Arbitration Agreement Third Parties

Toulson LJ, in agreement with Tomlinson LJ, usefully summarized the effect of Section 8, paragraph 1 – it allows a third party to grant an enforceable material right to a third party, subject to a procedural condition on which the contractor may but does not owe it. On the other hand, Article 8, paragraph 2, allows the third party to grant the third party an enforceable procedural right that the third party may exercise but must not exercise (the law being unilateral). While the contract in question could easily have contained a provision allowing directors to insist that any request from a party related to the agreement should be decided through an arbitration procedure, „it simply does not say so,” so section 8, paragraph 2, is not applicable. As early as 1988, the Paris Court of Appeal recognized that a third party could be bound by a compromise clause if he was involved in the performance of the contract and that it could be assumed that he was aware of the existence and scope of the compromise clause (Paris Court of Appeal, November 30, 1988, Sté Korsnas Marma v. Sté Duté-Auzias). This solution was recently confirmed (Paris Court of Appeal, December 18, 2018, New Europe Corporate Advisory Ltd. et al. v. Innova 5/LP).

In Northwestpharmacy.com Inc/Yates, the Supreme Court of British Columbia has ruled that non-signatories may be parties to arbitration agreements. (2) The Court of Appeal`s decision points to a clear difference between the operation of s8 (1) and s8 (2) of the 1999 Act and also shows a reluctance to find a third party bound by an arbitration agreement for all claims against the third party when the third party attempts to invoke a form of limitation or exclusion granted to it in the contract containing the arbitration agreement. In order for such a claim to be subject to arbitration proceedings against a third party, a very clear contractual clause would have to be added to that effect. Contract officials must take this into account when considering settling disputes involving third parties in order to avoid fragmentation of disputes between court proceedings and arbitration proceedings resulting from the same underlying contract or litigation. These reasons would also be welcome for international arbitrations. However, in international arbitration, the availability and scope of these mechanisms are much more limited, not least because of the different nature of the powers underlying the state and arbitrations. As the complexity of international business transactions, often involving multiple contracts, parties, jurisdictions and third parties, has increased, international arbitration has been increasingly pressured by its users to develop increasingly appropriate mechanisms to respond to disputes arising from these transactions. The High Court held that the power of the Court of Justice under section 9 of the Act to give interim measures and powers to the arbitral tribunal under section 17 of the Act is identical with respect to the amendment of section 17 of the Act effective October 23, 2015, so that a third party, directly or indirectly affected by the interim measures granted by the Court of Arbitration, will also be able to appeal.

The legal principles established by the Court`s chamber bank in the Girish Mulchand Mehta case have been extended to this case. The Tribunal also noted that, in the case of Girish Mulchand Mehta and Durga Jaishankar Mehta vs. Mahesh S. Mehta and Harini Cooperative Housing Society Ltd., the Bombay High Court division had considered whether the appeal under Section 37 of the Act could have been brought by the third party under the section 9 order of the Act.

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