The article aims to understand the applicability of the doctrine of res-judicata in domestic as well as international arbitration proceedings.
1. Introduction
Arbitration has evolved over the last few decades and has emerged as an effective means for dispute resolution all over the world. However, as per the Frances Kellor in her book "'American Arbitration: Its History, Functions and Achievements" has highlighted that the process of arbitration has been relied on for centuries. "Of all mankind's adventures in search of peace and justice, arbitration is amongst the earliest. Long before laws were established, or courts were organized, or judges formulated principles of law, men had resorted to arbitration for the resolving of discord, the adjustment of differences, and the settlement of disputes."
The doctrine of Res-judicata is derived from the Latin of "a matter judged" and is made to prohibit parties from litigating the same claim or argument which was already been settled. the doctrine becomes important in achieving finality to a judgement, avoid repetition and to ensure the judicial proceedings are not misused. The basic elements of the doctrine of res-judicata are:
- Same cause of action
- Same parties
- Re-litigation.
2. Res judicata in International Arbitration Proceedings
2.1 The basic principle of res judicata relevant for the international arbitration provides that a right or fact specifically put in issue and determined by a court or tribunal of competent jurisdiction cannot later be put back in question as between the same parties.1 Conflict of jurisdiction is a pertinent issue owing to the prevalence of numerous arbitral tribunals and international courts which may lead to an undesirable result of recurring disputes and conflicting judgments.2
2.2 The principle of 'res judicata' is integral to the international legal framework and is relevant in a very similar sense in the International Arbitration as it is to the criminal and civil procedure of national legal systems.3
The U.S. Supreme Court in the 1917 case of Hart Steel Co. v. Railroad Supply Co.4 deemed the principle of res judicata to be a "rule of fundamental and substantial justice", furthermore, the applicability of the concept of 'res judicata' in different jurisdictions is not a matter of contention although the requirements of 'res judicata' in Civil and Common Law jurisdictions does affect an international tribunal's adjudication of res judicata claims.5
2.3 Only few published awards directly deal with the res judicata effects of a prior judgment or award and thus the applicability of 'res judicata' in the international arbitration set up is uncertain and the same is filled with inconsistencies. The principle of res judicata is considered by some scholars to be a customary international law and by some to be a general principle of law.6
2.4 One of the foremost references to the applicability of 'res judicata' in an international arbitration framework was brought forward in in the Pious Fund Arbitration (United States v. Mexico)7 wherein 'the Hague' in its 1902 arbitral award considered a prior 1875 national award to be 'res judicata' to the arbitral proceedings.
Similarly, the relevant principle of 'estoppel' and 'abuse of rights' formed a significant part of the contemporaneous jurisprudence pertaining to applicability of 'res judicata' in the international framework.8
2.5 The primary contention for the international arbitral tribunal is whether a decision of the national courts would necessarily act as res judicata, and whether it acts as a stringent pre-requisite. In the case of Amco Asia Corp. et al. v. Republic of Indonesia9 the ICSID tribunal determined that it would not be bound by the Indonesian national court's decision, as otherwise the international arbitration proceedings would be meaningless. The ICSID tribunal in the Amco Asia Case held that "An international tribunal is not bound to follow the result of a national court. One of the reasons for instituting an international arbitration procedure is precisely that parties—rightly or wrongly—feel often more confident with a legal institution which is not entirely related to one of the parties. If a national judgment was binding on an international tribunal, such a procedure could be rendered meaningless. Accordingly, no matter how the legal position of a party is described in a national judgment, an International Arbitral Tribunal has the right to evaluate and examine this position without accepting any res judicata effect of a national court.
In its evaluation, therefore, the judgments of a national court can be accepted as one of the many factors which have to be considered by the arbitral tribunal."10
2.6 In the ICSID case of Inceysa Vallisoletana v. El Salvador11, the Tribunal commented on the direct applicability of judgments of national courts to act as res judicata. The tribunal did agree with the reasoning of the ICSID tribunal in the Amco Case and noted "that the State through the courts would redefine the scope and content of its own consent to the jurisdiction of the arbitral tribunal unilaterally at its own discretion." The ICSID tribunal in the case of World Duty Free Co. Ltd. v. Republic of Kenya highlighted for a judgment of the national court to act as res judicata the basic requisites should be met such as the 'identity of the parties' and he 'identity of the claims'.12
2.7 The question pertaining to the applicable law to adjudge the question of res judicata is not clear, in certain cases the law of the seat of Arbitration is favoured13 and in certain cases the tribunal noted that the domestic law would only act as a source of inspiration owing to the autonomous nature of international arbitration and would not be binding.14
In ICC Case No. 3383 of 1979, the tribunal noted that that prior awards must be considered final and binding in subsequent arbitral proceedings, unless successfully challenged before the competent domestic courts.15 In certain cases the tribunals decided the res judicata claims on the basic principles (the triple identity test) rather than agreeing to a specific jurisdiction.16
3. Res-judicata in Domestic Arbitration Proceedings
3.1 The question whether the doctrine of res-judicata and applicability on arbitration proceedings has been adjudicated before the Courts.
3.2 The Delhi High Court in a landmark case of Union of India v. Videocon Industries Limited17 held that re-initiation of proceedings before the London Courts was unfair and abuse of the process of law and is in violation of the doctrine of res judicata and issue estoppel provided under Section 11 of the Code of Civil Procedure.
3.3 The Supreme Court of India in the matter of United India Insurance Co. Ltd. v. Antique Art Exports Pvt Ltd18 had held that a full and final settlement arrived between the parties would bar future arbitration proceedings under the agreement. In the instant case, the parties reached a full and final settlement.
However, after 11 weeks, the respondent approached the High Court for appointment of Arbitrator on the grounds that he was forced into a settlement. The Apex Court held that, no dispute existed between the parties after the discharge voucher was signed by the parties without complaint. The Apex Court held that as per Section 11(6A) the courts perform a judicial function and not just an administrative function.
3.4 The judgement of United India Insurance Co. v. Antique Art Exports Pvt Ltd. was overruled by the three-judge bench in the matter M/s. Mayavathi Trading Pvt Ltd v. Pradyuat Deb Burman19. The three-judge bench after considering the law commission reports and other judgements came to a conclusion that "it is clear that the law prior to the 2015 Amendment that has been laid down by this Court, which would have included going into whether accord and satisfaction has taken place, has now been legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgment as Section 11(6A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment Duro Felguera, S.A. (supra) – see paras 48 & 59."
3.5 Most recent, the High Court of Kerala in Bativala and Karani v. KI Johny20 has held that the doctrine of res judicata would not apply to following arbitral proceedings when the first award was set aside by cause of inadequate constitution of the arbitral tribunal and not on merits.
3. Conclusion
From this brief analysis it can be construed that there is no specific established practice for the adjudication of res judicata in international arbitration, as the tribunals do not have a specific choice of law. The tribunals do not have a specific set of requirements on the basis of which the res judicata arguments are to be adjudged. Furthermore, the tribunals do not agree on the specific applicability of a judgment or a prior award. Therefore, no specific set of rules can be interpreted from the current nature and practice of international arbitration.
There has been accelerated increase in the reference of disputes to arbitration over the last decade or so. With this the concept of dispute resolution has also changed and adapted with he changes in the society to ensure equity and justice. The doctrine of res judicata is somewhere in between substantive and procedural laws.
The principle of res judicata is to prevent law from being abused. However, placing the doctrine in a right or wrong column is not possible with the ever-evolving space that is arbitration. It will be the responsibility of the specific tribunal, to determine after taking into consideration all relevant factors to that particular dispute, including the arbitration agreement and earlier decision.
Footnotes
1. 5 ALAN REDFERN, MARTIN HUNTER, NIGEL BLACKABY AND CONSTANTINE PARTASIDES, REDFERN, AND HUNTER ON INTERNATIONAL ARBITRATION 561 (Oxford) 2009.
2. Effect of Awards of Compensation Made by the United Nations Administrative Tribunal, Advisory Opinion, 1954 I.C.J. 47, 53 (July 13).
3. Enid Campbell, Res Judicata and Decisions of Foreign Tribunals, 16 Sydney L. Rev. 311 (1994).
4. Hart Steel Co. v. Railroad Supply Co, 244 U.S. 294, 299 (1917).
5. Barcelona Traction, Light & Power Co., Ltd. Belgium v. Spain, 1970 I.C.J. 3.
6. BIN CHENG, GENERAL PRINCIPLES OF LAW AS APPLIED BY INTERNATIONAL COURTS AND TRIBUNALS 390 (Cambridge Univ. Press 1953).
7. Weber Francis J, The United States Versus Mexico: The Final Settlement of the Pious Fund of the Californias. 51 Southern California Quarterly, (1969): 97–152.
8. Arbitral Award Made by the King of Spain on 23 December 1906 (Hond. v. Nicar.), Judgment, 1960 I.C.J. 192, 209, 213 (Nov. 18); Case concerning the Temple of Preah Vihear (Cambodia v. Thai.), Judgment, Merits, 1962 I.C.J. 6, 23, 31, 32 (June 15)
9. Amco Asia Corp. et al. v. Republic of Indonesia, ICSID ARB/81/1.
10. Ibid.
11. Inceysa Vallisoletana S.L. v. Republic of El Salvador, ICSID ARB/03/26.
12. Duty Free Co. Ltd. v. Republic of Kenya, ICSID Case No. ARB/00/7.
13. ICC Case No. 5901, Award (1989).
14. ICC Case No. 13509, Award (2006).
15. ICC Case No. 3383, Award (1979).
16. ICC Case No. 6363, Award (1991).
17. Union of India v. Videocon Industries Limited, CS (OS) 3314/2011.
18. United India Insurance Co. Ltd. v. Antique Art Exports Pvt Ltd, (2019) 5 SCC 362.
19. M/s. Mayavathi Trading Pvt Ltd v. Pradyuat Deb Burman, 2019 (8) SCC 714.
20. Bativala and Karani v. KI Johny, ARB.A NO. 34 OF 2011
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
