Paolo Vargiu

The recent award in Ahron G. Frenkel v. Republic of Croatia has already succeeded in dividing the very tribunal that rendered it - never an encouraging omen. It is unlikely to cease causing a stir in the near future, given its immediate impact on the claimant and its longer-term contribution to the perennial headaches induced by the doctrine of res judicata in investment arbitration . This post addresses four principal matters: the circumstances giving rise to the dispute in Frenkel v. Croatia; the competing analyses of res judicata advanced by the majority of the tribunal and the dissenting opinion; the importance of finality vis-á-vis a rigorous interpretation of the applicable law; and what the Frenkel award adds to the debate on the wider question of whether investment arbitration aspires to systemic coherence or rests on formal distinctions alone. Factual Background and Procedural History The facts of the case are fairly commonplace. Ahron G. Frenkel, an Israeli national, initiat...

There is a moment in The Merchant of Venice that sticks: Portia, in disguise, takes the floor, and with nothing more than a few inches of parchment and an arsenal of words, unseats Shylock’s claim to his pound of flesh. She has no badge, no robes, no divine mandate, but the court listens nonetheless. One could argue that Portia wins not by law, but by the force of her authority stitched together from reason, rhetoric, and something harder to pin down: moral suasion. It’s a scene that should give anyone working in arbitration a slight, uncomfortable itch. Strip away the costume drama and you’re left with the same awkward question: what gives an arbitrator the right to decide? In court, judges can fall back on the full, smug weight of the state. Arbitrators, on the other hand, operate on a thinner diet. Their legitimacy rests on consent. Consent is lovely, until one realises how easily it can be faked, coerced, or wrung out under duress. We love to talk about freedom of contract, but we ...