Res Judicata in International Arbitration

The principle of res judicata is recognised in every domestic legal system and is considered to be a general principle of international law. The principle has been accepted since ancient times, including by ancient Greek custom, Roman jurists and Hindi texts.3 The principle ensures that a judgment of a court that is no longer subject to appeal or an arbitration award is binding and final.

Res judicata is generally understood to have both a preclusive (or negative) effect that bars the re-litigation of matters finally decided in prior proceedings, and a conclusive (or positive) effect, which allows a party to invoke the final and binding character of the decision in further proceedings.

Res judicata therefore can be considered to have both procedural and substantive aspects. It is procedural because it precludes the adjudicator in new proceedings from deciding a matter that was already determined in a prior proceeding. It is often also qualified as substantive because a decision that is res judicata determines once and for all the parties’ substantive rights and obligations.

Res judicata therefore protects a party against the risk of repeated litigation and potential harassment, creates finality and legal certainty, and ensures the efficient function of the judicial system, conserving judicial resources. In the words of the US Supreme Court, ‘[t]he idea is straightforward: Once a court has decided an issue, it is forever settled between the parties, thereby protecting against the expense and vexation attending multiple lawsuits, conserving judicial resources, and fostering reliance on judicial action by minimizing the possibility of inconsistent verdicts. In short, a losing litigant deserves no rematch after a defeat fairly suffered.’4 While the principle of res judicata exists in all legal systems, the way the principle operates varies significantly.

Different legal systems have different names and terminology to describe the various effects of res judicata. Moreover, the scope of res judicata differs between legal systems. On the one end of the spectrum are jurisdictions that adopt a very narrow and technical approach to res judicata, and on the other, jurisdictions that take a broader and flexible approach based, among others, on concepts of good faith or abuse of process. In some jurisdictions, the principle of res judicata is exclusively based on case law and in others, it is grounded in the constitution or in procedural law but has been further developed by courts.

The difference between the scope of res judicata is most pronounced between civil law and common law jurisdictions.

Res judicata in Singapore:

In Singapore, res judicata can refer to any one of three legal concepts:

(i) cause of action estoppel;

(ii) issue estoppel; and

(iii) the ‘extended doctrine’ of res judicata, which refers to the procedural issue of abuse of process. Both cause of action estoppel and issue estoppel require three elements to be met, which were elucidated by the Singapore High Court in Zhang Run Zi v Koh Kim Seng and another:[2015] SGHC 175.

(1) There must be a final and conclusive judgment on the merits.

2. The judgment with estoppel effects cannot be an interim judgment and subject to change, as explained by the Singapore High Court (Family Division) in VIK v VIL and others.[2020] SGHCF 12

3. It must fully dispose of the issues before it. The judgment must be of a court of competent jurisdiction. There must be ‘identity of the parties’.

As explained by the Singapore High Court in Goh Nellie v Goh Lian Teck and others,32 this requirement is met if the principal Cause of action estoppel requires an additional fourth element to be met, as held by the Singapore High Court in Zhang Run Zi v Koh Kim Seng and another:[2015] SGHC 175. that the identity of the causes of action must be the same in substance. Issue estoppel requires a different fourth element to be met:

the identity of issues or subject matter, as held by the Singapore Court of Appeal in Lee Tat Development Pte Ltd v Management Corporation of Strata Title Plan No 301.34 This requirement of identity of issues or subject-matter, in turn, contains three sub-elements, as explained in Turf Club Auto Emporium Pte Ltd and others v Yeo Boong Hua and others and another appeal and other matters:[2017] 2 SLR 12.

(i) the prior decision must ‘traverse the same ground as the subsequent proceedings,’ and the facts and circumstances giving rise to the earlier decision ‘must not have changed or should be incapable of change;’

(ii) the issue determined must have been ‘fundamental and not merely collateral’ to the ruling;

(iii) the issue must in fact have been raised and argued.

Choice of law applicable to res judicata effects

i. Application of the law of the seat (lex arbitri)

ii. Application of the substantive law

iii. No clear choice of law/reference to general principles

iv. Application of a hybrid approach

v. Application of an autonomous approach to res judicata

Application of res judicata standards by arbitration tribunals

Given the variety of approaches taken by arbitration tribunals, it is unsurprising that the test and scope of res judicata applied by arbitration tribunals in available awards has also varied from case to case with respect to the test applied and the scope of res judicata, including the availability of doctrines of claim preclusion, issue preclusion and abuse of process.

i. Preclusion Regarding Claims Raised in the Previous Proceedings Because many domestic laws use a version of the triple identity test to determine res judicata effects, arbitral tribunals applying domestic law have also frequently applied a triple identity test.

However, because domestic laws apply different tests to res judicata, including different variations on the triple identity test, tribunals applying domestic law have likewise varied in that approach. Tribunals applying a hybrid or autonomous approach have also applied variations on this approach.

For example, as discussed in Section II.2.b.ix above, Romania is among the civil law jurisdictions which permit wider effects of res judicata. Tribunals of the Court of International Commercial Arbitration attached to the Chamber of Commerce and Industry of Romania, which apply Romanian law, have applied positive res judicata effects to prior awards without strict application of the triple identity test, including one award that held that identity of parties and a ‘close connection’ between the causes of action was sufficient to grant a prior award conclusive effects in the arbitration.

Further, some tribunals, despite holding that a particular domestic law applies to res judicata, nevertheless have applied a test which is either stricter or more permissive than that of the applicable law, suggesting that their approach is at least to a certain extent independent of the applicable domestic law.

For example, in ICC Case 6293 of 1990, the tribunal held that New York law applied to res judicata, but then applied a version of the triple identity test that appeared stricter than the comparatively broader test under New York law. The tribunal specified that, regardless of the requirements under New York law, res judicata applies where a claim is essentially identical to a claim previously decided between the same parties.

Tribunals that have adopted a hybrid approach have also applied hybrid versions of the triple identity test. In Sanum Investments v St Group (2023/2024), discussed above, the tribunal applied principles it found relevant to res judicata based on general Macau arbitration law, the ILA Recommendations, and the specific circumstances of the case, namely:

(i) the triple identity test;

(ii) that the first award is final and binding in the country of origin; and

(iii) that the first award is capable of recognition at the seat of the second arbitration.

In Abu Dhabi Investment Authority v Citigroup (2015), where, as discussed above, the tribunal applied a hybrid approach, the tribunal found that res judicata required

(i) a final judgment on the merits;

(ii) the parties are the same or in privity; and

(iii) the current claims were brought before the first tribunal, or the current claims could or should have been brought before the first tribunal.

• courtesy - IBA Arbitration Committee Task Force on Res Judicata in International Arbitration