a state court. Conversely, while the parties may agree to have a state court determine question Y as a preliminary, albeit necessary, step in the resolution of a different claim arising out of a different but related contract, they presumably did not intend to be bound by the determination of that preliminary issue in the arbitration. In this sense, it can be said that the state court did not have jurisdiction to ‘finally decide’ the preliminary issue, the final determination of that particular issue falling squarely within the scope of the arbitration agreement and thus under the exclusive jurisdiction of the arbitral tribunal. Therefore, the state court did not ‘finally decide’ the preliminary issue, and instead simply determined it for the purpose of deciding a claim dependent on that preliminary issue.106 Moreover, it can be argued that the parties restricted the scope of the earlier judgment’s preclusive effect in the arbitration by means of the arbitration agreement, namely excluding such preclusive effects with respect to issues that were determined as preliminary issues in the reasons of the judgment, but that constitute the main issue in the arbitration and thus fall within the exclusive jurisdiction of the arbitral tribunal. Because the parties bear the inconvenience of rearbitrating the preliminary issue in the arbitration proceedings, their agreement to limit the earlier judgment’s preclusive effects in the arbitration should be respected.107 In this situation, the policy considerations of the economy and efficiency of the arbitral process and the risk of inconsistent decisions are trumped by the parties’ intentions as expressed in the arbitration agreement and therefore cannot be regarded as the determining factors. The lack of ‘interchangeability’ between a national court, on the one hand, and an international commercial arbitral tribunal that has received a specific mandate to resolve a particular dispute, on the other hand,108 militate against applying issue preclusion principles in this situation. Clearly, this does not prevent the arbitral tribunal from showing due deference to the earlier judgment’s determinations on preliminary issues to promote consistency and procedural economy and efficiency. The question arises whether, instead of providing for the general application of 6.84 issue preclusion in international commercial arbitration, it would be preferable to grant arbitral tribunals broad discretionary powers with respect to issue preclusion to allow them to assess in the circumstances of each particular case whether the application of such principles would be warranted. It was seen earlier that the ALI’s Restatement (Third) US Law of International Commercial Arbitration provides for such an approach, allowing the arbitral tribunal to take into consideration 106   François-​X avier Train, Les contrats liés devant l’arbitre du commerce international (2003), para. 429. See also Hanotiau, para. 556. 107   See para. 5.82. 108  See paras 5.76–​5.77.

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Chapter 6:  Transnational Principles factors such as the parties’ reasonable expectations and the fact that parties to an international commercial arbitration may come from a country that does not recognize the doctrine of issue preclusion.109 6.85 Against making the application of issue preclusion principles subject to the

discretion of the arbitral tribunal, Born has argued that ‘this approach does little to produce either uniform international results (instead producing rules and results that vary from forum to forum) or predictability (instead introducing an undesirable element of “discretion” into a doctrine aimed at producing finality)’.110

6.86 For the reasons set forth above, it is submitted that the better approach would be

to provide for the application of uniform rules of preclusion, including issue preclusion, as this would be more compatible with the objectives of the transnational approach and the policy considerations underlying the res judicata doctrine, namely to produce finality, legal certainty, and predictability, as well as fairness and procedural economy and efficiency.111 Granting international commercial arbitral tribunals broad discretionary powers with respect to res judicata would run counter to these objectives and policy considerations.112

6.87 However, this does not mean that there should not be any exceptions to the general

applicability of issue preclusion principles by international commercial arbitral tribunals with respect to prior national court judgments. As was seen in Chapters 1 and 4, English and US law provide for several exceptions to the application of issue preclusion principles both in the context of litigation and international arbitration. Such exceptions include general fairness considerations or the application of a different burden of proof regarding different claims. It appears premature to provide detailed uniform, transnational rules with respect to possible exceptions to issue preclusion.113 Rather, the precise content of such rules should be developed progressively by international commercial arbitral tribunals.114

6.88 Finally, when applying issue preclusion principles, international commercial arbi-

tral tribunals with their seat in a civil law country may take into consideration the law of the country of the arbitral seat to ensure that their giving issue preclusive effects to an earlier national court judgment, contrary to the domestic law on res judicata, will not impair the award’s efficacy at the place of arbitration and, by extension, its recognition and enforcement abroad. However, as observed earlier, the

109  See paras 4.53–​4.54. It is worthy of note that the House of Lords in Carl Zeiss Stiftung v Rayner & Keeler Ltd (No. 2) also called for particular caution when applying the issue estoppel doctrine in an international context (see fn 9). 110  Born, p. 3771. See also para. 5.85. 111  See paras 4.03 et seq. 112  See paras 5.85 and 5.114–​5.115. 113  In this sense, see ILA, Final Report, para. 58. 114  In this sense, see Born, p. 3771.

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A.  Prior National Court Judgments risk of the award being set aside on grounds of due process violations would appear minor where the issues of fact or law were essential to the earlier judgment, where such issues were raised and seriously debated between the parties, and were decided in application of essentially the same legal tests. Regarding public policy considerations, it should be recalled that in France res judicata as such is not considered part of public policy. For there to be a violation of public policy an award must be irreconcilable with the earlier judgment.115 However, because the application of issue preclusion would further promote consistency and avoid irreconcilable decisions, it is not certain that the award would be set aside based on public policy grounds in France. The question is more difficult in Switzerland, where the doctrine of res judicata is part of procedural public policy.116 However, it is not certain that an application of issue preclusion principles would constitute a violation of public policy. Under Swiss law, it appears to be principally the coexistence of two contradictory, equal, and simultaneously enforceable decisions rendered between the same parties and with respect to the same subject matter that must be considered contrary to public policy.117 An award can be set aside in Switzerland for violation of public policy, whether substantive or procedural, only if the result of the award violates public policy.118 By promoting consistency, the application of issue preclusion principles would further avoid the coexistence in Switzerland of contradictory, equal, and simultaneously enforceable decisions.119 c. The abuse of process doctrine The question arises whether international commercial arbitral tribunals should 6.89 apply the abuse of process doctrine to preclude a party from raising a claim or an issue of law or fact that was not, but could and should have been, raised in earlier court proceedings between the same parties. In the situation where an arbitral tribunal is faced with the preclusive effects of another arbitral award, the ILA’s Recommendation No. 5 on res judicata provides for the following approach: [a]‌n arbitral award has preclusive effects in the further arbitral proceedings as to a claim, cause of action or issue of fact or law, which could have been raised, but was not, in the proceedings resulting in that award, provided that the raising of any such new claim, cause of action or new issue of fact or law amounts to procedural unfairness or abuse.   See para. 4.71.   See paras 4.86–​4.90. 117  See in this respect ATF 127 III 279, para. 2b. 118  See, e.g., Decision of the Swiss Federal Tribunal 4P.278/​ 2005 of 8 March 2006, para. 2; Decision of the Swiss Federal Tribunal 4A_​414/​2010 of 27 October 2010, para. 2. 119 See, however, the decision of the Swiss Federal Tribunal 4A_​ 633/​2014, 29 May 2015, para. 3.2.6. In this case, the Federal Tribunal held that the arbitral tribunal with its seat in Zurich had not violated Swiss procedural public policy by not applying issue preclusion principles to a prior arbitral award. By contrast, the Federal Tribunal held that a violation of procedural public policy could be admitted if the arbitral tribunal had applied such principles and refused to reconsider the issue of contract interpretation that had already been determined in the first arbitration between the same parties but in relation to a different claim. 115

116

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Chapter 6:  Transnational Principles 6.90 For the reasons set out below, it is submitted that this approach is also appropriate

where the plea of abuse of process is based on prior court proceedings.

6.91 As they stand today, transnational law in general and international commercial

arbitration law and practice in particular do not recognize an abuse of process doctrine, akin to the rule in Henderson v Henderson120 in English law or the broad notion of claim preclusion as known in US law.121 That said, the abuse of process doctrine has some foundation in comparative law. In addition to English and US law, it was seen in Chapter 1 that French case law has developed an ‘obligation de concentration’, barring subsequent proceedings where the same claim between the same parties is based on the same facts but on a different legal ground.122 Moreover, with respect to international commercial arbitration, in addition to the ILA, there is considerable support among international arbitration scholars in favour of the application of an abuse of process doctrine in international commercial arbitration.123

6.92 Similar to the res judicata doctrine, by obliging the parties to submit all aspects of

their dispute to the same court, the abuse of process doctrine seeks to promote procedural good faith and fairness, as well as procedural economy and efficiency. By avoiding the unjustified splitting of a dispute and the resulting multiplication of proceedings relating to that dispute, the doctrine promotes the speedy and final resolution of the entirety of the parties’ dispute and protects them against dilatory tactics and from being unwillingly and unfairly exposed to successive proceedings.124 It was seen in Chapter 3 that these policy considerations also apply in international commercial arbitration.125

6.93 That said, the application of the abuse of process doctrine in international com-

mercial arbitration gives rise to several concerns. First and foremost, the abuse of process doctrine raises considerations of due process. Precluding a party in the arbitration from raising an issue, cause of action, or claim that was not raised and decided in the earlier court proceedings could be considered a denial of justice. However, against this it can be argued that there is no denial of justice—​narrowly defined as a refusal of access to the judicial system—​given that the parties had the opportunity to submit the issue, cause of action, or claim to the court. This presupposes that the court would have had jurisdiction to determine the issue, cause

  Henderson v Henderson (1843) 3 Hare 100.   Pierre Mayer, L’obligation de concentrer la matière litigieuse s’ impose-​t-​elle dans arbitrage international?, 2 Cahiers de l’arbitrage 413, 419–​20 (2011) (cited as L’obligation de concentrer la matière litigieuse s’ impose-​t-​elle dans arbitrage international?). See also paras 1.162 and 4.167. 122  See paras 1.120 and 1.124–​1.126. An obligation to submit all aspects of a dispute to the court first seized also exists under Spanish law (see Debourg, para. 556, with references). 123  See, e.g., Mayer, L’obligation de concentrer la matière litigieuse s’ impose-​t-​elle dans arbitrage international?, p. 419, with references; Born, pp. 3745–​6; Radicati di Brozolo, pp. 145–​9. 124  Debourg, para. 557. 125  See paras 4.03 et seq. 120 121

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A.  Prior National Court Judgments of action, or claim in question.126 This argument is more difficult with respect to the parties’ right to be heard. In particular, extending a decision’s preclusive effect to claims and issues that were neither raised nor debated between the parties and that, as a result, were not decided by the court, appears problematic with respect to the parties’ right to be heard.127 This is true in particular if a decision’s preclusive effect is considered to be one of the consequences of the parties having been granted a right to be heard. If the parties were heard with respect to a particular claim or issue, they will be precluded from relitigating the same claims or issues in subsequent proceedings. The limits of a decision’s preclusive effect are thus determined in accordance with the parties who were granted the right to be heard in the earlier proceedings and the claims and issues with respect to which that right was granted.128 It follows from this that precluding a party from raising a claim or issue of law 6.94 or fact that was not raised and decided in earlier proceedings is at odds with the traditional conception of the res judicata doctrine, namely that a particular matter once decided by judicial determination must be regarded as final between the parties.129 In this respect, it is worth noting that the successful application of the res judicata doctrine entails stringent consequences, namely the inadmissibility of a new claim or issue of law or fact. These consequences are generally justified by the fact that the parties have already obtained a final and binding decision on the same matter and there is no legitimate interest in repeating costly and lengthy proceedings that the parties have already been through, with the resultant risk of contradictory decisions. Such stringent consequences appear much less justified with respect to claims and issues that have not already been debated and decided. It can also be argued that extending the preclusive effects of a decision to claims 6.95 and issues that were not raised and decided in an earlier decision constitutes a way of legalizing ultra petita. The first court might be bound by the parties’ prayers for relief and cannot award anything more than or different from what the parties have requested.130 Therefore, the question arises as to how one can consider as finally decided a particular claim or issue that the first court was not allowed to decide, on pain of having its judgment reversed on appeal.131

  Debourg, para. 566.   Ibid., para. 566. 128  In this sense, see Paul Oberhammer, Ad Article 236 CH-​CPC, in ZPO—​Schweizerische Zivilprozessordnung (Paul Oberhammer, Tanja Domej, and Ulrich Haas ed., 2nd ed. 2014), para. 28, p. 1068. 129  Debourg, para. 566. 130  E.g. in Switzerland, Article 58(1) CH-​CPC reads as follows: ‘The court may not award a party anything more than or different from what the party has requested, nor less than what the opposing party has acknowledged’. 131  Debourg, para. 564. 126 127

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Chapter 6:  Transnational Principles 6.96 Finally, giving preclusive effects to claims and issues that were not raised and

decided in earlier proceedings imposes a greater burden on claimants and their counsel when submitting a dispute before a court. The contours of the parties’ dispute will be fixed by the first proceedings, with limited possibilities for the evolution of the subject matter in dispute.132

6.97 In light of the concerns raised above and given its limited foundation in trans-

national law, it does not seem justified systematically to give preclusive effects in an international commercial arbitration to claims and issues of law or fact that were not, but could and should have been, raised in earlier court proceedings. This means that it would not be appropriate to found the application of such extensive preclusive effects on the doctrine of res judicata, which provides for the granting of preclusive effects based on an objective test, namely the identity requirement between the two sets of proceedings. This also means that it would not be appropriate systematically and automatically to provide for the inadmissibility of the new claim or issue of fact or law where the objective test is met. It is submitted that the better view is to detach the abuse of process doctrine from the res judicata doctrine and to subject its application to a subjective test, namely taking into consideration a party’s behaviour, as has been done in English law133 and has been suggested in the international commercial arbitration context by the ILA in its Recommendation No. 5.134

6.98 Accordingly, it is submitted that a party should generally be precluded from raising

in an international commercial arbitration a claim or issue of law or fact that was not, but could and should have been, raised by that party in an earlier court judgment, provided that raising the particular claim or issue in the arbitration would amount to procedural unfairness or abuse. Founding such preclusive effects on principles of procedural fairness and abuse instead of on an extensive interpretation of the res judicata doctrine is also more readily acceptable on a transnational level, given the general recognition of the parties’ obligation to participate in good faith in arbitration proceedings, which includes an obligation not to obstruct or delay the arbitral process,135 as well as the general acceptance of a prohibition of abuse of right.

6.99 Giving preclusive effect to claims or issues that were not, but could and should

have been, raised and decided in an earlier court judgment only where this will prevent procedural unfairness or abuse, will impair the abuse of process   Ibid., paras 563 and 565.   See para. 1.36. 134   In this sense, see Debourg, paras 568–​9. 135  See Born, pp. 1257 et seq. and in particular p. 1263, with references. See also decision by the Swiss Federal Tribunal in ATF 108 Ia 197, 201 (‘One of the aims of arbitration is to come to a fast resolution of the disputes submitted to it. The parties who agree to arbitration are bound by the rules of good faith to avoid any conduct which might delay without absolute necessity the normal conduct of the arbitral proceedings’) (English translation provided by Born, p. 1260). 132 133

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A.  Prior National Court Judgments doctrine’s efficiency in promoting procedural economy and efficiency. This is true in particular given the fact that it might be difficult in practice for a party to prove another party’s bad faith or abusive behaviour, which are generally not presumed.136 Moreover, granting broad discretionary powers to the arbitral tribunal in the application of the abuse of process doctrine impairs predictability. However, this compromise appears justified in light of the concerns raised previously and the lack of a strong foundation of the doctrine in transnational law.137 When deciding whether a party should be precluded from raising a claim, cause 6.100 of action, or issue in the arbitration on the ground that the party could and should have raised it in the court proceedings, arbitral tribunals should balance the private and public interests at stake. A claimant may have legitimate reasons for not raising all causes of action, claims, and issues in the court proceedings. For instance, a claimant may wish to preserve a long-​standing business relationship with the respondent. Engaging in a broad legal battle where all possible issues are raised and fully argued is likely significantly to aggravate the dispute between the parties, thereby diminishing their chances of reaching a settlement and continuing their business relations. Likewise, raising and litigating to the utmost all potential claims and issues is likely significantly to increase the cost of litigation. A claimant may thus have a legitimate strategic interest in not raising in the initial proceedings certain claims or issues that appear to be of lesser importance and that the claimant may well choose never to raise against the respondent at all were it not forced to do so by broad, stringent preclusion rules.138 The claimant must then have a corresponding right to have access to justice with regard to such claims and issues not already determined in the prior proceedings. By contrast, the respondent has a right to a fair trial. It has a legitimate interest not to be harassed by further proceedings where the claimant has failed to raise certain claims and issues in the earlier proceedings. There also is a public interest in not having arbitration proceedings in such circumstances in order to avoid additional proceedings before the supervisory courts at the arbitral seat.139 The ILA’s Recommendation No. 5 appropriately balances the various interests at 6.101 stake. On the one hand, it seeks to uphold the public interest in the economic and efficient use of resources and to protect the respondent against unfair and abusive multiple proceedings. At the same time, it recognizes that the claimant’s failure to

  Debourg, para. 569.   Ibid., para. 569. 138  Yuval Sinai, Reconsidering Res Judicata:  A  Comparative Perspective, 21 Duke Journal of Comparative & International Law 353, 372–​8 (2011); Yuval Sinai, The Downside of Preclusion: Some Behavioral and Economic Effects of Cause of Action Estoppel in Civil Actions, 56(3) McGill Law Journal 673, 684–​707 (2011); Oberhammer, ad Article 236 CH-​CPC, para. 53, pp. 1080–​1. 139  See ILA, Final Report, paras 60 et seq. 136 137

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Chapter 6:  Transnational Principles raise and fully litigate all possible issues, claims, and causes of actions in the first proceedings may well be justified by legitimate strategic considerations. 6.102 Having engaged in this balancing exercise, the arbitrators decide whether to apply

the abuse of process doctrine and declare the new claim or issue inadmissible on the ground that the claim or issue in question could and should have been raised in the earlier court proceedings. The party pleading abuse of process will have to persuade the arbitrators that the new arbitration proceedings constitute an abuse of process or a procedural unfairness. The arbitrators must be convinced that it would be just to deny the adverse party the opportunity (or right) to raise a matter that has not been determined in a prior decision, because that matter could and should in good faith have been brought in the prior proceedings.140 3. Requirements for the application of the res judicata doctrine

6.103 The final ILA Report on res judicata and arbitration identified five cumulative

requirements for the application of the res judicata doctrine between arbitral tribunals:

–​ The prior award must be final and binding and capable of recognition in the country where the arbitral tribunal of the subsequent arbitration proceedings has its seat –​ The arbitration proceedings in which the res judicata issue is raised, must pertain to the same legal order as the prior award –​ Identity of the subject matter –​ Identity of the cause of action –​ Identity of the parties.141 6.104 These are the traditional res judicata requirements transposed from litigation to

international commercial arbitration. In general, the application of these requirements appears appropriate. Because the aim of the res judicata doctrine is essentially the same whether the prior decision is a judgment or an award, there appear to be no reasons for applying substantially different res judicata requirements. Therefore, in principle, the requirements listed above should apply mutatis mutandis where

140  For an example where the application of the abuse of process doctrine might be justified, see Anne-​Véronique Schlaepfer, Jurisdiction and Admissibility: a Subtle Distinction, Not Always Easy to Make in International Arbitration, 2 Cahiers de l’arbitrage 327, 334–​6 (2013). The case reported by Schlaepfer concerned two consecutive arbitration proceedings. According to Schlaepfer, the second arbitration proceedings, in which the respondent to the first arbitration submitted a declaratory claim, was ‘purely artificial and obviously aimed at slowing down or derailing the arbitration proceedings’. The second arbitration was, in itself, of no interest in that it only made sense to the extent that it could possibly enable the respondent to avoid an arbitral award in the first arbitration ordering it to pay a certain amount to the claimant in the first arbitration. As such, the declaratory claim in the second arbitration was in reality a defence to the claimant’s damage claim in the first arbitration. For Schlaepfer, the filing of a declaratory claim in another arbitration commenced for that purpose was lacking any interest worthy of protection (Schlaepfer, pp. 335–​6). 141 ILA, Final Report, para. 29.

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A.  Prior National Court Judgments international commercial arbitral tribunals have to determine the res judicata effects of a prior national court judgment. The following analysis will begin by examining the triple identity test (a.). It will 6.105 then investigate whether a prior national court judgment must be capable of recognition at the arbitral seat in order to have res judicata effect in the arbitration proceedings (b.). The requirement of the same legal order has already been discussed in Chapter 5.142 a. The triple identity test With regard to the triple identity test, the ILA’s Recommendation No. 3 pro- 6.106 vides that a prior award should have res judicata effect in subsequent arbitration proceedings if 3.2 it has decided on or disposed of a claim for relief which is sought or is being reargued in further arbitration proceedings; 3.3 it is based upon a cause of action which is invoked in further arbitration proceedings; and 3.4  it has been rendered between the same parties.

This triple identity test ensures the identicalness of the disputes in both proceed- 6.107 ings and thereby avoids a party being deprived of its right of access to justice and its right to be heard with regard to a matter that has not already been decided in other or prior proceedings. By the same token, it also avoids unnecessary and wasteful duplications of proceedings: it is redundant to adjudicate the same dispute in more than one set of proceedings and it is undesirable for parties to a single dispute, through their own conduct, to generate inconsistent decisions regarding their rights and duties.143 These underlying rationales are the same whether the prior decision is a national court judgment or an international arbitral award. Transnational law should define the test to assess the identity between two disputes 6.108 in order to ensure as far as possible a uniform, consistent, and predictable application of the res judicata doctrine in international commercial arbitration. For this it will be necessary to determine the dominant tendency among the relevant transnational law sources.144 This will not be an easy task due to the uncertainties in both national and international law as to the interpretation to be given to the notions of ‘parties’, ‘cause’, and ‘object’. International arbitral tribunals may have a particular regard in the individual case to those laws and rules of law most closely connected to the parties and the dispute.145 Useful inspiration could also be sought   See paras 5.65 et seq.   Yuval Shany, Similarity in the Eye of the Beholder, in Contemporary Issues in International Arbitration and Mediation, The Fordham Papers 2007 (Arthur W. Rovine ed., 2008), pp. 126 et seq. (cited as Similarity in the Eye of the Beholder). 144  See paras 5.95 et seq. 145  See para. 5.63. 142 143

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Chapter 6:  Transnational Principles in public international law which developed a triple identity test based on domestic res judicata rules.146 Likewise, the ECJ has interpreted the triple identity test in several cases pertaining to lis pendens.147 6.109 Due to the current uncertainty between the existing transnational law sources on

the matter, it appears premature to formulate new transnational definitions of the notions of ‘parties’, ‘cause’, and ‘object’. However, it is useful to comment on the scope to be given to these notions.

6.110 There are important arguments in favour of a broad interpretation of the triple

identity test. A strict application of the test can put form over substance and ignore the ‘underlying economic realities’.148 Citing as an example the Lauder/​CME cases, Shany observed ‘a wider trend to erode or circumvent the application of jurisdiction-​regulating rules [such as the res judicata doctrine] through emphasizing the differences existing between related claims in a way that puts into question the very need for their regulation’.149

6.111 Accordingly, a strict interpretation of the identity test may lead to abuse by par-

ties trying to get a second bite at the cherry. It would also impair the efficiency of the res judicata doctrine in the achievement of its aims and is thus at odds with the strong public policy considerations underlying the res judicata doctrine, such as the avoidance of wasteful duplication of proceedings leading to inconsistent decisions.150 If international commercial arbitral tribunals adopt a strict approach with regard to the identity test, the res judicata doctrine will rarely apply.151 Indeed, multiple proceedings in international commercial arbitration rarely involve exactly the same parties and issues.152 Economic disputes may often be highly complex, involving closely related economic entities and separate yet essentially identical instruments.153 In this context, a strict application of the identity test could lead to injustice in international arbitration where there are   See paras 2.106 et seq.   See paras 2.24 et seq. International arbitrators should, however, be careful when applying a triple identity test designed for lis pendens. Because the consequences of lis pendens are less drastic than those of res judicata, it might be justified to interpret the test more broadly in a lis pendens situation. 148  Christoph Schreuer and August Reinisch, Legal Opinion prepared for UNCITRAL Arbitration Proceedings, CME Czech Republic BV (The Netherlands) v The Czech Republic, The Partial Award of September 13, 2001 The Partial Award of September 13, 2001, para. 223. 149 Shany, Similarity in the Eye of the Beholder, p. 122. 150 Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 282. 151  Schreuer and Reinisch, para. 265. See also Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 278 (‘there are relatively few cases where res judicata has been applied. Very often, the tribunal has found that the triple identity test has not been met’). 152  Kaj Hobér, Parallel arbitration proceedings—​ Duties of the arbitrators, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M. Cremades and Julian D.M. Lew ed., 2005), p. 245. 153 Shany, Similarity in the Eye of the Beholder, pp. 130 et seq.; Stavros Brekoulakis, The Effect of an Arbitral Award and Third Parties in International Arbitration: Res Judicata Revisited, 16(1) American Review of International Arbitration 177, 189 (2005). 146 147

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A.  Prior National Court Judgments limited possibilities of avoiding parallel proceedings.154 To avoid such injustice, it has been argued that international arbitral tribunals must look at the underlying nature of a dispute and not at its formal classification. Although a dispute may not appear to be literally identical to a previously decided dispute, it may be substantially the same.155 Conversely, a broad interpretation of the identity test could violate a party’s right 6.112 of access to justice, which is both a human right and a general principle of justice. If the parties and questions at issue in both proceedings are not identical, then each party normally has the right to bring separate proceedings.156 Where the prior decision was a national court judgment, it may be argued that a broad interpretation of the identity test could deprive a party of its right to arbitrate a certain dispute or issue, in violation of the parties’ arbitration agreement.157 The lack of interchangeability between international commercial arbitral tribunals and national courts thus militates in favour of a narrow interpretation of the identity test. Where it is in the parties’ interests for the arbitral tribunal to exercise its jurisdiction over the dispute, namely because the parties and the dispute in the prior court proceedings were not the same, it should not refuse to do so based on res judicata. It can further be argued that because the application of the res judicata doctrine entails serious consequences—​that is, the denial by the arbitral tribunal of exercising its jurisdiction—​it would be justified to apply this doctrine only where a strict identity test is met. International commercial arbitral tribunals ultimately face a policy choice. They 6.113 can either apply a strict identity test to protect and give maximum effect to the arbitration agreement, or they can apply a broad identity test to further policy considerations such as procedural economy and efficiency and legal coherence and consistency. A strict application of the identity test might have the benefit of clarity, predictability, and ease of application.158 By contrast, a broader, more flexible identity test might allow arbitral tribunals fully to address the complexity of the legal situation and engage in pragmatic problem solving. A flexible identity test would afford a greater degree of discretionary power to arbitral tribunals. However, this

 Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 282. See also para. 5.10.   Schreuer and Reinisch, paras 273 et seq. See also Bucher who favours an ‘identité fonctionelle’ as opposed to a ‘identité formelle’ of claims (in the context of lis pendens in international litigation) (L’examen de la compétence internationale, p. 168). 156  Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 February 2001 (2004), p. 26; Shany, Similarity in the Eye of the Beholder, pp. 125 and 127. 157  Where the first decision is an award, this consideration seems less important, because the party will not be denied the opportunity to arbitrate. In certain circumstances, the argument may be invoked nonetheless, because the arbitral tribunals in question may not be considered as interchangeable (see paras 5.76 et seq.). 158 Shany, Similarity in the Eye of the Beholder, p. 129; Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 282. 154 155

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Chapter 6:  Transnational Principles would be at odds with the transnational approach’s aim of producing uniform rules and result in reduced legal certainty and predictability.159 6.114 In light of the above, the better view appears to be to adopt a narrow, less flex-

ible identity test. However, an arbitral tribunal’s mandate is limited. International arbitrators must be wary of resolving aspects of a dispute that they were not authorized to resolve. By adopting too narrow an identity test and thereby interpreting the scope of their jurisdiction too broadly, arbitral tribunals might exceed their mandate.160 Arbitral tribunals should also be careful not to adopt an overly formalistic approach to avoid parties unduly evading the application of the res judicata doctrine. Over-​reliance on formal criteria may open the doors to abuse through deliberate recourse to multiple proceedings.161 Such abuse is particularly feasible in international arbitration where arbitral tribunals frequently face highly complex disputes involving multiple and closely related parties, contracts, and issues.

6.115 In order to avoid such abuse, arbitral tribunals could be guided by the abuse of

rights (abus de droit) principle, which is recognized as a general principle of law.162 In exceptional circumstances, this principle could bar parties from unduly invoking the right to bring a new claim when a virtually identical claim has already been adjudicated in prior proceedings. As was seen earlier, it can also give arbitral tribunals the authority to prevent parties from raising in the arbitration certain claims and issues of law or fact that they could and should have brought in the prior litigation.163 The final ILA Report supports the application of the abus de droit principle in this context, referring to it as the abuse of process and procedural unfairness doctrine.164 According to the ILA, the abuse of process and procedural unfairness doctrine applies with regard to the identity of cause of action requirement.165 In certain situations the arbitrators may conclude that an abuse of process or procedural unfairness has occurred if a party attempts to modify the cause of action by raising a different ground in support of the same claim for relief. Following this approach, international arbitral tribunals would examine whether different provisions relied upon in support of the new claim are substantially identical or different. If the provisions contain substantially the same rule, the arbitrators may conclude as to the identity of the cause of action.

6.116 Regarding the cause of action requirement, the question arises whether inter-

national commercial arbitral tribunals should avoid the problematic distinction between identity of cause and object and replace these two requirements by the

 Shany, Similarity in the Eye of the Beholder, p. 129. In this sense, see also Born, p. 3771.  Shany, Similarity in the Eye of the Beholder, p. 134. 161  Ibid., p. 130. 162  Ibid., p. 124; Bin Cheng, General Principles of Law as Applied in International Courts and Tribunals (1953, repr. 2006), p. 121. 163  See paras 6.89 et seq. 164 ILA, Final Report, para. 42. 165  Ibid., para. 43. 159

160

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A.  Prior National Court Judgments single requirement of ‘identity of question in dispute’. It has been suggested that international arbitral tribunals may consider a dispute identical to a dispute previously decided where the same claim is based on the same factual background,166 to the exclusion of the claim’s underlying legal grounds. This is in line with recent developments in civil law countries where courts now tend to adopt a broader and more pragmatic approach to assess the identity of the subject matter in dispute.167 This new approach aligns these civil law countries with the more pragmatic approach followed in common law countries, as well as the broad approach adopted by the ECJ when interpreting the identity of ‘cause of action’ requirement under the Brussels I Regulation.168 It also mirrors the tendency of international courts and tribunals to focus on the facts underlying the claims in order to determine whether or not two disputes are identical.169 In line with these developments, it appears appropriate for international commer- 6.117 cial arbitral tribunals to replace the two requirements of identity of cause and object by the single requirement of ‘identity of question in dispute’. A reference to a claim’s underlying ‘cause’ would not be necessary since the identity of questions in dispute would be determined only by reference to the totality of a claim’s or counterclaim’s underlying facts. The legal arguments that a party may have invoked in support of its claim or counterclaim would be irrelevant for determining whether there is identity of the questions in dispute between two sets of proceedings for the purposes of applying the res judicata doctrine. For the reasons mentioned above, the identity of the question in dispute require- 6.118 ment would cover not only claims and counterclaims, but also essential or fundamental issues of fact or law already debated and decided in the essential reasons of the earlier national court judgment.170 However, the notion of ‘question in dispute’ would not extend to claims or issues that were not raised and decided in the earlier judgment, unless raising such claims or issues in the subsequent arbitration would amount to procedural unfairness or abuse.171 Regarding the party identity requirement, there is no basis in transnational law in 6.119 general and international commercial arbitration law and practice to depart from the generally accepted rule that a particular decision can only have res judicata effect with respect to the parties to the proceedings that gave rise to that decision. Thus, the res judicata doctrine would not apply with respect to a party in the arbitration that was not a party to the court proceedings.172 This does not mean,

  In this sense, see Schreuer and Reinisch, para. 257.   For Switzerland, see paras 1.152 et seq. For France, see paras 1.116 et seq. 168   See paras 2.29 et seq. 169   See para. 2.128-​2.129. 170   See paras 6.73 et seq. See also Debourg, paras 487 and 36. 171   See paras 6.89 et seq. Cf Debourg, para. 36. 172  In this sense, see ILA, Final Report, para. 44. 166 167

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Chapter 6:  Transnational Principles however, that the requirement of party identity would not be met where only some of the parties were the same in both proceedings. A judgment should have res judicata effect between the parties to the court proceedings, even if the arbitration involves a third party that was not already a party to the court proceedings. The judgment would not have res judicata effect with respect to that third party, but only to the extent to which the parties to both sets of proceedings are the same.173 6.120 The abuse of process and procedural unfairness doctrine could also apply with re-

gard to the party identity requirement. A party to an arbitration should not be able to avoid the res judicata effects of a judgment by unduly invoking a separate legal identity. In this respect, a reference to the common law-​style ‘privity of interest’ test may be appropriate to assess the ‘sameness’ between the parties.174 The test would be met where the parties are either formally identical or so closely related as to represent virtually the same interests,175 so that it would be unfair or abusive for them to rely on their separate legal identities. However, international commercial arbitral tribunals must be careful not to unduly restrict the right of access to justice and the right to be heard of a party with different interests, which may be the result of an overly broad interpretation of the identity of parties requirement.176

6.121 Clearly, where the identity test is not met arbitral tribunals should always show ap-

propriate deference to the prior national court judgment in order to avoid contradictory decisions.177 Shany suggests the application of the principle of judicial comity which encourages tribunals to consider following the conclusions of law and fact reached by a prior court. This may provide arbitral tribunals with a way to break the legal deadlock that the current uncertainties surrounding the ascertaining of ‘sameness’ of parties and issues entail.178 As was seen earlier, in practice 173  See, e.g., ECJ, Tatry v Maciej Rataj, Case C-​406/​92, 6 December 1994, 1994 ECR, p. I-​5439, paras 33 et seq. (see para. 2.26). See also decision of the Cour d’appel de Paris, 26 March 2009, Société Papillon Group Corporation v République Arabe de Syrieet autres, Rev. arb., No. 3 (2010), pp. 525–​32 and the commentary by Vincent Chantebout, Note—​26 March 2009, Cour d’appel de Paris (1re Ch. C), 3 Revue de l’Arbitrage 533, 534–​5 (2010). 174  See, however, ILA, Final Report, para. 47. 175  See, e.g., Cour d’appel de Paris, 13 September 2007, Société Comptoir Commercial Blidéen v Société l’Union Invivo, Rev. arb., No. 2 (2008), pp. 313 et seq. While this case involved the consolidation of disputes over related contracts, the reasoning is interesting also for res judicata purposes. The dispute involved several parties and contracts. The arbitral tribunal decided to rule on all of the contracts and with regard to all parties in one and the same award. One of the parties challenged the award on the ground that the arbitral tribunal was wrong to do so. The court rejected the claim, noting that all of the disputed contracts were identical and were made as part of the same business relationship between the parties, whose separation was therefore purely formal. In addition, the parties did not have differing interests and they had the same director. The court concluded that the filing of a single arbitration request covering identical disputes was, moreover, a reasonable and useful procedural tactic and in everyone’s interests (see Bernard Audit, French Court Decisions on Arbitration, 2007–​2008, ICC International Court of Arbitration Bulletin, Vol. 19, No. 2 (2008), para. 17, p. 18). 176 Shany, Similarity in the Eye of the Beholder, p. 131. 177  On this, see paras 6.36–​6.37. 178 Shany, Similarity in the Eye of the Beholder, p. 138.

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A.  Prior National Court Judgments arbitral tribunals have given preclusive and conclusive effects to prior awards and judgments, even though the strict identity test was not met.179 Finally, it is worth noting that the triple identity test applies only in the case of 6.122 claim preclusion. It does not apply in the case of issue preclusion which traditionally applies not only regarding the same claim, but also regarding different claims.180 Like claim preclusion, there appear to be no reasons why traditional issue preclusion requirements should not apply in international commercial arbitration. This means that issue preclusion generally applies only where a particular issue of fact or law has been actually raised and litigated and necessarily determined by the earlier national court judgment as the legal foundation for its conclusion. The determination of the issue must have been essential or fundamental to the judgment. A contrario, this means that issues which were not actually raised and litigated, or which were merely subsidiary or collateral, do not have issue preclusive effects.181 Moreover, the triple identity test does not apply in the case of abuse of process 6.123 which, by definition, involves a claim, cause of action, or issue that was not raised in the prior proceedings.182 b. Is the prior judgment capable of recognition in the country of the arbitral seat? It is generally considered a requirement for the application of the res judicata doc- 6.124 trine that a foreign judgment must be capable of recognition in the country of the other or subsequent proceedings.183 This is because a foreign judgment cannot usually have any legal effect in another country, unless it may be recognized in that country. The process of recognition may therefore be described in general terms as the process by which it is determined whether a foreign judgment is entitled to legal effect in the recognizing state.184 There are two main effects associated with recognition. First, the recognized foreign judgment becomes enforceable in the recognizing state. Secondly, the judgment may be relied upon for preclusive purposes in proceedings in the recognizing state, provided that all the other requirements necessary for the application of the res judicata doctrine are met.185 179  See paras 4.173 et seq. Although no trend to this effect has been observed, it has been argued that the more a dispute is identical to the dispute before the arbitral tribunal, the more drastic preclusive and conclusive effects should be given to the prior judgment. In other words, the degree of identicalness between the disputes in both proceedings should determine the intensity of the preclusive and conclusive effects to be given to the prior judgment. This was argued, e.g., by Brekoulakis with regard to the party identity requirement (pp. 195 et seq.). 180 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 197; ILA, Final Report, para. 57. See also paras 1.24 et seq. and 1.65 et seq. 181  See ILA, Final Report, para. 56. See also paras 1.24 et seq. and 1.65 et seq. 182  For the applicable requirements, see paras 6.89 et seq. 183  Audley Sheppard, Res judicata and estoppel, in Parallel State and Arbitral Procedures in International Arbitration, Dossiers—​ICC Institute of World Business Law (Bernardo M. Cremades and Julian D.M. Lew ed., 2005), p. 232. 184 See Barnett, para. 203. 185  See ibid., para. 2.03.

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Chapter 6:  Transnational Principles 6.125 The purpose of the recognition requirement is twofold: on the one hand, it seeks to

avoid the coexistence in one jurisdiction of contradictory decisions that are equally and simultaneously enforceable. On the other hand, enforcement normally being the principal reason for which recognition of a judgment is sought, it seeks to allow a party that cannot use the foreign judgment for enforcement purposes in the relevant jurisdiction to pursue the case there in order to open up the possibility of local enforcement.186

6.126 The recognition requirement is plainly justified in private international litigation,

because the jurisdiction of state courts is not normally based solely on a choice-​ of-​court agreement, but on contacts with the country (for example, a domicile or a place of business) that are sufficiently close to justify the jurisdiction of that country’s courts. Because of these connections, future enforcement measures in that country are likely. The question arises whether the situation is different in international commercial arbitration in light of the fact that, ordinarily, the arbitral seat is chosen precisely because neither of the parties has any connection there.

6.127 According to Söderlund, the question of whether a prior judgment is enforceable

at the place of arbitration is normally of minor interest to the parties. Due to the lack of connection with the arbitral seat neither of the parties would foresee any future need for enforcement measures at the arbitral seat. For Söderlund, what is relevant is not whether the prior judgment is capable of recognition and enforcement at the arbitral seat, but whether the national court has jurisdiction to render the judgment.187

6.128 Moreover, the relevance of the requirement that the foreign judgment is capable of

recognition in the country of the arbitral seat depends on what conception of international commercial arbitration one adopts. If the legitimacy and validity of the arbitration are considered to derive from the legal system of the country of the arbitral seat and that international commercial arbitral tribunals must apply the doctrine of res judicata in the same way as a national court in that country, then the arbitral tribunal should assess the recognition requirement in accordance with the relevant domestic rules on the recognition of foreign judgments.188

6.129 By contrast, if the conception of international commercial arbitration as an arbitral

legal order is followed, then the question whether the national court judgment is

186  Christer Söderlund, Lis pendens, res judicata and the issue of parallel judicial proceedings, 22(4) Journal of International Arbitration 301, 303 (2005). 187  Ibid., pp. 305 et seq. 188  As seen earlier, according to the Swiss Federal Tribunal, the principles governing the res judicata effects of Swiss court judgments apply mutatis mutandis to the res judicata effects of international arbitral awards rendered in Switzerland (see para. 4.73). An arbitral tribunal seated in Switzerland must determine whether a foreign judgment can be recognized in Switzerland in accordance with Articles 25–​27 PILA or the Lugano Convention, applied by analogy (see Berger and Kellerhals, paras 1661–​3).

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A.  Prior National Court Judgments capable of recognition in the country of the arbitral seat does not arise. The proper question would be whether the earlier judgment is capable of recognition in the arbitral legal order. This would not be the case if the national court had rendered the judgment in violation of an arbitration agreement. As was seen earlier, whether or not the existence of an arbitral legal order is accepted, 6.130 it is usually recognized that international commercial arbitration is, at least to some degree, autonomous from national legal orders.189 It is also widely accepted that international commercial arbitral tribunals do not have the same relation to the national legal order of the arbitral seat as a national court to the local legal system.190 The application of a sui generis recognition requirement for international commercial arbitration appears appropriate as the application of uniform rules, instead of the domestic law of the country of the arbitral seat, would promote predictability. Rather than verifying whether the foreign judgment is capable of recognition in the country of the arbitral seat in the application of the local law, it might be more appropriate for international commercial arbitral tribunals to examine whether the foreign national court judgment is ‘valid’; that is, whether it was rendered in conformity with the standards prescribed by the New York Convention, in particular Article II and due process requirements. This is in line with the Convention’s objective of providing uniformity and the effective recognition and enforcement not only of arbitral awards but also of arbitration agreements.191 As was seen earlier, if a valid arbitration agreement exists pursuant to the Convention, then a national court judgment rendered in violation of the arbitration agreement would seem to constitute an improper intrusion into matters reserved by the arbitration agreement for determination by the arbitral tribunal. Therefore, a foreign judgment rendered in violation of the Convention should not be entitled to recognition and, as a result, to res judicata effects in international commercial arbitration proceedings.192 Where a request for recognition and enforcement has already been made at the 6.131 arbitral seat, the arbitral tribunal may deem it appropriate to await the enforcement court’s decision. However, where no such request has been made or if the local courts cannot be expected to render a decision within a reasonable period of time,193 the arbitral tribunal may have to predict whether the foreign judgment will be capable of recognition at the arbitral seat.194 Under domestic laws, the arbitral tribunal will usually have to examine whether the foreign court had

  See paras 5.49 et seq.   Born, pp. 3768–​9. 191  Ibid., p. 3771. 192  See para. 6.45. 193  See Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 199. 194  It is worth noting that while international arbitral tribunals may predict a foreign judgment’s ‘recognizability’, they will frequently not have the authority under the law of the country of the place of arbitration to decide whether a foreign judgment will be recognized in the country of the arbitral seat (for France, see, e.g., Pinna, para. 17). 189

190

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Chapter 6:  Transnational Principles jurisdiction in the international sense and whether the judgment is in conformity with the public policy of the arbitral seat. In Member States of the New York Convention, the foreign court’s international jurisdiction should be denied if the judgment was rendered in violation of the Convention, namely Article II.195 Indeed, the Convention imposes a mandatory international treaty obligation on its Member States to recognize and enforce arbitration agreements if the requirements in Article II are met.196 6.132 The test to determine whether a foreign judgment is capable of recognition in the

country of the arbitral seat thus resembles the proposed sui generis test as to the ‘validity’ of the foreign national court judgment, the conformity of the foreign judgment with the local public policy of the country where the arbitral seat is situated being reserved. If the judgment is capable of recognition in the country of the arbitral seat in the application of the law of that country, it will probably also be ‘valid’.

6.133 By contrast, a judgment that is not capable of recognition in the country of the

arbitral seat might still be considered as ‘valid’ and afforded res judicata effects in the arbitration. Whether an international commercial arbitral tribunal should give res judicata effects to a judgment that cannot be recognized at the arbitral seat may depend on the reason for which recognition has been denied. A court’s decision denying interim relief may not be recognized in the country of the arbitral seat simply because decisions on interim relief do not qualify as ‘decisions capable of recognition’ in that country.197 However, if the national court had jurisdiction to render the decision denying interim relief, if fundamental requirements of due process were observed, and if there was no change in circumstances, preclusive effects may be given to the court’s decision.198 By contrast, where a foreign judgment was not recognized because it violates public policy considerations of the arbitral seat, an award that gives res judicata effects to the foreign judgment might risk being set aside.

6.134 Finally, it is worth recalling that where the national court and arbitral tribunal are

located in Member States of the EU or EEA, the foreign court’s judgment might fall within the scope of the Brussels I Regulation or the Lugano Convention. As was 195  This was the solution adopted by the Swiss Federal Tribunal in Compania Minera Condesa SA v BRGM-​Perou SAS (ATF 124 III 83, 87). See also Söderlund, pp. 304 et seq. 196  It is worth noting that Article II(3) of the New York Convention does not specify the applicable law to assess whether a contested arbitration agreement is ‘null and void, inoperative or incapable of being performed’. It is submitted that the arbitral tribunal should not apply the lex fori of the foreign court, but rather the lex arbitri when doing this assessment. In this context, the relevant question is not whether the foreign court had jurisdiction over the dispute in question under its own lex fori. Rather, the relevant question appears to be whether, from the perspective of the country of the arbitral seat, the arbitration agreement in question would have served as a valid basis for the jurisdiction of the arbitral tribunal seated in the country of the arbitral seat, excluding the jurisdiction of state courts (in this sense, see Berger and Kellerhals, para. 1662). 197  This seems to be the case in Switzerland (see, e.g., Order No. 5 of 2 April 2002). 198  See paras 6.57 et seq.

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A.  Prior National Court Judgments seen earlier, the Brussels I Regulation applies to a Member State’s court judgment on the merits of a civil or commercial dispute, in which the court accepted its jurisdiction and held preliminarily that there was no valid arbitration agreement.199 As a result, such judgment must be recognized in all other Member States, without the possibility of reviewing the prior court’s assessment of its jurisdiction,200 including the prior court’s assessment of the validity of the arbitration agreement,201 notwithstanding the fact that the arbitration agreement would be valid according to the law of the place of arbitration.202 It was also seen that a review of the application of Article II(3) of the New York Convention by the courts in another Member State would appear impossible under the recast version of the Brussels I Regulation. Therefore, an arbitral tribunal seated in a Member State of the (Recast) Brussels I Regulation might find that the foreign judgment can be recognized at the arbitral

199 ECJ, Allianz SpA et al. v West Tankers Inc, Case C-​185/​07, 10 February 2009, 2009 ECR, p. I-​ 663 (‘If, because of the subject matter the dispute, that is, the nature of the rights to be protected in proceedings, such as a claim for damages, those proceedings come within the scope of Regulation No 44/​2001, a preliminary issue concerning the applicability of an arbitration agreement, including in particular its validity, also comes within its scope of application’). See also ECJ, Marc Rich & Co. AG v Società Italiana Impianti PA, Case C-​190/​89, 21 July 1991, 1991 ECR, p. I-​3855, para. 28; ECJ, Van Uden Maritime BV, trading as Van Uden Africa Line v Kommanditgesellschaft in Firma Deco-​Line and Another, Case C-​391/​95, 17 November 1998, 1998 ECR, p. I-​7091, para. 32. See also para. 3 of Recital 12 of the recast version of the Brussels I Regulation, according to which ‘where a court of a Member State, exercising jurisdiction under this Regulation or under national law, has determined that an arbitration agreement is null and void, inoperative or incapable of being performed, this should not preclude that court’s judgment on the substance of the matter from being recognised or, as the case may be, enforced in accordance with this Regulation’. 200  Articles 36(1) and 45(3) of the Brussels I Regulation and Articles 33(1) and 35(3) of the Lugano Convention. A list of exceptions is provided in Article 45(1) of the Brussels I Regulation and Article 34 of the Lugano Convention. 201  Kropholler, p. 101, para. 46; Wicki, p. 312. 202  See decision of the English Court of Appeal in National Navigation Company v Endesa Generacion SA [2009] EWCA Civ 1397, para. 59 (‘A regulation judgment can however give rise to an issue estoppel as much in Arbitration proceedings excluded from the regulation as in any other proceedings in an English court’). This should not apply where the prior court’s judgment violates public policy (Article 34(1) JR/​A rticle 27(1) of the Lugano Convention). See, however, Van Houtte, p. 90 (Van Houtte invokes a conflict between the Brussels and Lugano Conventions/​ EC Regulation and the New York Convention. The recognition and enforcement of a judgment rendered in violation of Article II of the New York Convention could be considered as a violation of public policy); Gaudemet-​Tallon, para. 363 (according to Gaudemet-​Tallon, a judgment should be considered as falling within the scope of the arbitration exclusion whenever there is a ‘serious’ debate regarding the existence of a valid arbitration agreement and lack of jurisdiction is raised in good faith by the respondent before the court that rendered the judgment. Because in these cases the judgment would not be covered by the EC Regulation/​Lugano Convention, the courts in the recognizing country would be allowed to review the international jurisdiction of the prior court and, thus, the jurisdiction of the arbitral tribunal. In this sense, see also Audit, Arbitration and the Brussels Convention, pp. 1 et seq.); Besson, Le sort et les effets au sein de l’Espace judiciaire européen d’un jugement écartant une exception d’arbitrage et statuant sur le fond, pp. 343 et seq. (according to Besson, when denying the existence of a valid arbitration agreement, the national court that rendered the prior judgment also decided on the material scope of application of the EC Regulation/​ Lugano Convention. Because the material applicability of these instruments can be reviewed at the recognition and enforcement stage, the question of the arbitral jurisdiction can also be reconsidered at that point).

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Chapter 6:  Transnational Principles seat, notwithstanding the fact that it was rendered in violation of the arbitration agreement and Article II(3) of the Convention.203 4. Conclusion 6.135 Transnational law should govern the res judicata effects of national court judg-

ments before international commercial arbitral tribunals, albeit that the law of the country where the national court judgment was rendered may be relevant in determining whether a judgment constitutes a res judicata. In particular, transnational law should ultimately determine which type of national court decision may be able to have res judicata effects in arbitration proceedings. It should also determine the scope of the res judicata effects to be given to an earlier judgment, as well as the requirements for the application of the res judicata doctrine.

6.136 Judicial decisions rendered by a judicial court or tribunal that finally and conclu-

sively determine a dispute ‘on the merits’ may have res judicata effects in an international commercial arbitration. Reference to the law of the country where the judgment was rendered may be made to help to determine whether the decision was rendered by a judicial tribunal and whether the decision is final and binding. However, whether a judgment is ‘on the merits’ for res judicata purposes should be determined autonomously. While decisions determining the substance of a dispute should have res judicata effect, the same should generally not apply to national court decisions regarding arbitral jurisdiction. Likewise, while national court decisions denying interim relief should have preclusive effects before arbitral tribunals seized of an identical request for interim relief, this should generally not apply to court decisions granting such a request.

6.137 Unless the parties agree otherwise, a national court judgment that qualifies as a res

judicata should have claim and issue preclusive effects in subsequent arbitration proceedings. Thus, a judgment’s res judicata effect should extend to the determination of issues of law or fact that were actually raised and decided in the reasons of an earlier judgment and the determination of those issues was essential or fundamental to the judgment. However, international commercial arbitral tribunals should not generally be bound by a national court’s determination of a preliminary issue, where that issue constitutes the main issue in the arbitration. Finally, the abuse of process doctrine should also apply in international commercial arbitration. Accordingly, a party should be precluded from raising in an international commercial arbitration a claim or issue of law or fact that was not, but could and should have been, already raised by that party and decided in an earlier court judgment, provided that raising the particular claim or issue in the arbitration would amount to procedural unfairness or abuse.

6.138 With regard to the requirements for the application of the res judicata doctrine,

while international commercial arbitral tribunals should generally apply the 203

  See paras 6.27–​6.28.

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B.  Prior Arbitral Awards traditional requirements, it is contended that arbitral tribunals should seek to develop a test that is based on transnational law and guided by the abuse of right principle. Before granting res judicata effect to a national court judgment rendered in a country other than the country of the arbitral seat, arbitral tribunals should also verify that the judgment in question is ‘valid’. This test should largely coincide with the test for whether a foreign judgment is capable of recognition at the place of arbitration.

B.  Res Judicata in Cases of Prior Arbitral Awards Before International Commercial Arbitral Tribunals For the reasons set out in this section, substantially the same res judicata principles 6.139 should apply where the earlier decision is an arbitral award. Hence, much of the foregoing analysis applies mutatis mutandis regarding the res judicata effect of a prior arbitral award. As in the first section of this chapter, an introductory remark must be made with 6.140 respect to the relevance of domestic laws. As was seen in Chapter 4, the lex arbitri governing both arbitration proceedings will generally contain little guidance with regard to res judicata. Furthermore, due to the specificity of international commercial arbitration and its autonomy from national legal systems, the domestic res judicata rules of the first and second arbitral seats should not be directly and necessarily applicable in the arbitration.204 The transnational approach to res judicata is particularly justified where the prior 6.141 decision is an international arbitral award, considering that an award does not have the same relation to the legal system of the arbitral seat as a national court judgment to the local legal system.205 International arbitral tribunals should seek to develop the precise contours of transnational res judicata rules, including the notion of an award that qualifies as a res judicata (or ‘res arbitrata’), the scope of the res judicata effects to be given to a prior award, as well as the requirements that need to be met for an award to operate as a res judicata in further arbitration proceedings.206 In doing so, international arbitral tribunals may refer to the sources of transnational law identified in Chapter 5.207 As seen earlier, in addition to international commercial arbitration law and practice, such sources include domestic res judicata rules, in particular general principles of law derived from comparative domestic law.208 In

  See paras 5.37 et seq.   Born, pp. 3768–​9. 206   In this sense, see Hascher, pp. 25 et seq. 207   See paras 5.95 et seq. 208   Arbitral tribunals may sometimes deem it appropriate to ‘double-​check’ their solutions against those domestic res judicata rules that have a close connection to the parties and the dispute, 204 205

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Chapter 6:  Transnational Principles addition, to avoid annulment of their award, the arbitrators should always consider the law of their place of arbitration. 1. Constituent elements of a res judicata 6.142 It is generally accepted that ‘arbitral awards’ have res judicata effect. What is more,

under many national laws, only ‘arbitral awards’, to the exclusion of other decisions issued by the arbitral tribunal, may have res judicata effect.209 However, there is no express definition in international commercial arbitration law of an ‘arbitral award’.210 Therefore, it is necessary to begin by identifying an arbitral award in general terms. Thereafter, the constituent elements of an arbitral decision capable of having res judicata effects in further arbitration proceedings will be determined.

a. An arbitral award 6.143 There currently is no legislative definition of the term ‘arbitral award’.211 International commercial arbitration conventions, such as the European Convention, are generally silent and the New York Convention merely states that ‘[t]‌he term ‘arbitral award’ shall include not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted’.212 6.144 As seen earlier, because no agreement on an acceptable general definition could be

reached, the term ‘award’ was left undefined in the United Nations Commission on International Trade Law (UNCITRAL) Model Law.213 Similarly, the ICC working party on dissenting opinions and interim and partial awards did not reach a consensus on a general definition of the terms ‘award’, ‘interim award’, and ‘partial award’.214 National arbitration laws often do not contain an express definition of the term ‘award’ and the way in which the term is interpreted may vary among jurisdictions.215

including the res judicata rules and principles governing the preclusive effects of arbitral awards at the place of arbitration where the first award was rendered. This solution was adopted by the arbitrators in ICC Case No. 13509 of 2006, 4 Journal du droit international 1205 (2008). The arbitrators made clear that they would look at French law merely as a source of inspiration without being bound by it, even though the seat of the arbitration was in France, the first award was rendered in France, the law governing the merits in both arbitrations was French law, and both parties to the arbitration relied on French law with regard to res judicata. The tribunal held that, in these circumstances, it would be appropriate to look at French res judicata rules, always pointing out however that it was not bound by these rules (see para. 4.131). 209  Born, p. 2918. 210  Ibid., p. 2919. 211  Ibid., pp. 2919–​21; Christoph Liebscher, The Healthy Award (2003), pp. 115 et seq.; ILA, Final Report, para. 18; Julian D.M. Lew, Loukas A. Mistelis, and Stefan M. Kröll, Comparative International Commercial Arbitration (2003), para. 24-​4. 212  Article I(2) of the New York Convention. 213  See paras 4.95 et seq. 214 See Liebscher, p. 115. 215  See paras 4.57 and 4.75.

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B.  Prior Arbitral Awards According to the ILA, because no international consensus is likely to emerge in 6.145 the near future regarding the characterization of ‘arbitral awards’ and ‘procedural orders’, the lex arbitri of the arbitration having given rise to the prior decision should determine whether that prior decision constitutes an award for the purposes of res judicata.216 The ILA therefore proposes to transpose to arbitral awards the conflict-​ of-​laws rule usually applicable to national court judgments. However, in order not to impair the aim of the transnational approach to produce uniform results and predictability in the application of the res judicata doctrine in international commercial arbitration, the better approach would appear to be for arbitral tribunals to seek to develop a transnational notion of ‘arbitral award’ capable of operating as a res judicata, looking at the lex arbitri of the prior award for guidance only.217 It has been submitted that ‘a reasonably clear definition of the concept [of an arbitral 6.146 award] can be derived from judicial authorities under the New York Convention and national arbitration legislation and from the purposes of these instruments’.218 Arbitral awards, it is further submitted, generally present three key features. First, the award must result from an agreement to ‘arbitrate’, rather than to do something else, such as litigate, mediate, or obtain an expert determination. Secondly, the award must have certain minimal formal characteristics in that only written decisions made by the arbitrators can constitute arbitral awards. Finally, an award must represent the final and binding expression of the tribunal’s decision on a substantive issue.219 Accordingly, it is widely accepted that an arbitral award is a written instrument, drafted and signed by the arbitral tribunal, stating the tribunal’s final decision on particular claims or disputes.220

 ILA, Final Report, para. 18.   In this sense, see Hascher who refers to ICC Case No. 6079 of 1992 where an arbitral tribunal, based on a broad arbitration agreement and Kompetenz-​Kompetenz, as well as the principle of party autonomy held that is was not bound by its own prior (interim) decision (p. 27). 218  Born, pp. 2919–​20. 219  Ibid., pp. 2923–​7, with references. See also Lew, Mistelis, and Kröll, paras 24.12 et seq., according to whom any decision that finally resolves a substantive issue affecting the rights and obligations of the parties is an award. An award concludes the dispute over the specific issue determined in the award, disposes of the parties’ respective claims, may be confirmed by recognition and enforcement, and may be challenged in the courts at the arbitral seat. See also Alan Redfern, Martin Hunter, Nigel Blackaby, and Constantine Partasides, Law and Practice of International Commercial Arbitration (5th ed. 2009), paras 9-​05 et seq. Liebscher proposes defining an ‘award’ as an act capable of direct challenge before the courts at the arbitral seat (p. 115). 220  Born, p. 2928. See, however, Article 189 PILA, according to which ‘(1) The arbitral award shall be made in conformity with the rules of procedure and the form agreed by the parties. (2) In the absence of such agreement, the award shall be made by a majority decision, or, in the absence of a majority, by the presiding arbitrator alone. It shall be in writing, reasoned, dated and signed. The signature of the presiding arbitrator shall suffice’. While a waiver of the written-​form requirement is therefore possible in theory under Swiss law, such a waiver should be extremely rare in practice as it implies a waiver of the parties’ right to obtain both an enforceable instrument and a title capable of being the subject of an annulment action (Berger and Kellerhals, para. 1482; Markus Wirth, Ad Article 189 PILA, in Basler Kommentar Internationales Privatrecht (Heinrich 216 217

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Chapter 6:  Transnational Principles 6.147 Consequently, the term ‘arbitral award’ thus defined covers any written de-

cision by the arbitrators that finally resolves one or more of the parties’ substantive claims, including claims for non-​monetary relief, such as declaratory or injunctive relief.221 The way in which a document is labelled is not decisive for its status as an ‘arbitral award’. What matters is the substance of the instrument.222

6.148 While there is some uncertainty whether procedural decisions, as opposed to deci-

sions ‘on the merits’, may qualify as ‘arbitral awards’, 223 it appears to be widely accepted that the notion of ‘arbitral award’ generally covers decisions by which the arbitral tribunal fully or partially decides matters of procedure or substance, whether as preliminary questions or main issues.224

6.149 With regard to arbitral decisions on jurisdiction, it will be seen later that while

there is some uncertainty, most commentators agree that both positive and negative arbitral decisions on jurisdiction constitute ‘arbitral awards’.225

6.150 There also is widespread support in favour of the view that arbitral decisions on

preliminary substantive issues, such as on the issue of liability or the applicable law, constitute ‘arbitral awards’ to the extent that they grant declaratory relief, rather than merely providing reasoning in support of a conclusion.226 Such arbitral decisions on preliminary substantive issues should in principle be able to have preclusive effects between the parties in that they finally decide a significant aspect of their dispute. They terminate the proceedings in respect of the specific issues they decide.227

6.151 The question is more difficult with respect to arbitral decisions on provisional

measures. According to some authorities, such decisions do not constitute ‘arbitral awards’ since they are not ‘final’.228 In some countries, for example Switzerland, arbitral decisions on provisional measures do not constitute ‘arbitral awards’.229 Also, even where decisions on provisional measures may qualify as ‘awards’, they Honsell, Nedim Peter Vogt, Anton K. Schnyder, and Stephen V. Berti ed., 3rd ed., 2013), para. 31, with references). 221  Born, pp. 2930–​1. 222  Ibid., pp. 2923 and 2930, with references. 223  See ibid., pp. 2932–​3, with references. 224  See, e.g., Berger and Kellerhals, para. 1454. 225  See paras 6.183 et seq. See also Fouchard, Gaillard, and Goldman, para. 1357; Born, pp. 2930 and 2935–​6. 226  Born, pp. 2936–​7, with references. It is worth noting that in Switzerland such awards constitute interim or preliminary awards and, under Swiss law, the traditional res judicata principles do not usually apply to such awards. But they are binding on arbitral tribunals seated in Switzerland during the further course of the proceedings (see para. 4.75). 227  Born, p. 2937. See also Lew, Mistelis, and Kröll, paras 24-​24 et seq. 228  Born, International Arbitration: Law and Practice, p. 210, with references. 229  See para. 4.75.

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B.  Prior Arbitral Awards may be considered as ‘interim awards’ and, as such, not fall under the New York Convention.230 By contrast, according to Born, the better view is that interlocutory decisions by the arbitrators on disputed issues should generally be regarded as awards, under both international arbitration conventions and arbitration legislation, provided that they finally dispose of a request for relief by one of the parties in a decision involving the application of legal rules to a factual record. This conclusion applies in particular to arbitral decisions on requests for provisional measures, stays of arbitral proceedings and disclosure. 231

It is not necessary to decide here whether arbitral decisions on provisional meas- 6.152 ures should be considered as genuine arbitral awards, which may be challenged in annulment proceedings before the courts at the place of arbitration or recognized and enforced under the New York Convention. As will be seen later, whether or not such decisions should qualify as ‘arbitral awards’, the principles of res judicata should in any event apply to them mutatis mutandis.232 Finally, it is worth noting that ‘arbitral awards’ must be distinguished from ‘pro- 6.153 cedural orders’ in that it is generally accepted that the former, but not the latter, may have res judicata effect. It has been submitted that there is ‘a substantial degree of unanimity regarding the differences between an “arbitral award” and a “procedural order”’ and that ‘[i]‌n the vast majority of cases, there is little dispute about what is an award and what is an order’.233 Indeed, while arbitral awards state the tribunal’s final decision on particular claims or disputes, procedural orders are decisions of the arbitral tribunal that aim to organize the procedure, relate to technical and procedural matters, and are rendered without formality or reasoning.234 These are purely procedural or administrative decisions that generally ‘deal with administrative or logistical matters, scheduling of hearings or submissions, disclosure or discovery issues and the like’.235

230  See, e.g., Lew, Mistelis, and Kröll, paras 24-​25–​24-​28. According to these authors, the term ‘interim award’ is often used interchangeably with that of ‘partial award’ (Lew, Mistelis, and Kröll, para. 24-​24. See also Redfern, Hunter, Blackaby, and Partasides, paras 9-​19 et seq.; Fouchard, Gaillard, and Goldman, para. 1357; Mauro Rubino-​Sammartano, International Arbitration Law and Practice (2nd ed. 2001), pp. 736 et seq.; Klaus Peter Berger, International Economic Arbitration (1993), p.  588). To avoid confusion Lew, Mistelis, and Kröll (see also Fouchard, Gaillard, and Goldman, para. 1359; Berger, p. 591) suggest that the term ‘partial award’ should cover all awards that settle specific issues before the arbitrators, including issues of jurisdiction, applicable law, or liability. By contrast, the term ‘interim award’ should only designate awards that are not ‘final’ in the sense that they do not finally determine an issue and cannot be challenged independently from the final award (Lew, Mistelis, and Kröll, paras 24-​24 et seq.). They do not terminate any aspect of the dispute before the arbitrators. 231  Born, p. 2934. 232  See paras 6.191 et seq. 233  Born, p. 2928. 234  Lew, Mistelis, and Kröll, paras 24-​25 et seq. 235  Born, p. 2927.

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Chapter 6:  Transnational Principles b. A final and binding arbitral award 6.154 There is no consensus among national laws as to the moment at which awards become res judicata. An arbitral award may be res judicata as at the time the award is rendered,236 signed,237 communicated to the parties,238 or at such time as means of recourse can no longer be instituted against the award.239 As was seen previously, no provision specifying the date when an award becomes res judicata was included in the UNCITRAL Model Law due to lack of agreement as to which date should be retained.240 6.155 According to the ILA’s Recommendation No. 3.1, an arbitral award should be-

come res judicata when it has become final and binding in the country of origin. The Final Report specifies that ‘the Recommendations do not deal with the moment at which arbitral awards constitute res judicata’.241 However, they proceed on the basis that, and apply only from such time as, the arbitral award can no longer be challenged before the domestic courts at the place of arbitration: either no challenge can be brought against the award or a challenge has been denied by a final decision of a domestic court at the place of arbitration.242 Hence, an award should be given preclusive and conclusive effects under the Recommendations not as of the moment it constitutes a res judicata pursuant to the lex arbitri (namely when it is rendered, communicated to the parties, or other), but as of the moment it can no longer be challenged before the supervisory courts at the arbitral seat.243

6.156 The better view appears to be to generally consider arbitral awards as final and

binding for res judicata purposes once they are rendered and no longer subject to an appeal with suspensive effects on the merits, subject to an agreement of the parties. Arbitral tribunals should seek to develop a transnational res judicata rule stipulating the moment at which arbitral awards should be considered as final and binding. This should be the moment at which the award is final and binding on the parties and the tribunal that rendered it. Drawing a parallel with Article V(1)(e) of the New York Convention, this should be the moment when the award has become ‘binding’ for the purposes of recognition and enforcement. The predominant view is that the term ‘binding’ under Article V(1)(e) should be given an autonomous interpretation in the sense that it is not subject to national law determination: the award becomes ‘binding’ at a moment prior to the setting aside   See, e.g., Article 1484 F-​CPC.   See, e.g., Article 824 bis Italian Arbitration Act 2006. 238  See, e.g., Article 190(1) PILA. 239  See, e.g., Article 1703 Judicial Code 1998 (Belgium). Under Article 1713(9) of the 2013 Judicial Code the award, once rendered, ‘shall have the same effect as a court decision in the relationship between the parties’. However, the parties still have the possibility of providing for an appeal against the arbitral award in the arbitration agreement (Article 1716 of the 2013 Judicial Code). 240  See paras 4.93 et seq. 241 ILA, Final Report, para. 31. 242  Ibid., para. 31. 243  In this sense, see also Rubino-​Sammartano, p. 797. 236 237

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B.  Prior Arbitral Awards proceedings, namely once it is rendered and not (or no longer) subject to appeal on the merits before a judge or an appeal arbitral tribunal.244 This autonomous interpretation should include agreements of the parties: the award should also be considered as ‘binding’ where the parties agreed, directly or indirectly, that the award would be final and binding upon being rendered, regardless of the possibility of an appeal.245 If the award may be recognized and enforced once it has become ‘binding’ thus defined, then it should also have res judicata effects at that moment.246 This is in line with the fact that arbitral awards are made by the arbitrators and are often effective under national laws once made or notified to the parties. The role of the supervisory courts at the arbitral seat is not to give effect to an award by granting it a seal of approval and arbitral awards may be recognized and enforced under the New York Convention even if the parties choose not to challenge them before the courts of the arbitral seat.247 Moreover, it is generally accepted that even arbitral awards that have been annulled 6.157 by the supervisory courts at the place of arbitration may, in principle, be recognized and enforced under the system of the New York Convention. Indeed, it is usually accepted that Article V(1)(e) of the Convention merely allows, but does not require, the refusal to recognize or enforce an annulled award. Recognizing arbitral awards as final and binding for res judicata purposes only once they can no longer be challenged or have been upheld by the domestic supervisory courts at the place of arbitration, appears to be inconsistent with this premise. Therefore, subject to the parties’ agreement, arbitral awards should generally be 6.158 considered as final and binding for res judicata purposes once they are rendered and not or no longer subject to an appeal with suspensive effects on the merits, regardless of whether the award remains subject to setting aside actions in the country where it was rendered on the basis of restrictive grounds, such as those provided for under the UNCITRAL Model Law.248

244  Albert Jan Van den Berg, The New York Arbitration Convention of 1958 (1981), p. 395; Lew, Mistelis, and Kröll, para. 26-​101; Redfern, Hunter, Blackaby, and Partasides, para. 11-​85; Rubino-​Sammartano, pp. 791 et seq.; Poudret and Besson, para. 918. See also Born, pp. 3609 et seq. 245  Born, pp. 3616–​19. 246  Berger recommends that the arbitrators reach an agreement with the parties to fix in the award the exact moment at which it becomes res judicata (Berger, pp. 613 et seq.). 247  Philippe Pinsolle, The Status of Vacated Awards in France: the Cour de Cassation Decision in Putrabali, 24(2) Arbitration International 277, 289 (2008). 248  That said, as will be seen in the following section, for reasons of coherence and efficiency, an arbitral award that was annulled in the country of the arbitral seat generally should no longer be considered as valid and operate as a res judicata in further or other arbitration proceedings. Therefore, it may sometimes be more appropriate for arbitral tribunals to give res judicata effect to prior arbitral awards only once they can no longer be challenged at the arbitral seat, e.g. where the deadline for bringing annulment proceedings will expire or where annulment proceedings have been brought and the local courts can be expected to render a decision within a reasonable period of time.

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Chapter 6:  Transnational Principles c. A valid arbitral award 6.159 According to the ILA, awards must not only be final, but also ‘valid’ pursuant to the lex arbitri of the prior or other arbitration proceedings. Awards set aside at the arbitral seat will no longer be valid and thus no longer produce conclusive and preclusive effects.249 6.160 At first sight, this solution appears at odds with the autonomous nature of inter-

national commercial arbitration and the general premise that an arbitral award may, in principle, be recognized and enforced under the New York Convention even if it has been annulled by the supervisory courts at the place of arbitration. If an annulled award does not lose its validity for the purposes of recognition and enforcement under the New York Convention, then it also cannot lose its validity for the purposes of res judicata. Consequently, annulled awards may be given res judicata effect in further arbitration proceedings.

6.161 However, for reasons of legal coherence, certainty, and efficiency, it does not appear

useful generally to give res judicata effects to annulled arbitral awards in practice. By determining an arbitral seat the parties also choose the supervisory courts of that seat to review the award. The task of those courts is to ensure the efficacy of the arbitration.250 Indeed, annulment proceedings constitute a mechanism of recourse against an arbitral award to ensure that the proceedings and the award meet fundamental standards of justice. They constitute less a tool at the disposal of the state to control international arbitration proceedings, but rather a tool serving the parties by providing them with the security and certainty that justice was done. Annulment proceedings are generally undertaken at the initiative of a party, not at the initiative of the supervisory courts of the arbitral seat.251

6.162 In the absence of a centralized international arbitration body, 252 the domestic courts

at the arbitral seat are the appropriate forum for such supervisory proceedings.

249 ILA, Final Report, paras 32 et seq. See also Diag Human SE v The Czech Republic [2014] EWHC 1639 (Comm), paras 14–​21, 48–​50, and 64–​91. 250  Jean-​Baptiste Racine, Réflexions sur l’autonomie de l’arbitrage commercial international, Rev. arb., No. 2 (2005), para. 34; Howard M. Holtzmann, L’arbitrage et les tribunaux: des associés dans un système de justice internationale, Rev. arb. (1978), p. 253; Julian D.M. Lew, Achieving the Dream: Autonomous Arbitration, 22(2) Arbitration International 179, 181 (2006). 251  Lew, p. 181. It is worth noting that the parties generally want to have the possibility of challenging their awards in annulment proceedings. This is illustrated by the failed attempt in Belgium to exclude annulment proceedings between foreign parties (see fn 124, para. 5.60). 252  This was suggested by Philippe Fouchard, Suggestions pour accroître l’efficacité internationale des sentences arbitrales, Rev. arb. (1998), paras 49 et seq.; Howard M. Holtzmann, A task for the 21st century: creating a new international Court for resolving disputes on the enforceability of arbitral awards, in The Internationalisation of International Arbitration (1995). The establishment of an international arbitration court for resolving disputes over the enforcement of arbitral awards was described as ‘the impossible dream’ by Charles N. Brower I, Charles H. Brower II, and Jeremy K. Sharpe, The Coming Crisis in the Global Adjudication System, 19(4) Arbitration International 415, 436 (2003). See also OGEMID discussion of February 2009 on New Appeal Procedures on Arbitral Awards in Israel.

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B.  Prior Arbitral Awards Their authority to annul an award is justified by the choice of the parties, who have chosen the arbitration law and domestic courts of the arbitral seat to support their arbitration. These courts were chosen by the parties in view of their neutrality and reliability.253 They are also the appropriate courts to review an award in the application of the arbitration law of the arbitral seat.254 If these supervisory courts annul the award, it should not usually be given res judicata effects in further arbitration proceedings, as this may lead to irreconcilable decisions which may be enforced in parallel in different countries. The practice to refuse the recognition and enforcement of annulled awards may promote the coherence and harmony of arbitral decisions within the international commercial arbitration system. The fact that there is a possibility under the New York Convention to recognize and enforce an annulled award is a sign that an annulled award does not cease to exist. However, for reasons of efficiency and coherence it would in general appear prefereable not to give res judicata effects to an annulled award. Accordingly, an arbitral award that was annulled in the country of the arbitral seat 6.163 should usually no longer be considered as valid and operate as a res judicata in further or other arbitration proceedings.255 d. An arbitral tribunal with jurisdiction over the parties and the subject matter? As in the case of a prior national court judgment, where the res judicata effects of 6.164 a prior arbitral award are invoked before an international commercial arbitral tribunal, the question is raised as to both tribunals’ jurisdiction over the dispute. The second arbitral tribunal generally has the power to examine its own jurisdiction. Moreover, where one party contests the jurisdiction of the first tribunal to render the previous award, it may be argued that the arbitral tribunal before which the res judicata doctrine is raised should in principle be able to pronounce itself, at least indirectly, on the jurisdiction of the first tribunal, as the second arbitral tribunal’s power to exercise its own jurisdiction over the dispute is at stake. 256 If the arbitral tribunal accepts jurisdiction over the entire dispute, it excludes at the same time (in whole or in part) the jurisdiction of the other tribunal, depending on the scope of the jurisdictional overlap between the two sets of arbitral proceedings. That said, it is doubtful whether the second arbitral tribunal is the appropriate 6.165 forum for reviewing the jurisdiction of the first tribunal. If one party contests the jurisdiction of the first tribunal, it usually should do so before the supervisory courts of the first arbitral seat or in recognition and enforcement proceedings.257   Poudret and Besson, para. 518.   Ibid., para. 1013. 255  However, as will be discussed later, an arbitral award may still be considered as valid for res judicata purposes if it was refused recognition or enforcement in the country of the subsequent arbitral seat for one of the grounds listed in Article V of the New York Convention (see para. 6.220). 256 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 196. 257  Born, p. 3773, n. 227. 253

254

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Chapter 6:  Transnational Principles These courts (not a further arbitral tribunal) have been chosen by the parties to review the prior award, including the prior arbitral tribunal’s decision on jurisdiction. In addition, arbitral tribunals are generally reluctant to act as ‘appeal bodies’ and to review the awards of other arbitral tribunals.258 Arbitral tribunals will usually be slow to review a prior arbitral tribunal’s assessment of the arbitration agreement, preferring to await the outcome of annulment proceedings. 6.166 As will be discussed in further detail later, where the arbitration proceedings giving

rise to the first award were held in a different country, the second arbitral tribunal may have to assess whether the first award will be capable of recognition at the second place of arbitration, usually under the New York Convention.259 This may involve an assessment of whether the first award was based on a valid arbitration agreement. Where the first award was not challenged or where the annulment court denied a lack of jurisdiction, the second arbitral tribunal may not have to review again the validity of the arbitration agreement.260 However, the second arbitral tribunal may have to determine whether the dispute in the first arbitration is arbitrable pursuant to the law of the enforcement country; that is, the arbitral seat of the other or subsequent arbitration proceedings.261

e. An arbitral award ‘on the merits’ 6.167 According to the ILA, only full final awards (including consent awards), partial final awards, and awards on jurisdiction may qualify as res judicata. This means that only awards that contain ‘final determinations’ may operate as a res judicata in further arbitration proceedings, whether these determinations are on the merits or on jurisdiction. 262 By contrast, no res judicata effect should attach to prior preliminary or provisional determinations or procedural orders. 263 In this respect, it is worthy of note that the ILA Recommendations on res judicata do not apply to arbitral decisions regarding interim measures. As will be seen later, arbitral decisions granting interim relief are not final and conclusive in the sense that they may be rescinded or modified by the arbitral tribunal in the event of a change in circumstances. However, as in the case of national court decisions on interim relief, such decisions should generally have preclusive effects, akin to res judicata effects. 264

258  See, in particular, ICC Case No. 3383, 1979, Collection of ICC Arbitral Awards (1974–​1985) (Sigvard Jarvin and Yves Derains ed., 1990), pp. 394 et seq. (paras 4.132 et seq.). See also Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 196; Debourg, para. 512, with references. 259  See paras 6.215 et seq. 260  Article V(1)(a) of the New York Convention. 261  Ibid., Article V(2)(a). 262 ILA, Final Report, para. 19. 263  Ibid., paras 19 and 22 (see paras 6.57 et seq.). 264  See paras 6.191 et seq. See also paras 6.57 et seq.

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B.  Prior Arbitral Awards This is broadly in line with the earlier conclusions regarding the definition of an 6.168 ‘arbitral award’. As was seen, the term ‘arbitral award’ generally describes a written instrument, drafted and signed by the arbitral tribunal, stating the tribunal’s final decision on particular claims or disputes.265 This is also corroborated by the survey of arbitration case law conducted in 6.169 Chapter 3, which showed that res judicata issues primarily arise in the case of a prior final (full or partial) award on the merits or on jurisdiction. In addition, the survey has highlighted situations in which a prior arbitral award is most likely to give rise to res judicata issues in other or further arbitration proceedings:  while res judicata issues may arise with respect to prior awards on the merits in an identical case, in most cases the prior award on the merits was rendered in a slightly different case. Furthermore, on several occasions arbitral tribunals have had to decide whether they should be bound by prior positive or negative decisions on jurisdiction. It was also seen that arbitral tribunals had to determine whether and to what extent they should be bound by their own prior partial awards. It is necessary to further investigate which type of prior arbitral award should be 6.170 able to operate as a res judicata in other or further arbitration proceedings; that is, which type of prior arbitral decision should be considered as rendered ‘on the merits’ for the purposes of res judicata. Prior full final award in an identical case  A prior full final award in an iden- 6.171 tical case should be considered as ‘on the merits’ for res judicata purposes. Such awards are clearly covered by Article III of the New York Convention. As in the case of prior national court judgments, the situation where a prior full 6.172 final award was rendered on the merits in exactly the same case should be rare and may typically arise where one party contests the jurisdiction of the first arbitral tribunal. Hence, a central question is whether the arbitral tribunal before which the res judicata doctrine is raised should be entitled to determine its own jurisdiction and rearbitrate the dispute if it finds that it has jurisdiction over the parties and the subject matter. This will entail an assessment of the jurisdiction of the first tribunal. As suggested earlier, arbitral tribunals will generally be reluctant to review the 6.173 prior award’s legality and regularity, in particular the first arbitral tribunal’s jurisdiction. 266 Unless the parties have waived the res judicata effects of the first award, in most cases arbitral tribunals will probably refuse to reopen the case where the first tribunal has accepted jurisdiction and has rendered a full final award on the merits in an identical case.

265

  See paras 6.146 et seq.   See paras 6.164 et seq.

266

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Chapter 6:  Transnational Principles 6.174 Reconsidering the dispute in such circumstances would often be contrary to prin-

ciples of procedural efficiency and economy. It may be a waste of valuable resources if the first arbitral award was rendered (or recognized) in the country where the other arbitral tribunal has its seat; the second award may risk being set aside if it was rendered in disregard of the first award’s res judicata effect and is irreconcilable with that award. In this case, it will also not be recognised and enforced in most other countries.

6.175 It may be argued that where a prior arbitral award was rendered on the merits,

then another arbitral tribunal cannot decide the same dispute based on the same arbitration agreement. According to this line of argumentation, the parties to an arbitration agreement have consented to submit their dispute to one arbitral tribunal. Once this arbitral tribunal has finally decided the dispute in question, the arbitration agreement covering the dispute has exhausted its effects and is no longer valid or operable.267 The exception is where the parties have waived the res judicata effects of the prior arbitral award and agreed to resubmit the dispute to arbitration.268 However, in the absence of such a waiver, a new award would be considered to have been rendered without any jurisdictional basis and thus risks being set aside at the arbitral seat and refused recognition and enforcement pursuant to Article V(1)(a) of the New York Convention.

6.176 This argument seems valid if the first arbitral tribunal had jurisdiction under the

arbitration agreement. If the award is annulled, it should be possible for the parties to obtain a new award based on the same arbitration agreement.269 Moreover, if another arbitral tribunal considers that it has jurisdiction over the parties and the dispute based on the arbitration agreement in question, it will not consider this agreement as having been ‘used up’ by the first tribunal. The question, therefore, is whether the second arbitral tribunal is bound by the first tribunal’s decision on jurisdiction. This will be discussed in further detail later.270

267  In this sense, see Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 196 and Mayer, L’obligation de concentrer la matière litigieuse s’ impose-​t-​elle dans l’arbitrage international?, p. 415. See also Schlosser, p. 374. According to Schlosser, the prior (national court) decision must have become res judicata. Contra: Schlaepfer, p. 335; Kaufmann-​Kohler and Rigozzi, para. 7.188. 268  In this case it may be argued that the parties have concluded a new arbitration agreement. See Permanent Court of Arbitration (PCA), The Government of Sudan v The Sudan People’s Liberation Movement/​Army, Final Award, 22 July 2009, paras 450 et seq., available at http://​w ww.pca-​cpa. org (‘Whatever the [res judicata] status of the ABC Experts’ Report, the Arbitration Agreement concluded by the Parties in 2008 had the effect of reopening questions that had been accepted as “final and binding,” thus novating the issues for decision in accordance with the contingencies in Article 2. When both Parties consented to this arbitration, that consent extended to all the matters provided under Article 2 of the Arbitration Agreement, and had the effect of re-​opening the ABC Experts’ Report to “excess of mandate” review under Article 2(a) and a potential new delimitation exercise under Article 2(c)’). 269  In this sense, see Kaufmann-​Kohler and Rigozzi, para. 7.188. 270  See paras 6.183 et seq.

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B.  Prior Arbitral Awards At this point it should be noted that considerations of legal coherence, certainty, 6.177 and efficiency should usually militate against reconsidering the dispute. A situation where it might be appropriate for an arbitral tribunal to reconsider a dispute is where the previous award is a default award. In this case the subsequent tribunal must be careful not to violate a party’s right to due process (in particular, its right to have its ‘day in court’) by refusing to decide the dispute brought before it by the party who failed to participate in the prior arbitration. In general, a party should not be under an obligation to participate in an arbitration if it considers the arbitral tribunal to lack jurisdiction. However, default awards are generally acceptable and capable of having res judicata effects provided each party was given an opportunity to present its case and to reply to the arguments of the other party. If there is evidence that copies of all notices and submissions were sent to the parties in time and by recorded delivery and the defaulting party simply refused to participate, the award will normally be acceptable.271 If the default award was not challenged by the defaulting party or was upheld by the supervisory courts of the arbitral seat, a subsequent arbitral tribunal should generally not reconsider the dispute.272 Prior full final award in a different case  As in the case of a prior national court 6.178 judgment, a prior award that finally disposes of the merits of a dispute in a case that overlaps to a certain degree with the one before the second tribunal may generally be considered as ‘on the merits’ for res judicata purposes. As in the first section of this chapter, the question concerns the scope of res judicata 6.179 effects that arbitral tribunals can or should afford to prior arbitral awards. It will be examined in further detail later.273 Prior partial final award  Partial final awards that finally determine a spe- 6.180 cific part of the parties’ dispute and can be challenged before the supervisory courts of the arbitral seat are usually recognized as having res judicata effects in the same manner as full final awards. 274 As full final awards, they are covered by Article III of the New York Convention and must therefore be recognized as binding. The above should hold true whether the res judicata effect of a prior partial award 6.181 is invoked before a different arbitral tribunal or before the same tribunal. That said, the principle that a partial award has res judicata effect before the tribunal that rendered it might give rise to problems in practice. In the debate of 7 February 2001 on the res judicata effects of arbitral awards, Reymond noted that problems

  Lew, Mistelis, and Kröll, para. 24-​32.  See Born, p. 3773. 273   See paras 6.195 et seq. 274   Born, p. 3772; Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 279; Lew, Mistelis, and Kröll, para. 24-​17. 271

272

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Chapter 6:  Transnational Principles may arise, for example, if the arbitrators realize at a later stage in the proceedings that they did not consider certain issues of fact or law important to the decision in the prior partial award. In such a situation, arbitrators will seek to limit the scope of the res judicata effect of the prior partial award as much as possible. Hascher confirmed that on several occasions arbitral tribunals have reverted to ‘acrobatics’ (‘des acrobaties qui sont quand même difficiles à accepter’275) to avoid the res judicata effect of their own partial awards. While the arbitral tribunals stated that they were merely interpreting their partial award, in reality they were reconsidering the prior decision.276 6.182 However, the interests of finality, efficiency, and legal certainty outweigh these dif-

ficulties and they should not therefore give rise to an exception to the res judicata effect of prior partial awards.277 Difficulties may be mitigated if arbitral tribunals follow a cautious approach with regard to the rendering of partial awards.278

6.183 Prior award on jurisdiction  The question whether an arbitral tribunal’s deci-

sion on jurisdiction has res judicata effect in further or other arbitral proceedings merits special attention.

6.184 There is some controversy as to whether an arbitral tribunal’s decision on juris-

diction may be considered to be a genuine award.279 However, the majority of  Hascher, p. 39.   Ibid., pp. 38 et seq. 277  A widely accepted exception to res judicata exists where a prior award has been procured by fraud. As was seen earlier, in Antoine Biloune et al. v Ghana Investments Centre et al., Awards of 27 October 1989 and 30 June 1990, Yearbook Commercial Arbitration, Vol. XIX (A.J. van den Berg ed., 1994), pp. 11 et seq., the UNCITRAL tribunal, applying customary principles of international law, held that it would exceptionally reconsider its prior partial award if it was shown by credible evidence that the tribunal had been the victim of fraud and that its determinations in the previous award were based on false testimony (see paras 4.170 et seq). 278  See, e.g., Redfern, Hunter, Blackaby, and Partasides, para. 9-​ 28. See also Berger, p. 592. 279  According to Boo, arbitral decisions on jurisdiction do not constitute awards under the UNCITRAL Model Law (ML) because they cannot be challenged under Article 34 ML. However, Boo argues that a tribunal’s negative ruling on jurisdiction under Article 16 ML is final and binding, but only with regard to the particular arbitral proceedings in which the decision was rendered. For Boo, positive rulings on jurisdiction cannot be considered as awards. Although Boo does not state this expressly, he appears to suggest that the tribunal’s positive ruling on jurisdiction should be considered final and binding, at least once upheld by the supervisory courts (Lawrence Boo, Ruling on Arbitral Jurisdiction—​Is that an Award?, 3(2) Asian International Arbitration Journal 125, 128 et seq. (2007)). Jones submits that a tribunal’s decision on jurisdiction is not final and binding, because it can be reviewed by the supervisory courts at the arbitral seat. In addition, the courts in the country of enforcement are also entitled to review an arbitral tribunal’s decision on jurisdiction pursuant to Article V(1)(a) of the New York Convention. The only situation where an arbitral tribunal’s decision on jurisdiction is final and binding is where the parties have concluded an ad hoc agreement to arbitrate an existing dispute about jurisdiction which expressly gives the arbitrators sole jurisdiction to decide questions of jurisdiction arising under the agreement (Doug Jones, Kompetenz-​Kompetenz, 75(1) Arbitration: The Journal of the Chartered Institute of Arbitrators 56, 63 (2009)). The opinion that an arbitral tribunal’s negative ruling on jurisdiction cannot be considered as a genuine arbitral award with res judicata effects has also been expressed by Jacqueline Rubellin-​Devichi, Essai sur la nature de l’arbitrage (1965), para. 349, p. 234 275 276

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B.  Prior Arbitral Awards commentators appears to agree that both positive and negative arbitral decisions on jurisdiction constitute ‘genuine arbitral awards’280 and should be entitled to the same res judicata effects as other arbitral awards.281 As awards they must also be recognized as binding by national courts pursuant to Article III of the New York Convention. The ILA cautiously submits that the Recommendations on res judicata and arbi- 6.185 tration ‘do not exclude’ giving res judicata effects to awards on jurisdiction. A positive jurisdictional award finally decides that there is a valid arbitration agreement covering the dispute and the parties in question. Conversely, a negative jurisdictional award on jurisdiction may entail a final decision that no such agreement exists.282 The mere fact that these jurisdictional awards may be challenged before the supervisory courts does not deprive them of res judicata effect in other proceedings. If the jurisdictional award is annulled it will not be considered a valid award and has no res judicata effects.283 It can be argued that because international commercial arbitral tribunals are not 6.186 interchangeable,284 they should in principle be allowed to rule on their own jurisdiction if seized of a dispute, despite the existence of a prior arbitral award in an identical or related case. Furthermore, because the arbitrators owe a primary duty to the parties, they should be entitled to determine independently whether and to what extent they have jurisdiction over the dispute at hand. And they should generally exercise this jurisdiction if there is a valid arbitration agreement conferring

and Pierre Mayer, L’autonomie de l’arbitre dans l’appréciation de sa propre compétence, 217-​V Recueil des Cours de l’Académie de Droit international 319, 353, para. 23 (1989). On this controversy, see also Jean-​Baptiste Racine, La sentence d’ incompétence, Rev. arb., No. 4 (2010), paras 9–​11, pp. 736–​8 (cited as La sentence d’ incompétence); Born, pp. 2935–​6. 280  Fouchard, Gaillard, and Goldman, para. 1357. See also Born, pp. 2930 and 2935–​6. 281  Born, pp. 3772–​3; Lew, Mistelis, and Kröll, para. 24-​ 24; Sheppard, The Scope and Res Judicata Effect of Arbitral Awards, p. 278; Poudret, p. 156; Charles Jarrosson, Note—​Cour d’appel de Paris (1re Ch. C) 25 March 1994—​Société Sardisud et autre v. société Technip et autre, Rev. arb., No. 2 (1994), p. 396; Debourg, para. 513, p. 424, with references; Markus Schott and Maurice Courvoisier, Ad Article 186 PILA, in Basler Kommentar, Internationales Privatrecht (Heinrich Honsell, Nedim Peter Vogt, Anton K. Schnyder, and Stephen V. Berti ed., 3rd ed., 2013), para. 125; Berger and Kellerhals, para. 729. On this issue, see also Racine, La sentence d’ incompétence, paras 12 et seq., pp. 738 et seq. 282  A distinction must be drawn between negative jurisdictional awards which completely exclude the existence or validity of an arbitration agreement, on the one hand, and negative jurisdictional awards which find that the arbitration agreement in question cannot constitute the jurisdictional basis of a certain arbitral tribunal in a particular case, on the other hand. It has been argued that only the first category of ‘absolute’ negative jurisdictional awards should have res judicata effects in further arbitral proceedings. By contrast, the second category of ‘relative’ negative jurisdictional awards cannot preclude another arbitral tribunal from ruling on its jurisdiction because the res judicata effects of the prior award only relate to the application of a certain arbitration agreement in a particular case. The first arbitral tribunal did not finally decide the general question of arbitral jurisdiction (Debourg, para. 513, p. 425). 283 ILA, Final Report, para. 20. 284  On the issue of ‘interchangeability’, see paras 5.76 et seq.

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Chapter 6:  Transnational Principles jurisdiction upon the arbitral tribunal. One could further argue that an arbitral tribunal should not give res judicata effect to a prior arbitral decision on jurisdiction and refuse to consider its own jurisdiction on that basis, as this would be contrary to the principle of Kompetenz-​Kompetenz.285 6.187 Moreover, it can be argued that prior arbitral awards on jurisdiction should not be

treated differently to prior national court judgments on jurisdiction. Accordingly, arbitral tribunals should not generally give res judicata effect to a prior arbitral decision on jurisdiction, unless there are compelling reasons to do so. Giving due deference to the jurisdictional ruling of the first arbitral tribunal, the second tribunal should be entitled to reach its own conclusions regarding the existence and scope of its jurisdiction.286

6.188 However, it was seen earlier that one central consideration for not automatically giving

preclusive effects to a prior national court ruling on the jurisdiction of the arbitral tribunal is to protect international commercial arbitration against national court interventions the purpose of which is to frustrate the arbitration agreement.287 Arguably, this concern to protect the arbitration process also exists where the prior decision on jurisdiction was rendered by another arbitral tribunal, as there may be situations where a party initiates arbitration proceedings in an attempt to sabotage another arbitration. However, this concern appears less strong in the case of prior arbitral awards on jurisdiction. The need to protect the arbitration process appears particularly strong where a party intentionally disregards an arbitration agreement to commence court proceedings, especially in its own courts, in order to frustrate the arbitration and obtain advantages that it would not have in the arbitration proceeding.288 The situation appears different where the prior jurisdictional award is relied upon in further arbitration proceeding, for example where the first arbitral tribunal has held that there is no valid arbitration agreement between the parties and the losing party brings a new arbitration, based on the same arbitration clause. Giving res judicata effect to the prior arbitral decision on jurisdiction in this situation will prevent the losing party from incessantly repeating its attempts to bring the dispute before an arbitral tribunal.289

6.189 As mentioned above, the second arbitral tribunal does not generally appear to be

the appropriate forum for reviewing the jurisdiction of the first arbitral tribunal; a  See Debourg, para. 513, with references.   See paras 6.41 et seq. In the lis pendens context, this is the approach followed by Swiss arbitration law (see Article 186(1bis) PILA). See also Chantebout (paras 12–​16, pp. 536–​9), who argues that giving res judicata effects to a prior arbitral award on jurisdiction would be contrary to the principle of Kompetenz-​Kompetenz, which grants every arbitral tribunal the right to rule on its own jurisdiction. Furthermore, giving res judicata effects to a prior award on jurisdiction would amount to recognizing the positive res judicata effect, even though most cases of the French Cour de cassation currently do not recognize this positive effect. 287  See paras 6.46 et seq. 288  On this point, see paras 6.47–​6.48. 289  Debourg, para. 523, with references. Equally, a party may have legitimate doubts as to the scope of an arbitral tribunal’s jurisdiction. Where the first arbitral tribunal has accepted broad 285

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B.  Prior Arbitral Awards party contesting the jurisdiction of the first tribunal should usually do so directly before that arbitral tribunal by raising a jurisdictional objection and thereafter before the supervisory courts of the first arbitral seat and in recognition and enforcement proceedings.290 Giving res judicata effect to the prior jurisdictional award is not necessarily in- 6.190 compatible with the principle of Kompetenz-​Kompetenz, as it should be possible to reconcile the two principles: the arbitral tribunal before which the res judicata doctrine is invoked can determine its own jurisdiction and, in doing so, take the res judicata effect of the prior jurisdictional award into account, for instance by implementing the prior jurisdictional findings into its own award.291 The res judicata policy considerations of putting an end to the dispute, avoiding the wasteful duplication of proceedings and contradictory awards, 292 should usually prevail over the second arbitral tribunal’s interest in ruling on jurisdiction anew, without taking into consideration the res judicata effect of the previous award on jursidiction. Therefore, where a prior arbitral tribunal has rendered an award on the existence and validity of the arbitration agreement and that award was not challenged or was upheld by the supervisory courts, in most cases there will probably be no compelling reason for the second arbitral tribunal to reconsider the issue of jurisdiction,293 it being recalled that reconsidering the first tribunal’s award on jurisdiction may put the second tribunal’s award at risk of being annulled at the arbitral seat and refused recognition and enforcement abroad.294 Prior arbitral decision on provisional measures  As was seen earlier, there is 6.191 uncertainty whether arbitral decisions on provisional measures qualify as ‘arbitral awards’ in that they are not ‘final’ and whether, as a result, they can have res judicata effects.295 However, regardless of their status as ‘arbitral awards’ within the meaning of the 6.192 international arbitration conventions and arbitration legislation, the principles of res judicata should in any event apply to arbitral decisions on provisional measures mutatis mutandis. Such decisions finally dispose of a request for relief by one of the parties in a decision involving the application of legal rules to a factual record.296 Accordingly, a number of recent authorities have submitted that arbitral decisions jurisdiction over related disputes, one party may disagree with the first tribunal’s jurisdictional scope and attempt to bring a second arbitration in respect of certain parts of the dispute, arguing that the first tribunal did not have jurisdiction over that dispute (see Born, pp. 3772–​3). 290  See para. 6.165. 291  Debourg, para. 513, with references. 292  It may be recalled that in some jurisdictions an arbitral award may be set aside on public policy grounds if it is irreconcilable with another award or judgment. For the position in France, see Debourg, paras. 436 et seq., pp. 365 et seq. 293  See also Born, pp. 3772–​3; Poudret, p. 156. 294  See paras 6.49 and 6.51. 295  See paras 6.151–​6.152. 296  Born, pp. 2934–​5.

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Chapter 6:  Transnational Principles on provisional measures should be considered as final and binding and be given preclusive effects. For example, according to Born, ‘[t]‌he better view is that provisional measures should be enforceable as arbitral awards under generally-​applicable provisions for the enforcement of awards. Provisional measures are “final” in that they dispose of a request for relief pending conclusion of the arbitration. Orders granting provisional relief are meant to be complied with, and to be enforceable’.297 If arbitral decisions on provisional measures must be enforceable, they must also be given preclusive effects in other proceedings. 6.193 This is in line with international commercial arbitration legislation that specifically

provides for the binding nature and enforceability of arbitral decisions on provisional measures. For instance, Article 17H of the UNCITRAL Model Law (as amended in 2006) reads as follows: An interim measure issued by an arbitral tribunal shall be recognized as binding and, unless otherwise provided by the arbitral tribunal, enforced upon application to the competent court, irrespective of the country in which it was issued, subject to the provisions of article 17 I.298

6.194 Prior arbitral decision on preliminary substantive issues  As seen earlier, there

is widespread support in favour of giving preclusive effects to arbitral decisions on preliminary substantive issues, such as the issue of liability or the applicable law, to the extent that they grant declaratory relief, rather than merely providing reasoning in support of a conclusion, and therefore finally decide a specific aspect of the parties’ dispute.299 2. The scope of res judicata effects to be given to prior arbitral awards in international commercial arbitration proceedings

6.195 The ILA Recommendations provide for broad res judicata effects of awards, covering

claim preclusion, issue preclusion, and abuse of process. The res judicata effects of an award also cover its underlying reasoning.300 Recommendation No. 4 states: An arbitral award has conclusive and preclusive effects as to: 4.1 determinations and relief contained in its dispositive part as well as in all reasoning necessary thereto; 4.2 issues of fact or law which have actually been arbitrated and determined by it, provided any such determination was essential or fundamental to the dispositive part of the arbitral award; and

297   Gary B. Born, International Arbitration: Law and Practice (2012), p. 211, with references (cited as International Arbitration: Law and Practice); Born, pp. 2932–​5, with references. See also Berger and Kellerhals, para. 1279. 298   See also Article 183(2) PILA (‘If the party concerned does not voluntarily comply with these measures, the arbitral tribunal may request the assistance of the state judge, the judge shall apply his own law’); section 42(1) of the EAA 1996. See also Born, International Arbitration: Law and Practice, pp. 210–​12; Born, p. 2934, with references. 299   See para. 6.150. 300 ILA, Final Report, paras 51 et seq.

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B.  Prior Arbitral Awards 4.3 a claim, cause of action or issue of fact or law which could and should have been raised in prior proceedings resulting in the award, provided the raising of any such new claim, cause of action or new issue of fact or law amounts to an abuse of process or procedural unfairness.301

Much of what was said with regard to the scope of the res judicata effect to be given 6.196 to prior national court judgments applies mutatis mutandis with respect to prior awards.302 a. Claim preclusion As in the case of prior national court judgments, the question of claim preclusion 6.197 will most likely arise in a situation where two arbitral proceedings overlap with regard to certain questions. Where one arbitral tribunal has finally decided a specific claim, the other arbitral tribunal before which the same question in dispute arises should generally be bound by the prior tribunal’s award.303 As noted previously, the ILA’s Recommendation for a broad notion of claim pre- 6.198 clusion, giving res judicata effect not only to a prior award’s dispositive part but also to its underlying reasons, should generally be adopted, unless the parties agree otherwise.304 If it is clear from a prior arbitral award’s reasons that the dispositive part is to be interpreted in a way which bars further arbitration proceedings, claim preclusion ought to follow for the sake of arbitral efficiency and finality. As was pointed out in the ILA’s Final Report on res judicata and arbitration, limit- 6.199 ing an arbitral award’s res judicata effects to its dispositive part may be overly formalistic and literal.305 As discussed previously, while arbitral awards are usually in writing, they do not necessarily follow the same model as national court judgments in that they do not always clearly distinguish between the award’s reasoning and its dispositif. National arbitration laws and the rules of arbitral institutions often do not require that the award pronounces the arbitrators’ decision in the form of a dispositif.306 Hence, arbitral awards do not necessarily contain a dispositif.307 In addition, international commercial arbitral tribunals sometimes appear to follow 301  This position is also taken by Born, according to whom such broad common law-​style res judicata effects of awards are in line with the expectations of the parties regarding finality, as well as the objectives of the arbitral process (Born, pp. 3746 and 3771). According to Veeder, while awards should give rise to a plea of issue estoppel, it is highly unlikely that the abuse of process doctrine may apply in international arbitration (Veeder, pp. 75 and 77). Mayer submits that awards may give rise to claim preclusion and abuse of process in subsequent arbitral proceedings. The doctrine of issue estoppel may apply in limited circumstances only (Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, pp. 195 et seq.). 302  See paras 6.66 et seq. 303  See paras 6.68 et seq. 304  See para. 6.71. See also ILA Recommendation on Res Judicata No. 4.1 (para. 6.195); ILA, Final Report, para. 52. 305  Ibid., para. 52. 306  For the position under French law, see para. 4.58. 307  Debourg, para. 488.

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Chapter 6:  Transnational Principles a more relaxed approach with respect to the distinction between reasons and dispositif in that final decisions that should have res judicata effect may be contained in the award’s reasons. Conversely, an award’s dispositif may sometimes contain elements that should not have any res judicata effect, such as the arbitral tribunal’s determination with respect to the arbitrators’ fees. Similarly, it is not certain that formulas in the dispositif such as ‘all other requests for relief are dismissed’ should always have res judicata effect. Finally, it is clear that an award’s reasons may generally be taken into consideration to interpret the meaning and scope of the dispositif.308 b. Issue preclusion 6.200 As in the case of a prior national court judgment, subject to the parties agreeing otherwise, an arbitral tribunal should usually be bound by determinations of essential issues of fact or law that were actually and necessarily raised and determined between the same parties in the reasons of an earlier arbitral award. This applies namely where an arbitral tribunal has decided a particular preliminary issue and the same preliminary issue arises again before another arbitral tribunal seized of a different claim between the same parties.309 6.201 By contrast, the situation is different where an arbitral tribunal has decided a spe-

cific preliminary issue in the award’s reasons and the same issue arises again in another arbitration as the main issue. In that situation, the second arbitral tribunal, in principle, should not be bound by the prior tribunal’s determination, as the parties presumably wanted to submit the issue to the second tribunal for final determination and this intent should be respected. That said, the arbitral tribunal should show due deference to the earlier award’s determinations on preliminary issues to promote consistency and procedural economy and efficiency.310

6.202 An exception should, however, apply where the particular issue was finally deter-

mined in a prior partial award. Where the parties wanted to have a specific issue decided in a partial award, they also agreed to be bound by that partial award. Another arbitral tribunal should generally respect the parties’ intention to be bound by the partial award by affording it res judicata effect.311 By authorizing the prior tribunal finally to decide the specific issue in a partial award, the parties have taken the matter out of the hands of the other tribunal. The same should apply where only one of the parties requested the rendering of the partial award and the prior

  Ibid., para. 488.   See paras 6.75 et seq. 310  See paras 6.81–​6.83. This solution was also adopted in Chamber of National and International Arbitration of Milan, Case No. 1491, 20 July 1992, Yearbook Commercial Arbitration, Vol. XVIII (A.J van den Berg ed., 1993), pp. 80 et seq. (case reported in Bernard Hanotiau, Complex Arbitrations (2005), para. 555, pp. 254 et seq.). See also Train, paras 636 and 682, n. 34. 311  In this sense, see Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 199. 308 309

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B.  Prior Arbitral Awards tribunal granted that request after giving each party the opportunity to explain its position. It appears that policy considerations of coherence, efficiency, and finality should prevail over the subsequent arbitral tribunal’s interest in reconsidering the particular issue. A party dissatisfied with the partial award usually should seek revision before the supervisory courts at the arbitral seat. In general, if the partial award is not challenged or upheld by the supervisory courts, the arbitral tribunal before which the prior partial award is invoked should afford it res judicata effect. As stated earlier, for the sake of arbitral efficiency and finality the res judicata 6.203 effects of an arbitral award should in principle extend to its underlying essential reasoning. However, it is worth noting that authorities are divided on this question. It has been argued that when submitting a particular dispute to arbitration, the parties do not generally agree to be bound by an arbitral tribunal’s reasons, but only by the tribunal’s determination of their dispute in the award. Hence, only the award’s dispositif, but not its underlying reasons, should operate as a res judicata in further arbitration proceedings. It is via the reasons that the prior tribunal reached its conclusions with regard to the dispute submitted to it. While the other arbitral tribunal should take this reasoning into account, it should have the same authority to decide the particular dispute before it as the prior tribunal, based on its own reasons and opinions.312 Moreover, it was seen in Chapter 4 that there is no established practice among inter- 6.204 national commercial arbitral tribunals in respect of the scope of the res judicata effect to be afforded to prior arbitral awards, in particular with respect to the application of issue preclusion principles.313 While some arbitral tribunals have given res judicata effect to a prior award’s reasoning, they have in the main done so because that was provided for by the law held to govern res judicata. In ICC Case Nos 2745 and 2762 of 1977314 the arbitral tribunal granted res judicata effects to the prior award’s underlying reasoning in accordance with French and Belgian law. The tribunal stated that it would not have been entitled to give res judicata effect to the prior award’s reasons if German law had governed res judicata.315 In ICC Case No. 7438 of 1994316 the arbitral tribunal, applying the procedural law of the canton of Zurich, adhered strictly to the rule that the res judicata effect of a decision attaches only to its dispositif. In conformity with Swiss law, the sole arbitrator referred to the reasoning only to determine the meaning and scope of the first award’s dispositive part.317

  See ibid., p. 198.   See paras 4.162 et seq. 314  ICC Case Nos 2745 and 2762, 1977, Collection of ICC Arbitral Awards (1974–​1985) (Siegvard Jarvin and Yves Derains ed., 1990), pp. 325 et seq. 315  See paras 4.164 et seq. 316  ICC Case No. 7438, 1994, award reported by Dominique Hascher, L’autorité de la chose jugée des sentences arbitrales, Recueil des travaux du Comité français de droit international privé, session of 7 Feburary 2001 (2004), p. 19 317  See para. 4.166. 312 313

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Chapter 6:  Transnational Principles 6.205 While the general application of the issue estoppel doctrine by international com-

mercial arbitral tribunals is thus controversial, it is however clear that this doctrine may apply where a partial award is invoked before the same arbitral tribunal that rendered it. In this situation, the argument about the lack of interchangeability between different arbitral tribunals obviously cannot justify a narrow approach towards res judicata. The policy considerations of procedural efficiency, finality, and fairness, as well as of legal coherence and certainty prevail over the arbitral tribunal’s or one party’s interest in reconsidering a specific issue decided in a prior partial award.318 Equally, it would appear to be unjust to the parties if an arbitral tribunal were bound by the decision taken in its partial award, but could later contradict the reasons it had itself given as the necessary foundation for that partial award.319 Accordingly, an arbitral tribunal should generally give res judicata effects to its own partial awards and these effects should cover the awards’ underlying reasons.320

c. The abuse of process doctrine 6.206 For the reasons discussed in the first section of this chapter, the cautious approach to abuse of process suggested by the ILA in Recommendation No. 5 should generally be adopted by international commercial arbitral tribunals faced with a prior award.321 Arbitral tribunals should be mindful not to deprive a party of its right to arbitrate a particular question at issue that has not already been decided in a prior award. In international commercial arbitration, the principle of party autonomy gives the parties wide discretion in determining their strategies. Several reasons may justify why a party did not raise a particular claim, cause of action, or issue in prior arbitration proceedings. This was expressed in pertinent terms in the ILA’s Final Report: Costs, psychological influences, relational elements, cross-​cultural considerations, persuasiveness, political constraints and other aspects may be responsible for not instituting certain claims or for not raising certain causes of action or issues of fact or law, and caution is in order to avoid res judicata amounting to a patronizing review of what parties and counsel ought to have done in managing their case.322 6.207 At the same time, it can be argued persuasively that the principle of party au-

tonomy should not entitle a party to hold back claims, causes of action, and issues for rearbitration in further arbitration proceedings that it could and should have raised in good faith in prior arbitration proceedings. The principle of good faith in proceedings should require the parties to an international arbitration to raise

318  As seen earlier, it is admitted that arbitral tribunals may exceptionally reconsider their prior partial awards if there has been fraud on the tribunal, (see paras 4.170 et seq). 319 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, pp. 200 et seq. 320 This solution was adopted by the arbitrator in ICC Case No. 3267, 1984, Yearbook Commercial Arbitration, Vol. XII (A.J. van den Berg ed., 1987), pp. 87 et seq. (see para. 4.168). 321  See paras 6.89 et seq. 322 ILA, Final Report, para. 60.

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B.  Prior Arbitral Awards all claims that are covered by the parties’ arbitration agreement and all causes of action and issues relating to the claim brought in the arbitration as early as possible. Allowing the parties to withhold certain claims, causes of action, and issues covered by the arbitration agreement could encourage abusive tactics, technical pleadings, and multiple proceedings which would be contrary to the objective of international arbitration to provide for a speedy, final, and efficient resolution of the parties’ dispute in a single forum.323 3. Requirements for the application of the res judicata doctrine As seen earlier, the requirements that must be met for a prior arbitral award to have 6.208 res judicata effect in other or further arbitration proceedings are set out in the ILA’s Recommendation No. 3 according to which [a]‌n arbitral award has conclusive and preclusive effects if: 3.1 it has become final and binding in the country of origin and there is no impediment to recognition in the country of the seat of the subsequent arbitration; 3.2 it has decided on or disposed of a claim for relief which is sought or is being reargued in further arbitration proceedings; 3.3 it is based upon a cause of action which is invoked in further arbitration proceedings; and 3.4 it has been rendered between the same parties.

The following analysis will briefly consider the triple identity test in the situation 6.209 where the prior decision relied upon is an arbitral award (a.). It will then examine whether a prior award must be capable of recognition in the country of the arbitral seat of the other arbitration in order to operate as a res judicata (b.). The requirement for the finality of the prior award in its country of origin has already been examined.324 a. The triple identity test The rationales underlying the triple identity test appear to be the same regardless of 6.210 the nature of the prior decision.325 Therefore, the considerations raised previously with regard to the identity test in the case of prior national court judgments apply mutatis mutandis to the situation where the res judicata effect of a prior arbitral award is invoked in further arbitration proceedings.326 It has been argued by Brekoulakis that, because of the limited possibilities of 6.211 joining related parties in arbitration proceedings, a prior arbitral award should also have certain preclusive and conclusive effects on related third parties; that is, parties who have not signed the arbitration agreement or taken part in the prior

  Born, pp. 2893 et seq.; Radicati di Brozolo, pp. 146–​8; Hascher, p. 26.   See paras 6.154 et seq. 325  See para. 6.107. 326  See paras 6.106 et seq. 323 324

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Chapter 6:  Transnational Principles arbitration process, but who have a close contractual link to the parties in the prior arbitration.327 According to Brekoulakis, a third party should not be precluded from bringing its claims in a separate arbitration against one of the parties in the prior proceedings. Further, the prior arbitral award cannot be enforced by or against the third party. However, a related third party should be bound in further arbitration proceedings by final determinations of legal and factual issues that are common to both proceedings. Brekoulakis proposes giving arbitral tribunals a discretionary power to decide whether a related third party should be bound by the legal and factual determinations of the prior tribunal.328 6.212 For the reasons discussed earlier, international commercial arbitral tribunals

should in principle be bound by the issues determined in the essential reasons underlying a prior arbitral award.329 However, it was seen that the application of the issue preclusion doctrine may give rise to due process concerns in international commercial arbitration.330 Such concerns arise with even greater force where the other arbitration involves a related third party, which did not participate in the arbitration having given rise to the first award and, therefore, did not have an opportunity to express its opinion on the factual and legal issues decided in the prior award. Hence, a related third party should not generally be bound by the factual and legal determinations made in a prior award between other parties.331 Also, it has been seen that, in principle, international commercial arbitral tribunals should not be given broad discretionary powers with respect to res judicata in general, and issue preclusion in particular, as this would run counter to the objectives of the transnational approach to providing for uniform rules of preclusion and the policy considerations underlying the res judicata doctrine, namely to produce finality, legal certainty, and predictability, as well as fairness and procedural economy and efficiency.332

6.213 However, although a related third party should not generally be bound by a prior

award to which it was not a party, it may nevertheless have to respect the legal situation created by the prior award. This has been submitted by Mayer, invoking the concept known in French law as ‘opposabilité aux tiers’.333 This means that a party in an arbitration may have to respect an award rendered between other parties in

  Brekoulakis, pp. 189 et seq.   Ibid., pp. 198 et seq. 329   See paras 6.197 et seq. 330   See para. 6.79. 331   In this sense, see also Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, pp. 199 et seq. 332   See paras 6.84 et seq. 333   A distinction must be drawn between res judicata and opposabilité. While the objective of the res judicata doctrine is to ensure the finality of a decision between the parties, ‘opposabilité aux tiers’ extends the legal situation created by a prior decision to third parties. Even though they were not parties to the proceedings which gave rise to the decision, they nevertheless have to take account of the new legal situation created by it (see Debourg, para. 278, with references cited at n. 266). 327

328

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B.  Prior Arbitral Awards another arbitration that finally decides the rights and obligations of those parties. The prior award has res judicata effects only between the parties to the prior arbitration. However, the parties to the prior award should be allowed to rely on the award in the further arbitration against the related third party to the extent that it finally determines the legal situation between them. Conversely, the related third party should also be allowed to invoke the conclusive effects of the prior award in the other arbitration against the parties to the prior award.334 The application of the ‘opposabilité’ principle seems appropriate. If a prior arbitral 6.214 award finally decided the legal situation between A and B, another arbitral tribunal seized of a related dispute between A, B, and C (or only A and C) should be bound by that prior award if the legal situation between A and B arises before it again as a preliminary issue. The tribunal having rendered the previous award had a greater interest in determining the legal situation between A and B than the subsequent or other tribunal. The same should apply where the legal situation between A and B was finally decided in a prior national court judgment.335 b. Is the prior arbitral award capable of recognition in the country of the arbitral seat of the other arbitration? According to ILA Recommendation No. 3.1, a prior arbitral award may only op- 6.215 erate as a res judicata in other arbitration proceedings if it is capable of recognition in the country of the arbitral seat of the other arbitration. As a preliminary issue, the question arises whether a prior foreign arbitral award 6.216 must not only be recognizable in the country of the arbitral seat of the other arbitration, but must first be formally recognized in order to have res judicata effects in that country. While there is some authority in support of the latter position,336 the majority view is that, for a prior foreign arbitral award to have res judicata effects in another arbitration, it is enough for the first award to be recognizable at the arbitral seat of the other arbitral tribunal and prior recognition proceedings should not be required.337  Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, p. 200.   In this sense, see decision of the Swiss Federal Tribunal in ATF 136 III 345, 350, where the Federal Tribunal held that the decision of the Zurich Commercial Court, quashing a decision by the FIFA Special Commission, had erga omnes effect. See also Berger and Kellerhals, para. 1652 (‘[I]‌t is also commonly accepted that any decision by which a defined legal relationship, or an obligation arising thereof, is established, amended or rescinded (Gestaltungsurteile) shall produce res judicata effects not only between the parties to the proceedings, but also vis-​à-​vis any third parties (for example a decision on the annulment of a vote taken in a general meeting of shareholders)’). 336  See, e.g., Poudret and Besson, paras 476–​7 (‘[I]‌n order to be binding on the courts of the requested country, the foreign award must first be recognised pursuant to Article III et seq. of the New York Convention. . . . [T]he New York Convention is directed at states and state jurisdictions, so that the foreign award is not directly binding on the second arbitral tribunal, but only once it has been recognised by the state in which it has its seat’). 337  This is the view supported by ILA Recommendation No. 3.1. It is also the position adopted in Switzerland by Federal Tribunal decision 4A_​633/​2014, 29 May 2015, para. 3.2.2; ATF 127 334 335

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Chapter 6:  Transnational Principles 6.217 The requirement of ‘recognizability’ is not universally accepted. It may be consid-

ered to be at odds with the autonomous nature of international commercial arbitration, in particular if the concept of international commercial arbitration as an arbitral legal order is followed. Recognition entails the transfer of a decision from one legal order to another. If the existence of an arbitral legal order is accepted, there should be no such transfer. The prior arbitral award, even if rendered in a country other than the country of the other arbitral seat, is not transferred from one legal order to another. In this hypothesis, the question of recognition does not arise.338

6.218 Even if the existence of an arbitral legal order is not accepted, the requirement may

give rise to difficulties in light of the reluctance among international commercial arbitral tribunals to scrutinize arbitral awards rendered by other arbitral tribunals. It has been suggested that arbitral tribunals cannot verify whether a prior arbitral award is capable of recognition in the country of the arbitral seat of the other arbitration. Examining the validity of the prior award would be outside the second tribunal’s jurisdiction. If the prior award was not challenged or was upheld by the supervisory courts, then the second arbitral tribunal should afford the award res judicata effects.339

6.219 That said, the lex arbitri of the arbitral tribunal before which the res judicata issue

is raised may require that tribunal to examine as a preliminary issue the ‘recognizability’ of the prior award. Moreover, where a request for recognition of the prior award has already been made before the courts of the arbitral seat of the second tribunal, the latter may in any event deem it appropriate to await the decision of the enforcement court.340 If the enforcement court grants recognition and enforcement to the prior award, the arbitral tribunal may prefer to respect its res judicata effects and refuse to reconsider the dispute to the extent that it was decided in the

III 279, 283; Federal Tribunal decision 4A_​508/​2010, para. 3.1.; 4A_​508/​2013, para. 3.1.; 4A_​ 374/​2014, para. 4.2.1. See also Berger and Kellerhals, paras 1658 and 1661. In Germany, the Regional Court of Essen held in a decision dated 24 March 2015 that an arbitral award rendered under the LCIA Arbitration Rules has res judicata effects in Germany and thus precludes the relitigation of the same issues in German state courts, even if the arbitral award was not first formally recognized by a German state court. A foreign arbitral award rendered in a contracting state of the New York Convention has res judicata effects ‘ipso iure’ in Germany if it meets the requirements set forth in that Convention. Additional proceedings in the German state courts for the formal recognition and enforcement of the arbitral award are not required for the award to have res judicata effects, and are only necessary once a party seeks to have the award enforced in Germany (Landgericht Essen, Docket No. 12 O 37/​12, 24 March 2015). 338  Hascher, p. 28. 339  Commentary to ICC Case No. 3383, 1979, Collection of ICC Arbitral Awards (1974–​ 1985) (Sigvard Jarvin and Yves Derains ed., 1990), p. 398. Landolt states that arbitral tribunals are not bound by the recognition requirements set out in the New York Convention; these only apply to state courts (Phillip Landolt, Modernised EC Competition Law in International Arbitration (2006), para. 8-​15). 340 Mayer, Litispendance, connexité et chose jugée dans l’arbitrage international, pp. 202 et seq.

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B.  Prior Arbitral Awards prior arbitral award, as not doing so may put the second tribunal’s award at risk of being annulled. If the enforcement court refuses to recognize the prior award, the question arises 6.220 whether the arbitral tribunal should refuse to grant res judicata effect to the prior award on that basis and, hence, reconsider the matter. The answer to that question might depend on the reason for which recognition and enforcement was refused. If it was refused for one of the grounds listed in Article V(1) of the New York Convention, the arbitral tribunal might prefer not to give preclusive effects to the prior award. Where one of those grounds is present, and in light of their narrow scope, the prior award may also have been annulled in its country of origin and its recognition and enforcement may also be refused in other contracting states to the Convention. Therefore, the arbitral tribunal might prefer not to afford it preclusive effects.341 That said, it is worth noting that the enforcement courts in other contracting states of the Convention should not generally be bound by a prior recognition decision rendered in another country. Each contracting state has an independent international treaty obligation under the Convention to recognize and enforce foreign arbitral awards if the conditions set out in the Convention are met, regardless of whether or not an enforcement court in another country has done so.342 This means that the refusal by one enforcement court to recognize and enforce an arbitral award should not usually deprive that award of its ‘validity’ for res judicata purposes.343 Where the prior arbitral award was not annulled in its country of origin and was 6.221 refused recognition on one of the grounds listed in Article V(2) of the Convention, the subsequent or other arbitral tribunal may decide to give res judicata effects to the prior arbitral award. Article V(2) entitles the enforcement court to refuse recognition and enforcement of an award if the subject matter in the arbitration was not arbitrable according to the law of the country where recognition or enforcement is sought, or if the award is contrary to the public policy of that country. These grounds concern only the law of the enforcement country and, hence, local particularities. Therefore, the award may well be recognized and enforced in other contracting states of the Convention; the award is deprived of its effectiveness only in the country where the subsequent or other arbitral tribunal has its seat. Where a prior award was refused recognition in the country of the arbitral seat on one of the grounds listed in Article V(2), the arbitral tribunal may decide to give res judicata effect to the prior arbitral award, always making sure that its award will not risk being set aside for granting res judicata effect to an award that might be considered as contrary to Article V(2) at the arbitral seat.

  See also Born, pp. 3782–​7 and 3790–​1.   See ibid., pp. 3790–​1. 343  See paras 6.159 et seq. 341

342

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Chapter 6:  Transnational Principles 4. Conclusion 6.222 Arbitral awards are generally recognized as having res judicata effects. Applying

the transnational law method, international commercial arbitral tribunals should determine autonomously the type of awards capable of operating as a res judicata in further arbitral proceedings. This should usually apply to arbitral awards that finally resolve a specific issue affecting the rights and obligations of the parties, including arbitral decisions on provisional measures.

6.223 In order to become res judicata, arbitral awards must be final and binding, in the

sense that, subject to the parties’ agreement, they have been rendered and are not or no longer subject to an appeal with suspensive effects on the merits. It should usually not be relevant for the purposes of res judicata that an arbitral award remains subject to setting aside proceedings on the basis of restrictive grounds in the country where it was rendered. However, arbitral awards that were set aside at the arbitral seat should no longer be considered as ‘valid’ and thus no longer have res judicata effects in further arbitration proceedings. Finally, all final arbitral awards (full and partial) should be considered as ‘on the merits’ for res judicata purposes. Equally, positive and negative arbitral decisions on jurisdiction should generally be considered as arbitral awards and capable of having res judicata effects in other arbitration proceedings.

6.224 Arbitral awards that qualify as res judicata may generally give rise to claim preclu-

sive effects in other or further arbitrations. Broadly speaking and unless the parties agree otherwise, these claim preclusive effects should extend to the award’s underlying reasons. Moreover, as a general rule, arbitral awards should also give rise to issue preclusive effects. However, it is submitted that the issue preclusion doctrine should not usually apply where one arbitral tribunal has decided a specific preliminary issue in the award’s reasons and the same issue arises again in another arbitration as the main issue. Nonetheless, final determinations of specific preliminary issues should have res judicata effects in further arbitration proceedings where they were decided in a partial award. Moreover, a partial award’s underlying reasoning should be binding on the tribunal that rendered it. And international commercial arbitral tribunals should in any event give due consideration to a prior arbitral award’s essential reasons in order to avoid inconsistent awards.

6.225 Furthermore, claims, causes of action, and issues that were not raised and decided

in a prior award should be covered by the award’s res judicata effects, provided the raising of such a claim, cause of action, or issue in the other arbitration would constitute an abuse of process or procedural unfairness.

6.226 With regard to the requirements that must be met for an award to operate as a res

judicata, international commercial arbitral tribunals should generally apply the triple identity test to verify that the prior award involved the same parties and issues. Where the prior award has been refused recognition or enforcement in the 292

C. Transnational Res Judicata Principles country of the second arbitration for one of the grounds listed in Article V(1) of the New York Convention, the arbitral tribunal may prefer not to give the award res judicata effects.

C. Transnational Res Judicata Principles for International Commercial Arbitral Tribunals In light of the findings highlighted so far, it is now possible to attempt to formulate 6.227 transnational res judicata principles for international arbitral tribunals regarding the res judicata effects to be given in an international commercial arbitration to prior national court judgments and international arbitral awards. Despite possible shortcomings, the ILA Recommendations on res judicata and 6.228 arbitration generally constitute a well-​considered set of transnational res judicata guidelines for international commercial arbitral tribunals and reflect a general approach towards issues of res judicata in international commercial arbitration.344 They are based on over four years of research by the ILA International Commercial Arbitration Committee. The ILA Recommendations therefore provide a useful starting point. The guidelines set out in the following sections use these Recommendations as a model, adapting them in accordance with the findings made earlier. The res judicata principles with respect to national court judgments are largely 6.229 identical to the principles applicable to arbitral awards. However, for reasons of clarity, they are considered separately. 1. Transnational res judicata principles with respect to prior national court judgments 1. To promote efficiency and finality of international commercial arbitration, national court judgments shall have conclusive and preclusive effects in arbitral proceedings. 2. International commercial arbitral tribunals shall decide on their jurisdiction notwithstanding a prior national court’s jurisdictional decision rendered in the same matter between the same parties, unless there are compelling reasons to give conclusive and preclusive effects to such jurisdictional decisions.

Comment: the notion of a national court judgment should generally include deci- 6.230 sions on provisional measures. In particular, where a party’s request for provisional relief has been denied by a national court, it should not usually be allowed to renew its request before an international commercial arbitral tribunal. In contrast, the

  In this sense, see also Radicati di Brozolo, pp. 146–​8; Born, p. 3771.

344

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Chapter 6:  Transnational Principles party that did not initiate the request for provisional measures before the national court should usually be allowed to apply to the arbitral tribunal to withdraw or revise a measure previously granted by the court. 6.231 Furthermore, as an exception to the general rule, to strengthen the arbitral tribu-

nal’s Kompetenz-​Kompetenz, prior national court rulings on the jurisdiction of the arbitral tribunal should not generally have res judicata effects in arbitration proceedings, unless there are compelling reasons to give such effects to the prior jurisdictional decision. However, international commercial arbitral tribunals should in any event take such prior jurisdictional rulings into consideration to avoid positive or negative conflicts of jurisdiction. 3. The conclusive and preclusive effects of national court judgments in arbitral proceedings shall be governed by transnational rules applicable to international commercial arbitration, unless the parties agree otherwise.

6.232 Comment: the application by international commercial arbitral tribunals of uni-

form transnational res judicata principles, rather than national laws, should promote uniform international results and predictability. However, when assessing a judgment’s res judicata status, international commercial arbitral tribunals may sometimes consult the law of the country where the prior national court judgment was rendered, for example to determine whether the judgment was rendered by a judicial court or tribunal. 4. A  national court judgment has conclusive and preclusive effects in arbitral proceedings if: 4.1 it has become final and binding and was rendered in conformity with Article II of the New York Convention and due process requirements;

6.233 Comment: the words ‘final and binding’ generally mean that the decision is bind-

ing on the parties and cannot be reopened by further proceedings. Subject to an agreement of the parties, it may be preferable to consider a prior national court judgment as final and binding once ordinary means of recourse with suspensive effects are no longer available against the prior judgment.

6.234 This provision also refers to the ‘validity’ requirement. It may be preferable to re-

place the requirement of a judgment capable of recognition in the country of the arbitral seat by the requirement that the foreign national court judgment was rendered in conformity with the standards prescribed by the New York Convention, in particular Article II and due process requirements. However, where a request for recognition and enforcement has already been brought in the country of the arbitral seat, the arbitral tribunal may deem it appropriate in the circumstances of the case to await the enforcement court’s decision. Moreover, where the national court and arbitral tribunal are located in Member States of the EU or EEA, the foreign court’s judgment might fall within the scope of the (Recast) Brussels I Regulation or the Lugano Convention and the foreign judgment might have to 294

C. Transnational Res Judicata Principles be recognized, without the possibility of reviewing the prior court’s assessment of its jurisdiction. 4.2 it has decided on or disposed of a claim for relief which is sought or is being reargued in the arbitration proceedings; 4.3 it is based upon a cause of action which is invoked in the arbitration proceedings or which forms the basis for the arbitral proceedings; and 4.4  it has been rendered between the same parties.

Comment: international commercial arbitral tribunals should seek to develop a test 6.235 that is based on transnational law and guided by the abuse of right principle. In particular, it has been suggested that international commercial arbitral tribunals should usually prefer a narrow identity test to promote simplicity, clarity, predictability, and uniformity in its application. They should be guided by the abuse of rights principle to prevent an overly formalistic interpretation of the identity test which might give rise to abusive tactics. 5. Unless the parties agree otherwise, a national court judgment has conclusive and preclusive effects in the arbitral proceedings as to: 5.1 determinations and relief contained in its dispositive part as well as in the reasoning necessary thereto; 5.2 issues of fact or law which have actually been arbitrated and determined by it, provided any such determination was essential or fundamental to the dispositive part of the national court judgment.

Comment: as an exception to the general applicability of issue preclusion principles, 6.236 international commercial arbitral tribunals should not usually be bound by a national court’s determination of a preliminary issue, where that issue constitutes the main issue in the arbitration. 6. A national court judgment has preclusive effects in the arbitral proceedings as to a claim, cause of action or issue of fact or law, which could have been raised, but was not, in the proceedings resulting in that judgment, provided that the raising of any such new claim, cause of action or new issue of fact or law amounts to procedural unfairness or abuse. 7. If not waived, a party shall raise the conclusive and preclusive effects of a national court judgment as soon as possible. The arbitral tribunal need not raise such effects on its own motion.

Comment: it has been submitted that res judicata in international commercial ar- 6.237 bitration should not pertain as such to public policy. Moreover, the parties should generally be able to waive the application of the res judicata doctrine. Therefore, the application of the doctrine should usually be left to the parties’ initiative, rather than the arbitral tribunal. In addition, it is considered that both positive and negative res judicata effects 6.238 should pertain to procedure. ILA Recommendations Nos 6 and 7 characterize and thus treat the positive and negative res judicata effects differently. In particular, according to ILA Recommendation No. 6, ‘[t]‌he conclusive effects of an arbitral 295

Chapter 6:  Transnational Principles award can be invoked in further arbitration proceedings at any time permitted under the applicable procedure’. 2. Transnational res judicata principles with respect to prior arbitral awards 1. To promote efficiency and finality of international commercial arbitration, arbitral awards shall have conclusive and preclusive effects in further arbitral proceedings. 6.239 Comment: international commercial arbitral tribunals should seek to develop a

transnational notion of ‘arbitral award’ capable of operating as a res judicata.

6.240 It has been submitted that the notion of ‘arbitral award’ should generally cover

written instruments, drafted and signed by the arbitral tribunal, stating the tribunal’s final decision on a particular claim or dispute. In general, arbitral decisions on preliminary substantive issues and on provisional measures should be capable of operating as a res judicata in further arbitration proceedings.

6.241 Jurisdictional decisions rendered by national courts should not generally be bind-

ing on international commercial arbitral tribunals, unless there are compelling reasons to give preclusive effects to such decisions. However, it does not appear justified also to apply this recommendation between two international commercial arbitral tribunals. A central consideration underlying this recommendation is to protect international commercial arbitration against national court interventions, the purpose of which is to frustrate a valid arbitration agreement. While not non-​ existent, this concern does not appear to apply with the same force in the relation between two different international commercial arbitral tribunals. Also, the second arbitral tribunal is not usually the appropriate forum for reviewing the jurisdiction of the first arbitral tribunal; a party contesting the jurisdiction of the first tribunal should generally do so by raising a jurisdictional objection before the first tribunal and, thereafter, before the supervisory courts of the first arbitral seat and in recognition and enforcement proceedings. Res judicata policy considerations of putting an end to the dispute, avoiding the wasteful duplication of proceedings and contradictory awards should thus usually prevail over the interest in reconsidering the issue of jurisdiction. As a general rule, prior positive and negative arbitral decisions on jurisdiction should thus be capable of having res judicata effects in other or further arbitral proceedings. In the rare situation where the arbitration having given rise to the first jurisdictional award was initiated in a manifestly abusive attempt to sabotage another arbitration and the prior arbitral decision on jurisdiction was upheld by the supervisory courts, the application of the general abuse of rights doctrine may suffice. 2. The conclusive and preclusive effects of arbitral awards in further arbitral proceedings shall be governed by transnational rules applicable to international commercial arbitration, unless the parties agree otherwise.

296

C. Transnational Res Judicata Principles Comment: in respect of national court judgments, the res judicata effects of a prior 6.242 arbitral award should generally be governed by transnational rules and national laws may be consulted for guidance. 3. An arbitral award has conclusive and preclusive effects in further arbitral proceedings if: 3.1 it is valid and has become final and binding;

Comment: mirroring Article V(1)(e) of the New York Convention, an award 6.243 may generally be considered as final and binding for res judicata purposes when it was rendered and cannot or can no longer be modified in appeal proceedings with suspensive effects. This is subject to the parties agreeing, directly or indirectly, that the award is final and binding upon being rendered, regardless of the possibility of an appeal. It should be irrelevant for res judicata purposes whether the award remains subject to setting aside actions in the country where it was rendered on the basis of restrictive grounds, such as those under the UNCITR AL Model Law. However, where the deadline for bringing annulment proceedings will expire or where annulment proceedings have been brought and the local courts can be expected to render a decision within a reasonable period of time, arbitral tribunals may sometimes deem it appropriate to give res judicata effect to a prior arbitral award only once they can no longer be challenged at the arbitral seat. Furthermore, it has been submitted that, for reasons of coherence and efficiency, arbitral tribunals should usually no longer grant res judicata effects to awards that have been annulled at the arbitral seat. In relation to national court judgments, the validity requirement replaces the re- 6.244 quirement that the prior award be capable of recognition at the place of arbitration of the subsequent arbitral tribunal. An award should generally be considered as ‘valid’ if it was not annulled by the supervisory courts at the prior arbitral seat and if it cannot be refused recognition or enforcement, in particular for one of the grounds listed in Article V(1) of the New York Convention. Conversely, where recognition and enforcement was refused, in particular for one of the grounds listed in Article V(2) of the Convention, it should not necessarily mean that the prior arbitral award cannot be considered as valid for res judicata purposes, as each contracting state has an independent international treaty obligation under the Convention to recognize and enforce foreign arbitral awards if the conditions set forth in the Convention are met, regardless of whether or not an enforcement court in another country has done so. 3.2 it has decided on or disposed of a claim for relief which is sought or is being reargued in the further arbitration proceedings; 3.3 it is based upon a cause of action which is invoked in the further arbitration proceedings or which forms the basis for the subsequent arbitral proceedings; and 3.4 it has been rendered between the same parties.

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Chapter 6:  Transnational Principles 6.245 Comment: with respect to prior national court judgments, international commer-

cial arbitral tribunals should seek to develop a test based on transnational law and guided by the abuse of right principle. 4. Unless the parties agree otherwise, an arbitral award has conclusive and preclusive effects in the further arbitral proceedings as to: 4.1 determinations and relief contained in its dispositive part as well as in the reasoning necessary thereto; 4.2 issues of fact or law which have actually been arbitrated and determined by it, provided any such determination was essential or fundamental to the dispositive part of the arbitral award.

6.246 Comment: as an exception to the general applicability of issue preclusion princi-

ples, international commercial arbitral tribunals should not usually be bound by a prior arbitral tribunal’s determination of a preliminary issue, where that issue constitutes the main issue in the arbitration, unless that particular issue was finally decided in a prior partial award. 5. An arbitral award has preclusive effects in the further arbitral proceedings as to a claim, cause of action or issue of fact or law, which could have been raised, but was not, in the proceedings resulting in that award, provided that the raising of any such new claim, cause of action or new issue of fact or law amounts to procedural unfairness or abuse. 7. If not waived, a party shall raise the conclusive and preclusive effects of an arbitral award as soon as possible. The arbitral tribunal need not raise such effects on its own motion.

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CONCLUSION We are here in a dynamic area of law, well able to embrace new situations as justice requires. Simon Brown J

The doctrine of res judicata as developed in domestic laws prohibits the relitigation 7.01 of a dispute that has finally been decided by a judicial court or tribunal. Affording finality to judgments, it puts an end to the dispute. The same dispute cannot be relitigated again between the same parties. The central question investigated in this research was whether international com- 7.02 mercial arbitral tribunals should apply the traditional res judicata doctrine to coordinate their relations with national courts and (other) international commercial arbitral tribunals. Should they apply the same res judicata principles as national courts to determine the effects of a prior national court judgment or arbitral award in the further arbitration proceedings? The main thesis underlying this research was that international commercial arbi- 7.03 tral tribunals should develop transnational res judicata principles; that is, generally accepted res judicata principles that respect the nature and objectives of international commercial arbitration. The reasons that justify this thesis may be succinctly summarized in the following 7.04 paragraphs. In Chapters 1 and 2 it was shown that there is no uniform res judicata doctrine. 7.05 Although the res judicata doctrine is recognized as a general principle of law inherent in all legal systems, there are several important differences among domestic laws with respect to res judicata. And these differences are mirrored in public international law. While general res judicata principles have been developed in public international law, it was seen that there is great uncertainty among international courts and tribunals in particular with respect to the scope and requirements of res judicata. By contrast, private international law instruments usually do not contain provisions on res judicata, focusing instead on the avoidance of parallel proceedings. In Chapters 3 and 4 it was seen that national court judgments and arbitral awards 7.06 may give rise to res judicata issues before international commercial arbitral tribunals in a myriad of situations. However, international commercial arbitration law 299

Conclusion contains few rules that go beyond stating the general principle that awards have res judicata effects. While the 2006 International Law Association (ILA) Recommen­ dations on res judicata and arbitration provide useful guidance to international arbitral tribunals, they leave several questions open. Also, they do not cover the situation where an arbitral tribunal is faced with a prior national court judgment. Furthermore, save for few exceptions, there is no established practice among international commercial arbitral tribunals with regard to res judicata. Therefore, the way in which international commercial arbitration law and practice currently deal with the problem of res judicata is unsatisfactory. 7.07 In Chapter 5 it was seen that international commercial arbitral tribunals should

not apply any particular domestic law to res judicata, but should develop transnational res judicata principles. The transnational approach to res judicata in international commercial arbitration is appropriate because it best reflects the autonomous and inherently transnational nature of international commercial arbitration. It also has the distinct advantage of providing a uniform set of res judicata principles for international arbitral tribunals, which will improve legal coherence and certainty. Finally, the transnational approach allows arbitral tribunals to adapt traditional res judicata principles better to meet the objectives of international commercial arbitration.

7.08 Finally, Chapter 6 determined the content of the transnational res judicata prin-

ciples that international commercial arbitral tribunals should apply to determine the effects of prior national court judgments and arbitral awards in further arbitration proceedings. As a conclusion to Chapter 6, the ILA Recommendations on res judicata and arbitration were adapted in accordance with the findings of this research.

7.09 This research on the res judicata doctrine before international commercial arbitral

tribunals does not aim to close the debate on the topic. That would have been an impossible goal to achieve. First, it is not possible to present ‘final’ answers to the complex problems that res judicata raises before international commercial arbitral tribunals (it is indeed doubtful whether there is such as thing as a ‘final’ answer in legal matters1). Moreover, due to the limited scope of this research, it would also have been impossible to suggest solutions to all of the questions that the res judicata doctrine poses in international commercial arbitration. For this reason several questions had to be left open, such as the standard of interpretation to be given to the triple identity test in international commercial arbitration. Some questions could only be raised but not analysed, such as the res judicata effect of decisions rendered by supranational courts and tribunals before an international

1  Pierre Lalive, Transnational (or Truly International) Public Policy and International Arbitration, in Comparative Arbitration Practice and Public Policy in Arbitration, ICCA Congress Series, 1986, Vol. 3 (Pieter Sanders ed., 1987), para. 2.

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Conclusion commercial arbitral tribunal. Finally, it was not possible for some questions even to be raised, for example whether the same or similar transnational res judicata principles should apply before national courts faced with the res judicata effects of a prior arbitral award, or in international investment arbitration. Rather than close the debate, the aim of this research was to clarify the problem 7.10 of res judicata in international commercial arbitration. It was to show the reality and magnitude of the problem and to offer some solutions. The research was intended to cast some light on a problem that currently gives rise to many questions and much uncertainty in international commercial arbitration and that, due to the growing complexity of international arbitration and litigation, is expected to arise more and more frequently in the future. The question of res judicata in international commercial arbitration is only one 7.11 aspect of a greater problem, which is the coordination of jurisdictions between arbitral tribunals and other national, international, and supranational courts and (arbitral) tribunals. The parallel coexistence of these courts and tribunals, coupled with the increasing complexity of international disputes that involve a multitude of closely related parties, contracts, and issues, will inevitably lead to conflicts of jurisdiction. These conflicts not only raise questions of res judicata, but also of the applicability of other jurisdiction-​regulating mechanisms, such as lis pendens, forum non conveniens, consolidation, and joinder, as well as the availability of anti-​suit and anti-​arbitration injunctions and of damages for breach of arbitration agreements. And the list goes on. These issues stand witness not only to the increasing complexity of international 7.12 commercial arbitration, but also to its development. International commercial arbitration can no longer be considered a ‘second-​class method’2 of dispute resolution. It is an alternative method that coexists in parallel with other dispute resolution mechanisms. The issues also indicate that because of international commercial arbitration’s expansion, arbitral tribunals will constantly face new problems which raise the same question: should the same solutions as those developed in litigation to coordinate the relations between domestic courts also apply in international commercial arbitration or do the particularities of international arbitration call for different solutions and, if so, which ones?

2  Bernard Hanotiau, Problems Raised by Complex Arbitrations Involving Multiple Contracts-​ Parties-​Issues— ​An Analysis, 18(3) Journal of International Arbitration 253, 256 (2001).

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315

INDEX abuse of procedure  6.89, 6.98–​6.99, 6.118–​6.120, 6.195, 6.225, 6.236, 6.246 abuse of process: abuse of rights, and  6.115 applicability  1.31–​1.33, 4.165, 6.120, 6.137, 6.225 basis of doctrine  1.32 civil law systems  1.87 claim preclusion, and  1.61 function 1.30 Henderson v Henderson  1.34–​1.36, 4.26–​4.29 ILA Recommendations  6.195, 6.206–​6.207 prior award  6.206–​6.207 prior national court judgment  6.89–​6.102 abuse of rights  1.87, 1.162, 6.98, 6.115, 6.138, 6.235, 6.241, 6.245–​6.246 action partielle (Switzerland) 1.134 administration of justice  2.12, 2.37, 4.62 admissibility: decisions on  1.136, 2.33, 2.90, 4.68 inadmissibility of new claims  4.88, 6.94, 6.97 non-​admissibility plea  1.96 requirement for  4.82 res judicata as issue of  5.74 advisory opinions 2.80, 2.83 aequo et bono 5.103 ALI/​UNIDROIT Principles of Transnational Civil Procedure: adoption 2.58 applicability 2.59 civil law approach  2.62 equalization of effects, doctrine of  6.09–​6.15 Explanatory Workshop  2.65 issue preclusion  2.63 parties 2.61 res judicata 2.60 restrictive approach  2.64 amiable compositeur  4.131, 4.166, 5.103 annulment of arbitral tribunal’s decision on interpretation or correction of award 4.90 annulment of award: annulment court  6.45, 6.166 avoidance of  6.38, 6.43, 6.141 decisions for  6.45 proceedings for  4.80–​4.81, 4.88, 5.06, 5.60, 6.152, 6.158, 6.161, 6.165–​6.166, 6.242 remedy, as  5.09 request for  4.90 waiver of right to seek

anti-​arbitration injunctions  4.157, 5.88, 6.47, 7.11 anti-​suit injunctions 4.03 applicable law: accordance of tribunal proceedings with  4.103 arbitration proceedings, in  4.126–​4.141 decision not appealable under  4.111 decisions on  6.150, 6.194 definition of  0.06 different laws applicable to the merits  4.174 ‘issue estoppel’ test, and  4.154 triple identity test, and  4.146 arbitrability/​non-​arbitrability 6.45 arbitral autonomy  5.05–​5.13 arbitral legal order  5.62–​5.66, 5.69, 5.71, 5.92, 5.95, 6.129–​6.130, 6.217–​6.218 arbitral tribunal, see tribunal arbitration law, see international commercial arbitration law; national laws arbitration, see international commercial arbitration arbitration procedure: applicable law  5.24 informal 4.51 flexibility 5.85 autonomy, see party autorità di giudicato (Switzerland) 1.127 autorité de chose jugée: France 1.89 Switzerland  1.127–​1.128 award, see judgment/​award bar (preclusive effect), see United States Brussels Convention: ‘judgment’, meaning of  2.16–​2.20 Brussels I Regulation: aims  2.10–​2.11 application of the res judicata doctrine implicit 2.37 systemic  2.35–​2.36 ‘cause of action’, meaning of  2.27–​2.31 conflicting judgment/​award  2.11, 2.13–​2.34 ECJ approach to res judicata  2.40–​2.41 full faith and credit argument  6.13 irreconcilable judgments  2.12 judgment/​award meaning of  2.16–​2.20 scope and extent of res judicata effects  2.38–​2.41

317

Index Brussels I Regulation (cont.): lis pendens 2.34 national court judgment rendered despite arbitration agreement  6.27–​6.28 national laws  2.33 New York Convention, national court judgment rendered despite arbitration agreement  6.27–​6.28 non-​recognition of judgment/​award  2.12 pending proceedings  2.21 priority of proceedings  2.21, 2.32 recast Regulation  2.09, 2.15, 2.17, 2.49 recognition or enforcement of conflicting judgment/​award  2.53 related actions Revised Lugano Convention, and  2.09 rules of jurisdiction  2.10, 2.34 ‘same cause’ requirement  2.27 ‘same parties’ requirement  2.23–​2.26 subject matter of proceedings  2.22 cause of action: abuse of right, and  6.115 Brussels I Regulation  2.27–​2.31 estoppel, see estoppel meaning of  1.20, 1.63–​1.64, 1.163, 2.27–​2.31, 6.116 ‘same cause’ requirement  1.121–​1.126, 2.27, 2.119–​2.125, 4.59–​4.60 choice-​of-​court agreement: Convention, see Hague Convention on Choice of Court Agreements validity  2.49–​2.50 choice-​of-​law (with respect to res judicata), prior national court judgment  6.04–​6.15 civil law systems, res judicata in  1.87–​1.88, 1.162, 4.16 claim preclusion  1.61–​1.64, 4.32–​4.44, 6.197–​6.199 ‘claim splitting’ 1.64, 2.115 ‘clear cases’ 1.139 collateral estoppel, see estoppel commercial arbitral tribunals, see international commercial arbitration comity  5.06, 6.36, 6.37, 6.121 common law systems, res judicata in  1.04, 1.161, 4.17 ‘company group’ theory 2.110 comparative law approach  5.27–​5.30, 5.114 confidentiality  4.54, 5.12, 5.89–​5.90 conflict of laws: Brussels I Regulation  2.13–​2.34 conventions and treaties  2.02–​2.03, 2.07, 2.130 national laws, and  2.02 problem of  0.02–​0.03, 2.05 purpose of private international law  2.06–​2.07 res judicata, need for  2.08 conflicting judgment/​award recognition or enforcement  2.52–​2.54

conservatory measures  1.97, 1.138, 4.79 contradiction: avoidance of  1.18, 1.22, 1.29 between necessary reasons and the dispositif 2.96 controlled takeover of effects, see Switzerland Convention on Choice of Court Agreements, see Hague Convention conventions and treaties: conflict of laws  2.02–​2.03, 2.07, 2.130 general res judicata principle  4.115 international commercial arbitration  4.105–​4.113 national laws, and  4.117 res judicata guidance  4.118 court: choice-​of-​court agreement, validity  2.49–​2.50 chosen court  2.43–​2.50 court not chosen  2.49–​2.50 jurisdiction, international law  2.84 lex fori  2.46, 2.50, 6.31 current study: aims 0.14 central thesis  0.06 methodology  0.15–​0.20 scope 0.21 terminology  0.22–​0.26 decision, see judgment/​award deemed parties, see party default awards 6.178 désistement d’action (Switzerland) 1.136 different case (res judicata in case of): prior award on  6.179–​6.180 prior national court judgment  6.39–​6.40 direct estoppel, see estoppel dispositif: jugements mixtes, and  1.98 res judicata effect limited to  1.100–​1.104, 1.143–​1.146, 1.148, 2.92–​2.98, 4.58, 4.73, 4.84–​4.85, 4.92, 4.104, 4.125, 4.160–​4.164, 4.166, 6.75, 6.79, 6.199 reasons, distinction between  6.199 domestic laws (on res judicata), see national laws domestic litigation (res judicata in), see litigation due process  4.142, 6.64, 6.77, 6.79, 6.88, 6.93, 6.130, 6.133, 6.178, 6.212, 6.232 duplicate proceedings, interests at stake  4.03–​4.11 enforcement: arbitration agreement  6.130 Brussels I Regulation, and  2.02, 2.10, 2.33, 2.35, 6.27–​6.28, 6.52 conflicting judgment/​award  2.52–​2.54, 4.07 distinguished from res judicata 0.25 Hague Convention on Choice of Court Agreements, and  2.42, 2.52 New York Convention, see New York Convention

318

Index previously annulled awards, of  5.61, 6.160–​6.163 recognition for purposes of  6.125–​6.127 remedy, as  5.06–​5.10 right to seek, and extinction of a claim  4.23–​4.24 England: abuse of process extended doctrine of res judicata, as  1.19 Henderson v Henderson  1.30–​1.36, 4.26–​4.29 decision final  1.11, 4.21–​4.22 ‘judicial decision’ defined  1.08 ‘on the merits’  1.12–​1.16, 4.22 equalization of effects, doctrine of  6.09 estoppel cause of action estoppel  1.20–​1.23, 4.20, 4.23–​4.24 issue estoppel  1.24–​1.27, 4.20, 4.25, 5.16 former recovery  1.28–​1.29 judicial tribunal definition 1.09 jurisdiction 1.10, 4.22 mutuality , doctrine of  1.39, 4.31 parties  1.40–​1.42 privies  1.43–​1.46 procedural public policy  1.132 res judicata analysis of  1.06 arising of  1.05 effects of  1.17–​1.19 elements of  1.07–​1.16 party identity requirement  1.37–​1.39 provision for  4.17, 4.20–​4.31 time when judgment/​award becomes 1.164, 4.30 types of  1.05, 1.17 ‘entrata in forza di cosa giudicata’, see Switzerland equalization of effects, doctrine of  6.09–​6.15 estoppel: cause of action estoppel applicability  1.23, 4.20, 4.24 effect 4.23 origin of term  1.21–​1.22 civil law systems  1.87 exception 1.27 function 1.24 international law, in jurisdictional issues, and  1.16 procedural issues, and  1.14–​1.15 test 4.154 collateral estoppel doctrine 4.149 effect 4.130 plea 4.150, 4.175 terminology 1.48 direct estoppel  1.48 issue estoppel, see also issue preclusion applicability  1.25–​1.26, 4.20, 4.25 extension of effects, doctrine of 6.08, 6.14

facts, identity of  1.124, 1.155, 2.126 fairness: expectation of  0.05, 4.07 policy consideration underlying res judicata, as  4.05, 4.07–​4.08, 5.08, 5.33, 5.85, 5.102, 5.114, 6.86 procedural (un)fairness  6.89, 6.98–​6.99, 6.115, 6.118, 6.120, 6.137, 6.236, 6.246 final and conclusive decision, see judgment/​award finality: question of  0.04 need for  PI.04 Fomento case (lis pendens) (Switzerland) 6.55 force de chose jugée: France 1.90 Switzerland  1.127–​1.128 foreign judgment/​award: preclusive effects, and  2.40, 2.56, 4.73, 4.86, 4.93, 6.09–​6.10, 6.21, 6.26–​6.28, 6.31, 6.43, 6.51, 6.124–​6.134, 6.215–​6.221, 6.234, 6.244 ‘formal identity’ standard 2.108 formelle Rechtskraft, see Switzerland former recovery: applicability 1.29 function 1.28 forum non conveniens 2.47 France: autorité de chose jugée 1.89 determination of legal dispute between parties 1.94 force de chose jugée 1.90 judgment/​award ‘award’ defined  4.57 definition 1.93 final and conclusive  1.95 jugement d’expédient 1.94 jugement processuel 1.136 jugements mixtes 1.98 ‘on the merits’  1.96–​1.98, 5.16 prior award, invocation of  4.64 violating res judicata, challenge to  4.67–​4.71 judicial tribunal  1.99 merger doctrine  1.48, 1.114 motifs décisifs 1.103 motifs décisoires 1.103 opposabilité aux tiers 6.213 parties determination between  1.94 identity  1.113–​1.115 judicial tribunal with jurisdiction over 1.99 ‘same parties’ requirement  4.59–​4.60 principe de concentration  4.61–​4.63 représentation 1.115 res judicata applicability requirements  1.110–​1.126 effects of  1.105–​1.109 elements of  1.91–​1.104

319

Index France (cont.): res judicata (cont.): general rule  4.58 procedural public policy  1.93, 1.165, 4.66 provision for  4.16, 4.55–​4.71 scope  1.100–​1.104, 4.56–​4.57 time when judgment/​award becomes  1.164, 4.55, 4.65 violation of  4.67–​4.71 ‘same cause’ requirement  1.121–​1.126, 4.59–​4.60 ‘same object’ requirement  1.116–​1.120, 4.59–​4.60 ‘same parties’ requirement  4.59–​4.60 fraudulent obtaining of decision 1.23, 4.177 full faith and credit argument 6.13 good procedural order  4.136, 4.172, 6.60 governing law: lis pendens 5.108 validity, as to  2.49, 5.10 Hague Convention on Choice of Court Agreements: adoption 2.42 aims 2.42 choice-​of-​court agreement, validity of  2.49–​2.50 chosen court  2.43–​2.50 conflicting judgment/​award, recognition or enforcement  2.52–​2.54 court not chosen  2.49–​2.50 entry into force  2.44 forum non conveniens 2.47 implicit recognition of res judicata  2.55–​2.57 ‘inconsistent judgment/​awards’  2.53–​2.54 jurisdiction 2.46 lis pendens 2.45, 2.47 New York Convention, and  2.43 parallel proceedings arising 2.51 suspension 2.48 ratification 2.44 res judicata 2.45 scope 2.43 Henderson v Henderson and abuse of process  1.34–​1.36, 4.26–​4.29 identical case (res judicata in case of), prior national court judgment  6.33–​6.38 identity of cause  1.121–​1.126, 2.27, 2.31, 2.107, 2.119–​2.125, 4.59–​4.61, 4.147, 4.173, 4.177, 5.14, 6.116–​6.117 identity of facts  1.124, 1.155, 2.126 identity of legal order  2.127–​2.128, 5.64–​5.72 identity of object  1.116–​1.120, 2.113–​2.118, 4.59–​4.60, 4.135, 5.14, 6.60, 6.116–​6.117 identity of parties  1.05, 1.23, 1.25–​1.26, 1.29, 1.37–​1.38, 1.40–​1.42, 1.47, 1.71–​72, 1.90, 1.110,

1.113–​1.115, 1.124, 1.128, 1.150–​1.151, 2.23–​2.26, 2.104–​2.112, 4.29, 4.59–​4.60, 4.144, 4.146, 4.173–​4.174, 4.177, 5.34, 5.67, 5.89, 6.103, 6.106, 6.119–​6.121, 6.211–​6.213 identity of questions at issue  1.123, 1.163, 2.106, 6.117–​6.118 identity of subject-​matter  1.152–​1.158, 2.26, 5.​19, 6.103, 6.116 implicit decisions 1.104, 1.145 inadmissibility, see admissibility ‘inconsistent judgment’, Hague Convention on Choice of Court Agreements  2.53–​2.54 institutional rules: final judgment/​award  4.97–​4.101 general res judicata principle  4.115 res judicata effect  4.103–​4.104 res judicata guidance  4.118 scope of res judicata effect  4.104 time when judgment/​award becomes res judicata 4.102 interchangeability: arbitral tribunals and national courts, between  6.74, 6.82, 6.83, 6.112 arbitrators, of  5.76, 6.205 interim measures  2.19, 3.06, 4.79, 4.156–​4.157, 6.32, 6.167, 6.193 international commercial arbitration: additional burden on winning party in first proceedings 4.05 anti-​arbitration injunctions  4.157, 5.88, 6.47, 7.11 arbitral autonomy  5.05–​5.13 author’s analytical approach PII.03–​PII.04 autonomy of  5.47–​5.72, 5.92 comparative law approach  5.27–​5.30 complexity of  0.02 confidentiality of  5.89–​5.90 conflict-​of-​laws approach  0.02, 5.14–​5.26 contractual nature of  5.73–​5.78, 5.93 conventions  4.105–​4.113, 4.115 definitions of  5.40–​5.46 domestic litigation, analogy with  5.13, 5.38–​5.94 duplicate proceedings, problem of  4.04, 4.186 equal treatment of judgments and awards  6.02 flexibility of  5.84–​5.85 inadequacy of current law and practice  4.187–​4.193 inconsistent decisions, risk of  4.06–​5.11 increased use  0.01 institutional rules final judgment/​award  4.97–​4.101 general res judicata principle  4.115 res judicata effect  4.103–​4.104 res judicata guidance  4.118 time when judgment/​award becomes res judicata 4.102 issues of res judicata current law, in  4.118–​4.121 current practice, in  4.122–​4.185

320

Index different international commercial arbitral tribunals, between  3.09–​3.16 different situations  3.02, 3.21 international commercial arbitral tribunals and state courts, between  3.04–​3.08 meaning of  3.03 questions as to  4.119–​4.120 same arbitral tribunal, before  3.17–​3.19 jurisdiction, rules on  5.10 jurisprudence arbitrale 5.95 key features of  5.47–​5.48 lex arbitri  5.83, 6.140, 6.145, 6.155, 6.159, 6.166, 6.242, 6.243 lex fori  4.138, 4.189, 5.24, 5.109 lis pendens 5.10 litigation, analogy with  5.13, 5.38–​5.94 Model Law, see UNCITRAL Model Law national or international rules applied? PII.01–​PII.02 neutrality of  5.86–​5.88 overlap with prior findings  3.04–​3.19 particularity of  5.91 practice author’s analytical approach  4.125 choice-​of-​law  4.126–​4.139 different approaches to  4.124 established  4.179–​4.185 inadequacy  4.187–​4.193 lack of guidance  4.122–​4.123 prior decisions not res judicata  4.171–​4.176 res judicata denial  4.168–​4.170 res judicata effect  4.160–​4.167 res judicata requirements  4.140–​4.159 private nature of  5.79–​5.83, 5.93 procedure, see arbitration procedure res judicata applicability 2.133 approaches to  5.04 arising of  3.05, 3.20, 4.01 development of res judicata jurisprudence  6.01 increased use  3.22 interpretive approach  4.178 negative effect  4.03–​4.11, 4.186 principles 4.177 problem of  3.01, 3.23, 5.01–​5.03 questions as to  4.119–​4.120 ‘soft law’  4.14, 4.114, 5.95 sources of law  4.14 transnational approach appropriateness 5.114 criticisms of  5.37 generally  5.31–​5.36 see also transnational res judicata principles UNCITRAL Model Law, see UNCITRAL Model Law international law: final decision  2.87

judgment/​award  2.77–​2.83 judgment/​award ‘on the merits’  2.88–​2.91 judicial court or tribunal  2.84 national laws, and  0.19, 1.166–​1.167, 2.01, 2.04, 2.129, 2.131 res judicata applicability 2.05 applicability requirements  2.104–​2.128 basis of doctrine  2.70–​2.75, 2.131 binding rule, as  2.68 consistency of application  2.132 effects  2.99–​2.103 elements  2.76–​2.98 general principle, as  2.66–​2.67 rule of customary international law, as 2.68 scope  2.92–​2.98 uniform doctrine  2.04 ‘same cause’ requirement  2.119–​2.125 ‘same facts’ requirement  2.126 ‘same legal order’ requirement  2.127–​2.128 ‘same object’ requirement  2.113–​2.118 ‘same parties’ requirement  2.104–​2.112 tribunal of competent jurisdiction  2.85–​2.86 International Law Association (ILA) recommendations and reports on res judicata and arbitration  0.08–​0.13, 3.02, 4.114, 5.17, 6.103, 6.195, 6.206–​6.208, 6.228 international tribunal, see international commercial arbitration irreconcilable judgments: Brussels I Regulation  2.12 issue estoppel, see estoppel issue preclusion: ALI/​UNIDROIT Principles of Transnational Civil Procedure 2.63 civil law  1.87 international commercial arbitration, in  6.200–​6.205 international law  6.72–​6.88 triple identity test, and  6.122 US law  1.61, 1.65–​70, 4.32–​4.36, 4.45–​4.54 judgment/​award: annulment, see annulment ‘arbitral award’ defined  6.143–​6.153 décision contentieuse (France)  1.94 décision gracieuse (France)  1.94 default awards  6.178 enforcement of, see enforcement equal treatment of judgments and awards  6.02 final  1.11, 1.55–​57, 1.95, 1.140–​1.141, 4.21–​4.22, 4.91, 4.93, 4.97–​4.101, 6.20–​6.22, 6.154–​6.158, 6.171–​6.183 fraudulent obtaining of  1.23, 4.177 implicit decisions  1.104, 1.145 in rem  1.37

321

Index judgment/​award (cont.): inconsistency, risk of  4.06–​4.11 international law  2.77–​2.83 ‘judgment’ defined  1.93 ‘judicial decision’ defined  1.08 jugement d’expédient 1.94 jugement processuel 1.136 jugements mixtes 1.98 jurisdiction requirement  1.10, 1.99, 1.142 meaning of  2.16–​2.20 ‘on the merits’  1.12–​1.16, 1.58–​60, 1.96–​1.98, 1.132, 1.134–​1.139, 2.88–​2.91, 4.22, 6.32, 6.167–​6.194 in personam 1.37 prior decisions not res judicata  4.171–​4.176 prior judgment/​award, see prior award; prior national court judgment procedural decision  1.137 recognition of, see recognition suspension of  1.90, 1.128, 1.141 time of becoming res judicata  1.164, 4.30, 4.55, 4.104 valid  1.51–​54, 6.159–​6.163 judicial court or tribunal, see court; tribunal jugement d’expédient (France) 1.94 jugement processuel (France) 1.136 jugements mixtes (France) 1.98 jurisdiction: prior award on  6.164–​6.166, 6.184–​6.190 prior national court judgment on  1.16, 1.60, 1.108, 6.41–​6.56 prior international court/​tribunal decision on  2.89–​2.91 requirement  1.10, 1.99, 1.142, 2.34 subject matter jurisdiction requirement  1.54 territorial jurisdiction requirement  1.53 jurisprudence arbitrale 5.95 jurisprudence constante 4.09, 6.01 Kompetenz-​Kompetenz  5.55, 5.57, 6.46, 6.48, 6.190, 6.230 ‘kontrollierte Wirkungsübernahme’, see Switzerland legal order: arbitral, see arbitral legal order identity of  2.127–​2.128 lex arbitri  5.83, 6.140, 6.145, 6.155, 6.159, 6.166, 6.242, 6.243 lex fori  2.46, 2.50, 4.138, 4.189, 5.24, 5.109, 6.31 lis pendens: Brussels I Regulation  2.11, 2.15, 2.23, 2.26, 2.34 distinguished from res judicata 0.26 Fomento case  6.55 governing law  5.108 Hague Convention  2.45, 2.47

triple identity test  6.108 literature review  0.07–​0.13 litigation: analogy with international commercial arbitration  5.13, 5.38–​5.94 res judicata in PI.01–​PI.07 ‘materielle Rechtskraft’, see Switzerland merger doctrine 1.48, 1.114 motifs décisifs (France) 1.103 motifs décisoires (France) 1.103 mutual trust 2.36, 6.13 mutuality, doctrine of  1.38–​1.39, 1.84–​1.86, 4.31 national courts, see also judgment/​award; prior national court judgment international commercial arbitral tribunals, and  3.04–​3.08, 6.74, 6.82, 6.83, 6.112 prior judgments, see prior national court judgment res judicata issues  0.04–​0.05, 3.04–​3.08 national law: comparative approach to  0.17–​0.18, 5.27–​5.30 consensus on res judicata 1.01, 6.17 express res judicata provisions  4.16 general res judicata principle  4.15, 4.115 international commercial arbitration conventions, and 4.117 international law, and  0.19, 1.166–​1.167, 2.01, 2.04, 2.129, 2.131 relevance of  6.04–​6.16, 6.140 res judicata effect  4.116 res judicata requirements  4.116 ne bis in idem 4.05, 4.136 negative awards on jurisdiction  4.80, 6.149, 6.169, 6.185–​6.186, 6.223, 6.241 negative consequences (related to res judicata issues)  4.03–​4.11 negative effect of res judicata  0.23, 1.105, 1.107, 1.110–​1.111, 1.119, 1.147, 2.100, 4.59, 4.82, 4.101, 5.16–​5.19, 6.238 New York Convention: applicability 4.106 automatic recognition of arbitral awards  5.10 Brussels I Regulation, national court judgment rendered despite arbitration agreement  6.27–​6.28 Hague Convention on Choice of Court Agreements, and  2.43 national court judgment rendered despite arbitration agreement  6.27–​6.28 preclusion 4.106, 4.108 recognition/​enforcement of arbitration agreement 6.130 recognition/​enforcement of judgment/​ award 4.107 res judicata effect  4.109 res judicata guidance  4.106

322

Index nominal party  1.75–​1.76 non-​admissibility, see admissibility non-​arbitrability, see arbitrability/​non-​arbitrability non-​party  1.80–​1.83 non-​recognition, see recognition object, identical  1.116–​1.120, 2.113–​2.118, 4.59–​4.60 ‘on the merits’ decision, see judgment/​award opposabilité aux tiers (France) 6.213 ordinary means of recourse  1.90, 1.128, 1.141 parallel proceedings: arising 2.51 suspension 2.48 partial claims 1.134, 4.85 party: additional burden on winning party in first proceedings 4.05 ALI/​UNIDROIT Principles  2.61 autonomy  4.62, 5.12, 5.55, 5.83, 6.206, 6.207 deemed parties  1.41–​1.42 definition 1.73 determination of legal dispute involving  1.94 judicial tribunal with jurisdiction over  1.99 res judicata applicability  1.74–​1.76 rules on determining  1.37–​1.38, 1.40–​1.42 nominal  1.75–​1.76 non-​party  1.80–​1.83 procedural position in proceedings  2.24 representation 1.115 same parties  1.40–​1.42, 1.71–​72, 1.113–​1.115, 1.150–​1.151, 2.104–​2.112, 4.59–​4.60 successor  1.77, 1.83, 1.114, 1.150, 2.23, 4.82 third party, see third party types of  1.40–​1.42 pending proceedings 2.21 plea: civil law systems  1.87 common law systems  1.04 effects of  1.17–​1.19 party identity requirement  1.37–​1.39, 1.40–​1.42, 1.71–​72, 1.150–​1.151 types of  1.17 positive awards on jurisdiction 4.80 preclusion: claim preclusion  6.68–​6.72, 6.197–​6.199 issue preclusion  1.61, 1.65–​1.70, 1.87, 2.63, 4.32–​4.36, 4.45–​4.54, 6.73–​6.88, 6.200–​6.205 prior award  6.200–​6.207 prior national court judgment  6.06–​6.14, 6.66–​6.67 principe de concentration (France)  4.61–​4.63 prior award: abuse of process  6.206–​6.207 arbitral award, meaning of  6.143–​6.153

arbitral award ‘on the merits’  6.167–​6.194 arbitral tribunal with jurisdiction  6.164–​6.166 claim preclusion  6.197–​6.199 final and binding arbitral award  6.154–​6.158 full final award different case, in  6.179–​6.183 identical case, in  6.171–​6.178 general res judicata principle  6.142 invocation of  4.64 issue preclusion  6.200–​6.205 jurisdiction, on  6.184–​6.190 preliminary substantive issues, on  6.194 provisional measures, on  6.191–​6.193 recognizability of  6.215–​6.221 relevance of national law  6.140 res judicata applicability  6.02–​6.03, 6.139–​6.141, 6.222–​6.226 res judicata effect  6.195–​6.207 res judicata elements  6.142–​6.194 res judicata requirements  6.208–​6.221 transnational res judicata principles  6.239–​6.246 triple identity test  6.210–​6.214 valid arbitral award  6.159–​6.163 prior findings: consideration of  3.04–​3.19 decisions not res judicata  4.171–​4.176 prior national court judgment: abuse of process  6.89–​6.102 choice-​of-​law  6.04 claim preclusion  6.68–​6.72 decision ‘on the merits’  6.32 different case, in  6.39–​6.40 equalization of effects, doctrine of  6.09 extension of effects, doctrine of  6.08, 6.14 final and conclusive decision  6.20–​6.22 full faith and credit argument  6.13 identical case, in  6.33–​6.38 issue preclusion  6.73–​6.88 judicial decision  6.18 judicial tribunal  6.19 judicial tribunal with jurisdiction  6.23–​6.31 jurisdiction, on  6.41–​6.56 preclusion  6.06–​6.14, 6.66–​6.67 provisional measures, on  6.57–​6.65 recognizability of  6.124–​6.134 relevance of national law  6.04–​6.16 res judicata applicability  6.02–​6.03, 6.135–​6.138 res judicata effect  6.66–​6.102 res judicata elements  6.17–​6.65 res judicata requirements  6.103–​6.134 transnational res judicata principles  6.230–​6.238 triple identity test  6.106–​6.123 priority of proceedings 2.21, 2.32 private international law, see conflict of laws private right, res judicata as  5.80–​5.83

323

Index conclusions as to  7.01–​7.12 consensus as to  1.01, 6.17 current study aims 0.14 central thesis  0.06 methodology  0.15–​0.20 scope 0.21 terminology  0.22–​0.26 different approaches to  0.05 different situations  3.02, 3.21 enforcement distinguished  0.25 extended doctrine of, see abuse of process fairness, and  0.05 finality, and  0.04, PI.04 general principle  PI.02 ‘issues of res judicata’, meaning of  3.03 lis pendens distinguished  0.26 literature review  0.07–​0.13 litigation, in PI.01–​PI.07 meaning PI.01 need for  2.08 origins PI.01 plea of, see plea private interest  PI.06 private right of  5.80–​5.83 public interest  PI.05 res judicata pro veritate accipitur  PI.01 scope 1.160 stare decisis distinguished  0.24 terminology  0.22–​0.26 time when judgment/​award becomes 1.164 uniform application  1.159–​1.167 uniform res judicata principles/​rules (and lack thereof )  2.04, 4.190, 5.31, 5.35, 5.85, 6.14, 6.85–​6.87, 6.108, 6.113, 6.130, 6.145, 6.212, 6.232, 6.235

privy/​privies: definition and examples  1.43–1.46, 1.71, 1.77–​1.79 international commercial arbitration, in  6.120 privity: categories of privy  1.44, 1.77 doctrine of  1.38 extension 1.46 interest, in  1.45, 6.120 ‘privy’ defined  1.43 procedural decision/​judgment  1.15, 1.137, 1.144, 2.19, procedural economy: effect of  4.157 ground of  4.172, 5.06, 6.78, 6.79, 6.113, 6.212 promotion of  1.32, 5.85, 6.09, 6.36, 6.56, 6.76, 6.83, 6.86, 6.92, 6.99, 6.201 principle of  4.142 question of  4.04 procedural efficiency  5.35, 6.12, 6.49, 6.73, 6.174, 6.205 procedural judgment (jugement processuel), see Switzerland procedural order  1.137, 4.75–​4.79 compared with arbitral award  6.145, 6.153 principle of  4.136, 4.172, 6.60 procedural public policy  1.129, 1.132, 1.165, 4.66, 5.19–​5.20; see also abuse of process procedural vs. substantive (res judicata characterized as)  4.127, 4.138, 5.16–​5.20 provisional measures: prior award on  6.191–​6.193 prior national court judgment on  6.57–​6.65 Prozessstandschaft (Switzerland) 1.151 public international law, see international law questions at issue, identity of 2.126, 6.117 Rechtsgrund (Switzerland)  1.154–​1.155 recognition, see also enforcement automatic recognition  2.35, 2.37, 5.10 conflicting judgment/​award  2.12, 2.52–​2.54 meaning  2.55–​2.56, 2.99 non-​recognition, grounds for  2.12, 2.52 partial 2.25 ‘recognizability’ 4.143, 6.217 requirement for res judicata  4.65, 4.86, 6.51, 6.88, 6.124–​6.134, 6.215–​6.221 representation 1.115 représentation (France) 1.115 res judicata, see also transnational res judicata principles/​rules applicability (in general)  PI.03 application, uniformity of  1.159–​1.167 characterisation as admissibility or jurisdictional issue 5.74 complexity of  5.05

‘same cause’ requirement’, see identity of cause same facts’ requirement, see identity of facts ‘same legal order’ requirement, see identity of legal order ‘same object’ requirement, see identity of object ‘same parties’ requirement, see identity of parties ‘same questions ‘ requirement, see identity of questions at issue ‘same subject matter’ requirement, see identity of subject-​matter separability 5.55, 5.57 settlement agreement 1.94 ‘single economic entity’ 2.110, 2.112 ‘soft law’  4.14, 4.114, 5.95 stare decisis distinguished from res judicata 0.24 state courts, see national courts subject matter: Brussels I Regulation  2.22

324

Index ‘same subject matter’ requirement  1.152–​1.158, 2.26, successor  1.77, 1.83, 1.114, 1.150, 2.23, 4.82 Switzerland: action partielle 1.134 autorità di giudicato 1.127 autorité de chose jugée  1.127–​1.128 ‘clear cases’  1.139 controlled takeover of effects, concept of 6.10 désistement d’action 1.136 entrata in forza di cosa giudicata 1.128 Fomento case (lis pendens) 6.55 force de chose jugée au sens matériel  1.127–​1.128 formelle Rechtskraft 1.128 judgment/​award final  1.140–​1.141, 4.72, 4.79–​4.80 interim 4.79 jurisdiction requirement  1.142 ‘on the merits’  1.132, 1.134–​1.139 res judicata effect  1.133 judicial tribunal with jurisdiction over parties and subject-​matter  1.142 jugement processuel (procedural judgment)  1.37, 1.136, 1.44 lis pendens (Fomento case)  6.55 kontrollierte Wirkungsübernahme 6.10 materielle Rechtskraft 1.127 Prozessstandschaft 1.151 Rechtsgrund  1.154–​1.155 res judicata applicability requirements  1.149–​1.158 effects of  1.147–​1.148, 4.82–​4.90 elements of  1.131–​1.146 federal law  1.130 procedural public policy  1.129, 1.165, 5.16 provision for  4.16 scope  1.143–​1.146, 4.72–​4.75 terminology  1.127–​1.128 time when judgment/​award becomes  1.164, 4.81 ‘same parties’ requirement  1.150–​1.151 ‘same subject-​matter’ requirement  1.152–​1.158 Teilklage 1.134 Terminology (res judicata)  0.22–​0.26 territorial jurisdiction requirement 1.53 third party: arbitrator, as  5.40, 5.43 disclosure to  5.89 prior proceedings, and  4.30–​4.31, 6.119, 6.211–​6.213 res judicata, and  1.49, 1.113, 5.34 separate claim by  6.211

subsequent proceedings, and  6.211, 6.212 third person 1.38, 1.151 time of judgment/​award becoming res judicata 1.164, 4.30, 4.55, 4.102 ‘transaction’ (United States) 1.63 transnational res judicata principles/​rules, see also ALI/​UNIDROIT Principles of Transnational Civil Procedure adoption of  5.12 analogy between international commercial arbitration and domestic litigation  5.38–​5.94 applicability of  5.114 appropriateness of  5.114 criticisms of transnational approach  5.37 formulation of  6.227 generally  0.05–​0.06, 0.14, 5.31–​5.36 ILA Recommendations as basis  6.228 legal basis for  5.105–​5.113 prior award  6.239–​6.246 prior national court judgment  6.229–​6.238 Recommendation to use  5.115 sources of  5.95–​5.104 tribunal, see also international commercial arbitration definition 1.09 interchangeability  5.76, 6.74, 6.82, 6.83, 6.112, 6.205 jurisdiction  1.10, 1.99, 1.142, 2.84–​2.86, 4.22, 6.23–​6.31 prior national court judgment  6.19 triple identity test  4.146, 6.106–​6.123, 6.210–​6.214 UNCITRAL Model Law: ‘award’ defined  4.95–​4.96 general res judicata principle  4.91 res judicata effect  4.18 ‘shall be recognized as binding’, meaning of 4.91, 4.93 time when judgment/​award becomes res judicata 4.94 unspecified matters  4.92 United States: abuse of process  1.61 bar (preclusive effect)  1.48 claim preclusion  1.61–​1.64, 4.32–​4.44 full faith and credit argument  6.13 issue preclusion  1.61, 1.65–​1.70, 4.32–​4.36, 4.45–​4.54 judgment/​award final  1.55–​1.57 ‘on the merits’  1.58–​1.60, 5.16 valid  1.51–1.​54, 4.35, 4.59, merger doctrine  1.48 mutuality , doctrine of  1.39, 1.84–​1.86 non-​parties  1.80–​1.83

325

Index United States (cont.): parties definition of ‘party’  1.73 res judicata applicability  1.74–​1.76 same parties  1.71–​72 privity  1.77–​1.79 recognition of foreign arbitral awards  5.10 res judicata effects of  1.61–​1.70 elements of  1.50–​1.60 generally  1.47–​1.49 provision for  4.17, 4.32 time when judgment/​award becomes 1.164 ‘transaction’ 1.63 valid arbitration agreement  0.03, 3.05, 3.10–​3.11, 4.68, 4.89, 4.132, 5.10, 6.25, 6.28, 6.37, 6.41,

6.45, 6.52, 6.81, 6.130, 6.133, 6.166, 6.175, 6.186–​6.187, 6.189, 6.241 valid arbitral award (existence thereof as a transnational res judicata principle) 6.159–6.163, 6.186, 6.242, 6.244 valid judgment/​award, see also United States 4.100, 2.57, 2.68, 4.59 valid jurisdiction clause  2.36, 2.41, 2.49 waiver: arbitration, right to waive  6.35 annulment/​setting aside proceedings, right to waive in advance  5.59 non use of right to waive arbitration  6.35, 6.175, 6.236 res judicata and right to waive  1.165, 3.04, 4.66, 5.83, 5.109, 6.38, 6.173, 6.175, 6.236–​6.237, 6.246 territorial jurisdiction requirement, of  1.53

326