Introduction

Domestic and international legal systems are often confronted with the need to balance contrasting rights in the face of alleged abuse of process. On a systemic level, adjudicators recognise their inherent power and duty to ensure dispute settlement mechanisms are not utilised in ways contrary to the purpose for which they have been designed. On the other hand, they are sensitive to parties’ rights to access avenues of adjudication with respect to legitimate disputes. Achieving such a balance has proven to be highly complex given the fact-specific nature of allegations of abuse.

There is pronounced difficulty in examining the theoretical underpinnings of this doctrine due to its multifaceted character.¹ Indeed, the exact scope for the invocability of the doctrine is still up in the air,² and commentators have attributed the flux of interest to the development of an unprecedented array of procedural tactics and legal strategies on the part of litigants.³

This article will first delineate the concept of abuse of process as well as its application in national legal systems (i.e. civil and common law approaches) and international tribunals (ICJ, UNCLOS, ECHR, WTO). Part II will examine the treatment of abuse of process cases by tribunals in investment arbitration and highlight how these awards can be categorised in four distinct groups. Part III will then explore the various existing international legal tools in preventing and managing instances of abuse of process in investment arbitration.

List of key awards (in chronological order):

1. Ronald S. Lauder v. The Czech Republic, UNCITRAL, Final Award, 3 September 2001 (‘Lauder’)
2. CME Czech Republic B.V. v. The Czech Republic, UNCITRAL, Partial Award, 13 September 2001 (‘CME’)
3. Autopista Concesionada de Venezuela v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/00/5, Decision on Jurisdiction, 27 September 2001 (‘Autopista’)
4. Waste Management Inc. v. United Mexican States, ICSID Case No. ARB(AF)/00/3, Decision of the Tribunal on Mexico’s Preliminary Objection Concerning the Previous Proceedings, 26 June 2002 (‘Waste Management’)
5. Tokios Tokeles v. Ukraine, ICSID Case No. ARB/02/18, Decision on Jurisdiction, 29 April 2004 (‘Tokios’)
6. Aguas del Tunarí SA v. Plurinational State of Bolivia, ICSID Case No. ARB/02/3, Decision on Respondent’s Objections to Jurisdiction, 21 October 2005 (‘Aguas’)
7. Bayindir Insaat Turizm Ticaret ve Sanayi A.S. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/29, Decision on Jurisdiction, 14 November 2005 (‘Bayindir’)
8. Inceysa Vallisoletana S.L. v. Republic of El Salvador, ICSID Case No. ARB/03/26, Award, 2 August 2006 (‘Inceysa’)
9. Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines, ICSID Case No. ARB/03/25, Award, 16 August 2007 (‘Fraport’)
10. Rompetrol Group NV v. Romania, ICSID Case No. ARB/06/03, Decision on Respondent’s Preliminary Objections on Jurisdiction and Admissibility, 18 April 2008 (‘Rompetrol’)
11. Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No. ARB/03/24, Award, 27 August 2008 (‘Plama’)
12. Chevron Corporation and Texaco Petroleum Corporation v. the Republic of Ecuador, PCA Case 34877, UNCITRAL Interim Award, 1 December 2008 (‘Chevron’)
13. Phoenix Action Ltd. v. the Czech Republic, ICSID Case No. ARB/06/5, Award, 15 April 2009 (‘Phoenix Action’)
14. Europe Cement Investment & Trade v. Republic of Turkey, ICSID Case No. ARB (AF)/07/2, Award, 13 August 2009 (‘Europe Cement’)
15. Cementownia ‘Nowa Huta’ S.A. v. Republic of Turkey, ICSID Case No. ARB (AF)/06/2, Award, 17 September 2009 (‘Cementownia’)
16. Venezuela Holdings, B.V., et al (formerly known as Mobil Corporation, Venezuela Holdings, B.V., et al.) v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/27, Decision on Jurisdiction, 10 June 2010 (‘Mobil’)
17. Saba Fakes v. Republic of Turkey, ICSID Case No. ARB/07/20, Award, 14 July 2010 (‘Saba Fakes’)
18. Rachel S. Grynberg, Stephen M. Grynberg, Miriam Z. Grynberg, and RSM Production Corporation v. Greneda, ICSID Case No. ARB/10/6, Award, 10 December 2010 (‘Rachel Grynberg’)
19. Malicorp Limited v. Arab Republic of Egypt, ICSID Case No. ARB/08/18, Award, 7 February 2011 (‘Malicorp’)
20. Abaclat and others (Case formerly known as Giovanna a Beccara and Others) v. Argentine Republic, ICSID Case No. ARB/07/5, Decision on Jurisdiction and Admissibility, 4 August 2011 (‘Abaclat’)
21. Pac Rim Cayman LLC v. Republic of El Salvador, ICSID Case No. ARB/09/12, Decision on the Respondent’s Jurisdictional Objections, 1 June 2012 (‘Pac Rim’)
22. Tidewater Inc. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/5, Decision on Jurisdiction, 8 February 2013 (‘Tidewater’)
23. ST-AD GmbH v. Republic of Bulgaria, UNCITRAL, PCA Case No. 2011-06, Award on Jurisdiction, 18 July 2013 (‘ST-AD GmbH’)
24. ConocoPhillips Petrozuata v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/30, Decision on Jurisdiction, 3 September 2013 (‘ConocoPhillips’)
25. Lao Holdings NV v. The Lao People’s Democratic Republic, ICSID Case No. ARB(AF)/12/6, Decision on Jurisdiction, 21 February 2014 (‘Lao Holdings’)
26. Renée Rose Levy and Gremcitel SA v. Republic of Peru, ICSID Case No. ARB/11/17, Award, 9 January 2015 (‘Renée Rose’)
27. Philip Morris Asia Ltd (Hong Kong) v. The Commonwealth of Australia, PCA Case No. 2012-12, Award on Jurisdiction and Admissibility, 17 December 2015 (‘Philip Morris’)
28. Ampal-American Israel Corporation v. Arab Republic of Egypt, ICSID Case No. ARB/12/11, Decision on Jurisdiction, 1 February 2016 (‘Ampal-American’)
29. Churchill Mining PLC and Planet Mining Pty Ltd v. Republic of Indonesia, ICSID Case No. ARB/12/14 and 12/40, Award, 6 December 2016 (‘Churchill’)
30. Orascom TMT Investments S.à r.l. v. People's Democratic Republic of Algeria, ICSID Case No. ARB/12/35, Final Award, 31 May 2017 (‘Orascom’)

I. Framing the concept of abuse of process

Concepts framed to avoid situations of the ‘misuse’ and ‘abuse’ of the law and of rights exist in all legal systems – domestic and international. Although the content of such concepts vary among domestic jurisdictions, concepts targeting improper uses of law are widely considered to be part of international law – whether as a general principle of law, or as part of customary international law.⁴ Increasingly, these concepts play an important role in mediating between, or otherwise limiting, the exercise of rights.⁵

The doctrine of abuse of process is ‘a particularly difficult topic as it denotes conduct that is not prima facie illegal’.⁶ Its function has been to make right situations where the strict application of law has unacceptable results.⁷ Investment tribunals and scholars have long been caught in the relentless search of the doctrine’s definitive content and parameters.⁸ This is to be expected, because investment treaties are silent on the abuse of process doctrine⁹ and its available remedies.¹⁰ To this end, while commentators have criticised the open-textured drafting of substantive provisions in investment treaties that contribute to systemic inconsistencies,¹¹ there is literally no textual guidance on the abuse of process that can be extracted from such treaties.¹²

A. Abuse of process: a particularisation of the good faith principle

While scholars have at times interpreted ‘abuse of process’ as one in the same with ‘abuse of rights’,¹³ it is submitted that distinguishing between the terms ought to be made for conceptual clarity. J. Gaffney has expressed that the ‘abuse of rights’ doctrine is more usually associated with the exercise by States of their substantive rights, such as the right of a State to make use of its territory in such a way as to prejudice the rights of another State. To this end, abuse of process should be interpreted as an application of the principle of good faith to the exercise of procedural rights.¹⁴

A useful analytical framework might be that ‘abuse of process’ exists as a facet of the ‘abuse of rights’ doctrine,¹⁵ itself a creature of the broader ‘good faith’ doctrine.

In fact, A. Zimmerman’s description in his commentary on the ICJ Statute¹⁶ potentially enables one to distill several core characteristics of ‘abuse of process’:¹⁷

• the claimant necessarily has a valid right to initiate arbitration;
• that right is procedural in nature;
• The claimant is however estopped from exercising that right as its exercise was alien to the purpose for which it was established, thereby constituting an abusive exercise of that procedural right.

An abuse of process can therefore be interpreted as a serious divergence between the exercise of a procedural right and the overall objectives of any particular system of adjudication.¹⁸

In light of the above, assessments to determine an abuse of process are usually closely connected to the study of the factual background of each case.¹⁹ Coupled with the overriding function of the doctrine – to correct ‘a too formalistic approach’ to procedure, and ‘taking into account elements of social finality and fairness’ – it is not surprising that scholarship and case law have through time employed multifarious ways of describing abuse.²⁰

B. Abuse of process ought to result in claims being inadmissible

Investment tribunals have thus far dealt with allegations of abuse of process at all stages of the arbitral process (jurisdiction, admissibility, and merits phases). More commonly dealt with at the jurisdiction phase, I submit that a finding of abuse of process ought to – in principle – result in claims being dismissed as inadmissible, not for lack of jurisdiction. Conceptually, the question of jurisdiction is a purely ‘technical’ matter; determination is based primarily on the scope of jurisdiction of an adjudicatory body as defined by an agreement (e.g. treaty or any legal instrument) between the parties in dispute. Once jurisdiction is ascertained, the adjudicatory body is obliged to exercise its jurisdiction so long as all relevant requirements are met.

In abuse of process claims, the finding of abuse should logically direct the court to refrain from exercising its jurisdiction (i.e. dismiss the case as inadmissible). Such a finding ought not to ‘negate the court’s jurisdiction as such’,²¹ but prevent the exercise thereof. In other words, ascertaining abuse of process as a matter of admissibility rightly concerns the ‘propriety of using the court’s competence’,²² rather than questioning it.

C. The civil law approach

It is to be noted that many civil jurisdictions do not have a general abuse of process doctrine.²³ Most jurisdictions deploy the abuse of rights doctrine in careful and limited ways given its ability to otherwise affect the exercise of fundamental procedural rights.²⁴ Such concepts can be framed either as general legal provisions,²⁵ or as precise rules that prohibit specific types of abuse of rights.²⁶ However, specific provisions prohibiting any abuse of procedural rights have nonetheless found their way into legislation, particularly in the context of French civil law.

In France, Josserand’s theories at the turn of the 19^th century marked ‘one of the most radical changes in the ideas on the nature and functions of law’, where the exercise of individual rights was increasingly considered as possessing social functions rather than as existing purely within the private, autonomous domain.²⁷ In particular, a controversy surrounded the concept of abuse of rights:

• One school of thought believed no abuse of rights can arise if they were exercised within the limits of the law, and when they do, ‘le droit cesse où l’abus commence (the law stops where abuse begins)’.²⁸
• Another school – Josserand’s theory on the relativity of rights – believed that any exercise of rights contrary to the social functions of these rights constitutes abuse.²⁹ This view was widely accepted³⁰ and came to be reflected in French legislation.

The French Code of Civil Procedure prohibits the ‘dilatory or abusive way’ of exercising one’s right to action,³¹ right to appeal,³² and right to a review action.³³ Sanctions apply to one’s abusive use of the right to access courts with fines ranging from €15 to €3,000, as well as compensation to the suffering party.³⁴ Similar provisions can also be found in the French Codes on Criminal Procedure³⁵ and Administrative Justice³⁶.

The French Courts have played a ‘decisive part’ in the development of the doctrine of the abuse of rights.³⁷ For example, in interpreting the res judicata effect of a decision,³⁸ the French Court of Cassation has held that the res judicata principle extends not only to grounds raised in the first set of proceedings, but also to grounds that could have been raised but were not.³⁹ This more extensive ‘duty to concentrate claims’⁴⁰ obliges litigants to raise all claims in a single proceeding, failing which subsequent proceedings in seeking additional compensation will not succeed.⁴¹ While subsequent French courts have shied away from imposing the duty to concentrate claims, it bears to note that other continental legal systems have squarely adopted the rule.⁴²

Dutch law as applied by the courts in Netherlands suggests that an ‘abuse of right’ is often perceived as an excess of right rather than a reprehensible exercise of a right, even though certain types of cases are aptly categorised under the latter definition.⁴³ As in France, the increasing shift of private rights as having social functions can be observed. In the Netherlands, the essence of the abuse of rights has been described as a legitimate exercise of a right that, ‘[o]nly on closer examination, when the interests of others are taken into account, does doubt arise whether what appeared to be exercise of a right, did not in fact exceed its limits’.⁴⁴ Notably, the Dutch Civil Code expressly provides for abuse of rights only in certain areas of law, primarily in the exercise of contractual rights that might be contrary to performance in good faith.⁴⁵ Given that the Dutch legal system is ‘essentially an equity system’, the Dutch Civil Code further obliges contracting parties to act not only in accordance to what is expressed in agreements, but also to what is required by ‘equity, custom, and statute’.⁴⁶ Particularly in the realm of procedural law, the Dutch Court of Appeal has examined the abusive use of procedural law as based on the combination of three factors:

1. Use of the right for a purpose different from the purpose for which it had been granted;
2. An intention to cause a particular result for which an otherwise rightful exercise of that right would not have caused; and
3. Absence of a respectable interest.⁴⁷

An abuse of procedural right, in connection with the wider doctrine of abuse of rights, is aimed primarily at harming the opponent; stress is laid on the impropriety of the exercise of the right.⁴⁸

D. The common law approach

There is no general principle of abuse of process recognised in the common law. Nonetheless, English courts have long upheld their inherent jurisdiction to sanction a party’s abusive exercise of its procedural rights.⁴⁹ The power to dismiss a case summarily as an abuse of process was, in fact, first employed in England in 1875. In this case, Baron Bramwell held that the court’s discretion to stop proceedings ought to be exercised against an ‘absolutely groundless’ action, or what is otherwise known to be an abuse of process of the court.⁵⁰ The exercise of such a discretion has often been employed to give effect to a litigant’s otherwise legal right to a fair trial; if dishonesty made a fair trial impossible, the court has a broad⁵¹ duty to stop the proceedings in order to protect the innocent party from injustice.⁵² Subsequent decisions have confirmed that such an inherent power to grant a permanent stay is to be seen as exercisable to prevent misuse of the court of justice’s procedure in a way that would be ‘manifestly unfair to a party to litigation before it’.⁵³ Such a broad duty and power to act is shaped by considerations of public and private interests involved and takes account of all the facts of the case.⁵⁴ The inherent power of an English court has found its way into legislation as Rule 3.4(2)(b) of the English Civil Procedure Rules.⁵⁵ As a case management tool, the English court is empowered to strike out the whole or part of a statement of case without full investigation at trial in the event of an abuse of process of the court.⁵⁶

Where a decision has been made on a case, the principles of law governing res judicata can prevent the losing party from re-litigating the same matter. While juridically different from abuse of process, the ‘cause of action estoppel’ conceptually overlaps with the underlying purpose of limiting abusive and duplicative litigation.⁵⁷ Albeit exercised only in exceptional circumstances, the res judicata principle enables courts and tribunals to preclude a party from challenging the (non)-existence of a cause of action where the issue has already been decided in earlier proceedings.⁵⁸ In fact, the English Courts have even suggested that res judicata could extend to a situation where the claimant seeks to re-litigate the central issue by suing another party in a related case.⁵⁹

E. Abuse of process as applied in international law

As with national law, international tribunals similarly possess the inherent power to regulate their own procedure so as to preserve the integrity of their judicial and decision making functions.⁶⁰ A study of the practice of the International Court of Justice (ICJ), the Law of the Sea, the European Court of Human Rights, and the World Trade Organization sheds light on several key applicable international legal principles surrounding the concept of abuse of process.

International Court of Justice

Abuse of process has been alleged before the ICJ in several instances, in which relevant parties sought the Court to dismiss claims as inadmissible.⁶¹ However, none of such allegations has ever succeeded. The ICJ has also not elaborated on the source and effects of abuse of process, although it should be noted that the relevant parties had ‘made no great case’ of their allegations of abuse.⁶² Nonetheless, in the recent case of ‘Immunities and Criminal Proceedings’ Equatorial Guinea v. France, the ICJ helpfully iterated differences between an ‘abuse of process’ claim, with regard to the procedure before a court or tribunal (the preliminary phase of proceedings),⁶³ and an ‘abuse of rights’ claim, where factual and legal issues ought to be considered at the merits phase.⁶⁴

In his commentary of Article 36 of the ICJ Statute, C. Tomuschat observed that objections on the ground of abuse of process are conceivably possible, but only under ‘solely…extreme circumstances’ which have not yet been present in any cases decided so far.⁶⁵ This is aligned with the notion that as long as the requirements of jurisdiction are met, States concerned have the right to bring a dispute before the ICJ. After all, ‘judicial settlement is generally the most appropriate of all methods of peaceful settlement’.⁶⁶

To this end, abuse of process is interpreted as grounded in general international law, and most probably as a general principle of law within the meaning of Article 38(1)(c) of the ICJ Statute.⁶⁷ It also bears to note that the ICJ’s cursory treatment of abuse of process may be attributable to the fact that the ICJ Statute does not contain explicit provisions on abuse of process.⁶⁸

Law of the Sea

The concept of good faith and abuse of rights is enshrined as Article 300 of the United Nation Convention on the Law of the Sea (UNCLOS),⁶⁹ and its Article 294 ‘Preliminary Proceedings’ explicitly empowers adjudicators to determine whether a claim constitutes ‘an abuse of legal process’.⁷⁰ Article 300 was intended to complement Article 294 and functions as an undertaking by States Parties to observe the following principles: (i) exercise rights in a way that they do not unnecessarily or arbitrarily harm the rights of other States; and (ii) to discharge in good faith the obligations entered into.⁷¹ It is noteworthy that Article 294 was framed in response to coastal States’ fears that they might be forced to defend too many cases before international courts and tribunals and that they should be protected against harassment through frivolous complaints.⁷² An assessment of such a claim requires prudent examination of the specific case where ‘only the most blatant cases of abuse…are likely to be stopped by [Article 294]’.⁷³

The sanction against an abuse of legal process can be found in Article 294(1), where a determination of abuse leads the court or tribunal to ‘take no further action in the case’. No tribunal has yet found an abuse of legal process. Nonetheless, it bears to note that Article 294 was recently analysed by the Permanent Court of Arbitration in the South China Sea (Philippines v. China) arbitration notwithstanding that China had not made such an application.⁷⁴ The Tribunal noted that the mere act of Philippines unilaterally initiating an arbitration in itself cannot constitute an abuse of rights, especially since Article 286 confers such a unilateral right.⁷⁵ Furthermore, the Tribunal again reiterated that the Article 294 procedure is appropriate only in the most blatant cases of abuse or harassment.⁷⁶

European Court of Human Rights

The abuse of the right to engage in any activity or perform any act aimed at the destruction of any rights and freedoms is expressly prohibited by the Convention for the Protection of Human Rights and Fundamental Freedoms.⁷⁷ The exercise of rights provided for by the Convention are limited and restricted to only exercises for the purpose for which they have been prescribed.⁷⁸ In particular, an abuse of the right of individual applications⁷⁹ will be declared inadmissible and subsequently be rejected by the European Court of Human Rights.⁸⁰ In interpreting these provisions, the European Court of Human Rights has referred to the general theory of law in order to define abuse of process through methods of interpretation prescribed by the Vienna Convention on the Law of Treaties, concluding that an abuse of procedural rights can occur from the ‘harmful exercise of a right for purposes other than those for which it is designed’. ⁸¹

World Trade Organization

According to the World Trade Organization (‘WTO’) Understanding on Rules and Procedures on the Settlement of Dispute, members of the WTO are obliged to utilise the WTO’s dispute settlement mechanisms in good faith. Article 3(10) provides that the use of WTO’s dispute settlement procedures ‘should not be intended or considered as contentious acts’ and all Members must ‘engage in these procedures in good faith’.⁸²

The WTO Appellate Body has expressly pronounced that two conditions ought to be satisfied before a WTO Member may be found to have failed to act in good faith: (i) the Member must have violated a substantive provision of the WTO agreements; and (ii) it is necessary to ‘prove more than mere violation to support such a conclusion’.⁸³ Where the first requirement is not met, WTO’s dispute settlement panels and Appellate Body are unlikely to proceed to an examination of the second element in determining a violation of the principle of good faith.⁸⁴

II. Abuse of process in investment arbitration

Article 44 of the ICSID Convention provides that the Tribunal shall decide ‘[i]f any question of procedure arises which is not covered by this Section or the [ICSID] Arbitration Rules or any rules agreed by the parties’.

While there has been academic discourse on what ‘abuse of process’ entails in investment treaty arbitration regime, it nonetheless remains open what ‘abuse of process’ itself is.⁸⁵ At present, investment tribunals have dealt with allegations of abuse through multitudes of terms: ‘good faith’, ‘abuse of rights’ or ‘abus de droit’,⁸⁶ ‘abuse of process’, ‘abuse of treaty’,⁸⁷ ‘systemic abuse’,⁸⁸ ‘procedural abuse’,⁸⁹ ‘misuse of power’ or ‘détournement de pouvoir’,⁹⁰ ‘abuse of the convention purposes’,⁹¹ ‘abuse of legal personality’,⁹² ‘abuse of corporate form’,⁹³ ‘abuse of the system of international investment protection’,⁹⁴ and ‘abuse of the international institutional arbitration system’.⁹⁵

While it is acknowledged that specific terms are used fittingly from case to case, the multifarious manifestations of what might constitute ‘abuse’ in investment arbitration and the potential dangers of fragmentation can easily occur when tribunals do not take extra care in explaining the use of these specific terms. To this end, while Phoenix Action was the first award for which a claim was dismissed on the premise of finding an abuse,⁹⁶ it is prudent to highlight that the tribunal in fact did not dismiss it explicitly on the grounds of ‘abuse of process’.⁹⁷

A. Types of abuses of process

A survey of 30 key investment arbitral awards has revealed four distinct groups of which an abuse of process in international investment law may arise. It is observed that the consideration of abuse of process in each group by investment arbitral tribunals has developed in varied jurisprudential directions.

Group 1: Corporate (re)structuring

List of cases: Autopista, Tokios, Aguas, Phoenix Action, Cementownia, Mobil, Pac Rim, Tidewater, ST-AD GmbH, ConocoPhillips, Lao Holdings, Renée Rose, Philip Morris

Cases in Group 1 generally pertain to allegations that local Claimants have abused the foreign juridical status of their corporations so as to benefit from the protection of investment treaties. For example, the Respondent in Autopista alleged that the Claimant’s continued foreign control of a corporation of convenience ought to be deemed an abuse of the purposes of the ICSID Convention,⁹⁸ while the Respondent (Ukraine) in Tokios alleged that the Claimant’s Lithuanian company was effectively Ukrainian, and allowing the claim would be tantamount to permitting locals to pursue international arbitration against their own government.⁹⁹ Similarly in Aguas, the Respondent questioned if the Claimant’s timing of the transfer of ownership was done in anticipation of disputes that would consequently provide access to the ICSID dispute settlement mechanism.¹⁰⁰

In adjudicating such allegations, tribunals tend to focus not on the outcomes of the corporate structuring schemes, but rather scrutinise the circumstances that would elucidate the underlying intentions of Claimants in so structuring their corporations.

• In Autopista, the tribunal examined the concrete circumstances to determine that the resulting foreign control was reasonable and found that the Claimant had not acted in a way contrary to the purposes of the ICSID Convention.¹⁰¹
• In Tokios, the tribunal found that the Respondent had failed to demonstrate a prima facie case to suggest that the Claimant had used its status as a juridical entity of Lithuania to perpetrate fraud or engage in malfeasance.¹⁰²
• In Aguas, the tribunal went a step further to express the commonness and legality for corporations to be located in jurisdictions with favourable regulatory and legal environments, including the availability of protection by investment treaties.¹⁰³
• In Phoenix Action, for the first time, the tribunal dismissed a claim entirely due to an abuse of the ICSID arbitral system. Here, upon examining the Claimant’s timing and motives of its corporate restructuring, the tribunal held that the Claimant had clearly manipulated its corporate structure for the sole purpose of gaining access to international arbitration when its earlier remedies sought locally were unsuccessful.¹⁰⁴

From a systemic perspective, Phoenix Action also marked the first time an ICSID tribunal had attempted to outline its authority to adjudicate issues dealing with good faith,¹⁰⁵ as well as the misuse of international investment law in accordance with requirements of the general principles of law¹⁰⁶ and the broader abuse of rights doctrine.¹⁰⁷ Subsequently, the tribunal in Mobil helpfully fleshed out further other areas and sources of law that deal with the abuse and misuse of rights.¹⁰⁸ Undertaking a teleological interpretation of the ICSID Convention, the Phoenix Action tribunal also pronounced its duty to prevent an abuse of the system of international investment protection under the ICSID Convention and BITs:¹⁰⁹

If it were accepted that the Tribunal has jurisdiction to decide Phoenix’s claim, then any pre-existing national dispute could be brought to an ICSID tribunal by a transfer of the national economic interests to a foreign company in an attempt to seek protections under a BIT…It is the duty of the Tribunal not to protect such an abusive manipulation of the system of international investment protection under the ICSID Convention and the BITs. It is indeed the Tribunal’s view that to accept jurisdiction in this case would go against the basic objectives underlying the ICSID Convention as well as those of bilateral investment treaties. The Tribunal has to ensure that the ICSID mechanism does not protect investments that it was not designed for to protect, because they are in essence domestic investments disguised as international investments for the sole purpose of access to this mechanism.

Since then, tribunals have been confronted with varied factual matrices concerning the restructuring of investments. Phoenix Action particularly laid the groundwork for tribunals to determine with greater conceptual clarity when circumstances amount to an abuse ‘détournement de procedure’.¹¹⁰ The determination of abuse in cases under this category is today assessed in light of two elements:

1. Timing. As regards timing, a chronology of the establishment and evolution of the corporate form is assessed.¹¹¹ Tribunals today consider it perfectly legitimate for corporate restructuring to take place in order to protect an investment from future disputes with the State. However, the determination of the critical date for which legitimate restructuring can take place is sometimes highly complex. This was observed in Pac Rim, where the Tribunal had to engage with the International Law Commission’s works on State Responsibility.¹¹² By utilising its typology of wrongful acts (whether the act is completed, continuing or composite),¹¹³ the tribunal conceived a ‘dividing line’ between abuse of process and legitimate restructuring:¹¹⁴ the timing requirement would be fulfilled in a dispute for which the occurrence is of ‘very high probability’ and the timing requirement would not be fulfilled where there is only ‘a possible controversy’.¹¹⁵ It can be observed that the high threshold for the timing requirement has gradually lowered over the years. For example, the Tidewater tribunal substituted the ‘very high probability’ standard with that of objective ‘reasonable foreseeability’.¹¹⁶ Later, in ConocoPhillips, the tribunal ascertained that no claim against the Respondent was ‘in prospect’ before corporate restructuring took place.¹¹⁷ Today, the timing requirement can be met as long as corporate (re)structuring was made in respect of a specific ‘foreseeable’ dispute.¹¹⁸

2. Motivation of the restructuring. All tribunals apply this criterion, with an apparent evolution in favour of a conclusion of abusive conduct.¹¹⁹ In Phoenix Action, the threshold for finding an abuse would only be met if economic transactions were undertaken and performed ‘with the sole purpose of taking advantage of the rights contained in such instruments’.¹²⁰ This test was adopted wholesale by the Cementownia tribunal that same year,¹²¹ but immediately got watered down a year later. In 2010, the Mobil tribunal suggested that an abuse could be found if the Claimant’s restructuring was ‘the main, if not the sole purpose’.¹²² In such cases where Claimants present multiple motivations for their corporate restructuring, tribunals accord greater emphasis on the motivation of gaining access to arbitration. In this regard, the Pac Rim tribunal was faced with the task of balancing and weighing between two motives: access to arbitration, and measures of economy within a group of companies. The tribunal ultimately found that the second was ‘not dominant, still less the only, motive for the change’.¹²³ Such a balancing act was later applied with greater flexibility in Tidewater, where the tribunal thought it unnecessary to conclude on the alleged motive of tax optimisation given that the motive of access to arbitration was demonstrated.¹²⁴

Group 2: Multiple / parallel proceedings

List of cases: Lauder, CME, Waste Management, Rachel Grynberg, Ampal-American, Orascom

Claimants’ initiation of multiple or concurrent proceedings to pursue essentially the same remedies in different fora can similarly constitute an abuse of process. Multiple and parallel proceedings present a range of problems in international arbitration. By increasing the costs of proceedings, parallel disputes drain the Respondent’s resources, which could potentially corner Respondents into a premature settlement or jeopardise its ability to mount a strong defence.¹²⁵ There is also a potential for parallelism to result in conflicting outcomes on the same matter.¹²⁶ Systemically, conflicting outcomes undermine confidence in the international investment protection system’s function as originally designed – to produce binding, objective, rule-based outcomes in relation to disputes.¹²⁷ Parallel proceedings also potentially result in double remedies, particularly when parallelism leads to separate awards for compensation in relation to the same injury or damage suffered,¹²⁸ thus enabling Claimants to receive compensation disproportionate to the actual harm suffered.¹²⁹

Given the different forms that such initiations of multiple or concurrent proceedings can take, investment arbitral tribunals have similarly addressed the issue in multifarious ways. Tribunals in earlier cases of multiple and concurrent proceedings tended to undertake a strict, textualist reading of the relevant rights afforded by BITs. For instance, in Lauder, the tribunal held that no abuse of process can occur in the face of multiple court and arbitral proceedings when the claimants and causes of action are not identical in both cases,¹³⁰ especially when the proceedings were the only forum where the Parties’ treaty rights could be protected.¹³¹ Furthermore, in CME, the tribunal noted how modern BITs ‘allow a broad and extended access’ to dispute resolution mechanisms,¹³² and further held that allegations of the Claimant’s pursuit of treaty proceedings for an essentially-contractual dispute must be rejected given that the Claimant had framed its claim as an alleged treaty breach.¹³³ To this end, the CME tribunal held that jurisdiction was not affected by such an incidence of parallel proceedings, albeit taking note that an affirmative award in both fora may have an impact on the quantum of the damages.¹³⁴

The strict, literalist approach in Lauder and CME gave way to purposive considerations in Waste Management, where the Tribunal alluded to an added consideration of the NAFTA’s ‘object and purpose’ in an instance where the Claimant had initiated new arbitral proceedings for which substantial merits of the claim had not yet been considered in earlier proceedings.¹³⁵ Where substantial merits of a claim had been considered by a prior tribunal, a subsequent attempt to re-litigate and overturn the findings in another forum may be deemed ‘a contractual claim…dressed up as a Treaty case’ and thus an abuse of process.¹³⁶

Today, tribunals are cognisant of the fact that parallel proceedings could at times be the natural consequence of agreed wording in separate BITs.¹³⁷ For example, in Ampal-American, the Tribunal looked beyond how the four parallel arbitrations were suggestive of abuse. Here, the Tribunal respected how – in the absence of bad faith – the distinct claims were pursued in the different fora and, where claims happened to overlap, the Tribunal held off its determination of abuse by giving the Claimant an opportunity elect it to hear the claim in accordance to Article 26 of the ICSID Convention.¹³⁸ Admittedly, the dividing line between strategic considerations and abuse can sometimes be difficult to ascertain. In the recent Orascom case, the Tribunal seemed to suggest that, short of evidence of bad faith conduct, a Claimant’s overtly strategic conduct to pursue investment arbitration at various levels of the vertical corporate chain must be viewed abusive, given that such an exercise of right conflicted with the purpose of such rights and BITs.¹³⁹

Group 3: Interest / motive in pursuing arbitration

List of cases: Bayindir, Rompetrol, Chevron, Abaclat

Cases that fall in Group 3 face the prospect of tribunals exercising their inherent power to impugn extra-legal motives behind Claimants’ request for arbitration. Seemingly the most appropriate of all groups in addressing abuses of process, tribunals have paradoxically been cautious of finding an abuse of process at such preliminary stages of the arbitral process.¹⁴⁰ On this note, tribunals have expressed that a Claimant’s last-minute tactical choice to abandon contractual claims in legitimate pursuit of treaty claims is not in of itself abusive, noting that such actions would instead feature as a factor in the allocation of costs.¹⁴¹ It is also not uncommon for tribunals to desire a full examination of all circumstances – even if it meant doing so at the merits stage – to conclusively determine if a Claimant indeed possessed an extra-legal, bad faith motive in pursuing the arbitration.¹⁴²

Group 4: Obtainment / performance of investment

List of cases: Inceysa, Fraport, Plama, Europe Cement, Saba Fakes, Malicorp, Churchill

Finally, cases within Group 4 pertain to what the Abaclat tribunal had described as an issue of ‘material good faith’, which requires a look into the context and way that an investment was procured and for which the investor seeks protection.¹⁴³ The conduct of the Claimant is scrutinised in these circumstances, where acts such as the presentation of false financial information, false representations, falsity of documents, and conscious concealment of the true corporate identity would be tantamount to a violation of the good faith principle.¹⁴⁴

Crucially, tribunals dealing with cases in Group 4 have analysed that insidious, bad faith conduct in procuring and performing the investments leads to the finding that the Claimants possessed no protected investment.¹⁴⁵ Consequently, this leads tribunals to find a lack of jurisdiction ratione materiae,¹⁴⁶ or in the alternative, that the Claimant’s claims are inadmissible (given that the investment was procured through illegality and therefore do not benefit from the protection afforded by international investment law).¹⁴⁷ In Europe Cement, the Claimant failed to produce any evidence that it owned the necessary shares despite repeated requests from the Tribunal.¹⁴⁸ Besides finding that such lack of evidence meant there was not an investment at all,¹⁴⁹ the Tribunal went one step further to denounce the Claimant’s conduct as an abuse of process.

B. Tribunals as guardians of the international investment legal system

It is observed that tribunals often undertake a teleological interpretation of the ICSID Convention and of their roles in protecting and upholding the international investment legal system. This was first pronounced in Phoenix Action, where the tribunal noted its duty to prevent an abuse of the system of international investment protection under the ICSID Convention and BITs.¹⁵⁰ Such a duty was necessary to address how pre-existing disputes under domestic investments, when disguised as international investments for the sole purpose of access to the mechanism, do not deserve protection by the ICSID system.¹⁵¹ Essentially adopting a purposive approach in characterising this duty,¹⁵² the tribunal noted that if it did accept jurisdiction to decide the claim, then ‘any pre-existing national dispute could be brought to an ICSID tribunal by a transfer of the national economic interests to a foreign company and thereafter seeking protection under a BIT’.¹⁵³

In expressing their inherent duty and power to safeguard the procedural integrity of the international investment legal regime, it is expected that tribunals have a clear idea of the multifarious dimensions to what constitutes an abuse of process. Where tribunals in the earlier cases have tended to adopt a strict, textualist approach in delineating the rights of relevant parties, today’s tribunals are observed as taking into consideration the so-called ‘social functions’ that now accompany the exercise of individual procedural rights.¹⁵⁴ At the same time, tribunals can be seen as performing self-regulating functions in ensuring that this duty and power is not unduly overreaching. Especially in the determination of bad faith conduct, tribunals desire to obtain a complete picture of the facts and evidence before dismissing a claim on the premise of an abuse of process. .

C. Investment arbitral jurisprudence

There is no doctrine of stare decisis in investment treaty arbitration, and it is trite that each arbitral tribunal assesses the circumstances of a case in its own way.¹⁵⁵ P. Duprey noted that one could only speak of precedent when the arbitrator is ‘under the obligation to defer to the precedent even though he disagrees with the stated solution’.¹⁵⁶ According to C. Stoecker, consensus among the practitioners of arbitration regarding the binding power of arbitral decisions could – at best – make them a source of lex mercatoria.¹⁵⁷

From the outset, prior awards are specifically excluded from having the same status as a binding precedent. Article 38(1)(d) is subject to Article 59 of the ICJ Statute, which specifically excludes arbitrators from the common law rule of stare decisis.¹⁵⁸ According to G. Guillaume, this solidifies the notion that prior awards are only binding ratione personae and rationae materiae; and there is no binding value attached to prior cases.¹⁵⁹ Instead, they are merely a ‘subsidiary means for the determination of rules of law’, which would mean that prior awards are objects of jurisprudence and doctrine that help confirm the existence of particular rules.¹⁶⁰ All in all, as P. Weil succinctly puts it, Article 38(1)(d) theoretically undermines the recognition of judicial decisions as a source of law.¹⁶¹

Nonetheless, it is widely accepted that jurisprudence in investment treaty arbitration tends to develop and evolve primarily by way of arbitral jurisprudence. In large part, this is due to the easy access to prior investment arbitral awards and various reasons have been proffered as regards the general widespread publication of investment treaty arbitral awards.¹⁶² In his commentary of the ICSID Convention, C.H. Schreuer highlighted two primary reasons:

1. The unique positions of the litigants to an investment dispute generally see the publication of awards as advantageous from a self-interested perspective: a host State is unlikely to preserve confidence in its investment climate by concealing details of an investment dispute; on the other hand, an investor’s eagerness to keep an award away from the public eye will likely arouse questions of its proper corporate behaviour.¹⁶³
2. The second reason arises from a broader perspective: the publication of an award portrays integrity and transparency of the arbitral process, thereby increasing confidence in the investment disputes regime.¹⁶⁴ Investment treaty arbitral awards are often published onto the public domain.¹⁶⁵ Institutions like ICSID are even obligated to ‘promptly include in its publications excerpts of the legal reasoning of the Tribunal’.¹⁶⁶ This mandate that came into force on 10 April 2006 was prompted by a desire to achieve greater transparency in ICSID proceedings.¹⁶⁷

Jurisprudential development by way of arbitral jurisprudence is especially observable in abuse of process cases.¹⁶⁸ Arguably, Phoenix Action has resulted in tribunals increasingly relying on prior awards to invoke the abuse of process doctrine. After all, virtually every subsequent tribunal of the 30 key awards identified here has treated Phoenix Action’s famous paragraph 144 as trite.¹⁶⁹ Discerning tribunals have observed that Phoenix Action caused an influx of tribunals considering the notion of ‘investment’ through the ‘initial spirit of the ICSID Convention’.¹⁷⁰ While few had consciously dissociated themselves from the expansiveness of Phoenix Action,¹⁷¹ most investment tribunals have nevertheless ridden its waves.

Furthermore, following the Phoenix Action award, there was a noticeable shift in tribunals’ perception towards the bindingness of prior awards (at least minimally quasi-binding). Four such tribunals deserve mention: in 2010, the Saba Fakes tribunal emphasised that it was not bound by prior awards but had a ‘duty to seek to contribute to the harmonious development of investment law and thereby meet the legitimate expectations’ of the participants in the system.¹⁷² This was subsequently echoed by the Abaclat tribunal in 2011.¹⁷³ In 2015, the Renée Rose tribunal took a step forward, this time noting that it had a ‘duty to follow solutions established in a series of consistent cases’,¹⁷⁴ and this was lifted word-for-word by the Churchill tribunal in 2016.¹⁷⁵ This certainly comes in stark contrast to pre-Phoenix Action tribunals who went only as far as ‘certainly carefully consider such decisions whenever appropriate’.¹⁷⁶

D. Towards an harmonisation of the abuse of process test

As stated, there is obvious desire on the part of investment tribunals to establish a set of arbitration ‘case law’ rules applicable to specific disputes, so as to affirm the specificity of arbitration in the field of investments.¹⁷⁷ As a starting point, the availability of the prior awards should (logically) improve the predictability and quality of future decisions.¹⁷⁸ However, tensions invariably arise between the highly fact-specific nature of abuse of process and Tribunals’ ever-increasing reliance on tests and principles derived and developed primarily through prior awards. Where abuse of process is not an express treaty provision in investment arbitration, one expects tribunals to exercise their adjudicatory functions in a quasi-common law manner characterised by some interpretative freedom. However, it is submitted that excessive reliance on prior awards, as discussed above, potentially results in ‘judicial interpretative restraint’; ¹⁷⁹ tribunals are observed as desiring to keep in line with past awards to the point that they are increasingly adopting a ‘checklist’ approach in deciding allegations of abuse.

Although tribunals constantly echo the need to evaluate each case in accordance with their respective factual matrices, to be primarily guided by the principles and tests derived from prior cases might paradoxically encourage a fixation with applying and fitting factual matrices into the four corners of established legal tests. Where certain factual patterns do not appear to fit snugly within these frameworks, a propensity to generalise may occur. This can be seen from the gradual watering down of the threshold to find abuse in cases in Group 1 (corporate (re)structuring). This could potentially result in two possible outcomes: (i) similar legal issues start to be treated inconsistently by different tribunals; or (ii) it becomes increasingly easy for tribunals to find that an abuse of process has occurred.

The international investment regime has been called out for its inconsistencies arising out of an inability to resolve conflicting decisions and provide a clear, stable, and congruent body of principles to guide participants.¹⁸⁰ In 2005, S. Franck noted that inconsistent decisions typically arise out of three scenarios: (i) different tribunals come to different conclusions about the same standard in the same treaty; (ii) different tribunals organised under different treaties come to different conclusions about disputes involving same facts and similar investment rights; and (iii) different tribunals organised under different treaties come to opposite conclusions about similar commercial situations and investment rights.¹⁸¹

E. Abuse of process increasingly encompassing instances of misuse?

From the overview of the practice of investment tribunals pertaining to abuse of process cases, different standards of assessment have emerged to deal with the different groups of cases. Yet, an observation is made of the overall jurisprudential direction that investment arbitration is taking as compared to other international courts and tribunals. Where the latter are astutely concerned about retaining the high thresholds (i.e. bad faith type situations) for which abuse of process may be found, investment tribunals on the other hand appear to increasing find an abuse of process in the face of legal tests and analyses embodying lower thresholds.

Abuse of process in cases of Group 1 (corporate (re)structuring) is ascertained by examining the timing and motivation of Claimants’ relevant corporate (re)structuring schemes. High thresholds that were once required to be met before abuse can be determined have given way to lowered bars in subsequent developments. From this perspective, one notices how tribunals afford themselves a wide discretion to make a value judgment of whether an abusive corporate (re)structuring scheme had taken place. While tribunals remain fervent in preventing an abuse of the system of international investment protection under the ICSID Convention and BITs, one wonders if such a broadly conceived duty might potentially capture legitimate, strategic corporate structure schemes that might otherwise leave investors without due recourse to dispute resolutions mechanisms. For example, following the judgment by the Court of Justice of the European Union (CJEU) that investor-state arbitration provisions in intra-EU BITs are incompatible with EU law,¹⁸² investors may consider restructuring to include jurisdictions outside of the EU in their corporate holding chain to preserve the potential to resort to investor-state arbitration.¹⁸³ The current ‘foreseeability’ threshold may not provide needed clarity and guidance for some investors who may otherwise face allegations of abuse of process or bad faith. To this end, it is currently unclear whether the current test for abuse in Group 1 cases solely captures purely abusive conduct, or which provides a leeway for Respondents to attempt at seeking a dismissal of Claimants’ claims.

Jurisprudential development in cases of Group 2 (multiple/parallel proceedings) appears more sympathetic in that tribunals are willing to afford a benefit of doubt for Claimants to remedy otherwise abusive undertakings of investment arbitral proceedings.¹⁸⁴ Nonetheless, the latest case of Orascom suggests a shift to potentially penalising an overtly strategic (yet void of bad faith) means of seizing investment arbitration possibilities.

Jurisprudential development of cases in Group 3 (interest/motive in pursuing arbitration) appears to retain a high standard of proof, requiring an explicit finding of bad faith before a Claimant’s claim may be dismissed. Similarly, tribunals dealing with cases in Group 4 (obtainment/performance of investment) still look out for procurements of investment that are specifically tainted by bad faith, fraud, or malfeasance before a finding of abuse may be made. Furthermore, as in Europe Cement, tribunals do not hesitate to display repugnance against investments procured illegally, signifying how tribunals do treat instances of abuse reprehensively rather than as a purely technical endeavour.

III. Proposals to prevent and deal with abuses of process

The overview of investment arbitral tribunals’ practice as regards abuse of process is illuminating. First, it appears that there can be no one-size-fit-all approach to dealing with any instance of alleged abuse. Tribunals have conceived and applied distinct legal tests for each separate group. Secondly, it is imperative to appreciate how certain legal tools that effectively deal with particular groups of cases may be entirely inadequate in other groups. To this end, the dynamic nature of abuse of process claims in investment arbitration requires myriad legal weapons to be employed in specific contexts. In this section, I endeavour to assess such potential tools that may aid in preventing, and managing, instances of abuse of process. It is hoped that this exercise would illustrate that a creation of a sui generis doctrine of abuse of process is not necessary, and instead, the various existing legal tools ought to be embraced as practical solutions in dealing with the distinct shades of abuse of process in investment arbitration.

A. Prevention

Denial of benefits clauses

Denial of benefits clauses are potentially potent against abusive Group 1 (corporate (re)structuring) type situations, for they entitle Contracting Parties to deny legal entities benefits under BITs in the absence of substantial business activities in the Contracting State¹⁸⁵ Denial of benefits clauses are not yet commonplace but have seen increasing incorporation into BITs,¹⁸⁶ so as to narrow the class of protected investors.¹⁸⁷ Besides a denial of benefits clause, States are also able to add language to the wording of ‘protected investments’, disallowing protection afforded to passive ownership of assets held through subsidiaries.¹⁸⁸

One perspective of denial of benefits clauses pertain to how such provisions facilitate a situation where investors have flexibility to structure their investments, but where States may also have the ability to redress perceived abuses.¹⁸⁹ Nonetheless, it should be noted that ‘substantial business activity’ is often (intentionally) left undefined, leaving States with latitude to evaluate on a case-by-case basis, albeit leaving tribunals with little guidance when determining whether a State’s exercise of its rights to deny benefits was proper.¹⁹⁰

Exclusion of compulsory investor-state dispute settlement processes

A slightly more radical method of preventing future instances of abuse of process lies in recent developments surrounding the upcoming Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Six countries party to the CPTPP have so far signed side letters with each other to exclude compulsory investor-state dispute settlement processes,¹⁹¹ and have to this end opted to disallow investors from having recourse to dispute settlement against them under Chapter 9, Section B (Investor-State Dispute Settlement) of the CPTPP in various ways, for example: as between Australia and New Zealand, investors from either country shall not have recourse to dispute settlement against each other;¹⁹² as between New Zealand and Vietnam, a dispute resolution procedure was established, mandating for compulsory resolution through consultation and negotiations, failing which the dispute may be submitted to arbitration.¹⁹³

Beyond situations like those between Australia and New Zealand, one may interpret such governmental action as backtracking on the compulsory nature of access to investor-state arbitration, as characterised by the history of international investment law and BITs. To this end, one awaits to observe how such new arrangements would play out in practice. Currently, this situation suggests that States are today increasingly exercising their sovereign rights in a bid to narrow the traditionally unlimited scope of access to investor-state dispute resolution mechanisms.

B. Management

Manifestly ill-founded, frivolous claims

It bears to note that Article 36(3) of the ICSID Convention sets up an administrative screening process to specifically deal with manifestly ill-founded and frivolous claims. By way of this provision, the ICSID Secretary-General, before registering a request, must make sure that the dispute is not ‘manifestly outside the jurisdiction of the Centre’. Admittedly, this screening is limited to jurisdictional grounds and has proved quite superficial.¹⁹⁴ Nonetheless, in the event this provision is invoked, claims are thrown out from the filing stage, which preserves efficiency and time that otherwise would be unduly expended.

Preliminary objections

Traditionally, preliminary objections were grounded on, and built up through, the case law of the PCIJ and the ICJ where an objective prima facie test was conceived to establish a tribunal’s jurisdiction ratione materiae.¹⁹⁵ This way, Claimants had to demonstrate that the alleged facts were capable of falling under the substantive legal provisions invoked as a recognised cause of action. According to H. Ascensio, such a procedure enabled potential abuses of process to be managed under the broader category of ‘unsubstantiated claims’.¹⁹⁶

In 2006, a new expedited rule of procedure was introduced into the ICSID Arbitration Rules, which allows Parties to file an objection that a claim is ‘manifestly without legal merit’.¹⁹⁷ The Rule 41(5) objection must be filed no later than 30 days after the constitution of the Tribunal and the Applicant must specify its basis for the objection ‘as soon as possible’. Unlike the administrative nature of Article 36, this summary procedure is judicial in nature and tribunals have interpreted the expression ‘without legal merit’ as including jurisdictional and substantive legal questions.¹⁹⁸ As the Tribunal is required to make a decision at its first session or shortly thereafter, it is to note that the Rule 41(5) decision would be made even before the Tribunal has the opportunity to examine matters of jurisdiction and competence.¹⁹⁹ To this extent, two observations ought to be made:

1. Rule 41(5) pertains to the lack of legal merit for which factual evidence will not be entertained at this stage.²⁰⁰
2. A Rule 41(5) objection need not state that the entire case is without merit; what is required is a statement that a Claimant’s claim is manifestly without legal merit.²⁰¹ Tribunals have attempted to clarify the meaning of ‘manifestly’ and ‘without legal merit’. With regard to ‘manifestly’, applicants need to establish its objection ‘clearly and obviously, with relative ease and despatch’.²⁰² ‘Without legal merit’ is slightly more abstract as tribunals have noted that facts will invariably need to be pleaded to make out the objection,²⁰³ although examples of ‘without legal merit’ include the non-existence of legal obligations and rights.²⁰⁴

These observations are useful in the abuse of process context. Crucially, given that abuse of process is not an express treaty provision, a Rule 41(5) applicant ought to couch its objections in line with existing legal provisions in the ICSID Convention or BITs. This is especially useful for cases within Group 4 (obtainment/performance of Investment) where the alleged bad faith and consequent abuse of process goes towards the existence of a protected investment.²⁰⁵ In this context, the Rule 41(5) applicant must be cognisant of identifying the Claimant as either: not a protected investor, or not possessing a protected investment. Furthermore, should BITs include express denial of benefits clauses,²⁰⁶ Group 1 type cases (corporate (re)structuring) could also come within the purview of a Rule 41(5) application in which the applicant ought to frame the objection in terms of the Claimant as being denied the relevant treaty protections. It is also arguable that cases within Group 2 (multiple/parallel proceedings) can come within a Rule 41(5) application; applicants must frame their objections in terms of broader legal principles such as principles of lis pendens²⁰⁷ or res judicata²⁰⁸.

Use of existing substantive legal analyses

Given that most tribunals have examined allegations of abuse of process at the jurisdiction stage, I submit that allegations of abuse can, as a practical matter, be framed in a way that targets the Tribunal’s potential lack of jurisdiction. Nonetheless, adopting this analysis means that any finding of bad faith would be a cause of reprehension that should feature, in accordance with current practice, more prominently in the quantum of damages stage rather than as a standalone doctrine.

Examples of the utility of analysing allegations of abuse in accordance with the legal requirements to establish objections include: in Fraport, the Tribunal lacked jurisdiction ratione materiae since no investment could have been made in accordance with the laws of the Philippines.²⁰⁹ Notably, the Phoenix Action tribunal could have very well ascertained the presence of a ‘protected’ investment, rather than the apparent founding of an entirely new doctrine of abuse of process in investment treaty arbitration. As rightly argued by commentators, there was simply no need for the Phoenix Action tribunal to rely on a sui generis doctrine of abuse to determine its jurisdiction.²¹⁰

Even where allegations of abuse have proceeded to the merits stage, it is imperative to appreciate, for instance, how the Malicorp tribunal nonetheless was able to rely upon a contractual analysis to find that ‘the nature and content of the information supplied [by the Claimant] to the Respondent was such as to give rise to an essential mistake’.²¹¹

The power of tribunals to stay proceedings

The lis pendens doctrine may be deployed to potentially remedy abuses of process, particularly in the context of Group 2 (multiple/parallel proceedings) type cases. In general, an adjudicatory body applying lis pendens will stay proceedings before it where the same matter is being litigated before another body.²¹² Such power may be derived from ICSID Arbitral Rule 41(3) where the Tribunal has the power to suspend the proceeding on the merits upon the formal raising of an objection relating to the dispute. Lis pendens can be deployed to potentially remedy abuses of process, especially in the context of parallel proceedings.

Traditional conceptions of lis pendens apply the triple identity test, which requires an identity of parties, causes of action, and remedies available.²¹³ The typical framework for the invocation of lis pendens consists of disputes involving: (i) same parties; (ii) same contract and agreement to arbitration; (iii) separate arbitration proceedings concerning the same dispute; (iv) giving rise to parallel arbitrations.²¹⁴ In investment treaty arbitration, tribunals have noted that lis pendens can only apply when parallelism occurs between tribunals of ‘equal status’; international tribunals are not subject to lis pendens when a parallel case is pending in a domestic forum.²¹⁵

Nonetheless, the lis pendens has been known to be strictly applied in international economic law, often entertained only when: (i) the Claimant is formally or in fact different; (ii) where the claims are different; or (iii) where the remedies are different. Typically, lis pendens is invoked in the context of an ICSID Rule 41(5) application, for which a Respondent seeks for the Claimant’s claims to be dismissed on the premise that they were ‘manifestly without legal merit’. On this note, tribunals seem to interpret ‘manifest’ to strictly mean the identity of parties in pursuit of parallel proceedings. In several cases, the triple-identity test need not even be fully fleshed out should the first element (identity of parties) fail to be met.²¹⁶

Ensuring the claimant cures overlapping claims in different, equal-status fora

As Gaillard has noted, the duty to ‘concentrate a dispute’ has been imposed on litigants in both civil and common law jurisdictions albeit under different legal doctrines and to different degrees.²¹⁷ To this extent, the ICSID Convention scheme seems to proffer a somewhat reminiscent variant of this duty by way of Article 26, in which having consented to ICSID arbitration obliges all Parties to essentially centralise proceedings, barring them from pursuing the claims in other fora. Specifically, the Tribunal in Ampal-American found that Article 26 more than sufficed to correct the potentially abusive parallel proceedings.²¹⁸ Failing which, an abuse of process would crystallise.

The res judicata principle

Finally, the Tribunal in Rachel Grynberg found that the res judicata principle (as embodied in Article 53 of the ICSID Convention) was appropriate to deal with ‘improper’ attempts to re-litigate issues that had already been decided by previous tribunals.²¹⁹ While it is to note that the precise scope of res judicata is still to be determined by arbitral tribunals, there are strong arguments for how its application has the potential to avoid repetition and strengthen the rule of law, especially in the face of Group 2 type cases (multiple/parallel proceedings).²²⁰

Conclusion

If the application of legal standards becomes so unpredictable and inconsistent that decisions appear arbitrary or dependent on the personal views of the judge, there is little left of the rule of law.²²¹ This explains the observation that abuse of process in investment arbitration has, until recently, been frequently discussed as a preoccupation of actors and observers of the arbitral process rather than as a legal principle.²²²

This article addressed how investment arbitration has become a dynamic field in respect to situations involving allegations of abuse of process. In fact, four distinct groups concerning abuse of process in investment arbitration can be identified: (i) corporate (re)structuring; (ii) multiple/parallel proceedings; (iii) interest/motive in pursuing arbitration; and (iv) obtainment/performance of investment.

In the face of such dynamism, ought the investment arbitration regime conceive and apply a sui generis doctrine of abuse of process? My answer is in the negative. Having surveyed the treatment of the concept by national legal systems, international tribunals and courts, and in 30 investment arbitral awards, the lesson gleaned is that an adoption of a one-size-fit-all approach is disadvantageous as 1) each distinct group of cases is undergoing its own jurisprudential development trajectory and possesses its own ‘shade’ of the meaning of abuse of process, which ought to be understood and appreciated autonomously; and 2) as a corollary, an overwhelming focus on a general abuse of process doctrine would necessarily ignore the current existing legal tools that can in fact help deal with instances of abuse of process. Appreciating, understanding and refining these existing tools, I argue, is the practical way forward in dealing with the various distinct shades of abuse of process in investment arbitration.