Rule 41.5 of the ICSID Arbitration Rules allows a respondent to raise a preliminary objection to claims that are "manifestly without legal merit". If the objection is accepted by the tribunal, it will make an award dismissing the claims (Rule 41.6).

Previous decisions on the scope of this provision have clarified that:

(See Trans-global Petroleum Inc v Jordan (ICSID Case No ARB/07/25), discussed in Legal update, Claims "manifestly without legal merit": ICSID tribunal interprets rule 41(5) and Brandes Investment Partners, LP v Bolivarian Republic of Venezuela (ICSID Case No ARB/08/3), discussed in Legal update, Tribunal can consider jurisdiction under ICSID Arbitration Rule 41(5) .)

Article 53 of the ICSID Convention provides that awards are binding on parties and are not subject to any appeal or other remedy "except those provided for in the Convention". Article 51 provides for parties to apply to the tribunal for revision of an award "on the ground of discovering some fact of such a nature as decisively to affect the award". For general discussion of these provisions, see Practice note, ICSID arbitration: a step-by-step guide.

Where a right, question or fact has been "distinctly put in issue and distinctly determined" by a competent court or tribunal, then the doctrine of collateral estoppel precludes the parties or their privies from disputing it in subsequent proceedings (Amco Asia Corporation v Republic of Indonesia (ICSID Case No ARB/81/1)).

The dispute between the parties arose out of a petroleum exploration agreement concluded by one of the claimants (RSM) and Grenada. The other claimants in these proceedings were the sole shareholders and controllers of RSM. RSM alleged that, in breach of the agreement, Grenada had refused to issue an exploration licence. This dispute was referred to ICSID arbitration (the prior arbitration) and the claims were dismissed, the tribunal holding that RSM's request for a licence had not been made in accordance with the agreement.

RSM and its shareholders commenced further ICSID arbitral proceedings alleging various breaches of the Grenada-US BIT. Grenada objected pursuant to Rule 41.5, arguing that all the claims were predicated on the alleged breaches of the agreement that had already been dismissed by the tribunal in the prior arbitration. In the circumstances, the issues between the parties had already been fully determined and the claims were manifestly without legal merit for the purposes of Rule 41.5.

In response, the claimants argued that the prior arbitration had been concerned with contract, not treaty, claims; furthermore, the individual shareholders had not been party to the prior arbitration. The claimants further advanced allegations of corruption which, they said, had not been ruled upon in the prior arbitration.

The tribunal made an award dismissing the claims, holding that the essential predicate of each of the BIT claims were issues that the tribunal in the prior arbitration had already ruled on and which could not now be re-opened.

The tribunal adopted the basic approach set out in Trans-global and Brandes. It added that:

In this case, the fact that the prior arbitration had been concerned with contractual, rather than treaty, claims did not prevent a collateral estoppel from arising. The findings and decisions of the tribunal in the prior arbitration on the various factual and legal issues were binding on the parties.

Furthermore, the RSM shareholders were bound by those findings as privies of RSM, even though they had not personally been party to the prior arbitration. In this connection the tribunal noted in particular that the shareholders owned 100% of, and had sole control of, RSM. In these proceedings, the shareholders were claiming losses suffered "through RSM". In the circumstances it was fair that they should be bound by the findings in the prior arbitration.

The tribunal further held that to permit the findings of the previous tribunal to be reopened would violate Article 53 of the ICSID Convention. The system of review provided for in the ICSID Convention is exhaustive: awards cannot be re-opened by other tribunals. It would be an abuse of process and an improper circumvention of the ICSID process to allow contract claims, dressed up as treaty claims, to be re-arbitrated.

Finally, insofar as the corruption allegations were new, the claimants could and should have raised them earlier (for example, by way of an application for revision of the tribunal's findings in the prior arbitration).

This is the second case in which an application under Rule 41.5 has been successful, and it follows hot on the heels of Global Trading Resource Corp and Globex International Inc v Ukraine (ICSID Case No ARB/09/11) (discussed in Legal update, ICSID tribunal dismisses claims as manifestly without legal merit). The tribunal's basic approach to the rule was consistent with previous cases, although a further gloss was added to the way in which a tribunal should assess the scope of the matters in issue.

The tribunal adopted a robust approach to the question of whether the claimants in this case were bound by the doctrine of collateral estoppel. The fact that the prior arbitration was technically concerned with different causes of action (contractual rather than treaty-based), and the fact that the shareholders had not themselves been party to the prior arbitration, did not prevent an estoppel from arising. Furthermore, the case demonstrates that any allegations that might impugn or otherwise affect an ICSID award (such as, here, the corruption allegations) must be raised as soon as possible and in accordance with the prescribed ICSID procedures. Parties will not be permitted to raise such allegations before other tribunals with a view to re-opening issues that have already been ruled on.