Transnational Arbitral Res Judicata

Abstract

Commercial arbitral awards are universally recognized to give rise to res judicata, but confusion reigns over what law applies to the res judicata effect of a prior arbitral award asserted before a subsequent tribunal. National res judicata laws diverge on key questions such as the availability of issue estoppel and the construction of the ‘triple identity’ test. Yet the normal tools used to manage divergence in potentially applicable laws – choice of law and codification – have failed to work when it comes to the res judicata effect of awards. I argue the answer is to adopt a transnational approach to res judicata in arbitration. Although this approach has support in principle, questions remain about how it would work in practice. I propose that a modified version of Gaillard’s ‘transnational rules method’ contains the seeds of a promising answer. Specifically, tribunals could look to both other commercial tribunals’ awards, as well as International Centre for Settlement of Investment Disputes (ICSID) and International Court of Justice (ICJ) case law on res judicata, to develop a sui generis transnational preclusion standard for international arbitration. This is consistent with informal practices arbitrators have developed with respect to other interstitial issues where choice of law processes do not yield satisfactory results. Finally, I evaluate the implications of taking this approach, as well as its prospects for success.