Until a few years ago, the question of whether there could be ‘mass’ arbitrations in investment arbitration was non-existent. The question arose at the end of 2006, when more than 180,000 claimants presented a request for arbitration before the International Centre for Settlement of Investment Disputes (ICSID) against Argentina. 1 The ICSID Secretary-General registered the request five months later, in February 2007, under the name Giovanna a Beccara and others v Argentine Republic. 2 The majority of the tribunal’s decision on preliminary issues of jurisdiction and admissibility was issued more than four years later, on 4 August 2011, and was followed by a dissenting opinion of the arbitrator appointed by Argentina in October 2011. 3

Since then, mass arbitration has been the subject of numerous discussions and further decisions such as the ones issued in the two other "Italian bondholder" cases, namely Ambiente Ufficio S.p.A. and others v Argentine Republic (ICSID Case No. ARB/08/9) 4 and Giovanni Alemanni and others v Argentine Republic (ICSID Case No. ARB/07/8). 5 Nevertheless, some questions related to the subject remain unanswered, and the answers that have been proposed reflect the different approaches and reasonings that have been adopted in relation to mass arbitration.

In this paper, I will touch upon two questions: the relevance of the terminology used, and the nature of the issues raised by these types of proceedings.

1. TERMINOLOGY

The first obvious set of questions relate to terminology: What is mass arbitration? Is there any difference between mass arbitration and multiparty arbitration? Where does multiparty arbitration stop and mass arbitration begin?

As already discussed by the other contributors, mass arbitration is derived from the American concept of class action litigation which is defined as a lawsuit that allows a large number of people with a common interest in a matter to sue or be sued as a group. It is a vehicle generally used when a number of people have suffered the same or similar injuries, but the injuries being relatively minor, they might not pursue legal redress on their own. When applied to arbitration under US law, ‘class arbitration’ consists in proceedings in which individual claimants assert claims in arbitration on behalf of a defined class of unnamed, similarly situated claimants. 6 This is closer to what has been called mass arbitration in the context of investor- State disputes, and yet it remains different. Indeed, in mass arbitrations in international investment cases, the representative element is missing in the sense that one individual claimant or several claimants cannot initiate a proceeding for an undetermined number of unidentified claimants. Under Article 25(1) of the ICSID Convention and under other arbitration rules as well as under the treaties that form the basis for the parties’ consent, each claimant must have consented to arbitration. Therefore, the number of claimants must be established as well as their identity. Mass arbitration in such context is a proceeding initiated by unrelated individuals and juridical persons having similar claims arising from the same basic conduct of the State.

However, as underlined by the Abaclat tribunal, there may be some features of a representative action in an investor-State mass arbitration proceeding, in particular with respect to its conduct:

Although Claimants made the individual and conscious choice of participating to the arbitration, their participation is thereafter limited to a passive participation in the sense that a third party, TFA, represents their interests and makes on their behalf all the decisions relating to the conduct of the proceedings. The high number of Claimants further makes it impossible for the representative to take into account individual interests of individual Claimants, and rather limits the proceedings to the defense of interests common to the entire group of Claimants. 7

In fact, beyond a certain number of claimants, it is difficult to imagine a proceeding where each individual claimant would have to be consulted for the appointment of the arbitrators, or the procedural strategic choices, or the review of the draft pleadings. These representative aspects of the mass arbitration proceedings are further discussed by Luca G. Radicati di Brozolo in his contribution entitled "Representative aspects of ‘mass claims’ proceedings in investor-State arbitration."

As summarized by the Abaclat tribunal, these types of proceedings initiated by thousands of claimants are a "hybrid kind of collective proceedings, in the sense that it starts as aggregate proceedings, but then continues with features similar to representative proceedings due to the high number of Claimants involved." 8 The Ambiente tribunal agreed with the Abaclat tribunal in considering that these proceedings cannot be qualified as class actions; 9 however, it rejected the label of ‘mass claims’ or ‘collective proceedings’ to describe, instead, the situation it was confronted with as a ‘multi-party proceeding.’ 10

It must be specified, however, that where the Abaclat case involved 180,000 claimants, the Ambiente tribunal was facing 90 claimants. 11 Accordingly, it is understandable for the Ambiente tribunal as well as the Alemanni tribunal, which was confronted with 74 claimants, to consider that the proceeding concerned was not a mass arbitration. While the distinction between 180,000 or even 60,000 claimants, 12 on the one hand, and 90, on the other hand, is clear, the Ambiente tribunal did not take the risk to specify when a claim would reach the critical level of a ‘mass.’ 13 The Ambiente tribunal and other tribunals that have dealt with this issue cannot be criticized for not defining such a level. This is because this ‘terminological imbroglio’14 (to borrow the term used by the Ambiente tribunal) has in any event no impact Mass Arbitrations in International Investment Cases on the crucial issue of whether the relevant tribunal can hear the case as initiated. In other words, the number of claimants is irrelevant to the pivotal question of whether the tribunal can hear the claims brought on a joint or collective basis. The issue arises as soon as there is an unrelated second claimant. Therefore, this ‘mass’ level does not need to be clearly defined. This does not mean, however, that the mass aspect of a claim does not have any implications that merit consideration. As developed by Luca G. Radicati di Brozolo in his contribution, there are due process considerations as well as special procedural mechanisms that are to be taken into account, in particular for the assessment of evidence.

In a nutshell, as stated by the Alemanni tribunal:

The present Tribunal sees no advantage whatsoever in entering into a battle of terminology. None of the terms that have been bandied about in argument is to be found in the two treaties that govern this Arbitration or in the applicable procedural rules, and none of them has a recognized and defined technical meaning in international law. 15

Rather than a question of terminology, it is a question of consent, more specifically the respondent’s consent facing multiple claimants. As the Alemanni tribunal concluded: "In a BIT case, therefore, where the consent of the respondent State is in issue, the question for consideration remains simply: on the proper interpretation of the BIT, has the respondent, or has it not, given a consent which is wide enough in scope to cover the proceedings brought (as in this case) by the multiple group of coclaimants?" This brings me to my second question: What are the issues linked to multiparty arbitration?

2. ISSUES LINKED TO MULTIPARTY ARBITRATION

The main question linked to multiparty arbitration involving unrelated claimants is whether the respondent’s written consent to arbitration encompasses the possibility for the tribunal to hear the case in a single proceeding. The correlated question is whether this is an issue of jurisdiction, admissibility, or simply a matter related to the conduct of the procedure. These topics are addressed by Carolyn Lamm in her contribution that follows. For introductory purposes, three questions will be addressed: how were multiparty arbitrations treated in prior cases, what is the analysis of the Italian bondholder tribunals and why objections to one single proceedings have recently been successful?

Prior Cases

It is worth noting that multiparty arbitration is not new under the ICSID Convention. Authors and tribunals often cite as examples the Klöckner16 or the Goetz v Burundi cases. 17 Nonetheless, mass arbitrations — such as the Italian bondholder cases — are not comparable to Klöckner and Goetz. In these latter cases, the claimants were either related entities or individuals and the dispute concerned the same investment or project. Particularly, the Klöckner case involved a German company and its subsidiaries with respect to agreements related to the delivery and management of a fertilizer plant. The Goetz case concerned six Belgian investors owning a company incorporated in Burundi involved in the production and marketing of precious metals. On the other hand, mass arbitrations involve unrelated claimants with distinct investments.

Prior cases comparable to the Italian bondholder proceedings include: Bernardus Henricus Funnekotter and others v Republic of Zimbabwe, 18 involving 13 Dutch investors owning different large commercial farms that were expropriated by Zimbabwe; Bayview Irrigation District and others v United Mexican States, 19 concerning 46 claimants in relation to the use of the waters of the Rio Grande river; Piero Foresti, Laura de Carli and others v Republic of South Africa, 20 involving 11 claimants — individuals and entities from two different nationalities (Italian and Luxembourgish) — against South Africa in relation to their mineral rights; Alasdair Ross Anderson and others v Republic of Costa Rica, 21 concerning 137 Canadians victims of a scheme organized by two brothers in Costa Rica. The claimants alleged that Costa Rica had failed to provide proper vigilance and governmental regulatory supervision over the national financial system.

In these cases, the respondent either did not raise any objection to the fact that there were multiple claimants joined in one single proceeding or agreed to have the individual claims heard in one proceeding for preliminary objection purposes. Those objections were upheld. 22 Therefore, the tribunals’ decisions in those cases do not bring light on the scope of respondent’s consent contained in the relevant bilateral or multilateral treaty (‘BIT’ or ‘MIT’). In the Noble Energy v Ecuador case, the tribunal examined the question of the respondents’ scope of consent as the proceeding involved the joinder of three disputes. The tribunal considered that it was not a matter of jurisdiction but a matter relating to the conduct of the procedure. It further sought inspiration from the law and practice on consolidation to conclude that by analogy, the disputes submitted to it could be heard in one single proceeding. 23 Although informative, this case is once again distinct from mass arbitrations as the claimants were related (MachalaPower was a subsidiary of Noble Energy), and as underlined by the tribunal: "there is an obvious interdependence between the different disputes submitted to this Tribunal. They stem from the same facts, the same overall economic transaction, and the same measures. Moreover, the measures complained of and the relief sought under the different instruments offer significant similarities." 24

The Italian Bondholder Cases

Therefore, the question of respondent’s scope of consent with respect to multiparty proceedings was first tackled by the three tribunals that dealt with the Italian bondholder cases. However, the question is not definitively solved as these tribunals took different approaches. In Abaclat, the tribunal considered that the mass aspect of the proceeding was a question of admissibility. 25 According to that tribunal, the relevant question was whether claimants’ claims were identical or sufficiently homogeneous:

The only relevant question is whether Claimants have homogeneous rights of compensation for a homogeneous damage caused to them by potential homogeneous breaches by Argentina of homogeneous obligations provided for in the BIT. 26

In Ambiente, the tribunal did not enter into the discussion of the distinction between jurisdiction and admissibility and reviewed the jurisdictional requirements. It considered that the question of number of claimants was one related to the manageability of the proceedings and due process. 27 As for the question of the homogeneity of the claims, the tribunal refused to give abstract conclusions but instead considered that the claims were sufficiently linked for them to be treated, and decided upon, by the tribunal in one single multiparty arbitration. 28

In Alemanni, the tribunal treated the question as a jurisdictional one and considered that the distinction between jurisdiction and admissibility was irrelevant for the issues before it. The tribunal stated that what mattered under the ICSID Convention and the relevant bilateral treaty29 was a substantive unity in the dispute submitted to arbitration. 30 The tribunal further considered that to decide whether there was a single dispute, it would have to determine the actual rights of the claimants and the actual effect on those rights of Argentina’s conduct. It concluded that the substance of that jurisdictional issue was closely entwined with the factual and legal substantive disagreement between the parties and that accordingly the objection had to be joined to the merits. 31 Since the case was discontinued for lack of payment of the advances required, 32 we will not know the final outcome.

Given the disparities in the different approaches, it is difficult to draw clear conclusions on the question of whether a tribunal can hear multiple claims in a single proceeding when the claimants are unrelated, when there is no unity of investment and when the respondent objects to this setting. It seems that (i) all three tribunals agree that there is no additional consent needed from the respondent besides the written consent given in the relevant treaty. Although in practice, the reasoning followed by the tribunals seems to lead to the requirement of a double consent by the respondent State when it is concluded that there is lack of single dispute or homogeneity of the claims; (ii) two out of the three tribunals considered that it is a jurisdictional question related to the scope of consent; and (iii) two out of the three tribunals considered that there is a need for a homogeneity of the claims (rather than a single dispute).

Successful Objections

It is interesting to note that concomitantly or subsequently to these decisions, respondent States seem to have given more attention to this question, and when they objected to the joining of the different claims, they were successful. Three examples illustrate this trend.

First, in 2012, the ICSID Secretary-General refused to register a request for arbitration brought by two unrelated foreign companies that had lost national FM radio-broadcasting frequencies after a tender procedure organized by Hungary. The requesting parties had filed a joint request for arbitration with the Centre. Hungary, however, submitted several communications objecting to the registration of the request. The Secretary- General notified the parties that "[i]n the absence of consent by all disputing parties to join disputes relating to manifestly separate investments, the Secretary-General cannot proceed to register the Request for Arbitration as submitted to the Centre." The requesting parties then proceeded to submit two separate amended requests: one on behalf of investors in Danubius Radio and a second one of behalf of the investors in Slager Rádió Műsorzolgáltató Zrt. 33 Following the reasoning of the Italian bondholder tribunals, the absence of homogeneity of the claims or the existence of distinct disputes justified the refusal to maintain a single proceeding. In addition, it should be specified that contrary to the Italian bondholder cases, these claims were based on three different bilateral investment treaties with Hungary (the United Kingdom, the Netherlands and Switzerland). As advanced by Zachary Douglas in his presentation, in cases where the unrelated claimants bring a joint claim based on different treaties, one cannot talk of one consent, but must note the existence of different written consents. Consequently, the respondent State is entitled to choose a different arbitrator for each claim, thereby procedurally refusing their joinder. This is what occurred in the second example described below.

Second, in 2013, the Permanent Court of Arbitration endorsed the Czech Republic’s refusal to allow claims by 10 foreign investors to proceed under a single arbitral proceeding. The 10 claimants had filed a joint request for arbitration complaining of various measures allegedly affecting their investments on the photovoltaic (pv) sector in the Czech Republic. The request had been brought on the basis of the Energy Charter Treaty and Czech bilateral investment treaties with five different countries (the Netherlands, Germany, Cyprus, Luxembourg and the United Kingdom). 34 Here again, for the most parts, the claimants were unrelated, the investments, claims and disputes distinct as well as the source of consent. The issue is whether the Czech Republic should have appointed one arbitrator and raise the objection to the joinder of the claims once the tribunal was constituted, as argued by Luca G. Radicati di Brozolo or whether the Czech Republic was right in appointing different arbitrators for each claim as endorsed by the PCA and explained by Zachary Douglas. In any event, the result might have been the same (i.e., rejection of the joinder) as reflected in the third example below.

Third, in 2015, an UNCITRAL tribunal declined jurisdiction over an arbitration initiated by 22 Turkish claimants against Turkmenistan. 35 The majority of the tribunal considered that the question was a jurisdictional one that went to the issue of consent. The claims being entirely unrelated, raised by unrelated claimants, and in relation to different unrelated investments, they could not be heard jointly. The tribunal further specified that the claimants had not met their burden of proof, even on a prima facie basis, that Turkmenistan had adopted an anti-Turkish policy upon the coming to the office of President Berdimuhamedow in December 2006.

3. CONCLUSION

Rather than trying to solve legal inconsistencies, I suggest to offer a practical approach to the question. The issue arises when two unrelated claimants or more (whichever the number is) file a joint request for arbitration and the respondent State objects to this joinder. The legal question is: does the State’s consent (in the bilateral or multilateral treaty) encompass joint claims? The practical answer is: the more elements of commonality exist, the higher the chances are that a tribunal will consider that it has jurisdiction. For instance, if the source of consent is identical (one BIT or MIT relied upon by the investors), the measure affecting the investors is the same, and the type of investment is similar, it is highly likely that a tribunal would consider that it could hear the claims in a single proceeding. On the contrary, if the investors rely on different BITs or MITs, the investments present significant variations and the measures are not exactly the same, then it is highly likely that the tribunal would refuse to hear the claims jointly. As to the question of the choice made by the respondent State to accept or refuse the single proceeding, this is a strategic question that varies from one situation to another and could be the subject of another conference! The advice is to weigh the pros and the cons on a case-by-case basis rather than systematically refuse single proceedings only to create obstacles to the claimants.

1
Abaclat and Others v Argentine Republic (ICSID Case No. ARB/07/5), Decision on Jurisdiction and Admissibility dated August 4, 2011, ¶¶1 and 98, available at http://www.italaw.com/sites/default/files/case-documents/ita0236.pdf (‘Abaclat’).

2
Abaclat, ¶641.

3
See ICSID website, Procedural details of Abaclat and Others v Argentine Republic (ICSID Case No. ARB/07/5), https://icsid.worldbank.org/apps/ICSIDWEB/cases/Pages/casedetail.aspx?CaseNo=ARB/07/5&tab=PRD.

4
Ambiente Ufficio S.p.A. and others v Argentine Republic (ICSID Case No. ARB/08/9), Decision on Jurisdiction and Admissibility dated February 8, 2013, available at http://www.italaw.com/sites/default/files/case-documents/italaw1276.pdf (‘Ambiente’).

5
Giovanni Alemanni and others v Argentine Republic (ICSID Case No. ARB/07/8), Decision on Jurisdiction and Admissibility dated November 17, 2014, available at http://www.italaw.com/sites/default/files/case-documents/italaw4061.pdf (‘Alemanni’).

6
Kent Rachael, String Marik, "Availability of Class Arbitration Under U.S. Law," in Albert Jan van den Berg (ed), Legitimacy: Myths, Realities, Challenges, ICCA Congress Series, Vol. 18, 2015, p. 853.

7
Abaclat, ¶487.

8
Abaclat, ¶488. The Tribunal defined the aggregate proceedings as individual claims arising out of the same fact pattern and assigned to the same judge (see ¶483).

9
Ambiente, ¶116.

10
Ambiente, ¶¶121-122.

11
Ambiente, ¶113. The request was filed by 119 claimants and the number dropped to 90 claimants after the exchange offer proposed by Argentina in 2010.

12
Abaclat, ¶216. The request was filed by 180,000 claimants and the number dropped to 60,000 claimants after the exchange offer proposed by Argentina in 2010.

13
Ambiente, ¶¶119-120.

14
Ambiente, ¶122.

15
Alemanni, ¶267.

16
Klöckner Industrie-Anlagen GmbH, Klöckner Belge, S.A. and Klöckner Handelsmaatschappij B.V. v United Republic of Cameroon and Société Camerounaise des Engrais (ICSID Case No. ARB/81/2), Award dated October 21, 1983, 111 Journal du droit international 409, (‘Klöckner’).

17
Antoine Goetz and others v Republic of Burundi (ICSID Case No. ARB/95/3), Award dated February 10, 1999, available at https://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc&docId=DC537_ Fr&caseId=C151, (‘Goetz’).

18
Bernardus Henricus Funnekotter and others v Republic of Zimbabwe (ICSID Case No. ARB/05/6), Award dated April 22, 2009, available at http://www.italaw. com/sites/default/files/case-documents/ita0349.pdf.

19
Bayview Irrigation District and others v United Mexican States (ICSID Case No. ARB(AF)/05/1), Award dated June 19, 2007, available at http://www.italaw.com/sites/default/files/case-documents/ita0076_0.pdf, (‘Bayview’).

20
Piero Foresti, Laura de Carli and others v Republic of South Africa (ICSID Case No. ARB(AF)/07/1), Award dated August 4, 2010, available at https://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc&docId=DC1651_ En&caseId=C90.

21
Alasdair Ross Anderson and others v Republic of Costa Rica (ICSID Case No. ARB(AF)/07/3), Award dated May 19, 2010, available at http://www.italaw.com/sites/default/files/case-documents/ita0031.pdf.

22
In the Bayview case, Mexico’s consent to having the tribunal’s jurisdiction determined for all claims in one single proceeding was indicated in Mexico’s Memorial on Jurisdiction, ¶126, available at: http://www.economia.gob.mx/files/comunidad_negocios/solucion_controversias/inversionista-estado/casos_concluidos/Bayview/esc_excep_mxbv_060419_ing.pdf.

23
Noble Energy, Inc. and MachalaPower Cia. Ltda. v Republic of Ecuador and Consejo Nacional de Electricidad (ICSID Case No. ARB/05/12), Decision on Jurisdiction dated March 5, 2008, ¶¶ 185-207, available at http://www.italaw.com/sites/default/files/case-documents/ita0563.pdf, (‘Noble Energy’).

24
Noble Energy, ¶192.

25
Abaclat, ¶¶491-492.

26
Abaclat, ¶541.

27
Ambiente, ¶¶147-151.

28
Ambiente, ¶¶152-163.

29
Agreement between the Argentine Republic and the Italian Republic on the Reciprocal Promotion and Protection of Investments signed in Buenos Aires on May 22, 1990, available at http://investmentpolicyhub.unctad.org/Download/ TreatyFile/99.

30
Alemanni, ¶287, ¶292.

31
Alemanni, ¶293.

32
See ICSID website, Procedural details of Giovanni Alemanni and others v Argentine Republic (ICSID Case No. ARB/07/8), https://icsid.worldbank.org/ apps/ICSIDWEB/cases/Pages/casedetail.aspx?CaseNo=ARB/07/8&tab=PRD.

33
Accession Mezzanine Capital L.P. and Danubius Kereskedöház Vagyonkezelö Zrt. v Hungary (ICSID Case No. ARB/12/3), Decision on Respondent’s Objection under Arbitration Rule 41(5), dated January 16, 2013, ¶9, available at http:// www.italaw.com/sites/default/files/case-documents/italaw1292.pdf; and Emmis International Holding B.V., Emmis Radio Operating B.V., MEM Magyar Electronic Media Kereskedelmi Szolgáltató Kft. v Hungary (ICSID Case No. ARB/12/2), Decision on Respondent’s Objection under ICSID Arbitration Rule 41(5), March 11, 2013, ¶9, available at http://www.italaw.com/sites/default/ files/case-documents/italaw1239_0.pdf.

34
See IA Reporter, "Following PCA decision, Czech Republic thwarts move by solar investors to sue in single arbitral proceeding; meanwhile Spain sees new solar claim at ICSID," January 1, 2014, available at www.iareporter.com.

35
Erhas Dis Ticaret Ltd. Sti and others v Turkmenistan, Award dated June 8, 2015, unpublished. See IA Reporter, "An UNCITRAL tribunal declines jurisdiction over a joint treaty claim brought against Turkmenistan by a series of unrelated claimants," June 23, 2015, available at www.iareporter.com.