I General Introduction
This chapter deals with the challenges faced by arbitrators and parties alike in investment treaty arbitrations under both the arbitration rules of the International Centre for Settlement of Investment Disputes (ICSID) and the United Nations Commission on International Trade Law (UNCITRAL), in dealing with the doctrine of res judicata.
It is important for arbitration players to know and to predict whether an arbitral tribunal would consider itself bound by earlier court judgments, and findings of a court or other arbitral tribunal. If the latest arbitral tribunal is likely to consider itself bound by doctrines of res judicata2 or issue estoppel, the next question that arbitration players need to know is the extent to which the res judicata applies. The breadth and scope of this doctrine may very much influence and affect the final outcome of the arbitration proceedings. There are many troublesome issues regarding the exact scope of the effects on res judicata of previous court judgments or arbitral awards that emerge before both commercial and investment arbitration tribunals.
Though procedural conditions may differ from one jurisdiction to another, the common thread that runs through all jurisdictions is that a foreign commercial judgment or award shall be deemed to be both final and conclusive,3 if the original court or tribunal that had pronounced the judgment has conclusively and finally established the existence of the claim, with the effect that it makes it res judicata between the parties. For a foreign commercial judgment or award to be considered as res judicata, the following conditions need to be fulfilled. The original judgment or award must: (1) be final and conclusive; (2) have been made on the merits;4 and (3) have had proper jurisdiction over the subject matter and the parties.
It is widely accepted in most legal systems and jurisdictions that, although the system of the court or arbitral tribunal that rendered the original decision determines the exact relationship of the party to the proceedings, and the incidents of that relationship, it is ultimately for the local law of the courts at the place of enforcement to determine whether that makes the party a proper one, for the purpose of the doctrine of estoppel by res judicata. It is also generally accepted that, in accordance with the res judicata principle, matters that have been judged on the merits are deemed binding on the parties, and may no longer be relitigated, re-arbitrated or decided differently in subsequent court or arbitral proceedings.
II different approaches from Civil Law and Common Law
Courts and arbitral tribunals in both common and civil law jurisdictions must decline their jurisdiction if the same dispute involving the same parties has already been finally resolved by a foreign court judgment or foreign arbitral award that is capable of recognition in the courts or tribunals of the second jurisdiction. Common law jurisdictions and common law have long recognised a 'core of common agreement'5 in respect of the doctrine of res judicata. The general principle that underpins the res judicata doctrine is that once a particular dispute has been settled by a judgment or arbitral award, it must be regarded as final and binding.6 This means that the same issues cannot thereafter be relitigated, re-arbitrated or challenged by way of collateral attack between the same legal persons who are bound by the earlier final and conclusive decision.7
Some commentators have explained that 'deeply-rooted considerations of public policy underlie rules of preclusion in national (and international) law',8 and that such public policy focuses upon the injustice of allowing a party to relitigate the exact same claims and issues against an opposing party in repeated proceedings. If these practices are not curbed, it would increase both the costs of litigation and the risks of litigation, and there would be damage caused to the credibility and resources of the legal system.
As a general statement, in common law jurisdictions, a party is not entitled to attempt to reopen, by arbitration or litigation, any issue that has already been decided by a competent court or arbitral tribunal between the same parties. In addition, most common law jurisdictions do not allow a party to attempt to reopen, in new arbitration or litigation proceedings, any points that could and should have been properly raised and decided in previous arbitration or litigation.9 In common law jurisdictions, res judicata principles tend not to be not codified, but are instead based mainly or entirely upon judicial authority.10 Similarly, as a general statement, the doctrine of res judicata is more limited in civil law than it is under common law.
Civil law doctrine gives rise only to the direct petition of res judicata, and covers neither common law petitions of issue estoppel nor of abuse of process. Civil law jurisdictions accept the view that an arbitral award or a court judgment that determines a legal dispute between parties in a way that is final and conclusive is deemed as res judicata.11 Civil law takes the approach that only the dispositive part of the award or judgment will become res judicata; the dispositive part of a judgment contains the court's decision on the matters in dispute. The dispositive part only becomes res judicata in respect of matters that were distinctly raised and determined in adversarial proceedings. No res judicata effect attaches to any matters that were not raised during the proceedings, even though the original arbitral tribunal or court rendered a definitive decision on those issues. In addition, no res judicata effect attaches to matters that were raised during the original proceedings but that were not decided in the operative order by the arbitral tribunal or the original court.12
III Res Judicata in International Arbitration
As a decision of an international arbitral tribunal is also considered to be final and binding, it is of no surprise that the doctrine of res judicata is equally important in international arbitration. The same subject matter could emerge in two different arbitrations taking place between the same parties in a number of different situations. For example, it is not uncommon for two arbitration proceedings to have been initiated under different putative contracts that relate to the same legal relationship because the parties had signed amendments to the original agreement and there may be an overlap in the subject matter. Similarly, in licensing agreements, the same parties could have entered into a number of different agreements relating to the same subject. It is also not uncommon for a party to take a position in an ensuing arbitration that the previous award did not completely deal with the disputes between the parties.
A final and conclusive decision on any particular matter by an arbitral tribunal is a decision that will be considered as res judicata and will be treated as conclusive and also preclusive in any subsequent proceedings that the same parties may attempt to bring against each other. It is considered as final and conclusive because the original decision is final and binding upon the parties. It is also considered as preclusive because the parties are prohibited from re-arbitrating or relitigating the same matter that has already been finally decided in the earlier original proceedings.
IV Doctrine of collateral estoppel established as a general principle of law
i Case 1: Amco v. Indonesia
Both international commercial and investment arbitral tribunals have not been consistent in their approach to dealing with the res judicata doctrine when faced with the same issue or dispute that has already been decided by an earlier arbitral tribunal or state court. It appears that the trend of investment tribunals, which have had to deal with issues pertaining to decisions made by earlier tribunals and courts, is to apply the common law approach, including reliance on issue estoppel, rather than the civil law approach, in deciding on res judicata and the preclusionary effects of an earlier international arbitral award.
In the ICSID decision in Amco v. Indonesia,15 an earlier final ICSID award had been handed down but it had subsequently been partially annulled by an ad hoc committee pursuant to Article 52 of the ICSID Convention. When the matter was presented to a new ICSID tribunal, there were differences in the way the parties wanted the new tribunal to deal with the earlier award. Though both parties agreed that the undisturbed and non-annulled parts of the first award were subjected to the doctrine of res judicata, Indonesia submitted that the new tribunal was mandated to look beyond the dispositive part of the ad hoc committee's award and to consider the reasoning provided in that award.
Amco claimed in its memorial that, although an earlier finding was res judicata, it was inapplicable in the second arbitration because Indonesian law makes market rate interest applicable to monetary awards for wrongful acts and for unjust enrichment claims. Indonesia took the opposite position and contended that the res judicata character of the finding of the first tribunal did not permit such arguments.
The second tribunal held that: 'The problem is still to determine whether the reasons of the nullifying body are also res judicata for a subsequent Tribunal. The Orinoco Steamship Company case, Hague Court Reports (1916) 226; 5 AJIL (1911) 20 does not address that particular question.'16 It went on to hold that:
It is by no means clear that the basic trend in international law is to accept reasoning, preliminary or incidental determinations as part of what constitutes res judicata . . . Had the Decision of the ad hoc Committee as to what was and was not annulled (and as to what thus was and was not judicata in the Award) been unclear, all the points in the Decision would undoubtedly have to be relied on to interpret and clarify the dispositif. But the Decision is clear.
The second tribunal went on to state that:
If the present Tribunal were bound by “integral reasoning” of the ad hoc Committee, then the present Tribunal would have bestowed upon the ad hoc Committee the role of an appeal court. The underlying reasoning of an ad hoc Committee could be so extensive that the tasks of a subsequent Tribunal could be rendered mechanical, and not consistent with its authority as indicated in Article 52(6), which speaks of “the dispute” being submitted to a new Tribunal.17
At the next hearing and in its next decision two years later, the second tribunal held that the decision of the ad hoc committee was to annul with qualifications, but, as the decision went beyond mere affirmation of such illegality, it was not to be treated as res judicata.
ii Case 2: Grynbery v. RSM
The tribunal in Grynberg v. RSM18 had to deal with a contention of issue estoppel pertaining to an investment claim made by RSM who was the claimant in an earlier ICSID arbitration against Grenada (RSM v. Grenada) relating to the breach of an oil exploration agreement.19 The new ICSID arbitration included new claimants. The arbitration was initiated in accordance with a distinct bilateral investment treaty (BIT), but pertained to the same oil exploration agreement.
The parties in the case were agreed as to the requirements for the application of the doctrine of collateral estoppel. They agreed that a finding concerning a right, question or fact may not be relitigated (and 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'.20 The Grynberg tribunal held that: 'It 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.'21
The Grynberg tribunal disagreed with the claimants' submission that the questions that had been 'put in issue' in the prior arbitration concerning the agreement and treaty questions had not been considered by the prior tribunal. It held that the claimants' submission 'confuses issue preclusion and claim preclusion'.
The Grynberg tribunal relied upon the United States Supreme Court decision in Southern Pacific Railroad v. United States,22 which held that:
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.23
The Grynberg tribunal agreed with Grenada, which did not seek to submit that the prior tribunal had not determined the treaty questions that claimants now raised. The tribunal agreed that the findings of the prior tribunal on a series of rights, questions and fact bound the Grynberg tribunal and held that those earlier findings must apply in the assessment of whether the claimants' present treaty claims are 'manifestly without legal merit'.24
The Grynberg tribunal held that an essential predicate to the success of each of the claimants' claims was:
an ability for the tribunal to relitigate and decide in the claimants' favour conclusions of fact or law concerning the parties' contractual rights that had already distinctly been put in issue and distinctly determined by the prior tribunal. Since the Tribunal had already concluded, in the answer to the first question it has considered, that it could properly revisit those earlier conclusions, the Tribunal came to the conclusion that each of Claimants' claims was manifestly without legal merit.25
The Grynberg tribunal felt obligated to dismiss each of claimants' claims.
V Traditional Civil Law approach to Res Judicata
Other international investment tribunals have applied the civil law approach to res judicata.
The majority decision in Gavazzi v. Romania26 considered whether the three elements pertaining to the test for res judicata were present. The majority set out the three elements and stated that: 'Under international law, three conditions need to be fulfilled for a decision to have binding effect in later proceedings: namely, that in both instances, the object of the claim, the cause of action, and the parties are identical.'27
The tribunal had to deal with the respondent's submission that the Romanian arbitration and the subsequent proceedings concerned the same cause of action. The respondent contended that the claims submitted in the second proceedings, although formally for breaches of the BIT, were in fact contractual claims based upon the share purchase contract. The respondent submitted that in both instances, the relief sought by the claimants for the alleged breaches was compensation through payment of pecuniary damages.28
In contrast, the claimants contended that the subject matters of the dispute in the previous 2002 arbitration and in the subsequent ICSID proceedings were different. That a contractual claim and a treaty claim might both aim at obtaining monetary damages (even in similar amounts) was of no relevance, and it did not undermine the distinction between treaty claims and contractual claims. The issue in the 2002 Romanian arbitration was the alleged breach of the share purchase contract in the light of the applicable Romanian law. The issue in the subsequent ICSID proceedings were the alleged breaches of the BIT by the respondent to the prejudice of the claimants as Italian investors protected by the BIT under international law.
The majority of the tribunal found that the claims before them were based upon a breach of the BIT, the decision of which would turn on the provisions of the BIT. The majority held that the Bucharest Court of Appeal proceedings dealt with claims for breach of the share purchase contract governed by Romanian law, the decision of which turned on the duties and rights under that contract.29
The majority tribunal came to the conclusion that under international law:
there is no identity between the cause of the contractual claims put before the Romanian courts and that of the BIT claims put before this Tribunal. For this reason alone, the majority concludes that the Bucharest court decisions cannot have conclusive effect for the Tribunal under the doctrines of res judicata and issue estoppel.30
The minority member dissented and concluded that the different causes of action of the two separate claims in the earlier proceedings and current proceedings would not stop an issue estoppel from operating. He gave the following dissenting view:
Issue estoppel is to be distinguished from res judicata even if the two doctrines apply common basic principles. . . . One has to distinguish cause of action estoppel from issue estoppel, since the former prevents a party from resubmitting the same claim which was previously decided, while issue estoppel prevents a party from re-litigating a point of law or of fact which was already decided by a previous judgment. . . . The issue estoppel doctrine is applied less frequently than res judicata since some jurisdictions concentrate on res judicata. . . . However, preclusion is a concept generally known to all jurisdictions. The effects of determination of issues by a previous judgment of a state court have then been dealt with.31
The minority member went on to say that:
In my opinion, the conditions required in order to apply an issue estoppel are not as strict as those for res judicata, even if one does not accept the widening of the scope of res judicata under ILA's Recommendations, which examine the underlying nature of the dispute and are not based on formalistic concepts. To me the requirements for issue estoppel are the identity of the parties in both instances and identity of the facts and findings on which an issue is based (such as when the claims arise out of the same factual situation).32
It is possible to see, therefore, that there are different approaches to preclusion and the doctrine of res judicata under the two different legal systems.
VI Prior decisions of courts and arbitral tribunals on questions of law
If the governing law of an arbitration is common law, courts are obliged to adopt any relevant prior decisions of the higher courts of that legal system. This is because, in addition to applicable statutory legislation, one of the principles of common law is the doctrine of stare decisis, which makes decisions enunciated in earlier decisions of higher courts binding until distinguished or overruled. Notwithstanding that arbitral tribunals are not within the court system, in a common law jurisdiction they are still expected to comply with stare decisis. This is because domestic tribunals are perceived as being akin to a first instance court in domestic arbitrations and are expected to apply the law as affirmed by previous decisions of the supreme court, appeal and high courts on the same point of law.
Historically, the position of the apex court in England and Wales, then the House of Lords (now the Supreme Court), was that it was bound by its own earlier decisions. This traditional position changed in 1966 following the Practice Statement (Judicial Precedent).33 The Law Lords started off by stating that they believe in 'the use of precedent as an indispensable foundation upon which to decide what is the law and its application to individual cases. It provides at least some degree of certainty upon which individuals can rely in the conduct of their affairs, as well as a basis for orderly development of legal rules'. They then concluded that:
too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law. They propose, therefore, to modify their present practice and, while treating former decisions of this House as normally binding, to depart from a previous decision when it appears right to do so.
Although supreme courts of common law jurisdictions are allowed to depart from their own rulings on legal issues, both lower courts and tribunals must still comply with the current pronouncement of law as set out in the supreme court of the seat of the arbitration.
Both civil and common law systems, however, take the same position that any prior decisions of an arbitral tribunal on any question of law is not binding and does not have any precedential value.34 A subsequent arbitral tribunal is not bound to follow the decision of an interpretation of law in an earlier tribunal award. If the subsequent tribunal finds that the interpretation is persuasive, it may follow the same interpretation but it is not compelled to do so.
As such, and because there is no stare decisis nor binding legal precedent to comply with, there is no res judicata for any prior arbitral tribunal decisions dealing with legal issues. However eminent the prior tribunal, there is no compulsion on another subsequent tribunal to follow the prior decision on points of law. There have been hundreds of ICSID cases filed and this number is ever increasing. As was published by the United Nations Conference on Trade and Development, 'In 2017, at least 65 new investor–state dispute settlement (ISDS) cases were initiated pursuant to international investment agreements (IIAs), bringing the total number of known cases to 855. . . . In 2017, ISDS tribunals rendered at least 62 substantive decisions.'35
As the number of investment arbitration awards is also growing rapidly, previous awards have become important sources of jurisprudence to arbitrators, counsel and end-users alike. However, despite the fact that such decisions are being referred to and even constantly cited, the prevailing view of these important tribunal decisions is that they have no precedential effect but are instead, at best, merely persuasive decisions.36
Article 38(1)(c) of the Statute of the International Court of Justice states that: 'The Court, whose function is to decide in accordance with international law such disputes as are submitted to it, shall apply the general principles of law recognized by civilized nations.'37 However, Article 59 goes on to state that: 'The decision of the Court has no binding force except between the parties and in respect of that particular case.'
Article 59, therefore, clarifies that the doctrine of res judicata applies only to the parties and only in respect of the particular case that has been decided. The decisions of the International Court of Justice itself in relation to legal issues are also not considered as res judicata if the same dispute over legal interpretation were to come up between one of the parties to an earlier decision and a new party that was not a party to the earlier court hearing.
Article 53(1) of the ICSID Convention states that: 'The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention.' Article 53(1) can be interpreted to make the point that there is no res judicata or binding case precedent to subsequent ICSID cases dealing with exactly the same issue of fact or law.
The tribunal in AES Corporation v. Argentina38 agreed with Argentina and stated that the provisions of Article 25 of the ICSID Convention, together with fundamental principles of public international law, dictate that: 'each decision or award delivered by an ICSID Tribunal is only binding on the parties to the dispute settled by this decision or award.' The tribunal made the following statement:
There is so far no rule of precedent in general international law; nor is there any within the specific ICSID system for the settlement of disputes between one State party to the Convention and the National of another State Party. This was in particular illustrated by diverging positions respectively taken by two ICSID tribunals on issues dealing with the interpretation of arguably similar language in two different BITs.39
However, after having made this statement, the tribunal then went back on its statement and adopted a contrary position, and rejected the 'excessive assertion' that 'absolutely no consideration might be given to other decisions on jurisdiction or awards delivered by other tribunals in similar cases'.40
The tribunal went on to state that:
An identity of the basis of jurisdiction of these tribunals, even when it meets with very similar if not even identical facts at the origin of the disputes, does not suffice to apply systematically to the present case positions or solutions already adopted in these cases. Each tribunal remains sovereign and may retain, as it is confirmed by ICSID practice, a different solution for resolving the same problem; but decisions on jurisdiction dealing with the same or very similar issues may at least indicate some lines of reasoning of real interest; this Tribunal may consider them in order to compare its own position with those already adopted by its predecessors and, if it shares the views already expressed by one or more of these tribunals on a specific point of law, it is free to adopt the same solution.41
In essence, after having made sweeping statements on the limited role of precedential value of the previous decision, the AES tribunal actually went on to examine, consider and rely on previous decisions made by other tribunals.
While it is clear that international investment and commercial arbitration decisions do not hold any precedential value, many tribunals have also walked the fine line between precedent and adopting previous arbitral awards as being of 'persuasive' or even 'extremely persuasive' status. It has been established practice among many arbitrators to look to prior decisions on the same issue as guidance. The tribunal in LETCO v. Liberia42 stated that: 'Though the Tribunal is not bound by the precedents established by other ICSID Tribunals, it is nonetheless instructive to consider their interpretations.'
VII Contradictory decisions made by different tribunals and avoidance of res judicata
In Orascom v. Algeria,43 the respondent opposed the claim and sought dismissal of the investor's claims on the ground that the proceeding was an abuse of rights, as the claimant had 'used his group of companies to seek to maximize his chances of success by introducing several arbitration proceedings against the Respondent at different levels of the chain of companies, which is an additional ground for the inadmissibility of the claims under the doctrine of abuse of rights'.44
In essence, the arbitration proceedings were one of three arbitrations that had been filed under different investment treaties by different companies, which were all controlled by the same shareholder. The respondent state complained that there was a risk of multiple proceedings arising out of the same facts, with the ensuing possibility of conflicting outcomes and multiple recoveries, and that this was likely to be aggravated as Weather Investments, one claimant, had reserved its right to bring an arbitration against Algeria by filing a notice of dispute under the Italy–Algeria BIT, while Orascom Telecom reserved its rights to file ICSID arbitration under the Investment Agreement.45
The tribunal decided against allowing other entities in the vertical chain controlled by the same shareholder to seek protection for the same harm inflicted on the investment. The tribunal held that to do so would give rise to a risk of multiple recoveries and conflicting decisions, not to speak of the waste of resources that multiple proceedings involve. The occurrence of such risks would conflict with the promotion of economic development in circumstances where the protection of the investment is already triggered. The tribunal dismissed the claims as inadmissible and concluded on this point by saying that:
where multiple treaties offer entities in a vertical chain similar procedural rights of access to an arbitral forum and comparable substantive guarantees, the initiation of multiple proceedings to recover for essentially the same economic harm would entail the exercise of rights for purposes that are alien to those for which these rights were established.46
In its concluding remarks, the Orascom tribunal criticised the decisions reached by earlier UNCITRAL arbitral tribunals in the decisions of Lauder v. Czech Republic47 and CME Czech v. Czech Republic,48 and stated that:
it cannot be denied that, in the fifteen years that have followed those cases, the investment treaty jurisprudence has evolved, including on the application of the principle of abuse of rights (or abuse of process), as was recalled above. The resort to such principle has allowed tribunals to apply investment treaties in such a manner as to avoid consequences unforeseen by their drafters and at odds with the very purposes underlying the conclusion of those treaties.49
In Lauder v. Czech Republic and CME v. Czech Republic, the respective arbitral tribunals allowed claims based on the same facts and the seeking of damages for the same harm to continue under different investment treaties. The Orascom tribunal observed that the Czech Republic had refused several of offers of consolidation in those cases resulting in the two tribunals reaching contradicting decisions.
The tribunal in Supervision v. Costa Rica50 had to deal with a similar issue but it came to a different conclusion (by a majority) and held that all investment arbitration claims that related to a dispute that had previously been submitted to the respondent state's courts were inadmissible.
The majority held that:
In any event, the Tribunal is of the view that the strict application of the triple identity test (same parties; same object; and same normative source) applied by some investment tribunals removes all legal effects from fork in the road clauses, which contravenes the effet utile principle applicable to the interpretation of treaties. What, in the end, matters for the application of fork in the road clauses is that the two relevant proceedings under examination have the same normative source and pursue the same aim. This is, in the Tribunal's view, the case here.51
The majority tribunal members came to this conclusion after comparing the claims in the domestic court proceedings and the investment arbitration proceedings. The tribunal held that: 'In order to determine whether the proceedings before the local tribunals relate to the same dispute submitted to arbitration, the Tribunal will apply the fundamental basis of a claim test, used in various cases, among them Pantechniki v. Albania.'52
In applying the 'fundamental basis of the claim'53 test, the majority concluded that:
the actions filed in the local proceeding and in the arbitration share a fundamental normative source and pursue ultimately the same purposes. The fundamental normative source is the same because compensation was claimed for lost profits derived from the failure of Costa Rica to adjust the VTI [Vanguard Total Stock Market Index] service rates according to what Claimant alleges was established in the Contract.54
The majority decision did not consider the fact that the causes of action in the two different forums were distinct in the sense that one was brought under an international treaty while the other was subject to domestic law. More importantly, the two separate cases had been initiated by different parties and the specific administrative acts alleged in each of the proceedings may not have been exactly the same. The dissenting opinion took the view that: 'Riteve and SyC cannot be viewed as being identical. Secondly, even if they were identical, the applications by Riteve to local tribunals did not and do not constitute an attempt to litigate the same issues that are presented here.'55
One of the perennial problems in investment arbitration is the lack of consistency and reasoning of decisions, particularly in situations where members of tribunals who sit in different cases reach contradictory conclusions when dealing with identical issues.
VIII Situations where one tribunal refers to and relies upon the decision of a prior tribunal
In the case of Helnan v Egypt,56 the tribunal had to deal with a prior arbitral award that had been issued by an earlier tribunal sitting at the Cairo Regional Centre for International Commercial Arbitration (the CRCICA award). The Helnan tribunal decided that the CRCICA award was res judicata within Egypt, but it also went on to state that: 'A national court and even less a private arbitral tribunal do not have the same authority. They are not performing their duties in the same legal order and their jurisdiction does not have the same scope.'57
The Helnan tribunal came to the conclusion that a decision by a national court or by a private arbitral tribunal 'cannot be opposed as res judicata to the admissibility of an action filed with an international arbitral tribunal' but an international tribunal must accept the res judicata effect of a decision made by a national court within the legal order where it belongs.58 The tribunal then relied upon the dissenting opinion of Professor Cremades in Fraport v. Republic of the Philippines where Professor Cremades stated that:
The ICSID tribunal is not bound by the decision of the Philippine court, even the Supreme Court, but its own judgment on Philippine law must be premised on the Philippine law itself. It is res judicata in Philippine law that the Terminal 3 concession is null and void ex tunc and not ex nunc, and this must be accepted by the arbitral tribunal . . . the tribunal should respect the consequences of the Supreme Court decision.59
The Helnan tribunal took the view that even if the CRICA award and itself were addressing the same legal order, the CRICA award could not be opposed as res judicata to the admissibility of Helnan's claims. Its reasoning was that 'for an earlier final decision, issued by a competent court or arbitral tribunal, to be conclusive in subsequent proceedings, three cumulative basic conditions must be met: identity of parties, identity of subject matter or relief sought and identity of legal grounds or causes of actions.'60 It held that the three cumulative conditions were not met in the instant case.
It is useful to contrast the position taken by the Helnan tribunal with the position taken by the tribunal in SGS v Philippines.61 The SGS v. Philippine tribunal stated that:
the present Tribunal does not in all respects agree with the conclusions reached by the SGS v. Pakistan Tribunal on issues of the interpretation of arguably similar language in the Swiss-Philippines BIT. This raises a question whether, nonetheless, the present Tribunal should defer to the answers given by the SGS v. Pakistan Tribunal. The ICSID Convention provides only that awards rendered under it are “binding on the parties” (Article 53(1)), a provision which might be regarded as directed to the res judicata effect of awards rather than their impact as precedents in later cases. In the Tribunal's view, although different tribunals constituted under the ICSID system should in general seek to act consistently with each other, in the end it must be for each tribunal to exercise its competence in accordance with the applicable law, which will by definition be different for each BIT and each Respondent State.29
Moreover, there is no doctrine of precedent in international law, if precedent is meant as a rule of the binding effect of a single decision.30
There is no hierarchy of international tribunals and, even if there were, there is no good reason for allowing the first tribunal to resolve issues for all later tribunals:
Initially, it must be for the control mechanisms provided for under the BIT and the ICSID Convention, and in the longer term for the development of a common legal opinion or jurisprudence constante, to resolve the difficult legal questions discussed by the SGS v. Pakistan Tribunal and also in the present decision.62
The tribunal in Joy Mining v. Egypt63 took a more interesting path and refused to be drawn into the different views taken by the two tribunals, and stated that:
There has been much argument regarding recent cases, notably SGS v. Pakistan and SGS v. Philippines. However, this Tribunal is not called upon to sit in judgment on the views of other tribunals. It is only called to decide this dispute in the light of its specific facts and the law, beginning with the jurisdictional objections.64
Tribunals and counsel alike need to look carefully into the facts of the case whenever they are faced with a dispute where the same issue has already been adjudicated upon by a state court or by a prior tribunal. The continuing debate in the breadth and approach as to how the doctrine of res judicata is to be implemented differs between legal systems and also between countries from the same type of legal system. This difficulty continues to lie at the implementation and scope of res judicata continuing to be tied down and dependent upon the law at the place of arbitration. There is no easy fix to this dilemma, but counsel and tribunals will need to understand the fundamental position of res judicata within the place of arbitration.
Although many arbitrators do tend to cite from prior ICSID or UNCITRAL investment awards in their own arbitral decisions, this may be fraught with potential danger. Depending on the factual circumstances, situations can be envisaged where clever counsel might try to mount an attack on an award on the basis that it has relied (or overly relied) upon a prior decision made by one or more tribunals in ICSID awards. It is quite possible for challenges to be made to an ICSID award on the basis that there has been inadequate detailed reasoning made by a tribunal and that it relied exclusively upon previous ICSID decisions.
Such awards might be susceptible to attack during an annulment process on the ground that the tribunal did not actually conduct any reasoning process itself, but instead relied overly (or fully) on 'precedents' in the form of often-cited earlier ICSID or UNCITRAL awards on the same point. Such a tribunal could well be accused of having acted in excess of its duties and failing to set out reasoning because the tribunal had decided to adopt and rely upon earlier awards without giving the parties a proper chance to deal with the earlier awards and to make submissions about such proposed reliance. If the challenging party can also show that there was a complete failure to state reasons, it could show that the tribunal had not come to its own independent decision but had allowed the decision-making process to be dictated by prior awards that have no precedential value at all.
The pressure of trying to find consistency when faced with the tests for res judicata is ongoing. Claimants will continue to seek to migrate from prior domestic court litigation onto the international investment treaty platform, while respondents will try to beat them back following the stricter tests of res judicata.
However, as more and more discourse and interaction take place between lawyers from the different systems of laws, it is hoped that the increasing number of decisions of investment treaty arbitral tribunals are likely to establish a more universal approach towards the doctrine of res judicata. It is possible that the increasing volume of investment arbitration awards will slowly generate the development of an accepted set of norms and standards as decisions made in prior awards get thoroughly evaluated by subsequent tribunals, academics, international legal bodies and by the states themselves.
1 Colin Ong is Queen's Counsel at Chambers at 36 Stone Chambers (London), the senior partner at Dr Colin Ong Legal Services (Brunei) and counsel at Eldan Law LLP (Singapore).
2 Sometimes the term 'claim preclusion' is used in place of res judicata but the terms are generally used interchangeably in the sense that there is preclusive effect of a court judgment or an arbitral award in subsequent court litigation or subsequent arbitration.
3 A 'final and conclusive decision' means a decision on the merits that is final in the court or arbitral tribunal in which the judgment or award was made and may not be re-adjudicated by the same court or tribunal.
4 See Spencer Bower and Handley, Res Judicata 2009 (Lexis Nexis 4 ed) at paragraphs 1.01 and 2.01.
5 See Scobbie, Res Judicata, Precedent and the International Court: A Preliminary Sketch, Australian Year Book of International Law, Vol. 20 (1999) at page 299.
6 See Gallagher, chapter in Pervasive Problems in International Arbitration, Mistelis and Lew (eds.) (2006), 'Parallel Proceedings, Res Judicata and Lis Pendens: Problems and Possible Solutions' at page 331.
7 See Spencer Bower and Handley, Res Judicata 2009 (Lexis Nexis 4 ed) at paragraph 1.01.
8 See Born, Intemational Commercial Arbitration (Wolters Kluwer 2014), Volume III, Chapter 27 at pages 3733 to 3734. The commentator cites the phrase interest reipublicae ut sit finis Baum ('it is in the public interest that there should be an end to litigation').
9 The rule against abuse of process was first laid down by the English Court of Chancery decision in Henderson v. Henderson (1843) 3 Hare 100, 67 ER 313, which ruled that a party may not raise any claim in subsequent litigation that it ought to have properly raised in a previous action.
10 See Barnett, Res Judicata, Estoppel and Foreign Judgments (2001); Lange, The Doctrine of Res Judicata in Canada (3rd ed. 2010); [Singapore] [Malaysia]. Nouvion v. Freeman (1889) 15 App. Cas. I (England).
11 See Fouchard, Gaillard and Goldman on International Commercial Arbitration, Kluwer Law International (1999) at paragraph 1353. See Article 175 of the Civil Procedure Law of the People's Republic of China (2012). Article 45(3) of the Vietnam-Lao treaty.
12 e.g.,: Article 114 (1) of the Japan Code of Civil Procedure provides that 'A final and binding judgment, only for the contents thereof that are included in the main text, shall have res judicata.'
13 The principles of issue estoppel and abuse of process, as additional grounds of res judicata, are accepted across most common law jurisdictions. See, e.g., Carl Zeiss Stiftung v. Rayner & Keeler Ltd (No. 2)  1 A.C. 853 at 935, which held that the same parties to the proceedings involving the same decided issue are bound by an estoppel arising from the earlier original final decision.
14 The House of Lords in Johnson v. Gore Wood & Co  2 AC 1 extended the earlier estoppel rule in Henderson v. Henderson (1844) 6 QB 288 to be classified as part of the 'abuse of process' doctrine to preclude a party in subsequent litigation from raising an issue that could and should have brought before the court in the earlier proceedings.
15 Amco Asia Corporation and others v. Republic of Indonesia, ICSID Case No. ARB/81/1, Award in Resubmitted Proceeding dated 5 June 1990 at paragraph 32.
16 Amco Asia Corporation and others v. Republic of Indonesia, ICSID Case No. ARB/81/1, Award in Resubmitted Proceeding dated 10 May 1988 at paragraph 30.
17 ibid., at paragraphs 32 and 44.
18 Rachel S. Grynberg, Stephen M. Grynberg, Miriam Z. Grynberg and RSM Production Company v. Grenada, ICSID Case No. ARB/10/6, Award, 10 December 2010.
19 RSM Production Corporation v. Grenada, ICSID Case No. ARB/05/14; the award was issued on 13 March 2009 dismissing all claims (prior arbitration).
20 Rachel S. Grynberg, Stephen M. Grynberg, Miriam Z. Grynberg and RSM Production Company v. Grenada, ICSID Case No. ARB/10/6, Award, 10 December 2010 at paragraph 7.1.1.
21 The Grynberg Tribunal cited Amoco Asia Corporation v. Republic of Indonesia, ICSID Case No. ARB/81/1, Decision on Jurisdiction (Re submitted Case) at paragraph 30 (10 May 1988) paragraph 7.1.2.
22 Southern Pacific Railroad Co v. United States, 168 U.S.1, 48-49 (1897).
23 Rachel S. Grynberg, Stephen M. Grynberg, Miriam Z. Grynberg and RSM Production Company v. Grenada, ICSID Case No. ARB/10/6, Award, 10 December 2010 at paragraph 7.1.3.
24 ibid., paragraph 7.1.3.
25 ibid., paragraph 7.2.1.
26 Marco Gavazzi and Stefano Gavazzi v. Romania, ICSID Case No. ARB/12/25, Decision on Jurisdiction, Admissibility and Liability, 21 April 2015 ('Majority Decision' of Professor Hans Van Houtte and VV Veeder, QC).
27 Apotex Holdings Inc. and Apotex Inc. v. United States of America (ICSID Case No. ARB(AF)/12/1), Award, at paragraphs 7.12 – 7.21, 7.31 and 7.59 (25 Aug. 2014).
28 Marco Gavazzi and Stefano Gavazzi v. Romania, ICSID Case No. ARB/12/25, Decision on Jurisdiction, Admissibility and Liability, 21 April 2015 at paragraph 167.
29 ibid., paragraph 171.
30 ibid., paragraph 172.
31 ibid., (minority dissent of Professor Rubino-Sammartano) at paragraphs 16–19.
32 ibid., (minority dissent of Professor Rubino-Sammartano) at paragraph 22.
33 The Practice Statement (Judicial Precedent)  1 WLR 1234 dated 26 July 1966.
34 Rolf Schutze, 'The Precedential Effect of Arbitration Decisions', 11 Journal of International Arbitration 69 (1994). Klaus Peter Berger, 'The International Arbitrators' Application of Precedents', 9 Journal of International Arbitration (1992).
35 See UNCTAD Investor-State Dispute Settlement: Review of Developments in 2017 (June 2018) at 1.
36 See Gabrielle Kaufmann-Kohler, 'Arbitral Precedent: Dream, Necessity or Excuse?' Arbitration International (2007) Vol. 23, No. 3.
37 Statute of the International Court of Justice (26 June 26 1945) 59 Stat. 1055.
38 AES Corporation v. Argentine Republic (ICSID Case No. ARB/02/17) (Decision on Jurisdiction 26 April 2005).
39 ibid., at paragraph 23(d).
40 ibid., at paragraph 27.
41 ibid., at paragraph 30.
42 Liberian Eastern Timber Corporation v. Republic of Liberia, ICSID Case No. ARB/83/2 (Award of the 31 March 1986).
43 Orascom TMT Investments S.a r.l. v. People's Democratic Republic of Algeria (ICSID Case No. ARB/12/35) (Award dated 31 May 2017).
44 ibid., at paragraph 390.
45 ibid., at paragraph 173.
46 ibid., at paragraph 543.
47 Ronald S. Lauder v. The Czech Republic, UNCITRAL award dated 3 September 2001.
48 CME Czech Republic B.V. (The Netherlands) v. The Czech Republic, UNCITRAL award dated 13 September 2001.
49 Orascom TMT Investments S.a r.l. v. People's Democratic Republic of Algeria (ICSID Case No. ARB/12/35) (Award dated 31 May 2017) at paragraph 547.
50 Supervision y Control S.A. v. Republic of Costa Rica (ICSID Case No. ARB/12/4) (Majority Award 18 January 2017).
51 ibid., at 330.
52 ibid., Supervision at paragraph 308. Referring to Pantechniki S.A. Contractors & Engineers v. Republic of Albania, ICSID Case No. ARB/07/21 (Award 30 July 2009).
53 This 'fundamental basis of a claim' emanated from the approach used by the tribunal in Pantechniki S.A. Contractors & Engineers v. Republic of Albania (ICSID Case No. ARB/07/21) (Award 30 July 2009 at paragraphs 61-64).
54 Supervision y Control S.A. v. Republic of Costa Rica (ICSID Case No. ARB/12/4) (Majority Award 18 January 2017) at 315.
55 Supervision y Control S.A. v. Republic of Costa Rica (ICSID Case No. ARB/12/4) (Minority view of Klock, J. P. 18 January 2017) at page 7.
56 Helnan International Hotels A/S v. Arab Republic of Egypt, ICSID Case No. ARB/05/19 (Award of 3 July 2008).
57 ibid., at 124.
58 ibid., at 125.
59 ibid., at paragraph 125 where the Helnan tribunal cited paragraph 26 of the Dissenting Opinion of Professor Cremades from Fraport AG Frankfort Airport Services Worldwide v. Republic of the Philippines of 16 August 2007.
60 Helnan International Hotels A/S v. Arab Republic of Egypt, ICSID Case No. ARB/05/19 (Award of 3 July 2008) at 126.
61 Société Générale de Surveillance S.A. v. Republic of Philippines, ICSID Case No.ARB/02/6 (Decision on Jurisdiction 29 January 2004).
62 ibid., at 97.
63 Joy Mining Machinery Ltd v. Egypt, ICSID Case No. ARB/03/11 Award on Jurisdiction dated 6 August 2004.
64 ibid., at 80.