Author: Sonal Gupta, IV Year of B.A.,LL.B(Prog.), from Symbiosis Law School, Hyderabad (Symbiosis International University, Pune)
Introduction
Parallel litigation is a scenario where parties file various suits in various courts or tribunals based on the same set of facts and claiming the same relief everywhere. Such parallel litigation may be either in the form of suits in various courts or suits in courts and referring the matter of arbitration at the same time. The courts and tribunals, before involving themselves into such parallel litigation suit must ensure that such suits filed are not in contravention to any law in force at the time and also not an abuse of the court or tribunal. It has to ensure that it is under the court’s or tribunal’s jurisdiction to try such a matter and only then go ahead with the proceedings.
Arbitration is a method of solving disputes without approaching the court and going through a tedious and time-consuming procedure of litigation. An arbitrator who is either appointed by the court or chosen by the parties or provided by the Centre is the authority who listens to the parties’ claims and investigates the matter to reach a settlement between the parties and gave them a decision which is known as an “award”. Such a procedure can be invoked when the parties ask the court to refer the matter to arbitration. This method of dispute resolution is most commonly used in the cases where disputes arise between corporate bodies or companies, and between consumers and suppliers of goods and services and also disputes of labor with regard to employment issues.
Parallel litigation and arbitration are linked closely. People usually file suits and also go for arbitration at the same time to get relief. But when such parallel litigations are commenced, it has to be ensured that the tribunals have jurisdiction to try the matter and also laws applicable in the matter must not be infringed.
The following article talks about parallel litigation and arbitration in detail and the two are interconnected.
Parallel Litigation
Parallel litigation is a situation where various courts are hearing the same claim parallelly. It is a process where simultaneous investigations or litigations of separate criminal, civil or administrative proceedings are initiated by different agencies, different branches of the government, or common public or private litigants arising out of a same set of facts. Parallel litigation traces its roots in United States and is a consequence of a system of “dual sovereignty” where both, the federal and the state courts have their personal jurisdiction over the parties to the suit.
This concept is foreign to India, as here, multiplicity of suits is not allowed. Same claim cannot be heard by two courts simultaneously. But parallel litigation concept can be applied when the matter is being referred to arbitration. A major exception to the rule of parallel litigation is that a second parallel in rem litigation will be enjoyed by the first court to obtain the jurisdiction, as it has already been pulled into the constructive possession of the object of the dispute. There are various types of parallel litigations such as- federal, provincial, judicial, tribunal, criminal, domestic, foreign and civil.
In India, the concept of parallel litigation is not applied in the courts.
Res Judicata, meaning a case or a suit involving a particular issue between two or more parties that is already decided by the court, is followed. This ensures that there is no multiplicity of proceedings. It essentially means that when there are suits arising from the same set of fact's and the suits claim the same reliefs from the courts in different places, it would lead to multiplicity of proceedings. The Indian courts do not allow a person to file multiple suits claiming for the same relief and having the same set of facts as this would increase the burden in Judiciary and also waste the precious time of the courts. In parallel litigations, a person is allowed to file suits in as many places as he wants claiming for the same relief and the suits arise from the same set of facts.
This is not possible in a magnanimous country like India where there are so many courts and so many suits pending on the courts and such an application of the doctrine of parallel litigation would be time-consuming and would add burden on the judiciary of the country.
But this is in the case of approaching the courts for a remedy. Parallel litigation is possible when the parties of a dispute request for their matter to be referred to arbitration. Frequently, in commercial and investment arbitration, parallel litigations arise as parties file various suits on the basis of same facts to multiple forums.
In case of investment arbitration cases, many investors of the same investment in a single corporate structure can file cases based on the same set of facts.
Such investors may be either direct or indirect and they are protected by the same investment. These various investors are also potential claimants when there arises a situation of a suit against the corporate structure. These investors being different entities being protected under the same investment, each of them has their right to claims and hence each of them may file a suit and seek arbitration under the various forums that are available to them. When there are multiple countries involved in a case, it is necessary to bring on parallel litigations to ensure that the challenges of applicability of different laws, the involvement of various countries, involvement of various causes of actions, and the assets of the companies being located at various places are all dealt with.
Sometimes, the parallel litigations are to be done necessarily to make sure that there is no ambiguity or any partiality in the decision given by one tribunal and to ensure that there is equity in the decision-making process.
Even though there are situations when multiple or parallel proceedings may be initiated, it causes problems, not only to the parties but also to the decision-making authorities. One of the main problems caused is that all the deciding authorities in all the jurisdictions need to do a full-fledged hearing of the case along with all evidences and testimonies to come to a decision. This also poses the problem where in one jurisdiction an evidence may be essential in one procedure may not be important in another. The changing procedures from one jurisdiction to another can cause problems while litigating. Further, such parallel proceedings also take a toll on the pockets. Filing for the same reliefs in different jurisdictions on the basis of the same set of facts at the same time will be very expensive and time consuming.
Another major problem arises when a party tries to enforce the judgment or award that he has received from one of the proceedings on the other party while there is another simultaneous proceeding based on the same set of facts and same relief is going on in some other place having jurisdiction of the case.
Simultaneous proceedings also gives rise to a major issue that needs to be addressed when the courts or tribunals are dealing with such cases. The courts and tribunals need to take closer look at lis alibi pendens to deal with this issue. The court has to look into the matter whether the proceedings based on the same cause of action or same set of facts and the case between same parties is a restraint of simultaneous proceedings (res judicata) or enforcement according to the rules of private international law of the jurisdictions concerned. Once this issue is dealt with, the validity of the simultaneous proceedings based on the same facts and the same relief claimed can be ascertained and then the proceedings can go on without being in contravention to any law of the land in force at the time of the proceedings.