The extension of the arbitration agreement to non-signatory parties

Article 19 April 2022 Experience

Multiparty disputes can arise due to the complex nature of commercial transactions where more than two parties are involved.

As such, oftentimes, the parties may choose to resolve the various disputes in a single arbitration procedure, in an attempt to save time and money.

However, this also allows parties already involved the strategic opportunity to join a third party to an existing arbitration.

Resultingly, international arbitrators are made to consider whether an arbitration agreement entered into by two parties may be extended to other non-signatory individuals or companies as additional claimants or respondents.

This article, authored by Camilla Gambarini and Andrea Ricci, provides an overview of the extension of the arbitration agreement to non-signatory parties in light of the rules of three major international arbitral institutions (the ICC, the CAM and the LCIA) as well as comparing the approach under English and Italian law.

Analysing the English Arbitration Act 1996 and the Contracts (Rights of Third Parties) Act 1999 – alongside relevant case law – it further considers the approach under Italian law developed under the civil code, the code of civil procedure and relevant cases of the Italian Court of Cassation.

Finally, the article concludes by providing information on how very clear arbitral clauses can be drafted, in order to clarify how any future disputes may be handled. It offers practical tips on how hurdles deriving from the extension of the arbitration clause can be dealt with and how risks can be anticipated during the drafting of arbitration agreements.

This article was first published in “Judicium” review by Pacini Editor. To access the full article, please contact the authors.