The difficulties associated with multiple claims brought by different claimants on the same subject-matter has been described as “detrimental to investment practice”.^[1] The existence of concurrent proceedings can “hinder amicable settlement” and “undermine predictability more generally”.^[2]

The UNCITRAL Secretariat’s Note on the ‘Concurrent Proceedings in Investment Arbitration’ defines parallel or concurrent proceedings as “situations where two or more investment-related claims against a State are, or can be, filed before different forums, and where such claims involve substantially related parties, irrespective of their location, in relation to the same measure or substantially identical measures taken by that State”.^[3] In the absence of a general definition, the threshold for proceedings to qualify as parallel or concurrent varies depending on the jurisdiction.^[4]

Parallel arbitrations are not characteristic of ISDS alone. When faced with concurrent proceedings, Tribunals have the option of suspending proceedings after due consideration of the facts and circumstances. An UNCLOS Tribunal, for instance, suspended its proceedings after concluding that “considerations of mutual respect and comity” should prevail between judicial institutions which may be called upon to determine rights and obligations between two States.^[5]

UNCITRAL also envisages a possible obligation for Tribunals to stay proceedings where a claim is also being considered by another forum.^[6] A tribunal seized of a concurrent proceeding may, in the interest of international judicial order, exercise discretion and as a matter of comity stay its hand pending a decision by the other.^[7] Such discretion is exercised only where a party seeking a stay on the proceedings demonstrates that there are truly compelling reasons to do so.^[8]

Complexities associated with parallel arbitrations

1. 1. Coherence and consistency

The UNCLOS Tribunal also observed that two conflicting decisions on the same issue would be unhelpful to the resolution of the dispute between the Parties; further, that “[c]oncurrent proceedings in relation to the same State measure may result in inconsistent or contradictory case law outcomes on issues of fact or law”. ^[9]

A popular example of this risk concerns the BIT arbitrations: Ronald S. Lauder v. The Czech Republic and CME Czech Republic B.V. v. The Czech Republic. The former (commenced first) was brought by the controlling shareholder of a company under the US – Czech Republic BIT and the latter (commenced second) by the company itself under the Netherlands – Czech Republic BIT. The CME Tribunal in its final award noted that the “parallel proceedings in London and Stockholm derived from the same circumstances, concerned the same subject matter”.^[10] While the Lauder Tribunal rejected all claims for relief, the CME Tribunal found in favour of the claimant on all claims. In both instances, the Czech Republic declined consent to consolidate or coordinate the two proceedings^[11], and “insist[ed] on a different arbitral tribunal to hear CME’s case”.^[12]

1. 1. Inefficiency and wasted costs in agitating the same issue before multiple fora

A common respondent in the parallel proceedings is left to “defend several claims in relation to the same measure, with potentially the same economic damage at stake, leading to a duplication of efforts, additional costs and procedural unfairness”.^[13] These effects are magnified where the State (more often than the investor) is the common respondent, leading to a waste of public money that could potentially, directly or indirectly, affect the rights of a significant number of its citizens.^[14] Take for instance the decision of an ICSID tribunal to stay its proceedings until the French courts finally resolved the question of whether the Parties had agreed to submit their dispute to the jurisdiction of the ICC.^[15]

1. 1. Multiple recovery and the rule against reflective loss

The rule against reflective loss restrains shareholders from seeking damages for loss in value of their shares on account of loss suffered by the company where the company itself has cause of action to claim against the same defendant.^[16] Another inherent risk with parallel arbitrations is that it may result in multiple recoveries by the same claimant in multiple fora or by separate but related entities in relation to the same cause of action.

Factors to be considered when granting stay on parallel arbitrations

The 1976 UNCITRAL Arbitration Rules confer upon a tribunal “a broad discretion as to the the conduct of [the] arbitration proceedings”. Article 15(1) provides the Tribunal with these powers, which are to be exercised by tribunals subject to compliance with fundamental safeguards such as “the requirements of procedural equality and fairness towards the [d]isputing [p]arties.”^[17]

Art. 15(1) has been interpreted by Tribunals as giving tribunals a power to conduct the arbitration in an “appropriate manner” and that this power is “essential to the very process of dispute settlement by way of arbitration and might be thought to be inherent even if not expressly stated.”^[18]

When determining an application for stay of proceedings on account of parallel arbitrations, a Tribunal ought to satisfy itself: First, that it is “not precluded from doing so under the applicable law”; Second, “that the outcome of the other pending proceedings or settlement process is material to the outcome of the [c]urrent [a]rbitration”; and Third, “that there will be no material prejudice to the party opposing the stay.”^[19]

[1] Report of UNCITRAL on its Forty-Eighth Session (29 June – 16 July 2015), UN Doc A/70/17, p. 25, para. 145

[2] UNCITRAL Secretariat Note, Concurrent Proceedings in Investment Arbitration, UN Doc A/CN.9/848 (17 April 2015), para. 13. 

[3] UNCITRAL Secretariat Note, ‘Concurrent proceedings in investment arbitration, 48^th Session, UN Doc. A/CN.9/848 (17 April 2015), para. 6

[4] Erk-Kubat, N., Parallel Proceedings in International Arbitration: A Comparative European Perspective, 2014, p.16

[5] MOX Plant Case (Ireland v United Kingdom), Procedural Order No 3 of 24 June 2003.

[6] UNCITRAL Secretariat Note, Concurrent Proceedings in Investment Arbitration, UN Doc A/CN.9/848 (17 April 2015), p. 6. 

[7] Southern Pacific Properties (Middle East) Limited, Southern Pacific Properties Limited v The Arab Republic of Egypt, Decision on Jurisdiction of November 27, 1985, ICSID Case No. ARB/84/3, 129. 

[8] Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan, ICSID Case No.

ARB/03/29, Decision on Jurisdiction dated 14 November 2005, para. 271.

[9] MOX Plant Case (Ireland v United Kingdom), Procedural Order No 3 of 24 June 2003, para. 28-29.

[10] CME Czech Republic B.V. v. The Czech Republic, (Final Award dated 14 March 2003), para. 200

[11] CME Czech Republic B.V. v. The Czech Republic, Final Award dated 14 March 2003), para. 427;

[12] Ronald S. Lauder v. The Czech Republic, (Final Award dated 03 September 2001), para. 173;

[13] UNCITRAL Secretariat Note, Concurrent Proceedings in Investment Arbitration, UN Doc A/CN.9/848 (17 April 2015), para. 13. 

[14] Giovanni Zarra, “Parallel Proceedings in Investment Arbitration”, Eleven International Publishing and G. Giappichelli Editore, p. XIV, 41

[15] Southern Pacific Properties (Middle East) Ltd v Egypt (ICSID Case No ARB/84/3, Award of 20 May 1992), paras. 15-17. 

[16] Foss v. Harbottle (1843) 2 Hare 461, 67 ER 189; Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204

[17] Methanex Corporation v United States of America (Decision on Amicus Curiae of 15 January 2001), paras. 25-27. 

[18] United Parcel Service of America, Inc v Canada (Decision on Amicus Curiae Participation of 17 October 2001), para. 38; Hrvatska Elektroprivreda v Slovenia (ICSID Case No ARB/05/24, Order Concerning the Participation of Counsel of 6 May 2008), para. 33 

[19] De Ly and Sheppard, ILA Final Report on Lis Pendens and Arbitration 25(1) Arbitration International 83, 84 (2009).