Experience, as Oscar Wilde noted, is the name people give to their mistakes. There can be no worse experience in international arbitration than for a party, however unwittingly, to have allowed his opponent to bring duplicate proceedings. This may happen where one party commences arbitration under the arbitration clause of one agreement, only to find that his opponent commences a parallel arbitration against him in relation to the same dispute under the arbitration clause of a separate, but related agreement.
The likelihood of this happening is greater than is commonly imagined. In any commercial relationship where there is more than one agreement or more than one party (e.g. joint venture arrangements, construction projects and "string" commodities deals), the potential for duplicate proceedings exists. And it does happen. The Bulk Oil1 disputes, albeit involving arbitration and litigation proceedings, are real examples of a real problem.
The immediate consequence is cost. It will inevitably cost more to fight two arbitrations than to fight one. Challenges to the jurisdiction of the competing tribunals will only add to spiralling legal bills. Moreover, if the two arbitrations are to be conducted in different countries or under different laws or languages, a second firm of lawyers may need to be instructed. Taken together, these factors could have a serious impact on the ability of a party with limited resources to obtain an award against a larger party with much greater resources.
If each arbitration is allowed to run its course, the potential for arbitral chaos is immense. For example, the tribunal in arbitration A may make a different award to that made by the tribunal in arbitration B2. Should each party then seek to enforce the Award most advantageous to it in the national courts, chaos will ensue. The resulting confusion is amply demonstrated by the string of conflicting decisions arising in the disputes between OTV and Hilmarton3.
From a practical perspective, there is relatively little that can be done to stop a parallel arbitration in its tracks. The only answer is to challenge the jurisdiction of the usurping tribunal. Unlike parallel proceedings in litigation4, there is no general principle of lis alibi pendens in international arbitration (although a sympathetic tribunal may adopt the doctrine and apply it by analogy). A challenge to the tribunal's jurisdiction must therefore be made on more general grounds. Amongst the...