The Norwegian claimant and the four Lithuanian respondents were shareholders in a manufacturing company (A). Together, they entered into an agreement to set up an export company as a joint venture with another company in the same group as the claimant and made a related agreement on exclusive export rights. The aim of these agreements was to make the manufacturing company a market leader, through financial assistance and investments. The claimant accused the respondents of violating these agreements by entering into competing agreements and engaging in uncooperative conduct. Fearing that the respondents were planning to dispose of all of their assets, the claimant brought an application for conservatory measures, in which it requested the arbitral tribunal to attach various assets belonging to the respondents as a means of securing a possible award of damages in its favour.

Le demandeur norvégien et les quatre défendeurs lithuaniens détenaient des actions dans une société de production industrielle (A). Ils conclurent conjointement avec une société appartenant au même groupe que le demandeur une convention établissant une société d'exportation et définirent, dans une seconde convention liée à la première, des droits exclusifs d'exportation. Ces conventions avaient pour but de faire de la société industrielle un leader sur son marché, grâce à des aides financières et à des investissements. Le demandeur reprocha aux défendeurs de violer la lettre et l'esprit de ces conventions en concluant des conventions concurrentes et en se comportant de manière non coopérative. Le demandeur, craignant l'aliénation de l'ensemble des biens détenus par les défendeurs, déposa une demande de mesures conservatoires dans laquelle il sollicita du tribunal arbitral la saisie de divers biens appartenant aux défendeurs afin de garantir une éventuelle sentence lui accordant des dommages-intérêts.

El demandante noruego y los cuatro demandados lituanos eran accionistas de una empresa de fabricación (A). Todos juntos concluyeron un acuerdo para crear una empresa de exportación en forma de empresa conjunta con otra empresa del mismo grupo del demandante y celebraron un acuerdo relacionado sobre derechos exclusivos de exportación. El objeto de estos acuerdos era convertir a la empresa de fabricación en un líder del mercado mediante ayuda financiera e inversiones. El demandante acusó a los demandados de violar estos acuerdos suscribiendo acuerdos competidores y adoptando una conducta no cooperativa. Temiendo que los demandados planearan enajenar todos sus activos, el demandante solicitó órdenes de medidas cautelares, en las que pidió al tribunal arbitral que embargara diversos bienes pertenecientes a los demandados como garantía de un posible laudo a su favor que estableciera una indemnización por daños y perjuicios.

'23. Respondents have contested the jurisdiction and the power of this arbitral tribunal to issue an order or an award of conservatory or injunctive nature and support their view with the res judicata argument, the lack of the pecuniary nature of the claims and therefore these being barred according to Article 156(1) of the Lithuanian Code of Civil Procedure, lack of specificity of the requested conservatory measures, the view that Article[s] 20 and 39 of the Lithuanian Arbitration Law not allow conservatory measures and in general that Article 23 of the ICC Rules has to be interpreted in a narrow way, and that granting an interim measure in this case will go far beyond the objectives of a commercial arbitration.

24. By agreeing to submit the dispute to arbitration the parties have opted out of the application of the non-mandatory provisions of any national civil procedure. This is reflected in Article 15 of the ICC Rules which state that the Rules themselves are the primary source of the applicable procedural law. Only when the Rules are silent is the procedural law to be determined either by the parties, or failing them the arbitrators. Since the parties in this arbitration did not stipulate the applicable procedural law, the rules of procedure are to be determined by arbitrators respectively. "In exercising its discretion in respect of procedural matters, the arbitral tribunal, as Article 15(1) makes clear, is not required to apply the procedural rules of any national law, and, indeed, this is not normally appropriate."1 In this context it is self-evident that due regard is to be given to the mandatory provisions of the laws of both place of arbitration and country where enforcement of the award is to be sought.2

25. Respondents' argument that this arbitral tribunal lacks jurisdiction for conservatory measures because such powers are not mentioned in Chapter 12 of the Lithuanian Code of Civil Procedure is rejected as it has been shown above in [paragraph] 24 that the parties have opted out of application of any national civil procedure and therefore Chapter 12 and in particular Articles 155, 156 of the Lithuanian Code of Civil Procedure do not apply in this arbitration.

26. Respondents' argument that this arbitral tribunal has no power to issue a conservatory award is not supported by the Commercial Arbitration Law of Republic of Lithuania No. 1-1274, passed on 2nd April 1996 (hereinafter referred to as Lithuanian Arbitration Law) which in Article 11(2) enumerates those types of disputes which may not be submitted to arbitration. This article does not list proceedings for injunctive or conservatory relief as being exempted from arbitration proceedings. Immediately following this enumeration, Article 12 states:

It shall not be incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, an injunction from a court and for a court to grant such an injunction.3

Arbitral proceedings and court proceedings are mutually exclusive. This is a general rule. Once the parties have decided to have their dispute resolved by arbitration and have concluded a valid arbitration agreement national courts cease to exercise jurisdiction. Article 12 of the Lithuanian Arbitration Law is an exception to this rule and this Article has to be interpreted to allow both an arbitral tribunal and a court to act in the same matter. It is up to the parties seeking injunctive relief to determine whether they will seek the assistance of the arbitral tribunal or the court or as permitted by the Lithuanian Arbitration Law petition arbitrators to seek injunctive relief with the help of the Lithuanian courts.

The dogmatic justification for this parallel jurisdiction is evident and easy to see. It is incompatible with the very concept of dispute resolution be it through arbitration or through national courts if one party is at liberty to act in such a way as to avoid the possible or even expected outcome of proceedings. If in such a case the other party is left without sufficiently powerful remedies all efforts of dispute resolution may become vain and the conduct of international commerce will be severely handicapped, if not reduced to cash transactions.

27. It has been shown that Lithuanian law recognizes that injunctive or conservatory measures may be requested from either a national court or from an arbitral tribunal. Article 23(1) of the Rules provides that the arbitral tribunal may order any interim or conservatory measure it deems appropriate unless the parties have otherwise agreed, and as soon as the file has been transmitted to the arbitral tribunal. Article 12 of the Lithuanian Arbitration Law blends perfectly into this framework provided by the Rules by allowing a party to request an injunction from the court before or during arbitral proceedings and thereby submitting the decision of where to seek injunctive relief to party autonomy, as does Article 23(1) of the Rules arguendo "unless the parties have otherwise agreed".4 This power is further supported by Article 20 of the Lithuanian Arbitration Law which also refers to party autonomy arguendo "unless otherwise agreed by the parties" . . . specifically permits the arbitral tribunal to order a party to provide security.

28. From this it follows that the arbitral tribunal may issue orders of a conservatory nature and that it is the party seeking such measures who decides whether to petition the arbitral tribunal for an order or a conservatory award or to file an application with a local court or to require the arbitrators to petition the local court directly.

29. Respondents contend that, due to the res judicata effect of the decisions of the Lithuanian courts . . ., the arbitral tribunal has to dismiss this application for conservatory measures. Provisional relief is not incompatible with the very concept of res judicata.5 The main characteristic of provisional measures is that they "are temporary in nature, their effects being limited by the purpose of assuring a specified protection until the time of the award (hence, their being 'provisional')",6 thus conservatory measures, granted in either arbitral or court proceedings, can be changed throughout the proceedings due to the change of determining facts.

30. The Appellate Court . . . refused attachment of Respondents' shares for the following reasons: the main claim, Respondents' duty not to enter into any shareholders agreement without prior consent of the Claimant and Respondents' duty to observe procedure in Article 3.2., was not a pecuniary claim that can be secured by conservatory measures, the claim for compensation of losses was not specific, neither was Respondents' responsibility nor the value of the shares whose attachment was sought . . .

31. In order to have effect, res judicata requires identity in things sued, identity of cause of action, of persons and parties to action and of quality in persons for or against whom the claim is made.7 The identity in parties on both sides exists, but the cause of action is not identical to the one before Lithuanian courts, since the Claimant's request for conservatory measures . . ., as it has been shown above, desires to secure an entirely different claim from the one sought to secure with the help of Lithuanian courts. Claimant's current request specifies the amount for which he seeks temporary relief, he claims it to amount to . . . After deliberation the arbitrators have found that all items of the application, except . . ., constitute monetary claims which therefore amount to . . . According to the Long-term Audit Report . . . each Respondent originally had 12.5% of common shares, whose nominal value is 1 Lt. During 1998, Respondents [3] and [4] sold part of their shareholding to [a company under their control], and the Respondents testified that during 1999 they sold/transferred unidentified portions of their shareholding to members of their families and/or friends. It was not possible to exactly establish the value of the shares sold, however Respondents left no doubt that their ownership of shares in [company A] today is very small and does not exceed the amount for which security is sought. Respondents did not state the real value of their shares and their real estate which in connection with Respondents' failure to provide for the down payment of costs shows that the security granted does not exceed the pecuniary amount for which security is sought. Therefore, even though the arbitral tribunal is not bound by Lithuanian civil procedure,8 Claimant's request for conservatory measures submitted to the tribunal . . . is in accordance with the requirements of the Lithuanian law.

32. It has long been accepted that arbitration is becoming the preferred method of resolving international commercial disputes, more and more states accept this fact and support arbitration by granting those powers to arbitrators when necessary to resolve a dispute with binding effect on both parties. The meanwhile almost universally accepted granting of Kompetenz-Kompetenz to the arbitrators evidences this development, as does the development to grant arbitrators authority to order conservatory measures, be it in a form of order or an award. While interim conservatory measures have been awarded in very rare cases and under exceptional circumstances, it can be expected that with the increasing importance of arbitration as the premier dispute resolution method in international commercial matters, parties will more often request arbitrators to issues interim and conservatory measures.9 An analysis of those arbitration rules which are frequently used in institutional commercial arbitrations confirms that development,10 as well as the ICC Rules which in Article 23 explicitly authorize the arbitral tribunal to order interim measures. Those countries where these powers are exclusively reserved to state courts are few. In Europe only Austria, Italy and Greece reserve the power to grant conservatory measures to the courts.11 Lithuania, with its modern law on commercial arbitration, follows the international trend in recognizing the importance of arbitration and permits a claimant to decide whether he wishes to use court system or the arbitral tribunal for measures to secure his claim. It has been shown12 that Article 20 of the Lithuanian Arbitration Law, therefore, in our view [is] to be interpreted as giving the arbitral tribunal standing it might otherwise not have, namely to assist in providing security or other interim measures in cases where the interest of justice or preservation of status quo requires it.13

33. It is self-evident and does not need further arguments that the arbitral tribunal lacks imperium to ensure compliance of a party with an interim or conservatory measure. This is reserved to national courts whose powers are necessary to ensure compliance with a measure ordered by an arbitral tribunal. Such compliance can either be obtained by enforcement of a conservatory award according to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, or as Article 20 of the Lithuanian Arbitration Law permits, by the arbitrators petitioning the local court for assistance. This wide spectrum of possibilities to ensure compliance with a measure ordered by the arbitral tribunal is also in compliance with and reflected in Article 23(1) of the Rules which leave it to arbitrators to decide what form such a measure shall take.

34. In the present case Claimant has specifically requested the arbitral tribunal to issue an interim conservatory award ordering Respondents to refrain from the further transferring their assets. The arbitral tribunal has decided to issue an award on conservatory measures as stated below, but has found it inappropriate to grant requests of attachment where the power of national courts would be a prerequisite.14 This is particularly the case when security is sought by immobilizing real estate and other in rem measures requiring cooperation of official national bodies such as land or company registries.

35. The arbitral tribunal has furthermore decided that the cost of the interim conservatory award shall form part of the cost of the arbitration and shall be dealt with in accordance with Article 31 of the Rules in the final award.

36. The arbitral tribunal has therefore decided to issue the following

Interim conservatory award:

In order to secure compliance with the final arbitral award up to an amount which is estimated not to exceed . . . per Respondent, with interest . . ., each Respondent is ordered to refrain from selling, encumbering, leasing or otherwise disposing of his interest in shares in [companies] as well as his interest in real property vested in his name as follows: . . . This order may be amended upon production by Respondent (or any one or more of them) of alternative security which the arbitral tribunal deems to be acceptable.

In respect of each Respondent this order shall remain in force [for three months], unless one of the following events shall first occur:

1. The arbitral tribunal issues a final award dismissing the Claimant's claims against that Respondent; or

2. The arbitral tribunal issues a final award against that Respondent in an amount, including interests and costs, which is less than the value of the security provided by that Respondent (in which case the amount of such security will be reduced accordingly); or

3. The arbitral tribunal issues an award which is satisfied in full by that Respondent.'

1
Derains, Schwartz, A Guide to the New ICC Rules of Arbitration, p. 211.

2
Ibid. p. 212.

3
The English translation of the Law is available at <http://www.lrs.lt/c-bin/eng/preps2?Condition1=56461&Condition2>. Official home page of the Lithuanian Parliament (Seimas).

4
See also Article 22 of the Lithuanian Arbitration Law.

5
Detailed analysis of the res judicata effect in provisional relief in arbitration can be found in Tijana Kojovic, Provisional Measures in Arbitration, an unpublished SJD Thesis at Central European University, Budapest, 1999.

6
Piero Bernardini, The Powers of the Arbitrator in Conservatory and Provisional Measures in International Arbitration, ICC Publication No. 519, p 23.

7
Black's Law Dictionary.

8
See supra 24.

9
"It is suggested that it will be argued increasingly that failure to take advantage of rules available in the arbitration itself should exclude or limit the intervention of the court. After all, if the rules provide a measure of protection, should this not be the first refuge?" in Hoyle, Mark S.W., The Mareva Injunction and Related Orders, LLP 1997, footnote 83 at p. 47.

10
Article 25 of the Arbitration Rules of the London Court of International Arbitration of 1998, Article 21 of the American Arbitration Association International Rules of 1997, Article 31 of the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce.

11
See footnote 617 in Derains, Schwartz, p.272.

12
See supra 26 and 27.

13
See Derain, Schwartz, p. 272.

14
The arbitrators lack the necessary imperium for granting in rem attachment but it is undisputed that they can order in personam freezing order to prevent further dissipation of the property-"Arbitrators may enjoin a party from removing and (or) disposing of its assets in the amount necessary for the satisfaction of the potential award" in Klaus Peter Berger, International Economic Arbitration (1993), p. 341 .