These are early days for investment arbitration. There have to date been only 120 published awards: 100 ICSID and around 20 ad hoc or other awards. (There are also awards from institutions which are still confidential and unknown.) It is difficult from this number of cases to determine principles of universal application. There are, however, certain vague and general concepts emerging from BITs on which uniform understandings may be possible. What the papers presented in this conference have done is describe the various concepts and development in the area of investment disputes and parallel arbitrations.

This concluding paper seeks only to identify and describe issues rather than to sum up or provide answers. The reality is there are few if any fixed international rules; there are however some tentative practices. There are also clear issues for resolution: legal, commercial and practical. They take place at all levels: national and international. Party autonomy at first instance regulates these concepts and application. The debate concerns whether, and the extent to which, pragmatically, national and international legal instruments can and should regulate these issues.

Parallel arbitrations arise in various circumstances. Most obviously is the regular overlap between contractual obligations and the interaction of public international law and treaty commitments of a state and a commercial party to a contract. Whilst there are many instances where contractual terms and public international law rights are distinct, there is a wide grey area between the two. Here the issue is whether claims arising out of these different relationships can or should be determined in separate tribunals, or whether one private international or public international law tribunal can deal with both issues. [Page305:]

This question is of importance to both the investment environment and international arbitration. Every investor expects to reap profits from the investment and, at the very least, for its capital and property to be protected. The availability of an effective arbitration mechanism to determine a dispute and to enforce rights and obligations is a vital protection for the investor.

Globalization has been an increasing phenomenon since the latter part of the 20th century. Together with the facility and immediacy of communication around the world, mobile phones, facsimiles, e-mail, and the collection of information via the internet, the business world has shrunk enormously. Time zones, language differences and even general commercial contract terms present little difficulty. Non-commercial problems, which directly affect the contractual relationship, have two major causes: cultural or understanding differences, and political influences or actions. State sovereignty remains a reality and there is a tight line between the exercise of sovereign power and global influences, including political, economic and factual reality.

Directly and indirectly there is an increasing involvement of states in international commerce. In addition to the state itself as a commercial partner, there are many commercial entities in which a state is and continues to be involved. State entities are now widely recognised as having separate status. There is a major issue as to the extent to which the state exercise of its normal sovereign powers can justifiably interfere with contractual rights of foreign investors. This interference or adverse effects on the foreign investor might be a direct or indirect result of state or government action.

An important distinction ought to be made in every case between private and commercial rights, and public or international rights. These are not always so clear. In the first case the issues are drawn from the parties' contract, what they agreed and the implications of the applicable law. This is equally so whether the contract parties are pure commercial entities, or if one party is also a state or state entity. In the latter case, public international law in general, and the treaty obligations of states as reflected in multilateral and bilateral treaties, establish an additional tier of rights and obligations. These may support, add to or be distinct from the private commercial terms agreed under the contract. [Page306:]

There are certain background facts which affect all international investment arrangements and investment disputes. They include:

Most states, especially those in the developing world, need foreign investment. It is difficult if not impossible for many countries to develop industrial infrastructure and economic bases, as they do not have the capital, the business skills, the intellectual property or the know-how. To develop the country they need finance, modern public utilities including in particular water supplies, electricity generation and distribution, and modern telecommunications. Investors contribute not only capital but also technology, hardware and software, intellectual property and knowhow.

The simple quid pro quo in return for this investment is the non-intervention, unfairly, of the state in the commercial activities of the investor. All investors are looking for a capital return for the monies invested. This may include country and regional market share. Wider than just specific action against the interests of the investor, governments and states do sometimes by way of political determinations make decisions which may have an adverse effect on the investor. This can include restrictions on price rises for public utilities, additional direct or indirect taxation, immigration controls and requirements for positive discrimination.

A corollary to the investors' requirement is the absolute right and responsibility of the sovereign to govern, as it considers appropriate for the state. It is axiomatic that the sovereign has the right to organise and legislate as it thinks appropriate. Local politics, democratic and otherwise, often influences decisions of the state. The result of these decisions may well be to interfere or affect investor rights.

The reality is that disputes do arise. Often these are genuine and commercial disputes. Arguments as to the rights and obligations of the parties, interpretation of contract or treaty terms, disagreements as to the factual arrangements, responsibilities for delay, obligations as to performance and entitlements to payment and interest are normal and do not necessarily imply bad faith on the part of one or other party. These disputes do arise in practice; they are inevitable. [Page307:]

The question is always where to resolve these disputes, taking into account the difference in equality between the parties on a political and sovereign level and the need for an effective forum. It is in determining the appropriate forum and the jurisdiction of any tribunal that the question of whether a dispute is commercial or is a public international law or treaty claim becomes an issue. This is an area that has generated different case law and academic views. Essentially it comes down to the question of whether arbitrators appointed under a treaty are precluded from also considering the specific contractual claim.

This issue is widely debated. Real answers are subjective and need to be looked at specifically. Objectively, there appear to be three elements that will help in determining this question in each case:

First, what are the specific terms of the jurisdiction clause in the contract? Is this provision wide enough to cover claims that might arise out of treaty obligations? On the other hand, in a pure commercial claim it may not be possible to bring the state, through the state entity, to be a party to the arbitration. Exceptions may arise when the state entity is considered the alter ego of the state.

Second, what are the specific terms of the treaty under which the dispute is brought? Does this limit claims to those that do not have a commercial nature? Are the claims only those which are directed under public international law or which arise out of the relevant treaty under which the arbitration is brought?

Third, and absolutely fundamental, in every arbitration the tribunal must look at the specific facts and issues of the case before it. The construction of the issues may well enable one particular issue to be dealt with in both tribunals.

There are specific subjective and practical questions which arise when starting an investment arbitration. These should be addressed in the first instance by the claimant to avoid or minimise the risk of challenges. The effect of a jurisdictional issue is additional costs and delay - and may often be tactical by one party or other.

What is the appropriate forum in which the parties' rights and obligations are to be determined? Is there a hierarchy of forums which must be looked[Page308:]

at in a particular order? For example, can an arbitration be commenced before all avenues in local courts have been exhausted? What arbitration institutions, e.g., ICC, ICSID, etc., should have jurisdiction, or is it an ad hoc tribunal? This might be regulated in the commercial contract, or a choice of forums might be provided under the relevant investment treaty.

What is the basis for the cause of action in the arbitration? Every claim must be based on certain rights. Invariably, these will arise directly out of the contract. Whilst contract terms may be express, the implications of the law will often strengthen or weaken the effectiveness and meaning of such clauses. But equally, parties' rights may arise directly from public international law protections against state intervention, or by the acceptance by the state of certain obligations through a treaty.

How is the arbitration to be conducted? Procedure is an important and influential factor in the conduct and determination of every dispute. Increasingly, international arbitrations follow a common or standard procedure. However, specific variants depend on the origin of the parties, their lawyers and the make-up of the tribunal. This will often be agreed by the parties and the tribunal; in the absence of agreement it will be fixed by the tribunal to meet the needs of the case.

One constantly arising issue is the meaning of 'investment claims'. This may have a different meaning under a relevant treaty to that under the applicable local law. Objectively this should be simple: the contractual commitment in a foreign jurisdiction for which there is an expected return. This could be financial, i.e., money payment due, but it could also be the right to delivery of goods, the right to freely own, enjoy and use property in the jurisdiction. On the other hand when a claim is based under a BIT there may be a clear definition. With the conflicting definitions which exist, this is an area where uniform law is needed.

The use or abuse of multiple fora is to be avoided. The effect of several arbitrations is the additional time, cost and effort that is involved with the uncertainty of tribunals reaching different conclusions or the futility of one merely confirming the decision of another. The use of multiple forums should not be allowed to interfere with the public international law and contractual rights of parties. [Page309:]

Various different concepts are suggested to avoid a multiplicity of arbitration proceedings. These could be regulated in the applicable contract or in the relevant treaty. Some argue that there are international arbitration procedures which regulate these problems. Specifically they include consolidation, lis pendens, estoppel, waiver, public policy, and the recognition of procedure and res judicata.

Consolidation or at least concurrent proceedings may be appropriate mechanisms to avoid simultaneous forums. The biggest problem with consolidation is that the parties may well be different. The state party has a different role and position to the commercial entity. The claims and defences to the alleged breaches may vary. There may also be a preference to 'hedge bets' and have two chances for success before different tribunals, regardless of the risks.

However, there are two prerequisites for consolidation: the parties must agree and there must be synergy between the issues, background facts and claims. Consolidation may be possible where parties cooperate by recognising that their disputes overlap, even if in principle there are different forums and different causes of action. Contractually it is possible to agree on consolidation either when the dispute arises, or even in advance. However, in advance it may not be possible to see the areas for potential overlap. For example, when contracting, the domestic partner is unlikely to have given the necessary degree of consideration to the relevant BIT. Also, both the commercial party and the state may be reluctant to join their respective arbitrations, as the issues may not be mutually supportive. After the dispute arises the culture of blame and desire to obtain financial benefit will often preclude agreement on consolidation.

In the absence of agreement consolidation is not possible. One party can prevent the possibility of consolidation by choosing different arbitrators or by seeking relief in a tribunal which is not accessible to one of the other parties. The fundamental basis of arbitral jurisdiction is the contractual agreement to arbitrate, or the right offered in a treaty and then accepted by an investor by bringing arbitration proceedings. This type of arbitration agreement (without privity) only becomes effective when accepted by the non-state party. Even if at this stage there may be uncertainties as to the exact scope of the dispute, and when this is clear it will be too late or impractical to consolidate. [Page310:]

Pragmatically, when entering into investment contracts parties, should consider the possibility of consolidation in contracts. This would obviate risks and provide protection for both parties. Clear provision could be included in the commercial agreement. Bilateral investment and other treaties could also make provision for consolidation when providing the alternative venues for the investor.

There is no place for the concept of lis pendens in international arbitration. It will not and cannot resolve the problem of parallel and simultaneous forums. No arbitral tribunal is more important than the other. The participation of a state or state entity in one arbitration does not place it on a higher level than a purely commercial tribunal. There is no hierarchy of international tribunals based on time provided both (or all) have jurisdiction. The reality is that parties have different preferences, which explains why they will, in many cases, decide on different places and forums in which their disputes are to be resolved.

Tribunals should not look over their shoulder at what other tribunals may or may not be doing. Each tribunal has a duty to carry out its authority and responsibility in accordance with the appropriate jurisdiction clause and the agreements of the parties. There may be instances where a stay or slowdown of proceedings might be appropriate, provided this does not cause undue delay and will not prejudice the interests of the parties.

For the same reason, precedent has no place in international arbitration: the decision of one tribunal cannot commit or bind another tribunal. Precedent cannot be binding in the way that the common law courts in a particular jurisdiction might consider appropriate. There is no hierarchy of tribunals. There is no hierarchy of arbitrators. There is a duty on every tribunal to decide the issues before them on the facts, arguments and law appropriate in the case. Furthermore, arbitration awards are confidential and there is no uniformity in the way arbitral awards are reasoned or argued.

However, in reality, decided arbitration awards which are well reasoned in legal content, particularly by eminent tribunals, may be persuasive where they are considered to be relevant in view of the circumstances of the case. However, they are not more persuasive than other written legal materials which may be presented to the tribunal. [Page311:]

Res judicata may have a slightly different influence. Whilst a decision of one international tribunal on a legal point cannot bind another, it may be binding where it extends to the same issues between the parties. This does not necessarily mean that a tribunal should not be influenced by what another tribunal decided at an earlier stage if it is between the same parties and on the same point (albeit a different contract).

It is suggested that in some circumstances waiver (or 'renunciation' ) and estoppel ( 'preclusão' or 'fin de non-recevoir') may indicate that one rather than another forum is preferred for a particular dispute. Specifically, the acceptance by one party to participate in proceedings commenced by the other party might be considered a waiver of the right to another forum. This might be the case where there are two alternative forums, but it cannot apply generally where there is a different basis for the jurisdiction.

By corollary the fact that a party has taken certain action in one jurisdiction may have implications for that party's position. On the other hand there are no general rules. Here again each case must be looked at on its facts. It is also important to note that whilst doctrines of waiver and estoppel, and similar concepts in other legal systems, have wide recognition in international arbitration practice, there is no uniformity as to the meaning of these concepts; quite the contrary, they have their origins in national laws and have differing bases and purposes.

If these concepts are to achieve international acceptance the decisions applying them must become widely known and read. Publication of awards would show trends or even general principles as they are applied by arbitral tribunals. There is uncertainty as to whether they can develop into an autonomous and directly applicable system of rules and form part of the lex mercatoria or international commercial law. Arbitrators would have to interpret and apply the different wording that one finds in commercial contracts, BITs and other treaties from an international perspective, developing international means and applying them regardless of the factual, geographic and national particularities of each issue.

Are we ready to accept and apply an international legal regime to regulate investments around the world and disputes arising, and being resolved, in investment arbitrations? [Page312:]