National Courts and International Arbitration: Exhaustion of Remedies and Res Judicata Under NAFTA Chapter Eleven
28 Pages Posted: 8 Jan 2016
Date Written: 2000
In Part I of this article, I review the customary international law relating to the exhaustion of local remedies and the res judicata effect of domestic decisions on international tribunals. Customary international law requires the exhaustion of local remedies before a foreign investor's claim may be brought before an international tribunal (a requirement frequently referred to as the “local remedies rule”), but holds that a domestic court's decision is not res judicata for a subsequent international tribunal. It gives the foreign investor two “bites at the apple” but requires it to take the domestic bite first. Against this background, I turn in Part II to look at Chapter Eleven of NAFTA and at Article 1121 in particular. I argue that Article 1121, which (with certain exceptions) requires a foreign investor to waive its “right to initiate or continue [proceedings] before any administrative tribunal or court under the law of any Party” as a precondition to bringing a Chapter Eleven claim, is best read as waiving the local remedies rule as a procedural requirement. With respect to the effect of domestic court decisions, however, I argue that Chapter Eleven tribunals should adhere to the traditional rule that such decisions are not res judicata, though for reasons quite different from those that support the customary international law rule.
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