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...

Remember the Merchant of Venice? At one point 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 know it’s o...

Should the law follow the practice, or should the practice abide to the law? Although the answer to this provocative question may seem obvious (what is the value of a practice that does not comply with the law after all?), the question of the impartiality of the arbitrators and its treatment in domestic legislation requires further reflection. In a previous post I wrote about how, sometimes, the analysis of arbitral proceedings by judges, accustomed to dealing with rather different subjects, does not reflect the actual practice of a country or a professional sector, but rather its textbook version – as such, purified from its local peculiarities and sterilized from any cultural influences. As we have learned from our interviews, there are countries – especially in Northern Europe – in which the concepts of independence and impartiality of the arbitrators are to be considered in its absolute sense – that is, the link between an arbitrator and the party that appointed them consists mere...

In a blog post of a few months ago , I questioned the international character of international commercial arbitration in light of the distinctive features of arbitration that emerged, at the national level, from our interviews. Indeed, the term "international commercial arbitration", in legal jargon, indicates a form of arbitration described in the most used teaching handbooks. Such form of arbitration, however, is characterized not only by the international character of the dispute, but also by a number of procedural aspects, principles and interpretative practices that are, in fact, specific of a minority of arbitration proceedings heard by a relatively small and exclusive group of practitioners, and mostly run in the main commercial arbitration hubs - especially Paris, London, Stockholm, Milan, Geneva, and New York. Together with this minority of high-profile cases, the realm of arbitration is widely populated by a large majority of international and domestic proceedings i...

The assessment of international commercial arbitration on the basis of the various practitioners’ communities is a fascinating exercise. What is studied in universities is soon revealed to be a rather peculiar version of international commercial arbitration – one that, for the most part, only exists in textbooks, and involves a relatively small circle of practitioners and a few high-profile cases. International commercial arbitration, however, is a large and lively universe, the diversity of which raises the question on whether there is such thing as “international” commercial arbitration, or whether there are some common principles informing what is in fact a commercial dispute settlement mechanism declined differently in the various countries that offer it in some form. “International commercial arbitration” is a term that technically defines an arbitral dispute between parties of different nationalities based on a contract with a transnational element. Such transnationality is a fer...

Among the various requirements to sit in an arbitral panel, impartiality is certainly one of the quintessential. Students of international commercial arbitration are often told in their first lecture that arbitrators must be and remain independent and impartial, and most arbitration rules include the requirement of impartiality of arbitrators in some form, whether explicit or implicitly (see e.g. UNCITRAL Rules 2010, Art. 12; ICC Rules 2012, Art. 14(1); ICDR Rules, Art. 8(1); HKIAC Rules, Art. 11(4); LCIA Rules, Art. 10(1) and (3); CIETAC Rules 2012, Art. 29(2); SIAC Rules 2010, Art. 11(1)). The said rules, however, seldom provide for any proper indication of what the parties should expect from the arbitrators, especially those they appointed, in terms of impartiality. According to Redfern and Hunter (p. 254) 'the concept of "impartiality" is considered to be connected with actual 4.78 or apparent bias of an arbitrator - either in favour of one of the parties, or in relat...