SAA Papers
Jonas Pust* has written a research paper on “How to Join Third Parties to Arbitration Proceedings?” for Volume 5 of the Selected Papers on International Arbitration series. Here it is a brief summary of his paper:
The ever growing complexity of business relationships oftentimes leads to intertwined legal relationships between several parties. Conflicts arising in this context are no longer mere bipolar disputes between two parties, but involve a larger number of parties, some of which pursue different interests. Thus, disputes resolved by arbitration need procedural mechanisms to cope with the different interests while safeguarding the essential procedural rights of all parties.
Historically, procedural rules were developed for bipolar disputes. At the same time, multi-party arbitrations offer the advantage to be more efficient. Conducting just one arbitration is (at best) in the interest of the procedural economy and avoids inconsistent decisions. Nevertheless, the general principles of arbitration must be safeguarded, which institutional rules increasingly reflect. At the same time, an overload of only one arbitration can also lead to procedural difficulties, which as a result only allow for slow and complicated dispute resolutions.
Procedural rules must take note of the consensual nature of arbitration. However, if the parties have validly subjected themselves to an arbitration agreement, procedural decisions – such as joining third parties – might also be permissible against their will. Furthermore, the benefit of confidentiality should be taken into account as including third parties might disclose confidential information. The biggest concern, however, is the equal treatment of the parties; especially if during the constitution of the tribunal an imbalance of influence is apparent. While the French view taken in the well-known Dutco Case pertains to the rule of equal treatment as absolute, other jurisdictions allow for more flexible solutions.
Besides the statutory requirement, institutional rules have also adopted rules on how to join third parties to arbitration proceedings. The article focuses on a comparison of the approaches taken by the institutional rules of the ICC, SCAI and DIS. The solutions vary from the wide discretion for maximizing procedural efficiency to strictly consent-centred approaches. While having flexible rules enables customized solutions for individual cases, it also entails the risk of setting aside procedures as, for example, an improper constitution of the tribunal would impair the enforcement of the award. Therefore, institutions, arbitral tribunals and parties shall cautiously weigh the potential advantages of joining third parties to pending proceedings in order not to endanger the procedural efficiency or even the enforceability of the award.
*Dr. Jonas Pust studied law at the University of Münster, Germany, where he also received his doctorate with a thesis about Multi-Tiered Dispute Resolution Clauses. Before and during his legal clerkship he worked inter alia at the litigation departments of White & Case, Berlin, and Freshfields Bruckhaus Deringer, Hamburg. He currently works in the Arbitration and Litigation Department at the German law firm Heuking Kühn Lüer Wojtek, based in Hamburg.
Buy Volume 5 here.
