The doctrine of Res Judicata before international arbitral tribunals.

347 Pages·2017·2.07 MB·English

UNIVERSITY OF LONDON UNIVERSITY OF GENEVA
QUEEN MARY AND WESTFIELD COLLEGE FACULTY OF LAW
CENTRE FOR COMMERCIAL LAW STUDIES

THE DOCTRINE OF RES JUDICATA
BEFORE INTERNATIONAL ARBITRAL
TRIBUNALS

PHD THESIS
presented at the Centre for Commercial Law Studies
Queen Mary and Westfield College, University of London
and
at the Faculty of Law of the University of Geneva

under the joint supervision of

PROFESSOR LOUKAS MISTELIS
and
PROFESSOR GABRIELLE KAUFMANN-KOHLER

by

SILJA SCHAFFSTEIN

Geneva 2012
I hereby declare that the work presented in this thesis is my own
ABSTRACT

There are currently no rules in international commercial arbitration law and practice
assuring the coordination between (partial or final) arbitral awards and/or national
court judgments rendered in identical or related cases. This lack of coordination is
unsatisfactory, particularly in light of the ever-growing tendency of parties to submit
their commercial disputes to international arbitration and the increasing complexity of
international arbitration. Today, international commercial transactions and the disputes
to which they give rise regularly involve multiple parties, contracts and issues. As a
consequence, these disputes (or certain aspects of these disputes) are increasingly tried
in multiple fora. In such circumstances, difficult issues regarding the res judicata effects
of prior judgments or awards are likely to arise before international commercial arbitral
tribunals.

The central hypothesis underlying this research is that transnational principles of res
judicata should be elaborated for international commercial arbitral tribunals. This
solution is justified for several reasons. First, it is justified given the differences among
domestic laws regarding res judicata and the difficulties surrounding the formulation of
appropriate conflict-of-laws rules. Second, it avoids inappropriate analogies between
international arbitration proceedings and litigation. Finally, the solution provides
guidance and ensures a certain degree of fairness, certainty and predictability, which is
expected by arbitration users.

This PhD thesis seeks to achieve its aims in two stages: Part One examines the doctrine
of res judicata in litigation, analysing the doctrine as applied in different domestic laws, as
well as in private and public international law. Part Two will determine whether and to
what extent the res judicata doctrine may be applied by international commercial arbitral
tribunals. It will demonstrate that transnational principles of res judicata should be
elaborated and will seek to formulate such principles.
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)
TABLE OF CONTENTS

Introduction.................................................................................................................... 1
Part I : The Doctrine of Res Judicata in Litigation ..................................................... 10
Chapter 1: The Doctrine of Res Judicata in Domestic Laws ....................................... 14
1. Common Law ....................................................................................................... 15
1.1. England .......................................................................................................... 15
1.1.1. Constituent elements of a res judicata .................................................................... 15
1.1.2. Effects of a res judicata ............................................................................................. 19
1.1.3. The same parties...................................................................................................... 25
1.2. United States .................................................................................................. 28
1.2.1. Constituent elements of a res judicata .................................................................... 29
1.2.2. Effects of a res judicata ............................................................................................. 32
1.2.3. The same parties...................................................................................................... 34
2. Civil Law ............................................................................................................... 39
2.1. France ............................................................................................................. 39
2.1.1. Constituent elements of a res judicata .................................................................... 40
2.1.2. Effects of a res judicata ............................................................................................. 44
2.1.3. Requirements for the application of the doctrine of res judicata ....................... 45
2.2. Switzerland ..................................................................................................... 49
2.2.1. Constituent elements of a res judicata .................................................................... 50
2.2.2. Effects of a res judicata ............................................................................................. 53
2.2.3. Requirements for the application of the doctrine of res judicata ....................... 54
3. Conclusion ............................................................................................................ 56
Chapter 2: The Doctrine of Res Judicata in International Law ................................... 60
1. Private international Law ..................................................................................... 61
1.1. The EC Regulation No. 44/2001 ................................................................... 61
1.2. The Convention on Choice of Court Agreements ......................................... 67
1.3. The ALI/UNIDROIT Principles of Transnational Civil Procedure ............ 71
2. Public International Law ...................................................................................... 73
2.1. Constituent Elements of a Res Judicata ........................................................ 76
I
2.2. Effects of a Res Judicata ................................................................................ 83
2.3. Requirements for the Application of the Doctrine of Res Judicata ............... 85
3. Conclusion ............................................................................................................ 93
Part II : The Doctrine of Res Judicata in International Commercial Arbitration ....... 95
Chapter 3 : Res Judicata Issues Arise in International Commercial Arbitration ........ 97
1. Issues of Res Judicata Between Arbitral Tribunals and State Courts .................. 98
2. Issues of Res Judicata Between Different Arbitral Tribunals ............................. 101
3. Issues of Res Judicata Before a Same Arbitral Tribunal .................................... 105
4. Conclusion .......................................................................................................... 105
Chapter 4 : Res Judicata in International Commercial Arbitration – A Problem ...... 107
1. Interests at Stake Due to the Occurrence of Res Judicata Issues in International
Commercial Arbitration ............................................................................................. 108
2. How are Res Judicata Issues Currently Dealt With in International Commercial
Arbitration Law and Practice?..................................................................................... 112
2.1. International Commercial Arbitration Law ................................................. 112
2.1.1. Domestic Arbitration Laws .................................................................................113
2.1.2. Institutional Arbitration Rules ............................................................................133
2.1.3. International Commercial Arbitration Conventions........................................135
2.1.4. International Arbitration “Soft Law”: The ILA Reports and
Recommendations on Res Judicata and Arbitration ............................................................137
2.1.5. Conclusion .............................................................................................................138
2.2. International Commercial Arbitration Practice ........................................... 140
2.2.1. Which law governs res judicata issues in arbitration proceedings? ..................141
2.2.2. Which res judicata requirements must be met before international arbitral
tribunals? .................................................................................................................................147
2.2.3. To what extent have international arbitral tribunals afforded res judicata effects
to prior decisions? ...................................................................................................................154
2.2.4. In what circumstances have international arbitral tribunals denied res judicata
effects to prior decisions that were res judicata? ...................................................................156
2.2.5. What effects have international arbitral tribunals afforded to prior decisions
that were not res judicata? ........................................................................................................157
2.2.6. Conclusion .............................................................................................................159
II
3. Conclusion ........................................................................................................... 161
Chapter 5 : Search for an Appropriate Approach ....................................................... 164
1. Possible Approaches to Res Judicata Before International Arbitral Tribunals. 164
1.1. Conflict-of-laws Approach ........................................................................... 167
1.2. Comparative Law Approach ........................................................................ 172
1.3. Transnational Approach .............................................................................. 173
2. The Appropriate Approach: Transnational Res Judicata Principles for
International Commercial Arbitration ....................................................................... 175
2.1. Analogy between International Commercial Arbitration and Domestic
Litigation for Res Judicata Purposes ..................................................................... 176
2.1.1. What is international arbitration? .......................................................................176
2.1.2. Fundamental features of international commercial arbitration ......................178
2.1.3. Conclusion .............................................................................................................202
2.2. Sources of Transnational Res Judicata Principles ....................................... 203
2.3. Legal Basis for the Application of Transnational Res Judicata Principles . 206
3. Conclusion .......................................................................................................... 208
Chapter 6 : Transnational Res Judicata Principles for International Commercial
Arbitral Tribunals ....................................................................................................... 210
1. Res Judicata in Case of Prior State Court Judgments Before International
Arbitral Tribunals ........................................................................................................ 211
1.1. Constituent Elements of a Res Judicata ...................................................... 214
1.1.1. A judicial decision .................................................................................................214
1.1.2. A judicial tribunal ..................................................................................................215
1.1.3. A final and conclusive decision ...........................................................................215
1.1.4. A judicial tribunal with jurisdiction over the parties and the subject matter? ....
..................................................................................................................................216
1.1.5. A decision “on the merits” ..................................................................................217
1.2. The Scope of Res Judicata Effects to be Afforded to Prior Judgments in
Arbitration Proceedings ......................................................................................... 229
1.3. Requirements for the Application of the Res Judicata Doctrine ................. 234
1.3.1. The triple identity test ..........................................................................................235
1.3.2. Is the prior judgment capable of recognition in the country of the arbitral
III
seat? . ................................................................................................................................241
1.4. Conclusion .................................................................................................... 243
2. Res Judicata in Case of Prior Arbitral Awards Before International Arbitral
Tribunals .................................................................................................................... 244
2.1. Constituent Elements of a Res Judicata ...................................................... 245
2.1.1. An arbitral award ...................................................................................................245
2.1.2. A final and binding arbitral award ......................................................................247
2.1.3. A valid arbitral award............................................................................................249
2.1.4. An arbitral tribunal with jurisdiction over the parties and the subject
matter?...... ........................................................................................................................ ........250
2.1.5. An arbitral award “on the merits” ......................................................................251
2.2. The Scope of Res Judicata Effects to be Afforded to Prior Arbitral
Awards in Arbitration Proceedings ........................................................................ 258
2.3. Requirements for the Application of the Res Judicata Doctrine ................. 263
2.3.1. The triple identity test ..........................................................................................263
2.3.2. Is the prior award capable of recognition in the country of the arbitral seat of
the subsequent arbitration? ....................................................................................................265
2.4. Conclusion .................................................................................................... 267
3. Transnational Res Judicata Principles for International Commercial Arbitral
Tribunals .................................................................................................................... 269
3.1. Transnational Res Judicata Principles with Respect to Prior National
Court Judgments .................................................................................................... 269
3.2. Transnational Res Judicata Principles with Respect to Prior Arbitral
Awards………… ..................................................................................................... 271
Conclusion .................................................................................................................. 274
BIBLIOGRAPHY ............................................................................................................ 278
TABLE OF CASES .......................................................................................................... 308
TABLE OF ABBREVIATIONS .......................................................................................... 334
IV
INTRODUCTION

Introduction
We are not final because we are infallible, but
we are infallible only because we are final.
(Robert H. Jackson J.)
1. International arbitration is widely considered to be the principal method of
dispute 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.
2. As a consequence of this ever-growing tendency of parties to submit their
commercial disputes to international arbitral tribunals, international arbitration has also
become increasingly complex. Today international commercial transactions and the
disputes to which they give rise regularly involve multiple parties, contracts and issues2.
One aspect of this growing complexity is the increasing number of multi-fora disputes,
i.e. disputes which (or aspects of which) are tried in two or more fora3. When disputes
involve multiple parties, contracts or 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.

1 REDFERN/HUNTER/BLACKABY/PARTASIDES, para. 1.01. See also NICHOLAS/LUKER, p.
6.
2 On the issue of “multiparty, multicontract and multi-issue” arbitrations see, in particular, HANOTIAU,
Complex Arbitrations. A growth in multiparty cases has been observed over recent years. For instance, the
ICC has observed a continuing increase in multiparty cases in 2009, with the number of multiparty cases
accounting for slightly less than a third of all cases (ICC, 2009 Statistical Report, p. 9). The number of cases
involving multiple contracts has also increased (see, e.g., WHITESELL/SILVA-ROMERO, p. 7).
3 SCHNEIDER, p. 101. See also LIATOWITSCH/BERNET, p. 142.
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The Doctrine of Res Judicata Before International Arbitral Tribunals

Thus, the same or a related dispute might be brought before an arbitral tribunal and a
state court or before different arbitral tribunals.
3. Difficult questions may arise from this situation: if a court renders a decision 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 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 on the merits. The parallel enforcement in
different countries of such contradictory decisions may give rise to even further
problems. To avoid such results, should arbitral tribunals be bound by a prior 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 state court but by another (or the same) arbitral tribunal?
4. The above questions all concern the finality of judgments and awards; they all
raise issues of res judicata before an international arbitral tribunal. Arbitrators will find
little guidance as to how to efficiently resolve these issues in international 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. Adequate solutions for dealing with res judicata issues in
international arbitration must therefore be found.
5. 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
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 award
determining their legal rights, and this award will be enforceable virtually worldwide4.
Pre-established res judicata principles will provide the fairness, certainty and predictability

4 PARK, e.g., para. 7-23 and para. 7-33.
2