The fork in the road provision, or Electa una via, non datur recursus ad alteram (English translation: “when one way has been chosen, no recourse is given to another”[1]), belongs to a category of jurisdiction-declining provisions[2] marking “the relationship between international arbitration and adjudication by domestic courts.”[3] However, it should be noted that certain tribunals have held that the issue of the fork in the road clause is more an issue of admissibility rather than jurisdiction.[4]
Along with the concept of waiver (not discussed here), a fork in the road provision prevents the duplication of procedures and claims. As stated in the Supervision y Control v. Costa Rica case, “the existence of national courts and international arbitration as mechanisms for resolving disputes can generate a significant risk of duplication and a problem in determining what is the proper dispute resolution mechanisms for disputes that may arise during the investment period.”[5]
Under this provision, an investor is required to choose between different jurisdictional systems. By making such a choice, the investor is deemed to have irrevocably chosen the dispute resolution forum. This final choice follows the logic of estoppel by election.[6]
As summarized by the M.C.I. Power Group arbitral tribunal, the fork in the road rule “refers to an option, expressed as a right to choose irrevocably between different jurisdictional systems. Once the choice has been made there is no possibility of resorting to any other option. The right to choose once is the essence of the fork-in-the-road rule.”[7]
Such a provision figures, for example, in Article VII (2) and (3) of the BIT concluded between the USA and Argentina which reads as follows:
“2. In the event of an investment dispute, the parties to the dispute should initially seek a resolution through consultation and negotiation. If the dispute cannot be settled amicably, the national or company concerned may choose to submit the dispute for resolution:
(a) to the courts or administrative tribunals of the Party that is a party to the dispute; or
(b) in accordance with any applicable, previously agreed dispute-settlement procedures; or
(c) in accordance with the terms of paragraph 3.
- (a) Provided that the national or company concerned has not submitted the dispute for resolution under paragraph 2 (a) or (b) and that six months have elapsed from the date on which the dispute arose, the national or company concerned may choose to consent in writing to the submission of the dispute for settlement by binding arbitration […]”
Fork in the Road and Triple Identity Test
Arbitral tribunals have applied the fork in the road provision through the lens of strict conditions called a triple identity test. In order for such a provision to deploy its effects, the application brought before the national jurisdiction and before arbitral tribunals must have the same object, the same cause of action and must include the same parties.[8] That said, arbitral tribunals need to consider whether the same claim is “on a different road, i.e., that a claim with the same object, parties and cause of action, is already brought before a different judicial forum.”[9]
In Khan Resources v. Mongolia, the Respondent argued that the triple identity test was too strict and deprived of any practical effect since “it is unrealistic to expect all three prongs of the test to be satisfied”.[10] To this argument, the arbitral tribunal replied that this test “should not be easy to satisfy”.[11] It further stated that the requirements of triggering the fork in the road provision need to remain difficult to satisfy since “this could have a chilling effect on the submission of disputes by investors to domestic fora, even when the issues at stake are clearly within the domain of local law. This may cause claims being brought to international arbitration before they are ripe on the merits, simply because the investor is afraid that by submitting the existing dispute to local courts or tribunals, it will forgo its right to later make any claims related to the same investment before an international arbitral tribunal.”[12]
However, it should be noted that some arbitral tribunals have considered that the triple identity test is not relevant, especially in cases when a BIT does not expressly require it. Such a scenario has occurred in the H&H Enterprises Investments v. Egypt case. There, the arbitral tribunal held that “Article VII of the US-Egypt BIT does not expressly require that the triple identity test be met before the fork-in-the-road provision can be invoked. The triple identity test raised by the Claimant in this case is based on its reading of arbitral jurisprudence as opposed to the specific language of the US-Egypt BIT and/or its interpretation.”[13]
It further considered that “the triple identity test is not the relevant test as it would defeat the purpose of Article VII of the US-Egypt BIT, which is to ensure that the same dispute is not litigated before different fora. It would also deprive Article VII from any practical meaning. The Tribunal notes that the triple identity test originates from the doctrine of res judicata. However, investment arbitration proceedings and local court proceedings are often not only based on different causes of action but also involve different parties. More importantly, the language of Article VII does not require specifically that the parties be the same, but rather that the dispute at hand not be submitted to other dispute resolution procedures; what matters therefore is the subject matter of the dispute rather than whether the parties are exactly the same. Finally, and in any event, it would defeat the purpose of the Treaty and allow form to prevail over substance if the respondents were required to be strictly the same because in practice, local court proceedings are often brought against state instrumentalities having a separate legal personality and not the state itself.”[14]
Fork in the Road – Identity of the Parties
Arbitral tribunals have assessed this requirement strictly. For instance, the Lauder v. Czech Republic tribunal, rejecting a fork in the road related objection, stressed that “neither Mr. Lauder nor the Czech Republic [was] a party to any of the numerous proceedings before the Czech courts.”[15]
Also, to satisfy the criterion of identity of the parties, it is insufficient to demonstrate that the two entities belong to the same corporate group. As pointed out in Charanne BV v. Spain, “For that to be the case it would have been necessary to demonstrate that the Claimants enjoy decision-making powers in Grupo T-Solar and Grupo Isolux Corsan S.A. in such a way that these companies have been in reality intermediary companies.”[16]
Fork in the Road – Identity of the Object and the Cause of Action
The importance of the identity of the object and the cause of action is relevant regarding the distinction between contract claims and treaty claims. As stated in the Toto Construzioni v. Lebanon case “contractual claims arising out of the Contract do not have the same cause of action as Treaty claims.”[17]
Fork in the Road and the Most-Favoured Nation Clause
Another important question regarding the application of a fork in the road provision concerns a possibility to circumvent its effects by invoking a most-favoured nation clause. This issue was discussed in Maffezini v. Spain. The arbitral tribunal considered that the fork in the road provision “cannot be bypassed by invoking” the most-favoured nation clause since “it would upset the finality of arrangements that many countries deem important as a matter of public policy.”[18]
[1] Black’s Law, 9th Ed, 2009: Law Encyclopaedia, p. 1828.
[2] C. McLachlan QC et al. (eds.), International Investment Arbitration – Substantive Principles (2nd ed., 2017), p. 107, ¶ 4.48.
[3] Ch. Schreuer, “Travelling the BIT Route: Of Waiting Periods, Umbrella Clauses and Forks in the Road”, 2004 Journal of World Investment & Trade, Vol. 5, No. 2, p. 239.
[4] See Desert Line Projects v. Yemen, ICSID Case No. ARB/05/17, Award, 6 February 2008, p. 31, ¶ 128: “the Arbitral Tribunal believes that this issue is more properly classified as one of admissibility rather than jurisdiction; its premise is that an ICSID tribunal having jurisdiction should nevertheless decline to exercise it due to circumstances which that ICSID tribunal has the authority to examine.”
[5] Supervision y Control v. Costa Rica, ICSID Case No. ARB/12/4, Award, 18 January 2017, pp. 134-135, ¶¶ 293-294.
[6] C. McLachlan QC et al. (eds.), International Investment Arbitration – Substantive Principles (2nd ed., 2017), p. 107, ¶ 4.48.
[7] M.C.I. Power Group v. Ecuador, ICSID Case No. ARB/03/6, Award, 31 July 2007, p. 42, ¶ 181.
[8] See for instance Victor Pey Casado v. Chile, ICSID Case No. ARB/98/2, Award, 8 May 2008, p. 156, ¶ 483: “L’exercice de l’option irrévocable suppose la réunion de trois conditions. Les demandes portées respectivement devant les juridictions nationales et devant le Tribunal arbitral doivent avoir à la fois le même objet et le même fondement et être présentées par les mêmes parties.”
[9] Toto Construzioni v. Lebanon, ICSID Case No. ARB/07/12, Decision on Jurisdiction, 11 September 2009, pp 60-61, ¶ 211.
[10] Khan Resources v. Mongolia, PCA Case No. 2011-09, Decision on Jurisdiction, 25 July 2012, p. 84, ¶ 391.
[11] Idem.
[12] Idem.
[13] H&H Enterprises Investments v. Egypt, ICSID Case No. ARB/09/15, Excerpts of the Award, 6 May 2014, pp. 33-34, ¶ 364.
[14] H&H Enterprises Investments v. Egypt, ICSID Case No. ARB/09/15, Excerpts of the Award, 6 May 2014, pp. 34-35, ¶ 367.
[15] Ronald S. Lauder v. Czech Republic, UNCITRAL Arbitration, Final award, 3 September 2001, p. 34, ¶ 163.
[16] Charanne BV v. Spain, SCC Case No. V 062/2012, Award, 21 January 2016, p. 92, ¶ 408 (unofficial English translation by Mena Chambers).
[17] Toto Construzioni v. Lebanon, ICSID Case No. ARB/07/12, Decision on Jurisdiction, 11 September 2009, pp. 60-61, ¶ 211.
[18] Maffezini v. Spain, ICSID Case No. ARB/97/7, Decision of the Tribunal on objections to jurisdiction, 25 January 2000, p. 24, ¶ 63.
