Iberdrola Energía, S.A. v. The Republic of Guatemala (II)
PCA · Investment (ICSID and treaty) · Switzerland · 24 Aug 2020
Why it matters
This case clarifies the res judicata effect of a negative jurisdictional award in investment arbitration, holding that a prior tribunal's decision that claims fall outside the treaty's subject-matter scope precludes relitigation of the same claims under a different procedural framework. It also confirms that a fork-in-the-road clause can bar subsequent arbitration if the investor previously submitted the same dispute to domestic courts.
Summary
Iberdrola Energía, a Spanish company, invested in Guatemala's electricity sector. After a tariff dispute, it initiated ICSID arbitration (Iberdrola I), but the tribunal declined jurisdiction ratione materiae, finding the claims concerned Guatemalan law, not treaty protections. Iberdrola then brought a second arbitration under UNCITRAL rules, raising similar claims. Guatemala objected on res judicata, fork-in-the-road, and other grounds. The Tribunal held that the prior award's jurisdictional finding had res judicata effect, as the same parties, cause of action, and subject matter were involved. It also found that Iberdrola had triggered the BIT's fork-in-the-road clause by previously litigating the dispute in Guatemalan courts. Consequently, the claims were inadmissible. The Tribunal also dismissed Guatemala's counterclaim for lack of jurisdiction. Costs were allocated against Iberdrola.
The detail
Parties: Iberdrola Energía, S.A. v. The Republic of Guatemala (II)
Case number: PCA Case No. 2017-41
Outcome: The Tribunal declined jurisdiction over Iberdrola's claims and the Respondent's counterclaim, ordering Iberdrola to bear the arbitration costs and pay part of Guatemala's legal fees.
Applicable law: Spain-Guatemala BIT (2002), UNCITRAL Rules 1976, Swiss law (seat), international law
Issues in play: Res judicata effect of a prior ICSID award declining jurisdiction; fork-in-the-road clause in the BIT; abuse of process.
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