The Perils of Parallel Proceedings: Is an Arbitration Award Enforceable if the Same Case is Pending Elsewhere? - Dispute Resolution Journal - Vol. 56, No. 4
Originally from Dispute Resolution Journal
This article tackles the complicated issue of parallel proceedings under the Brussels, Lugano, and New York Conventions. Using a hypothetical case, Nadine Balkanyi-Nordmann illustrates a web of legal problems that ensues when multiple proceedings involving the same parties and causes of action are pending in different countries. She discusses the concept of lis alibi pendens or parallel proceedings and shows that under the three Conventions a judgment or an arbitral award could indeed be enforced despite the existence elsewhere of parallel proceedings.
Globalization in international business has great impact on the cross-border relationship between the involved parties and it is evident that disputes in various jurisdictions have arisen and still arise. Simultaneous proceedings in various countries have become a fact in international commercial litigation and arbitration.
In many cases it occurs due to various factors1 that all lead to proceedings—be it litigation or arbitration—involving the same parties and causes of action but pending in the states of different jurisdictions. Bringing simultaneous proceedings in international litigation is often considered a necessity in order to face such challenges as involvement of different countries, applicability of different laws, involvement of different causes of action, and assets located in different countries. Commencing parallel proceedings is sometimes even considered inevitable in order to produce the best possible result for the client.2
Although simultaneous procedures might be necessary, various problems are created by double or even multiple suits. Obvious problems are the need for several full-blown substantive hearings in various jurisdictions, the fact that evidence which is available in one procedure might not be used in another one, the well-known reality that costs rise tremendously, and the fact that parties involved are substantially burdened from a temporal perspective. Most of all a serious problem arises when a party tries to enforce a judgment (or an arbitral award) despite the existence of a parallel procedure involving the same parties and causes of action.
The issues raised by simultaneous procedures must be addressed by having a close look at lis alibi pendens. A court decides the question whether lis alibi pendens—which means briefly the existence of proceedings based on the same cause of action or facts and between the same parties—is a restraint of simultaneous proceedings or enforcement according to the applicable rules of private international law of the jurisdiction concerned.