When can multi-party arbitrations arise from a single contract?
Three (or more) parties conclude a contract that contains an arbitration clause (joint
venture/shareholders agreement/limited liability partnership agreement). A dispute arises
involving the same facts and issues between all three parties and arbitration is commenced
with all three parties from the outset.
Three (or more) parties conclude a contract that contains an arbitration clause. A dispute
arises between only two of them and arbitration is commenced. However, one of the two
parties subsequently wishes to join the remaining party to the proceedings (joinder).
Alternatively, the remaining party itself wishes to join in the arbitration (intervention).
Two parties conclude a contract that contains an arbitration clause. A dispute arises and
arbitration is commenced. One of the parties wishes to join the other’s parent company, even
though it did not sign the contract. Alternatively, it may directly go after the parent company
arguing that the parent, not the subsidiary, is the actual party to the contract.
Business people rarely think about multi-party arbitration, but instead it is the transaction that
they are trying to create and the system of dispute resolution used to respect and enforce their
agreement1. Yet awareness of multi-party arbitrations in arbitration clauses or previous
negotiations seems to be increasing2.
What procedural issues arise from multi-party arbitrations?
If two or more parties participate, this can create due process issues especially regarding
arbitrator appointments and evidence submission. This is due to the bipolar framework
involving one claimant and one respondent.
Arbitration is a consensual dispute resolution mechanism. As arbitrators’ jurisdiction derives
from the parties’ arbitration agreement, they should only bind signatories. Thus, attempting to
include non-signatories normally face the difficulty of establishing that they intended to be
bound by the arbitration agreement. Rubins considers consent as establishing ‘meeting of the
minds’, but acknowledges that contractual consent is not purely subjective, nor can it be
described as fixed and formulaic3.
There may be tribunal composition issues where there is one claimant, but two respondents,
as normally each party nominates a single arbitrator to make two arbitrators. In Dutco4, two
respondents challenged the award at ICC Court based on the fact that each of them could not
nominate the arbitrator, which violated party equality public policy principles. Institutional
rules now require all parties to jointly nominate arbitrators if they agree. If not, the institution
will appoint all three arbitrators on their behalf, with no deference towards the parties’
nominations. Whereas AAA-ICDR Rules impose an additional element in which ‘If there are
more than two parties to the arbitration, the Administrator may appoint all arbitrators unless
1
Matthew Secomb, ‘Chapter 31- Multi-party, Multi-contract Rules and the Arbitrators' Role in Finding
Consent’, in Patricia Shaughnessy and Sherlin Tung (eds), The Powers and Duties of an Arbitrator- Liber
Amicorum Pierre A. Karrer, page 328.
2
Queen Mary Interview with Matthew Secomb (Partner, White & Case LLP)
3
Noah Rubins, ‘Group of Companies Doctrine and the New York Convention’, in Enforcement of Arbitration
Agreements and International Arbitral Awards: The NewYork Convention in Practice,
ed. E. Gaillard & D. di Pietro (London: Cameron May, 2008), 450.
4
Siemens AG and BKMI Industries Lagu GmbH v Dutco Construction Co. Ltd [1994] ADRLJ 36
Three (or more) parties conclude a contract that contains an arbitration clause (joint
venture/shareholders agreement/limited liability partnership agreement). A dispute arises
involving the same facts and issues between all three parties and arbitration is commenced
with all three parties from the outset.
Three (or more) parties conclude a contract that contains an arbitration clause. A dispute
arises between only two of them and arbitration is commenced. However, one of the two
parties subsequently wishes to join the remaining party to the proceedings (joinder).
Alternatively, the remaining party itself wishes to join in the arbitration (intervention).
Two parties conclude a contract that contains an arbitration clause. A dispute arises and
arbitration is commenced. One of the parties wishes to join the other’s parent company, even
though it did not sign the contract. Alternatively, it may directly go after the parent company
arguing that the parent, not the subsidiary, is the actual party to the contract.
Business people rarely think about multi-party arbitration, but instead it is the transaction that
they are trying to create and the system of dispute resolution used to respect and enforce their
agreement1. Yet awareness of multi-party arbitrations in arbitration clauses or previous
negotiations seems to be increasing2.
What procedural issues arise from multi-party arbitrations?
If two or more parties participate, this can create due process issues especially regarding
arbitrator appointments and evidence submission. This is due to the bipolar framework
involving one claimant and one respondent.
Arbitration is a consensual dispute resolution mechanism. As arbitrators’ jurisdiction derives
from the parties’ arbitration agreement, they should only bind signatories. Thus, attempting to
include non-signatories normally face the difficulty of establishing that they intended to be
bound by the arbitration agreement. Rubins considers consent as establishing ‘meeting of the
minds’, but acknowledges that contractual consent is not purely subjective, nor can it be
described as fixed and formulaic3.
There may be tribunal composition issues where there is one claimant, but two respondents,
as normally each party nominates a single arbitrator to make two arbitrators. In Dutco4, two
respondents challenged the award at ICC Court based on the fact that each of them could not
nominate the arbitrator, which violated party equality public policy principles. Institutional
rules now require all parties to jointly nominate arbitrators if they agree. If not, the institution
will appoint all three arbitrators on their behalf, with no deference towards the parties’
nominations. Whereas AAA-ICDR Rules impose an additional element in which ‘If there are
more than two parties to the arbitration, the Administrator may appoint all arbitrators unless
1
Matthew Secomb, ‘Chapter 31- Multi-party, Multi-contract Rules and the Arbitrators' Role in Finding
Consent’, in Patricia Shaughnessy and Sherlin Tung (eds), The Powers and Duties of an Arbitrator- Liber
Amicorum Pierre A. Karrer, page 328.
2
Queen Mary Interview with Matthew Secomb (Partner, White & Case LLP)
3
Noah Rubins, ‘Group of Companies Doctrine and the New York Convention’, in Enforcement of Arbitration
Agreements and International Arbitral Awards: The NewYork Convention in Practice,
ed. E. Gaillard & D. di Pietro (London: Cameron May, 2008), 450.
4
Siemens AG and BKMI Industries Lagu GmbH v Dutco Construction Co. Ltd [1994] ADRLJ 36
