Kremslehner - Lis Pendens and Res Judicata - AustrianY - 2007

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Chapter III: The Arbitration Procedure -

Lis pendens and res judicata in
International Commercial Arbitration
Florian Kremslehner
Author
How to deal with Parallel Proceedings.
Florian Kremslehner
How to determine the conclusive and preclusive effects of Publication date

Arbitral Awards.
2007
I. The Issues
Source
A number of cases reported during the last few years demonstrate Florian Kremslehner ,
that issues of lis pendens and res judicata have ceased to be an Chapter III: The
academic battlefield for professors of international law and civil Arbitration Procedure -
procedures (1) . Parallel arbitration proceedings as well as parallel Lis pendens and res
proceedings before state courts and arbitration panels are becoming judicata in International
more and more frequent, as are cases in which conflicting decisions Commercial Arbitration
are being enforced or set aside by courts of different states. This is a in Christian Klausegger ,
development that will not remain limited to investment arbitration Peter Klein , et al. (eds) ,
where the potential conflicts between state courts, arbitration under Austrian Arbitration
international law and commercial arbitration appear to be obvious (2) . Yearbook 2007 (C.H.
The increasing occurrence of parallel proceedings in commercial Beck, Stämpfli & Manz
disputes and the higher numbers of arbitrations that are being 2007) pp. 127 - 162
delayed by disputes regarding jurisdiction will put the reputation of
international commercial arbitration as an efficient means of dispute
resolution at risk. (3)
How can the negative effects of parallel proceedings on the

efficiency of arbitrations be limited? In an ideal and truly global world,
we could imagine a uniform page "127" set of rules that govern
the effects of parallel and subsequent proceedings within and
amongst all dispute resolution systems and all legal orders, from
international law arbitrations to commercial arbitrations and civil
litigation. This is rather unrealistic given the present discrepancies
between these systems of adjudication. What can be done within the
arbitration world, however, is to study and understand the different
approaches and to develop a solution that is adequate at least for
international commercial arbitrations. The International Law
Association in its International Commercial Arbitration Committee
has devoted several years of work and research to the issues of
parallel and subsequent proceedings, and at its recent conference in
Toronto adopted “Recommendations on lis pendens and res judicata
and Arbitration” (4) . The lessons to be learned from the ILA's work
can be summarized as follows:
http://www.kluwerarbitration.com/print.aspx?ids=KLI-KA-1006-207 03/05/2010
• Rules for lis pendens are always related to national systems of

adjudication; they are not necessarily useful outside their
jurisdictional context.
• National concepts of res judicata require a defined set of rules
governing the recognition and enforcement of decisions; this is not
necessarily the case in international arbitration.
• There is a need to develop specific rules on how to handle issues
of parallel and subsequent proceedings in arbitration.
This article first describes the concepts provided by the different

legal orders of national law and public international law, and
presents solutions for how to deal with situations of parallel and
subsequent proceedings in international arbitration. When reference
is made to the ILA Recommendations, such reference is to the
Recommendations on Lis Pendens and Arbitration or to the
Recommendations on Res Judicata and Arbitration, respectively,
depending on the heading of the respective section of this article.
II. The Solutions
The concept of res judicata can be described as a consequence of

the principle of finality, which seems to form the basis of any
adjudication system. Without the notion of res judicata, no dispute
could ever be resolved efficiently and parties would be tempted to
resubmit their claims in the same or in a different forum, with all the
tactical manoeuvring that opponents see as dilatory tactics. Indeed,
when looking at the development of the law regarding res judicata,
despite the universality of the concept, we find that different models
were developed within different legal systems: on the level of
national law, civil and common law lawmakers, judges and
academics created different rules, which again differ from the
solutions found on the level of public international law. These
approaches will be described in the following paragraphs. Here, it
suffices to state that jurisdictions which per page "128" ceive
themselves as providing a conclusive system of substantive and
procedural laws, like many civil law countries, typically favor a more
procedural approach for domestic matters and resort to conflict rules
of international private law only to solve cross-border problems. By
contrast, common law jurisdictions favor an approach that is more
orientated to substantive law, which is evidently more appropriate
within a legal system that reaches out over a larger number of
independent jurisdictions in which the law is being developed by the
courts (5) . On the level of international law, it is even more obvious
that the relationship between the structure of the substantive law and
the structure of the adjudication system has an impact on the notion
of res judicata: there is one body of international law, but several
unrelated international courts and other dispute resolution
mechanisms that have different and in many cases overlapping
competences. Within a similar setting, it would be hopeless to resort
to procedural rules that define which court's or tribunal's decision is
binding on another international court or tribunal. Consequently,

international law sees res judicata as a general principle that is
binding between the parties and on all international courts and other
organs of jurisdictional character (6) . It seems to the author that on
this high level of abstraction, it no longer makes any sense to debate
whether this principle is one of substantive or procedural law –
suffice it to state that it exists as a general rule of law.
The concept of lis pendens clearly responds to the same

challenges as the concepts of res judicata, but from a typically
procedural perspective: If conflicting decisions can be avoided, they
should be avoided in the interest of achieving finality. Despite this
almost universal objective, the solutions differ astonishingly between
different legal systems and between national and international law.
Parallel proceedings can be seen as an issue of case management,
or as a matter of procedural law, or as a situation that potentially
impacts public policy. Again, the different ways in which the
substantive law and the procedural law are interrelated seem to have
a major influence on how legal systems react to situations of lis
pendens (7) . The solutions provided depend on the notion of res
judicata (identity of parties and claims) and on the available
remedies against conflicting decisions (it is easier to allow parallel
proceedings to go ahead simultaneously if there is an organ that can
subsequently set aside one of the conflicting decisions).
In international arbitration, the concepts of lis pendens and res

judicata as developed in national laws and in international law
cannot always be applied. The parallel or subsequent proceedings
may pertain to different legal orders so that the (potential) impact of
a future decision rendered – e.g. by an international tribunal a
dispute under international law – cannot be easily foreseen. The
arbitration agreement, which in theory should confer exclusive
jurisdiction to an arbitral tri page "129" bunal, may be disputed
by one of the parties; or, alternatively, more than one arbitration
proceedings may have been instituted on the basis of the same
arbitration agreement; or arbitration and court proceedings may be
going on simultaneously (8) . In the latter case it may be uncertain in
which jurisdictions an award will be challenged, and what effects a
decision to set aside the award would have in other jurisdictions.
When confronted with such issues, arbitral tribunals should be aware

that the arbitrators' minds and thinking may be determined by very
different concepts of national law. In order to find a solution that is
most suitable for the specific dispute, it is helpful to discuss the
solutions provided by various jurisdictions and the cross-border
effects that may derive from the differences and the discrepancies
between these solutions. The following part of this article provides an
overview that may be helpful to structure this decision-making
process.
For the above reasons, this section first deals with typical conflicts
arising in transnational litigation cases before proposing adequate

solutions for international arbitration cases. The third part of the
section then deals with parallel and subsequent litigation/arbitration
proceedings. Within each chapter, the text follows procedural reality
by dealing first with lis pendens situations, which typically have to be
resolved by procedural orders at an early stage of the proceedings;
res judicata cases, on the other hand, usually require that a decision
on the merits has been rendered in the form of an award/judgment.
A. Litigation – Litigation
The following chapter provides a short and necessarily incomplete

comparative overview of the concepts applied in different legal
systems in situations where related litigations are being conducted in
parallel or in subsequent proceedings before courts of different
jurisdictions. For the purposes of this article, proceedings will be
considered as being related when they involve the same or related
parties and deal with the same or related issues of facts and law.
1. Lis pendens
Courts may react to parallel proceedings in three distinct ways: One

claim can be dismissed, one of the parallel litigation proceedings can
be stayed, or the two cases can be consolidated. The first solution is
widespread in continental European legal systems, of which Austria
is a good example; the second solution more reflects the approach
by courts in common Law countries, whereas the third solution
requires multi-jurisdiction panels as they are available in the US (9) .
The page "130" legal foundations are also significantly diverse:
civil law countries as Austria rely on procedural laws to justify a stay
or dismissal because of lis pendens, common law courts generally
regard this power to be inherent to their jurisdiction (10) .
Sec 233 of the “Austrian Code of Civil Procedure” reads as follows:
It is the effect of litis pendency that during its duration

no other contentious proceedings in regard of the
claims raised must be conducted, neither before the
same or another court. During litis pendency any
action for the same claim must be dismissed upon
request or ex officio.
The above statute applies only in a domestic context; however, on

an international level the Lugano and the Brussels Conventions as
well as the Brussels I Regulation (11) have stated the rule that
proceedings before any court other than the court first seized must
or may be stayed or dismissed, depending on whether they involve
the same or related claims and whether it is possible to consolidate
the parallel proceedings, and further depending on whether the
jurisdiction of the court first seized is exclusive:
Lis pendens – related actions
Article 27
1. Where proceedings involving the same cause of
action and between the same parties are brought
in the courts of different Member States, any court
other than the court first seised shall of its own
motion stay its proceedings until such time as the
jurisdiction of the court first seised is established.
2. Where the jurisdiction of the court first seised is
established, any court other than the court first
seised shall decline jurisdiction in favour of that
court.
Article 28
1. Where related actions are pending in the courts of
different Member States, any court other than the
court first seised may stay its proceedings.
2. Where these actions are pending at first instance,
any court other than the court first seised may also,
on the application of one of the parties, decline
jurisdiction if the court first seised has jurisdiction
over the actions in question and its law permits the
consolidation thereof.
3. 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.
page "131"
Article 29
Where actions come within the exclusive jurisdiction of

several courts, any court other than the court first
seised shall decline jurisdiction in favour of that court.
Over 15 years of experience demonstrate that this “first seized rule”

can be problematic if the national procedural systems bound by that
rule differ significantly in terms of efficiency, opportunities for
appellate review, discovery proceedings, cost etc. Several published
cases suggest that defendants use the opportunity to force a
potential claim to be brought within their own (or any other debtor-
friendly) jurisdiction. The European Court of Justice in a decision
about parallel proceedings in Italy and Austria has clearly stated that
there is no remedy against such dilatory tactics (12) .
Article 21 of the Brussels Convention must be

interpreted as meaning that a court second seised
whose jurisdiction has been claimed under an
agreement conferring jurisdiction must nevertheless
stay proceedings until the court first seised has
declared that it has no jurisdiction.
Article 21 of the Brussels Convention must be

interpreted as meaning that it cannot be derogated
from where, in general, the duration of proceedings
before the courts of the Contracting State in which the
court first seised is established is excessively long.
Another system of handling disputes pending in different jurisdictions

was developed by the courts in common law jurisdictions, of which
the United Kingdom and the United States provide good examples.
Here the basic thought is that every court has inherent jurisdiction to
stay or strike out proceedings pending before them.
In situations of “lis alibi pendens”, based on the concept of

international comity and procedural fairness, first the courts and then
the legislators have followed the doctrine of forum non conveniens.
For the purposes of this article, it is sufficient to observe that all
these concepts are based on the notion that for every dispute there
is a natural claimant and a natural defendant and a natural forum,
and that there must be strong arguments to allow a claimant to
litigate the case in a different forum. In England, the Supreme Court
Act addresses this point from a jurisdictional perspective and states
in section 49 (b):
1. Subject to the provisions of this or any other Act, every court
exercising jurisdiction in England or Wales in any civil cause or
matter shall continue to administer law and equity on the basis
that, wherever there is any conflict or variance between the rules
of equity and the rules of the common law with reference to the
same matter, the rules of equity shall prevail. page "132"
2. Every such court shall so exercise its jurisdiction in every cause
or matter before it as to secure that, as far as possible, all
matters in dispute between the parties are completely and finally
determined, and all multiplicity of legal proceedings with respect
to any of those matters is avoided.
3. Nothing in this Act shall affect the power of the Court of Appeal
or the High Court to stay any proceedings before it, where it
thinks fit to do so, either of its own motion or on the application of
any person, whether or not a party to the proceedings.
This short overview demonstrates that there is no uniform concept of

lis (alibi) pendens. The solutions offered by national and multi-
national systems of law vary from purely procedural approaches (first
seized rule) to approaches that focus more on substantive justice
(doctrine of forum non conveniens). Moreover, there is no uniform
understanding of the requirements that parallel proceedings must

fulfil in order to qualify as a “lis pendens”. These requirements range
from strictly identical litigations (same parties, same claims) to more
flexible approaches that also allow the lis pendens rules to be
applied to related proceedings.
For the purpose of international arbitration, the lesson to be learned

from this comparative law review is that lis pendens is indeed a
universal concept of procedural law. The differences lie in the
concepts that define what actually constitutes a lis (alibi) pendens. In
the context of international commercial arbitration, whenever there is
no clear answer as to which of these concepts should be applied, it
may be appropriate to apply an intermediate concept of lis pendens
that allows more flexibility than many civil law jurisdictions, but
avoids the uncertainties to which the common-law concepts of forum
non conveniens may lead. This approach requires the use of certain
terminology, the understanding of which is not bound by the law, the
doctrine or the practice of one specific legal system. The terminology
used in the Brussels I Regulation distinguishes between
“proceedings involving the same cause of action between the same
parties” and “related actions”. For purposes of discussing lis
pendens in arbitration, the terms “parallel proceedings”, “same
action” and “related actions” will be used in this article. This
terminology seems sufficiently neutral to develop an understanding
of when parties and claims are deemed to be identical in
international commercial arbitration, and when they are not. The
related topics of identity of parties and claims will be dealt with in the
context of res judicata in the following paragraphs.
2. Res judicata
While lis pendens deals with the effects of parallel proceedings, res
judicata deals with the conclusive and preclusive effects that prior
decisions have in subsequent proceedings. The conclusive effects
are also referred to as “positive effects” of a decision that allow a
party to enforce the previous decision and to rely upon it in
subsequent proceedings. The preclusive effects, also referred to as
“negative effects”, prevent a party from re-litigating the same subject
matter in subsequent proceedings.
page "133"
In a purely domestic context, i.e. with regard to judgments rendered

within the same jurisdiction, res judicata is usually seen as an
entirely procedural concept, even though the positive and negative
effects attributed to previous judgments may have an impact on
substantive law. In a typical civil law jurisdiction like Austria, positive
and negative effects are limited to the parties of the previous
proceedings, to its subject matter and to the causes of action relied
upon by the parties – with certain exceptions if third parties have
joined the previous litigation, and in cases of subrogation. This
clearly reflects a narrow and strictly procedural approach to res

judicata. From a transnational perspective, this narrow definition of
“thesame action” can lead todifficultieseven betweenclosely related
jurisdictions like Austria, Germany and Switzerland, which each have
developed different doctrines of what is the relevant subject matter
(“Streitgegenstand”), although they use the same language and
similar terminology.
The broader approach of common law is captured in the

Restatement Second, Judgments (13) , which provides a good
overview of the arguments developed by US courts and in the
following will be used as a reference to common law in general (14) .
It seems to be common ground in all legal systems that a previous

judgment has res judicata effect if there is a triple identity of (i)
parties, (ii) subject matter and relief, and (iii) causes of action. The
important differences lie in the definitions of when parties, subject
matter and relief are identical, and what are the effects of a previous
judgment for the parties of the previous litigation, and for third
parties. It follows from these differences that not all jurisdictions use
the same terminology in the same sense: The term “parties” may not
only include the claimant and the defendant, but also third parties
who have, should have or could have joined the proceedings; the
“subject matter” may include the factual and legal basis of a claim,
but also the specific relief sought; and “causes of action” may include
the legal basis for a specific claim or request, as invoked by claimant
or as applied by the court in the prior judgment. Again, the more
narrow and formalistic approach in civil law jurisdictions would limit
the cause of action to the facts, the legal grounds for an action and
the relief requested; whereas the more substantive common law
approach would look at the entire dispute, as it can be identified by
the factual and legal arguments, by the type of claims and relief
available, and the possible actions and their legal foundations.
This short introduction should be sufficient to explain why in any

transnational context, it is not appropriate to take a formalistic
approach by just asking what is considered to constitute res judicata
in the jurisdiction where the previous litigation has been or the
subsequent litigation is pending. Rather, a comparative approach is
required, and this approach should not be determined by categories
of thinking that rest on domestic terminology and doctrines.
page "134"
a. What Constitutes res judicata
The first decision that is required when dealing with a previous

judgment is whether only its operative part or its essential reasoning
should have a binding effect in the subsequent proceedings. Some
civil law jurisdictions, in particular German-speaking countries like
Austria, Germany and Switzerland, take a very narrow approach and

only look at the operative part of a decision – the dispositif or Spruch
– which may be interpreted according to the motivation in the
judgment. Other jurisdictions like France, Belgium, The Netherlands
and Italy take a broader view and also consider as binding the
essential factual and legal reasoning contained in a judgment. (15) In
common-law jurisdictions, the approach is fundamentally different
because a judgment is seen as extinguishing a claim and merging it
into the judgment, which requires a judge in subsequent proceedings
to deal with the reasoning of the prior decision in a more substantive
manner than in any civil law jurisdiction.
b. Identity of Parties
The common ground is that judgments with in personam effect are

only binding upon the claimant and the defendant of the very
proceedings from which the judgment derived. This is also referred
to as the principle of mutuality (16) . In civil law jurisdictions, the
binding effect may, under very limited circumstances, also be
extended to other parties who must necessarily join the proceedings
as claimants or defendants (Streitgenossen). Other parties who are
allowed to join the proceedings in a different capacity (e.g. as an
interpleader) are typically not bound by the judgment as such,
although it may have certain preclusive or conclusive effects in a
subsequent litigation in which they participate as a claimant or
defendant (17) . In common law jurisdictions, the binding effects
generally include parties that are closely related to the dispute.
Under the law of England and Wales, such privies include the
partners of a partnership as well as beneficiaries and trustees. Under
US law, even weaker links to a party involved in a litigation may be
sufficient to result in a binding effect: for example, parties who
control a litigation, as parent companies typically do, can be
regarded as having been “virtually represented” by the party they
controlled.
c. Identity of Subject Matter
In civil law systems, it is theoretically possible to force a court to re-

hear a case if a new action is based on additional factual allegations,
or on new grounds page "135" of action, or on another relief
(e.g. damages instead of performance). This is a logical
consequence of the narrow understanding of what is the subject
matter – the “res” – that has been determined in the previous
judgment. The common law approach goes beyond this narrow
scope and looks at the “cause of action”, which in England is
understood to comprise all claims that are based on substantially the
same facts and evidence. The binding effect of a previous judgment,
therefore, is also called “cause of action estoppel”. Different
terminology is used in the United States, where “claim” refers to all
rights to remedies out of which the previous action had arisen. The
binding effect, therefore, is referred to as “claim preclusion”. In the
words of the Restatement, the conclusive and preclusive effects of

judgments in their common law understanding are described as
follows (emphasis added):
§ 17. EFFECTS OF FORMER ADJUDICATION:

GENERAL RULES
A valid and final personal judgment is conclusive

between the parties, except on appeal or other direct
review, to the following extent:
(1) If the judgment is in favor of the plaintiff, the claim
is extinguished and merged in the judgment and a
new claim may arise on the judgment;
(2) If the judgment is in favor of the defendant, the
claim is extinguished and the judgment bars a
subsequent action on that claim;
(3) A judgment in favor of either the plaintiff or the
defendant is conclusive, in a subsequent action
between them on the same or a different claim,
with respect to any issue actually litigated and
determined if its determination was essential to
that judgment.
§ 18. JUDGMENT FOR PLAINTIFF – THE GENERAL

RULE OF MERGER
When a valid and final personal judgment is rendered

in favor of the plaintiff:
(1) The plaintiff cannot thereafter maintain an action
on the original claim or any part thereof,
although he may be able to maintain an action
upon the judgment; and
(2) In an action upon the judgment, the defendant
cannot avail himself of defenses he might have
interposed, or did interpose, in the first action.
The conclusive effects expressed in the Restatement are similar to

the effects that previous judgments de facto also have in civil law
jurisdictions: If a court has rendered a final and binding decision on
an issue, it is usually not very wise to argue in a subsequent lawsuit
that the previous court's findings were wrong. The preclusive
effects stated in § 18 are less familiar to a civil lawyer because they
are based on the notion that a claim is extinguished and merged into
the judgment.
The differences in terminology and results become more striking

when one considers that, for reasons of procedural fairness and
efficiency, common law jurisdictions also expand the notion of
“cause of action” or “claim” to all rights and page "136" remedies
that should have been invoked in a litigation, whether actually

litigated or not. The concept behind this is that parties should not be
allowed to split their claims and defences, unless there is good
reason to do so. This is why claim preclusion, in the definition of the
Restatement, is defined as follows (emphasis added):
§ 24. DIMENSIONS OF “CLAIM” FOR PURPOSES

OF MERGER OR BAR–GENERAL RULE
CONCERNING “SPLITTING”
(1) When a valid and final judgment rendered in an
action extinguishes the plaintiff's claim pursuant to
the rules of merger or bar … the claim
extinguished includes all rights of the plaintiff
to remedies against the defendant with respect
to all or any part of the transaction, or series of
connected transactions, out of which the action
arose.
(2) 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.
The preclusive and conclusive effects of a common law judgment,

within its home jurisdiction, are generally much broader than the
effects of a corresponding judgment issued by a civil law court. If
these judgments are recognized and enforced in the respective other
legal system, the question arises as to what should be the
judgment's effects in a subsequent litigation in the other state – is
this an issue of the other state's substantive or procedural law, or
should the procedural laws of the recognizing state be applied?
These questions need not be answered in this article; suffice it to
state that there is no common approach to the problem and that,
therefore, the effects of a prior judgment may be different in each
and every jurisdiction in which it is recognized and enforced.
d. Identity of Cause of Action
In civil law jurisdictions, the cause of action is broadly understood as

the legal grounds that justify a claim and the relief requested in an
action, and the term may or may not also include the factual grounds
on which the claim is based. As a consequence, it is generally not
possible in a civil law jurisdiction to consider as being finally
determined by a prior judgment those issues of fact and law which,
despite being so closely related to the previous dispute that an
inconsistent decision would be unacceptable, would still constitute a
different cause of action.
In common law, the already broad concept of claim preclusion is

further expanded to include issue preclusion because it would be
inappropriate to allow parties to re-litigate issues of facts and law just
because a claimant in a subsequent action brings a claim that has
not been extinguished by the prior judgment. In the words of the
Restatement, issue preclusion is defined as follows: page "137"
§ 27. ISSUE PRECLUSION – GENERAL RULE
When an issue of fact or law is actually litigated and

determined by a valid and final judgment, and the
determination is essential to the judgment, the
determination is conclusive in a subsequent action
between the parties, whether on the same or a
different claim.
Many lawyers in civil law countries would certainly confirm that prior
judgments can have similar practical effects because de facto, and
not as a matter of law, courts have a tendency to follow the opinion
of other courts which have already taken evidence for and decided
upon a certain factual or legal issue. Austrian law provides a good
example of these effects: The Constitutional Court decided to erase
from the Austrian Code of Civil Procedure a provision stating that
civil courts are bound by criminal court judgments, even though the
parties involved in the litigation before the civil court had not
necessarily participated in the criminal proceedings. The Austrian
Supreme Court, when deciding in a civil case, re-instituted this rule
by resorting to procedural principles, arguing that courts should not
ignore other courts' decisions in order to ensure the consistency and
efficiency of the adjudication system (18) . The differences in the
solutions found by two of the highest courts within the same legal
system are astonishing, and they are very similar to the discussion
points that typically arise when the conclusive effects of a foreign
judgment on third parties are disputed.
Issue preclusion in regard of third parties that have not been

involved in the prior litigation, to a minimal extent, is common in most
civil law systems, which provide procedural and substantive-law
rules for third parties who, for practical or legal reasons, have been
allowed to join the prior proceedings. Common law jurisdictions go
one step further and allow third parties who have not been involved
in the prior proceedings to rely upon the judgment rendered in these
proceedings. The Restatement describes this broad understanding
of issue estoppel/issue preclusion in the law of the United States in
the following words (emphasis added):
§ 29. ISSUE PRECLUSION IN SUBSEQUENT

LITIGATION WITH OTHERS
A party precluded from relitigating an issue with an
opposing party, in accordance with §§ 27 and 28, is

also precluded from doing so with another person
unless the fact that he lacked full and fair opportunity
to litigate the issue in the first action or other
circumstances justify affording him an opportunity to
relitigate the issue. The circumstances to which
considerations should be given include those
enumerated in § 28 and also whether:
(1) Treating the issue as conclusively determined
would be incompatible with an applicable scheme
of administering the remedies in the actions
involved; page "138"
(2) The forum in the second action affords the party
against whom preclusion is asserted procedural
opportunities in the presentation and
determination of the issue that were not available
in the first action and could likely result in the
issue being differently determined;
(3) The person seeking to invoke favorable
preclusion, or to avoid unfavorable preclusion,
could have effected joinder in the first action
between himself and his present adversary;
(4) The determination relied on as preclusive was
itself inconsistent with another determination of
the same issue;
(5) The prior determination may have been affected
by relationships among the parties to the first
action that are not present in the subsequent
action, or apparently was based on a compromise
verdict or finding;
(6) Treating the issue as conclusively determined
may complicate determination of issues in the
subsequent action or prejudice the interests of
another party thereto;
(7) The issue is one of law and treating it as
conclusively determined would inappropriately
foreclose opportunity for obtaining reconsideration
of the legal rule upon which it was based;
(8) Other compelling circumstances make it
appropriate that the party be permitted to relitigate
the issue.
It is evident that most courts in civil law countries would refuse to

endorse the approach that the law should prevent a claimant from
bringing different or even contradictory factual and legal arguments
in subsequent actions against other parties. Even less so, would
third parties be allowed to rely upon factual and legal findings that
are the result of proceedings between the defendant and another
claimant.
3. Abuse of Process
In common law jurisdiction, abuse of process is an argument that

allows a defendant to request a litigation to be stayed even though
this litigation, applying the principles of forum non conveniens, is
being conducted in the “natural forum”. The defendant has to
convince the court that a case was brought in bad faith, or that the
action is abusive, oppressive or vexatious. In civil law jurisdictions,
there is no clear equivalent. However, it seems to be a common
principle in civil law countries that, although a claim may be justified
under substantive law, it may not be enforceable for policy reasons.
In Austria, this requirement is referred to as the
“Rechtsschutzinteresse”. This indicates that there is a universal
concept of fair process and litigating in good faith that can also be
applied in international commercial arbitration.
4. Recognition and Enforcement Issues
In theory, all jurisdictions require a foreign prior judgment to be

recognized before it can have any legal effect. The differences lie in
the recognition rules as page "139" such. Some jurisdictions like
Austria or Switzerland only recognize and enforce foreign judgments
if there is an instrument of international law that allows recognition
and enforcement (typically a multilateral convention treaty like the
Brussels and Lugano Conventions, or a bilateral treaty). Some
jurisdictions, e.g. Germany, rely upon a reciprocity test, while other
jurisdictions, such as the United Kingdom and the United States,
have enacted specific domestic rules. The only general statement
that can be made is that under international law there is no obligation
of states to recognize or enforce judgments issued by courts of other
states. If judgments are enforced, this is done as an act of
international comity (ex comitia, not ex necessitate).
The various national recognition and enforcement rules and the

overlapping treaties and conventions provide a complex pattern of
potential effects that a specific court decision may have in other
states. In jurisdictions that require reciprocity to be guaranteed by an
international treaty or convention, a foreign court decision that is not
enforceable may be treated as a mere indication of how the foreign
law, should it be applicable, was applied by the courts of the foreign
state, or it may be entirely disregarded as an act of a foreign
sovereign state that is null and void outside the borders of its home
jurisdiction. In other jurisdictions, the potential enforceability of a
judgment may influence the courts to respect the foreign court
decision as a factual issue so that, although it is not binding, it
should not be disregarded either because of international comity or
because of procedural efficiency. Moreover, even if a decision was
recognized in another jurisdiction, there is still a variance in how this
foreign decision is applied outside the jurisdictional context in which
it had been rendered: the recognizing state may apply to the
decision its own rules of res judicata, or it may attribute to the foreign
judgment the same effects as in its home jurisdiction, depending

upon the applicable conflict rules. In the latter case, the conflict rules
of the recognizing state may refer to a different law than the one
applied in the prior judgment.
There seems to be no uniform or at least generally accepted answer

to these questions, and hence no rule from which an arbitration
panel could profit when confronted with the argument that issues of
fact or of law have already been determined by either the courts of
another state or an arbitration panel sitting in a different jurisdiction.
However, the lesson to be learned is that, certainly for the purposes
of international commercial arbitration, an intermediate solution must
be found that allows the convergence of diverging national concepts
and the development of a universal understanding of the effects that
arbitral awards should have.
5. Summary
There are various national concepts that define the conclusive and
preclusive effects of judgments. The discrepancies between these
concepts do not matter as long as the prior judgment was rendered
within the jurisdiction in which the subsequent litigation is pending. If
the prior judgment, however, was issued by a court in another
jurisdiction, there is no uniform rule whether in a subsequent
litigation page "140" in which res judicata is invoked by a party,
the court must apply its own concept of res judicata, or the concept
of the law of the jurisdiction in which the prior judgment was
rendered, or the law applicable its domestic conflict of laws rules.
The results may differ significantly depending upon the
understanding of what constitutes the “same action” and the “same
parties”, and what effects a prior judgment should have on related
actions and related parties. These definitions also influence what is
regarded as a situation of lis pendens, and how it determines the
appropriate reaction by the courts. These observations on lis
pendens and res judicata in transnational litigation allow us to draw
several conclusions from which international commercial arbitration
can benefit:
• The common law approach to lis pendens arguably offers better
protection against parallel and subsequent proceedings at the
price of increasing the pressure upon defendants to engage in a
lawsuit in a foreign jurisdiction, whereas the civil law approach
allows more predictable results and makes it easier to disregard
proceedings in foreign jurisdictions. The most suitable approach to
situations of lis pendens in international commercial arbitration
must obviously be flexible enough to cope with a greater variety of
potential parallel proceedings in different jurisdictions, and must
be reliable enough to provide efficient and foreseeable solutions at
least for the broad majority of the actual cases.
• Neither the lex arbitri, nor any other applicable law may be
appropriate to decide whether parallel proceedings constitute a
situation of lis pendens, or how an arbitral tribunal should react to

this situation. The domestic procedural rules for lis pendens are
made to fit within one system of competences, which in
international commercial arbitration does not exist; the applicable
law may be disputed between the parties and a decision on the
applicable law may lead to the case being prejudiced.
International commercial arbitration obviously requires an
autonomous understanding of which arbitrations can be
considered to be parallel proceedings, and how arbitral tribunals
should react to such parallel proceedings.
• Only in cases of manifest abuse of process can courts in civil law
countries resort to arguments that have the effect of claim or issue
estoppel; such arguments will most likely be based on general
principles of procedural or substantive law, not on specific legal
provisions in the respective codes. This bona fide argument may
be an approach in which civil and common law systems can
converge: the abuse of process as a last resort to prevent evident
injustice.
Meanwhile a closer look should be taken at the issues that arise in

parallel or subsequent arbitration proceedings in different
jurisdictions in order to identify what solutions are actually suitable
for dealing with arguments of lis pendens and res judicata in
international arbitration.
page "141"
B. Arbitration – Arbitration
Parallel and subsequent arbitration proceedings in related disputes

may occur in different settings:
• The places of arbitration of two parallel arbitrations or of the prior
and the subsequent arbitrations may be within the same
jurisdiction or in different jurisdictions.
• The parallel or the prior and the subsequent proceedings may be
based on the same or on different arbitration agreements.
• The parallel or the prior and the subsequent proceedings belong
to different legal orders.
Parallel or subsequent arbitrations with different places of arbitration

may occur whenever there is no fixed single place of arbitration,
either because the arbitration agreement or the applicable rules
allow for the parties or the arbitration institution to determine different
places of arbitration for related disputes, or because the claimants in
the two related proceedings rely upon different arbitration
agreements to pursue claims that are based on essentially the same
facts; these cases seem to be rare and do not require further
analysis. Related arbitration proceedings that are based on the same
arbitration agreement seem to be more frequent, and the resulting lis
pendens issues will be discussed below. (19)
In each of the above settings, a situation of lis pendens (in the case
of parallel proceedings) or of res judicata (in the case of prior and
subsequent proceedings) may be obvious, e.g. because each of the
arbitrations deals with the same factual and legal issues and the
same claims and the same request for relief between the same
parties. It is much more likely, however, that the two related
proceedings have only certain aspects in common and important
differences in other respects. The parties under these circumstances
are more likely to dispute whether there actually is a situation of lis
pendens or whether an award rendered in a prior arbitration is
binding, and if so, to what extent. Arbitration panels confronted with
similar issues should of course first try to look for solutions provided
by the applicable substantive law or the arbitration rules. In the likely
case that such solutions cannot be found, arbitral tribunals should
proceed to consider the relationship between the prior or parallel
arbitration and the arbitration in which they have to decide. This
relationship between the two arbitration proceedings can be
described in one or several of the following categories:
• the claims in both arbitration proceedings may result from
substantially the same factual and/or legal issues;
• the two arbitral tribunals base their respective jurisdiction on
arbitration arguments that exclude each other for factual or legal
reasons, so that only one can be valid; page "142"
• the award to be rendered by the arbitral tribunal is likely to conflict
with the award rendered in the prior arbitration or a potential
award to be rendered in the parallel arbitration.
Potentially conflicting awards and the duplication of arbitration

proceedings may in isolated cases be inevitable, e.g. because the
applicable law does not allow to consider as binding the results of
the parallel or prior arbitration; in most cases, however, conflicting
awards and arbitrations running in parallel pose serious policy
issues. As demonstrated above, there is no jurisdiction or legal order
that allows contentious proceedings to run in parallel without
allowing the judge or arbitrator to defer the decision on certain issues
of fact or law until a decision has been rendered in the other
concurrent dispute resolution process. Hence, it is difficult to argue
why in international commercial arbitration arbitrators should be
obliged to render procedural orders or awards which are unlikely to
resolve a dispute, and in fact create further uncertainty. The question
is whether in lis pendens situations arbitral tribunals should stay their
proceedings or even dismiss a request for arbitration, and what
effects of res judicata arbitral tribunals should attribute to awards
rendered by other arbitral tribunals (20) . The following part of the
article proposes answers to these questions.
1. Lis pendens
If two arbitration proceedings are being conducted in parallel, with

the two arbitral tribunals possibly sitting in the same or in separate
jurisdictions, they may apply the same or distinct procedural rules,
and their respective competence may rest on the same or distinct
factual and legal grounds.
If both arbitrations have their seat in the same jurisdiction, issues of

lis pendens can normally be resolved by reverting to common
arbitration rules or to local procedural laws that can be applied as the
common lex arbitri. Whenever the two arbitrations have their seat in
different jurisdictions and are not being conducted under the same
arbitration rules, a transnational approach is required. Such an
approach can either be based on rules of lis pendens before courts,
which may be similar or even identical in both jurisdictions, or on a
transnational approach that is specific to international commercial
arbitration.
In the well-known cases Lauder v. The Czech Republic and CME

Czech Republic BV v. The Czech Republic, both tribunals decided to
conduct the arbitrations independently from each other and from the
parallel court proceedings. The Partial Award in the CME case, para.
410 and 411 reads:
… The Respondent's contention that the Claimant

exploited a dispute under a commercial contract to
pursue Treaty proceedings must be rejected. page
"143" The Claimant based its claim on the alleged
breach of the Treaty. In parallel the Claimant's
subsidiary in the Czech Republic has pursued its civil
law claims in front of the Czech Civil Courts. The fact
that the object of the two proceedings, compensation
for injury to the Claimant's investment, is the same,
does not deprive the parties in the Treaty proceedings
nor in the civil court proceedings of jurisdiction. An
affirmative award and/or judgment may have impact on
the quantum of the damages adjudicated in the
proceedings or give the right to the respective
defendant to raise legal defences in the respective
enforcement proceedings with the argument that the
adjudicated damage claim has been already remedied
under the award and/or judgment of the respective
other proceeding. However, jurisdiction is not affected
by this incidence of parallel proceedings. The
Respondent's defence that the Claimant may not
concurrently pursue the same remedies in different
fora is, therefore, rejected.
In Austria, the new Arbitration Act has introduced a first-in-time rule

that allows parallel court and arbitration proceedings to go ahead
simultaneously, if the court was seised first or if a timely decision on
jurisdiction is not to be expected by he arbitrators (21) . The Austrian
Arbitration Act, as with most other national procedural laws, does not
however provide rules for handling competence disputes between
arbitral tribunals. Such conflicts may arise from a number of very
different situations:
• One party invokes an arbitration clause contained in a framework
agreement (e.g. in a distribution contract), whereas the other party
invokes an arbitration clause in an ancillary agreement (e.g. a
specific purchase contract), and both parties commence
arbitration in different jurisdictions.
• Both parties agree upon the validity of the arbitration agreement,
but different arbitral tribunals are constituted, e.g. because
counterclaims have been raised too late to be consolidated or
because the respondent in the first arbitration wants a differently
composed arbitral tribunal to decide on his counterclaims.
• One arbitration may be under international law (e.g. an ICSID or
BIT investment arbitration), whereas the other arbitration is based
on a private agreement (as is the case in many investment
disputes).
It has been argued that in each of the above situations an arbitral

tribunal is mandated to decide on the merits of the dispute because
the parties have agreed on this as a means of resolving their
dispute. This opinion disregards the obvious detrimental effects that
parallel arbitrations and potentially conflicting decisions may have
not only on the parties, but on the law as such. In addition, under
most national laws, as described in the short comparative law review
above, courts have the power to stay or strike out proceedings. This
phenomenon can be seen as an expression of the overriding scope
of all procedural laws to achieve a final and page "144" binding
decision in the most effective way, while still ensuring procedural
fairness and a result that comes as close to substantive justice as
permitted under the circumstances. There is no obvious reason why,
as a general principle of international commercial arbitration, arbitral
tribunals should follow different rules and why an agreement to
arbitrate should be interpreted in any other manner.
A reference to international law also confirms that the contractual

approach is too restrictive. The principle of res judicata clearly
applies in international law, and international tribunals have
repeatedly applied concepts of lis pendens (22) . The procedural rules
of some international courts and dispute settlement institutions also
provide rules to limit parallel proceedings. Article 35 paragraph 2 (b)
of the European Convention for the Protection of Human Rights and
Fundamental Freedoms may serve as an example (emphasis
added):
Article 35 – Admissibility criteria
The Court may only deal with the matter after all
domestic remedies have been exhausted, according to
the generally recognised rules of international law, and

within a period of six months from the date on which
the final decision was taken.
The Court shall not deal with any application submitted

under Article 34 that:
– is anonymous; or
– is substantially the same as a matter that has
already been examined by the Court or has
already been submitted to another procedure of
international investigation or settlement and
contains no relevant new information.
The Court shall declare inadmissible any individual

application submitted under Article 34 which it
considers incompatible with the provisions of the
Convention or the protocols thereto, manifestly ill-
founded, or an abuse of the right of application.
The Court shall reject any application which it

considers inadmissible under this Article. It may do so
at any stage of the proceedings.
It follows from the above considerations that there is general

acceptance in all adjudication systems that courts have authority to
react to lis pendens situations by either staying proceedings or
dismissing a claim. Therefore, in international commercial arbitration
arbitral tribunals should also have the power to stay the proceedings
before them in order to wait for the results of a pending parallel
arbitration. The ILA Recommendations on Lis Pendens and
Arbitration can and should be used as an authority whenever the
effects of parallel proceedings are being discussed and have to be
decided on in an arbitration. Even in cases in which arbitral tribunals
do not want to apply the Lis Pendens Recommendations directly,
they can still serve as a reference to sound case management.
page "145"
Conversly, the arbitral tribunal in the CME Czech Republic BV v. The

Czech Republic case, in para. 412 of its Partial Award, required the
consent of both parties to coordinate its proceedings with the other
UNCITRAL arbitration Lauder v. The Czech Republic which was
running in parallel, and applied a notion of lis pendens that was in
effect restricted to abuse of process:
There is also no abuse of the Treaty regime by Mr.

Lauder in bringing virtually identical claims under two
separate Treaties. The Czech Republic views it as
inappropriate that claims are brought by different
claimants under separate Treaties. The Czech
Republic did not agree to consolidate the Treaty

proceedings, a request raised by the Claimant (again)
during these arbitration proceedings. The Czech
Republic asserted the right to have each action
determined independently and promptly. This has the
consequence that there will be two awards on the
same subject which may be consistent with each other
or may differ. Should two different Treaties grant
remedies to the respective claimants deriving from the
same facts and circumstances, this does not deprive
one of the claimants of jurisdiction, if jurisdiction is
granted under the respective Treaty. A possible abuse
by Mr. Lauder in pursuing his claim under the US
Treaty as alleged by the Respondent does not affect
jurisdiction in these arbitration proceedings.
The Recommendations seek to provide guidance to parties and

arbitrators in situations where neither the applicable rules nor
reference to a common lex arbitri provide adequate solutions. The
Recommendations set out the following principles on how to deal
with parallel proceedings; a full version of the Recommendations can
be found at the end of this article. The proposed solutions depend on
the forum in which the other or parallel proceedings are pending:
1. Each tribunal should determine its own jurisdiction if it considers
itself to be prima facie competent.
2. An arbitral tribunal requested to decline jurisdiction or to stay the
arbitration because of parallel proceedings should try to avoid
conflicting decisions, to prevent costly duplication of proceedings
and to protect parties from oppressive tactics.
3. If the other proceedings are pending before a court of the
jurisdiction of the place of arbitration, the arbitral tribunal should
be mindful whether under the law of that jurisdiction the award
could be set aside in cases of conflicting decisions.
4. An arbitral tribunal should proceed with the arbitration if the
parallel proceeding is pending before a court of a jurisdiction
other than the jurisdiction of the place of arbitration, unless the
right to arbitrate was waived or save other exceptional
circumstances.
5. If the parallel proceedings are arbitration proceedings, the arbitral
tribunal second seized should decline jurisdiction or stay its
proceedings, provided that it is not precluded to do so under the
applicable law and provided that there is no material prejudice to
the party opposing the request. page "146"
6. Arbitral tribunals may stay their proceedings until the outcome of
any other pending proceedings or dispute settlement process,
provided that this is not precluded by the applicable law, that the
outcome of the other proceedings is material to the outcome of
the arbitration, and that there will be no material prejudice to the
party opposing the stay.
7. Effects of parallel proceedings need not be raised by an arbitral

tribunal on its own motion, and should be raised by a party as
soon as possible.
Supporting material and explanations for the recommendations can

be found on the ILA web-site in the Final Report by the International
Commercial Arbitration Committee to the Toronto Conference (2006)
(23)
. There are three elements of the Recommendations that need to
be pointed out within the context of this article because they are
useful to describe and balance those principles of international
commercial arbitration that should be taken into consideration when
dealing with parallel arbitration proceedings. The following
discussion is based on the assumption that neither the applicable
law nor the practice at the place of arbitration give sufficient
guidance to the arbitral tribunal that is faced with parallel arbitration
proceedings.
a. Competence-Competence
A valid agreement to arbitrate confers exclusive jurisdiction to a

legitimately composed arbitral tribunal, which is then authorised to
determine its own jurisdiction; this is the position of the New York
Convention and of most national laws (24) .
Article II of the New York Convention 1958 states:

1. Each Contracting State shall recognize an agreement in writing
under which the parties undertake to submit to arbitration all or
any differences which have arisen or which may arise between
them in respect of a defined legal relationship, whether
contractual or not, concerning a subject matter capable of
settlement by arbitration.
2. The term “agreement in writing” shall include an arbitral clause in
a contract or an arbitration agreement, signed by the parties or
contained in an exchange of letters or telegrams.
3. The court of a Contracting State, when seized of an action in
a matter in respect of which the parties have made an
agreement within the meaning of this article, shall, at the
request of one of the parties, refer the parties to arbitration,
unless it finds that the said agreement is null and void,
inoperative or incapable of being performed.
page "147"
These principles are also reflected in article 8 (1) UNCITRAL Model

Law:
Arbitration agreement and substantive claim

before court
(1) A court before which an action is brought in a
matter which is the subject of an arbitration

agreement shall, if a party so requests not later
than when submitting his first statement on the
substance of the dispute, refer the parties to
arbitration unless it finds that the agreement is null
and void, inoperative or incapable of being
performed.
Most procedural rules also state the principle of competence-

competence (e.g. article 21 UNCITRAL Arbitration Rules, article 6.4
ICC Rules, article 15.1 ICDR Rules, article 23.1 LCIA Rules, article
19.2 Vienna Rules). It follows from these principles that state courts
should refrain from determining competence issues before an arbitral
tribunal has decided on its competence.
However, this is not necessarily the case in practice. Whenever a

party sees a chance to argue that an arbitration agreement is invalid
or unable to be performed, or whenever arbitrability or issues of
public order become relevant, one of the parties is likely to seek
assistance from state courts in order to prevent arbitration
proceedings from being instituted or progressing. Courts in many
states may be prepared to decide on corresponding applications to
obstruct the arbitral process instead of waiting for a decision from the
arbitral tribunal. In similar cases, arbitral tribunals should first defend
the principle of competence-competence. This is not only a
requirement that results from the above sources of law, but also an
issue of sound case management. The court deciding in the other
proceedings, or the other arbitral tribunal deciding in the parallel
arbitration, needs to know the position of the arbitral tribunal
regarding its own competence, and a decision or award which states
the factual and legal grounds for accepting or denying jurisdiction
can only be helpful to the parties.
b. Identity of Parties and Issues
Given the diversity of solutions provided by national laws in defining

the “same parties” and the “same issues/claims/relief”, it would not
be wise to invent an arbitration-specific rule of what is and what is
not a parallel arbitration that constitutes a lis pendens.
Consequently, the ILA Recommendations do not contain a definition
of the elements an arbitration must fulfil in order to qualify as a
parallel arbitration to which the Recommendations apply. They
recommend a procedural approach and therefore refer to parallel
proceedings as proceedings in which the parties and one or more of
the issues are the same or substantially the same as the ones in the
Parallel Proceedings. The recommended reactions by arbitral
tribunals, nevertheless, may depend on how closely related the
“parallel” and the “current” arbitrations are:
• Where parallel arbitration proceedings have been commenced
and the parties and the issues and the relief requested are the
same in both proceedings, it may be appropriate to decline

jurisdiction or to stay the proceedings, pro page "148" vided
that the arbitral tribunal is satisfied that the arbitral tribunal in the
parallel arbitration has jurisdiction to decide on the issues, and
provided that there is no material prejudice to the opposing party.
This recommendation aims at avoiding the duplication of
arbitration proceedings by applying the first in time rule wherever
this is appropriate; e.g. because the parallel arbitration has made
substantial progress and the current arbitration seems to have
been started to correct mistakes of one party in the parallel
arbitration, or because the respondent in the parallel arbitration
dislikes the composition of the arbitral tribunal. The
recommendation is likely to compel parties who use oppressive
tactics to explain why a subsequent arbitration became necessary,
what benefit it has for the claimant, and why the prior arbitration
cannot be expected to resolve the dispute. In cases in which there
are no good reasons for the claimant to start the current
arbitration, the arbitral tribunal may decide to deny jurisdiction
because the policy reasons of arbitral efficiency and the
avoidance of conflicting awards constitute the second request for
arbitration as an abuse of the arbitral process. In cases where
such abuse is less obvious, the arbitral tribunal in the current
arbitration may still decide to stay its proceedings to avoid its
oppressive effects on the claimant in the parallel arbitration.
• Where parallel arbitration proceedings have been commenced
and the parties and the issues and the relief requested are
substantially the same in both proceedings, the arbitral tribunal in
the current arbitration may decide to stay its own proceedings until
the other arbitral tribunal in the parallel arbitration has determined
the issues and decided upon the relief. In such a case, the arbitral
tribunal in the current arbitration will have to be satisfied that the
arbitral tribunal in the parallel arbitration has jurisdiction, and that
there is no material prejudice to the party opposing the stay. This
recommendation allows room for case management issues and
scope for deviation from the first-in-time approach that is normally
applied if parties/claims/relief are identical, as discussed before.
The recommendation also permits proceedings to be stayed only
in regard of certain issues and part of the requested relief, and
restricts the current arbitration to the issues and the relief that the
parallel arbitration is not expected to deal with.
• The parties in the parallel and the current arbitrations may not be
identical, but related in a manner that justifies their treatment as
one party for procedural purposes; e.g. because they belong to
the same group of companies or because one is a subsidiary of
the other. In addition, it may also be the case that the issues in the
two arbitrations are not the same but are so closely related that,
when viewed from a case management perspective, it may be
appropriate to stay one of the arbitrations for a limited period of
time and under appropriate conditions. A typical scenario in which
a stay may be justified could be a series of arbitrations related to
the same construction project and involving the contractor and

several of his sub-contractors.
page "149"
In determining what types of relationship may justify the staying of

one or more parallel arbitrations, regard may be given to the
practices at the place of arbitration. Furthermore, the rules for claim
preclusion and issue preclusion as captured in the Restatement can
serve as a guideline to identify the manner in which the parties/the
issues/the relief can be interrelated – after all, the US law reflects
many years of experience in dealing with related litigations within a
very complex jurisdictional system. If the place of arbitration is in
Austria, it has to be taken into consideration that the present 2006
version of the Vienna Rules does not contain any rules to stay
proceedings, whereas the previous 2001 version of the Rules
allowed the interruption or suspension of proceedings only under
limited circumstances. By giving up these restrictions, the Vienna
Rules now allow broad case management discretion to the arbitral
tribunal, including the power to stay proceedings; but the Rules do
not give guidance as to how this discretionary power should be
exercised. The Recommendations can fill this gap by providing the
tribunal and the parties with a reference for sound case
management.
c. Material Prejudice to a Party
It may be inappropriate for an arbitral tribunal to deny jurisdiction or

stay its proceedings in favour of another arbitration if this would
result in a material prejudice to the party requesting to continue with
the proceedings. The Recommendations mention some of these
reasons as typical examples:
• The relief available in the parallel arbitration may be inadequate;
e.g. in cases where public policy at the place of the parallel
arbitration restricts the arbitral tribunal's ability to order
performance of certain obligations, whereas this is possible at the
place of the current arbitration.
• There may be a lack of due process in the parallel arbitration; in
this case, policy issues may compel the arbitral tribunal in the
current arbitration to risk issuing an award that contradicts a later
award in the parallel proceedings. If a party's right to be heard has
been violated clearly and substantially, it may be more appropriate
to leave it to the courts to decide on due process issues in future
setting aside or recognition proceedings than to defer the
determination of certain issues to the parallel proceedings in
which the lack of due process has occurred.
• The award to be rendered in the parallel arbitration is likely to be
set aside or not to be enforced. It would not make sense to deny
jurisdiction or stay proceedings in a current arbitration if there was
a significant risk that the award rendered in the parallel arbitration
would eventually not be upheld. When determining in the current

arbitration whether continuing or staying the arbitration would
result in material prejudice to a party, an arbitral tribunal should
discuss with both parties whether they are considering to
challenge a potential award rendered in the parallel arbitration,
and in which jurisdictions the potential reasons for setting aside
the award or for opposing its enforcement are available (at the
place of the parallel arbitration, and/or also at page "150" the
place of the current arbitration, or also in the state where
recognition and enforcement may become necessary).
Naturally, there may be many other reasons not to deny jurisdiction

because of a parallel arbitration, or not to stay an arbitration until
factual or legal issues have been determined in a parallel arbitration.
In any case, it will be helpful for the parties in both arbitrations and
for the respective arbitral tribunals to discuss why the parallel
arbitrations have become necessary and why a temporary stay of
one of these proceedings may result in a material prejudice.
2. Res judicata
As set out at the beginning of this chapter, the conclusive and

preclusive effects of an arbitral award often cannot be determined by
reference to a single legal system. The places of the previous and
the subsequent arbitrations may be different, and different
substantive law and distinct conflict rules may apply. The results may
be astonishing for the parties (25) . The ILA Recommendations provide
a set of transnational rules that can be applied in similar situations.
Their full text is printed at the end of this article; however, the
following recommendations deserve a more detailed explanation.
a. National Law or Transnational Rules?
The Recommendations clearly state as a principle of international

commercial arbitration that arbitral awards should have conclusive
and preclusive effects in further arbitral proceedings. They also state
that these effects do not necessarily need to be governed by national
law; rather, the Recommendations are to be understood as a
transnational rule that should be applied whenever national law
permits this to happen. This is a clear message to arbitral tribunals:
The efficiency and finality of international commercial arbitration as
an overriding policy objective should prevent arbitral tribunals from
by applying one of the national concepts of res judicata that have
been developed in and are bound to the jurisdictional context of the
respective legal system, as described in the introductory part of this
article. Rather, arbitral tribunals should apply a concept that reflects
the transnational nature of international commercial arbitration.
b. Requirements for Conclusive and Preclusive Effects
Prior awards may become relevant (i) in the same arbitration when a
partial or preliminary award has been rendered, (ii) between related
arbitrations that are page "151" based on the same agreement
to arbitrate, and (iii) between arbitrations that are only related
because the parties or the issues are related. In the first case, a
transnational approach is not required because the procedural rules
and the substantive law will determine the conclusive and preclusive
effects that an award usually has within the same arbitration. In the
second case, the agreement to arbitrate will normally refer to the
same place of arbitration and to the same substantive law; a
transnational approach will only be required under exceptional
circumstances, e.g. if two distinct places of arbitration have been
designated and two different arbitral tribunals have consequently
been constituted. Only in the third case does the need for
transnational rules become obvious: if an arbitral award has been
rendered in another jurisdiction, its binding effects on an arbitral
tribunal sitting in another jurisdiction need to be determined.
These are the issues that need to be addressed:

• Is the prior decision an award?
• On which parties is the award binding?
• What are the effects of the dispositive part of the award and its
reasoning?
• What relief/claims/causes of action has the award disposed of?
The Recommendations provide answers to most of these questions,

and they suggest the following principles:
• Whether or not a decision is an award should be decided
according to the law of the place of arbitration of the prior award; if
it has become final and binding in its country of origin, the award
should have conclusive and preclusive effects in any subsequent
arbitration. This rule does not only apply to final and partial final
awards, but also to awards on jurisdiction. It has the effect that an
award does not become binding as long as it can be challenged
before domestic courts at the place of arbitration. Once it has
been challenged, its conclusive and preclusive effects are
deferred until the claim to set aside the award has been finally
dismissed. If the prior award has been set aside by a court at the
place of arbitration, it should cease to have preclusive and
conclusive effects in other international commercial arbitrations.
This concept reflects the intention of the New York Convention,
which assumes that there is a uniform system and a global
standard for setting aside awards; this intention should not be
disregarded in international commercial arbitration. If an award
has been set aside in a third country, such decision should not
have any other effects outside this country. If an award has been
set aside at the place of arbitration, such decision should have a
global effect. The downside of this global approach is that it may
take years until an award becomes final and binding.
• An award should have conclusive and preclusive effects if there is

no impediment to recognition in the country of the place of the
subsequent arbitration. This does not mean that the prior award
actually needs to have been recognised in order to be binding
upon the parties in a subsequent arbitration; the arbitral tribunal in
the subsequent arbitration need not defer this deter page
"152" mination to the courts of its place of arbitration, it can
decide autonomously whether it thinks that, for example, public
order issues prevent the recognition of the prior award under the
lex arbitri of the subsequent arbitration.
• As regards the parties on whom the prior award has a binding
effect, the Recommendations do not provide a transnational
approach because the differences between the legal systems are
too significant and because there is no internationally accepted
conflict rule. The following laws may be relevant: (i) procedural law
of place of prior arbitration, (ii) procedural law of place of
subsequent arbitration, (iii) substantive law applied by prior
tribunal, (iv) substantive law applicable to the relationship to
potential parties (subrogation, succession, group of companies
etc.), (v) the law applied by the arbitral tribunal in the subsequent
arbitration. The arbitral tribunal in the subsequent arbitration,
therefore, will have to determine what is the applicable law and
what effect the prior award has under that law. This is why the
Recommendations simply state that in order to have conclusive
and preclusive effect, a prior award must have been made
between “the same parties”.
• The prior award must have decided on or disposed of a claim for
relief that is being sought or is being reargued in the further
arbitration proceedings, and it must be based upon a cause of
action which is also being invoked in the subsequent arbitration
proceedings or which forms the basis for these proceedings (e.g.
a declaratory award followed by a request for damages).
• Not only the dispositive part of the prior award has a binding
effect, but also all reasoning necessary thereto.
These requirements for a prior award to have binding effect in a

subsequent arbitration may seem self-explanatory and
uncontroversial. In the author's opinion, the main value of the
Recommendations lies in having expressed these principles in short
and precise language. As will be demonstrated below, the truly
innovative part of the Recommendations lies in defining the
conclusive and preclusive effects that a prior award may have.
c. The Preclusive and Conclusive Effects of a Prior Award
The effects of a prior award may extend to the relief, the causes of
action or the claims on which the prior award has decided. The
Recommendations propose to extend the preclusive and conclusive
effect beyond traditional civil law position that focuses on the
relief/causes of action/claims disposed of in the dispositive part of
the award. The Recommendations progress further and propose to

consider as binding any other issues of fact or law that have actually
been arbitrated and which have been determined by the prior award,
provided any such determination was essential or fundamental to the
dispositive part of the arbitral award. This means that preclusive
effect is also given to relief/causes of action/claims that have not
been dealt with in the dispositive part. As a consequence, arbitral
awards in international commercial arbitration may raise issues of
claim preclusion and issue preclusion, and these preclusive effects
may be broader than the correspond page "153" ing impact that
judgments might have at the places of the prior and the subsequent
arbitration.
The Recommendations can be a weapon against oppressive

litigation tactics. For instance, a party who has unsuccessfully raised
a set-off defence in the prior arbitration may be barred from re-
arbitrating its counterclaims if the prior award has already disposed
of the counterclaims (26) . However, the parties still have to be
identical; the Recommendations would not permit third parties to rely
upon this determination in the prior award since collateral estoppel
would not be accepted as a concept in most jurisdictions outside the
United States.
From a common law perspective, it would also be desirable to

extend claim preclusion and issue preclusion also to such claims and
issues that should have been raised already in the prior arbitration,
but actually have not been arbitrated. However, such a broad
understanding of preclusion/estoppel would not be accepted in
international commercial arbitration. The Recommendations,
therefore, propose a compromise that combines the doctrines of
preclusion and estoppel with the doctrine of abuse of process and
procedural fairness: An arbitral award should have 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 new claim, cause of action or new issue of fact or law constitutes
procedural unfairness or abuse of the arbitral process.
d. Recognition and Enforcement Issues
If international arbitral awards were to be considered similar to the

judgment of a foreign court, then their conclusive and preclusive
effects would depend on whether they had also been recognized by
a domestic court. This concept is inappropriate for international
commercial arbitration because it would force parties to apply for
recognition of an award under the lex arbitri of any subsequent
arbitration, even though the award has already become final and
binding in its country of origin. The Recommendations propose a
different approach that is based on the concepts of the New York
Convention:
• The prior award must have become final and binding at the place
of arbitration, i.e. it must have conclusive and preclusive effects in
its home jurisdiction. It follows from this recommendation that, if
an award has been challenged at the place of arbitration, but
nevertheless continues to have conclusive and preclusive effects
in its home jurisdiction, these effects should not be considered in a
subsequent arbitration pending in another country. Of course, if
the applicable law provides different solutions, these should be
applied before resorting to the Recommendations. page
"154"
• The prior award must be capable of being recognized and
enforced at the place of arbitration of the subsequent arbitration
proceedings. It follows from this recommendation that in a
subsequent arbitration, the arbitral tribunal can (and indeed
should) assess independently from the courts at the place of
arbitration whether the prior award also has conclusive and
preclusive effects also at the place of the subsequent arbitration.
However, if the prior award has actually been recognized or
recognition has been denied, such decision under the lex arbitri
will be binding upon the arbitral tribunal.
• If the prior award has been set aside in its home jurisdiction, it
loses any conclusive and preclusive effects it may have had.
Again, the applicable law and the lex arbitri in the subsequent
arbitration may in theory provide to the contrary, in which case the
Recommendations would not apply.
It should be noted that the conclusive and preclusive effects as such

should not be judged under the applicable law or the lex arbitri of the
prior award or of the subsequent arbitration, unless they contain
clearly applicable and consistent rules, which is unlikely. In all other
cases, the effects of prior awards should be judged according to the
Recommendations.
3. Summary
If an arbitral tribunal is confronted with a prior award, there will often

be more than one legal system that can serve as a reference to
determine whether and to what extent the prior award is binding in
the subsequent arbitration. In these circumstances, the
Recommendations provide a balanced approach to determine the
conclusive and preclusive effects of prior awards. Certain issues are
not covered by the Recommendations and will have to be resolved in
the future:
• The relationship between awards rendered in international
commercial arbitrations and judgments and awards rendered
under public international law.
• The development of conflict rules that allow the determination of
who is a party to an arbitration and who is bound by an award.
• The effect that awards may have on third parties who have not
been involved in the arbitration as a party.
The Res Judicata Recommendations have been phrased in a way to

leave room for future developments in these areas; the Lis Pendens
Recommendations already allow the above questions to be dealt
with as case management issues that may justify staying an
arbitration.
C. Litigation – Arbitration
Parallel and subsequent proceedings before a national or

international court and before an arbitral tribunal deciding upon an
international commercial matter or on a dispute under international
law seem to be becoming more and more fre page "155" quent.
This development may lead to the global legal community ceasing to
regard dispute resolution under international law and in international
commercial matters as belonging to strictly separated legal orders.
The increasing amount of parallel investment and contract
arbitrations will foster innovative ideas of how to react to similar
situations, but the world may never be able to provide one single
adjudication system with uniform rules that coordinate the jurisdiction
of all dispute resolutions systems and provide rules governing the
effects of decisions. For the time being, however, all that can be
done in the context of this article is to identify possible reactions by
arbitral tribunals who are faced with parallel or subsequent
proceedings in a transnational context in which the applicable law
does not provide guidance.
1. Lis pendens
If the parallel proceedings are before an international court or an

international arbitral tribunal, their outcome may be decisive for a
commercial arbitration, and conflicting decisions on issues of
international law may result in the likelihood that the award in the
commercial arbitration will be set aside. However, it is unlikely that in
such settings, a true situation of lis pendens could arise. Typically,
the parties as well as the relief and the subject matter in both
proceedings will be different, and it would not even be theoretically
possible for the parties to confer jurisdiction to the tribunal deciding
in the parallel proceedings. As a matter of case management,
Recommendation 6 may nevertheless be helpful: If determination of
the international law aspects by an international law tribunal would
facilitate to resolve the dispute, the arbitral tribunal should stay its
proceedings until such determination. The arbitral proceedings,
nevertheless, could be continued in other respects, e.g. by taking of
evidence that may be easier to collect than in a dispute under
international law.
If the parallel proceedings are before a national court, the

appropriate reaction by the arbitral tribunal will depend on the
potential impact that the court's decisions may have on the arbitral
tribunal: If the place of arbitration lies within the same jurisdiction as
the court, a decision by the court that denies the validity or the
existence of an agreement to arbitrate, or the arbitrability of the
dispute, would make it evident that an award by the arbitral tribunal
would eventually be successfully challenged and set aside by a court
at the place of arbitration. Such an award, applying the concepts of
the New York Convention, would be of little use for the prevailing
party, and the costs of the arbitration proceedings would be lost.
Recommendation 3, therefore, instructs the arbitral tribunal to have
regard to the potential effects that conflicting decisions on jurisdiction
and on the merits may have, and the likelihood that an award will be
set aside. The elements that an arbitral tribunal should consider and
discuss with the parties include:
• The timing of the parallel proceedings – is it likely that the arbitral
tribunal will render an award that can still be considered by the
court and how long will it take for the courts at the place of
arbitration to hand down a final judgment? page "156"
• The relationship between a future award and a future judgment –
to what extent will a judgment constitute res judicata for the
arbitration, and vice versa? (This issue is likely to be determined
under the lex arbitri and does not require a transnational approach
as proposed in the Recommendations.)
• The practical aspects of continuing or staying the arbitration – is
there a benefit for the parties if the arbitral tribunal continues its
proceedings, e.g. by the taking of evidence which in the court
proceedings would require lengthy legal assistance proceedings?
Depending on the answers to these and other questions, it may be

appropriate to stay the arbitration for a limited period of time in order
to wait for judgment on the legal issues which potentially jeopardize
the arbitration, or to a render an award on jurisdiction and then stay
the arbitration to see whether the award is successfully challenged.
If the parallel proceedings are pending before the courts of

another state, it is more difficult for the arbitral tribunal and the
parties to anticipate factors such as: in which state a future award on
jurisdiction or on the merits will be challenged, what might be the
result of proceedings to set aside or recognize and enforce the
award in that state – or in other states, and what will be the potential
effects on the position of the parties. Under these circumstances, it
will generally be more appropriate to continue with the arbitration (27) .
This is also the position of Recommendation 4 which proposes that
the arbitral tribunal should continue with the arbitration and
determine its jurisdiction independently of the parallel litigation.
There is one exception to this rule: If there is evidence that the
claimant in the arbitration, in his capacity as a defendant in the
litigation, has submitted to the jurisdiction of the court, or if there are
other exceptional circumstances, e.g. a manifest abuse of process
on the side of the claimant in the arbitration, an arbitral tribunal
should not stay its proceedings, but should decline jurisdiction.
2. Res judicata
Situations of res judicata may arise in subsequent arbitration and

court proceedings in two different settings: (i) a prior court decision is
invoked by one of the parties in a subsequent arbitration, or (ii) a
prior arbitral award is invoked in a subsequent litigation before a
state court. The respective reactions by the arbitral tribunal or the
court in the subsequent proceedings may differ significantly:
• The arbitral tribunal in a subsequent arbitration will have to decide
on conclusive and preclusive effects of the prior judgment by
considering whether it is enforceable at the place of arbitration,
what are the judgment's effects under the applicable law of the
arbitration and whether the judgment is binding on the other party
in its home jurisdiction. If the judgment is not page
"157" enforceable in each and every of these jurisdictions, the
arbitral tribunal faces a similar problem as if it were confronted
with a prior arbitral award and it may be impossible to foresee in
which state the judgment will be recognized and enforced, and
what effect this would have or has already had on the claims in
front of the arbitral tribunal. However, there is one major
difference: judgments do not per se have transnational effects,
and there is no rule of international law that guarantees almost
global enforcement of a judgment. In the event of uncertainty, an
arbitral tribunal will, therefore, request that a judgment has been
declared enforceable at the place of arbitration before accepting
its conclusive and preclusive effects. If the arbitral tribunal's award
is then challenged and set aside in another jurisdiction where the
judgment is not enforceable, this would be due to the deficiencies
of the international enforcement of judgments, and the arbitrators
would not be at fault.
• The court in a subsequent litigation will typically have less choice
when deciding upon the applicable law: it has to apply its domestic
conflict rules and its domestic procedural laws to determine
whether a prior arbitration award has effects within its own
jurisdiction. However, the conflict rules may not answer the
question as to whether the court should look at the arbitration
award with the eyes of a judge (a) of the country of origin, (b) of
the country where the arbitration award was recognized, (c) of the
country whose laws have been applied in the award or (d) of its
own country? In a similar situation, it may be helpful to argue that
arbitration awards should not be treated like foreign judgments
because they are transnational by nature. The Recommendations
can then be cited as evidence that the effects of arbitration awards
in international commercial arbitration are typically not determined
by national concepts of res judicata, but that the conclusive and
preclusive effects of arbitration awards should be interpreted and
applied consistent with the principles of international commercial
arbitration, as set out in the Recommendations.
To summarize, it can be said that the conclusive and preclusive

effects of judgments and arbitration will only follow the same rules if
they are subject to the same applicable law and if they have been
rendered within the same jurisdiction. If an arbitration award and a
judgment have different home jurisdictions, the effects of the
judgment will always be defined by national law(s) on res judicata,
whereas for the arbitration award, conclusive and preclusive effects
can be determined by a transnational approach, following the ILA
Recommendations on Res Judicata and Arbitration.
page "158"
III. Conclusion
Parallel and subsequent proceedings involving the same or related

claims and the same or related parties pose a threat to the efficiency
of arbitral proceedings and the finality of arbitration awards. There
are various reasons for this development:
• Commercial arbitration has been international from the outset,
whereas the international aspect of litigation has only recently
started to attract broader attention. This is best evidenced by the
structure of the respective sources of international law: the world
of arbitration is dominated by a limited number of international
conventions, whereas in the litigation world, the main sources of
international law are bilateral or regional treaties regarding
recognition and enforcement of decisions. The few existing
conventions in civil litigation matters relate to legal assistance and
the taking of evidence, and a global system of competences of
civil courts and recognition of judgments has not yet been
developed.
• The increasing intensity of global economic relations makes
transnational disputes more and more frequent, and the courts of
many jurisdictions are increasingly confronted with requests to
interfere with international arbitrations. This development has
resulted in parallel proceedings before state courts and arbitral
tribunals in different jurisdictions, and in a correspondingly high
number of disputes regarding lis pendens and res judicata.
• A further layer of complexity is added by arbitrations and other
dispute resolution mechanisms under international law, in
particular regarding investment disputes, which are being used in
parallel to commercial arbitration and litigation. This development
will result in the two legal orders of national and international law
converging, although so far they have been treated as separate
legal spheres. This convergence process will result in more
situations of parallel and subsequent proceedings between
international tribunals, arbitration tribunals and national courts.
The national concepts of lis pendens and res judicata are not
adequate to solve the problems of parallel and subsequent
proceedings arising in a transnational context. International
commercial arbitration is called upon to develop rules that

appropriately address the policy issues that arise whenever the
same or related claims are brought in parallel or subsequent
proceedings. To the extent the applicable law permits, arbitral
tribunals should develop solutions that are based on a transnational
approach and on the principles of international commercial
arbitration. The ILA Recommendations on Lis Pendens and
Arbitration and on Res Judicata and Arbitration can provide useful
guidance and should be used whenever parallel proceedings require
a procedural decision or the conclusive and preclusive effects of an
arbitration award are being disputed.
page "159"
International Law Association Recommendations on Lis

Pendens and Arbitration
1. An arbitral tribunal that considers itself to be prima facie

competent pursuant to the relevant arbitration agreement should,
consistent with the principle of competence-competence, proceed
with the arbitration (“Current Arbitration”) and determine its own
jurisdiction, regardless of any other proceedings pending before a
national court or another arbitral tribunal in which the parties and one
or more of the issues are the same or substantially the same as the
ones before the arbitral tribunal in the Current Arbitration (“Parallel
Proceedings”). Having determined that it has jurisdiction, the arbitral
tribunal should proceed with the arbitration, subject to any successful
setting aside application.
2. Nevertheless, in the interest of avoiding conflicting decisions,

preventing costly duplication of proceedings or protecting parties
from oppressive tactics, an arbitral tribunal requested by a party to
decline jurisdiction or to stay the arbitration on the basis that there
are Parallel Proceedings should decide in accordance with the
principles set out in paragraphs 3., 4. and 5. below.
3. Where the Parallel Proceedings are pending before a court of the

jurisdiction of the place of the arbitration, in deciding whether to
proceed with the Current Arbitration, the arbitral tribunal should be
mindful of the law of that jurisdiction, particularly having regard to the
possibility of setting aside of the award in the event of conflict
between the award and the decision of the court.
4. Where the Parallel Proceedings are pending before a court of a

jurisdiction other than the jurisdiction of the place of the arbitration,
consistent with the principles of competence-competence, the
tribunal should proceed with the Current Arbitration and determine its
own jurisdiction, unless the party initiating the arbitration has
effectively waived its rights under the arbitration agreement or save
in other exceptional circumstances.
5. Where the Parallel Proceedings have been commenced before

the Current Arbitration and are pending before another arbitral
tribunal, the arbitral tribunal should decline jurisdiction or stay the
Current Arbitration, in whole or in part, and on such conditions as it
sees fit, for such duration as it sees fit (such as until a relevant
determination in the Parallel Proceedings), provided that it is not
precluded from doing so under theapplicable law and provided that it
appears that:
5.1 the arbitral tribunal in the Parallel Proceedings has jurisdiction
to resolve the issues in the Current Arbitration; and
5.2 there will be no material prejudice to the party opposing the
request because of (i) an inadequacy of relief available in the
Parallel Proceedings; (ii) a lack of due process in the Parallel
Proceedings; (iii) a risk of annulment or non-recognition or non-
enforcement of an award that has been or may be rendered in
the Parallel Proceedings; or (iv) some other compelling reason.
6. Also, as a matter of sound case management, or to avoid

conflicting decisions, to prevent costly duplication of proceedings or
to protect a party from oppressive tactics, an arbitral tribunal
requested by a party to stay temporarily the page "160" Current
Arbitration, on such conditions as it sees fit, until the outcome, or
partial or interim outcome, of any other pending proceedings
(whether court, arbitration or supra-national proceedings), or any
active dispute settlement process, may grant the request, whether or
not the other proceedings or settlement process are between the
same parties, relate to the same subject matter, or raise one or more
of the same issues as the Current Arbitration, provided that the
arbitral tribunal in the Current Arbitration is:
6.1 not precluded from doing so under the applicable law;
6.2 satisfied that the outcome of the other pending proceedings or
settlement process is material to the outcome of the Current
Arbitration; and
6.3 satisfied that there will be no material prejudice to the party
opposing the stay.
7. The effects of Parallel Proceedings need not be raised on its own

motion by an arbitral tribunal. If not waived, such effects should be
raised as soon as possible by a party.
International Law Association Recommendations on Res

Judicata and Arbitration
1. To promote efficiency and finality of international commercial

arbitration, arbitral awards should have conclusive and preclusive
effects in further arbitral proceedings.
2. The conclusive and preclusive effects of arbitral awards in further

arbitral proceedings set forth below need not necessarily be
governed by national law and may be governed by transnational

rules applicable to international commercial arbitration.
3. An arbitral award has conclusive and preclusive effects in further

arbitral proceedings 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 place
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 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.
4. 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 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.
page "161"
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 havebeen 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.
6. The conclusive effects of an arbitral award can be invoked in

further-arbitration proceedings at any time permitted under the
applicable procedure.
7. The preclusive effects of an arbitral award need not be raised on

its own motion by an arbitral tribunal. If not waived, such preclusive
effects should be raised as soon as possible by a party. page
"162"
1
For cases regarding investment arbitration, see the article by
Gerold Zeiler in this volume of the Austrian Arbitration Yearbook, p.
332; for cases resulting from conflicts between arbitral tribunals and
national courts, see Irene Welser, p. 11; for cases under
international law, see August Reinisch, The Use and Limits of Res
Judicata and Lis Pendens, The Law and Practice of International
Courts and Tribunals 3: 37–77, 2004.
2
Christoph Schreuer, Concurrent Jurisdiction of National and
International Tribunals, Houston Law Review Vol. 13:508 (1976) and
Douglas Reichert, “Problems with parallel and duplicate
proceedings: the litispendence principle and international
arbitration” (1992) provide an overview of the developments from the
perspective of international law and international commercial
arbitration, respectively.
3
The author recently was involved as party counsel in a normal
commercial dispute in the course of which claims and counterclaims
were brought before two different sole arbitrators (ICC cases 12464
and 13688) and the Vienna Commercial Court – although the places
of both arbitrations and the court were in Austria, three years of
proceedings were not sufficient to resolve the competence issues in
a final and binding manner.
4
ILA Resolution No. 1/2006, for the text of the Resolution and
supporting reports see www.ila-hq.org (click
Committees/International Commercial Arbitration Committee).
5
See ILA Berlin Conference (2004) Interim Report “Res Judicata”
and Arbitration for further references.
6
Boundary Dispute between Qatar and Bahrain, I.C.J. Reports
2001, para. 303 (16 March 2001).
7
See ILA Toronto Conference (2006) Final Report on Lis Pendens
and Arbitration for further references.
8
The former and the present Austrian rules regarding parallel
proceedings court/arbitration are described in the article by Irene
Welser, p. 14.
9
For further information see
www.jpml.uscourts.gov/General_Information/general_information.html.
10
In the words of US Supreme Court Judge Cardozo in Landis v.
North American Co., 299 US 248, 255: “… the power to stay
proceedings is incidental to the power inherent in every court to
control the disposition of the cases on its docket with economy of
time and effort for itself, for counsel, and for litigants”.
11
Council Regulation (EC) No. 44/2001 of 22 December 2000 on
Jurisdiction and the Recognition and Enforcement of Judgments in
Civil and Commercial Matters.
12
ECJ Gasser, C-116/02; note: Art 21 Brussels Convention was the
predecessor of Art 27 Regulation 44/2001.
13
Restatement of the Law Second, Judgments, The American Law
Institute (1982).
14
It is not the purpose of this article to describe the differences
between common law jurisdictions; the US doctrine of res judicata,
being the most flexible, is also the most appropriate to describe the
structural differences to civil law systems.
15
See ILA Berlin Conference (2004) Interim Report “Res judicata
and Arbitration”, 13 et seq.
16
Mutuality may also require the parties to act in the same capacity
as in the prior dispute, as in the US.
17
For Germany, see Gerhard Wagner, Bindung des
Schiedsgerichtes an Entscheidungen anderer Gerichte und
Schiedsgerichte in Die Beteiligung Dritter an Schiedsverfahren,
Böckstiegel et al (Hrsg), Schriftenreihe der DIS.
18
Verfassungsgerichtshof (Constitutional Court) 12. 10. 1990,
G73/89, Slg. 12504, and Oberster Gerichtshof (Austrian Supreme
Court), 1 Ob 612/95, 7 Ob 310/99k.
19
Examples of arbitrations pertaining to different legal orders can be
found in the article by Gerold Zeiler (p. 332).
20
For a more detailed discussion, see Hans van Houtte, “Parallel
proceedings before state courts and arbitration tribunals: is there a
transnational lis alibi pendens – exception in arbitration or jurisdiction
conventions?” in Arbitral Tribunals or State Courts: Who must defer
to whom? ASA Special Series No. 15 (2001) 53 f.
21
See the article by Irene Welser (p. 16) for a more detailed
description.
22
August Reinisch, The Use and Limits of Res Judicata and Lis
Pendens, The Law and Practice of International Courts and
Tribunals 3 (2004) 48.
23
www.ila-hq.org/pdf/Int%20Commercial%20Arbitration/Report%
202006.pdf
24
Irene Welser provides further arguments, see p. 5 et seq.
25
In a case concerning an arbitration in Switzerland and parallel
litigation in Panama, Formento de Construccuones y Contratas SA v.
Colon Container Terminal SA, the Swiss Federal Tribunal in a
judgment of 14 May 2001, ATF 127 III decided that the arbitral
tribunal was bound by the judgment of a court in Panama accepting
jurisdiction because this decision had to be recognized in
Switzerland. The arbitral tribunal should even stay its own
proceedings if the state courts have been seized first.
26
C. Söderlund, Lis pendens, res judicata and the issue of parallel
judicial proceedings, 22 J.Int.Arb. (2005) 317 f, describes a case in
which the Swedish Supreme Court applied issue estoppel after a
set-off defence had been dismissed in a prior arbitration.
27
In SGS v. Pakistan, the ICSID tribunal decided to disregard an
order restraining the pending parallel arbitration proceedings, see p.
337 for a description of the case and for the full text of the decision
http://www.worldbank.org/icsid/cases/SGS-decision.pdf.
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Chapter III: The Arbitration Procedure -

How to determine the conclusive and preclusive effects of Publication date

How can the negative effects of parallel proceedings on the

• Rules for lis pendens are always related to national systems of

This article first describes the concepts provided by the different

II. The Solutions

The concept of res judicata can be described as a consequence of

binding on another international court or tribunal. Consequently,

The concept of lis pendens clearly responds to the same

In international arbitration, the concepts of lis pendens and res

When confronted with such issues, arbitral tribunals should be aware

arising in transnational litigation cases before proposing adequate

The following chapter provides a short and necessarily incomplete

Courts may react to parallel proceedings in three distinct ways: One

Sec 233 of the “Austrian Code of Civil Procedure” reads as follows:

It is the effect of litis pendency that during its duration

The above statute applies only in a domestic context; however, on

Lis pendens – related actions

Where actions come within the exclusive jurisdiction of

Over 15 years of experience demonstrate that this “first seized rule”

Article 21 of the Brussels Convention must be

Article 21 of the Brussels Convention must be

Another system of handling disputes pending in different jurisdictions

In situations of “lis alibi pendens”, based on the concept of

This short overview demonstrates that there is no uniform concept of

understanding of the requirements that parallel proceedings must

For the purpose of international arbitration, the lesson to be learned

In a purely domestic context, i.e. with regard to judgments rendered

clearly reflects a narrow and strictly procedural approach to res

The broader approach of common law is captured in the

It seems to be common ground in all legal systems that a previous

This short introduction should be sufficient to explain why in any

a. What Constitutes res judicata

The first decision that is required when dealing with a previous

Austria, Germany and Switzerland, take a very narrow approach and

The common ground is that judgments with in personam effect are

c. Identity of Subject Matter

In civil law systems, it is theoretically possible to force a court to re-

words of the Restatement, the conclusive and preclusive effects of

§ 17. EFFECTS OF FORMER ADJUDICATION:

A valid and final personal judgment is conclusive

§ 18. JUDGMENT FOR PLAINTIFF – THE GENERAL

When a valid and final personal judgment is rendered

The conclusive effects expressed in the Restatement are similar to

The differences in terminology and results become more striking

that should have been invoked in a litigation, whether actually

§ 24. DIMENSIONS OF “CLAIM” FOR PURPOSES

The preclusive and conclusive effects of a common law judgment,

d. Identity of Cause of Action

In civil law jurisdictions, the cause of action is broadly understood as

In common law, the already broad concept of claim preclusion is

§ 27. ISSUE PRECLUSION – GENERAL RULE

When an issue of fact or law is actually litigated and

Issue preclusion in regard of third parties that have not been

§ 29. ISSUE PRECLUSION IN SUBSEQUENT

A party precluded from relitigating an issue with an

opposing party, in accordance with §§ 27 and 28, is

It is evident that most courts in civil law countries would refuse to

In common law jurisdiction, abuse of process is an argument that

4. Recognition and Enforcement Issues

In theory, all jurisdictions require a foreign prior judgment to be

The various national recognition and enforcement rules and the