Given the huge number of bilateral and regional IIAs, the participants in a single investor-State relationship may be governed by multiple treaties. For example, one IIA may apply to a foreign company investing in a host State, while several other IIAs may separately cover the shareholders (of various nationalities) in the company, who thus participate in the investment indirectly.115 Even if the shareholders and the investing company are protected under the same treaty, their ability to file separate claims could result in the formation of multiple tribunals hearing essentially the same claim. In other situations, two or more investment claims can be closely linked simply because a governmental measure affects a large range of foreign investors. For example, after the Argentinean economic crisis of 2001, claimants filed over 40 investment cases, all relating to the same actions of the Argentinean Government, but based on several different BITs. Several complex cases have been treated as effectively “mass claims”, with multiple claimants
115 A real-life example of this possibility is the CME/Lauder dispute where one claim was brought against the Czech Republic by CME, a Dutch company, under the Czech Republic-Netherlands BIT, and another claim was brought by Mr. Lauder, the American owner of CME, under the Czech Republic-United States BIT. The cases — running concurrently and relating to the conduct of the Czech Government, but adjudicated by two different arbitral tribunals — famously resulted in divergent outcomes. See Ronald S. Lauder v. The Czech Republic, UNCITRAL Rules, Final Award, 3 September 2001 and CME Czech Republic B.V. v. The Czech Republic, UNCITRAL Rules, Partial Award, 12 September 2001.
seeking relief under the same treaty against the same respondent for the same measures.116
1. Pros and cons of consolidation
Consolidation of proceedings helps to deal with the problem of related proceedings, contributes to the uniform application of the law and reduces the costs of proceedings. The fact that consolidation increases coherence and consistency in arbitral awards is of particular importance for investment arbitration, where arbitrators are not bound by prior awards and their awards are not subject to appeal. In addition, consolidation may greatly decrease the cost and time of arbitral proceedings. At the same time, in some circumstances, a respondent State may feel that consolidation is not in its interests. The State might hope that at least one of the claimants would fail to press its case or that, strategically, if the proceedings remain separate, it would have a better chance of prevailing in at least one of them.117 Investors may oppose consolidation if they are competitors in the relevant market because joining proceedings may require disclosing sensitive business information to their co-claimants.118
116 See, e.g., Canadian Cattlemen for Fair Trade v. United States, UNCITRAL, Award on Jurisdiction, 28 January 2008; Bayview Irrigation District et al. v. Mexico, ICSID ARB(AF)/05/1, Award, 29 June 2007.
More controversially, in Abaclat et al. v. Argentina, an ICSID tribunal determined it had jurisdiction over a mass claim of some 60,000 bondholders notwithstanding Argentina’s argument that it had not agreed to arbitrate such mass claims. ICSID No. ARB/07/5, Decision on Jurisdiction and Admissibility, 4 August 2011.
117 For instance, in the CME/Lauder dispute, the Czech Republic refused to consent to the consolidation of the two cases, as proposed by the claimants, and prevailed in one of the cases.
118 This was the case in the high-fructose corn syrup cases, in which the claimants opposed consolidation. Although the tribunal had the authority
2. Premises for consolidation
Not all disputes may be suitable for consolidation even though they may relate to similar subject matter. The relevant factors include:
a) Consolidation pre-supposes ongoing or early-stage proceedings. If subsequent proceedings relating to a similar subject matter occur, obviously they cannot be consolidated with a case that has already finished its course or is far-advanced.
b) Only those proceedings challenging the same or similar government measures can be consolidated. In other words, the fact patterns of two disputes must be sufficiently similar.
c) The most problematic condition is that of common legal ground. Consolidating claims based on different IIAs can prove difficult because they may contain differing substantive obligations, as well as diverging time limits, procedural obligations and dispute settlement forums.
3. Consolidation provisions in arbitration rules
There is no uniform practice with regard to consolidation. It will generally depend on the consent of all parties and the discretionary powers of the arbitral tribunal to decide on the issue. The most widely used arbitration rules in investment disputes — ICSID and to consolidate the claims notwithstanding the claimants’ opposition, the tribunal noted the complexity that would ensue if the cases were to be consolidated because of the requisite confidentiality procedures that would need to be established to protect the proprietary information of fierce market competitors. Corn Products Int’l v. Mexico, ICSID Case No.
ARB(AF)/04/1 and Archer Daniels Midland Co. & Tate & Lyle Ingredients Americas, Inc. v. Mexico, ICSID Case No ARB(AF)/04/5, Order of the Consolidation Tribunal, 20 May 2005, paras. 7–13.
UNCITRAL 1976 — do not contain rules on the consolidation of disputes.119 Importantly, they do not preclude such a motion either.
The UNCITRAL Rules were amended in 2010 to address joinder and now explicitly allow “one or more third persons to be joined in the arbitration as a party provided such person is a party to the arbitration agreement, unless the arbitral tribunal finds […] that joinder should not be permitted because of prejudice to any of those parties.” (Article 17.5). However, the UNICITRAL Rules still do not address consolidation in situations when not all parties have consented to the same arbitration agreement.
4. Consolidation provisions in IIAs
A number of recent IIAs have included consolidation provisions. However, the practice is neither widespread nor uniform.
Two kinds of provisions can be identified. The first is a restatement of the general rule found in arbitration that consolidation is possible, if all of the parties concerned agree. For example, the Malaysia-New Zealand FTA (2009) provides in Article 10.27:
“Where two or more investors notify an intention to submit claims, or have submitted claims, separately to arbitration under Article 10.21 (Submission of a Claim to Arbitration) and the claims have a question of law or fact in common and arise out of the same or similar events or circumstances, all concerned disputing parties may agree to consolidate those claims in any manner they deem appropriate, including with respect to the forum chosen.”
The practical significance of such a provision is limited. First, although helpfully drawing attention to the possibility of consolidation, it does not create, but merely restates, a right already
119 Some other sets of arbitral rules do have provisions on consolidation.
See, in particular, Article 4(6) of the ICC Rules of Arbitration and Article 11 of the SCC Arbitration Rules.
available to parties. Second, it requires the consensus of all parties involved and does not give tribunals independent power to decide on consolidation. Third, it is silent on the specific mechanism by which consolidation would be achieved.
The second kind of consolidation provision found in IIAs is modeled on NAFTA Article 1126. These clauses set out a very detailed consolidation mechanism. Under this type of provision, any disputing party to the related, ongoing proceedings can request the consolidation of proceedings. This request triggers a quasi-automatic process that involves the establishment of a consolidation tribunal. This tribunal must hear the parties’ arguments regarding the desirability of consolidation, but can decide independently whether the proceedings should be consolidated. Thus, no consensus of the parties is required.
However, the tribunal's discretion in this scenario is limited by two conditions. First, and very importantly, only claims made under the dispute settlement mechanism of the same treaty can be consolidated.120 Second, claims must have “a question of law or fact in common”. Other treaties, such as Article 11(3) of the COMESA Common Investment Area, provide that claims have to “arise out of the same events or circumstances”.
If these conditions are met, the consolidation tribunal, after hearing the parties, can assume jurisdiction over all or part of the claims. If it does so, the original tribunals then lose jurisdiction over these matters. Some treaties provide for the possibility of referring the consolidated claims back to one of the original tribunals (e.g., Article 33(6) of the Rwanda-United States BIT (2008)).
120 Thus, IIA consolidation provisions do not help resolve the problem of a foreign company and its shareholders bringing separate claims under different IIAs.
Another way to manage parallel proceedings is to appoint the same arbitrators in the related proceedings.121 This approach can work whether the cases are brought under the same or under different treaties. Appointing the same arbitrators would likely contribute to the consistency of the arbitral rulings, though it would be of less assistance in reducing costs. Yet there would still likely be some economies of scale because the arbitrators would only have to become familiar with the relevant facts once.