Originally from Investment Treaty Arbitration and International Law Volume 7

A frequent issue in investor-state arbitration is that multiple parties may bring claims against a Host State on the basis of the impaired value of a single energy project. In these parallel proceedings, each party separately claims that the impairment was caused by the same State action or measure. For example, a project company (the “Project Company”) may bring a claim against a state-owned company (the “SOC”) under a concession agreement or a power purchase agreement (the “Contract”). The Contract may refer these contractual disputes either to the Host State’s domestic courts or to international arbitration (either scenario hereinafter referred to as the “Underlying Contract Adjudication”). Simultaneously, the parent of the Project Company (the “Parent Company”) may bring claims against the Host State under a bilateral investment treaty (“BIT”), while the Parent Company’s investors (whether partners, members, or majority or minority interest holders) may also have investment claims against the Host State under other BITs or foreign investment laws.1

Thus, a Host State may become subject to multiple independent claims for the same, allegedly wrongful act.2 In these circumstances, the international tribunals seized with the treaty claims (the “BIT Tribunals” and the “BIT Arbitrations”) of the Parent Company and its interest holders often confront two related questions:

(1) whether, absent consolidation of the various proceedings, the BIT Arbitrations should be stayed until resolution of the Underlying Contract Adjudication; and

(2) whether the factual findings of the Underlying Contract Adjudication should be treated as preclusive on the BIT Arbitrations.