The Role of Precedent in Defining Res Judicata in Investor–State Arbitration

Martinez-Fraga, Pedro J, Samra, Harout Jack | January 1, 2012

As international arbitration, and investment arbitration in particular, becomes more prevalent, the risks of doctrinal fragmentation also increase, in part driven by the disparate treatment of the doctrine of res judicata throughout most jurisdictions, and in the arbitration context. Notwithstanding the general consensus regarding the broad contours of res judicata and its firm position as a principle of international law, there is little agreement regarding how it is to be administered. These developments threaten to undermine the international arbitration system, wresting from it normative legitimacy. The U.S. common law version of res judicata, which is distinct from res judicata as developed in many civil law jurisdictions, may serve as a substantial conceptual foundation upon which civil law and other common law res judicata precepts may merge to fashion a uniform doctrine applicable in international arbitration that is expansive, substantive/transactional-based as to criteria, and non-formalistic in its application so as to avert and discourage the doctrine’s circumvention through the use of legal fictions.