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THE SCOPE OF AN ARBITRATION AGREEMENT IS A THIRD PARTY BOUND BY IT Executive Summary The arbitration procedure has become the principal method by which controversies and disputes may be settled outside of the formal litigation procedure filed in the courts…
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Download file to see previous pages... The arbitration agreement or clause is usually attached to a principal contract defining the relationship between the parties. When claims arise on the basis of the main contract, then arbitration is resorted to. There are a system of rights and obligations that come into play that occasionally involve third parties non-signatory to the contract (and consequently the arbitration clause) either as beneficiary or in some other capacity that is intricately connected to the transaction subject of arbitration. A dilemma is created when the need arises to include such third party under the coverage of the arbitration procedure in order to provide complete relief to the signatory parties, as this goes against the consensual nature of the arbitration procedure and the legal principle that only signatories to a contract may be bound by it. The problem is already difficult to address in the context of national law. Where the dispute involves a transaction between parties in different countries, however, then the dilemma becomes more complicated. Arbitration being an informal process, it relies much on broad considerations of case law, customs and traditions, and of course the original intention of the parties which, of itself, may also be interpreted from the viewpoint of tradition. In the case of international commercial disputes, where the only practical recourse is through arbitration, the matter of which laws should govern becomes itself a complication to the adjudication of the original dispute. The intricacies of international public law and conflicts in international private law between the countries confounds the use of customs and traditions and the interpretation of the parties’ original intention; this makes third party inclusion more difficult to determine, and an examination of existing case law bears witness to this. Given different situs of the arbitration proceedings, sometimes conflicting decisions are issued by different arbitration institutions.. This research is essentially a cursory survey of the provisions, doctrines and case law on the matter of the inclusion in arbitration proceedings of third parties who are non-signatories to the arbitration agreement. It aims to articulate the issues that come into play in the matter of international arbitration, when the inclusion or intervention of third parties becomes a necessary consideration. Table of Contents Title Page 1 Executive Summary 2 Table of Contents 4 Chapter One: INTRODUCTION 6 Chapter Two: SCOPE OF ARBITRATION AGREEMENT 9 2.1 Definition of Arbitration Agreement 10 2.2 Parties to an Arbitration Agreement 14 2.2.1 Capacity of the Parties 15 2.2.2 Third Party 16 2.3 Validity of an Arbitration Agreement 17 2.3.1 Writing 17 2.3.2 Defined Legal Relationship 18 2.3.3 Capable of Settlement by Arbitration 19 2.4 Separability 21 Chapter Three: THIRD PARTY AND ARBITRATION AGREEMENT 25 3.1 The Problem 25 3.2 Is It Possible to Joint a Non-Formal Party to the Agreement of Arbitration 26 3.2.1 Group of Companies Doctrine 27 3.2.2 The Theory of Estoppel 32 3.2.3 The Theory of Alter Ego 40 3.3 Distinction Between Non-Signatory Issue and the Joinder and Consolidation Issues 42 3.4 Is it the Same Terms for Extending an Arbitration Clause to Non-Signatory Companies and States 46 Chapter Four: MULTI ...Download file to see next pagesRead More
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