Originally from: Stockholm International Arbitration Review

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PREVENTING THE MULTIPLE AND CONCURRENT ARBITRATION PROCEEDINGS: WAIVER CLAUSES

Antoine Romanetti

Introduction

The risk of increase of multiple and concurrent arbitration proceedings have led some to become concerned about increased costs and growing dissatisfaction of end users towards international arbitration.

One method of preventing parallel arbitration proceedings is to incorporate a waiver clause in an underlying contract by which a foreign investor would renounce in advance its right to bring treaty-based arbitration proceeding against the host State. This should help reduce costs. Without such a clause, an investor may have the opportunity to "have two bites in the apple" by submitting first its contract claims to the arbitral tribunal constituted in compliance with the dispute settlement mechanism provided for in the underlying contract and then, additionally, submitting in parallel or subsequently its treaty (and contract) claims to a treaty-based arbitral tribunal constituted under the applicable bilateral treaty for the promotion and protection of foreign investments (BIT). Parallel arbitration proceedings can and sometimes do lead to contradictory awards. An eminent French academic and practitioner recently wrote that:

[o]ne should not conceal that the spectacle currently offered by the jurisprudence is not reassuring, neither for States nor for investors. Objections to jurisdiction are almost automatic. Clauses drafted in similar terms are interpreted in a different manner, and the situations in which parallel arbitration proceedings lead to contradictory awards are numerous (emphasis added).

As a preliminary remark, one should point out that the question of parallel arbitration proceedings is multifaceted in that contract and treaty claims may arise at different times. Further,  while a State ordinarily cannot sue the investor under a BIT (as there are no duties incumbent upon the investor in the BIT), the State would have rights under the underlying contract which it could enforce in arbitration proceedings.