International Commercial Arbitration

International Commercial Arbitration

Third Edition

By
Gary B. Born

Volume I: International Arbitration Agreements

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Chapter 10
Parties to International Arbitration Agreements1

An issue which arises recurrently in connection with the recognition and enforcement of
international arbitration agreements is the identity of the parties to such agreements:1 what

1 For commentary, see Abolafia, Implied Choice of Law Applicable to the Arbitration Agreement: The Effect on
Non-Signatories in International Arbitration, 37 ASA Bull. 64 (2019); J.-M. Ahrens, Die Subjektive Reichweite Inter-
nationaler Schiedsvereinbarungen und Ihre Erstreckung in der Unternehmensgruppe (2001); Alford, Binding Sover-
eign Non-Signatories, 19(3) Mealey’s Int’l Arb. Rep. 27 (2004); A. Badia & J. Lew, Piercing the Veil of State
Enterprises in International Arbitration (2014); Bagot & Henderson, Not Party, Not Bound? Not Necessarily: Bind-
ing Third Parties to Maritime Arbitration, 26 Tul. Mar. L.J. 413 (2002); Bharucha, Jaisingh & Gupta, The Extension
of Arbitration Agreements to Non-Signatories: A Global Perspective, 5(1) Indian J. Arb. L. 35 (2016); Bravo Abolafia,
Implied Choice of the Law Applicable to the Arbitration Agreement: The Effect on Non-Signatories in International
Arbitration, 37 ASA Bull. 64 (2019); Brekoulakis, Rethinking Consent in International Commercial Arbitration: A
General Theory for Non-Signatories, 8 J. Int’l Disp. Sett. 610 (2017); Brekoulakis, Parties in International Arbitra-
tion: Consent v. Commercial Reality, in S. Brekoulakis et al. (eds.), The Evolution and Future of International Arbitra-
tion 119 (2016); Brekoulakis, The Relevance of the Interests of Third Parties in Arbitration: Taking A Closer Look at
the Elephant in the Room, 113 Penn. St. L. Rev. 1165 (2009); S. Brekoulakis, Third Parties in International Commer-
cial Arbitration (2010); Busse, Privity to An Arbitration Agreement, 2005 Int’l Arb. L. Rev. 95; Byrnes & Pollman,
Arbitration, Consent and Contractual Theory: The Implications of EEOC v. Waffle House, 8 Harv. Neg. L. Rev. 289
(2003); Caivano, Arbitraje y Grupos Sociedades: Extensión de los Efectos de un Acuerdo Arbitral a Quien no ha Sido
Signatario, 1 Lima Arb. Rev. 121 (2006); Courtney, Binding Non-Signatories to International Arbitration Agree-
ments: Raising Fundamental Concerns in the United States and Abroad, 8 Rich. J. Global L. & Bus. 581 (2009);
Darwazeh & Zeman, Joint Nominations in Multiparty Arbitration: The Exercise of the ICC Court’s Discretionary
Power to Appoint the Entire Arbitral Tribunal Post-Dutco, 23(1) ICC Bull. 29 (2013); de Boisséson & Duprey,
L’Arbitrabilité Subjective en Matière de Droit des Sociétés, 2004 Paris J. Int’l Arb. 121; Delvolvé, Final Report on
Multi-Party Arbitrations of the ICC Commission on International Arbitration, 6(1) ICC Ct. Bull. 26 (1995); Del-
volvé, Multipartism: The Dutco Decision of the French Cour de Cassation, 9 Arb. Int’l 197 (1993); Derains, L’Exten-
sion de la Clause d’Arbitrage aux Non-Signataires: La Doctrine des Groupes de Sociétés 241 (1994); Dileo, The
Enforceability of Arbitration Agreements by and Against Nonsignatories, 2 J. Am. Arb. 31 (2003); Dunin-Wasowicz,
Collective Redress in International Arbitration: An American Idea, A European Concept?, 22 Am. Rev. Int’l Arb. 285
(2011); Gaffney, The Group of Companies Doctrine and the Law Applicable to the Arbitration, 19(6) Mealey’s Int’l
Arb. Rep. 47 (2004); Girsberger, The Law Applicable to the Assignment of Claims Subject to An Arbitration Agree-
ment, in F. Ferrari & S. Kröll (eds.), Conflict of Laws in International Arbitration 379 (2011); Girsberger & Haus-
maninger, Assignment of Rights and Agreement to Arbitrate, 8 Arb. Int’l 121 (1992); Gordillo, Dealing with
Non-Existing Claimants: Challenges and Solutions, in C. Gonzalez-Bueno (ed.), 40 Under 40 International Arbitra-
tion 199 (2018); Habegger, Arbitration and Groups of Companies, 3 Euro. Bus. Org. L. Rev. 516 (2002); Habegger,
Note – Federal Tribunal (1st Civil Court), 16 October 2003 (4P.115/2003): Extension of Arbitration Agreements to
Non-Signatories and Requirements of Form, 22 ASA Bull. 398 (2004); Hanotiau, Arbitration and Bank Guarantees:
An Illustration of the Issue of Consent to Arbitration in Multicontract-Multiparty Disputes, 16(2) J. Int’l Arb. 15
(1999); B. Hanotiau, Complex Arbitrations ¶¶1-213 (2005); Hanotiau, Consent to Arbitration: Do We Share A
Common Vision?, 27 Arb. Int’l 4 (2011); Hanotiau, Multiple Parties and Multiple Contracts in International Arbitra-
tion, in PCA, Multiple Party Actions in International Arbitration 35 (2009); Hanotiau, Non-Signatories, Groups of
Companies and Groups of Contracts in Selected Asian Countries: A Case Law Analysis, 32(6) J. Int’l Arb. 571 (2015);
Hanotiau, Non-Signatories in International Arbitration: Lessons from Thirty Years of Case Law, in A. van den Berg
(ed.), International Arbitration 2006: Back to Basics? 341 (2006); Hanotiau, Problems Raised by Complex Arbitra-
tions Involving Multiple Contracts-Parties-Issues: An Analysis, 18 J. Int’l Arb. 253 (2001); Hosking, Non-Signatories
and International Arbitration in the United States: The Quest for Consent, 20 Arb. Int’l 289 (2004); Hosking, The
Third Party Non-Signatory’s Ability to Compel International Commercial Arbitration: Doing Justice Without Destroy-
ing Consent, 4 Pepp. Disp. Resol. L.J. 469 (2004); ICC, Complex Arbitrations: Perspectives on Their Procedural
 Parties to International Arbitration Agreements

Implications (2003); ICC, Guide on Multiparty Arbitration (1982); ICC, Multi-Party Arbitration: Views from Inter-
national Arbitration Specialists (1991); Jagusch & Sinclair, The Impact of Third Parties on International Arbitration:
Issues of Assignment, in L. Mistelis & J. Lew (eds.), Pervasive Problems in International Arbitration 291 (2006);
Jarvin, The Group of Companies Doctrine, in M. Blessing (ed.), The Arbitration Agreement: Its Multifold Critical
Aspects 181 (1994); Koch, Judicial Activism and the Limits of Institutional Arbitration in Multiparty Disputes, 28
ASA Bull. 380 (2010); Lamm & Aqua, Defining the Party: Who Is A Proper Party in An International Arbitration
Before the American Arbitration Association?, 34 Geo. Wash. Int’l L. Rev. 711 (2002); Landbrecht & Wehowsky,
Determining the Law Applicable to the Personal Scope of Arbitration Agreements and Its “Extension”, 35 ASA Bull.
837 (2017); Leadley & Williams, Peterson Farms: There Is No Group of Companies Doctrine in English Law, 2004
Int’l Arb. L. Rev. 111; Leboulanger, Multi-Contract Arbitration, 13(4) J. Int’l Arb. 43 (1996); Lévy & Stucki, Swit-
zerland: The Extension of the Scope of An Arbitration Clause to Non-Signatories, 2005 Int’l Arb. L. Rev. N-5; Lin,
Parties to Arbitration, in Y. Lin (ed.), Judicial Review of Arbitration: Law and Practice in China 121 (2018); Mourre,
L’Impact de la Réforme de la Clause Compromissoire sur les Litiges Relatifs aux Sociétés, 2004 Paris J. Int’l Arb. 125;
Mráz, Extension of An Arbitration Agreement to Non-Signatories: Some Reflections on Swiss Judicial Practice, 3 An-
nals FBL Belgrade L. Rev. 54 (2009); Nicklisch, Multi-Party Arbitration and Dispute Resolution in Major Industrial
Projects, 11(4) J. Int’l Arb. 57 (1994); Orellana-Ubidia, El Área Gris Entre la Relatividad de los Contratos y la In-
clusión de Terceros No Signatarios en el Arbitraje, 1(2) Universidad San Francisco de Quito L. Rev. 26 (2014); Park,
Non-Signatories and International Arbitration: An Arbitrator’s Dilemma, in PCA, Multiple Party Actions in Interna-
tional Arbitration 3 (2009); Pavić, “Non-Signatories” and the Long-Arm of Arbitral Jurisdiction, in P. Hay, L. Vekas
& N. Dimitrijevic (eds.), Resolving International Conflicts 213 (2009); PCA, Multiple Party Actions in International
Arbitration (2009); Pengelley, Pyramids and Pilgrimages: An Arbitration Agreement with A State-Created Entity Is
Not An Arbitration Agreement with A State, 13 Vindobona J. Int’l Comm. L. & Arb. 293 (2009); Pimm, Jurisdiction
over Non-Signatories to the Arbitration Agreement: Can Arbitrators Pierce the Corporate Veil?, 2003 Asian Disp. Rev.
5; Pinsolle, A French View on the Application of the Arbitration Agreement to Non-Signatories, in S. Brekoulakis et al.
(eds.), The Evolution and Future of International Arbitration 209 (2016); Pinsolle, Distinction Entre le Principe de
l’Estoppel et le Principe de Bonne Foi dans le Droit du Commerce International, 125 J.D.I. (Clunet) 905 (1998);
Poudret, Arbitrage Multipartite et Droit Suisse, 9 ASA Bull. 8 (1991); Poudret, L’Extension de la Clause d’Arbitrage:
Approches Française et Suisse, 122 J.D.I. (Clunet) 893 (1995); Poudret, Note – Tribunal Fédéral, 1re Cour Civile, 16
Octobre 2003, (4P.115/2003); Un Statut Privilégié pour l’Extension de l’Arbitrage aux Tiers?, 22 ASA Bull. 390
(2004); Rau, “Consent” to Arbitral Jurisdiction: Disputes with Non-Signatories, in PCA, Multiple Party Actions in
International Arbitration 69 (2009); Romero & Saffer, The Extension of the Arbitral Agreement to Non-Signatories
in Europe: A Uniform Approach, 5 Am. U. Bus. L. Rev. 371 (2015); Sandrock, Arbitration Agreements and Groups
of Companies, 27 Int’l Law. 941 (1993); Sandrock, Die Aufweichung Einer Formvorschrift und Anderes Mehr: Das
Schweizer Bundesgericht Erlässt ein Befremdliches Urteil, 2005 SchiedsVZ 1; Sandrock, Extending the Scope of Arbi-
tration Agreements to Non-Signatories, in M. Blessing (ed.), The Arbitration Agreement: Its Multifold Critical Aspects
165 (1994); Sandrock, “Intra” and “Extra-Entity” Agreements to Arbitrate and Their Extension to Non-Signatories
Under German Law, 19 J. Int’l Arb. 423 (2002); Sandrock, Groups of Companies and Arbitration, 2 Tijdschrift
voor Arbitrage 3 (2005); Savage & Leen, Family Ties: When Arbitration Agreements Bind Non-Signatory Affiliate
Companies, 2003 Asian Disp. Rev. 16; Schwartz, Multiparty Arbitration and the ICC: In the Wake of Dutco, 10(3)
J. Int’l Arb. 5 (1993); Sentner, Who Is Bound by Arbitration Agreements? Enforcement by and Against Non-Signato-
ries, 6 Bus. L. Int’l 55 (2005); Sesin-Tabare, Extension of the Arbitration Agreement to Non-Signatories: Landscape
of Legal Theories and Jurisdictional Approaches, 2017 ICC Disp. Resol. Bull. 17; Shell, Arbitration and Corporate
Governance, 67 N.C. L. Rev. 517 (1989); Sheppard, Third Party Non-Signatories in English Arbitration Law, in S.
Brekoulakis et al. (eds.), The Evolution and Future of International Arbitration 183 (2016); Silva-Romero & Ve-
larde-Saffer, The Extension of the Arbitral Agreement to Non-Signatories in Europe: A Uniform Approach?, 5 Am. U.
Bus. L. Rev. 317 (2016); Smit, When Is A Government Bound by A Contract, Including An Arbitration Clause, It Did
Not Sign?, 16 Am. Rev. Int’l Arb. 323 (2005); Smit, When Does An Arbitration Clause Extend to A Guarantee That
Does Not Contain It?, 2003:1 Stockholm Arb. Rep. 273; Spence, Crossing Troubled Waters: Joining Non-Signatories
in Maritime Arbitration: The Co-optation and Containment of Consent in United States and British Law, 23 Roger
Williams U. Rev. 54 (2018); Stauffer, L’Extension de la Portée de la Clause Arbitrale à des Non-Signataires, in M.
Blessing (ed.), The Arbitration Agreement: Its Multifold Critical Aspects 229 (1994); Stipanowich, Arbitration and
the Multiparty Dispute: The Search for Workable Solutions, 72 Iowa L. Rev. 473 (1987); Stoehr, A Question of Sov-
ereignty, Development, and Natural Resources: A New Standard for Binding Third Party Nonsignatory Governments to

1516
Gary B. Born §10.01

entities are bound by, and what entities may invoke, an international arbitration agreement?
This Chapter addresses these issues.
The Chapter first discusses the basic principle that international arbitration agreements
are, as consensual instruments, binding only on the parties to such agreements. Second, the
Chapter examines the various legal doctrines that have been used to give effect to arbitration
agreements as regards entities that did not execute such agreements (“non-signatories”), in-
cluding theories of agency, implied consent, alter ego status (or veil-piercing), “group of com-
panies,” estoppel, guarantor relations, third party beneficiary rights, succession, assignment,
assumption and miscellaneous other doctrinal bases. Third, the Chapter examines the issues
of formal validity that arise from application of non-signatory theories. Fourth, the Chapter
addresses the choice-of-law rules governing the foregoing issues. Fifth, the Chapter discusses
the allocation of competence, between national courts and arbitral tribunals, to decide dis-
putes regarding the identity of the parties to an international arbitration agreement. Finally,
the Chapter addresses the subjects of arbitration in corporate contexts and “class arbitrations.”

§10.01 INTRODUCTION
As discussed above, international commercial arbitration is fundamentally consensual in na-
ture.2 As a consequence, the effects of an arbitration agreement extend only to the agreement’s
parties, and not to others.3 Presumptively, and in most instances, the parties to an arbitration
agreement will be its formal signatories; again presumptively, it will only be those signatories
who have either rights or obligations under the arbitration agreement.
Nonetheless, as detailed below, there are a number of legal bases by which non-signatories
may be held to be parties to – and consequently both bound and benefited by – an arbitration
agreement. The extent to which non-signatories may be bound or benefited by an arbitra-
tion agreement is among the most delicate and complex issues in international commercial
arbitration.4

Arbitration, 66 Wash. & Lee L. Rev. 1409 (2009); Thomas, Nonsignatories in Arbitration: A Good-Faith Analysis,
14 Lewis & Clark L. Rev. 953 (2010); Townsend, Non-Signatories and Arbitration, 3 ADR Currents 19 (1998);
Uloth & Rial, Equitable Estoppel as A Basis for Compelling Nonsignatories to Arbitrate: A Bridge Too Far?, 21 Rev.
Litg. 493 (2002); Vidal, The Extension of Arbitration Agreements Within Groups of Companies: The Alter Ego Doc-
trine in Arbitral and Court Decisions, 16(2) ICC Ct. Bull. 63 (2005); Voser, Multi-Party Disputes and Joinder of
Third Parties, in A. van den Berg (ed.), 50 Years of the New York Convention 343 (2009); Voser, The Swiss Perspec-
tive on Parties in Arbitration: “Traditional Approach with A Twist Regarding Abuse of Rights” or “Consent Theory
Plus”, in S. Brekoulakis et al. (eds.), The Evolution and Future of International Arbitration 161 (2016); Voser &
Groselj, Switzerland: Extension of Arbitration Agreement to Non-Signatory Upheld Under New York Convention,
Mondaq (28 June 2019); Wahab, Extension of Arbitration Agreements to Third Parties, in F. Ferrari & S. Kröll
(eds.), Conflict of Laws in International Arbitration 137 (2011); Werner, Jurisdiction of Arbitrators in Case of Assign-
ment of An Arbitration Clause: On A Recent Decision by the Swiss Supreme Court, 8(2) J. Int’l Arb. 13 (1991); Wet-
ter, A Multiparty Arbitration Scheme for International Joint Ventures, 3 Arb. Int’l 2 (1987); Whitesell & Silva-Romero,
Multiparty and Multicontract Arbitration: Recent ICC Experience, in ICC, Complex Arbitrations: Perspectives on
Their Procedural Implications 7 (2003); Wilske, Shore & Ahrens, The “Group of Companies Doctrine”: Where Is It
Heading?, 17 Am. Rev. Int’l Arb. 73 (2006); Woolhouse, Group of Companies Doctrine and English Arbitration
Law, 20 Arb. Int’l 435 (2004); Yang, Who Is A Party? The Case of the Non-Signatory (Assignment), 2005 Asian
Disp. Rev. 43; Zuberbühler, Non-Signatories and the Consensus to Arbitrate, 26 ASA Bull. 18 (2008).
2 See §1.02; §2.02[C][1][b][i]; §9.01.
3 See §§10.01[A] et seq. That extends to both the positive legal effects (i.e., the requirement that a party arbi-
trates, rather than litigates, its disputes and that it participates in good faith in the arbitral process) and the negative
legal effects (i.e., the requirement that parties not litigate disputes which are subject to arbitration). See §8.01.
4 Dallah Real Estate & Tourism Holding Co. v. Ministry of Religious Affairs, Pakistan [2010] UKSC 46, ¶105

1517
§10.01[A] Parties to International Arbitration Agreements

[A] International Arbitration Agreements Are Binding on

“Parties” and Not Others
The principle that the rights and obligations of an arbitration agreement apply only to the
agreement’s parties is a straightforward application of the doctrine of privity of contract, rec-
ognized in both civil and common law jurisdictions.5 In some legal systems, the identity of the
parties to an arbitration agreement is referred to as a question of the “subjective” scope of the
arbitration agreement or jurisdiction “rationae personae.”6 In other legal regimes, the identity
of the parties to the arbitration agreement is characterized as a question of formation or exis-
tence of the agreement to arbitrate.7
Whatever terminology is employed, the principle that only the parties to an international
arbitration agreement are either bound or benefited by that agreement is fundamental to in-
ternational arbitration. That principle is uniformly reflected in international arbitration con-
ventions, national arbitration legislation, institutional arbitration rules, judicial decisions and
arbitral awards.
All leading international arbitration conventions adopt the non-controversial principle
that an agreement to arbitrate binds only the parties to such agreement. Article II(1) of the
New York Convention impliedly recognizes the subjective limits on the binding nature and
effects of arbitration agreements, providing that Contracting States “shall recognize an agree-
ment in writing under which the parties undertake to submit [their disputes] to arbitration.”8

(U.K. S.Ct.) (Lord Collins) (“One of the most controversial issues in international commercial arbitration is
the effect of arbitration agreements on non-signatories”).
5 See, e.g., Dunlop Pneumatic Tyre Co. Ltd v. Selfridge & Co. Ltd [1915] AC 847 (House of Lords); Judgment
of 11 May 1993, 1997 Rev. Arb. 599 (French Cour de Cassation Com.); 2002 Principles of European Contract
Law, Art. 2:101(1) (“A contract is concluded if: (a) the parties intend to be legally bound”) (emphasis added);
Restatement (Second) Contracts §304 (1981) (“A promise in a contract creates a duty in the promisor to any intend-
ed beneficiary to perform the promise, and the intended beneficiary may enforce the duty”) (emphasis added);
UNIDROIT, Principles of International Commercial Contracts Art. 1.3 (2016) (“A contract validly entered into
is binding upon the parties”) (emphasis added); Müller & Keilmann, Beteiligung am Schiedsverfahren Wider
Willen?, 2007 SchiedsVZ 113, 114.
6 See Judgment of 19 August 2008, DFT 4A_128/2008, ¶4.1.1 (Swiss Fed. Trib.) (“The question as to the
subjective bearing of an arbitration agreement – at issue is which parties are bound by the agreement and to
determine to what extent one or several third parties not mentioned there nonetheless fall within its scope
ratione personae – relates to the merits and accordingly falls within Art. 178(2) [of the SLPIL]”); Judgment of
16 October 2003, 22 ASA Bull. 364, 384 (Swiss Fed. Trib.) (2004); Chloro Controls India Pte Ltd v. Severn Trent
Water Purification Inc., (2013) 1 SCC 641, ¶103 (Indian S.Ct.) (“Once it is determined that a valid arbitration
agreement exists, it is a different step to establish which parties are bound by it. Third parties, who are not
explicitly mentioned in an arbitration agreement made in writing, may enter into its ratione personae scope.”).
See also Habegger, Note – Federal Tribunal (1st Civil Court), 16 October 2003 (4P.115/2003): Extension of Arbi-
tration Agreements to Non-Signatories and Requirements of Form, 22 ASA Bull. 398, 400 (2004); Lévy & Stucki,
Switzerland: The Extension of the Scope of An Arbitration Clause to Non-Signatories, 2005 Int’l Arb. L. Rev. N-5;
P. Schlosser, Das Recht der Internationalen Privaten Schiedsgerichtsbarkeit ¶424 (2d ed. 1989).
7 See, e.g., Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630 (U.S. S.Ct. 2009) (“background principles
of state contract law” govern “the question of who is bound by [the arbitration agreement]”); First Options of
Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. S.Ct. 1995); Aloe Vera of Am., Inc. v. Asianic Food (S) Pte Ltd, [2006]
SGHC 78, ¶69 (Singapore High Ct.) (refusing to consider argument that non-signatory was not bound by
arbitration agreement under Article V(1)(c), on grounds that Article V(1)(c) concerned “the scope of the
arbitration agreement, rather than … whether a particular person was party to that agreement”).
8 New York Convention, Art. II(1) (emphasis added). See also id. at Art. II(3) (“an action in a matter in
respect of which the parties have made an agreement”) (emphasis added).

1518
Gary B. Born §10.01[A]

Other international conventions, including the European Convention, are similar.9 Each of
these instruments rests on the principle that an arbitration agreement is a contract between,
and binding on, the “parties” to that agreement, and not on other persons. Equally, each of
these instruments requires recognition of arbitration agreements insofar as their “parties,” and
not other entities, are concerned.10
National law also recognizes the limited subjective scope of arbitration agreements. Arti-
cle 7(1) of the UNCITRAL Model Law defines an arbitration agreement as “an agreement by
the parties to submit to arbitration all or certain disputes which have arisen or which may arise
between them.”11 Other national arbitration legislation is generally similar.12
Even in the absence of statutory provisions to this effect, settled law in all developed ju-
risdictions provides that it is the parties to an international arbitration agreement – and not
other persons – that are bound by the agreement.13 In the words of one U.S. judicial decision,
“[a]rbitration is a matter of contract and a party cannot be required to submit to arbitration

9 European Convention, Arts. I(1)(a), (2)(a) (arbitration agreement “shall mean either an arbitral clause
in a contract or an arbitration agreement, the contract or arbitration agreement being signed by the parties”)
(emphasis added); ICSID Convention, Art. 25 (“The jurisdiction of the Centre shall extend to any legal dispute
arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of
a Contracting State designated to the Centre by that State) and a national of another Contracting State, which
the parties to the dispute consent in writing to submit to the Centre”) (emphasis added); Inter-American Con-
vention, Art. 1 (“An agreement in which the parties undertake to submit to arbitral decision any differences that
may arise or have arisen between them with respect to a commercial transaction is valid”) (emphasis added).
10 New York Convention, Art. II(3) (courts must “refer the parties to arbitration”) (emphasis added).
11 UNCITRAL Model Law, Art. 7(1) (emphasis added).
12 See, e.g., French Code of Civil Procedure, Art. 1442 (“An arbitration clause is an agreement whereby
the parties to one or several contracts commit themselves to refer to arbitration the disputes their contract or con-
tracts may give rise to. A submission agreement is an agreement whereby the parties to a present dispute commit
themselves to refer it to arbitration.”) (emphasis added); Chinese Arbitration Law, Art. 4 (“In settling disputes
through arbitration, an agreement to engage in arbitration should first of all be reached by parties concerned
upon free will”) (emphasis added); Japanese Arbitration Law, Art. 2(1); Korean Arbitration Act, Art. 3.2
(“The term ‘arbitration agreement’ means agreement between the parties to settle, by arbitration, all or some
disputes …”) (emphasis added); Brazilian Arbitration Law, Art. 4 (“The arbitration clause is the agreement
whereby contracting parties oblige themselves to settle through arbitration all disputes that may arise relating to
the contract”) (emphasis added). But see English Arbitration Act, 1996, §6 (omitting term “parties”); Scottish
Arbitration Act, §4 (same).
13 See, e.g., EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (U.S. S.Ct. 2002) (“nothing in the [FAA] autho-
rizes a court to compel arbitration … by any parties … that are not already covered in the agreement”); A.D. v.
Credit One Bank NA, 885 F.3d 1054, 1060 (7th Cir. 2018) (“An arbitration agreement generally cannot bind a
non-signatory”); Waymo LLC v. Uber Techs., Inc., 870 F.3d 1342, 1345 (Fed. Cir. 2017) (“Contract law princi-
ples hold that non-parties to a contract are generally not bound by the contract. A contract to arbitrate is not an
exception.”); Invista Sàrl v. Rhodia SA, 625 F.3d 75, 85 (3d Cir. 2010) (“Although Rhodia correctly notes that
non-signatories can be compelled to arbitrate under the doctrines of equitable estoppel and/or assumption,
the argument overlooks the rather crucial fact that Rhodia did not sign any agreement to arbitrate the claims”);
InterGen NV v. Grina, 344 F.3d 134, 142-43 (1st Cir. 2003); Bridas SAPIC v. Turkmenistan, 345 F.3d 347, 353-
54 (5th Cir. 2003); E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187,
194-95 (3d Cir. 2001); Thomson-CSF, SA v. Am. Arb. Ass’n, 64 F.3d 773, 766 (2d Cir. 1995) (“Arbitration is
contractual by nature – a party cannot be required to submit to arbitration any dispute which he has not agreed
so to submit”); Dallah Real Estate & Tourism Holding Co. v. Ministry of Religious Affairs, Pakistan [2010] UKSC
46, ¶24 (U.K. S.Ct.) (“Arbitration is consensual – the manifestation of parties’ choice to submit present or
future issues between them to arbitration”).

1519
§10.01[A] Parties to International Arbitration Agreements

any dispute which he has not agreed so to submit.”14 Similarly, a recent English decision
concludes:
“The ‘validity’ of the arbitration agreement depends in the present case upon whether
there existed between Dallah and the Government any relevant arbitration agreement
at all.”15
Or, from a civil law perspective, both the consensual nature of an arbitration agreement and
the agreement’s lack of effects on third parties are recognized by French judicial decisions:
“The law of arbitration, based on the consensual nature of the arbitration clause, does
not allow to extend to third parties, foreign to the contract, the effects of the disputed
contract, and bars any forced intervention or guarantee procedures.”16
Equally, as discussed below, it is only parties to the arbitration agreement that are subject to
the arbitrators’ awards of relief,17 disclosure orders18 and provisional measures.19 One arbitral
award analyzed the subject as follows:
“Contrary to litigation in front of State Courts where any interested party can join
or be adjoined to protect its interests, in arbitration only those who are parties to the
arbitration agreement expressed in writing could appear in the arbitral proceedings ei-
ther as claimants or as defendants. This basic rule, inherent in the essentially voluntary
nature of arbitration, is recognized internationally by virtue of Article II of the New
York Convention.”20
Likewise, commentators have consistently concluded that, because arbitration rests on con-
sent, only the “parties” to an arbitration agreement are bound by the agreement.21

14 United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (U.S. S.Ct. 1960). See also
Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 233 (U.S. S.Ct. 2013) (“courts must ‘rigorously enforce’
arbitration agreements according to their terms, including terms that ‘specify with whom [the parties] choose
to arbitrate their disputes’”) (emphasis in original); Granite Rock Co. v. Int’l Bhd of Teamsters, 561 U.S. 287, 298
n.6 (U.S. S.Ct. 2010) (“arbitration is strictly a matter of consent – and thus … courts must typically decide any
questions concerning the formation or scope of an arbitration agreement before ordering parties to comply
with it”).
15 Dallah Real Estate & Tourism Holding Co. v. Ministry of Religious Affairs, Pakistan [2010] UKSC 46, ¶11
(U.K. S.Ct.).
16 Judgment of 19 December 1986, OIAETI v. SOFIDIF, 1987 Rev. Arb. 359, 363 (Paris Cour d’Appel). See
also Judgment of 23 December 2011, Case No. A40-56769/07-23-401, 6 (Russian S. Arbitrazh Ct.) (“Arbitration
agreement due to a principle of the autonomy of the parties’ will binds only the parties of that agreement and
has no legal effect with regard to third parties which are not parties thereto”).
17 See §23.07.
18 See §16.01.
19 See §17.02[A][5][a].
20 Banque Arabe et Internationale d’Investissement v. Inter-Arab Inv. Guar. Corp., Ad Hoc Award of 17 November
1994, XXI Y.B. Comm. Arb. 13, 18 (1996). See Interim Award in ICC Case No. 7337, XXIV Y.B. Comm. Arb.
149 (1999); Award in ICC Case No. 5721, 117 J.D.I. (Clunet) 1019, 1024 (1990) (“arbitration is essentially
based upon the principle of consent”; “Clearly, an arbitral tribunal has power only with respect to the parties
to the arbitration”); Unpublished Ad Hoc Award of 3 March 1999, discussed in de Boisséson, Joinder of Parties
to Arbitral Proceedings, Two Consenting Decisions, in ICC, Complex Arbitrations: Perspectives on Their Procedural
Implications 19 (2003).
21 See N. Blackaby et al. (eds.), Redfern and Hunter on International Arbitration ¶2.42 (6th ed. 2015) (“Party
consent is a prerequisite for international arbitration. Such consent is embodied in an agreement to arbitrate,
which … will generally be concluded ‘in writing’ and signed by the parties. The requirement of a signed agree-
ment in writing, however, does not altogether exclude the possibility that an arbitration agreement concluded

1520
Gary B. Born §10.01[B]

Institutional rules also uniformly assume that only parties to an arbitration agreement are
bound by that agreement. Article 1(1) of the 2013 UNCITRAL Rules is representative, pro-
viding that the Rules apply “[w]here parties have agreed that disputes between them in respect
of a defined legal relationship, whether contractual or not, shall be referred to arbitration ….”22
Other institutional rules are similar.23

[B] Signatories and Non-Signatories to Arbitration Agreement

In most cases, the parties to an arbitration agreement are – and are only – the entities that
formally executed, and expressly assumed the status of parties to, the underlying contract con-
taining the arbitration clause. In the vast majority of cases, the way to determine the parties to
the arbitration clause is simply to look at the signature page, and/or the recitals of a contract,
and see what entities are designated there.24
Simply, but correctly, put, it is the signature of an agreement that is the “customary im-
plementation of an agreement to arbitrate.”25 It is these “signatories” of an agreement that are
the parties to the arbitration agreement, and that are therefore bound by, and able to enforce,
the provisions of that agreement; other entities, who are “non-signatories,” are ordinarily not

in proper form between two or more parties might also bind other parties.”); Brekoulakis, The Relevance of
the Interests of Third Parties in Arbitration: Taking A Closer Look at the Elephant in the Room, 113 Penn. St. L.
Rev. 1165, 1166 (2009) (“The principal of ‘procedural party autonomy’ provides parties with the freedom to
contractually determine the circle of persons entitled to participate in the arbitration proceedings”); Hanotiau,
Problems Raised by Complex Arbitrations Involving Multiple Contracts-Parties-Issues: An Analysis, 18 J. Int’l Arb.
253, 256 (2001); Jagusch & Sinclair, The Impact of Third Parties on International Arbitration: Issues of Assignment,
in L. Mistelis & J. Lew (eds.), Pervasive Problems in International Arbitration 291, 292 (2006) (“At the heart
of the problems which can arise is that arbitration is a consensual process. Tribunals cannot accommodate
non-signatories to the arbitration clause in the same way that a court may join third parties.”); Orellana-Ubidia,
El Área Gris Entre la Relatividad de los Contratos y la Inclusión de Terceros No Signatarios en el Arbitraje, 1(2)
Universidad San Francisco de Quito L. Rev. 26, 27 (2014) (“Consent is considered the cornerstone of arbitra-
tion”); Pavić, “Non-Signatories” and the Long-Arm of Arbitral Jurisdiction, in P. Hay, L. Vekas & N. Dimitrijevic
(eds.), Resolving International Conflicts 213, 214 (2009).
22 2013 UNCITRAL Rules, Art. 1(1) (emphasis added). Compare 1976 UNCITRAL Rules, Art. 1(1)
(“Where the parties to a contract have agreed in writing that disputes in relation to that contract shall be re-
ferred to arbitration …”).
23 2017 ICC Rules, Art. 6(1) (“Where the parties have agreed to submit to arbitration under the Rules”);
2016 SIAC Rules, Art. 1(1) (“SIAC Rules apply [w]here the parties have agreed to refer their disputes to SIAC
for arbitration or to arbitration in accordance with the SIAC Rules …”); 2014 ICDR Rules, Art. 1(1) (ICDR
Rules apply “[w]here parties have agreed to arbitrate disputes under [these rules]”); 2020 LCIA Rules, Pre-
amble (“Where any agreement, submission or reference howsoever made or evidenced in writing (whether
signed or not) provides in whatsoever manner for arbitration under the rules of or by the LCIA, … the parties
thereto shall be taken to have agreed in writing [to these Rules]”); 2018 HKIAC Rules, Art. 1(2); 2018 AIAC
Rules, Rule 1(1); 2015 BAC Rules, Art. 2(1); 2000 BCICAC Rules, Art. 1(2)(a); 2015 CIETAC Rules, Art.
2(6); 2013 DIA Rules, Art. 2(1); 2016 DIFC-LCIA Rules, Preamble; 2016 JAMS Rules, Art. 1(1); 2016 KCAB
Rules, Art. 3(1); 2015 SHIAC Rules, Art. 3(1).
24 See, e.g., Final Award in ICC Case No. 10758, 128 J.D.I. (Clunet) 1171, 1176 (2001) (“if the Claimant
had intended [the non-signatory] to be a party to either the Contract or its arbitration clause it could have
so insisted at that time”); Bridas SAPIC v. Turkmenistan, 345 F.3d 347, 353 (5th Cir. 2003) (“to be subject to
arbitral jurisdiction, a party must generally be a signatory to a contract containing an arbitration clause”). See
also Schramm, Geisinger & Pinsolle, Article II, in H. Kronke et al. (eds.), Recognition and Enforcement of Foreign
Arbitral Awards: A Global Commentary on the New York Convention 62 (2010) (“In most cases, the answer is
clear: arbitration proceedings are conducted between the parties who signed the instrument containing the
arbitration agreement”).
25 Sarhank Group v. Oracle Corp., 404 F.3d 657, 665 (2d Cir. 2005).

1521
§10.01[B] Parties to International Arbitration Agreements

parties to the arbitration agreement and are therefore typically not bound by, or able to en-
force, its terms.
Despite the foregoing, the party that executes a contract is not necessarily a party to ei-
ther that agreement or the arbitration clause associated with it. Under most legal systems, an
agent or representative may execute an agreement on behalf of its principal, producing the
result that the principal is a party to the agreement (but the agent or representative is typically
not).26 The most obvious and frequent application of this rule is when agreements are execut-
ed on behalf of corporate or other legal entities by their officers or agents, with the result that
the corporate or other legal entity is a party to the agreement, but the officer or agent, in his or
her personal capacity, is not a party.27
The more general point is that, while signatory status is usually a basis for concluding that
an entity is a party to a contract, this is ultimately an issue of applicable contract law. That law
will usually, but not necessarily, provide that signatories are parties to the agreements that they
execute.
Conversely, it is also clear that entities that have not formally executed an arbitration agree-
ment, or the underlying contract containing an arbitration clause, may nonetheless be bound
by the agreement to arbitrate. Notwithstanding their status as non-signatories, there are circum-
stances in which entities that have not signed or otherwise formally assented to an arbitration
agreement may be both bound and benefited by its terms. As one U.S. court reasoned:
“Arbitration is consensual by nature. … It does not follow, however, that under the
[FAA] an obligation to arbitrate attaches only to one who has personally signed the
written arbitration provision. This court has made clear that a non-signatory party
may be bound to an arbitration agreement if so dictated by the ‘ordinary principles of
contract and agency.’”28

26 See §10.01[D].
27 See §10.01[D]; §10.02[A]. As discussed below, there are instances where national law may extend the
benefits of the arbitration clause to officers or representatives of a corporate party. See §10.02[A]. See also Re-
statement of the U.S. Law of International Commercial and Investor-State Arbitration §2.3 (2019) (non-signatories
may be bound by arbitration agreement).
28 Thomson-CSF, SA v. Am. Arb. Ass’n, 64 F.3d 773, 776 (2d Cir. 1995). See also A.D. v. Credit One Bank NA,
885 F.3d 1054, 1059-60 (7th Cir. 2018) (“Arbitration agreements are generally enforceable against non-signa-
tories only in a handful of limited circumstances. … These limited exceptions are: (1) assumption, (2) agency,
(3) estoppel, (4) veil piercing, and (5) incorporation by reference.”); Waymo LLC v. Uber Techs., Inc., 870 F.3d
1342, 1345 (Fed. Cir. 2017) (“A nonsignatory may compel arbitration where the ‘relevant state contract law
allows him to enforce the agreement’”) (quoting Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632 (U.S. S.Ct.
2009)); Hamilton Park Health Care Ctr Ltd v. SEIU United Healthcare Workers, 817 F.3d 857, 864 (3d Cir. 2016)
(“Where a party has not executed an express agreement to arbitrate, we must therefore discern whether any
‘traditional principles of contract and agency law’ can make it nonetheless bound by an arbitration provision”)
(quoting E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187, 194 (3d Cir.
2001)); Merrill Lynch Inv. Managers v. Optibase, Ltd, 337 F.3d 125, 130 (2d Cir. 2003); E.I. DuPont de Nemours
& Co. v. Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187 (3d Cir. 2001); Int’l Paper Co. v. Schwabedis-
sen Maschinen & Anlagen GmbH, 206 F.3d 411 (4th Cir. 2000); McCarthy v. Azure, 22 F.3d 351, 355 (1st Cir.
1994); Interocean Shipping Co. v. Nat’l Shipping & Trading Corp., 523 F.2d 527, 539 (2d Cir. 1975) (“The mere
fact that a party did not sign an arbitration agreement does not mean that it cannot be held bound by it”);
Fisser v. Int’l Bank, 282 F.2d 231, 233 (2d Cir. 1960); Ecuador v. ChevronTexaco Corp., 376 F.Supp.2d 334, 356
(S.D.N.Y. 2005), rev’d on other grounds, 638 F.3d 384 (2d Cir. 2011); W. Tankers Inc. v. Ras Riunione Adriatica di
Sicurta SpA [2005] EWHC 454, ¶33 (Comm) (English High Ct.) (subrogated insurer compelled to arbitrate:
“the defendant insurers have, under Italian law, by subrogation become entitled to enforce, the insured char-
terer’s right of action in delict against the owners, but that, by reference to English law, their duty to refer their

1522
Gary B. Born §10.01[C]

Civil law judicial decisions adopt identical reasoning:

“in principle, an arbitration clause is binding only on those parties which have entered
into a contractual agreement to submit to arbitration, whether directly or indirectly
through their representatives. Exceptions to this rule arise in cases of legal succession,
retroactive approval of an arbitration clause or attempts to pierce the corporate veil of
a legal entity in the case of abusive objections to the clause.”29
Or, in the words of a leading European commentator, “[p]ersons other than the formal sig-
natories may be parties to the arbitration agreement by application of the theory of apparent
mandate or ostensible authority or because they are third-party beneficiaries [or on other
grounds].”30
As discussed below, determining when a non-signatory is bound, or benefited, by an in-
ternational arbitration agreement typically requires application of generally-applicable con-
tract, agency and corporate law principles.31 Additionally, in a few instances, specialized rules,
applicable only to international arbitration agreements,32 have been developed, but these are
exceptional.

[C] Absence of Legislative Provisions Regarding Non-Signatory

Issues
In virtually all instances, international arbitration conventions and national arbitration legis-
lation provide no express guidance in identifying the parties to an international arbitration
agreement. As discussed above, the New York Convention refers only to the basic principle
that international arbitration agreements bind their parties, without addressing the question
of how an arbitration agreement’s parties are determined.33 The UNCITRAL Model Law and
most other national arbitration legislation is substantially identical.34
There are a few national arbitration statutes that address the identities of the parties to an
arbitration agreement, but these are unusual. For example, the Peruvian arbitration legislation

claim to arbitration is an inseparable component of the subject matter transferred to the insurers”); Montedipe
SpA v. JTP-RO Jugotanker [1990] 2 Lloyd’s Rep. 11, 19 (QB) (English High Ct.) (“[The assignee] is entitled
under the Law of Property Act to exercise all the legal remedies of the assignor”).
29 Judgment of 19 May 2003, 22 ASA Bull. 344, 348 (Swiss Fed. Trib.) (2004). See also Judgment of 19 Au-
gust 2008, DFT 4A_128/2008, ¶3.3 (Swiss Fed. Trib.) (“According to the principle of relativity of contractual
obligations, the arbitration agreement included in a contract binds only the parties to the contract. However, in
a number of cases, such as the assignment of a claim, the assumption of an obligation (simple or joint) or the
transfer of a contractual relationship, the Federal Tribunal has long recognized that an arbitration agreement
may bind even those who did not sign it and are not mentioned there.”).
30 B. Hanotiau, Complex Arbitrations ¶12 (2005). International arbitral institutions also must consider ar-
guments regarding the admissibility of requests for arbitration against non-signatories. See Mráz, Extension of
An Arbitration Agreement to Non-Signatories: Some Reflections on Swiss Judicial Practice, 3 Annals FBL Belgrade
L. Rev. 54, 55 (2009); Whitesell & Silva-Romero, Multiparty and Multicontract Arbitration: Recent ICC Expe-
rience, in ICC, Complex Arbitrations: Perspectives on Their Procedural Implications 7 (2003). See also GE Energy
Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 590 U.S. – (U.S. S.Ct. 2020) (“The
courts of numerous contracting states permit the enforcement of arbitration agreements by entities who did
not sign an agreement.”) (quoting G. Born, International Commercial Arbitration 1418-84 (2d ed. 2014)).
31 See §10.01[D].
32 See §10.02[E] (group of companies); §10.02[M] (corporate employees).
33 See §10.01[A].
34 See id.

1523
§10.01[C] Parties to International Arbitration Agreements

supplements the UNCITRAL Model Law’s definition of an arbitration agreement by adding

that:
“[t]he arbitration agreement extends to those who consent to submit to arbitration, in
good faith, as determined by their active and decisive participation in the negotiation,
execution, performance or termination of the contract that contains the arbitration
agreement or to which the agreement is related. It also extends to those who seek to
attain any rights or benefits from the contract, according to its terms.”35
A few other national arbitration statutes, including the English Arbitration Act, 1996, refer to
both “parties” and other persons claiming “under” or “through” a party, either providing or
suggesting that such persons are bound by arbitration agreements and/or arbitral awards.36
These provisions offer only limited textual guidance, and their terms have been subject to in-
consistent judicial treatment. Some national courts have taken a relatively restrictive approach
to these provisions, limiting the terms to persons who would be bound under generally-ac-
cepted concepts of contract and corporate law, such as succession, assignment, subrogation,
or equivalent statutory rights.37 Other courts have interpreted such terms more broadly, to
encompass persons whose interest is derived from the party to the agreement, including on
the basis of the “group of companies” doctrine.38

35 Peruvian Arbitration Law, Art. 14.

36 English Arbitration Act, 1996, §82(2) (“References in this Part to a party to an arbitration agreement
include any person claiming under or through a party to the agreement”). See also Singapore International
Arbitration Act, §6(5)(a) (“a reference to a party shall include a reference to any person claiming through or
under such party”); Hong Kong Arbitration Ordinance, §73(1) (“Unless otherwise agreed by the parties, an
award made by an arbitral tribunal pursuant to an arbitration agreement is final and binding both on – (a) the
parties; and (b) any person claiming through or under any of the parties”); Australian International Arbitration
Act, §7(4) (“a reference to a party includes a reference to a person claiming through or under a party”); Indian
Arbitration and Conciliation Act, §8 (“A judicial authority … shall, if a party to the arbitration agreement or
any person claiming through or under him, so applies …, refer the parties to arbitration …”), §35 (“an arbitral
award shall be final and binding on the parties and persons claiming under them respectively”), §45 (“a judicial
authority, … shall, at the request of one of the parties or any person claiming through or under him, refer the
parties to arbitration”); Scottish Arbitration Act, §11(1) (“A tribunal’s award is final and binding on the parties
and any person claiming through or under them (but does not of itself bind any third party)”). See also Priskich,
Binding Non-Signatories to Arbitration Agreements: Who Are Persons “Claiming Through or Under” A Party?, 35
Arb. Int’l 375 (2019).
37 See, e.g., London Steamship Owners’ Mut. Ins. Ass’n Ltd v. Spain [2015] EWCA Civ 333, ¶¶68-70 (English
Ct. App.) (non-signatory invoking statutory right of action against insurer was claiming “under or through”
party); City of London v. Sancheti [2008] EWCA 1283, ¶¶28-34 (English Ct. App.) (“a mere legal or commer-
cial connection is not sufficient”), overruling Roussel-Uclaf v. G.D. Searle & Co. Ltd [1978] 1 Lloyd’s Rep. 225
(English High Ct.); Through Transp. Mut. Ins. Ass’n (Eurasia) Ltd v. New India Assur. Co. Ltd [2005] EWHC
455, ¶¶24-28 (English High Ct.) (statutory transferee under Finnish statute was in similar position to assignee
claiming “under or through” assignor party); Cassa di Risparmio di Parma e Piacenza SpA v. Rals Int’l Pte Ltd,
[2016] 1 SLR 79, ¶70 (Singapore High Ct.) (“Whatever the true scope of the statutory phrase ‘through or
under’ might be, the core of that phrase must lie in the law of obligations”), aff’d, [2016] SGCA 53 (Singapore
Ct. App.). See also D. Sutton, J. Gill & M. Gearing, Russell on Arbitration ¶3-029 (24th ed. 2015) (discussing
§82(2) of English Arbitration Act, 1996 in context of substituted parties).
38 See, e.g., Cheran Props. Ltd v. Kasturi & Sons Ltd, Civ. App. No. 10025-26/2017, ¶20 (Indian S.Ct. 2018)
(“The expression ‘persons claiming under them’ is a legislative recognition of the doctrine that besides the
parties, an arbitral award binds every person whose capacity or position is derived from and is the same as a
party to the proceedings”); Chloro Controls India Pte Ltd v. Severn Trent Water Purification Inc., (2013) 1 SCC
641, ¶¶113, 167 (Indian S.Ct.) (phrase “claiming through or under” “is incapable of being construed narrowly
and must be given expanded meaning” and “would mean and take within its ambit multiple and multi-party

1524
Gary B. Born §10.01[D]

Nevertheless, in the absence of statutory guidance, disputes over the identities of the parties
to international arbitration agreements, and the application of non-signatory doctrines, have
been left almost entirely to national courts, arbitral tribunals and commentary. For the most
part, as discussed in the following sections, these authorities have applied generally-applicable
principles of contract, agency and corporate law to resolve such non-signatory disputes.

[D] Generally-Applicable Rules of Contract Law

A variety of legal theories have been invoked by national courts and arbitral tribunals to bind
entities that have not executed an arbitration agreement. These legal theories are in most cases
based on generally-applicable rules of contract and commercial law, including rules regard-
ing agency (actual and apparent), alter ego, implied consent, “group of companies,” estoppel,
third party beneficiary, guarantor, subrogation, legal succession and ratification or assumption
theories.39 In each of these instances, non-signatories of a contract can be bound by, and may
invoke, the arbitration clause contained within it.
In most circumstances, “general” or “ordinary” principles of contract and agency
law govern the question whether a non-signatory is party to an agreement to arbitrate.40

agreements, though in exceptional case[s]”); Rinehart v. Hancock Prospecting Pty Ltd, [2019] HCA 13 (Aus-
tralian High Ct.) (third party assignees were claiming “through or under” assignor parties as their defence was
reliant on whether assignors had committed breach of trust which was to be decided in arbitration); Tanning
Research Lab. Inc. v. O’Brien, (1990) 169 CLR 332, ¶11 (Australian High Ct.) (“the prepositions ‘through’ and
‘under’ convey the notion of a derivative cause of action or ground of defence … an essential element of the
cause of action or defence must be or must have been vested in or exercisable by the party before the person
before the person claiming through or under the party can rely on the cause of action or ground of defence,”
giving as examples liquidator or trustee in bankruptcy); Flint Ink NZ Ltd v. Huhtamaki Australia Pty Ltd, [2014]
VSCA 166, ¶¶15-29, 57-82, 135-150 (Victoria Ct. App.) (staying proceedings brought by non-signatory in
same corporate group as party to arbitration agreement on basis its claim was “through or under” party).
39 See, e.g., GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 590 U.S. –
(U.S. S.Ct. 2020) (“arbitration agreements may be enforced by nonsignatories through ‘assumption, piercing
the corporate veil, alter ego, incorporation by reference, third-party beneficiary theories, waiver and estop-
pel’”) (quoting Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630 (U.S. S.Ct. 2009) (quoting 21 R. Lord,
Williston on Contracts §57.19, 183 (4th ed. 2001)); Arthur Andersen LLP, 556 U.S. at 631; A.D. v. Credit One
Bank NA, 885 F.3d 1054, 1059-60 (7th Cir. 2018) (“arbitration agreements generally are enforceable against
non-signatories only in a handful of limited circumstances. … These limited exceptions are: (1) assumption,
(2) agency, (3) estoppel, (4) veil-piercing, and (5) incorporation by reference.”); Century Indem. Co. v. Certain
Underwriters at Lloyd’s, London, 584 F.3d 513, 520 n.5, 534-35 n.18 (3d Cir. 2009) (non-signatory principles);
Merrill Lynch Inv. Managers v. Optibase, Ltd, 337 F.3d 125, 131 (2d Cir. 2003); Smith/Enron Cogeneration LP,
Inc. v. Smith Cogeneration Int’l, Inc., 198 F.3d 88 (2d Cir. 1999); Thomson-CSF, SA v. Am. Arb. Ass’n, 64 F.3d
773, 776 (2d Cir. 1995) (five theories arising out of common law principles of contract and/or agency law that
would permit binding non-signatories to arbitration agreement: incorporation by reference, assumption, agen-
cy, veil-piercing/alter ego and estoppel); Dallah Real Estate & Tourism Holding Co. v. Ministry of Religious Affairs,
Pakistan [2010] UKSC 46, ¶106 (U.K. S.Ct.) (whether non-signatory is bound “depend[s] on a combination
of (a) the applicable law; (b) the legal principle which that law uses to supply the answer (which may include
agency, alter ego, estoppel, third party beneficiary); and (c) the facts of the individual case”).
40 See, e.g., Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630 (U.S. S.Ct. 2009) (FAA did not “alter back-
ground principles of state contract law regarding the scope of agreements (including the question of who is
bound by them)”); Bridas SAPIC v. Turkmenistan, 345 F.3d 347, 356 (5th Cir. 2003) (“Ordinary principles
of contract and agency law may be called upon to bind a nonsignatory to an agreement whose terms have not
clearly done so”); InterGen NV v. Grina, 344 F.3d 134, 142-43, 147-148 (1st Cir. 2003) (applying “traditional
principles of agency law”); Merrill Lynch Inv. Managers v. Optibase, Ltd, 337 F.3d 125, 130 (2d Cir. 2003) (“Tra-
ditional principles of agency law may bind a nonsignatory to an arbitration agreement”); McCarthy v. Azure,
22 F.3d 351, 355 (1st Cir. 1994) (federal common law rules for binding non-signatories “dovetail[] precisely

1525
§10.01[D] Parties to International Arbitration Agreements

This application of generally-applicable legal rules to non-signatory issues parallels the ap-
plication of similar generally-applicable contract law rules to the validity and interpretation
of international arbitration agreements (discussed above).41 Nonetheless, there are a few
instances in which specialized rules, applicable only to non-signatory issues in the context
of international arbitration agreements, have been developed. These include the so-called
“group of companies” doctrine, rules regarding corporate officers and employees and “class
arbitration.”42
Critically, regardless of the legal basis for application of an arbitration agreement to a
non-signatory, analysis must focus on the separable arbitration agreement. Paralleling issues
of contract formation and validity,43 the decisive question is whether a non-signatory is bound
by the arbitration agreement, not by the underlying contract. This is a straightforward appli-
cation of the separability presumption, discussed in detail above,44 but it is fundamental to
resolution of non-signatory issues.
Judicial case law and commentary on international arbitration sometimes make reference
to the “extension” of an arbitration agreement to non-signatories,45 or to “third parties,”46 on
the basis of one or more of the foregoing theories. These expressions are inaccurate, in that
they imply that an entity which is not a party to an arbitration agreement is nonetheless subject
to that agreement’s effects, by virtue of something other than the parties’ consent. Contrary to
the references to “extension” or “third parties,” most of the theories discussed below provide
a basis for concluding that an entity is in reality a party to the arbitration agreement – which
therefore does not need to be “extended” to a “third party” – because that party’s actions
constitute consent to the agreement, or otherwise bind it to the agreement, notwithstanding
the lack of its formal execution of the agreement.47 The arbitration agreement is therefore not

with general principles of contract law”); Letizia v. Prudential Bache Sec. Inc., 802 F.2d 1185, 1187-88 (9th Cir.
1986) (“signatories as well as nonsignatories of an arbitration agreement may be bound by the agreement based
on ordinary contract and agency principles”); Judgment of 22 December 1992, 14 ASA Bull. 646, 649 (Swiss
Fed. Trib.) (1996) (citing principle of reliance (“vertrauenbegründendes Verhalten”)); Int’l Research Corp. plc
v. Lufthansa Sys. Asia Pac. Pte Ltd, [2013] SGCA 55, ¶34 (Singapore Ct. App.) (“It is ultimately a matter of
contractual interpretation …”).
41 See §1.04[A][c][i]; §2.01[A][1]; §4.04; §9.02[C].
42 See §10.02[E] (group of companies); §10.02[M] (corporate employees).
43 See §§5.02-5.04.
44 See §3.03[A].
45 See, e.g., Poudret, L’Extension de la Clause d’Arbitrage: Approches Française et Suisse, 122 J.D.I. (Clunet)
893 (1995); Sandrock, Extending the Scope of Arbitration Agreements to Non-Signatories, in M. Blessing (ed.),
The Arbitration Agreement: Its Multifold Critical Aspects 165 (1994); Stauffer, L’Extension de la Portée de la Clause
Arbitrale à des Non-Signataires, in M. Blessing (ed.), The Arbitration Agreement: Its Multifold Critical Aspects 229
(1994). Compare Park, Non-Signatories and International Arbitration: An Arbitrator’s Dilemma, in PCA, Multiple
Party Actions in International Arbitration 3 (2009); J.-F. Poudret & S. Besson, Comparative Law of International
Arbitration ¶250 (2d ed. 2007).
46 Bridas SAPIC v. Turkmenistan, 345 F.3d 347, 355 (5th Cir. 2003) (“federal courts have held that so long
as there is some written agreement to arbitrate, a third party may be bound to submit to arbitration”).
47 This is true with regard to agency, third party beneficiary, guarantor, subrogation, implied consent and
group of companies theories. This rationale does not apply to alter ego, estoppel, or succession (merger)
theories where considerations of applicable corporate law, good faith, or equity can require treating an entity
as a party to an agreement to arbitrate without a showing of consent. See §§10.01[D] et seq.; S. Brekoulakis,
Third Parties in International Commercial Arbitration ¶¶1.05-06 (2010); B. Hanotiau, Complex Arbitrations ¶6
(2005). See also Voser, Multi-Party Disputes and Joinder of Third Parties, in A. van den Berg (ed.), 50 Years of the
New York Convention 343, 370 (2009) (phrase “extension of the arbitration agreement to non-signatories” is
misleading because “the methodological basis for being bound by an arbitration agreement is, in principle, the

1526
Gary B. Born §10.01[E]

ordinarily “extended,” but rather the true parties that have consented to the arbitration agree-
ment are identified.

[E] Application of Legal Bases for Subjecting Non-Signatories to

Arbitration Agreement
Also preliminarily, it is obvious, but nonetheless fundamental, that each of the legal doctrines
discussed below is the basis or framework for determining whether a non-signatory is bound
by an agreement to arbitrate, but not a conclusion that any particular non-signatory is in fact
bound by a particular agreement. Each of these doctrines provides the structure for evaluating
particular contractual language and factual settings, which must be examined to determine the
parties’ intentions and the legal consequences of those intentions in particular cases. In many
instances, analysis proceeds on a fact-intensive, case-by-case basis. One arbitral award put this
clearly:
“the question whether persons not named in an agreement can take advantage of an
arbitration clause incorporated therein is a matter which must be decided on a case-
by-case basis, requiring a close analysis of the circumstances in which the agreement
was made, the corporate and practical relationship existing on one side and known to
those on the other side of the bargain, the actual or presumed intention of the parties
as regards rights of non-signatories to participate in the arbitration agreement, and the
extent to which and the circumstances under which non-signatories subsequently be-
came involved in the performance of the agreement and in the dispute arising from it.”48
Although analysis differs under each of the non-signatory doctrines discussed below, in all
cases the inquiry is whether particular facts satisfy applicable legal standards for establishing
either consent to an arbitration agreement or a nonconsensual basis for binding an entity to
the agreement.
The focus in many cases involving questions of non-signatory status is on the parties’ in-
tentions.49 In particular, the focus is on the parties’ intentions – actual or presumed – that their
arbitration agreement will accomplish the purposes for which such agreement is designed.50
This inquiry recurs in various forms under most of the legal doctrines discussed below, and is

same for signatories as for non-signatory third parties”).

48 Interim Award in ICC Case No. 9517, quoted in B. Hanotiau, Complex Arbitrations ¶203 (2005).
49 See, e.g., Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 381 (5th Cir. 2008) (“Who is actually bound by
an arbitration agreement is a function of the intent of the parties, as expressed in the terms of the agreement”)
(quoting Bridas SAPIC v. Turkmenistan, 345 F.3d 347, 355 (5th Cir. 2003)); McCarthy v. Azure, 22 F.3d 351,
355, 359 (1st Cir. 1994) (“give effect to the mutual intentions of the parties”); Judgment of 5 December 2008,
DFT 4A_376/2008, ¶8.4 (Swiss Fed. Trib.) (“if it can be inferred from this interference his intention to be
party in the arbitration agreement”); Whitesell & Silva-Romero, Multiparty and Multicontract Arbitration: Re-
cent ICC Experience, in ICC, Complex Arbitrations: Perspectives on Their Procedural Implications 7, 8-9 (2003).
See also GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 590 U.S. – (U.S. S.Ct.
2020) (Sotomayor, J., concurring).
50 See §1.02[B]. Some commentators have suggested that the concept of consent be abandoned or modi-
fied in the context of non-signatories, and that the focus be on whether a non-signatory claim is “inextricably
implicated in a dispute submitted for arbitration.” See Brekoulakis, Parties in International Arbitration: Consent
v. Commercial Reality, in S. Brekoulakis et al. (eds.), The Evolution and Future of International Arbitration 119
(2016); Brekoulakis, Rethinking Consent in International Commercial Arbitration: A General Theory for Non-Sig-
natories, 8 J. Int’l Disp. Sett. 610 (2017). That proposal has elicited skepticism. See, e.g., Fellas, Comments on Par-
ties in International Arbitration: Consent v. Commercial Reality by Professor Stavros Brekoulakis, in S. Brekoulakis
et al. (eds.), The Evolution and Future of International Arbitration 199 (2016).

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§10.01[E] Parties to International Arbitration Agreements

central to explaining the application of these doctrines. One aspect of this inquiry is the un-
derlying requirement in all developed legal systems that parties act in good faith, which often
affects the assessment of issues of consent in the non-signatory context.51
The focus in some non-signatory contexts is not limited to issues of consent. Rather, in a
few instances, applicable law will subject an entity to an arbitration agreement even if it did
not consent – or even intend – to be bound by that agreement. This result is mandated by the
force of applicable law and considerations of equity, typically under theories of veil-piercing
(alter ego), estoppel, apparent authority, or succession.52
It is also often said that subjecting a non-signatory to an arbitration agreement is an excep-
tional act. As noted above, the ordinary mode of acceding to a commercial contract is through
formal execution by or on behalf of all parties.53 Although other modes of binding a non-sig-
natory are possible, they are often characterized as exceptions that must be established by the
party relying on them. Courts,54 arbitral tribunals55 and other authorities56 have emphasized
that non-signatories are only exceptionally bound by agreements to arbitrate and that reserve
must be exercised in reaching this conclusion.
It is sometimes said that such reserve should be particularly pronounced when a signatory
to an arbitration agreement seeks to assert claims against a non-signatory.57 In the words of

51 Blessing, Extension of the Arbitration Clause to Non-Signatories, in M. Blessing (ed.), The Arbitration Agree-
ment: Its Multifold Critical Aspects 151, 162 (1994) (“Again, the ‘heart’ of all the above notions or doctrines clearly
is the bona fides principle, respectively the requirement to act in good faith and the notion that positions or de-
fences which stand in contradiction to the exigencies to act in good faith will not deserve legal (or arbitral) pro-
tection”). See also Peruvian Arbitration Law, Art. 14 (“The arbitration agreement extends to those who consent
to submit to arbitration, in good faith, as determined by their active and decisive participation in the negotiation,
execution, performance or termination of the contract that contains the arbitration agreement or to which the
agreement is related. It also extends to those who seek to attain any rights or benefits from the contract, accord-
ing to its terms.”).
52 See §§10.02[B], [D], [K] & [H]. Compare Restatement of the U.S. Law of International Commercial and Inves-
tor-State Arbitration §2.3 comment a (2019) (“Despite the multiplicity of theories for finding that a nonsignatory
is bound or may invoke an arbitration agreement, the primary purpose of each inquiry is to discern the intent of
the parties”). That observation is erroneous in cases of alter ego, estoppel, apparent authority, and succession.
53 See §5.04[A][5]. Alternatively, parties may exchange orders, invoices, or other communications. See
§5.02[A][2][g][v].
54 See, e.g., InterGen NV v. Grina, 344 F.3d 134, 143 (1st Cir. 2003) (“courts should be extremely cautious
about forcing arbitration in situations in which the identity of the parties who have agreed to arbitrate is un-
clear”) (quoting McCarthy v. Azure, 22 F.3d 351, 355 (1st Cir. 1994)); Westmoreland v. Sadoux, 299 F.3d 462,
465 (5th Cir. 2002) (non-signatory bound by arbitration agreement only “in rare circumstances”); Smith/
Enron Cogeneration LP, Inc. v. Smith Cogeneration Int’l, Inc., 198 F.3d 88, 97 (2d Cir. 1999) (“court should be
wary of imposing a contractual obligation to arbitrate on a non-contracting party”); Judgment of 20 January
2006, Case No. LJN:AU4523, ¶¶4, 5 (Netherlands Hoge Raad) (non-signatory can be bound to arbitration
agreement only on basis of specific showing); Judgment of 11 May 2004, BASF Argentina SA v. Capdevielle y
Cia, Case No. 1651 (Argentine Corte Suprema de Justicia) (“Such extension of jurisdiction, must arise from
the contract that relates to the parties in dispute. … This requires a concrete, clear and express manifestation of
the consent of the parties in favor of arbitration.”).
55 J.-F. Poudret & S. Besson, Comparative Law of International Arbitration ¶227 (2d ed. 2007) (only
one-quarter of some 30 published awards recognized extension of arbitration clause to non-signatories).
56 Blessing, Extension of the Arbitration Clause to Non-Signatories, in M. Blessing (ed.), The Arbitration Agree-
ment: Its Multifold Critical Aspects 151, 160 (1994) (“an extension of the scope, reach and effects of an arbitra-
tion clause to a non-signatory third party has only been affirmed if very special circumstances existed which
justified or necessitated such extension”).
57 Nitro Distrib. Inc. v. Alticor, Inc., 453 F.3d 995, 999 (8th Cir. 2006) (distinguishing “situations where a
nonsignatory attempts to bind a signatory to an arbitration agreement” from those where “the signatory … is

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one commentary: “arbitral jurisdiction over non-signatory parties is more easily established
when they act as claimants than when they are sought to be joined as respondents.”58
It is difficult to see, however, why different standards should apply depending on whether
a non-signatory is the party invoking, or the party resisting, arbitration. Arbitration is a matter
of consent and, in particular, consent to arbitrate particular disputes with particular count-
er-parties, not consent to arbitrate generally or with the entire world.
In principle, therefore, there is little reason to think that a signatory to an arbitration agree-
ment with one party is more likely to be willing to arbitrate against a different (non-signato-
ry) party, than that a non-signatory to the agreement would be willing to arbitrate against a
signatory. Arbitration is a consensual means of dispute resolution, between specified parties,
and there is no justification for assuming that signatories to an agreement to arbitrate with
particular counter-parties intended to arbitrate with other, nonparties, absent application of
one of the legal grounds discussed below. As the U.S. Supreme Court has emphasized, “courts
must ‘rigorously enforce’ arbitration agreements according to their terms, including terms that
‘specify with whom [the parties] choose to arbitrate their disputes.’”59
It is true that the signatory of an arbitration agreement has consented to the arbitration
of some disputes, and waived the right to insist upon litigation of those disputes; in contrast,
a non-signatory will not typically have done so. Nonetheless, consent by a signatory to arbi-
trate some disputes, with some parties, is not consent to arbitrate those (or different) disputes
with different parties. As a consequence, there is no persuasive reason to treat signatories and
non-signatories differently when identifying the parties to an arbitration agreement.
Finally, different characterizations have been adopted of the question whether a non-sig-
natory is bound by an arbitration agreement. Some authorities, including the U.S. Supreme
Court, have characterized the issue as one concerning the scope of the agreement to arbitrate
(e.g., to what persons does the agreement extend?).60 Other authorities have categorized the

attempting to bind the nonsignatory”) (emphasis in original); Merrill Lynch Inv. Managers v. Optibase, Ltd, 337
F.3d 125, 131 (2d Cir. 2003) (“it matters whether the party resisting arbitration is a signatory or not”).
58 W. Craig, W. Park & J. Paulsson, International Chamber of Commerce Arbitration ¶11.05 (3d ed. 2000).
See also Rau, “Consent” to Arbitral Jurisdiction: Disputes with Non-Signatories, in PCA, Multiple Party Actions in
International Arbitration 69, ¶3.83 (2009) (“That an arbitration clause may in fact sweep most broadly when
asserted against a signatory to the agreement is not a novel proposition, and indeed … explain[s] the common
acceptance of non-mutual defensive collateral estoppel”).
59 Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 233 (U.S. S.Ct. 2013) (emphasis in original). See also
Yang v. Majestic Blue Fisheries, LLC, 876 F.3d 996, 1000 (9th Cir. 2017) (Article II(2) requires both contracts
containing arbitration agreements and arbitration agreements contained in exchange of letters to be signed).
60 See, e.g., GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 590 U.S. – (U.S.
S.Ct. 2020) (apparently treating existence of arbitration agreement under Article II(1) as distinct question
from right of entity to enforce that agreement under Article II(3): Articles II(1) and II(2) “address the recogni-
tion of arbitration agreements, not who is bound by a recognized agreement”); Judgment of 16 October 2003, 22
ASA Bull. 364 (Swiss Fed. Trib.) (2004) (question whether non-signatory is bound by arbitration agreement
is issue of determining scope of agreement); Judgment of 7 December 1994, V 2000 v. Project XJ220ITD, 1996
Rev. Arb. 245, 253 (Paris Cour d’Appel) (arbitration clause can “extend to parties directly involved in the per-
formance of the contract provided that their respective positions and activities give rise to a presumption that
they were aware of the existence and the scope of the arbitration clause, so that the arbitrator can consider all
economic and legal aspects of the dispute”); Chloro Controls India Pte Ltd v. Severn Trent Water Purification Inc.,
(2013) 1 SCC 641, ¶112 (Indian S.Ct.) (“Once it is determined that a valid arbitration agreement exists, it is a
different step to establish which parties are bound by it”; “third parties, who are not explicitly mentioned in an
arbitration agreement made in writing, may enter into its ratione personae scope”). Compare Egiazaryan v. OJSC
OEK Fin. [2015] EWHC 3532, ¶¶17-21 (Comm) (English High Ct.) (characterizing question as “whether
there is jurisdiction over a non-signatory to the arbitration agreement,” and not “who is or was party to the

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§10.01[E] Parties to International Arbitration Agreements

question whether a non-signatory is bound by an arbitration agreement as one of contract

formation (e.g., has an arbitration agreement been formed between parties A and C?).61
These characterizations can have considerable practical importance. As discussed
above, in some circumstances, different standards of proof apply to issues of formation of
the arbitration agreement, on the one hand, and issues of interpretation of the scope of
the arbitration agreement, on the other hand.62 Characterization may also be important
for choice of law and allocation of jurisdictional competence (where construction of the
scope of the arbitration agreement may be subject to different allocations of competence
and degrees of judicial review than those applicable to whether any agreement to arbitrate
exists).63
The better view is that the question whether a party is bound by an agreement to arbitrate
should be categorized as a question of the scope of the arbitration agreement. In cases where
there is concededly a valid agreement to arbitrate between some parties, the question wheth-
er that agreement extends to another party is more closely akin to determining the scope of
the agreement than to determining whether any agreement at all has been formed or whether
an agreement is valid.
Among other things, where there is a valid arbitration agreement between some parties
to a dispute, pursuant to which their disputes will be resolved, there are powerful interests in
efficiency and fairness in resolving related disputes, involving the same contractual relation-
ships, in the same forum and proceeding: this parallels similar considerations involving in-
terpretation of the scope of the arbitration agreement, where parties are generally presumed
to desire “one-stop” dispute resolution.64
This is particularly true because, in most instances, non-signatories have a substantial and
close relationship with one of the parties to the arbitration agreement (e.g., agency, alter ego,
guarantor, third party beneficiary). In these cases, determining whether that relationship is
sufficient to subject the non-signatory to the arbitration agreement is principally a question
of interpreting the parties’ underlying commercial relationship (as distinguished from deter-
mining the validity of the agreement to arbitrate). It is appropriate, in these circumstances,
to treat the decision whether a non-signatory is bound by the arbitration agreement as an
issue of determining the scope of that agreement, including for purposes of choice of law and
allocation of competence.

arbitration agreement” to determine whether non-signatory could be joined to arbitration under Russian law
as law of incorporation of signatory).
61 First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (U.S. S.Ct. 1995) (holding, in case involving
non-signatory issue: “When deciding whether the parties agreed to arbitrate a certain matter (including
arbitrability), courts generally … should apply ordinary state-law principles that govern the formation of
contracts”); Waymo LLC v. Uber Techs., Inc., 870 F.3d 1342, 1345 (Fed. Cir. 2017) (“A nonsignatory may
compel arbitration where the ‘relevant state contract law allows him to enforce the agreement’”) (quoting
Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632 (U.S. S.Ct. 2009)); Hamilton Park Health Care Ctr Ltd
v. SEIU United Healthcare Workers, 817 F.3d 857, 864 (3d Cir. 2016) (“Where a party has not executed an
express agreement to arbitrate, we must therefore discern whether any ‘traditional principles of contract and
agency law’ can make it nonetheless bound by an arbitration provision”) (quoting E.I. DuPont de Nemours
& Co. v. Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187, 194 (3d Cir. 2001)); Aloe Vera of Am., Inc.
v. Asianic Food (S) Pte Ltd, [2006] SGHC 78, ¶¶64 et seq. (Singapore High Ct.) (claim that arbitral tribunal
made award against party not bound by arbitration agreement relates to existence of arbitration agreement
and not to scope of tribunal’s mandate).
62 See §5.04[A][4]; §5.04[D]; §9.02.
63 See §7.03.
64 See §1.02[B][2].

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Gary B. Born §10.02[A]

[F] Distinction Between Jurisdiction and Substantive Liability

Finally, it is well-settled that there is a distinction between jurisdiction and substantive liabil-
ity.65 An entity may be a party to an arbitration agreement (despite its non-signatory status),
but not liable substantively in the parties’ underlying dispute; conversely, an entity may not
be bound by an arbitration agreement, despite being liable in the underlying dispute. This
is a consequence of both the separability presumption (pursuant to which an entity may
become a party to an arbitration agreement, but not the underlying contract)66 and poten-
tially differing standards governing issues of jurisdiction and substantive liability under the
applicable law or laws.67

§10.02 LEGAL BASES FOR BINDING NON-SIGNATORIES TO

INTERNATIONAL ARBITRATION AGREEMENTS
Although the principle that arbitration agreements are consensual is straightforward, the
application of this principle gives rise to numerous and complex issues. In particular, there is
a wide range of circumstances in which non-signatories may nonetheless be parties to, and
bound by or permitted to invoke, the associated arbitration agreement.
The principal legal bases for holding that a non-signatory is bound (and benefited) by an
arbitration agreement are discussed below. These bases include both purely consensual the-
ories (e.g., agency, assumption, assignment) and nonconsensual theories (e.g., estoppel, alter
ego). Each of these various theories gives rise to both substantive and choice-of-law issues.
The authorities discussed below, which address these issues, are relevant both in actions to
enforce agreements to arbitrate and in actions to annul or recognize arbitral awards.68

[A] Agency Relationship

The simplest, least controversial circumstance in which a non-signatory will be bound by
an arbitration agreement is when an agent executes a contract on behalf of its principal. It is
well-settled, under all developed legal systems, that one party (an “agent” or similar represen-
tative) may in certain circumstances legally bind another party (a “principal”) by its acts.69

65 See P. Blumberg et al., Blumberg on Corporate Groups §25.05 (2d ed. 2005 & Update 2017); G. Born & P.
Rutledge, International Civil Litigation in United States Courts 168, 174 (6th ed. 2018).
66 See §§3.03 et seq..
67 Judgment of 19 August 2008, DFT 4A_128/2008 (Swiss Fed. Trib.); P. Blumberg et al., Blumberg on Cor-
porate Groups §25.05 (2d ed. 2005 & Update 2017); Scherer, Introduction to the Case Law Section, 26 ASA Bull.
721, 729 (2008) (“liability is not necessarily a basis for jurisdiction. Indeed, the Federal Supreme Court has
held repeatedly … that an arbitration agreement cannot be extended to non‐signatories, even if the latter are
liable for performance under a separate agreement or as a result of general liability rules.”).
68 See §25.04[A]; §26.05[C][1].
69 See Final Award in ICC Case No. 6268, XVI Y.B. Comm. Arb. 119 (1991) (upholding arbitration agree-
ment where buyer’s agent had actual authority to enter into both arbitration agreement and underlying con-
tract); Judgment of 22 November 1950, DFT 76 I 338, 351-54 (Swiss Fed. Trib.); Restatement (Third) of Agency
§2.01 (2006); 2002 Principles of European Contract Law, Chp. 3 (“Authority of Agents”); UNIDROIT,
Principles of International Commercial Contracts Art. 2.2 (2016) (“Authority of Agents”); J. Herbots (ed.), In-
ternational Encyclopaedia of Laws: Contracts ¶223 (H.K.), ¶258 (N.Z.), ¶331 (Romania), ¶344 (Spain), ¶460
(Sweden), ¶425 (Austria), ¶472 (France), ¶609 (India) (1993 & Update 2019); P. Watts (ed.), Bowstead &
Reynold on Agency ¶1-013 (21st ed. 2017) (“It is nevertheless more commonly said that the agent has authority.
When examined, this authority amounts to no more than a power of a special sort, a power by doing an act to
affect the principal’s legal relations as if he had done the act himself.”).

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§10.02[A] Parties to International Arbitration Agreements

Among other things, an agent may execute contracts, including arbitration agreements,
which will be legally binding on its principal,70 although not necessarily on the agent.71
Consistent with these principles, a number of arbitral awards72 and national court deci-
sions73 have held that, in appropriate cases, an entity may be bound as principal by an arbi-
tration agreement which it has not signed, but which was executed on its behalf by an agent.
For the most part, courts and arbitral tribunals have relied on generally-applicable principles
of agency law when considering questions of agency in the specific context of international

70 See Restatement (Third) of Agency §1 (2006) (“Agency is the fiduciary relationship that arises when one
person (a ‘principal’) manifests assent to another person (an ‘agent’) that the agent shall act on the princi-
pal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents so to
act”); J. Herbots (ed.), International Encyclopaedia of Laws: Contracts ¶441 (Denmark), ¶438 (Belgium), ¶445
(Austria), ¶488 (France) (1993 & Update 2019). See also Trina Solar US, Inc. v. Jasmin Solar Pty Ltd, 2020
WL 1592487 (2d Cir.) (“‘Unless the contract explicitly excludes the principal as a party,’ a court may consider
extrinsic evidence to identify an unnamed principal to the contract, or to determine, more specifically, whether
a nonsignatory is bound by the contract as a principal”) (quoting Restatement (Third) of Agency §6.01 (2006)).
71 Typically, where the agency relationship is disclosed, the principal, but not the agent, will be a party
to the contract. See, e.g., Restatement (Third) of Agency §6.01 (2006); 2002 Principles of European Contract
Law, Art. 3:202; UNIDROIT, Principles of International Commercial Contracts Art. 2.2.3(1) (2016). See also
McCarthy v. Azure, 22 F.3d 351, 360-61 (1st Cir. 1994) (“It is well settled that when an agent acts on behalf of a
disclosed principal, the agent will not be personally liable for a breach of the contract, unless there is clear and
explicit evidence of the agent’s intention to be bound”); Filatona Trading Ltd v. Navigator Equities Ltd [2020]
EWCA Civ 109, ¶¶101, 126 (English Ct. App.) (“there is a heavy burden of persuasion on a party who seeks to
argue that a known and identified principal is to be excluded from a contract, and that any such intention must
appear clearly and unequivocally from the terms of the parties’ contract”); Capital Trust Inv. Ltd v. Radio Design
TJ AB [2002] EWCA Civ 135 (English Ct. App.); Judgment of 26 June 2003, Baba Ould Ahmed Miske v. AVC
Shipping, 2006 Rev. Arb. 143 (Paris Cour d’Appel).
72 See, e.g., Award in CRCICA Case No. 2/1994 of 25 July 1995, discussed in M. Alam-Eldin (ed.), Arbitral
Awards of the Cairo Regional Centre for International Commercial Arbitration 141-44 (2000); Biloune v. Ghana
Inv. Ctr, Ad Hoc Awards of 27 October 1989 & 30 June 1990, XIX Y.B. Comm. Arb. 11 (1994). See also Final
Award in ICC Case No. 10329, XXIX Y.B. Comm. Arb. 108 (2004); Interim Award in ICC Case No. 9781, XXX
Y.B. Comm. Arb. 28, 28 (2005) (applying Italian law: “agency relationship may be inferred from any circum-
stances showing that the agent has made known to the contracting party expressly and unequivocally that
the contract it executed was not binding upon itself but upon other persons”); Hanotiau, Problems Raised by
Complex Arbitrations Involving Multiple Contracts-Parties-Issues: An Analysis, 18 J. Int’l Arb. 253, 258-60 (2001);
Hosking, Non-Signatories and International Arbitration in the United States: The Quest for Consent, 20 Arb. Int’l
289, 292 (2004); Lamm & Aqua, Defining the Party: Who Is A Proper Party in An International Arbitration Before
the American Arbitration Association?, 34 Geo. Wash. Int’l L. Rev. 711, 724 (2002).
73 See, e.g., Gross v. GGNSC Southaven LLC, 817 F.3d 169 (5th Cir. 2016); Andermann v. Sprint Spectrum
LP, 785 F.3d 1157 (7th Cir. 2015); Grand Wireless, Inc. v. Verizon Wireless, Inc., 748 F.3d 1, 9-10 (1st Cir. 2014)
(binding non-signatories to arbitration agreement based on agency); Keytrade USA, Inc. v. Ain Temouchent
M/V, 404 F.3d 891, 896-97 (5th Cir. 2005); Harvey v. Joyce, 199 F.3d 790 (5th Cir. 2000); Pritzker v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1122 (3d Cir. 1993); Arriba Ltd v. Petroleos Mexicanos, 962 F.2d
528, 536 (5th Cir. 1992); Hester Int’l Corp. v. Nigeria, 879 F.2d 170, 176 (5th Cir. 1989); Interbras Cayman Co.
v. Orient Victory Shipping Co., 663 F.2d 4 (2d Cir. 1981); Kiskadee Commc’ns (Bermuda), Ltd v. Father, 2011 WL
1044241 (N.D. Cal.); Herlofson Mgt AS v. Ministry of Supply, Jordan, 765 F.Supp. 78 (S.D.N.Y. 1991); Peterson
Farms Inc. v. C&M Farming Ltd [2004] EWHC 121, ¶¶63-66 (Comm) (English High Ct.); Judgment of 14
October 1987, Ampafrance v. Wasteels, 1988 Rev. Arb. 288 (French Cour de Cassation Civ. 2); Judgment of 8
December 1999, 18 ASA Bull. 546 (Swiss Fed. Trib.) (2000); Judgment of 22 December 1992, 14 ASA Bull. 646,
649 (Swiss Fed. Trib.) (1996). See also Restatement of the U.S. Law of International Commercial and Investor-State
Arbitration §2.3 comment b (2019) (“When an agent executes a contract containing an arbitration agreement,
under the actual or apparent authority of a principal, the agent’s assent generally binds the principal to the
arbitration agreement”).

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arbitration agreements. In the words of one court, the “theories under which non-signatories
may be bound to the arbitration agreements of others … arise out of common law principles
of contract and agency law.”74 Other courts have referred to “traditional principles of agency
law” or “ordinary principles of contract and agency law.”75
Principles of agency law in most legal systems require proof that the agent was granted
authority, express or implied, to enter into the relevant contractual relationships on behalf of
the principal.76 In one highly-publicized decision during the 1980s, the Swiss Federal Tribunal
annulled an award applying an agency theory to bind a sovereign state to an arbitration clause.
The arbitral tribunal had held that four Middle Eastern states were bound by a contract, in-
cluding its arbitration clause, which had been entered into by an international organization
that the four states had founded.77 The Swiss Federal Tribunal annulled the award on the ap-
plication of one of the states, reasoning that there was insufficient evidence that the state had
granted the international organization power to bind the state to an arbitration agreement:78
“The arbitration clause cannot be opposed to a party which did not sign it unless this
party is nevertheless bound by the clause by the signature of an entity or third party
empowered to act on behalf of the first party, on the basis of an act granting to that
entity or third party the power to refer a dispute to arbitration.”79

74 Thomson-CSF, SA v. Am. Arb. Ass’n, 64 F.3d 773, 776 (2d Cir. 1995).
75 See, e.g., Hamilton Park Health Care Ctr Ltd v. SEIU United Healthcare Workers, 817 F.3d 857, 864 (3d
Cir. 2016); Flintkote Co. v. Aviva plc, 769 F.3d 215, 220 (3d Cir. 2014); DK Joint Venture 1 v. Weyand, 649 F.3d
310, 312, 314 (5th Cir. 2011); Bridas SAPIC v. Turkmenistan, 345 F.3d 347, 356 (5th Cir. 2003) (“Ordinary
principles of contract and agency law may be called upon to bind a nonsignatory to an agreement whose terms
have not clearly done so”); InterGen NV v. Grina, 344 F.3d 134, 142-43, 147-48 (1st Cir. 2003) (“It is hornbook
law that an agent can commit its (nonsignatory) principal to an arbitration agreement”; applying “traditional
principles of agency law”); Merrill Lynch Inv. Managers v. Optibase, Ltd, 337 F.3d 125, 130 (2d Cir. 2003) (“Tra-
ditional principles of agency law may bind a non-signatory to an arbitration agreement”); Bel-Ray Co., Inc. v.
Chemrite (Pty) Ltd, 181 F.3d 435, 445 (3d Cir. 1999) (“traditional principles of contract and agency law”);
Phoenix Canada Oil Co. v. Texaco, Inc., 842 F.2d 1466, 1478 (3d Cir. 1988) (“usual agency principles”); Letizia
v. Prudential Bache Sec. Inc., 802 F.2d 1185, 1187-88 (9th Cir. 1986) (“signatories as well as nonsignatories of an
arbitration agreement may be bound by the agreement based on ordinary contract and agency principles”);
Interbras Cayman Co. v. Orient Victory Shipping Co., 663 F.2d 4 (2d Cir. 1981); Judgment of 22 December 1992, 14
ASA Bull. 646, 649 (Swiss Fed. Trib.) (1996) (citing principle of reliance (“vertrauenbegründendes Verhalten”)
to conclude that under Spanish law, no special mandate was required for agent to bind principal); R. Merkin,
Arbitration Law ¶¶17.39-41 (1991 & Update March 2020) (“general agency principles”).
76 Bridas SAPIC v. Turkmenistan, 345 F.3d 347, 356-57 (5th Cir. 2003) (agency is “the fiduciary relation
which results from the manifestation of consent by one person to another that the other shall act on his behalf
and subject to his control and consent by the other so to act”) (quoting Restatement (Second) of Agency §1(1)
(1958)); J. Herbots (ed.), International Encyclopaedia of Laws: Contracts ¶239 (Ireland), ¶261 (N.Z.), ¶460
(Sweden), ¶427 (Austria), ¶474 (France), ¶621 (India) (1993 & Update 2019).
77 Westland Helicopters Ltd v. Arab Org. for Indus., Interim Award in ICC Case No. 3879 of 5 March 1984,
XI Y.B. Comm. Arb. 127 (1986). Among other things, the tribunal reasoned: “The mandatory force of the
arbitration clause cannot be dissociated from that of the substantial contractual commitments; the reply to the
question as to whether the four states are bound by the acts of [the organization they founded] must always
be the same, whether the procedural aspect of the arbitration clause is involved, or that of the substantive law
concerning the financial obligations of the four states.” Id. at 130.
78 The remaining three states did not seek annulment of the award, which therefore remained in effect
insofar as they were concerned. Judgment of 19 April 1994, DFT 120 II 155 (Swiss Fed. Trib.); Judgment of 19
July 1988, XVI Y.B. Comm. Arb. 180, 181 (Swiss Fed. Trib.) (1991).
79 Judgment of 19 July 1988, XVI Y.B. Comm. Arb. 180, 181 (Swiss Fed. Trib.) (1991). The Swiss Federal
Tribunal also refused to treat the international organization established by the four states as their agent (or alter

1533
§10.02[A] Parties to International Arbitration Agreements

It is generally essential, in order to bind a non-signatory party to an arbitration agreement, that

the non-signatory’s agency relationship with a signatory party pertain to the specific contract,
and arbitration agreement that is in dispute, and not involve only other relationships between
the parties or their affiliates. For example, one U.S. decision rejected agency as a basis to bind
a non-signatory to an arbitration agreement, reasoning that “the requirements for … vicarious
responsibility [under an agency theory] are exacting,” and concluding:
“although InterGen [the non-signatory] may have had an agency relationship with a
Bechtel entity [the signatory] for certain (limited) purposes, the record is bereft of any
evidence suggesting that a Bechtel entity acted as InterGen’s agent in committing to
carry out [the arbitration agreement or underlying contract].”80
Nonetheless, it is possible under some legal systems for one party to have a “general” agency
relationship with its principal, not limited to any specific contract or transaction, which would
result in all (or many) agreements executed by the agent being binding on the principal.81 In
practice, this result is unlikely in most settings, for reasons explained by one English decision:
“In commercial terms the creation of a corporate structure is by definition designed to
create separate legal entities for entirely legitimate purposes which would often if not
usually be defeated by any general agency relationship between them.”82
Accordingly, care should be taken in applying theories of general agency to conclude that one
party’s contract was binding on another party, by virtue of the first party’s status as a general
agent for the latter. Nonetheless, there are cases where one party so consistently acts entirely
on behalf of, and at the direction of, another party that a general agency relationship will be
found.83

ego): “The predominant role played by these states in [the international organization] … cannot affect [the
organization’s] independence and legal personality, nor can it lead to the conclusion that [the organization]
bound the founding states when dealing with third parties.” Id. at 181.
80 InterGen NV v. Grina, 344 F.3d 134, 148 (1st Cir. 2003). See also Ouadani v. TF Final Mile LLC, 876
F.3d 31, 37 (1st Cir. 2017) (non-signatory plaintiff was not bringing claims as agent of signatory); Phoenix
Canada Oil Co. v. Texaco, Inc., 842 F.2d 1466, 1477 (3d Cir. 1988) (“Not only must an [agency] arrangement
exist … so that one acts on behalf of the other and within usual agency principles, but the arrangement must
be relevant to the [legal obligation in dispute]”); Stern v. Charles Schwab & Co., 2009 U.S. Dist. LEXIS 96697,
at *9 (D. Ariz.) (“For a principal to be bound by an arbitration provision, the agent must have acted on behalf
of the principal”); Cohen v. TNP 2008 Participating Notes Program, LLC, 31 Cal.App.5th 840, 864 (Cal. Ct.
App. 2019) (“The requirements for imposing arbitration on a nonsignatory principal, as opposed to allowing
a nonsignatory agent to compel arbitration, however, must be ‘exacting’”) (quoting InterGen NV v. Grina, 344
F.3d 134, 148 (1st Cir. 2003)).
81 Restatement (Third) of Agency §2.01 comment d (2006) (“Courts have long distinguished between
‘general agents’ and ‘special agents,’ a distinction that rests on both the objects of the discretion granted an
agent and the mode of regulating the agent’s exercise of discretion. The labels matter less than the underlying
circumstances that warrant their application. … The prototypical general agent is a manager of a business, who
has authority to conduct a series of transactions and who serves the principal on an ongoing as opposed to an
episodic basis.”); G. Born & P. Rutledge, International Civil Litigation in United States Courts 199-201 (6th ed.
2018); P. Watts (ed.), Bowstead & Reynolds on Agency ¶¶1-045, 3-028 (21st ed. 2017).
82 Peterson Farms Inc. v. C&M Farming Ltd [2004] EWHC 121, ¶65 (Comm) (English High Ct.).
83 In some cases, agency principles are conflated with alter ego analysis. This is not analytically sound; the
two legal bases are distinct and should be addressed separately. See, e.g., Bridas SAPIC v. Turkmenistan, 345 F.3d
347, 358-59 (5th Cir. 2003) (“the alter ego doctrine is equitable in nature, agency principles are contractual”;
“Courts occasionally apply the alter ego doctrine and agency principles as if they were interchangeable. … The
two theories are, however, distinct.”); E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermedi-
ates, 269 F.3d 187, 198 (3d Cir. 2001) (distinguishing between alter ego/piercing corporate veil and agency);

1534
Gary B. Born §10.02[A]

Despite the applicability of ordinary agency principles to international arbitration agree-

ments,84 there are exceptions to this approach, which arise from the peculiar character of
arbitration agreements. In particular, some authorities have held that an agent may invoke
an arbitration agreement contained in a contract which it executes on behalf of a principal,85
notwithstanding the fact that the agent would not be bound by the substantive terms of the
underlying contract (made on behalf of the principal).86 As one court observed, there is a
“well-settled principle affording agents the benefits of arbitration agreements made by their
principal.”87 Likewise, as discussed below, a few authorities have reached similar results with
regard to corporate officers and employees, sued for actions taken in the course of their em-
ployment, holding that they may invoke arbitration clauses contained in their employer’s con-
tracts with the adverse third party.88
These results do not rest on a straightforward application of traditional principal-agent
rules, which would provide that the agent and/or employee is not a party to the underlying
contract. Instead, as discussed below, the approach is an exceptional one, which appears to
rest on the separable character of the agreement to arbitrate and to be primarily attributable
to the parties’ presumed intention to provide protections for agents and/or employees against
joinder in oppressive litigation and to prevent the circumvention of agreements to arbitrate
through satellite litigation.89
More generally, it is essential to consider issues of agency with regard specifically to the
arbitration agreement, and not only the underlying contract. This is a straightforward ap-
plication of the separability presumption.90 In most instances, an agency relation will either
exist, or not, for both the underlying contract and the arbitration agreement. Nonetheless,
there may be instances where a principal-agent relation is said to exclude conclusion of an
arbitration agreement, or allegedly applicable national law will be said to impose particular
requirements on the conclusion of arbitration agreements by agents.91
Determining the relevant legal standards for establishing an agency relationship presents
choice-of-law questions (also discussed below).92 Most authorities have applied national law
to the question of agency status (rather than international principles).93 Lower U.S. courts

Pan E. Exploration Co. v. Hufo Oils, 855 F.2d 1106 (5th Cir. 1988), superseded on other grounds, Texas Business
Corporation Act, 2005; House of Koscot Dev. Corp. v. Am. Line Cosmetics, Inc., 468 F.2d 64 (5th Cir. 1972).
84 See §10.01[D]; §10.02.
85 See, e.g., CD Partners, LLC v. Grizzle, 424 F.3d 795, 798-800 (8th Cir. 2005) (allowing non-signatories
to enforce arbitration agreement when non-signatories were officers of signatory company); Pritzker v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110 (3d Cir. 1993) (same); Roby v. Corp. of Lloyd’s, 996 F.2d 1353 (2d
Cir. 1993) (same); Kruse v. AFLAC Int’l, Inc., 458 F.Supp.2d 375 (E.D. Ky. 2006) (same); Thomas v. A.R. Baron
& Co., 967 F.Supp. 785, 788 (S.D.N.Y. 1997) (allowing agent to invoke arbitration agreement “in line with wide
judicial consensus on this issue”); Leopold v. Delphi Internet Servs. Corp., 1996 WL 628593 (E.D. Pa.); Brown v.
Centex Homes, 171 N.C.App. 741, 746 (N.C. Ct. App. 2005).
86 See, e.g., Lerner v. Amalgamated Clothing & Textile Workers Union, 938 F.2d 2 (2d Cir. 1991).
87 Arnold v. Arnold Corp., 920 F.2d 1269, 1282 (6th Cir. 1990).
88 See §10.02[M].
89 See id.
90 See §5.03[F][4].
91 See §10.05[B]. In many instances, such laws would conflict with the New York Convention. See
§10.05[C][3].
92 See §10.05.
93 See, e.g., Hague Convention of 14 March 1978 on the Law Applicable to Agency, Art. 11 (internal law of
state where agent had business establishment or acted); Maspons y Hermano v. Mildred, Goyeneche & Co. [1882]
9 QBD 530, 539 (English Ct. App.); Restatement (Second) Conflict of Laws §292 (1971); L. Collins et al. (eds.),

1535
§10.02[A] Parties to International Arbitration Agreements

historically applied federal common law agency principles, derived from the Restatement
(Second) of Agency, rather than applying the law of any particular jurisdiction.94 More recent
U.S. authority looks to generally-applicable state law rules of agency in domestic cases under
Chapter 1 of the FAA;95 the better view is that federal common law rules of agency remain
applicable in cases arising under the New York Convention and Chapter 2 of the FAA.96
In some cases, it is suggested that the law applicable to the question whether a principal
is bound by an arbitration agreement is that of the agency agreement (between the putative
principal and agent) itself.97 The better view, however, is that the law governing a principal’s
status as a party to an arbitration agreement should be either (a) that of the place where the
agent was either headquartered or acted,98 or (b) that of the arbitration agreement itself, in-
sofar as other parties to the arbitration agreement are concerned, as with other issues of

Dicey, Morris and Collins on The Conflict of Laws ¶33R-432 (15th ed. 2012 & Supp. 2019).
94 See, e.g., InterGen NV v. Grina, 344 F.3d 134, 147-48 (1st Cir. 2003) (“traditional” and “usual” agency
principles); E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187, 194, 198
(3d Cir. 2001) (“traditional principles of agency law may bind a non-signatory to an arbitration agreement”);
Int’l Paper Co. v. Schwabedissen Maschinen & Anlagen GmbH, 206 F.3d 411, 417 (4th Cir. 2000) (“common law
principles of contract and agency law” could provide basis “for binding nonsignatories to arbitration agree-
ments”); Bel-Ray Co., Inc. v. Chemrite (Pty) Ltd, 181 F.3d 435, 445 (3d Cir. 1999) (applying “traditional prin-
ciples of contract and agency law”); Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1122 (3d
Cir. 1993); In re Oil Spill by Amoco Cadiz, 659 F.2d 789, 795-96 (7th Cir. 1981); Ecuador v. ChevronTexaco Corp.,
376 F.Supp.2d 334, 353-56 (S.D.N.Y. 2005), rev’d on other grounds, 638 F.3d 384 (2d Cir. 2011); Hidrocarburos
y Derivados, CA v. Lemos, 453 F.Supp. 160, 167 (S.D.N.Y. 1977).
95 Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (U.S. S.Ct. 2009) (“‘traditional principles’ of state
law allow a contract to be enforced by or against nonparties to the contract through ‘assumption, piercing the
corporate veil, alter ego, incorporation by reference, third party beneficiary theories, waiver and estoppel’”)
(quoting 21 Williston on Contracts §57:19 (4th ed. 2001)). See also Gross v. GGNSC Southaven LLC, 817 F.3d
169 (5th Cir. 2016) (“the ‘federal policy favoring arbitration does not apply to the determination of whether
there is a valid agreement to arbitrate between the parties.’ … Instead, we ‘apply ordinary state-law principles
that govern the formation of contracts.’”) (quoting Am. Heritage Life Ins. Co. v. Lang, 321 F.3d 533, 537-38 (5th
Cir. 2003); Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996)); Wren Dist., Inc. v. Phone Mate, Inc., 600
F.Supp. 1576, 1580-81 (E.D.N.Y. 1985) (“state contract law principles”); Farkar Co. v. R.A. Hanson DISC, Ltd,
441 F.Supp. 841, 845 (S.D.N.Y. 1977) (“we know of no such federal law of contracts. For general principles of
contract law, federal courts rely on state law.”), modified on other grounds, 604 F.2d 1 (2d Cir. 1979).
96 See, e.g., Todd v. S.S. Mut. Underwriting Ass’n, 601 F.3d 329, 334 (5th Cir. 2010) (“in both FAA and [New
York] Convention cases, courts have largely relied on the same common law contract and agency principles to
determine whether nonsignatories must arbitrate, and not law derived from statute or treaty”).
97 See, e.g., Interim Award in ICC Case No. 14617, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection
of ICC Arbitral Awards 2012-2015 119, 123 (2019) (“Whether or not there is a valid agency with respect to the
representative is not to be determined by reference to the proper law of the contract between the two princi-
pals, but by reference to the law that determines the relationship between the alleged representative and the
principal sought to be bound”).
98 See, e.g., Hague Convention of 14 March 1978 on the Law Applicable to Agency, Art. 11; Judgment of
4 September 2003, XXX Y.B. Comm. Arb. 528 (Oberlandesgericht Celle) (2005) (law of place where agent
acted); Pfeifer, Hague Convention on the Law Applicable to Agency, 26 Am. J. Comp. L. 434, 435-36, 439 (1977-
1978) (law applicable to relations between principal and third party is internal law of state where agent had
business establishment or acted). See also Award in ICC Case No. 5832, 115 J.D.I. (Clunet) 1198 (1988) (dis-
tinguishing between (1) law governing arbitration agreement (law of seat); (2) law governing agent’s capacity
to conclude arbitration agreement on behalf of principal (law of principal’s registered office); and (3) form in
which such capacity should have been conferred on agent (law of jurisdiction in which agreement between
agent and principal was concluded).

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Gary B. Born §10.02[B]

formation.99 These alternative choices rest on the view that the law governing the princi-
pal-agent relationship will likely not be known or readily accessible to a counter-party.100
In principle, as with other choice-of-law issues in the context of arbitration agreements,101
a validation principle should apply to the effects of an agency relationship on a non-signatory
party’s status under an arbitration agreement. If either the law governing the underlying arbi-
tration agreement or the law governing the agency relationship would subject the principal (or
the agent) to the arbitration agreement, then the non-signatory should be bound (and bene-
fited) by that agreement. This is consistent with the likely intentions of the parties and serves
more general interests in efficiency and fairness, by centralizing disputes in a single forum.102

[B] Apparent or Ostensible Authority

Closely related to agency as a basis for concluding that an entity is party to an arbitration
agreement is ostensible or apparent authority.103 This is referred to as the “principle of appear-
ance” or “mandat apparent” in some jurisdictions.104

99 See §4.04; Sphere Drake Ins. Ltd v. Clarendon Nat’l Ins. Co., 263 F.3d 26, 32 n.3 (2d Cir. 2001) (applying
contractual choice of law to determine whether non-signatory principal was bound by arbitration agreement
signed by agent). See also Judgment of 18 February 2016, DFT 4A_84/2015, ¶3.3.1 (Swiss Fed. Trib.) (whether
putative principal is party to arbitration agreement in Swiss-seated arbitration is issue of formal validity subject
to Swiss private international law); Restatement (Second) Conflict of Laws §292 (1971) (entitled “Contractual
Liability of Principal to Third Person” and applying law of “state which, with respect to the particular issue, has
the most significant relationship to the parties and the transaction under the principles stated in §6”); L. Col-
lins et al. (eds.), Dicey, Morris and Collins on The Conflict of Laws ¶33R-432 (15th ed. 2012 & Supp. 2019) (“The
issue whether the agent is able to bind the principal to a contract with a third party, or a term of that contract,
is governed by the law which would govern that contract, or term, if the agent’s authority were established”).
This can be difficult, however, given that courts in one jurisdiction may apply different laws as proper laws of
arbitration agreement. See Pearson, Sulamérica v. Enesa: The Hidden Pro-Validation Approach Adopted by the
English Courts with Respect to the Proper Law of the Arbitration Agreement, 29 Arb. Int’l 115 (2013).
100 The same concern applies to application of the law governing the arbitration agreement to determine
whether a non-signatory principal is bound. See Final Award in ICC Case No. 6268, XVI Y.B. Comm. Arb. 119,
120 (1991) (“we would not resort to a choice of law in the contract itself to determine in the first instance
whether that contract binds [an entity] which contends it is not a party to the contract”).
101 See §4.04 (especially §4.04[B]); §§4.05-4.07).
102 See §1.02[B][2].
103 See Restatement (Third) of Agency §2.03 (2006) (“Apparent authority is the power held by an agent or
other actor to affect a principal’s legal relations with third parties when a third party reasonably believes the ac-
tor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestations”);
2002 Principles of European Contract Law, Art. 3:201 (“A person is to be treated as having granted authority
to an apparent agent if the person’s statements or conduct induce the third party reasonably and in good faith
to believe that the apparent agent has been granted authority for the act performed by it”); UNIDROIT, Prin-
ciples of International Commercial Contracts Art. 2.2.5(2) (2016) (“where the principal causes the third party
reasonably to believe that the agent has authority to act on behalf of the principal and that the agent is acting
within the scope of that authority, the principal may not invoke against the third party the lack of authority of
the agent”); H. Beale (ed.), Chitty on Contracts ¶31-056 (33d ed. 2018).
104 See, e.g., Judgment of 4 May 2017, 2018 Rev. Arb. 765, 767 (French Cour de Cassation Civ. 1) (putative
agent’s behavior can create appearance of acting on behalf of principal who may be bound to arbitration agree-
ment as a result); Judgment of 16 February 2017, DFT 4A_473/2016, ¶3.1.2 (Swiss Fed. Trib.) (principle of ap-
pearance recognized under Swiss law to determine ratione personae effects of arbitration agreement); Judgment of
7 October 1999, Russanglia v. Delom, 2000 Rev. Arb. 288, 289 (Paris Cour d’Appel) (“principle of appearance ap-
plicable in international commercial relations”); J. Herbots (ed.), International Encyclopaedia of Laws: Contracts
¶477 (France) (1993 & Update 1999) (doctrine of apparent agency under French law, “mandat apparent”).

1537
§10.02[B] Parties to International Arbitration Agreements

Under the apparent authority theory, a party may be bound by another entity’s acts pur-
portedly entered into on its behalf, even where those acts were unauthorized, if the putative
principal created the appearance of authorization through words or conduct, leading a count-
er-party reasonably to believe that authorization actually existed.105 In particular, this theory
of apparent authority can bind the “apparent” principal to a contract (including an arbitration
agreement) entered into putatively on its behalf by the “apparent” agent.106 In the words of one
U.S. decision, an “agent enjoys implied authority to enter into a transaction when verbal or
other acts by a principal reasonably give the appearance of authority to the agent.”107 Or, from
a civil law perspective, “[w]hat French law calls ‘la théorie du mandat apparent’ (the principle
of apparent authority) is generally accepted in international arbitration.”108

105 See, e.g., 2002 Principles of European Contract Law, Art. 3:201(3); UNIDROIT, Principles of Interna-
tional Commercial Contracts Art. 2.2.5 (2016); J. Herbots (ed.), International Encyclopaedia of Laws: Contracts
¶242 (France) (1993 & Update 1999) (in France, considering “nature of the purported contract; the agent’s
and the third party’s profession and experience; the use by the agent of the principal’s headed notepaper; the
past habit to act in the principal’s name, and even the usual lack of autonomy of the apparent agent towards the
principal”); P. Watts (ed.), Bowstead & Reynold on Agency ¶8-011 (21st ed. 2017) (“principal may be bound by
the acts of an agent which he has not authorised, and even has forbidden”); 12 Williston on Contracts §35:11
(4th ed. 1990 & Update 2013) (“An agent has the power to make contracts that are binding on a principal not
only when the agent has actual authority, express or implied, but also when the principal, though not intending
to confer authority on the agent, nevertheless holds the agent out to the public, or to the party with whom the
agent deals, as having the appearance of authority”).
106 See, e.g., Award in ICC Case No. 5730, 117 J.D.I. (Clunet) 1029 (1990); Award in ICC Case No. 1434, 103
J.D.I. (Clunet) 978 (1976) (controlling person of group of companies led counter-party to “justifiably believe
that he engaged all of the companies of the group that he managed”); Award in Zurich Chamber of Commerce
Case No. 188/1991 of 11 February 1993, cited in Judgment of 1 September 1993, 14 ASA Bull. 623 (Swiss Fed.
Trib.) (1996) (Chinese official had apparent authority to bind Chinese state entity); Telenor Mobile Commc’ns
AS v. Storm LLC, 584 F.3d 396, 411-12 (2d Cir. 2009) (“agent has apparent authority if ‘a principal places agent
in a position where it appears that the agent has certain powers which he may or may not possess’”) (quoting
Masuda v. Kawasaki Dockyard Co., 328 F.2d 662, 665 (2d Cir. 1964)); Ayco Co. LP v. Frisch, 2012 WL 42134, at
*7 n.5 (N.D.N.Y.) (“existence of ‘apparent authority’ depends upon a factual showing that the third party relied
upon the misrepresentation of the agent because of some misleading conduct on the part of the principal – not
the agent”); Alamria v. Telcor Int’l, Inc., 920 F.Supp. 658, 674-75 (D. Md. 1996); Bookman v. Britthaven, 233
N.C.App. 454, 458 (N.C. Ct. App. 2014) (“Apparent authority is that authority which the principal has held
the agent out as possessing or which he has permitted the agent to represent that he possesses”); Munn v. Hay-
mount Rehab. & Nursing Ctr, 208 N.C.App. 632, 639, 704 (2010); SEB Trygg Liv Holding AB v. Manches [2005]
EWCA Civ 1237 (English Ct. App.) (successor company, which did not commence arbitral proceedings, was
party to arbitration and bound by award because former director of predecessor company had ostensible au-
thority (as well as actual authority) from predecessor company in 1997 and thereafter to instruct insurance
expert, and through him solicitors, to bring and continue proceedings on behalf of predecessor company);
Judgment of 7 October 1999, Russanglia v. Delom, 2000 Rev. Arb. 288 (Paris Cour d’Appel).
107 99 Commercial St., Inc. v. Goldberg, 811 F.Supp. 900, 906 (S.D.N.Y. 1993).
108 Award in ICC Case No. 10504, discussed in Grigera Naón, Choice-of-Law Problems in International Com-
mercial Arbitration, 289 Recueil des Cours 9, 103 (2001). See also Judgment of 8 July 2009, SOERNI v. Air Sea
Broker Ltd, XXXV Y.B. Comm. Arb. 356, 358 (French Cour de Cassation) (2010) (“‘arbitration rules of the
CLS bill of lading’ was signed on SOERNI’s behalf by Y, the sole contact of ASB during the negotiations – ASB
not having been warned, either before or after the signature of the Letter, of [Y’s] possible lack of power by
the managers of SOERNI, who on the contrary tacitly ratified the operation by asking for an estimate for a
supplementary insurance”).

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Gary B. Born §10.02[C]

This doctrine rests in part on principles of contract law and good faith, aimed at objective-
ly identifying the parties to a contract, but also on notions akin to estoppel and abuse of right,
which operate independently from principles of consent.109 As explained by one authority:
“Ostensible authority, on the other hand, derives not from any consensual arrange-
ment between the principal and the agent, but is founded on a representation made
by the principal to the third party which is intended to convey, and does convey, to
the third party that the arrangement entered into under the apparent authority of the
agent will be binding on the principal.”110
As with agency, the apparent authority doctrine raises choice-of-law issues. Possibly applica-
ble national laws include the law governing the arbitration agreement,111 the law of the state
where the putative principal’s or putative agent’s conduct occurred, or the law of the state
where the counter-party apprehends the putative principal’s conduct or statements.112
There are few principled grounds for choosing among the options presented by existing
choice-of-law rules, providing the basis for a substantial argument that a specialized rule
of international law governing apparent authority should apply to international arbitration
agreements.113 Such a rule would not upset private expectations (for example, reflected in
choice-of-law agreements), given that apparent authority does not rest on principles of con-
sent. A rule of substantive international law, governing apparent authority, would also be con-
sistent with the better-reasoned approach, discussed below, to the choice of law governing
estoppel in the context of international arbitration agreements.114

[C] Implied Consent

As discussed above, it is not only by formal execution of an agreement, as a specifically iden-
tified contractual party, that an entity can become a party to that agreement. Under most de-
veloped legal systems, an entity may become a party to a contract, including an arbitration

109 See, e.g., Award in ICC Case No. 10504, discussed in Grigera Naón, Choice-of-Law Problems in Internation-
al Commercial Arbitration, 289 Recueil des Cours 9, 103 (2001) (“no more than an application of the principle
of good faith considered as a basic requirement in international business relations”); Utilities Optimization
Group, LLC v. TIN, Inc., 440 F.App’x 249, 252 (5th Cir. 2011) (“Apparent authority is based on estoppel”);
Marfia v. T.C. Ziraat Bankasi, 100 F.3d 243, 251 (2d Cir. 1996) (where there is apparent authority, “the prin-
cipal is estopped to deny that the agent’s act was not authorized”); Miller v. Mueller, 343 A.2d 922, 926 (Md.
App. 1975) (“Apparent authority may arise when the actions of the principal, reasonably interpreted, cause a
third person to believe in good faith that the principal consents to the acts of the agent”). See also Geneva Con-
vention on Agency in the International Sale of Goods, Art. 14(2) (1983) (not in force) (“Where the conduct
of the principal causes the third party reasonably and in good faith to believe that the agent has authority to act
on behalf of the principal and that the agent is acting within the scope of that authority, the principal may not
invoke against the third party the lack of authority of the agent”); P. Watts (ed.), Bowstead & Reynolds on Agency
¶8-028 (21st ed. 2017) (in English law, doctrine based on “weak form” of estoppel).
110 Kett v. Shannon, [1987] ILRM 364, ¶8 (Irish S.Ct.).
111 See L. Collins et al. (eds.), Dicey, Morris and Collins on The Conflict of Laws ¶33R-432 (15th ed. 2012 &
Supp. 2019).
112 See Restatement (Second) Conflict of Laws §292 (1971); Blessing, The Law Applicable to the Arbitration
Clause, in A. van den Berg (ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40 Years of Ap-
plication of the New York Convention 168, 176-77 (1999); P. Schlosser, Das Recht der Internationalen Privaten
Schiedsgerichtsbarkeit ¶352 (2d ed. 1989); B. von Hoffmann & K. Thorn, Internationales Privatrecht 302 (9th
ed. 2007).
113 See §10.05[C][2].
114 See §10.02[K].

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§10.02[C] Parties to International Arbitration Agreements

agreement, impliedly – typically, either by conduct or non-explicit declarations – as well as by

express agreement or formal execution of an agreement.115
In general, ordinary principles of contract law apply to issues of implied consent (as to oth-
er issues) with respect to arbitration agreements.116 As discussed above, authorities in some
jurisdictions impose requirements for express consent to arbitration agreements, but these
decisions are dated and contrary to Article II of the New York Convention.117 A few other
national arbitration statutes expressly address the issue of implied consent to an arbitration
agreement,118 but such provisions are exceptional.
The fundamental question in the context of implied consent is whether the parties’ inten-
tion was that a particular entity be a party to the arbitration agreement. Although the non-sig-
natory’s intent is often most controversial, the intention of other parties to be bound by the
agreement to arbitrate with the non-signatory is also necessary.119 That is, even if a non-signa-
tory intended to be bound by the arbitration agreement, one must also determine whether the
signatory (and other) parties to the agreement accepted it as such: for commercial or other
reasons, signatories to an arbitration agreement may wish to extend their obligations to arbi-
trate only to those entities that have signed the agreement, and not to others.
Questions of implied consent arise in numerous factual settings. Some arbitral tribunals
have held that participation in the negotiation and/or performance of some or all of the
obligations of a contract, even when unsigned by a counter-party, can bind a party to that
agreement, including its arbitration provision.120 As one award reasoned, the “scope of an

115 See §5.04[E][6]; Award in ICC Case No. 5721, 117 J.D.I. (Clunet) 1019, 1024 (1990) (“Of course, such
an intention can be merely implicit, otherwise any discussion of extension would have no meaning”); Final
Ad Hoc Award of 24 August 2010, 29 ASA Bull. 890 (2011) (quoting commentary with approval: “case law
admits the extension of an arbitration agreement to a third party (i) if such party has intervened in a particularly
intense manner in the execution of the contract containing the arbitration clause or (ii) if the third party has
reserved his right to interfere in the contract by providing for this in a connected contract”); Judgment of 15
January 2019, Case No. 28/14.3TBOHP (Portuguese Supremo Tribunal de Justiça) (binding non-signatories
(affiliated with signatories) to arbitration agreement based on implied consent); Judgment of 16 December 2014,
No. 68/2014 (Madrid Tribunal Superior de Justicia) (binding non-signatories to arbitration agreement based
on implied consent); 2002 Principles of European Contract Law, Art. 2:102 (“The intention of a party to be
legally bound by contract is to be determined from the party’s statements or conduct as they were reasonably
understood by the other party”); UNIDROIT, Principles of International Commercial Contracts Art. 2.1.1 com-
ment 2 (2016); J. Herbots (ed.), International Encyclopaedia of Laws: Contracts ¶40 (Belgium), ¶46 (France),
¶109 (Austria), ¶154 (Denmark) (1993 & Update 2019). See also Bharucha et al., The Extension of Arbitration
Agreements to Non-Signatories: A Global Perspective, 5(1) Indian J. Arb. L. 35, 62 (2016) (“general trend” is to
uphold “arbitration agreement [that] was concluded by the parties either expressly or impliedly”).
116 See §10.01[D].
117 See §§5.02[A][2][d] & [g].
118 See, e.g., Peruvian Arbitration Law, Art. 14 (“the arbitration agreement extends to those who consent to
submit to arbitration, in good faith, as determined by their active and decisive participation in the negotiation,
execution, performance or termination of the contract that contains the arbitration agreement or to which
the agreement is related. It also extends to those who seek to attain any rights or benefits from the contract,
according to its terms”).
119 W. Craig, W. Park & J. Paulsson, International Chamber of Commerce Arbitration ¶5.09 (3d ed. 2000).
The requirement for both parties’ consent is implicit in the requirement for “agreement” in both international
conventions, national law and arbitral rules. See, e.g., New York Convention, Art. II(3) (“parties have made an
agreement”). See §2.02[C][1][b][i].
120 See, e.g., Partial Award in ICC Case No. 13774, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection
of ICC Arbitral Awards 2012-2015 287, 293-94 (2019) (doctrine of assumption “arises when the subsequent
conduct of the non-signatory indicates that it is assuming the obligation to arbitrate”); Final Award in ICC Case

1540
Gary B. Born §10.02[C]

arbitration clause may be extended to non-signatory companies with separate legal [exis-
tence] only if they played an active role in the negotiations leading to the clause, or if they are
directly implicated in the agreement.”121
Other tribunals have held that a company’s awareness of a contract (including an arbitra-
tion clause) between other parties, and its confirmation of one aspect of the underlying con-
tract, does not necessarily make the company a party to the arbitration clause.122 In general,
arbitral awards have also held that merely incidental involvement in contract negotiation or
contractual performance is insufficient to constitute consent to the underlying contract, or its
arbitration clause.123
National courts have adopted similar approaches to issues of implied consent to an in-
ternational arbitration agreement.124 Where a party conducts itself as if it were a party to a
commercial contract, by playing a substantial role in negotiations and/or performance of the
contract, it may be held to have impliedly consented to be bound by the contract.125 In the

No. 9771, XXIX Y.B. Comm. Arb. 46 (2004) (party’s continued involvement in performance of contract con-
firmed its position as a party, despite assignment of contract to another company); Partial Award in ICC Case
No. 6000, 2(2) ICC Ct. Bull. 31, 34 (1991) (company subject to arbitration clause because it was “involved in
the conclusion, the performance and the termination of the contracts in dispute”); Final Award in Ad Hoc Case
of 24 August 2011, 29 ASA Bull. 884, 890 (2011) (“The behaviour and role of the non-signatory in the nego-
tiation phase of the agreement as well as its performance must be looked at to determine the party’s actual or
implied intent”). See also Restatement of the U.S. Law of International Commercial and Investor-State Arbitration
§2.3 comment c (2019) (“[A] party may impliedly consent to an arbitration agreement. … It may, for instance,
perform obligations established by the underlying contract, affirmatively invoke the arbitration agreement to
commence an arbitration, or fail to object to arbitral jurisdiction …”).
121 Final Award in ICC Case No. 6519, 2(2) ICC Ct. Bull. 34, 35 (1991).
122 See, e.g., Award in ICC Case No. 6769, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC
Arbitral Awards 1991-1995 456 (1997); Award in ICC Case No. 5721, 117 J.D.I. (Clunet) 1019, 1024 (1990)
(finding no consent where the non-signatory was not “focus of the contractual agreements”). But see Judgment
of 30 November 1988, Korsnas Marma v. Durand-Auzias, 1989 Rev. Arb. 691 (Paris Cour d’Appel) (court appar-
ently presumed non-signatory’s intention to be bound from its awareness of arbitration clause). See also J.-F.
Poudret & S. Besson, Comparative Law of International Arbitration ¶256 (2d ed. 2007).
123 See, e.g., Award in ICC Case No. 6673, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC
Arbitral Awards 1991-1995 429 (1997) (non-signatory parent of signatory to license agreement is not party to
that agreement, or its arbitration clause, by virtue of ownership of licensed property); Final Award in ICC Case
No. 6519, 2(2) ICC Ct. Bull. 34 (1991) (one of three non-signatory affiliates bound by agreement because of
involvement in negotiations and performance; two, less-involved affiliates not bound); Award in ICC Case No.
4972, in S. Jarvin, Y. Derains & J.-J. Arnaldez (eds.), Collection of ICC Arbitral Awards 1986-1990 380 (1994);
Interim Award in ICC Case No. 4504, 113 J.D.I. (Clunet) 1118 (1986) (role of non-signatories in negotiation
and performance of contract was insufficient to warrant conclusion they had assumed contract); Award in ICC
Case No. 2138, in S. Jarvin & Y. Derains (eds.), Collection of ICC Arbitral Awards 1974-1985 242 (1990); Award
in Geneva Chamber of Commerce Case of 24 March 2000, 21 ASA Bull. 781 (2003) (insufficient evidence that
conduct indicated consent to contract or arbitration clause); J.-F. Poudret & S. Besson, Comparative Law of
International Arbitration ¶254 (2d ed. 2007).
124 There are differences in the standards of proof and factors relevant to finding an implied contract in dif-
ferent jurisdictions. Silva-Romero & Velarde-Saffer, The Extension of the Arbitral Agreement to Non-Signatories
in Europe: A Uniform Approach?, 5 Am. U. Bus. L. Rev. 317 (2016).
125 See, e.g., Gvozdenovic v. United Air Lines, Inc., 933 F.2d 1100, 1105 (2d Cir. 1991) (“agreement [to arbi-
trate] may be implied from the party’s conduct”); Town & Country Salida, Inc. v. Dealer Computer Servs., Inc.,
2012 WL 1964106, at *7 (E.D. Mich.) (party’s conduct may imply its agreement to arbitrate); In re TFT-LCD
(Flat Panel) Antitrust Litg., 2011 WL 5325589 (N.D. Cal.) (requiring non-signatory to arbitrate when agree-
ments referenced to non-signatory and “expressly contemplate[d]” that it would perform portions of contracts
on behalf of signatory); Scone Invs., LP v. Am. Third Mkt Corp., 992 F.Supp. 378, 381 (S.D.N.Y. 1998) (agreement

1541
§10.02[C] Parties to International Arbitration Agreements

words of the Swiss Federal Tribunal, “a third party that becomes involved in the performance
of a contract containing the arbitration agreement is deemed to have adhered to it through its
acts if from its involvement one may deduct the intent to become a party to the arbitration
agreement.”126 Again, however, merely incidental involvement in negotiations or performance
is consistently held to be insufficient to constitute implied consent to be bound by the con-
tract, or its arbitration clause.127

to arbitrate can be implied from parties’ conduct); Blashka v. Greenway Capital Corp., 1995 WL 608284, at *4-6
(S.D.N.Y.) (even in absence of signed contract, agreement to arbitrate may be implied from party’s conduct);
SEA2011 Inc. v. ICT Ltd [2018] EWHC 520 (Comm) (English High Ct.) (parties impliedly agreed to be in
contractual relationship on same terms as previous contract); Judgment of 7 April 2014, DFT 4A_450/2013,
¶3.5.6.1 (Swiss Fed. Trib.) (“a third party involving itself in the performance of the contract containing the
arbitration agreement is deemed to have adhered to the clause by conclusive acts if it is possible to infer from
its involvement its willingness to be bound by the arbitration clause”); Judgment of 6 October 2010, 2010 Rev.
Arb. 813 (French Cour de Cassation Civ. 1); Judgment of 17 February 2011, Gouv’t du Pakistan, Min. Affaires
Religieuses v. Sté Dallah Real Estate & Tourism Holding Co., XXXVI Y.B. Comm. Arb. 590, ¶¶592 et seq. (Paris
Cour d’Appel) (2011) (“claimant had been the defendant’s only counterpart in all (pre-)contractual dealings,
had terminated the contract and had behaved at all times as if it, rather than a Trust which was the nomi-
nal contracting party (and had ceased to exist before the contract’s termination), were the ‘true party’ to the
contract”); Judgment of 28 November 1989, 1990 Rev. Arb. 675 (Paris Cour d’Appel) (party’s performance of
contractual obligations of another entity constituted consent to underlying agreement, including arbitration
clause); Judgment of 26 August 2015, Case No. 0035404-55.2013.8.26.0100, 8 (São Paulo Tribunais Regionais
Federais) (“the plaintiffs’ consent [to arbitration] can be implied from the circumstances, that is, the plaintiffs’
conduct in negotiations …”); Judgment of 27 May 2015, Violeta SA v. Food Source SA, Case No. 868-13, 4 (Pana-
manian Corte Suprema de Justicia) (“It appears that [non-signatory] had actively intervened in the negotiation
and execution of the lease agreement signed by [signatory] and [signatory]; therefore, it is party to the disputes
that arise from the contract that includes the arbitration agreement”). See also Lamm & Aqua, Defining the
Party: Who Is A Proper Party in An International Arbitration Before the American Arbitration Association?, 34 Geo.
Wash. Int’l L. Rev. 711, 725 (2002) (“A party may be bound by an arbitration clause that it has not signed if its
subsequent conduct indicates that it has assumed the obligation to arbitrate”).
126 Judgment of 19 August 2008, DFT 4A_128/2008, ¶3.2 (Swiss Fed. Trib.). See also Judgment of 17 April
2019, DFT 4A_646/2018 (Swiss Fed. Trib.) (non-signatory performed distribution relationship for many
years and impliedly expressed intention to be party to agreement and arbitration agreement within); Judgment
of 19 April 2011, DFT 4A_44/2011 (Swiss Fed. Trib.); Judgment of 5 December 2008, DFT 4A_376/2008,
¶8.6 (Swiss Fed. Trib.) (“Considering the intense involvement of D, B and C Ltd in the preparation of the
Employment Contract and the role that they reserved for themselves in connection with the performance
of that contract, it must be concluded that they acted in a way that binds them to the arbitration agreement
contained in the contract, the contents of which is incidentally identical to that which is in the Sales Con-
tract”); Judgment of 16 October 2003, 22 ASA Bull. 364 (Swiss Fed. Trib.) (2004); B. Berger & F. Kellerhals,
International and Domestic Arbitration in Switzerland ¶567 (3d ed. 2015); G. Kaufmann-Kohler & A. Rigozzi,
International Arbitration: Law and Practice in Switzerland ¶3.179 (2015); Naegeli & Schmitz, Switzerland: Strict
Test for the Extension of Arbitration Agreements to Non-Signatories, Note on An Important Decision Rendered by the
Swiss Federal Tribunal, 2009 SchiedsVZ 185; N. Voser, Multi-Party Disputes and Joinder of Third Parties, in A. van
den Berg (ed.), 50 Years of the New York Convention 371-72 (2009).
127 See, e.g., Air Line Pilots Ass’n Int’l v. US Airways Group Inc., 609 F.3d 338, 347 (4th Cir. 2010) (declining
to imply agreement to arbitrate where party did not show “clear intent” to do so by participating, or expressing
willingness to participate, in arbitration); Sec. Ins. Co. of Hartford v. TIG Ins. Co, 360 F.3d 322, 322 (2d Cir.
2004) (“[third] party’s participation in preliminary arbitration proceedings did not result in waiver of its right
to seek a stay of arbitration pending outcome of the related litigation, particularly where [third] party notified
arbitration panel early in preliminary proceedings of possibility it would move to stay arbitration”); Promo-
tora de Navegacion, SA v. Sea Containers, Ltd, 131 F.Supp.2d 412, 419-21 (S.D.N.Y. 2000) (declining to imply
agreement to arbitrate where record failed to demonstrate “requisite clear and unambiguous intent” on part of
non-signatory to arbitrate).

1542
Gary B. Born §10.02[C]

Implied consent to be bound by the arbitration clause in one contract can also be inferred
from a party’s conclusion of a related agreement.128 This type of analysis has close parallels
to the incorporation of arbitration agreements by reference, which is discussed above,129 and
which some courts have referred to as a basis for binding a non-signatory to an arbitration
agreement.130
As with other non-signatory issues, it is essential to consider questions of implied con-
sent to an arbitration agreement in the context of the separability presumption. As discussed
above, it is a party’s implied consent to arbitrate – not to deliver or purchase goods or under-
take other commercial activities – that is decisive.131
Nonetheless, in most instances, a party’s consent to the underlying contract will carry
with it consent to the associated arbitration clause, just as a party’s formal execution of the un-
derlying contract carries with it consent to the arbitration agreement; there are circumstances
where this will not be the case, but these are exceptional.132 Again, negotiation or involve-
ment in performance of only isolated aspects of a contract is less likely to constitute consent
to the arbitration clause than broad involvement in many or central aspects of the contractual
relationship.
There are also instances in which a party’s conduct after a dispute arises evidences its im-
plied consent to an arbitration clause. A classic example of such consent is where a non-sig-
natory party affirmatively invokes an arbitration clause or fails to object when another party
invokes the clause against it133 (with this factual scenario often also being considered under

128 See, e.g., McBro Planning & Dev. Co. v. Triangle Elec. Constr. Co. Inc., 741 F.2d 342, 344 (11th Cir. 1984)
(non-signatory to contract containing arbitration clause was bound to arbitrate dispute where claims were in-
extricably intertwined with duties created in underlying contract and non-signatory signed related contract
which contained arbitration clause); Judgment of 5 December 2008, DFT 4A_376/2008 (Swiss Fed. Trib.) (up-
holding jurisdiction over non-signatories based on conclusion that they were parties to related contracts and
were intended to be bound by arbitration clause in agreement they did not sign); Astel-Peiniger Joint Venture v.
Argos Eng’g Heavy Indus. Co., [1994] 3 HKC 328 (H.K. Ct. First Inst.) (“back-to-back” subcontract sufficient to
demonstrate parties’ intention to incorporate arbitration agreement contained in original contract into subcon-
tract); Chloro Controls India Pte Ltd v. Severn Trent Water Purification Inc., (2013) 1 SCC 641, ¶¶68-69 (Indian
S.Ct.) (“where the parties execute different agreements but all with one primary object in mind, the Court
would normally hold the parties to the bargain of arbitration and not encourage its avoidance”); Judgment of 3
August 2006, Chaval v. Liebherr, Recurso Especial No. 653.733-RJ 2004/0102276-0 (Brazilian Superior Tribu-
nal de Justiça) (arbitration clause binds non-signatory because of “intertwined agreements”). See also Chinese
Supreme Court, Reply to the Request of the Higher People’s Court of Shanghai Municipality for Instructions on the
Case of the Revocation of the Arbitral Award No. 415 (2013) of the Shanghai International Economic and Trade
Arbitration Commission (Shanghai International Arbitration Center), [2015] Min Si Ta Zi No. 8 (newly-formed
non-signatory company designated as purchaser in sale and purchase agreement bound by arbitration clause in
agreement).
129 See §5.05.
130 See, e.g., Century Indem. Co. v. Certain Underwriters at Lloyd’s, London, 584 F.3d 513, 534 (3d Cir. 2009)
(“we have recognized incorporation by reference as one theory for binding non-signatories to arbitration
agreements”); Allstate Settlement Corp. v. Rapid Settlement, 559 F.3d 164, 170 (3d Cir. 2009); Habaş Sinai ve
Tibbi Gazlar Istihsal Endustri AS v. Sometal SAL [2010] EWHC 29 (Comm) (English High Ct.).
131 See §10.01[D].
132 See §5.04[A][5]; §5.04[E][6].
133 See §5.04[E][6][g]; Thomson-CSF, SA v. Am. Arb. Ass’n, 64 F.3d 773, 776-77 (2d Cir. 1995) (“In the
absence of a signature, a party may be bound by an arbitration clause if its subsequent conduct indicates that it
is assuming the obligation to arbitrate”); Gvozdenovic v. United Air Lines, Inc., 933 F.2d 1100, 1105 (2d Cir. 1991)
(party’s “voluntary and active participation in arbitration,” coupled with its lack of objection to arbitration,
“manifested a clear intent to arbitrate the dispute”); Clarke v. Upwork Global, Inc., 2017 WL 1957489 (S.D.N.Y.);

1543
§10.02[C] Parties to International Arbitration Agreements

principles of estoppel134). It remains essential, however, that all the relevant parties agree to a
non-signatory’s inclusion as a party to the arbitration agreement.135
As with other non-signatory doctrines, questions of implied consent raise choice-of-law
issues. Questions of implied consent should be governed by the law applicable to the arbitra-
tion agreement, as is the case with other questions of interpretation and formation.136 Given
the contractual character of the implied consent doctrine, this approach is in keeping with the
expectations of reasonable commercial parties.137
U.S. courts are divided with regard to the choice of law governing implied consent. Some
courts have applied principles of federal common law,138 while other courts have applied state
(or foreign) law, particularly when the parties’ agreement contains a choice-of-law provision.139
A few U.S. courts have concluded that, when a non-signatory objects to being subjected to an
arbitration clause, the existence of consent on its part is governed by federal common law,
while the question of consent by a non-signatory who seeks to invoke an arbitration clause is
governed by any choice-of-law agreement associated with the clause.140

Award in ICC Case Nos. 7604 & 7610, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC Arbitral
Awards 1996-2000 510 (2003) (reliance on arbitration clause to resist jurisdiction of court in national court
litigation signifies party’s consent to clause); Final Award in ICC Case No. 7453, XXII Y.B. Comm. Arb. 107
(1997).
134 See §10.02[K].
135 See Final Award in ICC Case No. 7453, XXII Y.B. Comm. Arb. 107 (1997) (no arbitration agreement
because one signatory had not accepted non-signatory as party). See also Lamm & Aqua, Defining the Party:
Who Is A Proper Party in An International Arbitration Before the American Arbitration Association?, 34 Geo. Wash.
Int’l L. Rev. 711, 727 (2002).
136 See §4.04.
137 See §4.04[B]. Where the New York Convention applies, application of implied consent rules is also
subject to the validation principle and to international limitations against discriminatory national laws. See
§4.04[A][1][b][i].
138 See, e.g., Sourcing Unlimited, Inc. v. Asimco Int’l Inc., 526 F.3d 38, 46 (1st Cir. 2008) (“In the absence of
any contention from the parties to the contrary, we apply federal common law to resolve the issues”); Chris-
topher Assocs. v. Koh Young Tech., Inc., 2011 U.S. Dist. LEXIS 164436, at *5 n.3 (C.D. Cal.) (applying “federal
common law”); Hernandez, S de RL de CV v. Smart & Final, Inc., 2010 WL 2505683, at *5 (S.D. Cal.) (applying
“ordinary principles of law and equity”); Ecuador v. ChevronTexaco Corp., 499 F.Supp.2d 452 (S.D.N.Y. 2007)
(federal common law applies to claims that non-signatory is bound by arbitration agreement (but law chosen
by parties’ choice-of-law clause applies to claims by non-signatory that it may exercise rights under arbitration
agreement)); BS Sun Shipping Monrovia v. Citgo Petroleum Corp., 509 F.Supp.2d 334 (S.D.N.Y. 2007); Fyrnetics
(H.K.) Ltd v. Quantum Group, Inc., 2003 WL 164220, at *2 (N.D. Ill.); Shaw Group, Inc. v. Triplefine Int’l Corp.,
2001 WL 883076, at *1 (S.D.N.Y.).
139 See, e.g., Motorola Credit Corp. v. Uzan, 388 F.3d 39, 51-53 (2d Cir. 2004) (“applying the parties’ choice
of law is the only way to ensure uniform application of arbitration clauses within the numerous countries that
have signed the New York Convention” and “is fully consistent with the purposes of the [FAA]”); Int’l Minerals
& Res., SA v. Pappas, 96 F.3d 586, 592 (2d Cir. 1996) (applying English law); Int’l Chartering Servs. v. Eagle Bulk
Shipping Inc., 138 F.Supp.3d 629, 638 (S.D.N.Y. 2015) (applying English law); FR8 Singapore Pte Ltd v. Albacore
Maritime Inc., 754 F.Supp.2d 628 (S.D.N.Y. 2010) (choice-of-law clause governs where non-signatory seeks to
enforce arbitration agreement against signatory); CCP Sys. AG v. Samsung Elecs. Corp. Ltd, 2010 WL 2546074,
at *8 (D.N.J.) (“Swiss law governs the issue concerning whether a non-signatory to the Software Agreement …
is permitted to invoke the arbitration clause”).
140 See, e.g., Motorola Credit Corp. v. Uzan, 388 F.3d 39, 51 (2d Cir. 2004) (“if defendants wish to invoke the
arbitration clauses in the agreements at issue, they must also accept the Swiss choice-of-law clauses that govern
those agreements”); Ecuador v. ChevronTexaco Corp., 376 F.Supp.2d 334, 355 (S.D.N.Y. 2005), rev’d on other
grounds, 638 F.3d 384 (2d Cir. 2011) (“choice-of-law clause will govern where a non-signatory to a particular
arbitration agreement seeks to enforce that agreement against a signatory, but not where a signatory seeks to

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Gary B. Born §10.02[D]

[D] Alter Ego and Veil-Piercing141

Authorities from virtually all jurisdictions hold that a party who has not assented to a contract
containing an arbitration clause may nonetheless be bound by the clause if that party is an
“alter ego” of an entity that did execute, or was otherwise a party to, the agreement. This is a
significant, but exceptional, departure from “the fundamental principle … [that] ‘each com-
pany in a group of companies (a relatively modern concept) is a separate legal entity possessed
of separate legal rights and liabilities.’”142 Likewise, it departs from the general, and basic, prin-
ciple that the arbitration agreements of companies are agreements of those companies alone,
and not their corporate affiliates.143
The alter ego doctrine is referred to in German as “Durchgriff,”144 in French as “levée du
voile social,”145 in Spanish as “levantamiento del velo societario”146 and in many English language
contexts as “piercing” or “lifting” the “corporate veil.”147 As discussed below, whatever the ter-
minology, the veil-piercing doctrine has broadly similar elements in most jurisdictions, at least
in the context of international arbitration agreements.
The International Court of Justice explained the veil-piercing doctrine in Barcelona Trac-
tion as follows:

enforce the agreement against a non-signatory”). See also §4.02[A][2][d]; §4.04[A][2][j][v]; §4.04[A][2]
[j][v](5).
141 For commentary, see P. Blumberg et al., Blumberg on Corporate Groups §§10-14 (2d ed. 2005 & Update
2019); Capuano, The Realist’s Guide to Piercing the Corporate Veil: Lessons from Hong Kong and Singapore, 23
Australian J. Corp. L. 1 (2009); B. Hanotiau, Complex Arbitrations ¶¶98, 126 (2005); Hosking, Non-Signatories
and International Arbitration in the United States: The Quest for Consent, 20 Arb. Int’l 289 (2004); Kryvoi, Pierc-
ing the Corporate Veil in International Arbitration, 1 Global Bus. L. Rev. 169 (2010); Note, Piercing the Corporate
Law Veil: The Alter Ego Doctrine Under Federal Common Law, 95 Harv. L. Rev. 853 (1982); Pimm, Jurisdiction
over Non-Signatories to the Arbitration Agreement: Can Arbitrators Pierce the Corporate Veil?, 2003 Asian Disp.
Rev. 5; Otazu, The Law Applicable to Veil Piercing in International Arbitration, 5 McGill J. Disp. Resol. 30 (2018-
2019); Ramsay & Noakes, Piercing the Corporate Veil in Australia, 19 Comp. & Sec. L.J. 250 (2001); Savage &
Leen, Family Ties: When Arbitration Agreements Bind Non-Signatory Affiliate Companies, 2003 Asian Disp. Rev.
16; Tan, Wang & Hofmann, Piercing the Corporate Veil: Historical, Theoretical and Comparative Perspectives, 26
Berkeley Bus. L.J. 140 (2019); Vidal, The Extension of Arbitration Agreements Within Groups of Companies: The
Alter Ego Doctrine in Arbitral and Court Decisions, 16(2) ICC Ct. Bull. 63 (2005).
142 Adams v. Cape Indus. plc [1990] Ch 433, 532 (English Ct. App.).
143 See Dayhoff Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1297 (3d Cir. 1996) (parent company cannot “by reason
of their corporate relationship” invoke subsidiary’s arbitration clause).
144 Sandrock, Groups of Companies and Arbitration, 2 Tijdschrift voor Arbitrage 3 (2005); Gross, Zur
Inanspruchnahme Dritter vor Schiedsgerichten in Fällen der Durchgriffshaftung, 2006 SchiedsVZ 194. See also
P. Schlosser, Das Recht der Internationalen Privaten Schiedsgerichtsbarkeit ¶426 (2d ed. 1989).
145 Cohen, L’Engagement des Sociétés à l’Arbitrage, 2006 Rev. Arb. 35, 61.
146 Angell, Piercing the Corporate Veil: A Spanish Perspective, 15 Comp. L. Y.B. Int’l Bus. 343 (1993); Bouc-
kaert & Dupeyré, La Participación de Terceros en el Arbitraje Internacional, 2010:9 Spain Arb. Rev. 83; Mullerat,
Los Segundos 50 Años del Convenio de Nueva York: Reflexiones Sobre la Falta de Interpretación Uniforme de Algunos
de sus Preceptos, 2009:5 Spain Arb. Rev. 111.
147 Prest v. Petrodel Res. Ltd [2013] UKSC 34, ¶27 (U.K. S.Ct.) (“the principle that the court may be justified
in piercing the corporate veil if a company’s separate legal personality is being abused for the purpose of some
relevant wrongdoing is well established in the authorities”). See also Cape Pac. Ltd v. Lubner Controlling Inv. Pty
Ltd, [1995] (4) SA 790 (AD) (S. African S.Ct.) (“circumstances under which the Court will pierce the corpo-
rate veil … would generally have to include an element of fraud or other improper conduct in the establishment
or use of the company or the conduct of its affairs. In this connection the words ‘device,’ ‘stratagem,’ ‘cloak’ and
‘sham’ have been used.”) (quoting Shipping Corp. of India Ltd v. Evdomon Corp., [1994] (1) SA 550, 556 (A) (S.
African S.Ct.)).

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§10.02[D] Parties to International Arbitration Agreements

“the process of ‘lifting the corporate veil’ or ‘disregarding the legal entity’ has been
found justified and equitable in certain circumstances or for certain purposes. The
wealth of practice already accumulated on the subject in municipal law indicates that
the veil is lifted, for instance, to prevent misuse of the privileges of legal personality,
as in certain cases of fraud or malfeasance, to protect third persons such as creditor or
purchaser, or to prevent the evasion of legal requirements or of obligations.”148
Definitions of “alter ego” vary materially in different legal systems, and are applied in a num-
ber of different contexts. Nonetheless, the essential theory of the “alter ego” doctrine in most
jurisdictions is that one party so thoroughly dominates the affairs of another party, and has
sufficiently misused such control, that it is appropriate to disregard the two companies’ sepa-
rate legal forms, and to treat them as a single entity. In the context of arbitration agreements,
demonstrating an “alter ego” relationship under most developed legal systems requires con-
vincing evidence that one entity dominated the day-to-day actions of another and/or that it
exercised this power to work fraud or other injustice or inequity on a third party or to evade
statutory or other legal obligations.
The “alter ego” doctrine differs from principles of agency or implied consent149 in that the
parties’ intentions are not decisive; rather, the doctrine rests on overriding considerations of
equity and fairness, which mandate disregarding an entity’s separate legal identity in specified
circumstances.150 In the words of one arbitral award, “[e]quity, in common with the princi-
ples of international law, allows the corporate veil to be lifted, in order to protect third parties
against an abuse which would be to their detriment.”151 Or, as a U.S. judicial decision reasoned:
“The concept of ‘piercing the corporate veil’ is equitable in nature and courts will pierce the

148 Case Concerning the Barcelona Traction, Light & Power Co., [1970] I.C.J. Rep. 3, 38-39 (I.C.J.).
149 Some courts (mistakenly) confuse of conflate alter ego and agency analysis. See, e.g., CBF Industria de
Gusa SA v. AMCI Holdings, Inc., 850 F.3d 58, 75 (2d Cir. 2017) (applying contract and agency law to determine
“whether a third party not named in an arbitral award may have that award enforced against it under a theory
of alter-ego liability, or any other legal principle concerning the enforcement of awards”); Round Rock Research
LLC v. ASUSTEK Computer Inc., 967 F.Supp.2d 969 (D. Del. 2013) (implying agency relationship under “alter
ego theory”). The two doctrines are separate and should be analyzed separately, although there may be circum-
stances where the facts relevant to one doctrine are also (highly) relevant to the other.
150 See Award in ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC
Arbitral Awards 1996-2000 474, 479 (2003) (“The final question is to what extent the juridical fiction which
is the basis of legal entities must give way to the reality of human behavior and cease to protect those who
hide behind the corporate veil in order to promote their own interests at the cost of those who dealt with the
company”); Award in Ad Hoc Case in Geneva of 1991, 10 ASA Bull. 202, 209 (1992) (“principle of good faith
in business matters requires that the legal independence of [the subsidiary] be disregarded, because relying on
it constitutes an abuse of rights on the part of the respondent which clearly harms the legitimate interests of
the claimant”). See also First Nat’l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 629 (U.S.
S.Ct. 1983) (“our cases have long recognized ‘the broader equitable principle that the doctrine of corporate
entity, recognized generally and for most purposes, will not be regarded when to do so would work fraud or
injustice’”) (quoting Taylor v. Standard Gas & Elec. Co., 306 U.S. 307, 322 (U.S. S.Ct. 1939)); Bridas SAPIC v.
Turkmenistan, 345 F.3d 347, 359 (5th Cir. 2003) (noting alter ego “doctrine’s strong links to equity”; in con-
trast, “[t]he laws of agency … are not equitable in nature, but contractual, and do not necessarily bend in favor
of justice”); InterGen NV v. Grina, 344 F.3d 134, 149 (1st Cir. 2003) (“‘Federal common law emphasizes the
equitable character of the alter ego doctrine. … [I]t can be invoked only where equity requires the action to
assist a third party.’”) (quoting McCarthy v. Azure, 22 F.3d 351, 362-63 (1st Cir. 1994)); Town of Brookline v.
Gorsuch, 667 F.2d 215, 221 (1st Cir. 1981) (“The general rule adopted in the federal cases is that a corporate
entity may be disregarded in the interests of public convenience, fairness and equity”).
151 Westland Helicopters Ltd v. Arab Org. for Indus., Interim Award in ICC Case No. 3879 of 5 March 1984, XI
Y.B. Comm. Arb. 127, 131 (1986).

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Gary B. Born §10.02[D]

corporate veil ‘to achieve justice, equity, to remedy or avoid fraud or wrongdoing, or to impose
a just liability.’”152
Many national courts have been circumspect in piercing the corporate veil or finding an
alter ego relationship.153 In England, the corporate veil will be pierced only where the cor-
porate structure has been used to evade mandatory legal obligations or the enforcement of
existing and legitimate third party rights.154 This standard generally requires fraud or other
misconduct calculated to avoid or conceal liability through the use of company structure.155
In a frequently-cited decision, an English court emphasized that it is legitimate to structure a
corporate group so as to allocate risk between members of the group and limit the liability of
particular companies:
“we do not accept as a matter of law that the court is entitled to lift the corporate veil
as against a defendant which is the member of a corporate group merely because the
corporate structure has been used to ensure that the legal liability (if any) in respect of
particular future activities of the group (and correspondingly the risk of enforcement
of that liability) will fall on another member of the group rather than the defendant
company. Whether or not this is desirable, the right to use a corporate structure in this
manner is inherent in our corporate law.”156
Likewise, Swiss courts157 and tribunals applying Swiss law158 only disregard the corporate form
in exceptional circumstances, amounting to fraud or an abuse of right. In the words of a lead-
ing Swiss commentator:
“Swiss law … is resolutely committed to the legal independence of the company in
relation to its sole shareholder or of the subsidiary in relation to the parent company.

152 In re Cambridge Biotech Corp., 186 F.3d 1356, 1376 (Fed. Cir. 1999) (quoting Fletcher Cyclopedia Corpo-
rations §41.20, at 598-601, 603 (1999)).
153 See, e.g., Prest v. Petrodel Res. Ltd [2013] UKSC 34, ¶35 (U.K. S.Ct.).
154 Id. (“there is a limited principle of English law which applies when a person is under an existing legal ob-
ligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement
he deliberately frustrates by interposing a company under his control. The court may … pierce the corporate
veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage that
they would otherwise have obtained by the company’s separate legal personality.”). See also VTB Capital plc v.
Nutritek Int’l Corp. [2013] UKSC 5 (U.K. S.Ct.) (refusing to pierce corporate veil); Adams v. Cape Indus. plc
[1990] Ch 433, 539 (English Ct. App.).
Arbitral tribunals sitting in London and applying English law have generally reached similar conclu-
sions. See, e.g., Final Award in ICC Case No. 7626, XXII Y.B. Comm. Arb. 132 (1997). See also §10.02[E].
155 Prest v. Petrodel Res. Ltd [2013] UKSC 34 (U.K. S.Ct.); VTB Capital plc v. Nutritek Int’l Corp. [2013]
UKSC 5 (U.K. S.Ct.). See also Ben Hashem v. Ali Shayif [2008] EWHC 2380 (Fam) (English High Ct.).
156 Adams v. Cape Indus. plc [1990] Ch 433, 544 (English Ct. App.).
157 See, e.g., Judgment of 24 November 2006, DFT 4C.327/2005 (Swiss Fed. Trib.); Judgment of 16 October
2003, 22 ASA Bull. 364 (Swiss Fed. Trib.) (2004) (controlling shareholder of various companies used them
as tools for personal interests and it would be contrary to good faith to interpose corporate form); Judgment of
29 January 1996, 14 ASA Bull. 496 (Swiss Fed. Trib.) (1996); Judgment of 1 September 1993, 14 ASA Bull. 623
(Swiss Fed. Trib.) (1996).
158 See, e.g., Ad Hoc Interim Award of 9 September 1983, XII Y.B. Comm. Arb. 63, 72 (1987) (under Swiss law,
piercing corporate veil is possible in cases of “inadmissible abuse of the separation of legal entities,” “where a
corporation is used inappropriately as a shield against liability and is essentially under the influence of a natural
or legal person. … However, in view of certainty of justice, it is required to confine the doctrine of piercing the
corporate veil to gross and clear cases.”). Compare Award in Ad Hoc Case in Geneva of 1991, 10 ASA Bull. 202
(1992) (piercing corporate veil based on total domination of subsidiary and abuse of rights; domination being
inferred from undercapitalization, overlapping of administration and management and overlapping of assets).

1547
§10.02[D] Parties to International Arbitration Agreements

It will only be disregarded in exceptional circumstances, where the fact of resorting

to such a subsidiary to escape one’s obligations would amount to fraud or to a patent
abuse of right.”159
German courts are also cautious in applying veil-piercing (Durchgriff) theories,160 requiring
fraud or other misconduct.161 Indeed, some German authorities question (wrongly) whether
the veil-piercing theory, which is traditionally used for purposes of substantive liability, may
ever be used to bind non-signatories to arbitration agreements.162 163164165166167168169
170
While also relying on a potentially expansive “group of companies” theory (discussed be-
low),163 French courts appear willing, often without clearly distinguishing the doctrines,164 to

159 Poudret, L’Extension de la Clause d’Arbitrage: Approches Française et Suisse, 122 J.D.I. (Clunet) 893, 913
(1995).
160 Sandrock, Groups of Companies and Arbitration, 2 Tijdschrift voor Arbitrage 3 (2005); P. Schlosser, Das
Recht der Internationalen Privaten Schiedsgerichtsbarkeit ¶426 (2d ed. 1989).
161 Judgment of 17 September 2001, 2001 DStR 1853 (German Bundesgerichtshof). See also Judgment of
10 December 2008, 2008 DnotZ 542 (German Bundesgerichtshof); Judgment of 16 July 2007, 2008 DnotZ
213 (German Bundesgerichtshof); Judgment of 14 November 2005, 2006 DStR 808 (German Bundesgerichts-
hof); Judgment of 13 December 2004, 2005 DStR 340 (German Bundesgerichtshof); Judgment of 25 September
2003, 2004 NJW-RR 1504 (German Bundesgerichtshof); Judgment of 24 June 2003, 2002 NJW 302 (German
Bundesgerichtshof); Judgment of 9 April 2008, 2008 DStR 1976 (Oberlandesgericht Naumburg); Gross, Zur
Inanspruchnahme Dritter vor Schiedsgerichten in Fällen der Durchgriffshaftung, 2006 SchiedsVZ 194, 195.
162 Müller & Keilmann, Beteiligung am Schiedsverfahren Wider Willen?, 2007 SchiedsVZ 113, 116-17.
163 See §§10.02[E] et seq.
164 See E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International Commercial Arbitration
¶505 (1999); J.-F. Poudret & S. Besson, Comparative Law of International Arbitration ¶¶255-56 (2d ed. 2007).
165 Judgment of 11 June 1991, Orri v. des Lubrifiants Elf Aquitaine, 1992 Rev. Arb. 73 (French Cour de Cassa-
tion Civ. 1).
166 See, e.g., Delizia Ltd v. Nevsun Res. Ltd, [2017] FCA 187 (Canadian Fed. Ct. App.) (control alone is in-
sufficient to pierce corporate veil); Trans-Pac. Shipping Co. v. Atl. & Orient Trust Co., [2005] FC 311 (Canadian
Fed. Ct.) (permitting veil-piercing claims to proceed); Abener Energia v. Sunopta, Case Nos. CV-09-374167 &
CV-09-380451 (Ontario Super. Ct. 2009); Collavino Inc. v. Yemen (Tihama Dev. Auth.), [2007] ABQB 212
(Alberta Q.B.); Hi-Seas Marine Ltd v. Boelman, [2006] BCSC 488 (B.C. Sup. Ct.), aff’d, [2007] BCCA 137
(B.C. Ct. App.).
167 See, e.g., Fyffes plc v. DCC plc, [2005] IEHC 477 (Dublin High Ct.), rev’d on other grounds, [2007] IESC
36 (Irish S.Ct.); Jones v. Gunn, [1997] 2 ILRM 245 (Dublin High Ct.).
168 See, e.g., GMR Energy Ltd v. Doosan Power Sys. India Pvt Ltd, [2017] CS(COMM) 447/2017, ¶24.3
(Delhi High Ct.) (in some circumstances “this Court recognized that though limited, corporate veil could be
lifted”); Pan Liberty Nav. Co. Ltd v. World Link (H.K.) Res. Ltd, [2005] BCCA 206 (B.C. Ct. App.) (binding
non-signatory to arbitration agreement based on alter ego relationship).
169 See, e.g., Judgment of 11 September 2008, 2007 Da 90982 (Korean S.Ct.) (“If a company takes the appear-
ance of a corporate entity but is merely an individual engaging in his personal business or is used by an individ-
ual as a means to evade certain laws, the court held that the corporate veil must be pierced and the individual
behind the company shall be held responsible for the actions of the company”); Judgment of 12 November 2004,
2002 Da 66892 (Korean S.Ct.) (corporate veil can be pierced based on commingling of assets and “abuse of the
company system”); Judgment of 19 January 2001, 97 Da 21604 (Korean S.Ct.).
170 See, e.g., Lee v. Kelly McKenzie Ltd, [2004] HKCA 218, ¶16 (H.K. Ct. App.) (“The whole point of pierc-
ing the corporate veil is to look through the facade to those who were exercising real and actual control behind
it”); China Ocean Shipping Co. v. Mitrans Shipping Co., [1995] 3 HKC 123, ¶17 (H.K. Ct. App.) (“Using a
corporate structure to evade legal obligations is objectionable. The court’s power to lift the corporate veil may
be exercised to overcome such evasion so as to preserve legal obligations.”); Lee Thai Lai v. Wong Chung Kai,
[2003] HKCFI 263, ¶6 (H.K. Ct. First Inst.) (“Without seeking to be exhaustive, the normal circumstances
for lifting the corporate veil are the prevention of the corporate form from being used for the purposes of fraud,

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Gary B. Born §10.02[D]

disregard corporate identities in cases amounting to fraud.165 Courts in Canada,166 Ireland,167

India,168 Korea,169 Hong Kong170 and China171 are also prepared to pierce the corporate veil, at
least in some circumstances.
U.S. courts have often been more willing than many other authorities to apply an alter
ego analysis to subject a non-signatory to an arbitration agreement.172 According to one U.S.
decision:
“To apply the alter ego doctrine to justify the disregard of a corporate entity, the court
must determine that there is such unity of interest and ownership that separate person-
alities of the corporations no longer exist, and that failure to disregard the corporate
form would result in fraud or injustice.”173
Even in U.S. courts, the standard for establishing alter ego status is ordinarily difficult to satisfy.
The starting point is a strong presumption that a parent corporation and its affiliates are legally
separate and distinct entities.174 In the memorable words of one early authority:
“Normally, the corporation is an insulator from liability on claims of creditors. … Lim-
ited liability is the rule not the exception; and on that assumption large undertakings
are rested, vast enterprises are launched, and huge sums of capital attracted.”175

or as a device to evade a contractual or other legal obligation”).

171 See, e.g., Lee & Blumental, Parent Company and Shareholder Liability: “Piercing the Veil” of Chinese Corpo-
rate Subsidiaries, 5 Bus. L. Int’l 221 (2004); J. Tao, Arbitration Law and Practice in China 51-53 (3d ed. 2012);
Wu, Piercing China’s Corporate Veil: Open Questions from the New Company Law, 117 Yale L.J. 329 (2007).
172 See, e.g., Hicks v. Bank of Am., NA, 218 F.App’x 739, 746 (10th Cir. 2007) (original purchaser of prom-
issory note properly compelled to arbitrate even though claims arose from lawsuit initiated by subsequent
purchaser because original and subsequent purchaser were alter egos); Bridas SAPIC v. Turkmenistan, 447 F.3d
411, 416-20 (5th Cir. 2006) (applying alter ego theory to bind non-signatory to arbitration agreement, be-
cause parent both committed fraud or injustice and used subsidiary’s financial dependence to perpetuate such
wrong); Cigna Prop. & Cas. Ins. Co. v. Polaris Pictures Corp., 159 F.3d 412, 422 (9th Cir. 1998); Wm. Passalacqua
Builders, Inc. v. Resnick Dev. S., Inc., 933 F.2d 131, 138-39 (2d Cir. 1991); McAllister Bros., Inc. v. A & S Transp. Co.,
621 F.2d 519 (2d Cir. 1980). See also Hosking, Non-Signatories and International Arbitration in the United States:
The Quest for Consent, 20 Arb. Int’l 289 (2004); Lamm & Aqua, Defining the Party: Who Is A Proper Party in An
International Arbitration Before the American Arbitration Association?, 34 Geo. Wash. Int’l L. Rev. 711 (2002); A.
Steingruber, Consent in International Arbitration 160 (2012) (“in the United States the threshold for lifting the
corporate veil has traditionally been, as a result of the paramount policy in favour of arbitration, much less strict
than that adopted in European jurisdictions”).
173 Oriental Commercial & Shipping Co., Ltd v. Rosseel, NV, 609 F.Supp. 75, 78 (S.D.N.Y. 1985). See also Mass.
Carpenters Cent. Collection Agency v. A.A. Bldg Erectors, Inc., 343 F.3d 18, 21-22 (1st Cir. 2003) (“the [alter ego]
doctrine is a tool to be employed when the corporate shield, if respected, would inequitably prevent a party
from receiving what is otherwise due and owing from the person or persons who have created the shield”); C.F.
Trust, Inc. v. First Flight Ltd P’ship, 111 F.Supp.2d 734, 742 (E.D. Va. 2000) (considering “(1) whether the enti-
ties engaged in separate operations or were interdependent; (2) whether the defendant used the multiplicity of
entities as part of a plan to defraud; and (3) whether not piercing the veil would lead to substantial injustice or
inequity”).
174 InterGen NV v. Grina, 344 F.3d 134, 148 (1st Cir. 2003) (“The overarching principle … is that the
corporate form may be disregarded only if considerations of fairness or public necessity warrant such a step”)
(emphasis added); Freeman v. Complex Computing Co., 119 F.3d 1044, 1052 (2d Cir. 1997); Gorill v. Icelandair/
Flugleidir, 761 F.2d 847, 853 (2d Cir. 1985); Am. Renaissance Lines, Inc. v. Saxis S.S. Co., 502 F.2d 674, 677 (2d
Cir. 1974) (“absent findings of fraud or bad faith, a corporation … is entitled to a presumption of separateness
from a sister corporation … even if both are owned and controlled by the same individuals”).
175 Anderson v. Abbott, 321 U.S. 349, 362 (U.S. S.Ct. 1944).

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§10.02[D] Parties to International Arbitration Agreements

Many U.S. courts have also held that piercing the corporate veil is an exceptional action, in
both international and other contexts, requiring persuasive evidence to overcome the sep-
arate corporate identities of the parties.176 The existence of overlapping boards of directors
and management, 100% share ownership and common corporate logos or trademarks are not
sufficient to establish (or even particularly probative of) alter ego status.177 Similarly, under-
capitalization of a company is ordinarily not sufficient, independently, to justify piercing the
corporate veil.178
Most U.S. courts have held that overcoming the presumption of separateness requires
showing: (a) the domination of a corporate affiliate, including disregard of corporate formali-
ties, such that it has no separate identity or existence,179 and (b) fraudulent or collusive misuse

176 See, e.g., Bridas SAPIC v. Turkmenistan, 447 F.3d 411, 416 (5th Cir. 2006) (“alter ego doctrine, like all
variations of piercing the corporate veil doctrine, is reserved for exceptional cases”); Consorcio Rive v. Briggs
of Cancun, Inc., 82 F.App’x 359 (5th Cir. 2003); United Int’l Holdings, Inc. v. Wharf (Holdings) Ltd, 76 F.3d
393 (10th Cir. 1996); ARW Exploration Corp. v. Aguirre, 45 F.3d 1455, 1461 (10th Cir. 1995) (“Courts do not
lightly pierce the corporate veil, ‘even in deference to the strong policy favoring arbitration’”) (quoting Califano
v. Shearson Lehman Bros. Inc., 690 F.Supp. 1354, 1355 (S.D.N.Y. 1988)); In re Multiponics, Inc., 622 F.2d 709,
724-25 (5th Cir. 1980) (“we must remember that the alter ego doctrine and piercing of the corporate veil are
truly exceptional doctrines, reserved for those cases where the officers, directors or stockholders utilized the
corporate entity as a sham to perpetuate a fraud, to shun personal liability, or to encompass other truly unique
situations”); Patz v. Sureway Supermarket, 2018 U.S. Dist. LEXIS 215988, at *20 (E.D. La.) (alter ego doctrine
reserved for exceptional cases); Cohen v. Schroeder, 248 F.Supp.3d 511, 518 (S.D.N.Y. 2017) (court will disregard
corporate form only in exceptional case); Inter-Tel Tech., Inc. v. Linn Station Props., LLC, 360 S.W.3d 152, 168
(Ky. 2012) (“Courts should not pierce corporate veils lightly but neither should they hesitate in those cases
where the circumstances are extreme enough to justify disregard of an allegedly separate corporate entity”).
177 See, e.g., U.S. v. Bestfoods, 524 U.S. 51, 69 (U.S. S.Ct. 1998) (“well-established principle that directors
and officers holding positions with a parent and its subsidiary can and do ‘change hats’ to represent the two
corporations separately, despite their common ownership”); InterGen NV v. Grina, 344 F.3d 134, 149 (1st Cir.
2003) (“Common ownership and common management, without more, are insufficient to override corporate
separateness and pave the way for alter ego liability”); Hester Int’l Corp. v. Nigeria, 879 F.2d 170, 181 (5th Cir.
1989) (“factors of 100% ownership and appointment of the Board of Directors cannot by themselves force a
court to disregard the separateness of the juridical entities”).
178 See, e.g., Cent. Parking Sys. v. Tucker Parking Equities LLC, 2018 U.S. Dist. LEXIS 182862, at *8 (E.D.
Mo.) (undercapitalization is not per se reason to pierce corporate veil but is factor to consider); Ahcom, Ltd v.
Smeding, 2011 WL 3443499 (N.D. Cal.) (undercapitalization alone does not justify piercing corporate veil);
Lisa McConnell, Inc. v. Idearc, Inc., 2010 WL 364172, at *8 (S.D. Cal.) (undercapitalization is one “factor” among
many); Trevino v. Merscorp, Inc., 583 F.Supp.2d 521, 530 (D. Del. 2008) (undercapitalization is not per se reason
to pierce corporate veil). But see Bridas SAPIC v. Turkmenistan, 447 F.3d 411, 420 (5th Cir. 2006) (“Under­
capitalization is often critical in alter ego analysis. … The fact that a subsidiary maintains what amounts to a
‘zero balance,’ and relies exclusively upon another entity to service its debts, is strong evidence that the sub-
sidiary lacks an independent identity.”); Lumpkin v. Envirodyne Indus., Inc., 159 B.R. 814, 820 (N.D. Ill. 1993)
(“Undercapitalization has been a significant factor in many veil-piercing cases. It lends itself to analysis as disre-
spect for the corporate form, as fraudulent intent and as resulting in injustice.”).
179 See, e.g., U.S. v. Scophony Corp. of Am., 333 U.S. 795 (U.S. S.Ct. 1948); Bridas SAPIC v. Turkmenistan, 345
F.3d 347, 359 (5th Cir. 2003) (“corporate veil may be pierced to hold an alter ego liable for the commitments
of its instrumentality only if (1) the owner exercised complete control over the corporation with respect to the
transaction at issue, and (2) such control was used to commit a fraud or wrong that injured the party seeking
to pierce the veil”); InterGen NV v. Grina, 344 F.3d 134, 148-49 (1st Cir. 2003); Material Supply Int’l, Inc. v.
Sunmatch Indus. Co., 62 F.Supp.2d 13, 21 (D.C. Cir. 1999) (“In short, once unity of interest and ownership is
shown, equity counsels piercing the veil whenever adherence to the fiction of the separate existence of the cor-
poration would sanction a fraud or promote injustice”); LiquidX Inc. v. Brooklawn Capital, LLC, 254 F.Supp.3d
609, 616 (S.D.N.Y. 2017) (“In this case there is no actual conflict among the law of the states at issue, because
each employs substantially the same analysis to determine whether a corporation is the alter ego of an owner

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of that control, or equivalent misconduct, to the injury of other parties.180 In cases of complete
domination or control of one company’s day-to-day activities by another company, this may in
some circumstances be independently sufficient to pierce the corporate veil.181
U.S. judicial decisions have generally conducted fairly extensive factual inquiries in de-
ciding claims of domination or control.182 Different U.S. authorities have identified a variety
of factors that are relevant to an inquiry into control for purposes of alter ego status.183 For

or of another corporation. Each state requires a showing that one corporation is wholly under the domination
and control of another.”); Lakah v. UBS AG, 996 F.Supp.2d 250, 260 (S.D.N.Y. 2014) (“a court may pierce
the corporate veil where ‘(1) the owner exercised complete domination over the corporation with respect to
the transaction at issue, and (2) such domination was used to commit a fraud or wrong that injured the party
seeking to pierce the veil’”) (quoting MAG Portfolio Consult, GmbH v. Merlin Biomed Group LLC, 268 F.3d 58,
63 (2d Cir. 2001)); Oriental Commercial & Shipping Co., Ltd v. Rosseel, NV, 609 F.Supp. 75, 78 (S.D.N.Y. 1985)
(“To apply the alter ego doctrine to justify the disregard of a corporate entity, the court must determine that
there is such unity of interest and ownership that separate personalities of the corporations no longer exist, and
that failure to disregard the corporate form would result in fraud or injustice”); Restatement (Second) Conflict of
Laws §52 comment b (1971) (parent must “so control[] and dominate[] the subsidiary as in effect to disregard
the latter’s independent corporate existence”).
180 See, e.g., Anderson v. Abbott, 321 U.S. 349, 362 (U.S. S.Ct. 1944) (“there are occasions when the limited
liability sought to be obtained through the corporation will be qualified or denied. … The cases of fraud make
up part of that exception. But they do not exhaust it. An obvious inadequacy of capital, measured by the na-
ture and magnitude of the corporate undertaking, has frequently been an important factor in cases denying
stockholders their defense of limited liability.”); Taylor v. Standard Gas & Elec. Co., 306 U.S. 307, 322 (U.S. S.Ct.
1939) (“doctrine of corporate entity … will not be regarded when so to do would work fraud or injustice”). See
also P. Blumberg et al., Blumberg on Corporate Groups §12.03 (2d ed. 2005 & Update 2019).
181 See, e.g., First Nat’l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 621-23 (U.S. S.Ct.
1983) (separate corporate status may be disregarded when “corporate entity is so extensively controlled by its
owner that a relationship of principal and agent is created”); Crystallex Int’l Corp. v. Venezuela, 932 F.3d 126,
140 (3d Cir. 2019); Corporación Mexicana De Mantenimiento Integral, S. de RL de CV v. Pemex-Exploración y
Producción, 832 F.3d 92, 103 (2d Cir. 2016); Alejandre v. Telefonica Larga Distancia, de Puerto Rico, Inc., 183
F.3d 1277, 1284 (11th Cir. 1999); Wye Oak Tech., Inc. v. Iraq, 2018 U.S. Dist. LEXIS 194225, at *56 (D.D.C.);
DRC, Inc. v. Honduras, 71 F.Supp.3d 201, 208 (D.D.C. 2014); Servaas Inc. v. Iraq, 686 F.Supp.2d 346, 354-55
(S.D.N.Y. 2010) (“Alter ego has a clearly defined meaning in law; namely, where one entity exercises complete
domination and control over the day-to-day operations of another entity”); Dighello v. Busconi, 673 F.Supp. 85,
89 (D. Conn. 1987) (piercing corporate veil of “clearly intertwined” corporate entities).
182 See Bridas SAPIC v. Turkmenistan, 345 F.3d 347, 359 (5th Cir. 2003) (“Alter ego determinations are
highly fact-based, and require considering the totality of the circumstances in which the instrumentality func-
tions”); InterGen NV v. Grina, 344 F.3d 134, 148-49 (1st Cir. 2003) (“there is no precise litmus test for deter-
mining when the corporate form should be ignored. The overarching principle, however, is that the corporate
form may be disregarded only if considerations of fairness or public necessity warrant such a step. … courts
must apply such tests flexibly and with due regard for the demands of the federal statute at issue.”); Bhd of
Locomotive Eng’rs v. Springfield Terminal Railway Co., 210 F.3d 18, 26 (1st Cir. 2000) (“the federal standard ‘for
when it is proper to pierce the corporate veil is notably imprecise and fact-intensive”) (quoting Crane v. Green &
Freedman Baking Co., 134 F.3d 17, 21 (1st Cir. 1998)); Thomson-CSF, SA v. Am. Arb. Ass’n, 64 F.3d 773, 777-78
(2d Cir. 1995); Garcia v. Vasilia, 2019 U.S. Dist. LEXIS 147243, at *30 (S.D. Tex.) (“Delaware courts consid-
er numerous factors in the alter ego analysis, and no single factor is determinative”); Clipper Wonsild Tankers
Holding, Biodiesel Ventures, LLC, 851 F.Supp.2d 504 (S.D.N.Y. 2012) (“Veil piercing determinations are fact
specific and different with the circumstances of each case; thus, the alter ego determination must be made in
view of the totality of the facts”); In re Adler, 467 B.R. 279, 286 (Bankr. E.D.N.Y. 2012) (“courts must conduct a
broad-based inquiry into the totality of the facts to determine whether the party seeking to pierce the corporate
veil has established the domination prong of the test”); Ahcom, Ltd v. Smeding, 2011 WL 3443499, at *5 (N.D.
Cal.) (“no litmus test to determine when the corporate veil will be pierced”).
183 For a representative list, see Carte Blanche (Singapore) Pte Ltd v. Diners Club Int’l, Inc., 2 F.3d 24 (2d

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§10.02[D] Parties to International Arbitration Agreements

example, in a decision arising from the attempted recognition of an international arbitral

award, the U.S. court identified fifteen “private law” factors, which it described as always “con-
cerned with reality and not form”:
“(1) the parent and subsidiary have common stock ownership; (2) the parent and
subsidiary have common directors or officers; (3) the parent and subsidiary have
common business departments; (4) the parent and subsidiary file consolidated fi-
nancial statements; (5) the parent finances the subsidiary; (6) the parent caused the
incorporation of the subsidiary; (7) the subsidiary operated with grossly inadequate
capital; (8) the parent pays salaries and other expenses of the subsidiary; (9) the sub-
sidiary receives no business except that given by the parent; (10) the parent uses the
subsidiary’s property as its own; (11) the daily operations of the two corporations are
not kept separate; (12) the subsidiary does not observe corporate formalities … (13)
whether the directors of the ‘subsidiary’ act in the primary and independent interest
of the ‘parent’; (14) whether others pay or guarantee debts of the dominated corpora-
tion; and (15) whether the alleged dominator deals with the dominated corporations
at arm’s length.”184
Assessing these various factors, the court held that a foreign state-owned entity was not finan-
cially independent from the foreign state that owned it (Turkmenistan), and that the foreign
state’s intentional “bleeding [of] a subsidiary to thwart creditors is a classic ground for pierc-
ing the corporate veil.”185 The court also noted that “[u]ndercapitalization is often critical in
alter ego analysis.”186

Cir. 1993) (absence of corporate formalities; inadequate capitalization; financial dealings between parent and
subsidiary; overlap in ownership, officers, directors, and personnel; common office space, address, and phone
numbers; business discretion of allegedly dominated company; whether companies deal with each other at
arms’ length; whether companies are separate profit centers; parent’s payment or guarantee of subsidiary’s
debts; subsidiary’s use of parent’s property); Andrew Martin Marine Corp. v. Stork-Werkspoor Diesel BV, 480
F.Supp. 1270 (E.D. La. 1979) (common ownership, directors or officers, financing, capitalization, payment
of expenses, use of property, sources of business, observance of legal formalities, integration of operations,
control). See, e.g., McKay v. Longman, 211 A.3d 20, 61-62 (Conn. 2019) (applying same factors as Carte Blanche
(Singapore) Pte Ltd).
For comparable lists from non-U.S. contexts, see Award in Ad Hoc Case in Geneva of 1991, 10 ASA Bull.
202 (1992); Schlosser, Arbitration Clauses in Maritime Contracts and Their Binding Effect on Groups of Compa-
nies, 11(4) J. Int’l Arb. 127, 129-32 (1994).
When alter ego is sought between a state and another entity, some decisions have taken additional crite-
ria into account. See Bridas SAPIC v. Turkmenistan, 447 F.3d 411, 418 (5th Cir. 2006) (listing additional “public
law” factors); §10.02[D].
184 See Bridas SAPIC, 447 F.3d at 416, 418. The Court also listed six “public law” factors, relevant in cases
involving alter ego claims against state-related entities: “(1) whether state statutes and case law view the entity
as an arm of the state; (2) the source of the entity’s funding; (3) the entity’s degree of local autonomy; (4)
whether the entity is concerned primarily with local, as opposed to statewide, problems; (5) whether the entity
has the authority to sue and be sued in its own name; and (6) whether the entity has the right to hold and use
property.” Id.
185 See id. at 419-20 (undercapitalized state company, with equivalent of U.S. $17,000, which was “paltry
sum to finance oil and gas exploration and production,” diverted company’s revenues to State Oil and Gas
Developments Fund (which also collected revenues from other state-owned entities), and immunized Fund’s
from seizure). See also §10.02[P].
186 Bridas SAPIC, 447 F.3d at 420. Compare InterGen NV, 344 F.3d at 148-49 (rejecting defendant’s attempt
to compel InterGen, a non-signatory to arbitration agreement, to arbitrate despite fact that InterGen’s two sub-
sidiaries were signatories to agreement because “[c]ommon ownership and common management, without

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As noted above, many U.S. courts have held that there must be a showing of fraud or oth-
er wrongful or inequitable conduct in order to bind a non-signatory to an arbitration agree-
ment.187 As explained by one U.S. court: “‘[w]hile complete domination of the corporation
is the key to piercing the corporate veil, … such domination, standing alone, is not enough;
some showing of a wrongful or unjust act toward plaintiff is required.’”188 Other courts have
expressed the same view,189 although a considerable body of authority holds that, in some
circumstances, sufficiently extensive day-to-day control or domination is sufficient to pierce
the corporate veil.190
Typically, alter ego status can only be established with respect to an entity or person which
owns shares (directly or indirectly), or holds a corporate position, in a company. Nonetheless,
in unusual cases, other sorts of control relationships or corporate affiliations have been regard-
ed as sufficient to establish alter ego status.191
International arbitral tribunals have also generally been circumspect in applying alter ego
theories. Most awards have required persuasive evidence of overlapping ownership, manage-
ment and (often) involvement in negotiation and performance of the contract, as well as (oc-
casionally) affirmative statements that the affiliated company is involved in the transactions
in question.192 Use of a common logo, brand, or trademark is generally not a decisive factor in

more, are insufficient to override corporate separateness and pave the way for alter ego liability”).
187 See §10.02[D].
188 Freeman v. Complex Computing Co., 119 F.3d 1044, 1053 (2d Cir. 1997) (emphasis added) (quoting
Morris v. N.Y. State Dep’t of Taxation & Fin., 82 N.Y.2d 135, 142 (N.Y. 1993)). See also LiquidX Inc. v. Brooklawn
Capital, LLC, 254 F.Supp.3d 609, 619 (S.D.N.Y. 2017) (“‘Generally … piercing the corporate veil requires a
showing that: (1) the owners exercised complete domination of the corporation … (2) that such domination
was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff’s injury’”) (quoting Morris,
82 N.Y.2d at 141).
189 See Bridas SAPIC, 345 F.3d at 360 n.11 (“Once it has been determined that the corporate form was used
to effect fraud or another wrong upon a third-party, alter ego determinations revolve around issues of control
and use”); Subway Equip. Leasing Corp. v. Sims, 994 F.2d 210, 217-18 (5th Cir. 1993); Interocean Shipping Co. v.
Nat’l Shipping & Trading Corp., 523 F.2d 527, 539 (2d Cir. 1975) (even if company has “no mind of its own,”
showing of fraud or something akin to fraud is needed); Presbyterian Church of Sudan v. Talisman Energy, Inc.,
453 F.Supp.2d 633, 689 (S.D.N.Y. 2006) (“corporation will only be found to be a facade when it was estab-
lished as a device to evade existing obligations to other parties”); In re Sunstates Corp. S’holder Litg., 788 A.2d
530, 534 (Del. Ch 2001) (“to pierce the corporate veil based on an agency or ‘alter ego’ theory, the corporation
must be a sham and exist for no other purpose than as a vehicle for fraud”) (quoting Wallace v. Wood, 752 A.2d
1175, 1184 (Del. Ch 1999)).
190 See §10.02[D].
191 See, e.g., Bhd of Locomotive Eng’rs v. Springfield Terminal Railway Co., 210 F.3d 18, 29 (1st Cir. 2000)
(“While alter ego liability may be most common in an ordinary parent-subsidiary context, ‘the equitable doc-
trine of piercing the corporate veil is not limited to the parent-subsidiary relationship’”) (quoting C.M. Corp. v.
Oberer Dev. Co., 631 F.2d 536, 538 (7th Cir. 1980)); Freeman v. Complex Computing Co., 119 F.3d 1044, 1051-52
(2d Cir. 1997) (shareholder who exercises sufficient control over corporation may be held liable as “equitable
owner” under alter ego theory); Minn. Power v. Armco, Inc., 937 F.2d 1363, 1364 (8th Cir. 1991).
192 See, e.g., Final Award in ICC Case No. 11160, 16(2) ICC Ct. Bull. 99 (2005) (“The active participation of
[the parent company] in the negotiation, preparation and execution of the Contract, and in some respects the
performance under it, determines that the intention of the parties can be reasonably inferred as to the extension
of said Contract and the arbitration clause to [the parent company]. … [T]he evidence supports a conclusion
that [the parent company] was and still is the mind and soul, and partly the body, of the project contract. The
beneficiary of the project contract is in substance [the parent company]. [The subsidiary] is an instrumentality
functional to a specific and legitimate purpose. It is therefore concluded that with respect to the present arbi-
tration both [the parent company] and [the subsidiary] are the proper Respondents.”); Award in ICC Case No.
8385, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC Arbitral Awards 1996-2000 474, 479

1553
§10.02[D] Parties to International Arbitration Agreements

alter ego analysis,193 nor is the mere fact of overlapping management or supervisory boards or
shared employees.194 On the other hand, fraudulent or similarly abusive misconduct,195 under-
capitalization of a corporate body,196 deliberate tortious actions,197 or siphoning off of assets

(2003) (“The piercing, or not, of the corporate veil very much depends on the circumstances of each case.
Some elements are nearly always considered as necessary. They comprise a significant direct control measure
of the activities of the subsidiary by the parent company or the shareholder and the insolvability of the former.
… An illegitimate behavior of the subsidiary, instigated by the parent company, towards the person seeking to
pierce the corporate veil is another element that can facilitate this piercing. … It is therefore the facts of the
case that impose the solution.”); Final Award in ICC Case No. 7626, XXII Y.B. Comm. Arb. 132, 141 (1997)
(“By making A-Europe party to Agreement no. 1, the members of the Group did not attempt to escape any
pre-existing liability. … There was no facade involved.”); Partial Award in ICC Case No. 6000, 2(2) ICC Ct.
Bull. 31 (1991); Award in ICC Case No. 1434, 103 J.D.I. (Clunet) 978 (1976) (corporate identities were of
“secondary importance” and parties intended to bind affiliate); Interim Award in Ad Hoc Case of 9 September
1983, XII Y.B. Comm. Arb. 63 (1987); Award in Ad Hoc Case of 24 August 2011, 29 ASA Bull. 884, 896 (2010)
(“As for the doctrine of the piercing of the corporate veil, it cannot be applied since the Third Respondent was
not a majority shareholder and did not control the First Respondent”).
193 Award in ICC Case Nos. 7604 & 7610, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC
Arbitral Awards 1996-2000 510 (2003).
194 See, e.g., Award in ICC Case No. 14114, 138 J.D.I. (Clunet) 1188 (2011) (overlapping management and
fact that parent company was sole shareholder did not justify piercing corporate veil without abuse of subsid-
iary’s corporate structure by parent company); Award in ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains & D.
Hascher (eds.), Collection of ICC Arbitral Awards 1996-2000 474, 479 (2003) (“significant degree of direct
control over the activities of a subsidiary by a parent company or its stakeholders and the insolvency of the
subsidiary … in general … is not enough”); Award in ICC Case No. 5721, 117 J.D.I. (Clunet) 1019, 1024 (1990)
(“fact that two companies belong to the same group, or that a shareholder has a dominant position, are never
sufficient, in and of themselves, to legally justify lifting the corporate veil”).
195 See, e.g., Interim Award in ICC Case No. 9517, 16(2) ICC Ct. Bull. 80, 47 (2005) (“The only exception
is the hypothesis of fraud, for example when it is evident that the company which is a party to the arbitration
agreement was intentionally and, therefore, fraudulently deprived of any substance or where a non-signatory
owner of the group has entertained a total confusion between its various companies in the eyes of third parties
and has used fraudulent manoeuvres to try to avoid being personally bound by its undertakings”); Award in
ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC Arbitral Awards 1996-
2000 474, 479 (2003) (“The cessation of significant activities by the subsidiary and its directors is also a fac-
tor which facilitates lifting the corporate veil. And if the control and effective management of the subsidiary by
the parent corporation contribute to making an action against the subsidiary illusory, lifting the corporate veil
is all the more imperative.”); Award in ICC Case No. 8163, 16(2) ICC Ct. Bull. 77 (2005) (non-signatory not
subject to arbitration agreement under veil-piercing doctrine in absence of abuse of right or use of company
as sham).
196 Partial Award in ICC Case No. 14208/14236, 24(2) ICC Ct. Bull. 62, 69 (2013); Lemire v. Ukraine,
Award in ICSID Case No. ARB/06/18 of 28 March 2011; Int’l Triathlon Union v. Pac. Sports Corp. Inc., Award in
CAS Case No. 1996/O/161 of 4 August 1999, in M. Reeb (ed.), Digest of CAS Awards II 1998-2000 4 (2002)
(“To pierce the corporate veil a shareholder must have abusively used the company to defraud the law in one
of the following manner: bad faith conduct evidencing an intention to evade contractual obligations, commin-
gling of corporate and shareholders assets, under capitalization, or conducting business with lack of corporate
formalities”); Award in Ad Hoc Case in Geneva of 1991, 10 ASA Bull. 202 (1992) (undercapitalization of subsid-
iary warrants piercing corporate veil).
197 Award in ICC Case No. 10758, 16(2) ICC Ct. Bull. 87, 18 (2005) (“Accordingly, where a corporate struc-
ture is being used in bad faith as an instrument of deliberate concealment or confusion, or to defeat a possible
award against the named party to an arbitration agreement, then the Arbitral Tribunal might be justified in
lifting the corporate veil”); Award in ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.),
Collection of ICC Arbitral Awards 1996-2000 474, 479 (2003) (“illegitimate conduct by the subsidiary at the
instigation of the parent company towards the person seeking to lift the corporate veil is another element that
facilitates this lifting”); Westland Helicopters Ltd v. Arab Org. for Indus., Interim Award in ICC Case No. 3879 of 5

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(resulting in undercapitalization)198 are strong indicators of an alter ego relationship.

Some awards have also relied on the existence of reasonable, good faith mistake or con-
fusion as to the identity or character of a counter-party in finding alter ego status.199 As one
tribunal explained, in the context of an effort to subject a controlling shareholder to the arbi-
tration agreement:
“[A]rbitration is essentially based upon the principle of consent. So too, any extension
of the scope of application of the arbitration clause must have a voluntary basis. Of
course, such an intention can be merely implicit, otherwise any discussion of exten-
sion would have no meaning. … [T]he fact that two companies belong to the same
group, or that a shareholder has a dominant position, are never sufficient, in and of
themselves, to legally justify lifting the corporate veil. … One would entertain this ex-
ception where confusion is fostered by the group or by the majority shareholder. … An arbi-
trating body must be very circumspect in matters of extending the effect of a clause to
a director or manager who has acted strictly in an official capacity. Any such extension
presupposes that the artificial person has been no more than the business implement
of the natural person, so that one can ascribe to the natural person the contracts and
undertakings signed by the artificial person.”200
Other awards have emphasized the importance of principles of good faith in conducting an al-
ter ego analysis.201 This approach parallels that of most national courts (summarized above)202
and the expectations of parties engaged in international commercial transactions, being to
give effect to corporate forms, save in exceptional cases, where considerations of equity and
fairness will justify piercing the corporate veil.
Contrary to the suggestions of some authorities,203 there should be no question that
veil-piercing or alter ego doctrines apply to international arbitration agreements. As discussed
above, that is the uniform conclusion of both national courts and arbitral tribunals in all ju-
risdictions to address the issue. Likewise, as a matter of principle, there is no reason that alter
ego analysis should not apply fully to arbitration agreements – just as it does to other types

March 1984, XI Y.B. Comm. Arb. 127, 131 (1986) (“Equity, in common with the principles of international law,
allows the corporate veil to be lifted, in order to protect third parties against an abuse which would be to their
detriment”); Award in Ad Hoc Case of 1991, 10 ASA Bull. 202 (1992).
198 See, e.g., Bridas SAPIC v. Turkmenistan, 447 F.3d 411, 414 (5th Cir. 2006) (“The alter ego doctrine, like
all variations of piercing the corporate veil doctrine, is reserved for exceptional cases”); In re Multiponics, Inc.,
622 F.2d 709, 724-25 (5th Cir. 1980) (“The doctrine applies only if (1) the owner exercised complete control
over the corporation with respect to the transaction at issue and (2) such control was used to commit a fraud
or wrong that injured the party seeking to pierce the veil”); Award in Ad Hoc Case in Geneva of 1991, 10 ASA
Bull. 202 (1992) (piercing corporate veil where subsidiary had been wrongly dissolved and assets necessary for
honoring obligations to creditors had been transferred to parent company).
199 See, e.g., Award in ICC Case No. 5730, 117 J.D.I. (Clunet) 1029 (1990) (individual who deceived count-
er-party as to identity of companies that signed arbitration agreement held subject to agreement on alter ego
grounds); Award in ICC Case No. 5103, 115 J.D.I. (Clunet) 1206, 1207 (1988) (“companies that form the unity,
did all participate, through an apparent and real [structure], in a complex international contractual relationship,
in which the interest of the group prevailed over the interest of each company”).
200 Award in ICC Case No. 5721, 117 J.D.I. (Clunet) 1019, 1024 (1990) (emphasis added). Some legal sys-
tems would address this issue as one of mistake, to be addressed by contractual interpretation or rectification.
E. Peel (ed.), Treitel: The Law of Contracts ¶8-65 (15th ed. 2020).
201 See authorities cited §10.02[D].
202 See §10.02[D].
203 Müller & Keilmann, Beteiligung am Schiedsverfahren Wider Willen?, 2007 SchiedsVZ 113, 116-17. See
§10.02[D].

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§10.02[D] Parties to International Arbitration Agreements

of contractual (and non-contractual) relationships. Indeed, given the importance of consid-

erations of good faith and equity in international arbitration, there is a serious argument that
alter ego status can be more readily established with respect to international arbitration agree-
ments than with respect to substantive obligations and liability under other types of contracts.
That conclusion is also consistent with reduced (or neutral) standards of proof for interna-
tional arbitration agreements204 and pro-arbitration rules of interpretation.205
As with other non-signatory theories, the critical question in the alter ego context is
whether one party’s relationship with another justifies treating it as a party to the agreement
to arbitrate (not the underlying contract).206 There may, for example, be instances where one
party’s domination of another party’s participation in a particular transaction (or in an arbi-
tration) results in it being bound by the associated agreement to arbitrate, notwithstanding
the absence of any such control or alter ego relationship more generally. More frequently,
however, an alter ego relationship will exist with regard to a particular commercial contract or
relationship, which will also be applied with regard to the associated arbitration agreement.207
Finally, as with other bases for binding non-signatories to arbitration agreements, ques-
tions of alter ego status and veil-piercing raise choice-of-law questions. Various authorities
have applied the law of the state of incorporation of a company,208 or the law governing the
arbitration agreement,209 or the law governing the underlying contract,210 to the question 211

204 See §5.04[D][1].

205 See §5.04[D][2].
206 See also §10.01[F]; §10.02[A]; §10.02[C].
207 That is the case in virtually all of the authorities cited in this section.
208 See, e.g., Fletcher v. Atex Inc., 68 F.3d 1451, 1456 (2d Cir. 1995) (“The law of the state of incorporation
determines when the corporate form will be disregarded”); Kalb, Voorhis & Co. v. Am. Fin. Corp., 8 F.3d 130, 132
(2d Cir. 1993) (“The law of the state of incorporation determines when the corporate form will be disregarded
and liability will be imposed on shareholders: ‘Because a corporation is a creature of state law whose primary
purpose is to insulate shareholders from legal liability, the state of incorporation has the greater interest in
determining when and if that insulation is to be stripped away’”) (quoting Soviet Pan Am Travel Effort v. Travel
Comm., Inc., 756 F.Supp. 126, 131 (S.D.N.Y. 1991)); Restatement of the U.S. Law of International Commercial and
Investor-State Arbitration §2.3 comment d (2019) (“Forum choice-of-law rules generally point courts to the
law of the place where the company is incorporated in order to identify corporate law theories that determine
whether non-signatories are bound by or may invoke an arbitration agreement”). See also Restatement (Second)
Conflict of Laws §307 (1971) (“The local law of the state of incorporation will be applied to determine the
existence and extent of a shareholder’s liability to the corporation for assessments or contributions and to its
creditors for corporate debts”).
209 See, e.g., Smith/Enron Cogeneration LP, Inc. v. Smith Cogeneration Int’l, Inc., 198 F.3d 88, 96 (2d. Cir. 1999)
(applying federal common law as law governing arbitration agreement, rather than law of seat (New York) or
law governing contract (Texas)).
210 See, e.g., FR8 Singapore Pte Ltd v. Albacore Maritime Inc., 754 F.Supp.2d 628 (S.D.N.Y. 2010) (applying
choice-of-law clause in underlying contract to issues of alter ego status in action to require non-signatories to
arbitrate).
211 See, e.g., Award in ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC
Arbitral Awards 1996-2000 474, 479 (2003) (“third parties who deal with the corporations cannot properly
be regarded to have united themselves with the corporation in a venture to be controlled by the law of the
corporation’s creation. This is especially true of third parties from other countries who are necessarily less ac-
quainted with the law of the state of incorporation.”); Award in ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains
& D. Hascher (eds.), Collection of ICC Arbitral Awards 1996-2000 474, 484-85 (2003), Note, Derains (“the
lex societatis has no role to play. It is a question of assessing the scope of an arbitration clause and not about
deciding on the operational functions of a legal entity whose very existence is questionable vis-à-vis a contract-
ing party. The law of the place of arbitration must also be rejected, as the arbitral tribunal has no lex fori. That
leaves the law applicable to the arbitration clause. But … the choice that the signatories could have made in this

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Gary B. Born §10.02[D]

whether the company’s corporate veil may be pierced. The weight of authority rejects these
analyses,211 instead applying either international principles212 or general principles of law.213
Thus, a leading U.S. Supreme Court decision held that the question whether to pierce the
veil of a Cuban state-owned company was governed by principles of international law (rather
than Cuban law).214 The Court reasoned:

respect cannot be held against a party that has not signed the arbitration clause and against whom it is sought to
be extended, at least as long as the question of extension has not been decided.”); Restatement (Second) Conflict
of Laws §307 Reporters Note (1971) (“A state may impose liability upon a shareholder of a foreign corporation
for an act done by the corporation in the state, if the state’s relationship to the shareholder is sufficient to make
reasonable the imposition of such liability upon him”). See also §10.05[A]. Compare Otazu, The Law Applica-
ble to Veil Piercing in International Arbitration, 5 McGill J. Disp. Resol. 30, 59 (2018-2019) (concluding law of
place of incorporation of signatory is best rule, with transnational standards only applicable in rare cases where
veil-piercing not permitted by law of place of incorporation).
212 See, e.g., Partial Award in ICC Case No. 14208/14236, 24(2) ICC Ct. Bull. 62, 65 (2013) (recognizing
“the general principle that transnational norms should be applied to determine the issue of extension of the
arbitration clause to a non-signatory, even when piercing the corporate veil is at issue”); First Nat’l City Bank
v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 621-23, 629 (U.S. S.Ct. 1983) (“‘the process of lifting
the veil, being an exceptional one admitted by municipal law in respect of an institution of its own making, is
equally admissible to play a similar role in international law’”) (quoting Case Concerning The Barcelona Traction,
Light & Power Co., [1970] I.C.J. Rep. 3, 38-39 (I.C.J.)); Judgment of 15 May 2003, Czechia v. CME Czech Repub.
BV, Case No. T8735-01 (Svea Ct. App.) (where there is implied willingness to apply international law, “[w]ith
respect to piercing the corporate veil, no international cases have been presented in the case in which, in an
actual situation of lis pendens and res judicata, a controlling minority shareholder has been equated with the
company”).
213 See, e.g., Interim Award in ICC Case No. 9873, 16(2) ICC Ct. Bull. 85 (2005) (citing no national law for
veil-piercing analysis); Award in ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collec-
tion of ICC Arbitral Awards 1996-2000 474, 478 (2003) (tribunal applied lex mercatoria as “law which best
corresponds to the needs of the international business community, which is not in conflict with the legitimate
expectations of the parties, which produces uniform results and offers a reasonable solution to the dispute”);
Award in ICC Case No. 5721, 117 J.D.I. (Clunet) 1019, 1023 (1990) (decision based on lex mercatoria: “a non-na-
tional rule constructed from international commercial usage alone”); Dow Chem. France v. ISOVER St. Gobain,
Interim Award in ICC Case No. 4131 of 23 September 1982, IX Y.B. Comm. Arb. 131, 134 (1984) (citing “usages
… of international commerce”); Dimolitsa, L’Extension de la Clause Compromissoire à des Non-Signataires: Rien
de Neuf, 30 ASA Bull. 516 (2012) (“Arbitrators, in view of deciding on their jurisdiction over a non-signatory,
may directly apply certain specific legal concepts of a national law that imply consent, but more often than not
they turn to an analysis of parties’ conduct pragmatically examining all the factual elements and the surround-
ing circumstances of a particular case. By this process, they may conclude – on application of concepts akin to
a règle matérielle of French origin – that a non-signatory has actually consented to arbitration or determine – on
application of the theories of piercing the corporate veil and alter ego or better, on direct application of general
principles of law – that a non-signatory should be considered as a real party to the arbitration.”); Jarvin, The
Group of Companies Doctrine, in M. Blessing (ed.), The Arbitration Agreement: Its Multifold Critical Aspects 181,
196 (1994) (“the traditional approach to the problem that the arbitrators take, is done without reference to
any particular law. … The existence of an intention to be bound to an arbitration agreement is demonstrated
without reference to a particular law; it is a matter of facts and of evidence, not law.”); K. Youssef, Consent in
Context: Fulfilling the Promise of International Arbitration ¶¶5:1 et seq. (2012).
Some authorities have also adopted a cumulative approach, although this is of limited value in cases of
“true conflicts.” See, e.g., Award in ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection
of ICC Arbitral Awards 1996-2000 474 (2003) (“all three systems [international, New York and Belgian] recog-
nize that, at least in some instances, the corporate veil may be pierced”).
214 First Nat’l City Bank, 462 U.S. at 621-22 (law of state of incorporation applies to internal affairs of corpo-
ration, but “[d]ifferent conflicts principles apply … where the rights of third parties external to the corporation
are at issue”). See also §10.05[A].

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§10.02[E] Parties to International Arbitration Agreements

“To give conclusive effect to the law of the chartering state in determining whether the
separate juridical status of its instrumentality should be respected would permit the
state to violate with impunity the rights of third parties under international law while
effectively insulating itself from liability in foreign courts.”215
Accordingly, the Court applied veil-piercing principles “common to both international law
and federal common law,”216 reflecting an approach bearing some similarities to the “cumula-
tive” choice-of-law analyses adopted in a number of contemporary arbitral awards:217
“Our decision today announces no mechanical formula for determining the circum-
stances under which the normally separate juridical status of a government instrumen-
tality is to be disregarded. Instead, it is the product of the application of internationally
recognized equitable principles to avoid the injustice.”218
This authority is persuasive, and applies more broadly to veil-piercing issues arising in deter-
mining whether either state or non-state entities are parties to an international arbitration.
As with the doctrines of apparent authority and estoppel,219 it is artificial to select the law of
any particular national jurisdiction to define those circumstances in which basic principles
of fairness and good faith in international business dealings require disregarding a corporate
identity conferred by national law and subjecting a party to an international arbitration agree-
ment. Rather, uniform international principles better achieve the purposes of the veil-piercing
doctrine, without materially interfering with the parties’ expectations.220

[E] “Group of Companies” Doctrine221

Another significant, but controversial, basis for binding non-signatories to an arbitration
agreement is the “group of companies” doctrine. Under this principle, non-signatories of a

215 First Nat’l City Bank, 462 U.S. at 621-22.

216 Id. at 623.
217 See §4.04[A][2][g].
218 First Nat’l City Bank, 462 U.S. at 621-22.
219 See §10.02[B] (apparent authority); §10.02[K] (estoppel).
220 See §10.05[A].
221 For commentary, see J.-M. Ahrens, Die Subjektive Reichweite Internationaler Schiedsvereinbarungen und
Ihre Erstreckung in der Unternehmensgruppe 128 et seq. (2001); Derains, L’Extension de la Clause d’Arbitrage aux
Non-Signataires: La Doctrine des Groupes de Sociétés 241 (1994); Ferrario, The Group of Companies Doctrine in In-
ternational Commercial Arbitration: Is There Any Reason for This Doctrine to Exist?, 26(5) J. Int’l Arb. 647 (2009);
Gaffney, The Group of Companies Doctrine and the Law Applicable to the Arbitration, 19(6) Mealey’s Int’l Arb.
Rep. 47 (2004); Habegger, Arbitration and Groups of Companies, 3 Euro. Bus. Org. L. Rev. 516 (2002); Hanoti-
au, Non-Signatories, Groups of Companies and Groups of Contracts in Selected Asian Countries: A Case Law Analy-
sis, 32(6) J. Int’l Arb. 571 (2015); Jarvin, The Group of Companies Doctrine, in M. Blessing (ed.), The Arbitration
Agreement: Its Multifold Critical Aspects 181 (1994); Leadley & Williams, Peterson Farms: There Is No Group of
Companies Doctrine in English Law, 2004 Int’l Arb. L. Rev. 111; Poudret, Trois Remarques à Propos de la Théorie
des Groupes de Sociétés, 13 ASA Bull. 145 (1995); Sandrock, “Intra” and “Extra-Entity” Agreements to Arbitrate
and Their Extension to Non-Signatories Under German Law, 19 J. Int’l Arb. 423 (2002); Sandrock, Arbitration
Agreements and Groups of Companies, 27 Int’l Law. 941 (1993); Sandrock, Groups of Companies and Arbitration,
2 Tijdschrift voor Arbitrage 3 (2005); Sandrock, Die Aufweichung einer Formvorschrift und Anderes Mehr: Das
Schweizer Bundesgericht Erlässt ein Befremdliches Urteil, 2005 SchiedsVZ 1; Savage & Leen, Family Ties: When
Arbitration Agreements Bind Non-Signatory Affiliate Companies, 2003 Asian Disp. Rev. 16; Schwartz, Multiparty
Arbitration and the ICC: In the Wake of Dutco, 10(3) J. Int’l Arb. 5 (1993); Shore & Wilske, The Rise and Fall of
the “Group of Companies” Doctrine, 4 J. Int’l Disp. Resol. 157 (2005); Vidal, The Extension of Arbitration Agree-
ments Within Groups of Companies: The Alter Ego Doctrine in Arbitral and Court Decisions, 16(2) ICC Ct. Bull. 63

1558
Gary B. Born §10.02[E]

contract may be deemed parties to the associated arbitration clause based on factors which are
often roughly comparable to those relevant to an alter ego analysis. In particular, where a com-
pany is part of a corporate group, is subject to the control of (or controls) a corporate affiliate
that has executed a contract and is involved in the negotiation or performance of that contract,
then that company may in some circumstances invoke or be subjected to an arbitration clause
contained in that contract, notwithstanding the fact that it has not executed the contract itself.
Unlike other bases for binding a non-signatory to an arbitration agreement (such as agen-
cy, alter ego, estoppel, third party beneficiary, or assignment), the group of companies doctrine
was developed specifically in the arbitration context and is not typically invoked outside that
context. At least thus far, the group of companies doctrine has also been explicitly accepted in
only a limited number of jurisdictions222 (in particular, as discussed below, France). In part for
that reason, the doctrine has given rise to substantial controversy.223
The weight of earlier (and more recent) authority adopting the group of companies doctrine
was French.224 One of the seminal group of companies decisions is Interim Award in ICC Case
No. 4131 (“Dow Chemical”), between Dow Chemical Company (“Dow”), together with various
of its subsidiaries, and Isover Saint Gobain (“Isover”).225 Several of Dow’s 100% subsidiaries
(but not Dow itself) and Isover were signatories of several contracts containing ICC arbitration
clauses. Various difficulties arose under the contracts, leading Dow and three of its subsidiaries
to commence an ICC arbitration against Isover pursuant to the contractual arbitration claus-
es. In response, Isover challenged the arbitral tribunal’s jurisdiction to hear claims asserted by
Dow, as well as one of its subsidiaries, on the grounds that they had not executed the contract
in question.
The arbitral tribunal issued an award which upheld the rights of Dow and its subsidiaries
to invoke the arbitration clause. The tribunal applied what it referred to as general principles
of international arbitration law,226 reasoning:

(2005); Wilske, Shore & Ahrens, The “Group of Companies Doctrine”: Where Is It Heading?, 17 Am. Rev. Int’l
Arb. 73 (2006); Woolhouse, Group of Companies Doctrine and English Arbitration Law, 20 Arb. Int’l 435 (2004).
222 A recent overview indicated that only a small number of jurisdictions surveyed had expressly recognized
the group of companies doctrine. G. Wegen & S. Wilske (eds.), Getting the Deal Through: Arbitration in 55 Juris-
dictions Worldwide (2013). In addition to French courts, Indian courts also appear to have applied the group of
companies doctrine in the context of international arbitration. See, e.g., Cheran Props. Ltd v. Kasturi & Sons Ltd,
Civ. App. No. 10025-26/2017, ¶¶14-20 (Indian S.Ct. 2018); Chloro Controls India Pte Ltd v. Severn Trent Water
Purification Inc., (2013) 1 SCC 641, ¶¶67-71, 102 (Indian S.Ct.).
223 For criticisms of the group of companies doctrine, see Habegger, Note – Federal Tribunal (1st Civil
Court), 16 October 2003 (4P.115/2003): Extension of Arbitration Agreements to Non-Signatories and Require-
ments of Form, 22 ASA Bull. 398, 398-404 (2004); Poudret, Note – Tribunal Federal, 1re Cour Civile, 16 Octobre
2003, (4P.115/2003) – Un Statut Privilégié pour l’Extension de l’Arbitrage aux Tiers?, 22 ASA Bull. 390, 390-97
(2004); Sandrock, Groups of Companies and Arbitration, 2 Tijdschrift voor Arbitrage 3, 6 (2005) (“doctrine
must be rejected for several reasons”; “not clear-cut and definite”; “confusingly blurred”); Wilske, Shore &
Ahrens, The “Group of Companies Doctrine”: Where Is It Heading?, 17 Am. Rev. Int’l Arb. 73, 77 et seq. (2006)
(“no serious theoretical groundwork was done to justify its application”).
224 There were, however, decisions that adopted essentially identical analysis in other jurisdictions. See,
e.g., Map Tankers, Inc. v. MOBIL Ltd, Partial Final Award in SMA Case No. 1510 of 28 November 1980, VII Y.B.
Comm. Arb. 151, 153 (1982) (“It is neither sensible nor practical to exclude the claims of companies who have
an interest in the venture and who are members of the same corporate family”).
225 Dow Chem. France v. ISOVER St. Gobain, Interim Award in ICC Case No. 4131 of 23 September 1982, IX
Y.B. Comm. Arb. 131 (1984). The arbitral tribunal was comprised of distinguished academics; it was chaired by
Professor Pieter Sanders (one of the principal negotiators and drafters of the New York Convention), and the
co-arbitrators were Professor Berthold Goldman and Professor Michel Vasseur.
226 Id. at 135.

1559
§10.02[E] Parties to International Arbitration Agreements

“Dow Chemical France at the time of signature of the 1965 contracts as well as the
negotiations which led to the 1968 contract, appeared to be at the center of the
organization of the contractual relationship with the companies succeeded by the
present Defendant. Moreover, this relationship could not have been formed without
the approval of the American parent company, which owned the trademarks under
which the relevant products were to be marketed in France. … [I]t is indisputable
… that Dow Chemical Company has and exercises absolute control over its sub-
sidiaries having either signed the relevant contracts or, like Dow Chemical France,
effectively and individually participated in their conclusion, their performance, and
their termination.”227
The tribunal referred to earlier awards, concluding, with some overstatement,228 that these
awards:
“progressively create case law which should be taken into account, because it draws
conclusions from economic reality and conforms to the needs of international com-
merce, to which rules specific to international arbitration, themselves successively
elaborated, should respond.”229
The tribunal concluded that “irrespective of the distinct juridical identity of each of its
members, a group of companies constitutes one and the same economic reality (une réalité
économique unique),” and that the arbitration clause bound all the Dow companies which, “by
virtue of their role in the conclusion, performance, or termination of the contracts contain-
ing said clauses, and in accordance with the mutual intention of all parties to the proceedings,
appear to have been veritable parties to these contracts or to have been principally concerned
by them and the disputes to which they may give rise.”230 The award was subsequently up-
held by the Paris Cour d’Appel, rejecting Isover’s application for annulment on jurisdictional
grounds.231 Later French judicial decisions also approved awards based on the group of com-
panies doctrine, albeit not always relying expressly on that doctrine.232
The Dow Chemical award has been cited or followed by a substantial body of subsequent
international arbitration authority as establishing the “group of companies” theory.233 A sub-
sequent award summarized the theory as follows:

227 Id.
228 It is doubtful that earlier awards had adopted reasoning that could fairly be characterized as the group of
companies theory. See, e.g., Award in ICC Case No. 2375, 103 J.D.I. (Clunet) 973 (1976); Award in ICC Case No.
1434, 103 J.D.I. (Clunet) 978 (1976).
229 Dow Chem. France v. ISOVER St. Gobain, Interim Award in ICC Case No. 4131 of 23 September 1982, IX
Y.B. Comm. Arb. 131, 136 (1984).
230 Id. The tribunal reiterated elsewhere that “the circumstances and the documents analyzed above show
that such application conforms to the mutual intent of the parties.” Id. at 136-37.
231 Judgment of 21 October 1983, Isover-Saint-Gobain v. Dow Chem. France, 1984 Rev. Arb. 98 (Paris Cour
d’Appel) (group of companies doctrine is “not seriously contested … as a usage of international commerce”).
232 See, e.g., Judgment of 11 June 1991, Orri v. des Lubrifiants Elf Aquitaine, 1992 Rev. Arb. 73 (French Cour de
Cassation Civ. 1); Judgment of 7 October 1999, Russanglia v. Delom, 2000 Rev. Arb. 288 (Paris Cour d’Appel);
Judgment of 26 November 1986, Sponsor AB v. Lestrade, 1988 Rev. Arb. 153, 155 (Pau Cour d’Appel), Note,
Chappelle (group of companies doctrine “accepted in law”).
233 See, e.g., Interim Award in ICC Case No. 6610, XIX Y.B. Comm. Arb. 162 (1994); Final Award in ICC Case
No. 6519, 2(2) ICC Ct. Bull. 34 (1991); Partial Award in ICC Case No. 5894, 2(2) ICC Ct. Bull. 25 (1991);
Award in ICC Case No. 5103, 115 J.D.I. (Clunet) 1206 (1988); Jarvin, The Group of Companies Doctrine, in M.
Blessing (ed.), The Arbitration Agreement: Its Multifold Critical Aspects 181 (1994).

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Gary B. Born §10.02[E]

“When concluding, performing, nonperforming and renegotiating their contractual

relations with [defendants], the three claimant companies appear, pursuant to the
common intention of all parties engaged in the procedure, to have been real parties
to all the contracts. In its formulation and in its spirit, this analysis is based on a
remarkable and approved tendency of arbitral rulings favoring acknowledgement,
under those circumstances, of the unity of the group. … The security of interna-
tional commercial relations requires that account should be taken of its economic
reality and that all the companies of the group should be held liable one for all and
all for one for the debts of which they either directly or indirectly have profited at
this occasion.”234
This formulation is particularly expansive, arguably departing from the Dow Chemical group
of companies analysis by permitting an entity to be deemed party to an arbitration agree-
ment without regard to the parties’ intentions, and instead based, at least in substantial part,
on general notions of the “security of international commercial relations.”
The foregoing analysis would misstate the group of companies doctrine, incorrectly
conflating it with an (overly expansive) alter ego analysis. The better, and more common,
approach to the group of companies doctrine has been to ascertain the parties’ objective
intentions in entering into a particular transaction, and specifically to determine whether a
specific non-signatory was intended to be bound (and benefited by) the agreement in ques-
tion:235 Thus:
“although the existence of a group is the first condition for joining a third party to the
arbitration proceedings, it is also necessary to determine the parties’ actual intention
at the time of the facts or, at the very least the intention of the non-signatory third
party.”236

234 Award in ICC Case No. 5103, 115 J.D.I. (Clunet) 1206, 1207, 1212 (1988).
235 See, e.g., Interim Award in ICC Case No. 15116, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collec-
tion of ICC Arbitral Awards 2012-2015 303 (2019) (“It seems that the mutual intention of the parties, such as
evidenced by the third party’s close/direct involvement in the performance of the contract, is becoming the
decisive criterion in order to ascertain whether or not an arbitration agreement should be extended to that third
party. One may even wonder whether the existence of a group of companies is really relevant.”). Partial Award
in ICC Case No. 6000, 2(2) ICC Ct. Bull. 31, 34 (1991) (“it is largely admitted that by virtue of a usage of the
international trade, where a contract, including an arbitration clause, is signed by a company which is a party to
a group of companies, the other company or companies of the group which are involved in the execution, the
performance and/or the termination of the contract are bound by the arbitration clause, provided the common
will of the parties does not exclude such an extension, and even more so where the common will of the parties
was to include a company of the group in the contractual relationship, even if such company did not formally
sign the contract”). See also E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International Commer-
cial Arbitration ¶501 (1999) (“The existence of the parties’ consent is thus clearly the key issue”). Nonetheless,
as discussed below, there are some cases, involving considerations of estoppel, abuse of right, or good faith
principles, where members of a corporate group would be bound by an arbitration agreement notwithstanding
the parties’ intentions. See §10.02[K].
236 Award in ICC Case Nos. 7604 & 7610, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of
ICC Arbitral Awards 1996-2000 510 (2003). See also Ferrario, The Group of Companies Doctrine in International
Commercial Arbitration: Is There Any Reason for This Doctrine to Exist?, 26 J. Int’l Arb. 647, 648 (2009) (group
of companies doctrine requires showing “(1) the intention of all the parties involved to consider the whole
group as the contracting party without giving importance to which company would conclude or perform the
contract; (2) the active participation of the non-signatories in the negotiation, performance or termination
of the contract, showing the will of those companies to be party to the contract and, as a consequence, to the
arbitration agreement even though they did not sign it”).

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§10.02[E] Parties to International Arbitration Agreements

General presumptions concerning the parties’ desire for security are relevant to ascertaining
the parties’ intentions in particular transactions, but it is those intentions, as reflected in the
terms of the parties’ agreements, that are the cornerstone of the group of companies doctrine.
It is clear, under most formulations, that the group of companies doctrine must be applied
with caution,237 and that the doctrine requires showing more than a non-signatory’s member-
ship in a group of affiliated companies.238 Rather, the doctrine provides that a non-signatory
may be bound by an arbitration agreement where a group of affiliated companies exists and
the parties have engaged in conduct (such as negotiation or performance of the relevant con-
tract) or made statements239 indicating the intention, assessed objectively and in good faith,
that the non-signatory be bound and benefited by the relevant arbitration agreement.240 In the
words of one representative award:

237 See, e.g., Final Award in ICC Case No. 10758, 128 J.D.I. (Clunet) 1171, 1173 (2001) (group of companies
must “be treated with caution”); Award in ICC Case No. 5721, 117 J.D.I. (Clunet) 1019, 1024 (1990) (“where
a company or individual appears to be the pivot of the contractual relations in a particular matter, one should
carefully examine whether the parties’ legal independence ought not, exceptionally, be disregarded in the in-
terests of making a global decision”); Interim Award in ICC Case No. 4504, 113 J.D.I. (Clunet) 1118 (1986)
(expressing doubt regarding group of companies doctrine).
238 See, e.g., Final Award in ICC Case No. 10758, 128 J.D.I. (Clunet) 1171, 1172-73 (2001) (“The extension of
an arbitration agreement to a non-signatory is not a mere question of corporate structure or control, but rather
one of the non-signatory’s participation in the negotiations, conclusion or performance of the contract, or its
conduct towards the other party that the Arbitral Tribunal can infer”); Derains, Note on ICC Case No. 4131,
110 J.D.I. (Clunet) 899, 906 (1983) (“Only these companies of the group that played a part in the negotiation,
conclusion or termination of the contract may thus find themselves bound by the arbitration clause, which, at
the time of the signature of the contract, virtually bound the economic entity constituted by the group. Beyond
the general principle, the arbitrators should thus appreciate on a case-by-case basis not only the existence of an
intention of the members of the group to bind it as a whole, but also and especially, if such an intent is estab-
lished, its practical effects vis-à-vis each of the companies of the group considered separately.”).
239 See, e.g., Final Award in ICC Case No. 6519, 2(2) ICC Ct. Bull. 34 (1991) (effects of arbitration clause can
be extended only to non-signatory companies which have distinct legal status if they were effectively or implic-
itly represented or if they played active role during preceding negotiations, or if they are directly concerned by
agreement which contains arbitration clause); Award in ICC Case No. 5721, 117 J.D.I. (Clunet) 1019, 1024 (1990)
(“The membership of two companies in the same group or the domination by one shareholder are never, in
themselves, sufficient reasons to justify the automatic lifting of the corporate veil. However, when one company
or one individual appears to be the linchpin of the contractual relationship in a particular matter, it should be
carefully examined whether the legal independence of the parties should exceptionally be dismissed in favor of
an overall assessment. One will accept such an exception when confusion maintained by the group or the majori-
ty shareholder is apparent.”); Award in ICC Case No. 5103, 115 J.D.I. (Clunet) 1206 (1988) (all members of group
participated without distinction in performance of contract; upholding application of clause to non-signatories).
240 See, e.g., Final Award in ICC Case No. 11160, 16(2) ICC Ct. Bull. 99 (2005) (“active participation of
[non-signatory] in the negotiation, preparation and conclusion of the Contract, and in some respects in the
performance under it, determines that the intention of the parties can be reasonably inferred as to the extension
of said Contract and the arbitration clause to [the non-signatory]”); Award in ICC Case Nos. 7604 & 7610, in
J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC Arbitral Awards 1996-2000 510, 511 (2003)
(authorities “recognize the extension of the legal effects of an arbitration agreement to a non-signatory third
party when the circumstances of the operation under analysis show the existence of a common intention of
the parties to the proceedings to consider this third party to be concerned directly by this operation or to
be an actual party to the agreement containing the arbitration clause, or when the circumstances allow the
presumption that this third party accepted to be subject to such agreement”); Award in ICC Case No. 7155, 123
J.D.I. (Clunet) 1037 (1996) (no evidence of common intention to bind non-signatories); Award in ICC Case
No. 5103, 115 J.D.I. (Clunet) 1206 (1988) (“common intention of all parties”); Dow Chem. France v. ISOVER
St. Gobain, Interim Award in ICC Case No. 4131 of 23 September 1982, IX Y.B. Comm. Arb. 131, 135 (1984) (“in
accordance with the mutual intention of all parties”).

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Gary B. Born §10.02[E]

“there is no general rule, in French international arbitration law, that would provide
that non-signatory parties members of a same group of companies would be bound
by an arbitration clause, whether always or in determined circumstances. What is rel-
evant is whether all parties intended non-signatory parties to be bound by the arbitra-
tion clause. Not only the signatory parties, but also the non-signatory parties should
have intended (or led the other parties to reasonably believe that they intended) to be
bound by the arbitration clause.”241
Some authorities have also suggested (as with the alter ego doctrine) that some showing of
fraud or comparable lack of good faith is necessary to bind a non-signatory to an arbitration
agreement under the group of companies doctrine.242 In contrast, a few decisions appear to
have focused entirely (and, as discussed below, incorrectly) on the mere existence of a group
of companies.243
As noted above, and as has been frequently observed, the group of companies doctrine
“depends on the intentions of the parties.”244 This observation is generally correct, but must
be qualified. The statement underscores the fact that the affiliation of companies (and/or in-
dividuals) or the membership of companies in a related corporate group does not by itself
suffice to bind them to one another’s arbitration agreements. As with other consent-based
legal doctrines in the non-signatory field, such as guarantee, implied consent, assumption,
assignment, or agency, the decisive question is whether the circumstances of the parties’ re-
lationship evidence an intention by the parties to bind a non-signatory to a particular arbitra-
tion agreement.245
This reflects a fundamental difference between the alter ego doctrine and the group of
companies doctrine. The alter ego theory is a rule of law that is invoked to disregard or nullify
the otherwise applicable effects of incorporation or separate legal personality. The outcome of
this analysis is that one entity is deemed either nonexistent or merely an unincorporated part
of another entity. This result is often achieved without regard to the parties’ intentions at the time
of contracting, based on overriding considerations of equity and good faith.246
In contrast, the group of companies doctrine is ordinarily a means of identifying the
parties’ intentions, which does not disturb or affect the legal personality of the entities in

241 Interim Award in ICC Case No. 11405, quoted in B. Hanotiau, Complex Arbitrations ¶105 n.142 (2005).
242 See, e.g., Interim Award in ICC Case No. 6610, XIX Y.B. Comm. Arb. 162 (1994); Award in ICC Case No.
5721, 117 J.D.I. (Clunet) 1019, 1024 (1990) (“where a company or an individual appears to be the pivot of
the contractual relations in a particular matter, one should carefully examine whether the parties’ legal inde-
pendence ought not, exceptionally, be disregarded in the interests of making a global decision. This exception
is acceptable in the case of confusion deliberately maintained by the group or by the majority shareholder.”);
Unpublished Ad Hoc Award of 3 March 1999, excerpted in de Boisséson, Joinder of Parties to Arbitral Proceedings:
Two Contrasting Decisions, in ICC, Complex Arbitrations 19, 21 (2003). See also Fyffes plc v. DCC plc, [2005]
IEHC 477 (Dublin High Ct.), rev’d on other grounds, [2007] IESC 36 (Irish S.Ct.) (“In the case of a group of
companies, the court may sometimes treat the group as one entity, particularly where to do otherwise would
have unjust consequences for outsiders dealing with companies in the group”) (quoting R. Keane, Company
Law ¶11.64 (3d ed. 2000)); B. Hanotiau, Complex Arbitrations ¶¶104-213 (2005); Vidal, The Extension of Ar-
bitration Agreements Within Groups of Companies: The Alter Ego Doctrine in Arbitral and Court Decisions, 16(2)
ICC Ct. Bull. 63 (2005).
243 Award in ICC Case No. 2375, 103 J.D.I. (Clunet) 973 (1976).
244 E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International Commercial Arbitration ¶504
(1999). See also §10.02[E].
245 See Hanotiau, L’Arbitrage et les Groupes de Sociétés, II Cahiers de l’Arbitrage 11, 113 (2004) (“existence of
a group of companies gives a special dimension to the question of behavior as an expression of consent”).
246 See §10.02[D].

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§10.02[E] Parties to International Arbitration Agreements

question. Rather, as usually formulated, the group of companies doctrine is akin to principles
of agency or implied consent, whereby the corporate affiliations among distinct legal entities
provide the foundation for concluding that they were intended to be parties to an agreement,
notwithstanding their formal status as non-signatories.247 Commentators have observed the
same distinctions between the group of companies doctrine and veil-piercing principles.248
Consistent with this distinction, most decisions relying on the group of companies
doctrine involve facts which indicate that non-signatories in a group of companies were in-
tended by the parties to be bound by an arbitration agreement.249 The most straightforward
application of this aspect of the group of companies theory is at the time of formation of a
contract, when the group of companies doctrine is applied to hold that a non-signatory was
intended to be bound by the signatories’ contract and arbitration agreement;250 this result is

247 See §10.02[E]; Final Award in ICC Case No. 6519, 2(2) ICC Ct. Bull. 34, 35 (1991) (“without denying
the economic reality of a ‘group of companies,’ the scope of an arbitration clause may be extended to non-sig-
natory companies with separate legal significance only if they played an active role in the negotiations leading
to the agreement containing the clause, or if they are directly implicated in the agreement”); Partial Award in
ICC Case No. 6000, 2(2) ICC Ct. Bull. 31, 34 (1991) (“it is largely admitted that … where a contract, including
an arbitration clause, is signed by a company which is a party to a group of companies, the other company or
companies of the group which are involved in the execution, the performance and/or the termination of the
contract are bound by the arbitration clause, provided the common will of the parties does not exclude such an
extension, and even more so where the common will of the parties was to include a company of the group in the con-
tractual relationship, even if such a company did not formally sign the contract”) (emphasis added); Judgment of
31 October 1989, Kis France SA & KIS Photo Indus. SA v. Société Générale, XVI Y.B. Comm. Arb. 145, 146 (Paris
Cour d’Appel) (1991) (arbitrator had correctly “inferred from the contractual relationships between the two
groups of companies that there was a common intention of the parties” to be jointly bound) (emphasis added).
248 See, e.g., Besson, Piercing the Corporate Veil: Back on the Right Track, in B. Hanotiau & E. Schwartz (eds.),
Multiparty Arbitration 149 (2010) (“Piercing the corporate veil focuses on the fraud or the abuse of right re-
sulting from the use or abuse of a corporate form in order to limit the liability of the real party. The group of
companies doctrine focuses on the determination of the intention – or the presumed intention to arbitrate. …
The doctrine of piercing the corporate veil therefore pertains to company law, whereas the group of companies
doctrine is predominantly a contract law theory.”); S. Brekoulakis, Third Parties in International Commercial
Arbitration ¶5.79 (2010) (“Overall, thus, the theory of lifting the corporate veil has distinguishable character-
istics and a different focus from that of the group of companies doctrine: the former focuses on an excessive
element of domination and fraud, rather than consent, which is the epicentre of the discussion under the latter.
In fact, the theory of lifting the corporate veil was originally developed and is currently used mainly to hold a
company liable for the substantive debts of another, rather than to bind a parent company on the arbitration
agreement signed by its subsidiary.”) (emphasis in original); K. Youssef, Consent in Context: Fulfilling the Promise
of International Arbitration ¶¶6:3-18 (2012).
249 See §10.02[E]; Partial Award in ICC Case No. 8910, 127 J.D.I. (Clunet) 1085, 1094 (2000) (group of
companies participated in negotiation of contract and common intent was for companies to be bound by arbi-
tration clause); Partial Award in ICC Case No. 5894, 2(2) ICC Ct. Bull. 25, 26 (1991) (parent companies party
to several contracts because “these agreements create a tight network of obligations to be discharged by or for
the companies concerned”); Dow Chem. France v. ISOVER St. Gobain, Interim Award in ICC Case No. 4131 of 23
September 1982, IX Y.B. Comm. Arb. 131 (1984) (parent company either signed contracts for subsidiaries or
participated in their conclusion, performance and termination); Award in ICC Case No. 2375, 103 J.D.I. (Clunet)
973 (1976) (contract between two parent companies bound subsidiaries of each); Award in ICC Case No. 1434,
103 J.D.I. (Clunet) 978 (1976) (agreement stated that it was entered into on behalf of corporate group). See also
E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International Commercial Arbitration ¶500 (1999)
(“it is not so much the existence of a group that results in the various companies of the group being bound by the
agreement signed by only one of them, but rather the fact that such was the true intention of the parties”).
250 See, e.g., Final Award in ICC Case No. 11160, 16(2) ICC Ct. Bull. 99 (2005) (non-signatory special pur-
pose vehicle, which was involved during contract formation, subject to arbitration clause); Final Award in ICC
Case No. 6519, 2(2) ICC Ct. Bull. 34 (1991) (non-signatory joint venture bound by arbitration clause, because

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Gary B. Born §10.02[E]

sometimes reached even without adopting the “group of companies” label.251 Nonetheless, the
doctrine can also apply to subsequent conduct, as an instance of a non-signatory’s assumption
of pre-existing contractual obligations.252 This was foreseen by the Dow Chemical decision,253
and has been confirmed in subsequent awards254 and judgments.255
Not many authorities have been receptive to the group of companies doctrine and some
national courts have been affirmatively hostile. English courts have expressly rejected the
doctrine as a matter of English law.256 As one English court put it, in emphatic terms, “the
[group of companies] doctrine … forms no part of English law.”257 English commentary has

of central involvement in negotiations; two parent company non-signatories not bound by arbitration clause).
Compare Award in ICC Case No. 7155, 123 J.D.I. (Clunet) 1037 (1996) (two non-signatories not bound be-
cause they were not part of corporate group when contract was concluded); Interim Award in ICC Case No.
4504, 113 J.D.I. (Clunet) 1118 (1986) (non-signatory not bound by arbitration clause, despite involvement of
its representatives in negotiation and execution of contract).
251 See, e.g., Astra Oil Co. v. Rover Navigation, Ltd, 344 F.3d 276, 277 (2d Cir. 2003) (on estoppel theo-
ry, non-signatory oil company affiliated with shipper could compel arbitration against charter-vessel owner,
pursuant to arbitration clause contained in charter party between shipper and charter-vessel owner, because
of close connection between oil company’s claims and contract, close corporate and operational relationship
between oil company and shipper, and fact that charter-vessel owner treated oil company as if it were party
to contract); Choctaw Generation LP v. Am. Home Assur. Co., 271 F.3d 403, 406-07 (2d Cir. 2001) (signatory
estopped from objecting to arbitration because issues non-signatory was seeking to resolve were intertwined
with agreement that estopped party had signed); Smith/Enron Cogeneration LP, Inc. v. Smith Cogeneration Int’l,
Inc., 198 F.3d 88, 97-98 (2d Cir. 1999) (where defendant treated affiliated companies, only some of whom were
signatories to arbitration agreement, as single entity in filing claims against them in related lawsuit, defendant
was estopped from resisting arbitration against affiliated companies).
252 See §10.02[E]; Judgment of 19 August 2008, DFT 4A_128/2008 (Swiss Fed. Trib.); Judgment of 18
December 2001, LUKoil-Permnefteorgsintez, LLC v. MIR Müteahhitlik ve Ticaret A.S., 20 ASA Bull. 482 (Swiss
Fed. Trib.) (2002) (upholding award finding non-signatory bound by arbitration clause because it assumed
payment and other obligations under underlying contract).
253 Dow Chem. France v. ISOVER St. Gobain, Interim Award in ICC Case No. 4131 of 23 September 1982, IX Y.B.
Comm. Arb. 131, 134 (1984) (referring to “conclusion, execution or performance” of contract) (emphasis added).
254 See, e.g., Final Award in ICC Case No. 11160, 16(2) ICC Ct. Bull. 99 (2005) (piercing corporate veil
after assessing, inter alia, entities involved in performance of contract); Award in ICC Case No. 7155, 123 J.D.I.
(Clunet) 1037 (1996) (applying group of companies doctrine to related companies that were created after
contract was completed).
255 See, e.g., Judgment of 30 November 1988, Korsnas Marma v. Durand-Auzias, 1989 Rev. Arb. 691, 694 (Paris
Cour d’Appel) (“arbitration clause in an international contract has a validity and an effectiveness of its own,
such that the clause must be extended to parties directly implicated in the performance of the contract and in
any disputes arising out of the contract, provided that it has been established that their respective situations
and activities raise the presumption that they were aware of the existence and scope of the arbitration clause,
and irrespective of the fact that they did not sign the contract containing the arbitration agreement”), quoted in
E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International Commercial Arbitration ¶505 (1999).
256 See, e.g., Peterson Farms Inc. v. C&M Farming Ltd [2004] EWHC 121, ¶¶43, 65 (Comm) (English High
Ct.) (court rejected award, concluding that “one company in the group can bind the other members to an
agreement if such a result conforms to the mutual intentions of all of the parties and reflects the good usage
of international commerce” and stating: “English law treats the issue as one subject to the chosen proper law
of the Agreement and that excludes the [group of companies doctrine] which forms no part of English law”);
Caparo Group Ltd v. Fagor Arrasate Sociedad Coop. [2000] Arb. & Disp. Resol. L.J. 254 (QB) (English High
Ct.). See also Manuchar Steel H.K. Ltd v. Star Pac. Line Pte Ltd, [2014] SGHC 181, ¶¶73-76, 100, 136 (Singapore
High Ct.) (rejecting argument that ”single economic entity” concept exists in Singapore law) (citing G. Born,
International Commercial Arbitration 1449-54 (2d ed. 2014)).
257 Peterson Farms Inc. v. C&M Farming Ltd [2004] EWHC 121, ¶62 (Comm) (English High Ct.). See also
Pyxis Special Shipping Co. Ltd v. Dritsas & Kaglis Bros. Ltd [1978] 2 Lloyd’s Rep. 380 (QB) (English High Ct.).

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§10.02[E] Parties to International Arbitration Agreements

also generally been skeptical of the group of companies doctrine.258 As another English court
concluded, in rejecting a similar argument:
“[Counsel] suggested beguilingly that it would be technical for us to distinguish be-
tween parent and subsidiary company in this context; economically, he said, they were
one. But we are concerned not with economics but with law. The distinction between
the two is, in law, fundamental and cannot here be bridged.”259
Swiss courts have been more ambivalent. Some Swiss commentators have concluded that
“Swiss law ignores the notion of group of companies.”260 Nonetheless, Swiss judicial authority
is mixed, with some decisions suggesting that the group of companies doctrine would not
be recognized under Swiss law261 and other decisions implying the opposite.262 Dutch courts
also appear to reject the group of companies doctrine (but take account of evidence that the
parties intended that a non-signatory be bound by an arbitration agreement).263
Similarly, a number of published arbitral awards have declined to apply the group of com-
panies doctrine to non-signatory respondents.264 That has been particularly true in arbitra-
tions seated in Switzerland and England.265

258 See, e.g., Gaffney, The Group of Companies Doctrine and the Law Applicable to the Arbitration, 19(6) Mea-
ley’s Int’l Arb. Rep. 47 (2004); Leadley & Williams, Peterson Farms: There Is No Group of Companies Doctrine
in English Law, 2004 Int’l Arb. L. Rev. 111; Wilske, Shore & Ahrens, The “Group of Companies Doctrine”: Where
Is It Heading?, 17 Am. Rev. Int’l Arb. 73, 81-82 (2006); Woolhouse, Group of Companies Doctrine and English
Arbitration Law, 20 Arb. Int’l 435 (2004).
259 Bank of Tokyo Ltd v. Karoon [1987] AC 45, 64 (English Ct. App.). See also Adams v. Cape Indus. plc
[1990] Ch 433, 538 (English Ct. App.) (“In our judgment, we have no discretion to reject the distinction
between the members of the group as a technical point”).
260 Poudret, L’Extension de la Clause d’Arbitrage: Approches Française et Suisse, 122 J.D.I. (Clunet) 893, 913
(1995).
261 Judgment of 29 January 1996, 14 ASA Bull. 496 (Swiss Fed. Trib.) (1996) (rejecting arguments that
non-signatory parent company was subject to arbitration clause, principally on veil-piercing/alter ego grounds).
262 Judgment of 16 October 2003, 22 ASA Bull. 364, 382 (Swiss Fed. Trib.) (2004) (refusing to annul award
where arbitral tribunal, seated in Switzerland, applied Lebanese law and group of companies doctrine, to bind
non-signatory shareholder).
263 See Judgment of 20 January 2006, Case No. LJN:AU4523, ¶4.5 (Netherlands Hoge Raad). See also Judg-
ment of 8 May 2014, III ZR 371/12 (German Bundesgerichtshof) (remanding decision relying on group of
companies doctrine for consideration of other grounds for binding non-signatory to arbitration agreement).
264 See, e.g., Partial Award in ICC Case No. 10818, 16(2) ICC Ct. Bull. 94 (2005) (non-signatory not subject
to arbitration agreement because it was not interchangeable in performance of contract); Final Award in ICC
Case No. 9839, XXIX Y.B. Comm. Arb. 66 (2004) (non-signatory not subject to arbitration agreement under
group of companies doctrine); Interim Award in ICC Case No. 6610, XIX Y.B. Comm. Arb. 162 (1994) (same);
Award in ICC Case No. 5281, 7 ASA Bull. 313 (1989) (same); Interim Award in ICC Case No. 4504, 113 J.D.I.
(Clunet) 1118 (1986) (non-signatory not subject to arbitration agreement under group of companies doctrine
in Swiss-seated arbitration); Partial Award in ICC Case No. 4402, IX Y.B. Comm. Arb. 138 (1984); Award in
ICC Case No. 3742, 111 J.D.I. (Clunet) 910 (1984); Award in ICC Case No. 2138, in S. Jarvin & Y. Derains (eds.),
Collection of ICC Arbitral Awards 1974-1985 242 (1990) (refusing to subject non-signatory to arbitration clause
under group of companies doctrine: “it was not demonstrated that [respondent] would have accepted the arbi-
tration clause if it had signed the contract”).
265 See, e.g., Award in ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC
Arbitral Awards 1996-2000 474 (2003); Interim Award in ICC Case No. 4504, 113 J.D.I. (Clunet) 1118 (1986);
Award in Geneva Chamber of Commerce Case of 24 March 2000, 21 ASA Bull. 781 (2003) (“principle according
to which a company may be considered a party to a contractual undertaking made by another company as a
consequence of the fact that both companies belong to a group which constitutes one economic reality, does
not exist in Switzerland de lege lata”); Award in Ad Hoc Case in Geneva of 1991, 10 ASA Bull. 202 (1992) (no

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Gary B. Born §10.02[E]

Particularly in light of the hesitations or rejections reflected in some national court deci-
sions and arbitral awards, it is important to note that the group of companies doctrine ordi-
narily concerns only the parties to the arbitration agreement, not the underlying contract. It
is entirely possible for non-signatories to become party to an agreement to arbitrate without
thereby becoming party to the underlying commercial contract.266
Properly understood, the group of companies doctrine rests on the presumption that
commercial parties within corporate groups engaged in a business transaction will ordinarily
desire – when entering into a contract – that their arbitration agreements provide efficient, cen-
tralized dispute resolution mechanisms for all disputes relating to a particular transaction.267
That assumption, in turn, argues for interpreting an arbitration agreement to encompass those
members of a corporate group, involved in a transaction, without altering the identities of the
parties to the underlying contracts.
English and Swiss authorities declaring that the group of companies doctrine is no part
of national law268 are rhetorically impressive in their invocations of corporate identities and
party autonomy. They nonetheless miss the essential focus, and importance, of the doctrine
and arrive at unsatisfactory conclusions.
Properly understood, the group of companies doctrine is a way of applying well-accepted
principles of agency and implied consent to agreements to arbitrate in the context of modern,
multi-party international business transactions, in order that the parties’ true objectives and
intentions can be ascertained. Whether denominated “group of companies,” or something
else, is less important than the effective interpretation and enforcement of dispute resolution
mechanisms among commercial parties in international commercial settings.
Critical to this effort is the premise that companies in a corporate group can agree to be
bound by an agreement to arbitrate, in order to ensure the efficacy of that agreement between
its signatories, without signing the arbitration agreement and without being bound by the un-
derlying contracts.269 Giving effect to this principle serves in particular to prevent the circum-
vention of an international arbitration through satellite litigation by non-signatory corporate
affiliates of signatories – with each set of parties contriving extracontractual theories to justify
home-court litigation. From this perspective, criticism of the group of companies doctrine is
ultimately unsatisfyingly, missing the fundamental commercial objectives of agreements to
arbitrate international disputes.
It is also important to recognize that the group of companies doctrine can extend beyond
situations where the intention of the parties was to bind the non-signatory. Limiting applica-
tion of the doctrine solely to cases of consent would omit an important aspect or application
of the group of companies theory.270

group of companies doctrine in Swiss law).

266 See generally §5.04[A][1]; §10.01[D]; §10.02[C]. See also Ferrario, The Group of Companies Doctrine
in International Commercial Arbitration: Is There Any Reason for This Doctrine to Exist?, 26 J. Int’l Arb. 647, 673
(2009) (group of companies doctrine “aims to prevent the parties from commencing different proceedings in
relation to the same dispute”).
267 See §1.02.
268 See §10.02[E].
269 Compare the analogous treatment of corporate officers and directors under some national legal systems.
See §10.02[M]; Ferrario, The Group of Companies Doctrine in International Commercial Arbitration: Is There Any
Reason for This Doctrine to Exist?, 26 J. Int’l Arb. 647, 670 (2009).
270 See, e.g., Award in ICC Case No. 9138, discussed in Grigera Naón, Choice-of-Law Problems in International
Commercial Arbitration, 289 Recueil des Cours 9, 132-33 (2001) (group of companies doctrine designed to
“avoid manipulations which are contrary to the principle that in performing their contractual obligations the

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§10.02[F] Parties to International Arbitration Agreements

In some instances, neither the affiliated entities in a group of companies nor the count-
er-party will have “intended” – in a subjective sense – that these entities be bound, either at
the inception of their contract or later. Indeed, the affiliated company may have deliberately
structured its affairs in an effort not to be contractually bound by a contract (or an arbitration
agreement), while the counter-party may have been unaware of, or misled as to, the affiliated
company’s involvement. Accordingly, in some cases, the group of companies doctrine operates
precisely to correct mistaken subjective assumptions or understandings at the time of contract-
ing, by looking through ordinarily applicable legal forms and contractual arrangements.271 In
this respect, the doctrine can be applied in a manner similar to principles of alter ego, apparent
authority, estoppel and abuse of right, relying on concepts of good faith, equity and objective
intent to supplement subjective intentions of the parties to an arbitration agreement.272
Like other non-signatory theories, the group of companies doctrine raises choice-of-law
issues (particularly given the different approaches of Swiss, English, French and other courts
to the subject). French courts, and arbitral tribunals seated in France, have generally treated
the group of companies doctrine as a rule of international law.273 Other awards adopt the same
analysis.274 In principle, however, the better view is that, insofar as the group of companies
doctrine is directed towards ascertaining the existence of consent or assumption, the nation-
al law governing the arbitration agreement should apply (subject to the validation principle
and to international prohibitions against discriminatory and idiosyncratic national laws275).
Where the group of companies doctrine is applied as a variation of estoppel or alter ego prin-
ciples, then international principles are appropriate (for reasons outlined elsewhere).276

[F] Third Party Beneficiaries

In some legal systems, nonparties to a contract may, in certain circumstances, claim the ben-
efits of that contract as third party beneficiaries.277 In such circumstances, the third party may

parties have to act in good faith”); Award in ICC Case No. 5721, 117 J.D.I. (Clunet) 1019, 1024 (1990) (“where a
company or an individual appears to be the pivot of the contractual relations in a particular matter, one should
carefully examine whether the parties’ legal independence ought not, exceptionally, be disregarded in the inter-
ests of making a global decision. This exception is acceptable in the case of confusion deliberately maintained
by the group or by the majority shareholder.”).
271 An application of alter ego analysis in these circumstances may sometimes be more appropriate than ap-
plication of a group of companies analysis. As noted above, the former is directed towards disregarding separate
corporate forms in cases of fraud and similar conduct. See §10.02[D].
272 See, e.g., Ad Hoc Interim Award of 9 September 1983, XII Y.B. Comm. Arb. 63 (1987) (treating abuse of
right as basis for “group of companies” analysis); Vidal, The Extension of Arbitration Agreements Within Groups
of Companies: The Alter Ego Doctrine in Arbitral and Court Decisions, 16(2) ICC Ct. Bull. 63 (2005).
273 Dow Chem. France v. ISOVER St. Gobain, Interim Award in ICC Case No. 4131 of 23 September 1982, IX
Y.B. Comm. Arb. 131, 132-33 (1984) (“[T]he tribunal shall … determine the scope and effects of the arbitra-
tion clauses in question, and thereby reach its decision regarding jurisdiction, by reference to the common
intent of the parties to these proceedings. … In doing so, the tribunal, following, in particular, French case law
relating to international arbitration should also take into account, usages conforming to the needs of interna-
tional commerce, in particular, in the presence of a group of companies.”).
274 Award in ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC Arbitral
Awards 1996-2000 474 (2003) (applying lex mercatoria).
275 See §4.04[B] (especially 4.04[B][2][b][ii]). See also §10.05[C][3].
276 See §10.05[A] for a discussion of these principles.
277 See Restatement of the U.S. Law of International Commercial and Investor-State Arbitration §2.3 comment
f (2019) (“In some instances, a third-party beneficiary of a contract may invoke or be bound by an arbitration
agreement contained in that contract”); English Contracts (Rights of Third Parties) Act; Singapore Contracts

1568
Gary B. Born §10.02[F]

either be able to invoke or may be bound by an arbitration clause contained in the contract.
This analysis is well stated in one frequently-cited arbitral award:
“It is generally accepted that if a third party is bound by the same obligations stipulated
by a party to a contract and this contract contains an arbitration clause or, in relation
to it, an arbitration agreement exists, such a third party is also bound by the arbitration
clause, or arbitration agreement, even if it did not sign it.”278
Applying this analysis, a number of national courts and arbitral tribunals have held that a party
who invokes the provisions of a contract, claiming third party beneficiary rights, is bound by
the arbitration clause contained in the contract,279 and also entitled to invoke that clause.280 In
a few jurisdictions, issues of third party beneficiary status are governed generally by statutory
provisions (and often include provisions that apply specifically to arbitration agreements).281

(Rights of Third Parties) Act; 2002 Principles of European Contract Law, Art. 6:110; UNIDROIT, Principles of
International Commercial Contracts Art. 5.2.1 (2016); J. Herbots (ed.), International Encyclopaedia of Laws: Con-
tracts ¶256 (Australia), ¶239 (Ireland), ¶240 (Austria), ¶253 (Romania), ¶358 (Denmark), ¶285 (France),
¶365 (India) (1993 & Update 2019).
278 Final Award in ICC Case No. 9762, XXIX Y.B. Comm. Arb. 26, 40 (2004).
279 See, e.g., Nauru Phosphate Royalties, Inc. v. Drago Daic Interests, Inc., 138 F.3d 160, 166 (5th Cir. 1998)
(confirming award against non-signatory third party beneficiaries where their interests were “identified and
adequately represented” by party to arbitral proceedings); Spear, Leeds & Kellogg v. Cent. Life Assur. Co., 85 F.3d
21, 27 (2d Cir. 1997); Flink v. Carlson, 856 F.2d 44, 46 n.3 (8th Cir. 1988) (“Of course, if the third party bene-
ficiary seeks to enforce the contract, he will be bound by the contract’s limitations”); Riek v. Xplore-Tech Servs.
Private Ltd, 2009 U.S. Dist. LEXIS 28567 (M.D.N.C.); Black & Veatch Int’l Co. v. Wartsila NSD N. Am., Inc.,
1998 U.S. Dist. LEXIS 20732 (D. Kan.) (third party beneficiary of underlying contract bound by arbitration
clause contained in contract); Bevere v. Oppenheimer & Co., 862 F.Supp. 1243 (D.N.J. 1994) (party asserting
claims under agreement is bound by arbitration clause contained in agreement); Benton v. Vanderbilt Univ., 137
S.W.3d 614 (Tenn. 2004); Tractor-Trailer Supply Co. v. NCR Corp., 873 S.W.2d 627 (Mo. Ct. App. 1994) (third
party beneficiary that invokes contract is bound by arbitration clause contained therein); Judgment of 9 Sep-
tember 1999, 1999 BayobLGZ 255, 267 (Bayerisches Oberstes Landesgericht) (arbitration agreement can be
concluded with effect for third party beneficiaries); Interim Award in ICC Case No. 17669, XLI Y.B. Comm. Arb.
41, ¶61 (2016) (third party beneficiary must be bound by arbitration clause if agreement does not provide for
exemption from arbitration of the third party beneficiary) (citing G. Born, International Commercial Arbitration
1178 (2009)).
280 See, e.g., Geier v. m-Qube Inc., 824 F.3d 797, 800-01 (9th Cir. 2016) (terms of contract “create a direct
obligation from the subscriber to the Company’s suppliers,” which “are intended third-party beneficiaries of the
Terms” who could enforce arbitration clause); Newby v. Enron Corp., 391 F.Supp.2d 541, 561 (S.D. Tex. 2005)
(“non-signatories may enforce arbitration clauses if they were intended third-party beneficiaries”).
281 See, e.g., English Contracts (Rights of Third Parties) Act, §8(1) (“Where (a) a right under §1 to enforce
a term (‘the substantive term’) is subject to a term providing for the submission of disputes to arbitration (‘the
arbitration agreement’), and (b) the arbitration agreement is an agreement in writing … the third party shall be
treated for the purposes of that Act as a party to the arbitration agreement as regards disputes between himself
and the promisor relating to the enforcement of the substantive term by the third party), §8(2) (“Where (a) a
third party has a right under §1 to enforce a term providing for one or more descriptions of dispute between the
third party and the promisor to be submitted to arbitration (‘the arbitration agreement’), (b) the arbitration
agreement is an agreement in writing … and (c) the third party does not fall to be treated under subsection (1)
as a party to the arbitration agreement, the third party shall, if he exercises the right, be treated for the purposes
of that Act as a party to the arbitration agreement in relation to the matter with respect to which the right is
exercised, and be treated as having been so immediately before the exercise of the right.”); Singapore Contracts
(Rights of Third Parties) Act, §9(1) (“Where (a) a right under § to enforce a term (referred to in this section
as the substantive term) is subject to a term providing for the submission of disputes to arbitration (referred to
in this section as the arbitration agreement); and (b) the arbitration agreement is an agreement in writing …
the third party shall be treated for the purposes of the Arbitration Act or the International Arbitration Act, as

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§10.02[F] Parties to International Arbitration Agreements

Even in jurisdictions where neither statutory provisions nor judicial decisions address the is-
sue, commentary suggests that third party beneficiary status will provide a basis for subjecting
a non-signatory to an arbitration clause contained in the contract that benefits it.282
Some courts or tribunals have parsed the language of arbitration clauses or other contrac-
tual provisions carefully, holding in some circumstances that they were drafted so as not to
extend to third party beneficiaries.283 As one court reasoned:
“In the circumstances presented here, the Court is compelled to follow the plain lan-
guage of the Banking Agreement that limits the right to demand arbitration to BNP
and the United Nations. Accordingly, even if the Republic were to be a third-party
beneficiary entitled to sue for breach of contract, the Banking Agreement does not
grant the Republic a right to compel arbitration.”284
The essential inquiry in third party beneficiary cases is the parties’ intentions: did they or did
they not intend to confer rights under the arbitration agreement on third parties? The goal of
this analysis is to determine the parties’ objective, good faith intentions.285

the case may be, as a party to the arbitration agreement as regards disputes between himself and the promisor
relating to the enforcement of the substantive term by the third party”), §9(2) (“Where (a) a third party has a
right under §2 to enforce a term providing for one or more descriptions of dispute between the third party and
the promisor to be submitted to arbitration (referred to in this section as the arbitration agreement); (b) the
arbitration agreement is an agreement in writing … ; and (c) the third party does not fall to be treated under
subsection (1) as a party to the arbitration agreement, the third party shall, if he exercises the right, be treated
for the purposes of the Arbitration Act (Cap. 10) or the International Arbitration Act (Cap. 143A), as the case
may be, as a party to the arbitration agreement in relation to the matter with respect to which the right is exer-
cised, and be treated as having been so immediately before the exercise of the right.”).
282 The Swiss Federal Tribunal has not considered whether a third party beneficiary is bound by an obliga-
tion to arbitrate at the request of another contracting party. Judgment of 19 April 2011, DFT 4A_44/2011 (Swiss
Fed. Trib.). Nonetheless, Swiss commentators conclude that a third party beneficiary is bound, ipso jure, by the
arbitration agreement, particularly if it has accepted substantial benefits under and intervened in performance
of the relevant agreement. J.-F. Poudret & S. Besson, Comparative Law of International Arbitration ¶289 (2d
ed. 2007); K.-H. Schwab & G. Walter, Schiedsgerichtsbarkeit ¶7-36 (7th ed. 2005). Compare B. Berger & F.
Kellerhals, International and Domestic Arbitration in Switzerland ¶¶474, 558 (3d ed. 2015) (parties can agree
that third party beneficiary only acquires rights under contract if it accepts arbitration agreement).
283 See, e.g., Final Award in ICC Case No. 9839, XXIX Y.B. Comm. Arb. 66 (2004) (payment provisions of
contract contradicted third party beneficiary argument); Weckesser v. Knight Enters. SE, LLC, 735 F.App’x 816,
822 (4th Cir. 2018) (“South Carolina law requires that a contract make clear on its face the parties’ intent that
the agreement benefit another” and nothing in arbitration clause evinced intent to create right enforceable by
third party); Brantley v. Repub. Mortg. Ins. Co., 424 F.3d 392, 396 (4th Cir. 2005) (non-signatory could not en-
force arbitration agreement as third party beneficiary because agreement “does not clearly indicate that, at the
time of contracting, the parties intended to provide [the non-signatory] with a direct benefit”); Zurich Am. Ins.
Co. v. Watts Indus., Inc., 417 F.3d 682 (7th Cir. 2005) (declining to extend arbitration clause to defendant who
neither sought nor received benefits under contract); Tamayo v. Brainstorm USA, 93 F.App’x 126, 128 (9th Cir.
2004) (denying defendant’s motion to compel arbitration because, had the parties intended defendant to be
third party beneficiary, “such intent easily could have been expressed in the [arbitration] agreement”); MediVas,
LLC v. Marubeni Corp., 2011 WL 768083 (S.D. Cal.) (denying motion to compel non-signatories to arbitrate
on third party beneficiary theory); In re Infocure Sec. Litg., 210 F.Supp.2d 1331, 1372 (N.D. Ga. 2002) (“third
parties may sue on the contract only if the contract was intended for their direct rather than merely their inci-
dental benefit”); Hugh Collins v. Int’l Dairy Queen, Inc., 2 F.Supp.2d 1465 (N.D. Ga. 1998) (where arbitration
clause applied to “parties hereto” third party beneficiary could invoke it, but where arbitration clause referred
specifically to defined parties, not including third party beneficiary, latter could not invoke it).
284 Iraq v. ABB AG, 769 F.Supp.2d 605, 614-15 (S.D.N.Y. 2011).
285 See, e.g., Hogan v. SPAR Group, Inc., 914 F.3d 34, 39 (1st Cir. 2019) (“As is generally the case in matters of

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Gary B. Born §10.02[F]

Some authorities have suggested that a particularly clear showing must be made of third
party beneficiary status sufficient to permit a party to invoke (or be bound by) an arbitration
agreement:
“Because third-party beneficiary status constitutes an exception to the general rule
that a contract does not grant enforceable rights to non-signatories, a person aspiring
to such status must show with special clarity that the contracting parties intended to
confer a benefit on him.”286
It is doubtful, however, that this analysis is well-considered; for the same reasons that “an-
ti-arbitration” standards of proof for the existence of an arbitration agreement are inappro-
priate287 and pro-arbitration rules of interpretation are appropriate,288 third party beneficiary
status should require no special or elevated standard of proof in the context of international
arbitration agreements. On the contrary, considerations of efficiency and “one-stop” dispute
resolution argue for a reduced standard of proof, particularly in international settings.289
The parties’ intentions regarding a third party beneficiary must be analyzed with the
separability presumption in mind.290 In determining whether a third party is benefited by
an arbitration agreement, the decisive issue is whether the signatories intended to confer
that benefit on the third party (i.e., the right to invoke the arbitration agreement). In addi-
tion, however, a third party may be bound by an arbitration agreement if it asserts rights
that it enjoys by virtue of its status as a third party beneficiary to a contract containing an
arbitration agreement;291 in these instances, the relevant intentions of the signatories will fo-
cus on the underlying contractual rights (as distinguished from the arbitration agreement).
Some courts have required that the third party be entitled to, and assert, contractual rights

contract interpretation, ‘[t]he crux in third-party beneficiary analysis … is the intent of the parties’”) (quoting
McCarthy v. Azure, 22 F.3d 351, 362 (1st Cir. 1994)); Ouadani v. TF Final Mile LLC, 876 F.3d 31, 39 (1st Cir.
2017) (“The ‘critical fact’ that determines whether a nonsignatory is a third-party beneficiary is whether the
underlying agreement ‘manifest[s] an intent to confer specific legal rights upon [the nonsignatory]’”) (quoting
InterGen NV v. Grina, 344 F.3d 134, 147 (1st Cir. 2003)); E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber
& Resin Intermediates, 269 F.3d 187, 200 n.7 (3d Cir. 2001) (“Under the third party beneficiary theory, a court
must look to the intentions of the parties at the time the contract was executed. Under the equitable estoppel
theory, a court looks to the parties’ conduct after the contract was executed.”); McCarthy v. Azure, 22 F.3d 351,
362 (1st Cir. 1994) (“the crux in third-party beneficiary analysis … is the intent of the parties”).
More than merely incidental benefits must ordinarily be involved to confer third party beneficiary sta-
tus. See, e.g., McCarthy, 22 F.3d at 362 n.16 (requirements to establish third party beneficiary status “are not
satisfied merely because a third party will benefit from performance of the contract”); Cargill Int’l, SA v. M/T
Pavel Dybenko, 991 F.2d 1012, 1019 (2d Cir. 1993) (“it is not enough that some benefit incidental to the perfor-
mance of the contract may accrue to [i]t”).
286 McCarthy, 22 F.3d at 362 n.16.
287 See §5.04[D][1].
288 See §5.04[D][2].
289 See §9.02[A].
290 See §10.01[D].
291 See, e.g., Am. Bureau of Shipping v. Tencara Shipyard SpA, 170 F.3d 349, 352 (2d Cir. 1999) (ordering
non-signatory to arbitrate because it received direct benefits of lower insurance rate and ability to sail under
French flag as result of contract containing arbitration clause); Flink v. Carlson, 856 F.2d 44, 46 n.3 (8th Cir.
1988) (“Of course, if the third party beneficiary seeks to enforce the contract, he will be bound by the contract’s
limitations”); Black & Veatch Int’l Co. v. Wartsila NSD N. Am., Inc., 1998 U.S. Dist. LEXIS 20732 (D. Kan.)
(third party beneficiary of underlying contract bound by arbitration clause contained in contract); Bevere v. Op-
penheimer & Co., 862 F.Supp. 1243 (D.N.J. 1994) (party asserting claims under contract is bound by arbitration
clause contained in contract).

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§10.02[G] Parties to International Arbitration Agreements

(as distinguished from limitations of liability) under a contract in order to be subject to its
arbitration clause.292
In some instances, the conclusion that a non-signatory party is bound by, or may invoke,
an arbitration clause on third party beneficiary grounds may involve considerations akin to
estoppel, rather than exclusive consideration of issues of intent.293 For example, one court held
that a company was “equitably estopped” from resisting arbitration against the respondent
because “the very basis of [its] claim [in the dispute was] that [the respondent] breached the
duties and responsibilities assigned and ascribed to [the respondent] under [an] agreement,”
which contained an arbitration clause.294 Although ostensibly analyzed as an issue of third par-
ty beneficiary rights, the more appropriate and convincing basis for such decisions is estoppel
(discussed below).295
Issues of third party beneficiary status should in principle be governed by the law applica-
ble to the arbitration agreement or (less likely) the law applicable to the underlying contract.
That is because the third party beneficiary’s status is a question related to interpretation and
formation of the arbitration agreement, which should be governed by the same law as other is-
sues of interpretation and formation.296 Alternatively, a few authorities have reasoned that the
basis for subjecting a third party beneficiary to an arbitration clause is the grant of substantive
rights under the underlying contract, which carry with them the associated arbitration clause;
as such, the law applicable to the underlying third party beneficiary rights would arguably
govern the question whether the third party beneficiary is subject to the arbitration clause.297

[G] Guarantors298
It is not uncommon in international commercial transactions for one party to guarantee the
obligations of another party under a contract to which the guarantor is not party.299 When this

292 Judgment of 8 March 2012, DFT 4A_627/2011 (Swiss Fed. Trib.) (no third party beneficiary status
where alleged third party beneficiary was not granted direct rights). See also Fortress Value Recovery Fund I LLC
v. Blue Skye Special Opportunities Fund LP [2013] EWCA Civ 367 (English Ct. App.) (non-signatory defen-
dants could not claim benefit of arbitration agreement where non-signatories relied on contractual exclusions).
293 See §10.02[K].
294 See Thomson-CSF, SA v. Am. Arb. Ass’n, 64 F.3d 773, 779 (2d Cir. 1995) (if party “directly benefited”
from underlying contract, “it would be estopped from avoiding arbitration” pursuant to arbitration clause in
contract); Hughes Masonry Co. v. Greater Clark County Sch. Bldg Corp., 659 F.2d 836, 838 (7th Cir. 1981).
295 See §10.02[K].
296 See §4.04.
297 See, e.g., Am. Patriot Ins. Agency, Inc. v. Mut. Risk Mgt, Ltd, 364 F.3d 884, 890 (7th Cir. 2004) (remanding
to district court to determine whether, under law governing underlying contract, plaintiff is third party bene-
ficiary and therefore subject to contract’s arbitration agreement). Also applicable are the validation principle
(discussed above in §4.04[A][1][b][i]; §4.04[A][3]) and international principles prohibiting discriminatory
and idiosyncratic national law rules (discussed above in §4.04[B] (especially §4.04[B][2][b][ii])). Compare S.
Brekoulakis, Third Parties in International Commercial Arbitration ¶2.178 (2010) (“There is no reason why tri-
bunals should not seek to apply transnational substantive rules to determine the matter. This is more especially
the case here than for example in the case of agency and representation, as issues of third-party beneficiary do
not touch on public policy or international public law.”).
298 For commentary, see Hanotiau, Arbitration and Bank Guarantees: An Illustration of the Issue of Consent to
Arbitration in Multicontract-Multiparty Disputes, 16(2) J. Int’l Arb. 15 (1999); Leurent, Guaranties Bancaires et
Arbitrage, 1990 Rev. de Droit Affaires Int’l 414; Scherer, Bank and Parent Company Guarantees in International
Arbitration, 22 Revista de Arbitragem e Mediação 148 (2009); Smit, When Does An Arbitration Clause Extend
to A Guarantee That Does Not Contain It?, 2003:1 Stockholm Arb. Rep. 273.
299 R. Bertrams, Bank Guarantees in International Trade ¶1-1 (4th ed. 2013); Hanotiau, Arbitration and Bank

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Gary B. Born §10.02[G]

occurs, questions may arise as to the extent to which the guarantor is bound by provisions of
the underlying contract – including particularly its arbitration clause.
The starting point for analysis is that, because the guarantor is not party to the guaranteed
contract, the guarantor is also not party to the arbitration agreement contained in the guaran-
teed contract. That is true under both common law300 and civil law301 regimes.
Despite this, a number of arbitral awards302 and judicial decisions303 have held, without
detailed analysis, that guarantors are bound by arbitration clauses in the guaranteed contracts.
There are a number of bases, not always clearly articulated, that permit such a conclusion.
First, a guarantor may be benefited by an assignment of the guaranteed party’s rights un-
der the underlying contract if the guarantor is required to pay under the guarantee. In these

Guarantees: An Illustration of the Issue of Consent to Arbitration in Multicontract-Multiparty Disputes, 16(2) J.

Int’l Arb. 15 (1999); Ruiz Del Rio, Arbitration Clauses in International Loans, 4(3) J. Int’l Arb. 45, 51 (1987)
(describing “practically unavoidable presence of guarantors” in context of international arbitrations); P. Wood,
Comparative Law of Security and Guarantees 334 et seq. (1995) (describing various forms of guarantees in inter-
national business).
300 See, e.g., Bridas SAPIC, 345 F.3d at 357 (“typically a guarantor cannot be compelled to arbitrate on the
basis of an arbitration clause in a contract to which it is not a party”); Asplundh Tree Expert Co. v. Bates, 71 F.3d
592, 595 (6th Cir. 1995) (“as a general rule, a guarantor who is not a signatory to a contract containing an arbi-
tration clause is not bound by the arbitration clause”); Proshred Holdings Ltd v. Conestoga Document, 2002 WL
1067328, at *3 (N.D. Ill.) (“‘guarantors for the performance of a contract are bound by the arbitration clause
in that contract only when they expressly agree to the obligation to arbitrate’”) (quoting Grundstad v. Ritt, 106
F.3d 201, 204 (7th Cir. 1997)); S.N. Prasad v. Monnet Fin. Ltd, (2010) 1 SCC 320 (Indian S.Ct.) (guarantor of
loan agreement not bound by arbitration clauses in subsequent loan agreements).
301 See, e.g., Judgment of 16 July 1992, 1993 Rev. Arb. 611 (French Cour de Cassation Civ. 1) (guarantor
not bound by arbitration clause in guaranteed contract); Judgment of 22 November 1977, 1978 Rev. Arb. 461
(French Cour de Cassation Com.); Judgment of 7 July 1994, Uzinexport-Imp. Romanian Co. v. Attock Cement
Co., 1995 Rev. Arb. 107 (Paris Cour d’Appel) (corporate guarantor of turnkey contract not party to arbitration
clause in contract); Judgment of 19 August 2008, DFT 4A_128/2008 (Swiss Fed. Trib.) (guarantor of contract
did not become party to arbitration clause in underlying contract); Decision of 23 December 2011, Case No.
A40-56769/07-23-401, 6 (Russian S. Arbitrazh Ct.) (“[A]rbitration agreement in the supply contract is bind-
ing only on the parties of the said contract. … [It] cannot bind the [surety] who is not a party of the supply
contract.”).
302 See, e.g., Partial Award in ICC Case No. 3896, 110 J.D.I. (Clunet) 914 (1983); Hanotiau, Arbitration and
Bank Guarantees: An Illustration of the Issue of Consent to Arbitration in Multicontract-Multiparty Disputes, 16(2)
J. Int’l Arb. 15 (1999).
303 See, e.g., Maxum Found., Inc. v. Salus Corp., 779 F.2d 974 (4th Cir. 1985); Exchange Mut. Ins. Co. v. Haskell
Co., 742 F.2d 274 (6th Cir. 1984); Son Shipping Co. v. De Fosse & Tanghe, 199 F.2d 687, 688 (2d Cir. 1952); Dev.
Bank of Philippines v. Chemtex Fibers Inc., 617 F.Supp. 55 (S.D.N.Y. 1985) (guarantor of loan agreement, that also
signed loan agreement, bound by arbitration clause in that agreement); Banque de Paris et des Pays-Bas v. Amoco
Oil Co., 573 F.Supp. 1464 (S.D.N.Y. 1983); Hidrocarburos y Derivados, CA v. Lemos, 453 F.Supp. 160 (S.D.N.Y.
1977); Midland Tar Distilleries, Inc. v. M/T Lotus, 362 F.Supp. 1311, 1313 (S.D.N.Y. 1973); Lowry & Co. v. SS Le
Moyne D’Iberville, 253 F.Supp. 396, 398 (S.D.N.Y. 1966); Judgment of 16 March 1978, Inex Film & Inter-Exp. v.
Universal Pictures, 1978 Rev. Arb. 501 (Paris Cour d’Appel); Judgment of 21 August 2008, DFT 4A_194/2008
(Swiss Fed. Trib.) (party signed contract as guarantor and was therefore bound by contract’s arbitration agree-
ment); Judgment of 26 May 2005, Interactive Television, SA v. Satcom Nederland BV y Banco de Bilbao Vizcaya,
SA, Case No. 404/2005 (Spanish Tribunal Supremo) (arbitration clause binding on those companies “directly
implicated in the execution of the contract”; claimant permitted to pursue arbitration against non-signatory
guarantor); Judgment of 16 May 2002, Case No. T4496-01 (Svea Ct. App.), in S. Jarvin & A. Magnusson (eds.),
International Arbitration Court Decisions 643 (2006) (upholding award declaring that guarantor (by state enti-
ty) was bound by arbitration clause in guaranteed contract).

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§10.02[G] Parties to International Arbitration Agreements

circumstances, as discussed below,304 the guarantor’s exercise of the assigned contractual

rights may be subject to an arbitration agreement contained in the underlying contract.305
Second, the guarantor may provide substitute performance under the guaranteed con-
tract. As discussed above, where a non-signatory performs a contract containing an arbitra-
tion agreement, the non-signatory may be bound by the arbitration clause.306 This analysis
also applies in cases where a guarantor performs the guaranteed party’s obligation under the
guaranteed contract.307
Third, the guarantee may incorporate the terms of the underlying contract, including the
arbitration agreement. This involves application of general principles relating to the incorpo-
ration of arbitration clauses,308 which can result in a conclusion that the guarantee incorpo-
rates the arbitration provision of the guaranteed contract.309
Fourth, in some cases, the guarantor may qualify as a party to the underlying contract,
on the basis of an implied agreement granting it that status, and will therefore be liable under
both the guarantee (to the guaranteed party) and the underlying contract (to the party who is
owed the obligation).310 In determining whether the guarantor is impliedly a party to the un-

304 See §10.02[I].

305 See, e.g., Kvaerner ASA v. Bank of Tokyo-Mitsubishi, 210 F.3d 262 (4th Cir. 2000) (guarantor compelled
to arbitrate under construction contract); Eres, NV v. Citgo Asphalt Refining, 2010 U.S. Dist. LEXIS 47691 (S.D.
Tex.) (assignees assumed all obligations under contract, including arbitration clause); Judgment of 19 August
2008, DFT 4A_128/2008, ¶3.2 (Swiss Fed. Trib.) (where guarantor assumes contractual debt, arbitration
clause in loan also binds guarantor, unless it explicitly objects: “The external takeover of debt entails the transfer
of additional rights from the debtor to the person taking over. The arbitration agreement constitutes such an
accessory. It therefore ensues that it binds the person taking over, unless exceptions exist to the contrary.”).
306 See §10.02[C].
307 See, e.g., Stellar Shipping Co. LLC v. Hudson Shipping Lines [2010] EWHC 2985 (Comm) (English High
Ct.) (guarantor who endorses contract is generally bound by arbitration clause in contract); Judgment of 21
August 2008, DFT 4A_194/2008 (Swiss Fed. Trib.) (party signed contract as guarantor and was therefore
bound by contract’s arbitration agreement).
308 See §5.02[A][2][g][viii].
309 See, e.g., Choctaw Generation LP v. Am. Home Assur. Co., 271 F.3d 403, 405 (2d Cir. 2001) (bond did not
contain arbitration clause, but construction contract, which did, was “referred to” in bond “and made a part” of
bond “as if fully set forth therein”); Kvaerner ASA v. Bank of Tokyo-Mitsubishi, 210 F.3d 262, 265 (4th Cir. 2000)
(requiring guarantor to arbitrate dispute because guaranty agreement mandated that “the same ‘rights and rem-
edies’” be available to parties as under contract); Grundstad v. Ritt, 106 F.3d 201, 205 (7th Cir. 1997); U.S. Fid.
& Guar. Co. v. Westpoint Constr. Co., 837 F.2d 1507, 1508 (11th Cir. 1988) (“incorporation of the subcontract
into the bond expresses an intention of the parties, including USF & G, to arbitrate disputes”); Judgment of 19
August 2008, DFT 4A_128/2008, ¶3.2 (Swiss Fed. Trib.) (“In order that its jurisdiction can be recognized, the
guarantee agreement must include an arbitration clause specifically stipulating it, or alternatively containing
sufficient referral to the arbitration clause featuring in the principal agreement (arbitration agreement by refer-
ence)”). See also Stellar Shipping Co. LLC v. Hudson Shipping Lines [2010] EWHC 2985 (Comm) (English High
Ct.) (company which had endorsed contract of affreightment as guarantor had thereby agreed to arbitration of
disputes arising out of guarantee in accordance with arbitration clause in affreightment contract).
310 As discussed above, a non-signatory may qualify as a party to an arbitration agreement on the basis of
implied consent not reflected in the express terms of the underlying contract. See §10.02[C]. See also Judg-
ment of 19 August 2008, DFT 4A_128/2008, ¶3.2 (Swiss Fed. Trib.) (“In order that its jurisdiction can be
recognised, … the guarantor [must have] manifested, expressly or implicitly, a wish that the creditor interpret
in good faith, according to the principle of trust, as being a wish to submit to the arbitration agreement in the
principal agreement”); Judgment of 19 March 2014, Constitutionality Challenge to Article 37 of Law 1563 of 2012,
C-170/14. Ref. No. D-9777 (Colombia Corte Constitucional) (upholding constitutionality of Article 37 of
Law 1536, which provides that guarantor is bound by arbitration agreement in guaranteed contract, on basis
that it implicitly agrees to be bound).

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Gary B. Born §10.02[G]

derlying contract, the nature of the guarantee and the guarantor’s contractual role is import-
ant.311 Typically, the more commercially significant the role of the guarantor in performance of
the underlying contract or transaction, the more likely it will be that the parties intended the
guarantor to be a party to the arbitration agreement.312
As in other non-signatory contexts, the correct analysis requires consideration of the rela-
tions between the parties and the contractual language that they have adopted. The language
of the guarantee agreement and the underlying arbitration clause will be significant in ascer-
taining whether the parties intended that the guarantor be bound (and benefited) by the arbi-
tration clause in the underlying contract.313 If the guarantee agreement is narrowly drafted314 or
if the arbitration clause refers specifically and only to identified parties,315 then the guarantor
will likely not be bound by the arbitration agreement.
Issues relating to the application of the guarantor doctrine to non-signatories have often
been held to be governed by the national law applicable to the underlying guarantee relation-
ship. That is the approach taken by most national courts and arbitral tribunals.316 The better

311 A bank that provides a guarantee of contractual payments, or similar performance by a third party,
should ordinarily not be considered to have been accepted as (nor to have consented to status as) a party to the
underlying contract, much less the arbitration clause in that contract. On the other hand, where a corporate
parent or affiliate, or a related state entity, guarantees the performance of an affiliated company under a con-
tract, then the guarantee relationship will often evidence the parties’ intention that the guarantor be bound by
the arbitration clause in the guaranteed contract. See, e.g., Award in Bulgarian Chamber of Commerce & Industry
Case of 1 October 1980, XII Y.B. Comm. Arb. 84 (1987) (guarantor subject to arbitration clause in underlying
contract); Judgment of 16 March 1978, Inex Film & Inter-Exp. v. Universal Pictures, 1978 Rev. Arb. 501, 515 (Paris
Cour d’Appel) (same); Judgment of 21 August 2008, DFT 4A_194/2008 (Swiss Fed. Trib.) (company that for-
mally acted as guarantor was in fact a partner); Judgment of 16 May 2002, Case No. T4496-01 (Svea Ct. App.),
cited in B. Hanotiau, Complex Arbitrations 130 (2005).
312 See, e.g., Astra Oil Co. v. Rover Navigation Ltd, 344 F.3d 276, 281 (2d Cir. 2003) (signatory’s non-signa-
tory affiliate permitted to compel arbitration under charter party based on (1) undisputed evidence of close
corporate and operational relationship between two entities; (2) fact that non-signatory’s claims are under
charter party; and (3) fact that non-signatory was treated as if it were party to charter party); Compania Es-
panola de Petroleos SA v. Nereus Shipping, SA, 527 F.2d 966, 973-74 (2d Cir. 1975) (guarantors bound by arbi-
tration clause in original contract, but agreed to perform balance of original contract, and to assume rights and
obligations under original contract); Judgment of 16 May 2002, Case No. T4496-01 (Svea Ct. App.) (buyer’s
and guarantor’s respective obligations were identical, and guarantor was aware of arbitration clause in main
agreement).
313 See W. Craig, W. Park & J. Paulsson, International Chamber of Commerce Arbitration ¶5.10 (3d ed. 2000)
(“The answer depends to a considerable extent on the wording of the guarantee”).
314 See, e.g., Compania Espanola de Petroleos SA, 527 F.2d at 973 (distinguishing broader language in guar-
anty and arbitration clauses at issue from narrower language of such clauses in other cases: “determination
of whether a guarantor is bound by an arbitration clause contained in the original contract necessarily turns
on the language chosen by the parties in the guaranty”); Minera Alumbrera Ltd v. Fluor Daniel, Inc., 1999 WL
269915, at *5 (S.D.N.Y.) (denying non-signatory guarantor right to compel arbitration when arbitration clause
at issue “applies only to disputes ‘arising from’ and/or ‘arising under,’ in contrast with clauses that state that they
apply to ‘[a]ll disputes arising in connection with the present contract’”).
315 See, e.g., Imp. Exp. Steel Corp. v. Miss. Valley Barge Line Co., 351 F.2d 503, 506 (2d Cir. 1965) (arbitration
clause only applied to specifically identified parties); Rice Co. (Suisse) v. M/V Nalinee Naree, 2007 WL 26794,
at *1 (S.D. Tex.) (“Where the restrictive ‘owner/charterer’ language is used in the arbitration clause, it is indeed
difficult to bind to that clause one who is not a signatory to the charter party”).
316 See, e.g., Minera Alumbrera Ltd v. Fluor Daniel, Inc., 1999 WL 269915, at *1, 3 (S.D.N.Y.) (applying law
governing guarantee to determine whether guarantee incorporated arbitration clause by reference); Stellar
Shipping Co. LLC v. Hudson Shipping Lines [2010] EWHC 2985 (Comm) (English High Ct.) (“It would be
surprising to find that the parties actively agreed that the [underlying agreement] was to be subject to English

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§10.02[H] Parties to International Arbitration Agreements

view, however, is that a validation principle applies, providing that a guarantor is subject to an
arbitration agreement if either the law governing the underlying guarantee agreement or the
law governing the arbitration agreement provides for this result.317

[H] Succession318
It is well-settled that an entity that does not execute an arbitration agreement may become
a party thereto by way of legal succession.319 In the words of the Swiss Federal Tribunal, “in
principle, an arbitration clause is binding only on those parties which have entered into a
contractual agreement to submit to arbitration. … Exceptions to this rule arise in cases of
legal succession.”320 The most common means of such succession is by a company’s merger or
combination with the original party to an agreement.321 322323
Under many national legal regimes, corporate or company law permits the merger or com-
bination of two or more previously separate legal entities into either a new legal entity or one of
the preexisting legal entities. The consequence of such “mergers” or “business combinations”

law and arbitration but that they wished to have any dispute under the linked guarantee determined by some
unspecified court in some unspecified jurisdiction according to some unspecified governing law”).
317 See §4.04[A][1][b][i]; §4.04[A][3].
318 For commentary, see P. Blumberg et al., Blumberg on Corporate Groups §32.04 (2d ed. 2005 & Update
2014); Cremades, Problems that Arise from Changes Affecting One of the Signatories to the Arbitration Clause, 7(2)
ICC Ct. Bull. 29 (1996).
319 See, e.g., Int’l Bhd Elec. Workers, Local No. 234 v. Witcher Elec., Inc., 1990 WL 89315, at *4 (9th Cir.) (“party
not a signatory to an arbitration agreement cannot be forced to arbitration until and unless the court has found
that it is bound by the agreement as … successor of the signatory company”); Jenks v. DLA Piper Rudnick Gray
Cary U.S., 243 Cal.App.4th 1, 13 (Cal. Ct. App. 2015) (“both states’ laws support the conclusion that successor
partnerships acquire the right to enforce the contractual rights of the prior entity”); SEB Trygg Liv Holding
AB v. Manches [2005] EWCA Civ 1237 (English Ct. App.); A v. B [2016] EWHC 3003 (Comm) (English
High Ct.) (non-signatory successor company under Indian law validly substituted for signatory in arbitration);
Judgment of 8 February 2000, 2000 RTD Com. 596, 596 (French Cour de Cassation Civ. 1) (“international
arbitration clause is binding on any party that is a successor to one of the contractual partners”); Judgment of 30
April 2013, Case No. 18/16 (Kyiv Comm. Ct.) (upholding validity of arbitration agreement between claimant
and respondent’s successor company); Judgment of 21 March 2013, Case No. 6-42691CB12 (Ukrainian Higher
Specialized Civ. & Crim. Ct.) (enforcing arbitral award against successor company).
320 Judgment of 19 May 2003, 22 ASA Bull. 344, 348 (Swiss Fed. Trib.) (2004).
321 The same principle applies to natural persons. See, e.g., English Arbitration Act, 1996, §8(1) (“Unless
otherwise agreed by the parties, an arbitration agreement is not discharged by the death of a party and may be
enforced by or against the personal representatives of that party”); Chinese Supreme Court, Reply Concerning
the Request of Yu Yingru Withdrawing the Arbitral Award, [2007] Min Si Ta Zi No. 25 (if party died after signing
arbitration agreement, agreement continues to be binding on party’s heir).
322 French Civil Code, Art. 1844(4) (“A company … may be absorbed by another company or may par-
ticipate in the formation of a new company by way of merger”); Swiss Law on Mergers, Demergers, Transfor-
mation and Transfer of Assets, Arts. 3, 22; German Umwandlungsgesetz, §20(1)1; 19 Am.Jur.2d Corporations
§2254 (2007) (“unless there is some provision to the contrary, either in the statute or agreement of consol-
idation or merger, the consolidated or resulting corporation succeeds to the powers, privileges, and property
of the constituents or merged corporation”); Ukrainian Civil Code, Art. 104(1) (“A legal entity is wound up
by transfer of all of its assets, rights and liabilities to other legal entities – the successors (merger, accession,
division, transformation) or by liquidation”).
323 See, e.g., Award in ICC Case No. 6754, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC
Arbitral Awards 1991-1995 600 (1997) (restructuring of state companies, resulting in transfer of all assets and
liabilities, including contractual rights and obligations, of company B to company C); Award in ICC Case No.
2626, 105 J.D.I. (Clunet) 980 (1978) (conversion of limited liability company into joint stock corporation had
effect of transferring obligations of limited liability company to joint stock corporation).

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Gary B. Born §10.02[H]

is that the “surviving” entity will be the owner of all the assets and liabilities (including con-
tract rights and obligations) of the previously-existing entities. This is confirmed by national
law,322 arbitral tribunals323 and commentary.324 When such a combination occurs, most na-
tional laws provide that the merged or surviving entity succeeds by operation of law as a party
to the contracts, including the arbitration agreements, of the previously-existing entities.325
There is no apparent contrary authority and no reason to doubt this conclusion.
National courts326 and arbitral awards327 have held that the same result generally applies in
other instances of corporate succession, when one entity assumes the rights and obligations
of another entity as a matter of applicable national company law.328 As the French Cour de

324 See, e.g., 15 Fletcher Cyclopedia Corporations §7041 (2007) (“Strictly speaking, a merger means the
absorption of one corporation by another; the latter retains its name and corporate identity with the added
capital, franchises and powers of the merged corporation”); A. Bonnasse, JurisClasseur Sociétés, Traité, Fasc.
161-10, ¶11 (2001) (“The universal transmission of assets, arising out of successoral rules, means that the entire
rights and obligations of the absorbed company are automatically transferred to the absorbing company”);
J.-F. Poudret & S. Besson, Comparative Law of International Arbitration ¶290 (2d ed. 2007).
325 See, e.g., Award in ICC Case No. 3742, 111 J.D.I. (Clunet) 910 (1984); Award in ICC Case No. 3281, 109
J.D.I. (Clunet) 990 (1982) (“it results from the terms of the minutes of the Shareholders meeting [approving
the merger between Z and X] that Z is subrogated in all the rights and obligations of X, notably on those
resulting from [the arbitration agreement]”); Fyrnetics (H.K.) Ltd v. Quantum Group, Inc., 293 F.3d 1023, 1029
(7th Cir. 2002) (successor company bound by arbitration agreement signed by entity that was merged into
successor company); Nat’l Bank of Greece & Athens SA v. Metliss [1958] AC 509 (English Ct. App.) (effect of
universal succession under Greek law is that new entity continues personality of old entity and all rights and
liabilities are automatically transferred and vested in new entity); Judgment of 13 June 1963, 1964 Rev. Arb. 125
(Paris Cour d’Appel); Judgment of 9 June 1998, 16 ASA Bull. 653 (Swiss Fed. Trib.) (1998); Chinese Supreme
Court, Interpretation Concerning Some Issues on Application of the Arbitration Law, [2006] Fa Shi No. 7, Art. 8
(“Where a party concerned is merged or divided after concluding an agreement for arbitration, the agreement
for arbitration shall be binding upon the successor of its rights and obligations”).
326 See, e.g., AT&S Transp., LLC v. Odyssey Logistics & Tech. Corp., 803 N.Y.S.2d 118 (N.Y. App. Div. 2005)
(sale of substantially all assets of predecessor company constituted de facto merger and bound successor
company to arbitration agreement signed by predecessor); Judgment of 15 October 1997, MS “EMJA” Braack
Schifffahrts KG v. Wartsila Diesel Aktiebolag, XXIV Y.B. Comm. Arb. 317, 318 (Swedish S.Ct.) (1999) (“It must
generally be accepted that where a change in parties has taken place by a universal assignment, the universal
successor is bound by the arbitration clause”); Chinese Supreme Court, Interpretation Concerning Some Issues
on Application of the Arbitration Law, [2006] Fa Shi No. 7, Art. 8.
327 See, e.g., Final Award in ICC Case No. 9762, XXIX Y.B. Comm. Arb. 26 (2004) (one state ministry held
to be successor to earlier ministry and therefore bound by contract and arbitration clause); Interim Award in
ICC Case No. 7337, XXIV Y.B. Comm. Arb. 149, 154 (1999) (“It is a general principle of law that a contract
can bind only the parties that have entered into it. There are, however, exceptions. A party may be substituted
by universal succession or singular succession. An agreement to arbitrate is therefore valid between the parties
and their legal successors.”); Award in ICC Case No. 6223, discussed in Grigera Naón, Choice-of-Law Problems
in International Commercial Arbitration, 289 Recueil des Cours 9, 142 (2001) (signatory to arbitration agree-
ment had been merged into another entity, and ceased to exist, meaning that only latter entity was party to
arbitration agreement); Westland Helicopters Ltd v. Arab Org. for Indus., Interim Award in ICC Case No. 3879 of
5 March 1984, XI Y.B. Comm. Arb. 127 (1986) (noting possibility of transfer of rights/duties under arbitration
agreement by “universal succession”); Award in ICC Case No. 2626, 105 J.D.I. (Clunet) 980 (1978).
328 See, e.g., Award in ICC Case No. 2626, 105 J.D.I. (Clunet) 980 (1978) (“The dominant trend in case law
holds that an arbitration agreement is not only valid between the parties, but can also be relied upon against
their heirs, their legatees, their assignees and all those acquiring obligations”); John Wiley & Sons, Inc. v. Living-
ston, 376 U.S. 543, 548-51 (U.S. S.Ct. 1964) (holding that employer, who was successor to merged entity that
had entered into arbitration agreement with employees, was bound by arbitration agreement because there was
“substantial continuity of identity,” and public policy argues in favor of binding successor entities to arbitration
agreements in federal labor disputes).

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§10.02[I] Parties to International Arbitration Agreements

Cassation concluded: “[t]he international arbitration clause is binding on any party that is a
successor to one of the contractual partners.”329
Some authorities note the possibility that an arbitration agreement could be drafted to
preclude its transfer, by way of universal or other succession (in a manner paralleling prohibi-
tions against assignment, discussed below330). Thus:
“The dominant trend in case law holds that an arbitration agreement is not only valid
between the parties, but can also be relied upon against their heirs, their legatees, their
assignees and all those acquiring obligations. The only exceptions are cases where the
arbitration agreement is drafted in such a way as to exclude successors and assignees.”331
Most authorities have held that the national law governing the issue of succession also applies
to a non-signatory’s succession to an arbitration agreement.332 The better view is that the val-
idation principle applies, providing for succession to the arbitration agreement if that result
would be obtained under either the law governing the underlying succession (e.g., the merger)
or the arbitration agreement.333

[I] Assignment and Other Transfers of Contractual Rights334

In contemporary commerce, contracts are frequently transferred from one party to another by
way of assignment, novation, assumption, or other contractual transfer mechanisms. In these
circumstances, disputes sometimes arise as to whether the transferee or assignee of a contract
is bound by an arbitration clause contained in the transferred/assigned agreement.335

329 Judgment of 8 February 2000, 2000 RTD Com. 596, 596 (French Cour de Cassation Civ. 1).
330 See §10.02[I].
331 Award in ICC Case No. 2626, 105 J.D.I. (Clunet) 980, 981 (1978). See also Chinese Supreme Court,
Interpretation Concerning Some Issues on Application of the Arbitration Law, [2006] Fa Shi No. 7, Art. 8 (rule of
succession subject to contrary agreement).
332 Courts usually apply the same law to determine succession to an arbitration agreement without analysis.
See, e.g., Fyrnetics (H.K.) Ltd v. Quantum Group, Inc., 293 F.3d 1023 (7th Cir. 2002); AT&S Transp., LLC v.
Odyssey Logistics & Tech. Corp., 803 N.Y.S.2d 118, 120-21 (N.Y. App. Div. 2005) (sale of substantially all assets
of predecessor company constituted de facto merger and bound successor company to arbitration agreement
signed by predecessor).
333 Further, where the New York Convention applies, national law rules of succession would be subject
to international prohibitions against discriminatory and idiosyncratic legislation. See §4.04[B] (especially
§4.04[B][2][b][ii]). Thus, if local law provided that all obligations of a locally incorporated company were
transferred in a merger or other reorganization, with the exception of agreements to arbitrate (either generally
or with foreign companies), that limitation would be ineffective under the Convention’s neutrality and non-dis-
crimination principles. In principle, this appears to be the correct conclusion.
334 For commentary, see Girsberger, The Law Applicable to the Assignment of Claims Subject to An Arbitration
Agreement, in F. Ferrari & S. Kröll (eds.), Conflict of Laws in International Arbitration 379 (2011); Girsberger &
Hausmaninger, Assignment of Rights and Agreement to Arbitrate, 8 Arb. Int’l 121 (1992); Jagusch & Sinclair, The
Impact of Third Parties on International Arbitration: Issues of Assignment, in L. Mistelis & J. Lew (eds.), Pervasive
Problems in International Arbitration 291 (2006); Oommen & Yap, Assignee’s Right and Obligation to Arbitrate
Under Singapore Law: A Missed Opportunity by the Court of Appeal?, 5(2) Indian J. Arb. L. 177 (2016); Mantil-
la-Serrano, International Arbitration and Insolvency Proceedings, 11 Arb. Int’l 67 (1995); Scherer, Bank and Parent
Company Guarantees in International Arbitration, 22 Revista de Arbitragem e Mediação 148 (2009); Werner,
Jurisdiction of Arbitrators in Case of Assignment of An Arbitration Clause: On A Recent Decision by the Swiss Su-
preme Court, 8(2) J. Int’l Arb. 13 (1991); Yang, Who Is A Party? The Case of the Non-Signatory (Assignment),
2005 Asian Disp. Rev. 43.
335 See, e.g., Rals Int’l Pte Ltd v. Cassa di Risparmio di Parma e Piacenza SpA, [2016] SGCA 53, ¶¶52-56 (Sin-
gapore Ct. App.) (suggesting that assignee’s right to arbitrate is more easily reconcilable with consensual nature

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Gary B. Born §10.02[I]

Some early judicial decisions suggested that arbitration agreements were not capable of
being transferred, apparently on the theory that they were “personal” obligations, which were
specific to and binding upon only the original parties.336 These decisions have been super-
seded, and it is now almost universally accepted that parties have the contractual autonomy
to transfer or assign arbitration agreements, just as they have the power to assign or transfer
other types of contracts.337 Again, the touchstone in such cases should be the intention of the
parties, both in the original agreement and in the assignment.
In principle, an assignment of a contract should have the effect of conveying the arbitra-
tion clause associated with the contract, as one aspect of the parties’ overall agreement, to the
assignee, at least absent some sort of contractual or legal prohibition that renders the assign-
ment ineffective.338 Indeed, in most jurisdictions, it is presumed that assignment of the under-
lying contract entails the assignment of the associated arbitration agreement. As one arbitral
award reasoned, “an arbitration clause must be considered an ancillary right (Nebenrecht) to
the assigned principal rights which … follows the assigned rights.”339
In the United States, most courts have held that, when a contract is transferred from one
party to another entity, the arbitration clause passes along with the underlying contract.340

of arbitration than its obligation to arbitrate). Similar issues may arise in cases of transfer or assumption of some
(but not all) contractual rights and duties. See, e.g., Trippe Mfg Co. v. Niles Audio Corp., 401 F.3d 529, 532 (3d
Cir. 2005) (“Under New York law, the assignee of rights under a bilateral contract is not bound to perform the
assignor’s duties under the contract unless he expressly assumes that obligation. … That said, when an assignee
assumes the liabilities of an assignor, it is bound by an arbitration clause in the underlying contract.”).
336 See, e.g., Cottage Club Estates Ltd v. Woodside Estates Co. (Amersham) Ltd [1928] 2 KB 463 (KB) (English
High Ct.) (assignment did not transfer to assignee any right in arbitration clause because arbitration clause was
a separate “personal covenant”).
337 See Girsberger & Hausmaninger, Assignment of Rights and Agreement to Arbitrate, 8 Arb. Int’l 121 (1992).
See also Restatement of the U.S. Law of International Commercial and Investor-State Arbitration §2.3 comment e
(2019) (“In general, when rights in the underlying contract are legally transferred to another party, by what-
ever means, the obligation to arbitrate under an arbitration agreement in the underlying contract is similarly
transferred”).
338 See, e.g., Partial Award in ICC Case No. 6000, discussed in Grigera Naón, Choice-of-Law Problems in Inter-
national Commercial Arbitration, 289 Recueil des Cours 9, 127 (2001) (“It could not be denied by Respondent
that, under US and French Law, it is a well-settled principle that the assignment of a contract containing an
arbitration clause carries with it the obligation, on the part of the assignee, to submit its claim to arbitration to
the same extent as assignor”); HT of Highlands Ranch, Inc. v. Hollywood Tanning Sys., Inc., 590 F.Supp.2d 677,
684 (D.N.J. 2008) (“when an assignee assumes the liabilities of an assignor, it is bound by an arbitration clause
in the underlying contract”); Donel Corp. v. Kosher Overseers Ass’n of Am., 2001 WL 228364, at *3 (S.D.N.Y.)
(assignee of contract may invoke arbitration clause in contract); Cedrela Transp. Ltd v. Banque Cantonale Vau-
doise, 67 F.Supp.2d 353, 355 (S.D.N.Y. 1999) (assignee of contract may invoke arbitration clause in contract);
Schifffahrtsgesellschaft Detlev von Appen GmbH v. Voest Alpine Intertrading GmbH [1997] 2 Lloyd’s Rep. 279
(English Ct. App.); Shayler v. Woolf [1946] Ch 320 (English Ct. App.); Judgment of 5 May 2011, Sarl Kosa
France Holding v. SAS Rhodia Opérations, 2011 Rev. Arb. 580 (Paris Cour d’Appel) (assignee bound by arbi-
tration clause that was known about at time of assignment); Judgment of 15 October 1997, MS “EMJA” Braack
Schifffahrts KG v. Wartsila Diesel Aktiebolag, XXIV Y.B. Comm. Arb. 317, 318 (Swedish S.Ct.) (1999) (assignee
bound by arbitration clause provided it “knew or should have known of the arbitral clause”).
339 Award in ICC Case No. 9801, discussed in Grigera Naón, Choice-of-Law Problems in International Com-
mercial Arbitration, 289 Recueil des Cours 9, 147 (2001).
340 See, e.g., Andermann v. Sprint Spectrum LP, 785 F.3d 1157 (7th Cir. 2015) (arbitration agreement invoked
by agent of assignee); Asset Allocation & Mgt Co. v. W. Employers Ins. Co., 892 F.2d 566, 574 (7th Cir. 1989)
(arbitration agreement may be invoked against assignee); Johnson Controls v. City of Cedar Rapids, 713 F.2d 370
(8th Cir. 1983) (assignment of contract assigns arbitration clause); Erichsen v. RBC Capital Mkts, LLC, 883
F.Supp.2d 562 (E.D.N.C. 2012) (assignee can invoke arbitration clause in assigned contract); Conerly Corp. v.

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§10.02[I] Parties to International Arbitration Agreements

English courts have reached similar conclusions.341

The same approach is adopted in civil law jurisdictions,342 including in Switzerland, where
the Swiss Federal Tribunal has confirmed that a valid assignment of the underlying contract
“automatically” transfers the arbitration agreement (which is regarded as an ancillary or inci-
dental right, accompanying the underlying commercial contract).343 Likewise, under French
law, there is a presumption of “automatic” assignment of the arbitration clause together with
the underlying contract.344 A recent Russian judicial decision similarly concluded that:

Regions Bank, 668 F.Supp.2d 816 (E.D. La. 2009) (when “assignee is subrogated to the rights of the assignor
against the debtor … [t]his means that the assignee [that] steps into the shoes of the assignor has any rights that
it had at the time of the assignment … as long as they are not strictly personal or the assignment is not other-
wise prescribed by law”); Fla. Farm Bureau Ins. Cos. v. Pulte Home Corp., 2005 WL 1345779, at *10 (M.D. Fla.)
(assignment); S.E. Pa. Transp. Auth. v. AWS Remediation, Inc., 2003 WL 21994811, at *2-3 (E.D. Pa.) (when par-
ty obtains certain rights under contract which contains arbitration clause, but is not specifically assigned right
to arbitrate, assignee may compel arbitration); Elzinga & Volkers, Inc. v. LSSC Corp., 838 F.Supp. 1306, 1310-11
(N.D. Ind. 1993) (same); Star-Kist Foods, Inc. v. Diakan Hope, SA, 423 F.Supp. 1220, 1222-23 (C.D. Cal. 1976);
Crown Oil & Wax Co. of Del., Inc. v. Glen Constr. Co. of Va., Inc., 578 A.2d 1184, 1192 (Md. 1990) (assignment
of arbitration agreement); S & L Vending Corp. v. 52 Thompkins Ave. Rest., Inc., 274 N.Y.S.2d 697 (N.Y. App.
Div. 1966). See also Eres, NV v. Citgo Asphalt Refining, 2010 U.S. Dist. LEXIS 47691 (S.D. Tex.) (assignees had
assumed assignor’s obligations under contract and were therefore bound by its arbitration clause); Annotation,
Arbitration Provisions of Contract as Available to or Against Assignees, 142 A.L.R. 1092 (1943); A. Corbin, Corbin
on Contracts §892 (1951 & Supp. 1991); M. Domke, G. Wilner & L. Edmonson (eds.), Domke on Commercial
Arbitration §13.17 (3d ed. 2013 & Update July 2020).
341 See, e.g., W. Tankers Inc. v. Ras Riunione Adriatica di Sicurta SpA [2005] EWHC 454 (Comm) (English
High Ct.) (assignee bound because duty to arbitrate is inseparable component of transferred rights); Shayler v.
Woolf [1946] Ch 320 (English Ct. App.) (arbitration clause is transferred automatically and thus binds assign-
ee); R. Merkin, Arbitration Law ¶¶3.37-46 (1991 & Update March 2020).
The drafters of the English Arbitration Act, 1996, deliberately did not address the question of assign-
ment because of the complexities to which it was perceived as giving rise. See U.K. Departmental Advisory
Committee on Arbitration Law, Report on the Arbitration Bill ¶¶45-46 (1996) (“A number of those responding
to our drafts expressed the wish for the Bill to lay down rules relating to assignment. … However, on further
consideration, we concluded that it would not be appropriate to seek to lay down any such rules.”).
342 See, e.g., Judgment of 2 October 1997, 1998 NJW 371 (German Bundesgerichtshof) (assignment of con-
tractual right presumptively implies assignment of related arbitration clause); Judgment of 11 September 1979,
VI Y.B. Comm. Arb. 230 (Italian Corte di Cassazione) (1981) (bill of lading, containing arbitration clauses, as-
signed to goods purchaser, who may invoke arbitration clauses); Award in Confidential CIETAC Case, cited in J.
Tao, Arbitration Law and Practice in China 51 (2d ed. 2008) (partial assignment transfers arbitration agreement
of original contract to transferee); Chinese Supreme Court, Interpretation Concerning Some Issues on Applica-
tion of the Arbitration Law, [2006] Fa Shi No. 7, Art. 9 (“Where the creditors or debts are entirely or partially
assigned, the agreement for arbitration shall be binding upon the assignee, unless the parties concerned have
otherwise agreed, or the assignee explicitly objects to the assignment of the credits or debts or does not know
there is a separate agreement for arbitration”). See also Girsberger & Hausmaninger, Assignment of Rights and
Agreement to Arbitrate, 8 Arb. Int’l 121 (1992).
343 See Judgment of 9 May 2001, 20 ASA Bull. 80 (Swiss Fed. Trib.) (2002). See also Judgment of 19 April
2011, DFT 4A_44/2011 (Swiss Fed. Trib.); Judgment of 19 August 2008, DFT 4A_128/2008 (Swiss Fed. Tri-
bunal); Judgment of 18 December 2001, LUKoil-Permnefteorgsintez, LLC v. MIR Müteahhitlik ve Ticaret A.S., 20
ASA Bull. 482 (Swiss Fed. Trib.) (2002) (transferee assumed obligations and indebtedness of contracting par-
ty, which carried with it obligation to arbitrate); Judgment of 7 August 2001, 20 ASA Bull. 88 (Swiss Fed. Trib.)
(2002).
344 E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International Commercial Arbitration ¶716
(1999). See also Award in ICC Case No. 7154, 121 J.D.I. (Clunet) 1059 (1994); Judgment of 8 February 2000,
2000 Rev. Arb. 280 (French Cour de Cassation Civ. 1) (assignee of contract bound by arbitration clause con-
tained in contract).

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“Unless otherwise provided for by law or agreement, rights of the initial creditor are
transferred to a new creditor in full and under the conditions which existed at the time
of transfer. … The right to protect interests … in a particular forum, initially chosen by
the parties, also is transferred to an assignee.”345
In a few jurisdictions, the effects of an assignment of a contract on the agreement to arbitrate
are prescribed by statute.346
The “automatic” transfer of the arbitration agreement is properly understood as only
presumptive, leaving the parties generally free to agree upon a different disposition of that
agreement. Particularly in common law jurisdictions, close attention is sometimes paid to the
wording and intention of the original arbitration clause and the subsequent assignment con-
tract, to determine whether the parties intended to provide for assignment of the arbitration
clause.347 If the assignment agreement excluded the arbitration clause, then this will ordinarily
be sufficient to prevent the assignee from becoming a party to that clause.348 In most instances,
however, assignment agreements will not specifically address the transfer of the arbitration
agreement, leaving that issue to the general presumption of “automatic” transfer of the agree-
ment to arbitrate together with the underlying contract. In some cases, the assignor of a con-
tract may have continuous rights under the contract’s arbitration clause.349
A few decisions suggest that the autonomous nature of the agreement to arbitrate argues
against the arbitration clause’s automatic transfer together with the underlying contract. In the
words of one award:

345 Judgment of 20 April 2010, Case No. A56-29770/2009, 5 (Russian S. Arbitrazh Ct.), aff’d, Judgment of
22 September 2010, Case No. A56-29770/2009 (Russian Arbitrazh Ct. App.). See also Award in ICAC Case
No. 258/2014 of 1 June 2016, 1 Int’l Comm. Arb. Rev. (2017) (claims against assignee rejected on basis that
primary debtor had been wound up before assignment was effective); Award in ICAC Case No. 102/2013 of
13 March 2014, 2 Int’l Comm. Arb. Rev. 300, 312 (2014) (“both Russian and foreign law widely recognize the
principle pursuant to which the assignee of the rights under the contract containing an arbitration agreement
becomes automatically bound by the provisions of such agreement as regards the assignee’s relationships with
its contractor”).
346 See, e.g., Norwegian Arbitration Act, §10 (assignment or transfer of contract also assigns or transfers ar-
bitration clause); Russian Arbitration Law, Art. (11) (“In the event of a change of an entity in a creditor-debtor
relationship, with regard to which an arbitration agreement was concluded, the arbitration agreement shall be
valid with regard to the new creditor as well as with regard to the original one, and with regard to the new debtor
as well as with regard to the original one”).
347 See, e.g., Britton v. Co-op Banking Group, 4 F.3d 742 (9th Cir. 1993); Cedrela Transp. Ltd v. Banque Can-
tonale Vaudoise, 67 F.Supp.2d 353, 354-55 (S.D.N.Y. 1999) (assignee of “a contract with a broad, ‘all disputes’
arbitration clause … may be entitled to compel signatories to those agreements to submit to arbitration”); R.
Merkin, Arbitration Law ¶¶3.37-45 (1991 & Update March 2020).
348 See, e.g., Lachmar v. Trunkline LNG Co., 753 F.2d 8 (2d Cir. 1988) (assignee not bound by arbitration
clause because assignment agreement excluded it); Solar & Environmental Tech. Corp. v. Zelinger, 726 F.Supp.2d
135, 148 (D. Conn. 2009) (assignment agreement did not transfer rights under arbitration clause); U.S. v. Pan-
handle E. Corp., 672 F.Supp. 149 (D. Del. 1987) (same); GMAC Commercial Credit LLC v. Spring Indus., Inc., 171
F.Supp.2d 209 (S.D.N.Y. 2001) (“a finance assignee suing on an assigned contract is bound by that contract’s
arbitration clause unless it secured a waiver from the signatory seeking to arbitrate”). See also Award in ICC
Case No. 2626, 105 J.D.I. (Clunet) 980 (1978) (restrictions on arbitration clause’s assignability, contained in
clause itself, are exceptions to transfer of clause in cases of assignment or universal succession). There might be
circumstances in which the effort to exclude the arbitration clause from the assigned contract would vitiate the
assignment altogether, as an impermissible effort to abrogate the arbitration clause or alter a material term of
the underlying contract.
349 See, e.g., Trefny v. Bear Stearns Sec. Corp., 243 B.R. 300, 316 (Bankr. S.D. Tex. 1999) (assignors of sale
contract can enforce arbitration clause); Nissan Motor Acceptance Corp. v. Ross, 703 So.2d 324, 326 (Ala. 1997).

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§10.02[I] Parties to International Arbitration Agreements

“due to the legal autonomy of an arbitration agreement vis-à-vis the contract in which
it is included, a power of agency, whether implied or in writing, or an endorsement of
rights and obligations, with respect to that contract, shall not necessarily result in an
agency or in an endorsement of rights relating to the arbitration convention.”350
This reasoning is ill-considered. The fact that the arbitration agreement is presumptively sep-
arable does not mean that it has no relationship or association with the underlying contract;
rather, the separability presumption means only that there are circumstances in which the
legal status and characterization of the arbitration agreement will differ from that of the un-
derlying contract.351 As discussed above, the purpose of virtually all arbitration agreements
is to provide means of dispute resolution for a particular substantive contractual (or other)
relationship;352 as a consequence, the arbitration clause is often said to be “parasitic” or “in-
cidental” to the underlying contract.353 Thus, just as execution of the underlying contract will
virtually always automatically result in conclusion of the associated agreement to arbitrate,
so the assignment or transfer of the underlying contract (or its rights and obligations) will
presumptively result in the automatic transfer of the arbitration agreement; the separability of
the arbitration agreement does not alter that conclusion.
There are often contractual limits on assignment in commercial agreements that may
forbid a party from assigning the underlying contract, either absolutely or without its count-
er-party’s consent. These contractual limits may render a purported assignment invalid or
ineffective. There may also be instances where a contract cannot legally be transferred or as-
signed, at least not without regulatory approvals.
If the assignment of the underlying contract and the arbitration clause are in violation
of a contractual restriction, then the putative assignee arguably has no rights under the ar-
bitration clause (since the contract and arbitration clause were arguably never assigned).354
This is potentially a jurisdictional defect (as distinguished from a substantive defense or ad-
missibility objection) and, again potentially, an issue that is subject to interlocutory judicial
decision.355
In some legal systems, an assignment in breach of a contractual prohibition is presump-
tively not invalid, even if it is wrongful, but rather is effective while giving rise to a damages
claim for breach of the anti-assignment provision.356 In these legal systems, the breach of an

350 See Award in ICC Case No. 7050, discussed in Grigera Naón, Choice-of-Law Problems in International
Commercial Arbitration, 289 Recueil des Cours 9, 144 (2001).
351 See §3.03[D].
352 See §1.04[E][2].
353 See §3.01; §3.02[B][2]; §3.02[E]; §3.03[A].
354 See Judgment of 16 October 2001, 2002 Rev. Arb. 753 (Swiss Fed. Trib.) (agreement prohibited assign-
ment of arbitration clause); Judgment of 9 April 1991, DFT 117 II 94, 98 et seq. (Swiss Fed. Trib.) (same). See
Scherer, Three Recent Decisions of the Swiss Federal Tribunal Regarding Assignments and Transfer of Arbitration
Agreements, 20 ASA Bull. 109 (2002). See also Final Award in ICC Case No. 6363, XVII Y.B. Comm. Arb. 186
(1992).
355 See §7.03[A][2][a].
356 See, e.g., Restatement (Second) Contracts §322(2)(b) (1981) (“A contract term prohibiting assignment of
rights under a contract, unless a different intention is manifest … gives the obligor a right to damages for breach
of the terms forbidding assignment but does not render the assignment ineffective”); Bel-Ray Co., Inc. v. Chem-
rite (Pty) Ltd, 181 F.3d 435, 442 (3d Cir. 1999) (following “general rule that contractual provisions limiting or
prohibiting assignment operate only to limit a parties’ right to assign the contract, but not their power to do
so, unless the parties manifest an intent to the contrary with specificity”; assignment in violation of contractual
provision ordinarily “remains valid and enforceable against both the assignor and the assignee”); Cedar Point
Apts., Ltd v. Cedar Point Inv. Corp., 693 F.2d 748, 754 n.4 (8th Cir. 1982).

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anti-assignment provision would arguably not affect the tribunal’s jurisdiction; on the other
hand, the basic requirement, in Article II(3) of the New York Convention and most con-
temporary arbitration statutes that arbitration agreements be specifically enforced,357 argues
strongly for a contrary result.
The wrongful assignment of a contract also gives rise to issues under the separability pre-
sumption. It is at least theoretically possible that an arbitration clause will have been validly
assigned even if the underlying contract has not been (and vice versa).358
There may be circumstances in which the parties have concluded a contract containing
a specific prohibition on the assignment of an arbitration agreement. In principle, these pro-
hibitions should be given effect. In addition, the circumstances of a particular contractual re-
lationship may give rise to implied prohibitions on assignment of the arbitration agreement,
which should also be given effect. For example, a U.S. company might agree to arbitrate under
CIETAC Rules in China with a German company, and then one of the parties might pur-
portedly assign the agreement to a Chinese state-owned entity. It is appropriate to take these
circumstances into account in considering whether the parties intended to permit the assign-
ment of the arbitration agreement.
If an assignment of an arbitration clause is validly effected, then the assignee will have
rights (and obligations) under the clause. In addition, the original assignor may also retain
such rights (either as to pre-assignment events or generally, depending on the terms of the
assignment and any restrictions on assignability).359
There are instances in which an arbitration agreement is purportedly assigned during the
pendency of an arbitration. While finding the validity of an assignment in such circumstances
“rather more difficult” than pre-arbitration assignments, some national courts have generally
permitted post-arbitration assignments.360 This may be subject to the condition that the arbi-
trator(s) in the pending arbitration consent to the assignment.361
As with other non-signatory theories, questions of assignment give rise to choice-of-law
issues.362 Commentators have noted the lack of uniform substantive rules concerning the

357 See §5.01[B][2]; §8.02[C]; §8.03.

358 See, e.g., Judgment of 28 May 2002, 2003 Rev. Arb. 397, 398 (French Cour de Cassation Civ. 1) (“in inter-
national matters, the arbitration clause, which is judicially independent from the principal contract, is assigned
with it, whatever the validity of the assignment of [the contract’s] substantial rights”). Compare Judgment of 16
October 2001, 2002 Rev. Arb. 753 (Swiss Fed. Trib.) (assignment of arbitration clause depends on validity of
assignment of principal contract).
359 See, e.g., Award in ICC Case No. 2626, 105 J.D.I. (Clunet) 980 (1978) (arbitration clause generally binds
assignees and successors, except where agreement forbids assignment); Bel-Ray Co., Inc. v. Chemrite (Pty) Ltd,
181 F.3d 435 (3d Cir. 1999) (compelling arbitration against both assignor and assignee); Affymax, Inc. v. John-
son & Johnson, 420 F.Supp.2d 876, 879 (N.D. Ill. 2006) (while absolute assignment “ordinarily extinguishes the
right to compel arbitration,” here assignor retained certain rights and obligations, including “correlative right”
to arbitration).
360 Kazakhstan v. Istil Group Inc. [2006] EWHC 448 (Comm) (English High Ct.); Montedipe SpA v. JTP-
RO Jugotanker [1990] 2 Lloyd’s Rep. 11, 16 (QB) (English High Ct.) (“The rights under a contract may be
assigned at any stage, whether before, during, or after performance. … In principle the assignee should be able
to rely upon the arbitration already commenced.”); R. Merkin, Arbitration Law ¶¶3.38-42 (1991 & Update
March 2020) (notice of assignment shall be sent to arbitrator and other party).
361 NBP Dev. Ltd v. Buildko & Sons Ltd (1992) 8 Const. L.J. 377 (QB) (English High Ct.); R. Merkin,
Arbitration Law ¶3.41 (1991 & Update March 2020).
362 Bel-Ray Co., Inc. v. Chemrite (Pty) Ltd, 181 F.3d 435, 440 (3d Cir. 1999) (issue of validity of assignment
“require[s] a conflict of laws analysis to determine which state had the weightier interest in having its law ap-
ply in resolving the relevant issue”); L. Collins et al. (eds.), Dicey, Morris and Collins on The Conflict of Laws

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§10.02[J] Parties to International Arbitration Agreements

assignment of arbitration agreements.363 In the absence of applicable international rules, arbi-

trators and commentators have tended to look to domestic legal regimes for a solution.
There is also a lack of uniformity among national choice-of-law rules for selecting the
law governing the question whether an arbitration agreement has been validly assigned. In
some jurisdictions, the question whether an arbitration agreement has been validly assigned
is treated as a procedural matter to be determined by the law of the arbitral seat.364 In other
jurisdictions, the substantive law that governs the underlying contract has been applied to
determine issues of assignability.365 As in other contexts, the better view is that the validation
principle should apply to the assignability of the arbitration clause, upholding the assignment
if that is the result under either the law governing the assignment agreement or the arbitration
agreement.366

[J] Subrogation
Under many national legal systems, there are circumstances where one party may be subrogat-
ed to the contractual rights of another party. This frequently occurs in the case of insurers, who
may be subrogated to the rights of insureds. In these circumstances, the insurer is typically
entitled to invoke (and is bound by) the arbitration provisions of the insured’s underlying con-
tract (from which the subrogated rights arise).367 In principle, the validation principle should

¶¶16-011 et seq., 24-067 et seq. (15th ed. 2012 & Supp. 2019); Girsberger, The Law Applicable to the Assignment
of Claims Subject to An Arbitration Agreement, in F. Ferrari & S. Kröll (eds.), Conflict of Laws in International
Arbitration 379 (2011).
363 See Mantilla-Serrano, International Arbitration and Insolvency Proceedings, 11 Arb. Int’l 67 (1995). As
with other non-signatory issues, international arbitration conventions (including the New York Convention
and the European Convention) do not expressly address the issue of the transfer of the arbitration agreement.
The rules of most arbitral institutions do not expressly address issues of assignment. Some commentators have
nonetheless sought to infer from Articles 7 and 8 of the 1998 ICC Rules a general principle that an arbitration
clause cannot bind the assignee without its express consent. See Girsberger & Hausmaninger, Assignment of
Rights and Agreement to Arbitrate, 8 Arb. Int’l 121 (1992). This is unconvincing and the issue is better left to
generally-applicable contract law principles.
364 See Judgment of 30 January 1957, 23 BGHZ 198, 200 (German Bundesgerichtshof) (characterizing arbi-
tration agreement as “a contract of substantive law governing procedural relations”).
365 See, e.g., Award in ICC Case No. 2626, 105 J.D.I. (Clunet) 980 (1978) (assignee bound by arbitration
agreement concluded between parties under governing German law); Final Award in ICC Case No. 1704, 105
J.D.I (Clunet) 981 (1978) (assignment of arbitration agreement valid under French law); Apollo Computer v.
Berg, 886 F.2d 469, 472 (1st Cir. 1989).
366 For a decision erroneously taking the opposite approach, see Harris Adacom Corp. v. Perkom Sdn Bhd,
[1994] 3 MLJ 504, 507 (Kuala Lumpur High Ct.), discussed in S. Greenberg, C. Kee & J. Weeramantry (eds.),
International Commercial Arbitration: An Asia-Pacific Perspective ¶4.82 (2011) (assignment agreement must
be valid under both applicable law of assignment (Florida law) and place of enforcement (Malaysia)). See
§4.04[A][3].
367 See, e.g., Holiday Inns SA/Occidental Petroleum Corp. v. Morocco, Award in ICSID Case No. ARB/72/1 of 1
July 1973, discussed in Lalive, The First World Bank Arbitration (Holiday Inns v. Morocco): Some Legal Problems,
51 Brit. Y.B. Int’l L. 123 (1980); Partial Award in NAI Case of 17 May 2005, XXXI Y.B. Comm. Arb. 174, 180
(2006) (“subrogation also extends to an agreement to arbitrate”; “subrogation gives the third party the same
rights as the original creditor which also includes accessory rights [such as] arbitral clause”); Allianz Global Risk
U.S. Ins. Co. v. Gen. Elec. Co., 2012 WL 689957, at *1 (9th Cir.) (“The subrogated [non-signatory] insurer stands
in the shoes of its insured, and is entitled to its contractual rights and remedies” including right to compel
arbitration against signatory); Alstom Brasil Energia e Transporte Ltda v. Mitsui Sumitomo Seguros SA, 2016 WL
3476430, at *6 (S.D.N.Y.); W. Tankers Inc. v. Ras Riunione Adriatica di Sicurta SpA [2005] EWHC 454 (Comm)
(English High Ct.) (insurer bound by insured’s arbitration agreement); Judgment of 13 November 1992, 1993

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apply to the effects of subrogation on an arbitration agreement.368 In some jurisdictions, direct

action statutes have also been applied to permit claims by non-signatories.369

[K] Estoppel and Related Doctrines370

Particularly in common law jurisdictions, “estoppel” is a well-recognized legal doctrine, which
can be invoked to preclude parties from denying that they are party to arbitration (or other)
agreements.371 In these jurisdictions, “estoppel” is defined in various ways, but generally means
that a party is barred by considerations of good faith and equity from acting inconsistently
with its own statements or conduct.372 As one commentator summarized the doctrine:
“The doctrine of equitable estoppel exists to prevent fraud or injustice; to the extent
that a party has made a statement or acted in a particular way, it is unjust and tanta-
mount to fraud to permit that party thereafter to allege and prove facts contrary to its
previous statements.”373
It is sometimes said that the doctrine of estoppel is not, as such, extant in civil law jurisdic-
tions. According to one commentator, estoppel is “rarely applied” in Continental European
arbitrations.374 Nonetheless, similar conceptions exist under rubrics of good faith, abuse

Rev. Arb. 632, 636 (Paris Cour d’Appel) (“as a consequence of the subrogation of an insurance company in the
rights and duties of its insured, the arbitration clause is transferred to the insurer with the claim and the rights
of the insured, as it is an accessory thereof”); H. Beale (ed.), Chitty on Contracts ¶32-045 (33d ed. 2018) (“A
person subrogated to the rights of an assured under a policy of insurance by virtue of the Third Parties (Rights
Against Insurers) Act 1930 [superseded by Third Parties (Rights Against Insurers) Act 2010] or otherwise is
bound by an arbitration clause contained in the policy”); B. Hanotiau, Complex Arbitrations ¶¶38-40 (2005)
(subrogation of arbitration agreements benefits both indemnifier of insured victim and “liability insurer who
has indemnified the victim for the account of its insured”). Compare Beijing Branch of China Pac. Prop. Ins.
Corp. v. Beijing COSCO Logistics Co. Ltd, [2009] Min Si Ta Zi No. 11 (Chinese S.Ct.) (arbitration agreement in
contract not binding on insurer because insurer not party to contract and arbitration agreement not expression
of its will).
368 See §4.04[A][3].
369 Simmons v. Sabine River Auth. of La., 2011 WL 4703053 (W.D. La.) (non-signatory plaintiffs may enforce
terms of insurance policy by virtue of Louisiana Direct Action Statute, and consequently invoke or be bound by
policy’s arbitration provision).
370 For commentary, see Adeline, L’Edification de la Notion d’Estoppel par la Cour de Cassation (France): So-
ciété Merial c. Société Klocke Verpackungs – Service GmbH, 28 ASA Bull. 406 (2010); Gaillard, L’Interdiction
de Se Contredire au Détriment d’Autrui Comme Principe Général du Droit du Commerce International (le Principe
de l’Estoppel dans Quelques Sentences Arbitrales Récentes), 1985 Rev. Arb. 241; Hui, Equitable Estoppel and the
Compulsion of Arbitration, 60 Vand. L. Rev. 711 (2007); Judgment of 6 July 2005, Golshani v. Gouvernement de
la République Islamique d’Iran, 2005 Rev. Arb. 993 (French Cour de Cassation Civ. 1), Note, Pinsolle; Pinsolle,
Distinction Entre le Principe de l’Estoppel et le Principe de Bonne Foi dans le Droit du Commerce International, 125
J.D.I. (Clunet) 905 (1998); Uloth & Rial, Equitable Estoppel as A Basis for Compelling Nonsignatories to Arbi-
trate: A Bridge Too Far?, 21 Rev. Litg. 493 (2002).
371 See, e.g., P. Feltham, D. Hochberg & T. Leech (eds.), Spencer Bower: Reliance-Based Estoppel (5th ed.
2017); J. Herbots (ed.), International Encyclopaedia of Laws: Contracts ¶209 (France) (1993 & Update 1999)
(in France, equity “allows the courts to include in a contract obligations which have not been provided for by
the parties, but may be implied on the basis of an equitable view of the parties’ relations”).
372 E. Cooke, The Modern Law of Estoppel 2 (2000) (“Estoppel … is a principle of justice and equity. It
comes to this: when a man, by his words or conduct, has led another to believe in a particular state of affairs, he
will not be allowed to go back on it when it would be unjust or inequitable for him to do so.”).
373 4 Williston on Contracts §8.3 (4th ed. 1990 & Update 2013).
374 B. Hanotiau, Complex Arbitrations ¶¶41, 55-56 (2005).

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of right, or venire contra factum proprium,375 or in connection with the group of companies
doctrine.376
A number of authorities, particularly in common law jurisdictions, have recognized estop-
pel or related doctrines as a basis for either permitting a non-signatory to invoke an arbitra-
tion agreement or holding that a non-signatory is bound by an arbitration agreement. These
authorities have held that, where a non-signatory claims or exercises rights as a party under
a contract, which contains an arbitration clause, the non-signatory will typically be estopped
from denying that it is a party to the arbitration clause.377 Similarly, where a party invokes an
arbitration clause in national court proceedings, claiming rights under that clause, it will ordi-
narily be estopped from subsequently denying that it is bound by the arbitration agreement

375 See, e.g., Judgment of 6 July 2005, Golshani v. Gouvernement de la République Islamique d’Iran, 2005 Rev.
Arb. 993 (French Cour de Cassation Civ. 1), Note, Pinsolle; Judgment of 16 January 1995, Compagnie de Nav-
igation et Transports SA v. Mediterranean Shipping Co. SA, XXI Y.B. Comm. Arb. 690, 698 (Swiss Fed. Trib.)
(1996). See also Budylin, A Comparative Study in the Law of the Ostensible: Apparent Agency in the U.S. and
Russia, 16 Currents Int’l Trade L.J. 63, 67 (2007-08) (“estoppel as such does not exist in Russia, but certain
equitable ideas are present in law, which sometimes may effectively result in ‘power by estoppel’”); Gaillard,
L’Interdiction de Se Contredire au Détriment d’Autrui Comme Principe Général du Droit du Commerce International
(le Principe de l’Estoppel dans Quelques Sentences Arbitrales Récentes), 1985 Rev. Arb. 241, 247; Pinsolle, Distinc-
tion Entre le Principe de l’Estoppel et le Principe de Bonne Foi dans le Droit du Commerce International, 125 J.D.I.
(Clunet) 905 (1998).
For the reverse situation, see Judgment of 20 May 1968, 55 BGHZ 191, 196 (German Bundesgerichtshof)
(respondent estopped from claiming valid arbitration agreement in proceedings before national court after
denying existence of such agreement in arbitral proceedings).
376 See §5.02[A][12]; §10.02[E].
377 See, e.g., Sourcing Unlimited Inc. v. Asimco Int’l Inc., 526 F.3d 38, 48 (1st Cir. 2008) (“All of Jumpsource’s
claims against Asimco ultimately derive from benefits it alleges are due it under the partnership Agreement.
Jumpsource must seek redress through arbitration in accordance with the terms of the arbitral clause in the
Agreement.”); JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163 (2d Cir. 2004) (“under principles of estoppel,
a non-signatory to an arbitration agreement may compel a signatory to that agreement to arbitrate a dispute
where … the issues the signatory is seeking to resolve in arbitration are intertwined with the agreement that
the estopped party has signed”); Thomson-CSF, SA v. Am. Arb. Ass’n, 64 F.3d 773, 778-80 (2d Cir. 1995); Riek v.
Xplore-Tech Servs. Private Ltd, 2009 WL 891914, at *5 (M.D.N.C.) (“facts in this case meet the test for equitable
estoppel because Riek’s Second Claim against Xplore-Tech arises out of the Purchase agreement and because
Riek, in pursuing his claim, seeks a direct benefit from the Purchase Agreement”); The Titan Unity, [2014]
SGHCR 4, ¶30 (Singapore High Ct.) (citing U.S. authority regarding estoppel and arbitration agreement),
¶36 (applying doctrine of estoppel to hold that “it would not lie in the mouth of Portigon to say that it did
not consent to have its claim against Singapore Tankers arbitrated); Jiangxi Provincial Metal & Minerals Imp.
& Exp. Corp. v. Sulanser Co. Ltd, [1995] 2 HKC 373 (H.K. High Ct.) (binding non-signatory to arbitration
agreement based on estoppel, where party invoked arbitration agreement but later challenged tribunal’s juris-
diction because agreement was unsigned); Hadad v. Dadon, Case No. 1030/15 (Israeli S.Ct. 2015) (binding
non-signatories to arbitration agreement based on estoppel); Rosenhouse, Annotation: Application of Equitable
Estoppel to Compel Arbitration by or Against Nonsignatory – State Cases, 22 A.L.R.6th 387 (2007) (“The federal
courts have initiated and many state courts have recognized and adopted a unique body of ‘equitable estoppel’
law that is peculiarly applicable in cases in which a non-signatory to an arbitration agreement either seeks to
compel arbitration of a claim against itself brought by a signatory party to the arbitration agreement or asserts
a claim against such a signatory, who then seeks to compel the non-signatory to arbitrate that claim”). See also
Kabab-ji SAL v. Kout Food Group [2020] EWCA Civ 6, ¶31 (English Ct. App.) (non-signatory not party to con-
tract or arbitration agreement by conduct due to “no oral modification” clause unless conditions for estoppel
or preclusion satisfied, which it was not on facts); Oceanografia SA de CV v. DSND Subsea AS [2006] EWHC
1360, ¶¶107-08 (Comm) (English High Ct.) (non-signatory bound by contract, including arbitration clause,
because it waived right to insist on need for signature and was estopped by convention from denying that it was
bound by its conduct).

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in other proceedings.378 Some U.S. courts have adopted a theory of “equitable estoppel” for
application to questions of arbitral jurisdiction.379
Estoppel principles have frequently been applied to hold that a party is bound by the ar-
bitration clause associated with the substantive contractual rights that it claims: that is, if a
party claims or exercises rights under a contract, then it is ordinarily bound by the arbitration
clause in that contract. As one U.S. court put it: “In short, [plaintiff] cannot have it both ways.
It cannot rely on the contract when it works to its advantage and ignore it when it works to its
disadvantage.”380
Other U.S. lower courts have held that a party that receives a “direct benefit” under a con-
tract is estopped from denying that it is a party to the contract’s arbitration clause,381 as have

378 See, e.g., Flintkote Co. v. Aviva plc, 769 F.3d 215, 220 (3d Cir. 2014) (considering “knowing exploitation”
and “detrimental reliance” theories of equitable estoppel under Delaware law, although these were not estab-
lished on facts); Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753 (11th Cir. 1993); Hughes Masonry
Co. v. Greater Clark County Sch. Bldg Corp., 659 F.2d 836, 838 (7th Cir. 1981) (party that brought suit in court
against signatory and non-signatory equitably estopped from later arguing that non-signatory could not seek
to compel arbitration pursuant to underlying contract); In re Oil Spill by Amoco Cadiz, 659 F.2d 789, 796 (7th
Cir. 1981) (party estopped from denying agency status after acknowledging such status in litigation); Life Techs.
Corp. v. AB Sciex Pte Ltd, 803 F.Supp.2d 270 (S.D.N.Y. 2011) (licensee equitably estopped from avoiding arbi-
tration); Rapture Shipping, Ltd v. Allround Fuel Trading BV, 350 F.Supp.2d 369, 373-75 (S.D.N.Y. 2004) (party
cannot argue in court that contract was never formed to avoid arbitration provision in contract when party
previously argued in foreign court that implied contract had been formed and that other party had breached
contract); Alvarado v. Apex Partitions, Inc., 2004 U.S. Dist. LEXIS 18185 (N.D. Cal.); Dunlap v. Wild, 591 P.2d
834 (Wash. App. 1979) (having invoked arbitration clause, plaintiff was estopped from denying its validity);
Robinson v. Hamed, 813 P.2d 171 (Wash. App. 1991).
379 See, e.g., GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 590 U.S. –, –
(U.S. S.Ct. 2020) (“The ‘traditional principles of state law’ that apply under Chapter 1 include doctrines that
authorize the enforcement of a contract by a nonsignatory,” including “equitable estoppel doctrines”); Crawford
Prof. Drugs, Inc. v. CVS Caremark Corp., 748 F.3d 249 (5th Cir. 2014) (binding non-signatories to arbitration
agreement based on equitable estoppel); Choctaw Generation LP v. Am. Home Assur. Co., 271 F.3d 403, 404 (2d
Cir. 2001); Int’l Paper Co. v. Schwabedissen Maschinen & Anlagen GmbH, 206 F.3d 411, 417-18 (4th Cir. 2000);
Grigson v. Creative Artists Agency, 210 F.3d 524, 527 (5th Cir. 2000); Am. Bureau of Shipping v. Tencara Shipyard
SpA, 170 F.3d 349, 353 (2d Cir. 1999) (non-signatory bound to arbitrate under estoppel theory based upon
exercise of contractual rights under agreement containing arbitration clause); Deloitte Noraudit AS v. Deloitte
Haskins & Sells, U.S., 9 F.3d 1060, 1064 (2d Cir. 1993); Hughes Masonry Co. v. Greater Clark County Sch. Bldg
Corp., 659 F.2d 836, 838 (7th Cir. 1981); Harland Clarke Holdings Corp. v. Milken, 997 F.Supp.2d 561, 582
(W.D. Tex. 2014) (direct benefit estoppel is “a type of equitable estoppel first applied in the arbitration con-
text by federal courts and subsequently adopted by [state] courts”); Life Techs. Corp. v. AB Sciex Pte Ltd, 803
F.Supp.2d 270 (S.D.N.Y. 2011) (applying estoppel theory to non-signatories who failed to object to arbitration
clause despite having actual or constructive knowledge of contents of contract containing arbitration clause and
knowingly exploiting benefits of contract); Metalclad Corp. v. Ventana Environmental Org. P’ship, 1 Cal.Rptr.3d
328, 335 (Cal. Ct. App. 2003) (equitable estoppel “prevents a party from playing fast and loose with its com-
mitment to arbitrate, honoring it when advantageous and circumventing it to gain undue advantage”). See also
Frankel, The Arbitration Clause as Super Contract, 91 Wash. U. L. Rev. 531, 587 (2014) (“By creating special rules
that favor arbitration and that deviate from state contract law, courts are enforcing arbitration agreements in
situations where they would not enforce other agreements. … Due in no small part to the liberal federal policy
favoring arbitration, courts have created a ‘unique’ doctrine of equitable estoppel as it applies to arbitration.”).
380 Tepper Realty Co. v. Mosaic Tile Co., 259 F.Supp. 688, 692 (S.D.N.Y. 1966). See also InterGen NV v. Grina,
344 F.3d 134, 145 (1st Cir. 2003) (equitable estoppel “precludes a party from enjoying rights and benefits
under a contract while at the same time avoiding its burdens and obligations”); In re Weekley Homes, LP, 180
S.W.3d 127, 133 (Tex. 2005) (“by demanding compliance with provisions of the contract” between her hus-
band and the defendant, plaintiff “cannot equitably object to the arbitration clause attached to them”).
381 See, e.g., Blaustein v. Huete, 449 F.App’x 347, 350 (5th Cir. 2012) (under “direct benefits estoppel,”

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§10.02[K] Parties to International Arbitration Agreements

courts in a few other jurisdictions.382 In contrast, if not entirely clearly, a party that only receives
an “indirect” benefit will not be estopped from resisting arbitration on this theory.383 Some U.S.
lower courts have gone further, either holding that signatories to arbitration agreements are es-
topped from resisting arbitration with non-signatories of disputes that are “intertwined” with ar-
bitrable disputes384 or relying on a theory of concerted misconduct between one signatory and
a non-signatory to compel arbitration between that non-signatory and a different signatory.385
It is sometimes said that the proper application of the estoppel doctrine is as a “shield,”
and not as a “sword.”386 In particular, some courts have held that estoppel is most (or only)

non-signatory was bound to arbitrate because it had “embraced” contract containing arbitration clause and
knowingly sought and obtained “direct benefits” from contract); Astra Oil Co. v. Rover Navigation Ltd, 344 F.3d
276 (2d Cir. 2003) (binding non-signatory on estoppel grounds, where it was closely-related corporate affiliate
of signatory, was party to related contract and was treated as if it was party to underlying contract); Javitch v.
First Union Sec., Inc., 315 F.3d 619, 629 (6th Cir. 2003) (remanding for determination whether, under equita-
ble estoppel doctrine, a non-signatory resisting arbitration had sought to benefit directly from contracts that
contained arbitration clause); MAG Portfolio Consult, GmbH v. Merlin Biomed Group LLC, 268 F.3d 58, 61 (2d
Cir. 2001) (“benefit derived from an agreement is indirect where the non-signatory exploits the contractual re-
lation of parties to an agreement, but does not exploit (and thereby assume) the agreement itself”); E.I. DuPont
de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187, 199 (3d Cir. 2001) (direct benefits
estoppel applies when non-signatory “knowingly exploits the agreement containing the arbitration clause”);
Am. Bureau of Shipping v. Tencara Shipyard SpA, 170 F.3d 349, 353 (2d Cir. 1999) (“A party is estopped from
denying its obligation to arbitrate when it receives a ‘direct benefit’ from a contract containing an arbitration
clause”) (quoting Thompson-CSF, SA v. Am. Arb. Ass’n, 64 F.3d 778, 779 (2d Cir. 1995)).
382 See, e.g., CE Int’l Res. Holding v. Yeap Soon Sit, 2013 BCSC 1804 (B.C. Sup. Ct.) (binding non-signatory
to arbitration agreement based on estoppel where non-signatory knowingly accepted benefits of contract con-
taining arbitration clause).
383 See, e.g., Trina Solar US, Inc. v. Jasmin Solar Pty Ltd, 2020 WL 1592487 (2d Cir.) (although nonsignatory
benefited from contractual relationship, it did not invoke agreement to obtain benefit and agreement does not
provide it with direct benefit); Life Techs. Corp. v. AB Sciex Prop. Ltd, 803 F.Supp.2d 270, 273-74 (S.D.N.Y. 2011)
(“A nonsignatory may be estopped from avoiding arbitration where it knowingly accepted the benefits of an
agreement with an arbitration clause. The benefits must be direct – which is to say, flowing directly from the
agreement. In contrast, benefit derived from an agreement is indirect, and is therefore insufficient to support
estoppel, where the nonsignatory exploits the contractual relation of parties to an agreement, but does not
exploit (and thereby assume) the agreement itself.”); Thomson-CSF, SA v. Am. Arb. Ass’n, 64 F.3d 773, 779
(2d Cir. 1995) (finding only indirect benefit insufficient to invoke equitable estoppel against a non-signatory);
Lucy v. Bay Area Credit SVC LLC, 2011 U.S. Dist. LEXIS 55088 (D. Conn.) (refusing to permit debt collection
company to invoke arbitration agreements in contracts between company and customers on equitable estoppel
grounds); QPro, Inc. v. RTD Quality Servs. USA, Inc., 761 F.Supp.2d 492 (S.D. Tex. 2011) (refusing to compel
arbitration by non-signatory under equitable estoppel theory; claims had no relationship to contract with arbi-
tration clause); MediVas, LLC v. Marubeni Corp., 2011 WL 768083 (S.D. Cal.).
384 See, e.g., Sourcing Unlimited Inc. v. Asimco Int’l Inc., 526 F.3d 38, 38 (1st Cir. 2008) (signatory was equi-
tably estopped from avoiding arbitration of dispute with non-signatory that involved issues intertwined with
contract between signatories); Choctaw Generation LP v. Am. Home Assur. Co., 271 F.3d 403, 404 (2d Cir. 2001)
(“Choctaw, as signatory, is estopped from avoiding arbitration with a non-signatory ‘when the issues the non-
signatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has
signed’”) (quoting Smith/Enron Cogeneration LP, Inc. v. Smith Cogeneration Int’l, Inc., 198 F.3d 88, 98 (2d. Cir.
1999)); Thomson-CSF, SA, 64 F.3d at 779.
385 See, e.g., PRM Energy Sys. Inc. v. Primenergy, LLC, 592 F.3d 830, 836 (8th Cir. 2010) (compelling arbitration
based on “collusive conduct” between non-signatory and signatory that was “intimately founded in and inter-
twined with” signatory’s contractual obligations); Donaldson Co. Inc. v. Burroughs Diesel Inc., 581 F.3d 726, 733-35
(8th Cir. 2009); CD Partners, LLC v. Grizzle, 424 F.3d 795, 798-99 (8th Cir. 2005). See also Driskill, A Dangerous
Doctrine: The Case Against Using Concerted Conduct Estoppel to Compel Arbitration, 60 Ala. L. Rev. 443 (2009).
386 See, e.g., 2550 Olinville Ave., Inc. v. Crotty, 149 Misc.2d 806, 810 (N.Y. Sup. Ct. 1991), aff’d, 185 A.D.2d

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appropriate where a non-signatory claimant seeks to invoke an arbitration agreement against a

signatory to the arbitration agreement, but less frequently (or not at all) in the reverse posture,
where a signatory seeks to bind a non-signatory to an arbitration clause:
“[Courts] have been willing to estop a signatory from avoiding arbitration with a
non-signatory when the issues the non-signatory is seeking to resolve in arbitration
are intertwined with the agreement that that estopped party has signed.”387
Conversely, other courts have suggested the reverse, indicating that a signatory may more read-
ily pursue claims that a non-signatory is estopped from challenging an arbitration clause.388
In principle, it is difficult to see why estoppel should not be equally available to both sig-
natories and non-signatories, albeit under different analyses. For example, when a non-sig-
natory to a contract claims rights under that contract on third party beneficiary, subrogation,
or similar grounds, the signatories to that contract should be entitled to invoke the contract’s
arbitration clause against the non-signatory claimant, just as the non-signatory claimant itself
invokes the contract. Consistent with this reasoning, some U.S. courts have allowed estoppel
to be used as a “sword,” permitting a signatory to demand that a non-signatory arbitrate its
claims.389

200 (N.Y. App. Div. 1992) (estoppel “is a shield, not a sword” and “will not operate to create a right where
none exists”); Mount v. Morton, 20 Barb. 123, 135 (N.Y. Sup. Ct. 1855) (“Estoppels are not favored – they are
odious – to be used as a shield sometimes, never as a sword”); Welland Canal Co. v. Hathaway, 8 Wend. 480,
480 note a (N.Y. Sup. Ct. 1832) (“estoppel is to be resorted to solely to prevent injustice; always as a shield,
never as a sword”).
387 Thomson-CSF, SA, 64 F.3d at 779. See also Grigson v. Creative Artists Agency, 210 F.3d 524, 530-31 (5th
Cir. 2000) (estopping signatory plaintiff from relying on non-signatory’s status as such to resist arbitration);
Choctaw Generation LP v. Am. Home Assur. Co., 271 F.3d 403, 406-07 (2d Cir. 2001) (estopping signatory
where merits of dispute non-signatory seeks to arbitrate are “bound up with” and “linked textually to” terms
of contract containing arbitration clause); BCC Merchant Solutions, Inc. v. Jet Pay, LLC, 129 F.Supp.3d 440, 457
(N.D. Tex. 2015) (“Under Utah law, equitable estoppel is typically used as a ‘shield,’ not a ‘sword’ capable of
creating a cause of action”) (quoting Youngblood v. Auto–Owners Ins. Co., 158 P.3d 1088, 1093 (Utah 2007);
Tri-State Truck Ins., Ltd v. First Nat’l Bank of Wamego, 2011 WL 3349153, at *19 (D. Kan.) (“Equitable estoppel is
a defense which, if established, would preclude Plaintiffs from asserting their rights against FNBW, but cannot
be affirmatively used by FNBW to create a cause of action”); 2550 Olinville Ave., Inc. v. Crotty, 149 Misc.2d
806, 810 (N.Y. Sup. Ct. 1991) (direct benefits estoppel cannot be used as a sword to “create a right where none
exists”), aff’d, 185 A.D.2d 200 (N.Y. App. Div. 1992); Klinke v. Famous Recipe Fried Chicken, Inc., 616 P.2d 644,
646 (Wash. 1980) (“Equitable estoppel … is available only as a ‘shield or defense’”) (quoting Tiffany Inc. v.
W.M.K. Transit Mix, Inc., 493 P.2d 1220, 1224 (Ariz. App. 1972)).
388 See Motorola Credit Corp. v. Uzan, 388 F.3d 39, 51-53 (2d Cir. 2004) (applying Swiss law, “non-signatory
may be required to arbitrate in certain circumstances where it acts in bad faith,” but not where “non-signatory
… attempt[s] to invoke an arbitration clause”).
389 See, e.g., Todd v. S.S. Mut. Underwriting Ass’n, 601 F.3d 329 (5th Cir. 2010); Int’l Paper Co. v. Schwabedis-
sen Maschinen & Anlagen GmbH, 206 F.3d 411 (4th Cir. 2000) (non-signatory purchaser required to arbitrate
against signatory seller because purchaser alleged breach of agreement containing arbitration clause); Am.
Bureau of Shipping, 170 F.3d at 349 (non-signatory that received direct benefits of lower insurance and the
ability to sail under French flag bound to arbitrate against signatory); Deloitte Noraudit AS v. Deloitte Haskins &
Sells, U.S., 9 F.3d 1060 (2d Cir. 1993) (non-signatory compelled to arbitrate under equitable estoppel princi-
ples, because it received copy of contract, did not object to it, offered no persuasive reason for its inaction and
knowingly accepted benefits of contract); Life Techs. Corp. v. AB Sciex Pte Ltd, 803 F.Supp.2d 270 (S.D.N.Y.
2011) (licensee equitably estopped from avoiding arbitration); Gersten v. Intrinsic Techs., LLP, 442 F.Supp.2d
573 (N.D. Ill. 2006) (granting defendant’s motion to stay proceedings and refer parties to arbitration; court
held that plaintiff non-signatory was bound by arbitration agreement because it made claims rooted in contract
in question); Larson v. Speetjens, 2006 WL 2567873 (N.D. Cal.) (although plaintiff signed contract as trustee,

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As noted above, civil law jurisdictions do not necessarily recognize the estoppel doctrine
as such.390 Nonetheless, the principles of good faith and equity or fairness that underlie the
doctrine are universal, and are recognized, among other things, in the New York Conven-
tion.391 As a consequence, civil law authorities have reached comparable results to those pro-
vided under most forms of estoppel by different avenues.392
For example, in one decision, the Swiss Federal Tribunal disregarded the requirement for
a “signed” arbitration agreement where the clause was included in a bill of lading that was
exchanged by the parties. The Tribunal relied on the parties’ ongoing business relations with-
in the legal framework of the same general contractual conditions, including an arbitration
clause, and reasoned that obligations of good faith precluded one of the parties from invok-
ing a formal signature requirement.393 Similarly, the Austrian Oberster Gerichtshof relied on
concepts of venire contra factum proprium and abuse of right to bind a party to an arbitration
agreement notwithstanding formal defects in the agreement.394
Principles of estoppel and related doctrines have not frequently been the subject of
choice-of-law analysis.395 It is difficult to formulate predictable conflicts rules applicable to the

and not in individual capacity, she was equitably estopped from denying obligation to arbitrate malpractice
claim); Belzberg v. Verus Invs. Holdings Inc., 999 N.E.2d 1130, 1133 (N.Y. 2013) (“New York courts have relied on
the direct benefits estoppel theory, derived from federal case law, to abrogate the general rule against binding
nonsignatories”).
390 See §10.02[K]; B. Hanotiau, Complex Arbitrations ¶41 (2005). French courts have recognized the
doctrine of estoppel as a defense against the claim, by a party who has used an arbitration agreement to its
advantage in the first place, that this agreement is void. Judgment of 6 July 2005, Golshani v. Gouvernement de la
République Islamique d’Iran, 2005 Rev. Arb. 993 (French Cour de Cassation Civ. 1).
391 See §5.02[A][2][i]; Judgment of 23 September 2004, XXX Y.B. Comm. Arb. 568, 572 (Bayerisches
Oberstes Landesgericht) (2005) (“It appears from the interpretation of Art. II [of the New York] Convention
that the prohibition of contradictory behavior is a legal principle implied in the Convention”); Judgment of 30
March 2000, XXXI Y.B. Comm. Arb. 652, 653 (Schleswig-Holsteinisches Oberlandesgericht) (2006) (“prohi-
bition of contradictory behavior is a legal principle that must be deemed included in the Convention and that
must be taken into account when applying Art. II”); China Nanhai Oil Joint Serv. Corp. Shenzhen Branch v. Gee
Tai Holdings Co. Ltd, [1994] HKC 375 (H.K. Ct. First Inst.) (“on a true construction of the Convention there is
indeed a duty of good faith” requiring award debtor to raise jurisdictional objection). See also A. van den Berg,
The New York Arbitration Convention of 1958 185 (1981) (“principle of good faith may be deemed enshrined in
the Convention’s provisions”).
392 Award in ICC Case No. 5803, discussed in Grigera Naón, Choice-of-Law Problems in International Com-
mercial Arbitration, 289 Recueil des Cours 9, 105 n.94 (2001) (relying on “venire contra factum proprium” and
“abuse of rights” to hold that party could not challenge its own capacity to conclude arbitration agreement).
393 See, e.g., Award in ICC Case No. 5730, 117 J.D.I. (Clunet) 1029 (1990); Award in ICC Case No. 2375, 103
J.D.I. (Clunet) 973 (1976); Judgment of 16 January 1995, Compagnie de Navigation et Transports SA v. Mediterra-
nean Shipping Co., XXI Y.B. Comm. Arb. 690, 698 (Swiss Fed. Trib.) (1996) (“in particular situations, a certain
behavior can replace compliance with a formal requirement according to the rules of good faith”).
394 Judgment of 26 April 2006, 7 Ob 236/05 (Austrian Oberster Gerichtshof) (2007). Austria’s revised
arbitration legislation expressly recognizes the principle of estoppel. Austrian ZPO, §584(4) (“If an action is
rejected by a court due to the jurisdiction of an arbitral tribunal, or by an arbitral tribunal due to the jurisdiction
of a court or of another arbitral tribunal, or when an arbitral award is set aside in setting aside proceedings due
to lack of jurisdiction of the arbitral tribunal, the proceedings are deemed to have been properly continued if
the action is immediately brought before the court or arbitral tribunal”). See Fremuth-Wolf, in S. Riegler et al.
(eds.), Arbitration Law of Austria: Practice and Procedure §584, ¶¶41 et seq. (2007); G. Zeiler, Schiedsverfahren
§§577-618 ZPO idF des SchiedsRÄG 2006 §110, ¶9 (2006).
395 See, e.g., Kingsley Capital Mgt, LLC v. Sly, 820 F.Supp.2d 1011, 1021-23 (D. Ariz. 2011) (unclear whether
estoppel is federal common law or state law); DK Joint Venture 1 v. Weyand, 649 F.3d 310, 313, 314 n.4 (5th Cir.
2011) (same).

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subject, because of the diversity of connecting factors: for example, if a party based in State
A asserts the existence of an arbitration clause, providing for arbitration in State B, during
litigation in State C, against a party based in State D, in connection with disputes under a
contract governed by the law of State E, what state’s law should apply? As in other nonconsen-
sual contexts, the better approach in these circumstances is to apply international principles
of estoppel and good faith, together with a validation principle, rather than engaging in an
unpredictable, potentially arbitrary choice-of-law analysis.396

[L] Ratification
A non-signatory (and nonparty) to an agreement may subsequently become a party to that
agreement by ratification.397 Ratification can occur with regard to arbitration agreements, as
well as with other forms of commercial contracts.398 For example, Party A to an arbitration
agreement may ratify Party B’s assignment of Party B’s rights and duties under the arbitration
agreement to a third party. Likewise, in the case of novation, a new contract generally replaces
a previous contract and one of the original parties is substituted by a new party.399 The same
choice-of-law rules that apply to guarantee/guarantor relations400 should also apply in the
context of ratification.

[M] Corporate Officers and Directors

Some national courts have adopted what appear to be sui generis rules with regard to the ap-
plication of arbitration clauses to officers and directors of companies who have executed the
arbitration agreement. In virtually all such cases, the officers and directors of the corporate
party will not be parties to the relevant contract. Even in cases where a company’s officers or

396 See §§4.04[A][2]-[3]; §10.02[E] (group of companies); §10.02[G] (guarantors); §10.02[H] (succes-
sion); §10.02[K] (estoppel); §10.02[J].
397 This would ordinarily require the consent of the parties to the original agreement and would be akin to
assignment or novation. See §10.02[L].
398 See, e.g., Interim Award in ICC Case No. 4504, 113 J.D.I. (Clunet) 1118 (1986); Award in ICC Case No.
3493, IX Y.B. Comm. Arb. 111 (1984); Deloitte Noraudit AS v. Deloitte Haskins & Sells, U.S., 9 F.3d 1060, 1064
(2d Cir. 1993) (non-signatory who failed to object to settlement agreement and derived direct benefits from it
effectively ratified agreement); Day v. Fortune Hi-Tech Mktg, 2012 WL 588768, at *3 (E.D. Ky.) (non-signatories
assented to arbitration clause in contract by ratifying contract through their conduct and accepting benefits
thereunder); Lemus v. CMH Homes, Inc., 798 F.Supp.2d 853, 862 (S.D. Tex. 2011) (non-signatories ratified
terms of contract by performance, thus waiving right to object to arbitration pursuant to arbitration clause in
contract); Asia N. Am. Eastbound Rate Agreement v. BJI Indus., Inc., XXI Y.B. Comm. Arb. 815 (D.D.C. 1995)
(1996) (award debtor ratified agreement including arbitration clause); Judgment of 19 May 2003, 22 ASA Bull.
344, 348 (Swiss Fed. Trib.) (2004) (“retroactive approval”).
399 See, e.g., CMA CGM SA v. Hyundai Mipo Dockyard Co. Ltd [2008] EWHC 2791 (Comm) (English High
Ct.); Judgment of 11 June 1998, Ferring AB v. Debiopharm, 2002 Rev. Arb. 149 (Paris Cour d’Appel) (upholding
arbitrator’s finding that arbitration agreement had disappeared with novation); Judgment of 5 October 1994,
Van Hopplynus v. Coherent Inc., XXII Y.B. Comm. Arb. 637 (Brussels Tribunal de Commerce) (1997) (rejecting
argument that arbitration agreement could not be tacitly novated by conduct, and instead required a writ-
ing; applying law governing arbitration agreement); Nigerian Nat’l Petroleum Corp. v. Clifco Nigeria Ltd, Suit
No. SC.233/2003 (Nigerian S.Ct. 2011). See also Final Award in ICC Case No. 8587, 12(1) ICC Ct. Bull. 102
(2001); Final Award in ICC Case No. 7421, 21(2) ICC Ct. Bull. 64 (2010); Final Award in ICC Case No. 7331,
6(2) ICC Ct. Bull. 73 (1995).
400 See §10.02[G].

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§10.02[M] Parties to International Arbitration Agreements

directors execute a contract on behalf of the company, they do not ordinarily thereby become
parties, in their personal capacities, to the contract.401
Occasionally, however, litigation relating to the underlying dispute will include the officers
and directors (or other agents) of one or both parties, with claims being asserted personally
against individual officers and directors. In these cases, the officers and directors sometimes
seek to invoke the arbitration agreement (or, conversely, may have the arbitration agreement
invoked against them).
As noted above, some U.S. courts have permitted the officers and directors of a corporate
party to invoke the arbitration clause in that party’s underlying commercial contracts, not-
withstanding the fact that the individual officers, directors and employees are not parties to
the underlying contract under ordinary contractual principles.402 In these circumstances, a
number of U.S. decisions have held that corporate employees, sued for actions taken in the
course of their employment, may invoke arbitration clauses contained in their employer’s con-
tracts with the adverse third party.403 As one U.S. court reasoned, with a degree of overstate-
ment, a company can only act through employees and officers, and “an arbitration agreement
would be of little value if it did not extend to them.’”404
These decisions are not unanimously followed even in the United States.405 One U.S. court
rejected them on the following grounds:
“courts must not offer contracts to arbitrate to parties who failed to negotiate them
before trouble arrives. To do so frustrates the ability of persons to settle their affairs

401 See, e.g., Partial Award in ICC Case No. 18830, XLIII Y.B. Comm. Arb. 153 (2018) (director of signatory
not proper party to arbitration even though director signed personal guarantee in respect of contractual obliga-
tions of signatory), Interim Award in ICC Case No. 11405, described in B. Hanotiau, Complex Arbitrations ¶158
(2005) (signatures by chief executive and general manager on behalf of company, with notation that company
is “acting in its own name as well as in the name and on behalf of all its shareholders,” did not bind individuals);
Award in ICC Case No. 5730, 117 J.D.I. (Clunet) 1029 (1990); Award in ICC Case No. 5721, 117 J.D.I. (Clunet)
1019 (1990) (individual who executed contracts for account of corporate party not bound by contracts); In-
terim Award in ICC Case No. 4504, 113 J.D.I. (Clunet) 1118 (1986) (corporate entity not bound by contract or
arbitration clause because, although individual that executed contract was president of corporate party, he exe-
cuted contract in different capacity); Mason Tenders Dist. Council Welfare Fund v. Thomsen Constr. Co., 301 F.3d
50, 52, 54 (2d Cir. 2002) (owner of corporation not bound as individual by contract when owner signed in his
capacity as president); Judgment of 23 October 2003, Kocak Ilac Fabrikasi AS v. SA Labs. Besins Int’l, 2006 Rev.
Arb. 149, 152 (Paris Cour d’Appel) (setting aside award against officer of corporate party; officer’s “will to be
bound by the arbitration agreement could not be inferred only from his signature of the contract”); Judgment
of 27 April 2016, Case No. 310/2015 (Dubai Cassation Ct.), in A. Hassan & L. Hammoud (eds.) Summaries of
UAE Courts’ Decisions on Arbitration, Including DIFC Courts’ Decisions (2012-16) 1 (2018) (presumption that
person signing contract with company name in preamble and body is doing so in name of company).
402 See §10.02[A].
403 See, e.g., Nesslage v. York Sec., Inc., 823 F.2d 231, 233 (8th Cir. 1987) (employees of company that entered
into arbitration agreement are third party beneficiaries of agreement); Letizia v. Prudential Bache Sec., Inc., 802
F.2d 1185, 1187-89 (9th Cir. 1986); Hirschfeld Prod. Inc. v. Mirvish, 88 N.Y.2d 1054 (N.Y. 1996).
404 Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1012 (3d Cir. 1993).
405 See, e.g., DK Joint Venture 1 v. Weyand, 649 F.3d 310, 314-15 (5th Cir. 2011) (“Under ordinary principles
of contract and agency law, non-signatories’ status as corporate officers and agents of the corporation is insuffi-
cient to personally bind them to arbitration agreements entered into on behalf of the corporation”); Covington
v. Aban Offshore Ltd, 650 F.3d 556, 559-60 (5th Cir. 2011); Bel-Ray Co., Inc. v. Chemrite (Pty) Ltd, 181 F.3d 435
(3d Cir. 1999) (refusing to extend arbitration clause to officers and directors); McCarthy v. Azure, 22 F.3d 351
(1st Cir. 1994).

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against a predictable backdrop of legal rules – the cardinal prerequisite to all dispute
resolution.”406
Outside the United States and a few other jurisdictions, this approach of permitting corporate
employees or agents to invoke arbitration agreements, to which they are not parties, has not
been widely considered.407 Nonetheless, it has been adopted in a few other jurisdictions, in-
cluding France,408 Canada409 and Germany.410
The treatment of corporate officers by some U.S. and other courts does not rest on a con-
ventional analysis of the contractual consequences of the principal-agency relationship, which
would instead usually provide that the agent and/or employee is not a party to the underlying
contract.411 The separability doctrine might provide an explanation for this approach if one
reasoned that the officers and directors of a corporate signatory were intended to enjoy the
benefits of the arbitration agreement, even if they are not parties to the underlying contract.
These results would be exceptional ones, which appear to be primarily attributable to the par-
ties’ presumed intentions to provide mutual procedural protections for their respective agents
and/or employees against joinder in oppressive litigation and to avoid the circumvention of
agreements to arbitrate through the medium of satellite litigation against related parties and
individuals. As one court explained:
“When contracting parties agree to arbitrate all disputes … they generally intend to
include disputes about their agents’ actions because ‘as a general rule, the actions of
a corporate agent on behalf of the corporation are deemed the corporation’s acts.’ If
arbitration clauses only apply to contractual signatories, then this intent can only be
accomplished by having every officer and agent (and every affiliate and its officers and
agents) either sign the contract or be listed as a third party beneficiary.”412
On the other hand, in reverse circumstances (i.e., when an adverse party sought, over the
agent’s objections, to assert claims against it in arbitral proceedings), courts and tribunals

406 Westmoreland v. Sadoux, 299 F.3d 462, 467 (5th Cir. 2002).
407 B. Hanotiau, Complex Arbitrations ¶153 (2005). See Award in ICC Case No. 4972, in S. Jarvin, Y. Derains
& J.-J. Arnaldez (eds.), Collection of ICC Arbitral Awards 1986-1990 380 (1994). See also A Co. v. D, [2018]
SGHCR 9, ¶¶51, 64 (Singapore High Ct.) (citing G. Born, International Commercial Arbitration 1479, 1486 (2d
ed. 2014)) (refusing to extend arbitration agreement to officers and directors as “agency principle” allowing
non-signatory directors to compel arbitration does not apply in Singapore).
408 Judgment of 22 October 2008, Système U Centrale Régionale sud v. M. Jacques Médard, JurisData No. 2008-
045519 (French Cour de Cassation Civ. 1).
409 See, e.g., Remax Royal Jordan v. Maragoudakis, [2006] RJQ 295 (Québec Ct. App.); Décarel Inc. v. Con-
cordia Project Mgt Ltd, [1996] RDJ 484 (Québec Ct. App.) (principal shareholders and officers of company
that executed contract with arbitration agreement could invoke agreement); Rodrigue v. Loisel, [2004] Car-
swellQue 11694 (Québec Super. Ct.).
410 See, e.g., Judgment of 13 February 1997, 1998 NJW-RR 198 (Oberlandesgericht München) (officers and
directors did not sign arbitration agreement entered into by company but were bound as “organs” of company).
This decision is criticized in Sandrock, “Intra” and “Extra-Entity” Agreements to Arbitrate and Their Extension to
Non-Signatories Under German Law, 19 J. Int’l Arb. 423, 440-41 (2002).
411 See §10.02[A].
412 In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 762 (Tex. 2006). See also Roby v. Corp. of Lloyd’s, 996 F.2d
1353, 1360 (2d Cir. 1993) (“Courts in this and other circuits consistently have held that employees or disclosed
agents of an entity that is a party to an arbitration agreement are protected by that agreement. … If it were
otherwise, it would be too easy to circumvent the agreements by naming individuals as defendants.”). Compare
Toledano v. O’Connor, 501 F.Supp.2d 127, 152 (D.D.C. 2007) (refusing to permit “troubling asymmetry” of
allowing agent to compel third party to arbitrate, but not the reverse).

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§10.02[N] Parties to International Arbitration Agreements

have been reluctant to hold that the agent or employee is subject to arbitral jurisdiction.413
These results appear to rest on the notion that corporate officers and directors are third party
beneficiaries of arbitration agreements, who are entitled to invoke, but are not bound by, those
agreements.

[N] Shareholder Derivative Rights

In some legal systems, a shareholder of a company may in certain circumstances act for the
company itself; in general, these circumstances are narrowly circumscribed, involving only
cases where the company’s interests are damaged and the company’s management refuses to
take steps to protect those interests, despite demands that it do so, ordinarily because of some
sort of self-dealing.414 When a shareholder is permitted by applicable substantive law to act on
behalf of a company to enforce a contract, questions may arise whether the shareholder may
invoke (and is bound by) an arbitration clause in the company’s contract.
Historically, there was judicial aversion to the arbitration of shareholder derivative
claims. Objections to arbitrability were based on a perceived lack of the shareholders’ assent
to an arbitration agreement.415 More recently, some courts have shifted the focus of consent
away from the assent of individual shareholders, towards an inquiry into the corporation’s
consent to arbitrate. These courts have reasoned that, in a derivative suit, shareholders stand
in the shoes of the corporation, asserting its rights and privileges, and “those they choose to
sue [may not] be deprived of defenses they could assert against the corporation’s claims.”416
The law of the place of incorporation governs the nature and extent of shareholder derivative
rights.417

413 See, e.g., Award in ICC Case No. 5721, 117 J.D.I. (Clunet) 1019, 1024 (1990) (“A tribunal should be re-
luctant to extend the arbitration clause to a director who has acted as such. The extension requires that the
legal person is nothing but a business instrument of the natural person in such a way that one can transfer the
contract and obligations entered into by the former to the latter.”). But see Award in ICC Case No. 5730, 117 J.D.I.
(Clunet) 1029 (1990) (owner/director of corporate group personally subject to arbitration clause); Ripmaster
v. Toyoda Gosei, Co., 824 F.Supp. 116 (E.D. Mich. 1993) (employee bound by arbitration agreement entered
into by his corporate employer).
414 See generally ABA Model Business Corporation Act, §§7.40-47 (3d ed. 2002) (“Derivative Proceed-
ings”); 1994 ALI Principles of Corporate Governance: Analysis and Recommendations, §§7.01-17; Foss v.
Harbottle [1843] 67 ER 189 (English Vice-Ch. Ct.); 13 Fletcher Cyclopedia Corporations §5940 (2007) (“The
derivative proceeding developed as an equitable device to enable shareholders to enforce a corporate right
against faithless officers and directors, or abusive majority shareholders, that the corporation had either failed
or refused to assert on its own behalf”); Mojuy, French Corporate Governance in the New Millenium: Who Watch-
es the Board in Corporate France?, 6 Colum. J. Euro. L. 73 (2000) (discussing derivative litigation in France);
Utsumi, The Business Judgment Rule and Shareholder Derivative Suits in Japan: A Comparison with Those in the
United States, 14 N.Y. Int’l L. Rev. 129, 160-61 (2001) (discussing derivative litigation in Japan).
415 See, e.g., Lane v. Abel-Bey, 418 N.Y.S.2d 25, 26 (N.Y. App. Div. 1979) (rejecting, with respect to close cor-
poration, “petitioner’s argument that, because the … claims are in the nature of derivative suits, public policy
precludes arbitration of such claims”).
416 In re Salomon Inc. S’holders’ Derivative Litg., 1994 WL 533595, at *4 (S.D.N.Y. 1994). See also May v.
Coffey, 291 Conn. 106, 114 (Conn. 2009) (shareholder’s derivative action is “an equitable action by the corpo-
ration as the real party in interest with a stockholder as a nominal plaintiff representing the corporation”); Pierce
v. GlobeOp Fin. Serv. LLC, 2009 WL 3813775 (N.Y. Sup. Ct.). See Sanborn, The Rise of “Shareholder Derivative
Arbitration” in Public Corporations: In Re Salomon Inc. Shareholders’ Derivative Litigation, 31 Wake Forest L.
Rev. 337 (1996); Shell, Arbitration and Corporate Governance, 67 N.C. L. Rev. 517 (1989); Sockol, A Natural
Evolution: Compulsory Arbitration of Shareholder Derivative Suits in Publicly Traded Corporations, 77 Tul. L. Rev.
1095 (2003).
417 See, e.g., Konamaneni v. Rolls-Royce Indus. Power (India) Ltd [2002] 1 All ER (Comm) 532, ¶¶45-55

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Gary B. Born §10.02[O]

In principle, there is no reason that a minority (or other) shareholder should not be per-
mitted to invoke an arbitration clause of one of the signatories to that agreement, provided
that applicable national corporate law permits the shareholder to act on behalf of the signato-
ry. This conclusion was adopted in Frederick v. First Union Securities, Inc., a U.S. case in which
a plaintiff-shareholder brought a derivative suit against a brokerage firm for allegedly partic-
ipating in a scheme with company officials to manipulate the market and engage in insider
trading.418 The court held that the plaintiff was compelled to arbitrate his claim because the
agreement between the corporation and the brokerage firm, which established the brokerage
firm’s duties and pursuant to which the plaintiff had brought suit, contained an arbitration
clause, and the plaintiff was bringing suit on behalf of the company.419 The court also held that
the broad language of the arbitration clause, which provided that it applied to “all claims or
controversies” between the corporation and the brokerage firm, argued for arbitration of the
plaintiff’s claims.420 Other U.S. lower courts have reached comparable conclusions in holding
that shareholder claimants in derivative actions were bound by the corporation’s arbitration
agreements.421

[O] Joint Venture Relations

A seldom-applied, but potentially important, theory of non-signatory status is that of joint
venture liability. Although not frequently invoked, some authorities have held that one joint
venture partner’s commitment to arbitrate disputes related to the joint venture binds other
joint venture partners.422 Similar results can be reached through principles of “civil conspira-
cy,” as applied in some national legal systems.423 In both cases, considerations similar to those
arising under the group of companies doctrine apply,424 often justifying application of an
agreement to arbitrate to non-signatories.

(English High Ct.) (law of place of incorporation governs right to bring derivative action).
418 Frederick v. First Union Sec., Inc., 122 Cal.Rptr.2d 774, 775-76 (Cal. Ct. App. 2002) (corporation bound
by client agreement containing arbitration clause with brokerage, executed by corporate officer; shareholder
bringing derivative lawsuit was bound by same agreement, including its arbitration clause).
419 Id. at 776.
420 Id. at 776-78.
421 Ernst & Young Ltd Bermuda v. Quinn, 2009 WL 3571573, at *3 (D. Conn.) (requiring arbitration because
shareholder’s derivative action is “an equitable action by the corporation as the real party in interest with a
stockholder as a nominal plaintiff representing the corporation”; “Because the arbitration agreement between
SCAF and Ernst & Young Bermuda governs ‘any dispute or claim arising out of or relating to the Audit Ser-
vices,’ that agreement would extend to any claim that actually belongs to SCAF, including any derivative claim
brought by a SCAF investor on behalf of the Fund”); Tooley v. Donaldson, Lufkin & Jenrette, 845 A.2d 1031, 1036
(Del. 2004) (describing derivative suit as enabling “a stockholder to bring suit on behalf of the corporation for
harm done to the corporation”).
422 See, e.g., Sasportes v. M/V Sol de Copacabana, 581 F.2d 1204, 1208 (5th Cir. 1978); Hellenic Lines, Ltd
v. Commodities Bagging & Shipping, Process Supply Co., 611 F.Supp. 665 (D.N.J. 1985); Margate Indus., Inc. v.
Samincorp., Inc., 582 F.Supp. 611 (S.D.N.Y. 1984).
423 See G. Born & P. Rutledge, International Civil Litigation in United States Courts 188-89 (6th ed. 2018); R.
Casad & W. Richman, Jurisdiction in Civil Actions §4-3[1] (3d ed. 1998 & Supp. 2012). Compare In re Merrill
Lynch Trust Co., FSB, 2007 WL 2404845, at *3 (Tex.) (“while conspirators consent to accomplish an unlawful
act, that does not mean that they impliedly consent to each other’s arbitration agreements”).
424 See §10.02[E].

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§10.02[P] Parties to International Arbitration Agreements

[P] State Non-Signatories425

States and state entities are important actors in international commercial transactions and
the international arbitral process. Indeed, as discussed above, one of the reasons that parties
choose to arbitrate their international disputes is to ensure that states and state entities can be
required to participate in, and be bound by the results of, such processes.426
Disputes sometimes arise as to whether a state or state entity is party to an international ar-
bitration agreement. The same legal rules that apply to private parties in such disputes should
in principle also apply to state entities.427 Nevertheless, some national court decisions have
demonstrated a deep-seated, but misconceived, reluctance to hold that non-signatory states
(or state entities) are bound by international arbitration agreements.
One leading example was the frequently-debated Pyramids case, where agreements (that
included an ICC clause, providing for arbitration seated in Paris) to construct a tourist resort
were entered into between foreign investors and an Egyptian state entity. The agreements
were negotiated with the participation of the Egyptian Ministry of Tourism, whose involve-
ment in the contractual performance was both necessary and expressly contemplated. Fol-
lowing the signature page of the agreement, the Minister for Tourism executed the contract,
with a declaration that the agreement was “approved, agreed and ratified by the Ministry of
Tourism.”428
After disputes arose, and the foreign investor commenced an ICC arbitration in Paris, the
Egyptian Ministry of Tourism resisted on jurisdictional grounds. The arbitral tribunal rejected
the objection, reasoning, inter alia, that:

425 For commentary, see Alford, Binding Sovereign Non-Signatories, 19(3) Mealey’s Int’l Arb. Rep. 27 (2004);
B. Audit, Transnational Arbitration and State Contracts (1987); A. Badia & J. Lew, Piercing the Veil of State En-
terprises in International Arbitration (2014); K.-H. Böckstiegel, Arbitration and State Enterprises (1984); Fox,
States and the Undertaking to Arbitrate, 37 Int’l & Comp. L.Q. 1 (1988); E. Gaillard, State Entities in International
Arbitration (2008); Leboulanger, Some Issues in ICC Awards Relating to State Contracts, 15(2) ICC Ct. Bull. 93
(2004); Rosenberg, State as Party to Arbitration, 20 Arb. Int’l 387 (2004); Silva Romero, ICC Arbitration and
State Contracts, 13(1) ICC Ct. Bull. 34 (2002); Smit, When Is A Government Bound by A Contract, Including An
Arbitration Clause, It Did Not Sign?, 16 Am. Rev. Int’l Arb. 323 (2005).
426 See §1.02[B][10]; Fox, States and the Undertaking to Arbitrate, 37 Int’l & Comp. L.Q. 1 (1988); von
Mehren, Arbitration Between States and Foreign Enterprises: The Significance of the Institute of International Law’s
Santiago de Compostela Resolution, 5 ICSID Rev. 54 (1990). In 2018, approximately 15% of new ICC cases
involved a state or a state entity. ICC, 2018 Dispute Resolution Statistics, 2019:1 ICC Disp. Resol. Bull. 12, 18. See
§1.02[B][10].
427 See, e.g., Amoco Int’l Fin. Corp. v. Iran, Award in IUSCT Case No. 310-56-3 of 14 July 1987, 15 Iran–US
C.T.R. 189, 238-41 (1987) (“[I]n certain circumstances, the separate personality of an entity fully controlled by
a State can be discarded and the State considered bound by the terms of a contract entered into by such an en-
tity. … Such a conclusion, however, can only be drawn if this entity acted as an instrument of the State.”); Dole
Food Co. v. Patrickson, 538 U.S. 468, 475 (U.S. S.Ct. 2003) (“The fact that the shareholder is a foreign state does
not change the [alter ego] analysis”); First Nat’l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S.
611, 629-34 (U.S. S.Ct. 1983); Bridas SAPIC v. Turkmenistan, 345 F.3d 347, 356 (5th Cir. 2003) (“Ordinary
principles of contract and agency law may be called upon to bind a [state-owned] nonsignatory to an agree-
ment whose terms have not clearly done so”); Sevaas Inc. v. Iraq, 686 F.Supp.2d 346, 357-58 (S.D.N.Y. 2010);
K.-H. Böckstiegel, Arbitration and State Enterprises 34-48 (1984). See also Hanotiau, Consent to Arbitration: Do
We Share A Common Vision?, 27 Arb. Int’l 4, 547 (2011) (“It is on this basis, as we have seen, that French courts
may include, within the scope of an arbitration clause, a non-signatory, which is not necessarily a company but
may also be an individual or a State. And this, on the basis of an entity’s conduct – as an expression of consent
– in the conclusion, performance or termination of the agreement contained in the arbitration clause”).
428 Award in ICC Case No. 3493, IX Y.B. Comm. Arb. 111, 112 (1984).

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Gary B. Born §10.02[P]

“it does not seem in any way unlikely or improbable that the government would have
wished that all disputes concerning the same project would go to the same tribunal.
In this connection one should remember that … the transaction as a whole is to be
viewed as a unified contractual scheme. … [T]he Claimant in future disputes might
well have been either the Egyptian government or [its state-owned entity] or both.”429
Despite the tribunal’s analysis, and the Ministry of Tourism’s signed declaration, the Paris
Cour d’Appel annulled the award, holding that the signed declaration did not evidence an in-
tention to become a party to the agreement.430 That conclusion is inconsistent with the weight
of international authority, and difficult to reconcile with the plain language and obvious inten-
tions of the signed statement that the Ministry of Tourism “approved, agreed and ratified” the
contractual terms.
An equally misconceived decision was reached by an ICC arbitral tribunal in a dispute
between Libya and a foreign investor. The Libyan state-owned oil company and the investor
had negotiated a “suspension agreement,” dealing with a period of force majeure, which a rep-
resentative of the Libyan state had executed with the declaration “Approved and Endorsed.”431
Nonetheless, the tribunal held that Libya was not a party to the agreement, or the arbitration
clause, on the ground that it had only signed in its capacity as a regulatory authority.432
Likewise, the U.K. Supreme Court refused to recognize an award, rendered in Paris by
a distinguished arbitral tribunal (chaired by Lord Mustill, formerly of the House of Lords)
against a Ministry of the Pakistan government.433 The tribunal made a carefully-reasoned
award, concluding that, although not a signatory, the Ministry had negotiated and performed
the underlying contract and then permitted the formal signatory to be dissolved; in these cir-
cumstances, the arbitrators held, applying French law, that the Ministry was bound by the
contract and its arbitration clause.434 Despite that (and despite a French decision confirming
the award435), the U.K. Supreme Court held that the tribunal had misapplied French law and
that, under Article V(1)(a) of the New York Convention, the award would not be recognized
in England.436
These decisions reflect an unsatisfactory view of the manner in which regulatory authori-
ties exercise their powers. They also risk producing unfair fact-finding and legal decisions, by
absenting a potentially important party from the dispute resolution process.

429 Id. at 115.

430 Judgment of 12 July 1984, X Y.B. Comm. Arb. 113 (Paris Cour d’Appel) (1985), aff’d, Judgment of 6 Janu-
ary 1987, S. Pac. Props. Ltd v. République Arabe d’Egypte, 26 I.L.M. 1004 (1987) (French Cour de Cassation Civ.
1). But see Judgment of 12 July 1984, SPP Ltd v. Egypt, X Y.B. Comm. Arb. 487 (Amsterdam Rechtbank) (1985)
(granting leave for enforcement of award on same day Paris Cour d’Appel annulled award).
431 Award in ICC Case No. 8035, 124 J.D.I. (Clunet) 1040 (1997).
432 Id.
433 Dallah Real Estate & Tourism Holding Co. v. Ministry of Religious Affairs, Pakistan [2010] UKSC 46 (U.K.
S.Ct.). See also §26.05[C][1][g][iii].
434 Final Award in ICC Case No. 9987, 2(4) Int’l J. Arab Arb. 420 (2010).
435 Judgment of 17 February 2011, Gouv’t du Pakistan, Min. Affaires Religieuses v. Sté Dallah Real Estate &
Tourism Holding Co., XXXVI Y.B. Comm. Arb. 590 (Paris Cour d’Appel) (2011).
436 Dallah Real Estate & Tourism Holding Co. v. Ministry of Religious Affairs, Pakistan [2010] UKSC 46, ¶145
(U.K. S.Ct.). See also §26.05[C][1][g][iii].

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§10.02[Q] Parties to International Arbitration Agreements

[Q] Third Party Funders437

The increasingly important role of third party funders in international arbitration also raises
non-signatory issues. By definition, a “third party” funder is a non-signatory to the arbitration
agreement and this is almost always true in practice.438 In its typical modern form, where the
third party funder is often an independent private equity funder, the funder is generally unre-
lated to the parties, the arbitration agreement, or the underlying contract and only becomes
involved after a dispute has arisen. Nonetheless, third party funders have an economic interest
in the outcome of the arbitral proceedings and may exercise a measure of control over the
arbitral procedure.439
Whether a third party funder should be treated as a party in arbitral proceedings, sub-
ject to the arbitral tribunal’s jurisdiction, requires consideration of the grounds for binding
non-signatories to arbitration agreements. This issue most commonly arises in considering
whether an arbitral tribunal can render a costs award against a funder.440 This question raises
several, largely-unexplored issues.
First, depending on the terms of the funding agreement, the funded party may be substi-
tuted by the third party funder in the arbitration, such that the funder becomes the claimant
or respondent in the arbitration (and is no longer a “third party”). This will generally depend
on the application of general principles of assignment or subrogation. In these cases, the “third
party” funder ceases to be a third party and becomes both a party and often a signatory to the
arbitration agreement and the arbitration.

437 For commentary, see Chen, The Outsider’s Identity in International Commercial Arbitration: From the
Group of Companies Doctrine and IBA Guidelines on Conflict of Interest to Adverse Costs Awards Against Third-Par-
ty Funders, 12 Contemp. Asia Arb. J. 21 (2019); Gayner & Khouri, Singapore and Hong Kong International Arbi-
tration Meets Third Party Funding, 40 Fordham Int’l L.J. 1033 (2017); ICCA, Report of the ICCA-Queen Mary
Task Force on Third-Party Funding in International Arbitration (2018); Lévy & Bonnan, Third-Party Funding: Dis-
closure, Joinder and Impact on Arbitral Proceedings, in B. Cremades & A. Dimolitsa (eds.), Third-Party Funding in
International Arbitration 78 (2013); Mechantaf, Third-Party Funding in International Arbitration: Active Funders
as Parties in Arbitration Proceedings, 82 Arb. 371 (2016); J. von Goeler, Third-Party Funding in International Arbi-
tration 207 (2016).
438 J. von Goeler, Third-Party Funding in International Arbitration 209 (2016).
439 The influence that third party funders may have on the arbitral process is recognized in the IBA Guide-
lines on Conflicts of Interest, which, for purposes of arbitrator conflicts of interest, provides that “any legal or
physical person having … a direct economic interest in, or a duty to indemnify a party for, the award to be ren-
dered in the arbitration, may be considered to bear the identity of such party.” 2014 IBA Guidelines on Conflicts
of Interest, General Standard 6(b). The explanation to that General Standard confirms that the direct economic
interest that third party funders and insurers have in the award is such that they may be considered to be the
equivalent of the party in identifying conflicts of interest. See id. at Explanation to General Standard 6(b).
440 See J. von Goeler, Third-Party Funding in International Arbitration 212-13, 221-25 (2016). See also Chen,
The Outsider’s Identity in International Commercial Arbitration: From the Group of Companies Doctrine and IBA
Guidelines on Conflict of Interest to Adverse Costs Awards Against Third-Party Funders, 12 Contemp. Asia Arb. J. 21,
31-36 (2019); Gayner & Khouri, Singapore and Hong Kong International Arbitration Meets Third Party Funding,
40 Fordham Int’l L.J. 1033, 1045-46 (2017); ICCA, Report of the ICCA-Queen Mary Task Force on Third-Party
Funding in International Arbitration 160-63 (2018); Lévy & Bonnan, Third-Party Funding: Disclosure, Joinder
and Impact on Arbitral Proceedings, in B. Cremades & A. Dimolitsa (eds.), Third-Party Funding in International
Arbitration 82 (2013); Mechantaf, Third-Party Funding in International Arbitration: Active Funders as Parties in
Arbitration Proceedings, 82 Arb. 371 (2016).
Some courts have treated third party funders as parties to the proceedings for the purposes of making
adverse costs awards in the international litigation context. See, e.g., Abu-Ghazaleh v. Chaul, 36 So.3d 691 (Fla.
Dist. Ct. App. 2009); Excalibur Ventures LLC v. Tex. Keystone Inc. [2014] EWHC 3436 (English High Ct.), aff’d,
[2016] EWCA Civ 1144 (English Ct. App.).

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Gary B. Born §10.03

Second, a third party funder may be joined to the arbitral proceedings as an additional
party based on theories such as implied consent, group of companies, estoppel and other doc-
trines. At least one tribunal has ordered security for costs against a funder on the basis that the
claimant would not comply with an adverse costs award, citing the “uncertainty as to whether
or not the unknown third party [funder] will be willing to comply with a potential costs award
in Respondent‘s favor.”441 This exercise of jurisdiction raises more difficult issues because most
non-signatory theories do not comfortably apply to conventional third party funding arrange-
ments where the funder does not have corporate ties to the funded party or the subject matter
of the underlying contract.442
Some commentators have suggested that arbitral tribunals generally possess jurisdiction
over third party funders for reasons of fairness, efficiency, certainty and flexibility of the ar-
bitral process.443 The rationale for these approaches appears to require a departure from the
consent-based conception of arbitral jurisdiction, which appears unwarranted. There is also
little justification for focusing only on third party funders as distinct from others serving func-
tionally similar roles, such as insurers or counsel acting on a contingency fee basis.444
The better analysis is to avoid distorting basic principles of consent,445 while specifically
addressing the issue of the arbitral tribunal’s jurisdiction to make orders against third party
funders in national arbitration laws or institutional arbitration rules.446 Even absent such pro-
visions, however, there is a substantial argument that a third party funder impliedly subjects
itself to an arbitral tribunal’s jurisdiction, for limited purposes of ensuring the procedural
integrity and fairness of the arbitral proceeding and bearing the costs of the arbitration, by
agreeing to fund one party in the arbitration. Alternatively, principles of estoppel arguably
also subject a third party funder to the (limited) jurisdiction of the arbitral tribunal. In neither
case, however, does the third party funder become a party generally to the arbitration agree-
ment (much less the underlying contract).

§10.03 FUTURE DIRECTIONS: LEGAL BASES FOR BINDING

NON-SIGNATORIES TO INTERNATIONAL ARBITRATION
AGREEMENTS
For the most part, authorities are agreed that consent is the essential foundation for ascertain-
ing whether a particular entity has the status of a party to an arbitration agreement. Whatever

441 RSM Prod. Corp. v. St. Lucia, Decision on St. Lucia’s Request for Security for Costs in ICSID Case No.
ARB/12/10 of 13 August 2014, ¶83.
442 See, e.g., ICCA, Report of the ICCA-Queen Mary Task Force on Third-Party Funding in International Arbi-
tration 161-62 (2018); J. von Goeler, Third-Party Funding in International Arbitration 214-20 (2016).
443 Chen, The Outsider’s Identity in International Commercial Arbitration: From the Group of Companies Doc-
trine and IBA Guidelines on Conflict of Interest to Adverse Costs Awards Against Third-Party Funders, 12 Contemp.
Asia Arb. J. 21 (2019) (supporting arbitral tribunal’s jurisdiction over third party funders only in respect of costs
based on implied consent or non-signatory theory); Mechantaf, Third-Party Funding in International Arbitra-
tion: Active Funders as Parties in Arbitration Proceedings, 82 Arb. 371 (2016) (supporting extension of arbitration
clause to active funders based on their direct implication in arbitral process).
444 See J. von Goeler, Third-Party Funding in International Arbitration 209, 214-15 (2016)
445 Id. at 250.
446 ICCA, Report of the ICCA-Queen Mary Task Force on Third-Party Funding in International Arbitration
163 (2018). See, e.g., Hong Kong Arbitration Ordinance, §§98S(2)(b), 98W (arbitral tribunal may take into
account (non-)compliance with third party funding code of practice and disclosure requirements); 2017 SIAC
Investment Rules, Art. 35 (arbitral tribunal may take into account third party funding arrangements in making
costs award). See also §[21.03[A][f].

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§10.03 Parties to International Arbitration Agreements

legal construct is utilized, the beginning and ending question is ordinarily whether the parties,
with their words and actions considered objectively and on the basis of good faith in commer-
cial relations, intended that a particular entity be a party to the arbitration clause. This ques-
tion arises in numerous contexts – ranging from implied assent, to guarantee, to incorporation
and assumption, to subrogation, to agency, to group of companies analysis, to ratification –
but the fundamental inquiry remains the same in each case.447 And, again in each instance,
the resolution of this question requires careful analysis of the language used in the parties’
agreements and communications, the parties’ actions and the commercial background of the
parties’ dealings.
There are instances in which national courts lose sight of this principle. In one decision,
the Paris Cour d’Appel declared:
“in the law of international arbitration, the effects of the arbitration clause extend to
parties which are directly implicated in the performance of the contract as long as their
situation and their activities give rise to the presumption that they were aware of the
existence and of the scope of the arbitration clause in order for the arbitrator to be
seized of all economical and legal aspects of the dispute.”448
Similarly, one U.S. appellate decision held that a non-signatory was bound by an arbitral award
because it had “related and congruent interests” with the parties,449 while another decision
relied on a “nexus between” the parties’ claims and the “integral relationship” between the
parties.450 Commentators have argued persuasively that these types of decisions rest (improp-
erly) on general considerations of equity and efficiency, rather than a contractual analysis, to
support broad extensions of arbitration clauses.451

447 As noted elsewhere, there are limited exceptions to this, where entities may be bound to an arbitration
agreement by operation of law – such as by alter ego status, estoppel, or succession – regardless of their in-
tent. See §10.02[A] (agency); §10.02[C] (implied consent); §10.02[D] (alter ego and veil-piercing) §10.02[E]
(group of companies); §10.02[G] (guarantors); §10.02[H] (succession); §10.02[ J] (subrogation); §10.02[K]
(estoppel); §10.02[L] (ratification).
448 Judgment of 7 December 1994, V 2000 v. Project XJ220ITD, 1996 Rev. Arb. 245 (Paris Cour d’Appel);
Alford, Binding Sovereign Non-Signatories, 19(3) Mealey’s Int’l Arb. Rep. 27, 29-31 (2004).
449 Isidor Paiewonsky Assocs., Inc. v. Sharp Props., Inc., 998 F.2d 145, 155 (3d Cir. 1993). See also Barrow-
clough v. Kidder, Peabody & Co., 752 F.2d 923, 938-39 (9th Cir. 1985) (party who has not executed arbitration
agreement may nevertheless be bound by it when its claims arise from contract containing agreement: “since
the non-parties to this arbitration agreement have related and congruent interests with the principals to the
litigation, the district court did not abuse its discretion in refusing to stay the arbitration”).
450 Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 758 (11th Cir. 1993). See also Sourcing Unlim-
ited, Inc. v. Asimco Int’l, Inc., 526 F.3d 38 (1st Cir. 2008) (signatory to contract equitably estopped from resisting
arbitration of dispute with non-signatory that involved issues intertwined with contract between signatories);
Choctaw Generation LP v. Am. Home Assur. Co., 271 F.3d 403, 404 (2d Cir. 2001) (“this controversy is arbitrable
because Choctaw agreed that controversies that are unable to be resolved pursuant to the construction contract
‘shall be settled by arbitration,’ and because (under our case law) Choctaw, as signatory, is estopped from avoid-
ing arbitration with a non-signatory ‘when the issues the nonsignatory is seeking to resolve in arbitration are
intertwined with the agreement that the estopped party has signed’”) (quoting Smith/Enron Cogeneration LP,
Inc. v. Smith Cogeneration Int’l Inc., 198 F.3d 88, 98 (2d Cir. 1999); Thomson-CSF, SA v. Am. Arb. Ass’n, 64 F.3d
773, 779 (2d Cir. 1995)).
451 B. Hanotiau, Complex Arbitrations ¶48 (2005); Townsend, Non-Signatories and Arbitration, 3 ADR Cur-
rents 19, 21 (1998). See also Blessing, Extension of the Arbitration Clause to Non-Signatories, in M. Blessing (ed.),
The Arbitration Agreement: Its Multifold Critical Aspects 151, 162 (1994) (“Most of the situations discussed in
international arbitral practice where one or more parties had not themselves formally signed or counter-signed
the arbitration clause have one element in common: namely the element that justice would not seem to be

1600
Gary B. Born §10.03

There are substantial grounds for criticizing these various decisions and for accepting the
foregoing assessment of their analyses. The fact that a party is “directly implicated” in contractu-
al performance and “aware of” an arbitration clause, or had “congruent interests,” should gener-
ally be insufficient, without more, to subject that party to an arbitration agreement. Rather, save
in exceptional cases where alter ego, estoppel, apparent authority, or similar nonconsensual
theories are at issue, it remains essential to root the application of arbitration agreements to
non-signatories in the parties’ intentions and in generally-applicable contractual and legal prin-
ciples. This is required by the bedrock principle that international arbitration agreements are
consensual instruments,452 and is necessary for reasons of commercial predictability.
The touchstone should be whether the parties intended that a non-signatory be bound
and benefited by the arbitration clause. Answering that question cannot be achieved through
abstract generalizations, but requires consideration of the arbitration clause’s language and the
relations and dealings among the parties in a specific factual setting.
On the other hand, some courts have erred in the opposite direction, declining to extend
arbitration clauses to non-signatories, on the basis of formalistic analyses that ignore the par-
ties’ objective, good faith expectations. For example, in one decision, a U.S. appellate court
considered a dispute in which certain subsidiaries of one company (“Company A”) entered
into contracts (containing arbitration clauses) with certain subsidiaries of a second company
(“Company B”).453 After disputes arose, Company A initiated U.S. litigation against Company
B, carefully structuring its claims to avoid inclusion of either party’s subsidiaries, or any con-
tractual claims, in the litigation. Although the claims were a fairly transparent device to circum-
vent the underlying arbitration clause, the U.S. court rejected the argument that the parent
companies were obligated to arbitrate with one another. Among other things, it reasoned454
that both companies were “sophisticated commercial actors” that were “quite deliberate in con-
structing and deploying an elaborate web of affiliates” to negotiate the transaction, and there
was “no compelling policy objective” that would be furthered by a finding of alter ego.455

done if the only criterion applied and considered was the criterion that a particular third party did not itself sign
or countersign the arbitration clause”).
452 See §1.02[A]. See also GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC,
590 U.S. –, – (U.S. S.Ct. 2020) (Sotomayor, J., concurring) (courts must “strictly adhere” to “foundational”
principle of consent).
453 InterGen NV v. Grina, 344 F.3d 134 (1st Cir. 2003).
454 Id. at 142. Most U.S. decisions have correctly reached different results on similar facts. See Hernandez, S
de RL de CV v. Smart & Final, Inc., 2010 WL 2505683, at *6 (S.D. Cal.) (“Although Smart-Mex is not a signato-
ry to the Agreement (which contains the arbitration clause), the Agreement identifies Smart-Mex as a whol-
ly-owned subsidiary of SFI, formed for the purpose of creating SFDN with Tre-Her. … Subsequent provisions
of the Agreement set forth various rights and duties of both SFI and Smart-Mex. … Tre-Her was a signatory
to the Agreement and, therefore, knew of and consented to the formation and participation of Smart-Mex for
this purpose.”); Thixomat, Inc. v. Takata Physics Int’l Co., 2001 WL 863566, at *4 (S.D.N.Y.) (staying litigation
against subsidiary of signatory of arbitration agreement on grounds that “[the parent] would be deprived of the
benefit of the arbitration clause for which it explicitly bargained and the federal policy in favor of arbitration,
especially of international commercial contracts would be thwarted”); Fluor Daniel Intercont’l Inc. v. Gen. Elec.
Co., 1999 WL 637236, at *6 (S.D.N.Y.) (rejecting plaintiff’s claim that three related entities cannot be bound to
arbitration agreement where, inter alia, there was “close relationship” between signatory and non-signatories,
one non-signatory owned 50% of signatory and wrongs alleged by non-signatories were “intimately founded in
and intertwined with” contract).
455 InterGen NV, 344 F.3d at 150. The court also formulated a distinction between a third party that bene-
fited from a contract and a third party beneficiary that would be bound by a contract, finding the status of the
parent company to be the former. Id. at 147. See also MAG Portfolio Consult, GmbH v. Merlin Biomed Group LLC,
268 F.3d 58 (2d Cir. 2001) (non-signatory’s benefit derived from agreement containing arbitration clause is

1601
§10.03 Parties to International Arbitration Agreements

Although formally plausible, and consistent with rhetoric about the parties’ freedom to
structure their corporate and commercial relations, this analysis overlooks the separability of
the arbitration agreement and the fundamental objectives of parties that conclude interna-
tional arbitration agreements. As discussed above, it is precisely to avoid expensive, time-con-
suming litigation in multiple, potentially partisan forums, with potentially inconsistent and
uncertain results, that parties agree to arbitrate.456
Permitting non-signatory corporate affiliates and other related parties to assert claims
based on the parties’ underlying transactions and agreements, while avoiding the express
terms of the arbitration agreement, frustrates these objectives and the parties’ agreement to
arbitrate in a fundamental manner. This reflects the most powerful rationale for the group of
companies doctrine, being that corporate affiliates of the signatory to an international arbitra-
tion agreement should not be permitted to circumvent or frustrate that agreement through the
device of satellite litigation. This is not a question of extending the arbitration agreement on
the basis of a priori formulae, but of identifying which parties – acting in good faith – should
be regarded as having consented to arbitrate.
In this regard, it is important to apply the various legal bases for binding non-signatories
specifically to the separable agreement to arbitrate (as distinguished from the underlying con-
tract). It bears emphasis that the parties’ intentions – both actual and presumed – will often
be different with regard to their arbitration agreement, and its dispute resolution mechanism,
than with regard to their underlying commercial contracts. That is, there will readily be cases
where the parties desire a unified, “one-stop” dispute resolution mechanism, particularly one
extending to all the members of a corporate group involved in a particular transaction, without
altering the allocations of substantive contractual rights contained in the underlying contracts.
The foregoing considerations suggest that most criticisms of the group of companies doc-
trine457 and rules regarding the treatment of corporate officers and directors458 are unjustified.
These doctrines are virtually unique, in that they were developed specifically with application
to the agreement to arbitrate, rather than to other types of contracts. The fundamental ratio-
nale for the group of companies doctrine, not always well-articulated by its proponents, is to
preserve the efficacy of the signatories’ agreement to arbitrate. An agreement to arbitrate has
the objective of centralizing the parties’ disputes in a single, neutral, expert forum;459 similar
logic justifies rules permitting corporate officers and directors to invoke arbitration provisions
in contracts to which they are not parties.460 As already noted, in both cases, satellite litigation
by or against corporate affiliates, officers, or other related parties frustrates this objective en-
tirely, returning the parties to the very jockeying for local court advantage that their agreement
to arbitrate was meant to prevent.
The group of companies doctrine and specialized rules regarding corporate officers and
directors serve – sensibly – to prevent this sort of circumvention and frustration of arbitration
agreements. The group of companies doctrine permits corporate affiliates who have become
materially involved in the signatories’ negotiation and performance to be subjected to (and

indirect, and thus non-signatory cannot be bound by clause, where it exploits contractual relationship of parties
to agreement, but does not exploit agreement itself); McCarthy v. Azure, 22 F.3d 351, 362 n.16 (1st Cir. 1994)
(requirements of third party beneficiary theory “are not satisfied merely because a third party will benefit from
performance of the contract”).
456 See §§1.02[B][1]-[2].
457 See §10.02[E].
458 See §10.02[M].
459 See §10.02[E].
460 See §10.02[M].

1602
Gary B. Born §10.03

benefited by) the signatories’ agreement to arbitrate: the critical consideration in determining
whether the doctrine binds a non-signatory is whether the signatories to the arbitration agree-
ment would, considered objectively and in good faith, have intended to bind (and benefit)
their affiliates to their agreement to arbitrate. In many instances, while the signatories may
very well have had no intention at all to bind corporate affiliates to the underlying contract,
they will have intended to bind those affiliates to their dispute resolution mechanisms – for
the simple reason that this is necessary in order to make those mechanisms work. Similar
analysis applies to specialized rules governing the rights of corporate officers and directors to
invoke arbitration agreements to avoid satellite litigations.
The foregoing rationale is typically limited to the group of companies doctrine, involving
corporate affiliates, and to the treatment of corporate officers and directors; it does not extend
generally to other mechanisms for binding non-signatories that are not corporate affiliates,
officers, or directors. Nonetheless, this rationale is also reflected in a few other contexts, in-
cluding shareholder derivative rights, some versions of estoppel, and treatment of third party
funders. In each of these settings, courts and tribunals have correctly relied on fairly attenu-
ated conceptions of consent and party intent, to conclude, absent express language, that the
parties’ desire for an effective, centralized dispute resolution mechanism implied an agree-
ment to subject corporate affiliates, directors, officers, shareholders and other related parties
to arbitration.
As discussed above, national courts in a number of jurisdictions apply a presumption in
favor of arbitrability in interpreting the scope of an admittedly valid arbitration agreement.461
A few lower courts have also applied this presumption to the question whether a particular
party is bound by an arbitration agreement. The same analysis may explain some of the more
expansive decisions of some courts identifying the parties that are bound by international
arbitration agreements.462
For the reasons already explained, however, it is inappropriate to adopt the same approach
to issues of interpretation as to the question of a non-signatory’s status: the strong “pro-arbi-
tration” presumptions that apply in the context of interpreting a valid arbitration agreement
are relevant, but not fully applicable, in the context of determining whether an arbitration
agreement binds a party.463 It is one thing to determine whether a party which concededly
concluded a valid agreement to arbitrate some disputes also intended to arbitrate other, relat-
ed disputes; it is another thing to determine whether a party agreed to arbitrate anything at all.
Nonetheless, as also discussed above, it is appropriate in international settings to apply
a liberal standard of proof of consent that takes into account the pro-arbitration policies of
the New York Convention and national arbitration legislation.464 For the reasons already dis-
cussed, this approach makes particular sense in the context of corporate affiliates, officers and
directors, groups of companies, and other related parties, where there are strong reasons to

461 See §9.02[D][1].

462 See §10.02[E]; §10.02[K]; §10.02[M].
463 See §§5.04[D][1], [4]-[5]; Granite Rock Co. v. Int’l Bhd of Teamsters, 561 U.S. 287, 303 (U.S. S.Ct. 2010)
(presumption favoring arbitration applies “only where it reflects, and derives its legitimacy from a judicial con-
clusion that arbitration of a particular dispute is what the parties intended”); E.I. Dupont de Nemours & Co., v.
Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187, 194 (3d Cir. 2001) (“The liberal policy favoring arbi-
tration agreements … is at bottom a policy guaranteeing the enforcement of private contractual arrangements,
and under the FAA, a court may only compel a party to arbitrate where that party has entered into a written
agreement to arbitrate that covers the dispute”); Different Drummer LLC v. Nat’l Urban League, Inc., 2012 WL
406907, at *3 (S.D.N.Y.).
464 See §5.04[D][5].

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§10.04 Parties to International Arbitration Agreements

conclude that parties who have entered into an international arbitration agreement do not
intend or desire for it to be circumvented by corporate affiliates or other related parties, but
rather that it will centralize all of the disputes related to the parties’ transactions in a single,
neutral forum. Moreover, even in other contexts, there is also substantial force to the notion
that commercial parties would presumptively desire that all related disputes be resolved effi-
ciently, in a unified, “one-stop” forum, rather than in multiple, potentially inconsistent pro-
ceedings in different forums.
Finally, in limited circumstances, entities may be bound by arbitration agreements by op-
eration of law, without regard to questions of intent. Cases of succession (through merger or
similar doctrines) are the most obvious examples.465 The same is true, albeit less obviously,
with regard to doctrines of veil-piercing and estoppel, where a party’s actions subject it to an
arbitration agreement, signed by another entity, regardless of questions of assent or intent.466
It is critical to distinguish such cases, which do not involve traditional contractual analysis,
conceptually from other non-signatory theories, which do. Although these doctrines are only
exceptionally applicable, they play an essential role in ensuring the fairness and efficiency of
the international arbitral process.

§10.04 FORMAL VALIDITY AND NON-SIGNATORIES

Application of the theories discussed above to bind a non-signatory to an arbitration clause
raises questions of compliance with applicable formal requirements, under many legal regimes,
for a “written” arbitration agreement.467 There has been surprisingly little attention to issues of
form in non-signatory cases, with the issue apparently not frequently being raised or decided.
Many courts have apparently concluded, usually without discussion, that there is no re-
quirement under the New York Convention (or national law) that an arbitration agreement sat-
isfy the form requirements of the Convention (or national arbitration legislation). In principle,
this conclusion is difficult to accept. Although form requirements are archaic, for the reasons
discussed above,468 where they exist these requirements logically must apply for the benefit of
each party: a party as to whom the “signature” or “exchange” requirements under the Conven-
tion or national law were not satisfied would, in principle, not be bound by the agreement.
Nonetheless, those authorities who have generally addressed the issue have adopted a
variety of means of avoiding or satisfying applicable form requirements in non-signatory con-
texts. There is, of course, no rule forbidding an agreement from being signed by one entity
on behalf of another entity (most obviously, in the case of agency relations).469 For example,

465 See §10.02[H].

466 See §10.02[D] (alter ego); §10.02[K] (estoppel).
467 See §5.02. A formal “writing” requirement is imposed by the New York Convention, the UNCITRAL
Model Law and most other national arbitration regimes. See §5.02[A][6]. See generally Gabriel, Congruence of
the NYC and Swiss Lex Arbitri Regarding Extension of Arbitral Jurisdiction to Non-Signatories: BGE 145 III 199
(BGer Nr. 4A_646/2018), 37 ASA Bull. 883 (2019); Habegger, Note – Federal Tribunal (1st Civil Court), 16
October 2003 (4P.115/2003): Extension of Arbitration Agreements to Non-Signatories and Requirements of Form,
22 ASA Bull. 398 (2004); Sandrock, Die Aufweichung Einer Formvorschrift und Anderes Mehr: Das Schweizer
Bundesgericht Erlässt ein Befremdliches Urteil, 2005 SchiedsVZ 1.
468 See §5.02[A][10].
469 This is most clearly the case where agency, alter ego, guarantor and third party beneficiary theories are
involved. See, e.g., Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630 (U.S. S.Ct. 2009) (FAA did not “alter
background principles of state contract law regarding the scope of agreements (including the question of who
is bound by them)”); Washington Mut. Fin. Group, LLC v. Bailey, 364 F.3d 260 (5th Cir. 2004); E.I. DuPont
de Nemours & Co., v. Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187 (3d Cir. 2001); Thomson-CSF,

1604
Gary B. Born §10.04

although Article II(2) of the Convention requires an arbitration agreement “signed by the
parties,” it is clear that a “party’s” signature can be provided by another entity on its behalf
(most obviously, an agent, subrogator, or alter ego). To the same effect, one may also reason
that the “writing” requirement of the New York Convention and most national laws can be
satisfied by the existence of a written arbitration agreement, which may be consented to by an
exchange of writings other than the traditional arbitration agreement (e.g., guarantees, assign-
ments, agency agreements, ratification by written instrument).470
More broadly, some authorities have held that form requirements apply only to the ar-
bitration agreement itself and not to extracontractual mechanisms by which an entity may
succeed to or assume a party’s obligations and rights under that agreement (e.g., by merger,
group of companies, alter ego); this effectively reduces the relevance of form requirements in
non-signatory contexts to a very small set of cases.471 As the Swiss Federal Tribunal explained
this rationale:
“this formal [writing] requirement only applies to the arbitration agreement itself, that
is to the agreement … by which the initial parties have reciprocally expressed their
common will to submit the dispute to arbitration. As to the question of the subjective
scope of an arbitration agreement formally valid [under this writing requirement] the
issue is to determine which are the parties which are bound by the agreement and
eventually determine if one or several third parties which are not mentioned therein
nevertheless enter into its scope ratione personae.”472

SA v. Am. Arb. Ass’n, 64 F.3d 773, 776 (2d Cir. 1995); Judgment of 16 October 2003, 22 ASA Bull. 364, 383
(Swiss Fed. Trib.) (2004) (concluding that underlying agreement between signatories satisfied written form
requirements).
470 See Judgment of 17 April 2019, DFT 4A_646/2018, ¶2.4 (Swiss Fed. Trib.) (“the distinction between
formal and substantive validity of the extension of an arbitration agreement to a third party pursuant to the
New York Convention is not different from the described jurisdiction of the Federal Tribunal”). But see Gabriel,
Congruence of the NYC and Swiss Lex Arbitri Regarding Extension of Arbitral Jurisdiction to Non-Signatories: BGE
145 III 199 (BGer Nr. 4A_646/2018), 37 ASA Bull. 883 (2019) (Swiss Federal Tribunal’s finding of congru-
ence between formal validity requirements of New York Convention and Swiss national law ignores lack of
“exchange” requirement under Swiss national law).
471 See Interocean Shipping Co. v. Nat’l Shipping & Trading Corp., 523 F.2d 527, 539 (2d Cir. 1975); Fisser v.
Int’l Bank, 282 F.2d 231, 233 (2d Cir. 1960); Judgment of 6 November 1984, DFT 110 II 342, ¶1.b (Swiss Fed.
Trib.); Judgment of 2 February 1978, 71 BGHZ 162, 166 (German Bundesgerichtshof); Girsberger & Haus-
maninger, Assignment of Rights and Agreement to Arbitrate, 8 Arb. Int’l 121, 142 (1992). See also E.I. DuPont
de Nemours, 269 F.3d at 194 (validity of arbitration agreement and determination of parties to agreement are
separate inquiries: “There is no dispute that the Agreement contained a valid and enforceable arbitration clause
which required all disputes arising out of the Agreement between the parties be submitted to binding arbitra-
tion in Singapore. The only question is whether DuPont, a non-signatory to that Agreement, is bound by that
arbitration clause.”).
472 Judgment of 16 October 2003, 22 ASA Bull. 364, 386 (Swiss Fed. Trib.) (2004). See also Arthur Andersen
LLP v. Carlisle, 556 U.S. 624, 631 (U.S. S.Ct. 2009) (“If a written arbitration provision is made enforceable
against … a third party under state contract law, the [FAA’s writing requirement is] fulfilled”); Judgment of
17 April 2019, DFT 4A_646/2018, ¶2.4 (Swiss Fed. Trib.) (rejecting argument that Article II of Convention
prohibits applying “valid arbitration agreement to third Parties that do not meet the formal requirement”; Ar-
ticle II(2)’s “wording ‘signed by the Parties’ [should be] understood as meaning that the arbitration agreement
must be signed by the (original) parties to the agreement when the agreement is concluded” and non-signa-
tory must not “meet any additional formal requirement”); Judgment of 8 May 2014, III ZR 371/12 (German
Bundesgerichtshof) (Article II form requirement does not prevent application of arbitration agreement to
non-signatory).

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§10.05 Parties to International Arbitration Agreements

The U.S. Supreme Court has apparently adopted similar analysis.473 Other authorities have
reasoned more generally that “no overly strict requirements should apply to the formal valid-
ity of an extension of the arbitration clause to a third party,”474 or have relied on principles of
estoppel (to excuse compliance with form requirements).475
The lack of attention to form requirements in non-signatory contexts is further indication
of the extent to which these requirements fail to reflect contemporary commercial practice
and substantial justice. Given these critiques of form requirements generally, there is little
justification for extending these requirements beyond their role with regard to the initial for-
mation of arbitration agreements.
That conclusion applies with particular force insofar as the evidentiary role of form require-
ments is concerned476 – in cases involving a written, formally valid arbitration agreement be-
tween parties A and B, there will be no question regarding the terms of that agreement if party
C is subjected to it. Instead, analysis in these circumstances focuses on whether party C in fact
agreed to be bound by the arbitration agreement – an inquiry as to which the general form
requirement for agreements to arbitrate is often ill-suited. That is most obviously true in cases
involving alter ego, agency, ratification, implied consent and estoppel theories. The better view,
in light of these considerations, is that the form requirements of the New York Convention and
national arbitration legislation apply only to the initial agreement to arbitrate and not to legal
bases for subjecting parties, that are by definition “non-signatories,” to that agreement.477

§10.05 CHOICE OF LAW GOVERNING PARTIES TO INTERNATIONAL

ARBITRATION AGREEMENT
Choice-of-law issues frequently arise in disputes over the identities of the parties to inter-
national arbitration agreements.478 Nonetheless, there is little considered analysis focusing
on the law applicable to determining the parties to an arbitration agreement or the status of

473 GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 590 U.S. – (U.S. S.Ct.
2020) (apparently treating existence of arbitration agreement under Article II(1) as distinct question from
right of entity to enforce that agreement under Article II(3): Articles II(1) and II(2) “address the recognition
of arbitration agreements, not who is bound by a recognized agreement”).
474 Habegger, Note – Federal Tribunal (1st Civil Court), 16 October 2003 (4P.115/2003): Extension of Arbi-
tration Agreements to Non-Signatories and Requirements of Form, 22 ASA Bull. 398, 410 (2004).
475 See, e.g., Judgment of 5 December 2008, DFT 4A_376/2008, ¶8.4 (Swiss Fed. Trib.) (“Swiss case law – the
law applicable in this case – already recognized the possibility to extend the arbitration clause to persons which
did not sign it, although written form is one of the requirements for the validity of the clause stated at Art. 178
[of the SLPIL]. This may be the case when a claim is assigned, taken over or when a contractual relationship
is transferred. It has already been admitted that in specific circumstances, a certain behaviour may substitute
compliance with a formal requirement on the basis of the rules of good faith. For instance, when a third party
becomes involved in the performance of the contract which contains the arbitration clause in such a way that an
intent to submit to the arbitration agreement, expressed by its behaviour, may be deducted from its behaviour.”).
476 See §5.02[A][1].
477 Nonetheless, a few national court decisions are to the contrary. See, e.g., Indowind Energy Ltd v. Wescare
(India) Ltd, (2010) 5 SCC 306 (Indian S.Ct.) (rejecting claim that non-signatory may be bound by arbitration
clause by virtue of its conduct, holding that written form requirement was mandatory).
478 See §10.02[A] (agency); §10.02[B] (apparent authority); §10.02[C] (implied consent); §10.02[D]
(alter-ego); §10.02[E] (group of companies); §10.02[F] (third party beneficiary); §10.02[G] (guarantor);
§10.02[H] (succession); §10.02[I] (assignment); §10.02[K] (estoppel). Of course, as discussed above, the
separability doctrine permits the application of one law to the parties’ underlying contract and another law to
the arbitration clause. See §3.03; §4.02.

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Gary B. Born §10.05[A]

non-signatories.479
As discussed above, some authorities have applied international principles (particularly
to the group of companies, estoppel and alter ego doctrines),480 while other authorities have
applied national law rules (particularly to issues of agency, assignment, merger and guaran-
tee/ratification).481 Generally speaking, as discussed below, the application of these various
international and national law standards to different non-signatory theories, depending on
the nature of the relevant theory, is appropriate: properly analyzed, the law applicable to
determine whether a non-signatory is bound by an arbitration agreement depends on the
particular theory that is invoked.482 Also preliminarily, where national law is applicable, the
better analysis is to apply a validation principle, which gives effect to an arbitration agreement
vis-à-vis a non-signatory if that is the result provided for under either the law applicable to the
underlying legal event (e.g., third party beneficiary rights, assignment agreement) or the law
applicable to the arbitration agreement.

[A] Application of International Principles to Non-Signatory

Issues
In practice, national courts and arbitral tribunals have adopted varying approaches to the
choice of law applicable to determining the parties to an arbitration agreement. A number
of arbitral awards have applied principles of international law to ascertain the parties to an
international arbitration agreement.483 As one award reasoned:
“In international relations, the tribunal considers that it is preferable to apply rules
adapted to the conditions of the international market and which provide a reason-
able balance between the company’s confidence in its distinct legal status and the

479 See Restatement (Second) Conflict of Laws §218 (1971) (conflict of laws rules apply to “the validity of an
arbitration agreement, and the rights created thereby”); L. Collins et al. (eds.), Dicey, Morris and Collins on The
Conflict of Laws ¶¶16R-001 et seq. (15th ed. 2012 & Supp. 2019). See also Bravo Abolafia, Implied Choice of the
Law Applicable to the Arbitration Agreement: The Effect on Non-Signatories in International Arbitration, 37 ASA
Bull. 64 (2019); Landbrecht & Wehowsky, Determining the Law Applicable to the Personal Scope of Arbitration
Agreements and Its “Extension”, 35 ASA Bull. 837 (2017). For cases where the status of a non-signatory appar-
ently turned on the applicable law, see Kabab-ji SAL v. Kout Food Group [2020] EWCA Civ 6 (English Ct.
App.); Egiazaryan v. OJSC OEK Fin. [2015] EWHC 3532 (Comm) (English High Ct.).
480 See §10.02[D] (alter ego); §10.02[E] (group of companies); §10.02[K] (estoppel).
481 See §10.02[A] (agency); §10.02[H] (succession); §10.02[G] (guarantor).
482 See §10.05[A].
483 See, e.g., Ocean-Air Cargo Claims, Inc. v. Iran, Award in IUSCT Case No. 11429 of 15 December 1989, 23
Iran–US C.T.R 296 (1989); Interim Award in ICC Case No. 9873, 16(2) ICC Ct. Bull. 85 (2005) (not applying
any national law to determine status of non-signatory; no explanation or analysis); Final Award in ICC Case
No. 9797, 18 ASA Bull. 514 (2000) (applying UNIDROIT Principles); Award in ICC Case No. 5721, 117 J.D.I.
(Clunet) 1019 (1990); Dow Chem. France v. ISOVER St. Gobain, Interim Award in ICC Case No. 4131 of 23
September 1982, IX Y.B. Comm. Arb. 131, 135 (1984); Final Award in Chamber of National & International Arbi-
tration of Milan Case No. 1795 of 1 December 1996, XXIV Y.B. Comm. Arb. 196 (1999) (applying UNIDROIT
Principles); Sea-Land Serv., Inc. v. Iran, Award No. 135-33-1 of 22 June 1984, X Y.B. Comm. Arb. 245 (1985).
See also Hosking, Non-Signatories and International Arbitration in the United-States: The Quest for Consent, 20
Arb. Int’l 289, 296 (2004); Park, Arbitrators and Accuracy, 1 J. Int’l Disp. Sett. 25, 47 (2010) (“arbitrators often
seek guidance in transnational norms articulated by scholars and in published awards. Such norms address the
circumstances under which an arbitration clause might be extended to a non-signatory, for example, by virtue
of the parent company’s behaviour in negotiations and contract formation, or performance of related contracts
which form part of a single contract scheme constituted by multiple agreements.”).

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§10.05[A] Parties to International Arbitration Agreements

protection of entities which may fall victim to the manipulations of a company con-
trolling its subsidiary to deprive a creditor of the benefits to which it is entitled.”484
A number of the awards cited in support of the foregoing proposition expressly reject the
application of national law to non-signatory issues, instead concluding that the application of
international law is appropriate.485 A few awards have characterized these rules of international
law as lex mercatoria or general principles of international law.486 Others have apparently relied
on the parties’ incorporation of institutional arbitration rules, as reflecting a choice of interna-
tional or transnational law:
“The Arbitral Tribunal will not examine this delicate question [of the status of a
non-signatory under veil-piercing analysis] only on the basis of the law applicable to
the merits of the dispute, Egyptian law, … [as] the Tribunal is justified in referring
to the lex mercatoria. The principle of autonomy of arbitration clauses, now widely
recognized, justifies this reference to a non-national rule construed from international
commercial usage alone. In particular, it is justified to separate the merits from the
validity and scope of the arbitration clause. The Arbitral Tribunal will thus rule on the
basis of general notions of good faith in business transaction and international com-
mercial usage.”487
Some national courts have also adopted international principles, rather than national rules, in
resolving non-signatory issues. This has been most pronounced in France, where courts have
applied more general French choice-of-law analysis, providing that international arbitration
agreements are “autonomous” from national legal systems and subject to international law.488
This analysis was well-articulated in the Dow Chemical decision (discussed above), applying
the group of companies doctrine as a “usage of international commerce.”489

484 Award in ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC Arbitral
Awards 1996-2000 474, 479 (2003).
485 Id. at 478 (“[T]he tribunal considers that in the case of a neutral forum such as this one, the automatic
application of the rules of conflict of the seat of the arbitration must be rejected and the tribunal must apply
the law, and if necessary private international law, which is the most appropriate in the circumstances. This is
the law which best corresponds to the needs of the international business community, which is not in conflict
with the legitimate expectations of the parties, which produces uniform results and offers a reasonable solution
to the dispute.”); Jarvin, The Group of Companies Doctrine, in M. Blessing (ed.), The Arbitration Agreement: Its
Multifold Critical Aspects 181, 196-97 (1994) (“[T]he traditional approach to the problem that the arbitrators
take, is done without reference to any particular law. … The existence of an intention to be bound to an arbitra-
tion agreement is demonstrated without reference to a particular law; it is a matter of facts and of evidence, not
of law. … [T]he choice of a national law as source seems to be in the defensive.”).
486 See, e.g., Award in ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC
Arbitral Awards 1996-2000 474 (2003) (“The application of international principles offers many advantages.
They apply in a uniform fashion and are independent from the peculiarities of each national law. They take into
consideration the needs of international relations and allow for a fruitful exchange between systems which
are sometimes excessively attached to conceptual distinctions, and systems which seek a just and pragmatic
solution to particular situations. This is therefore an ideal opportunity to apply what is increasingly referred to
as the lex mercatoria.”); Award in ICC Case No. 5721, 117 J.D.I. (Clunet) 1019 (1990).
487 Compare Habegger, Note – Federal Tribunal (1st Civil Court), 16 October 2003 (4P.115/2003): Extension
of Arbitration Agreements to Non-Signatories and Requirements of Form, 22 ASA Bull. 398, 399 (2004).
488 See §4.04[A][2][j][iv]; §4.04[B][3][e].
489 Judgment of 21 October 1983, Isover-Saint-Gobain v. Dow Chem. France, 1984 Rev. Arb. 98 (Paris Cour
d’Appel) (group of companies doctrine is “not seriously contested … as a usage of international commerce”).
See §10.02[E]. See also Judgment of 26 November 1986, Sponsor AB v. Lestrade, 1988 Rev. Arb. 153 (Pau Cour
d’Appel) (group of companies doctrine “accepted in law”).

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Gary B. Born §10.05[A]

In a conceptually-analogous fashion, some U.S. courts have applied “federal common law,”
derived from general U.S. contract law and agency rules, to the question whether a non-signa-
tory is bound by an international arbitration agreement.490 Although not ordinarily denom-
inated as “international” principles or rules, these U.S. decisions decline to apply otherwise
applicable U.S. state (or foreign) law to non-signatory issues in favor of neutral, judicially-fash-
ioned principles that focus on the parties’ consent and considerations of fairness and equity
– in a manner analogous to the application of general principles of law.
More recently, the U.S. Supreme Court has apparently rejected the application of federal
common law to non-signatory issues in the context of domestic arbitration agreements under
Chapter 1 of the FAA. The Court held, in Arthur Andersen LLP v. Carlisle, that, although the
FAA “creates substantive federal law regarding the enforceability of arbitration agreements, …

490 See, e.g., E.I. DuPont de Nemours & Co., v. Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187 (3d
Cir. 2001); McCarthy v. Azure, 22 F.3d 351, 355 (1st Cir. 1994) (federal common law rules “dovetail[] precisely
with general principles of contract law”); McPheeters v. McGinn, Smith & Co., 953 F.2d 771 (2d Cir. 1992);
Hester Int’l Corp. v. Nigeria, 879 F.2d 170, 177 (5th Cir. 1989) (“The Court specifically declined to apply the law
of the chartering state to determine the separate juridical status of its instrumentality”); Genesco, Inc. v. T. Kak-
iuchi & Co., 815 F.2d 840, 845 (2d Cir. 1987) (question whether party is “bound by the arbitration clause … is
determined under federal law, which comprises generally accepted principles of contract law”); Valero Refining,
Inc. v. MT Lauberhorn, 813 F.2d 60, 64 (5th Cir. 1987); McAllister Bros., Inc. v. A & S Transp. Co., 621 F.2d 519,
524 (2d Cir. 1980); Fisser v. Int’l Bank, 282 F.2d 231, 233 (2d Cir. 1960); Alstom Brasil Energia e Transporte Ltda
v. Mitsui Sumitomo Seguros SA, 2016 WL 3476430, at *4 (S.D.N.Y.) (“The application of federal arbitration law,
consonant with the ‘general principles of domestic contract law,’ is thus appropriate, and consistent with the
parties’ demonstrated intent through their selection of a U.S. arbitral forum”); Harland Clarke Holdings Corp. v.
Milken, 997 F.Supp.2d 561, 582 (W.D. Tex. 2014) (“Direct benefits estoppel is a type of equitable estoppel first
applied in the arbitration context by federal courts and subsequently adopted by [state] courts”); Toledano v.
O’Connor, 501 F.Supp.2d 127, 152 (D.D.C. 2007) (applying “the federal substantive law of arbitrability, which
in turn incorporates general principles of contract and agency law”); Wood v. PennTex Res., LP, 458 F.Supp.2d
355, 371 (S.D. Tex. 2006); Ecuador v. ChevronTexaco Corp., 376 F.Supp.2d 334, 334 (S.D.N.Y. 2005) (“apply
federal common law to the question of whether [a non-signatory] is bound by the arbitration clause”), rev’d on
other grounds, 638 F.3d 384 (2d Cir. 2011); Legacy Wireless Serv., Inc. v. Human Capital, LLC, 314 F.Supp.2d 1045
(D. Or. 2004); Creative Sec. Corp. v. Bear Stearns & Co., 671 F.Supp. 961, 965 (S.D.N.Y. 1987), aff’d, 847 F.2d
834 (2d Cir. 1988); Oriental Commercial & Shipping Co., Ltd v. Rosseel, NV, 609 F.Supp. 75 (S.D.N.Y. 1985);
Banque de Paris et des Pays-Bas v. Amoco Oil Co., 573 F.Supp. 1464 (S.D.N.Y. 1983); Hidrocarburos y Derivados
CA v. Lemos, 453 F.Supp. 160, 167-68 (S.D.N.Y. 1977); Belzberg v. Verus Invs. Holdings Inc., 999 N.E.2d 1130,
1133 (N.Y. 2013) (“New York courts have relied on the direct benefits estoppel theory, derived from federal
case law, to abrogate the general rule against binding nonsignatories”); In re Weekley Homes LP, 180 S.W.3d 127,
134 (Tex. 2005) (“Like the equitable doctrine of promissory estoppel, we do not understand direct-benefits
estoppel to create liability for noncontracting parties that does not otherwise exist. As [the nonsignatory] and
[the signatory] had no contract between them, estoppel alone cannot grant either a right to sue for breach.”); In
re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739 (Tex. 2005) (“‘direct benefits estoppel’ is “a type of equitable
estoppel that federal courts apply in the arbitration context”). See also Frankel, The Arbitration Clause as Super
Contract, 91 Wash. U. L. Rev. 531, 531, 587 (2014) (“By creating special rules that favor arbitration and that
deviate from state contract law, courts are enforcing arbitration agreements in situations where they would
not enforce other agreements. … Due in no small part to the liberal federal policy favoring arbitration, courts
have created a ‘unique’ doctrine of equitable estoppel as it applies to arbitration.”); Rosenhouse, Annotation,
Application of Equitable Estoppel to Compel Arbitration by or Against Nonsignatory – State Cases, 22 A.L.R.6th
387 (2007) (“The federal courts have initiated and many state courts have recognized and adopted a unique
body of ‘equitable estoppel’ law that is peculiarly applicable in cases in which a non-signatory to an arbitration
agreement either seeks to compel arbitration of a claim against itself brought by a signatory party to the arbi-
tration agreement or asserts a claim against such a signatory, who then seeks to compel the non-signatory to
arbitrate that claim”).

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§10.05[B] Parties to International Arbitration Agreements

background principles of state contract law” govern “the question of who is bound by them.”491
The Court went on to conclude that “‘traditional principles’ of state law allow a contract to
be enforced by or against nonparties to the contract through ‘assumption, piercing the cor-
porate veil, alter ego, incorporation by reference, third party beneficiary theories, waiver and
estoppel.’”492 The Court’s generic references to “background principles of state contract law”
and “traditional principles” of state contract law are equivocal: although apparently suggesting
that state law would apply to domestic non-signatory issues, the references to “background”
and “traditional” principles, rather than “rules” of state law applicable under the Erie doctrine,
arguably contemplates federal common law rules based in traditional state contract law. In
any event, the decision of the Court in Arthur Andersen did not address the application of the
New York Convention or Chapter 2 of the FAA, where the better view, generally adopted by
U.S. lower courts, remains that federal common law should govern issues of alter ego, agency,
estoppel and the like.493 That conclusion is underscored by the pro-enforcement policies and
federal interests under the Convention.494

491 Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630 (U.S. S.Ct. 2009).
492 Id. at 631 (quoting 21 Williston on Contracts §57:19 (4th ed. 2001)). See also GE Energy Power Conver-
sion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 590 U.S. – (U.S. S.Ct. 2020) (leaving open question of
“which body of law governs” application of non-signatory theory, but observing that FAA provides for applica-
tion of “state-law doctrines” and “background principles of state contract law”) (quoting Arthur Andersen LLP,
556 U.S. at 630); First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (U.S. S.Ct. 1995) (“When deciding
whether the parties agreed to arbitrate a certain matter (including arbitrability), courts generally … should
apply ordinary state-law principles that govern the formation of contracts”); Century Indem. Co. v. Certain Un-
derwriters at Lloyd’s, London, 584 F.3d 513, 524 (3d Cir. 2009) (“ordinary state-law principles that govern the
formation of contracts” determine threshold question of whether a party has agreed to arbitrate); §10.01[D].
493 U.S. lower courts have generally continued to apply federal common law to non-signatory issues in cases
arising under the Convention. See, e.g., Todd v. S.S. Mut. Underwriting Ass’n, 601 F.3d 329, 334 (5th Cir. 2010)
(“in both FAA and [New York] Convention cases, courts have largely relied on the same common law contract
and agency principles to determine whether nonsignatories must arbitrate, and not law derived from statute
or treaty”); InterGen NV v. Grina, 344 F.3d 134, 143-144 (1st Cir. 2003) (“As between state law and federal
common law, we conclude that uniform federal standards are appropriate” to question of whether non-signa-
tories can be bound by arbitration agreement); Smith/Enron Cogeneration LP, Inc. v. Smith Cogeneration Int’l,
Inc., 198 F.3d 88, 96 (2d Cir. 1999) (applying “the body of federal law under the FAA” to determine whether
non-signatories are bound by international arbitration agreement); Alstom Brasil Energia e Transporte Ltda v.
Mitsui Sumitomo Seguros SA, 2016 WL 3476430, at *4 (S.D.N.Y.) (“The application of federal arbitration law,
consonant with the general principles of domestic contract law, is thus appropriate. … Under clearly estab-
lished principles applied in the federal courts, a party may be bound by an agreement to arbitrate even in the
absence of a signature.”); Lakah v. UBS AG, 996 F.Supp.2d 250, 260 (S.D.N.Y. 2014) (“Federal arbitration law
governs” the determination of whether non-signatories are bound by international arbitration agreements);
Meena Enter., Inc. v. Mail Boxes Etc., 2012 WL 4863695, at *4 n.6 (D. Md.) (“Federal common law, rather than
state law, applies to MBE’s equitable estoppel argument”); Filanto SpA v. Chilewich Int’l Corp., 789 F.Supp. 1229,
1236 (S.D.N.Y. 1992) (“the question of whether these parties agreed to arbitrate their disputes is governed
by the [New York] Convention and its implementing legislation. That Convention … controls any case in
any American court falling within its sphere of application. Thus, any dispute involving international commer-
cial arbitration which meets the Convention’s jurisdictional requirements, whether brought in state or federal
court, must be resolved with reference to that instrument.”). Compare Motorola Credit Corp. v. Uzan, 388 F.3d
39, 51 (2d Cir. 2004) (“if defendants wish to invoke the arbitration clauses in the agreements at issue, they must
also accept the Swiss choice-of-law clauses that govern those agreements”); FR8 Singapore Pte Ltd v. Albacore
Maritime Inc., 754 F.Supp.2d 628 (S.D.N.Y. 2010) (applying English law to determination of piercing corporate
veil).
494 See §1.04[B][1].

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Gary B. Born §10.05[B]

[B] Application of National Law to Non-Signatory Issues

Despite these approaches, other courts and arbitral tribunals have rejected the notion that
international law rules apply to the determination of the parties to an international arbitration
agreement, and have instead applied various choice-of-law rules calling for the selection of a
national law. Thus, in one frequently-cited decision, an English court declared:
“The identification of the parties to an agreement is a question of substantive not pro-
cedural law. … There [is] no basis for the tribunal to apply any other law [than that
selected by the parties].”495
This analysis went on to reject the application of an international “group of companies” doc-
trine and to affirm the primacy of national law in structuring contemporary commercial trans-
actions. Other courts and arbitral tribunals have reached similar conclusions, holding that
national law, selected through the application of choice-of-law rules, applies to non-signatory
issues.496 Thus, some courts and tribunals have applied the law selected by the choice-of-law
clause in the underlying contract to non-signatory issues497 (although other authorities, set
out above, have rejected these analyses); other courts have applied the law of the arbitration
agreement,498 or the law of the arbitral seat,499 to non-signatory issues.

495 Peterson Farms Inc. v. C&M Farming Ltd [2004] EWHC 121, ¶¶45, 47 (Comm) (English High Ct.).
496 See, e.g., Restatement of the U.S. Law of International Commercial and Investor-State Arbitration §2.3 com-
ment b (2019) (choice-of-law rules of forum applicable to choose law governing agency relationship, alter ego
relationship or implied consent to arbitration agreement).
497 See, e.g., Award in Ad Hoc Case in Zurich of 15 September 1989, 8 ASA Bull. 270, 273-74 (1990) (Italian
law applied to determine whether partner in Italian partnership is bound by arbitration agreement entered
into by partnership); Motorola Credit Corp. v. Uzan, 388 F.3d 39, 51-53 (2d Cir. 2004) (applying Swiss law
selected by choice-of-law clause); Sphere Drake Ins. Ltd v. Clarendon Nat’l Ins. Co., 263 F.3d 26, 32 n.3 (2d Cir.
2001) (applying New York and New Jersey choice-of-law clauses); FR8 Singapore Pte Ltd v. Albacore Maritime
Inc., 794 F.Supp.2d 449, 458 (S.D.N.Y. 2011) (applying English law, selected by choice-of-law clause, rather
than federal common law, to determine whether to pierce corporate veil); CCP Sys. AG v. Samsung Elecs. Corp.
Ltd, 2010 WL 2546074, at *7-8 (D.N.J.) (“the Software Agreement contains a choice of law provision requir-
ing the application of Swiss law. … Swiss law governs the issue concerning whether a non-signatory to the
Software Agreement, Defendant Samsung America, is permitted to invoke the arbitration clause.”).
498 See, e.g., Kabab-ji SAL v. Kout Food Group [2020] EWCA Civ 6, ¶10 (English Ct. App.) (parties agreed
that law governing validity of arbitration agreement governs question of whether non-signatory became party
to arbitration agreement); Judgment of 8 May 2014, III ZR 371/12 (German Bundesgerichtshof) (“This jus-
tifies applying the law applicable to the arbitration agreement to the question whether … E.L.’s obligation to
arbitrate was transferred to the Danish Assignee. In this manner, the debtor preserves the law applicable to its
relationship with the assignor, to which he is subject on the basis of the arbitration agreement.”); Trina Solar
(US), Inc. v. Jasmin Solar Pty Ltd, [2017] FCAFC 6, ¶¶82-84, 166 (Australian Fed. Ct.) (citing G. Born, Interna-
tional Commercial Arbitration 497, 1423-24 (2d ed. 2014)) (same choice-of-law rules should apply to selecting
law governing arbitration agreement’s formation and substantive validity at stage of enforcing agreement and at
stage of enforcing arbitral award).
499 See, e.g., Judgment of 18 February 2016, DFT 4A_84/2015, ¶3.3.1 (Swiss Fed. Trib.) (whether putative
principal is party to arbitration agreement in Swiss-seated arbitration is issue of formal validity governed by
Swiss private international law); Judgment of 19 August 2008, DFT 4A_128/2008, ¶4.1.1 (Swiss Fed. Trib.)
(“The question as to the subjective bearing of an arbitration agreement – at issue is which parties are bound
by the agreement and to determine to what extent one or several third parties not mentioned there nonethe-
less fall within its scope ratione personae – relates to the merits and accordingly falls within Art. 178(2) [of
the SLPIL]. This question falls under Swiss law as it is not established that the parties to the Contract would
have submitted the arbitration agreement to another law and the two other possibilities anticipated by that
provision (i.e. the lex causae and the lex fori) also lead to the application of that law.”).

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§10.05[B] Parties to International Arbitration Agreements

In contrast, some national courts500 and arbitral tribunals501 have (wrongly) applied the
local law of the judicial enforcement forum to issues of non-signatory status. The clearest ex-
ample of this approach was a 2005 U.S. appellate decision which reversed a trial court’s recog-
nition of a foreign (Egyptian) arbitral award, where the arbitral tribunal had applied a variant
of the group of companies doctrine to bind a non-signatory parent corporation.502 Among
other things, the U.S. court held that “American” law was mandatorily applicable to determine
whether a non-signatory U.S. company was a party to an arbitration agreement:
“It is American federal arbitration law that controls. An American nonsignatory can-
not be bound to arbitrate in the absence of a full showing of facts supporting an articu-
lable theory based on American contract law or American agency law.”503
To arguably the same effect, other U.S. courts have applied national law to a variety of non-sig-
natory issues, such as alter ego status504 and estoppel,505 but have done so based upon more

500 See, e.g., Judgment of 8 May 2014, III ZR 371/12 (German Bundesgerichtshof) (“It does not suffice in
this respect that the German court – had it decided the case according to German law – would have reached a
different result on the basis of mandatory German norms. … The finding of a violation of public policy comes
into consideration only in extreme, exceptional cases.”). See Landbrecht & Wehowsky, Determining the Law
Applicable to the Personal Scope of Arbitration Agreements and Its “Extension”, 35 ASA Bull. 837, 848 (2017) (“It
is submitted that the conflict of law rules used to determine the law applicable to the personal scope of the
arbitration agreement in case of alleged actual consent should be the same as those used to determine the law
applicable to the substantive validity of the arbitration agreement”).
501 See, e.g., Final Award in ICC Case No. 10758, 128 J.D.I. (Clunet) 1171 (2001) (applying law of arbitral
seat to determine status of non-signatory on grounds that this was parties’ implied choice); Award in ICC Case
Nos. 7604 & 7610, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC Arbitral Awards 1996-
2000 510 (2003); Award in ICC Case No. 5730, 117 J.D.I. (Clunet) 1029 (1990) (applying law of arbitral seat
to determine status of non-signatory on grounds that this was law governing arbitral proceedings). Compare
Award in ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC Arbitral Awards
1996-2000 474 (2003) (refusing to apply law of arbitral seat to determine status of non-signatory).
Some awards apply the conflicts rules of the arbitral seat to non-signatory issues. See, e.g., Partial Award
in ICC Case No. 10818, 16(2) ICC Ct. Bull. 94 (2005); Interim Award in ICC Case No. 9719, 16(2) ICC Ct. Bull.
83 (2005) (applying conflicts rules of arbitral seat to determine non-signatory’s status); Interim Award in ICC
Case No. 4504, 113 J.D.I. (Clunet) 1118 (1986) (same); Partial Award in ICC Case No. 4402, IX Y.B. Comm. Arb.
138 (1984).
502 Sarhank Group v. Oracle Corp., 404 F.3d 657 (2d Cir. 2005) (applying “American” law to alter ego inqui-
ry in recognition action).
503 Id. at 662. The U.S. appellate court was concerned by the lack of reasoning and factual analysis reflected
in the arbitral award. Among other things, the court quoted the following passage from the arbitral award:
“despite … their having separate juristic personalities, subsidiary companies to one group of companies are
deemed subject to the arbitration clause incorporated in any deal either is a party thereto provided that this is
brought about by the contract because contractual relations cannot take place without the consent of the par-
ent company owning the trademark by and upon which transactions proceed.” Id. Other commentators have
termed this a “rather simplified, even crude version” of the group of companies doctrine, which explains in part
the U.S. court’s treatment of the award. Wilske, Shore & Ahrens, The “Group of Companies Doctrine”: Where Is It
Heading?, 17 Am. Rev. Int’l Arb. 73, 83 (2006).
For additional criticism of the Sarhank decision, see Garfinkel & Herlihy, Looking for Law in All the
Wrong Places: The Second Circuit’s Decision in Sarhank Group v. Oracle Corporation, 20(6) Mealey’s Int’l Arb.
Rep. 18 (2005) (U.S. court embarked on “a mistaken application of Article V(2)(a)” and took “the wrong route
to get to its ultimate conclusion”); Rau, “Consent” to Arbitral Jurisdiction: Disputes with Non-Signatories, in PCA,
Multiple Party Actions in International Arbitration 69, ¶3.67 n.143 (2009).
504 See §10.02[D].
505 See §10.02[K].

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Gary B. Born §10.05[C]

generally-applicable choice-of-law rules, rather than (wrongly and reflexively) applying the
law of the judicial enforcement forum.506

[C] Future Directions: Choice of Law Applicable to Non-

Signatory Issues
As discussed above, a number of different legal theories are invoked to subject non-signatories
to an arbitration agreement.507 The better approach to the choice of law applicable to non-sig-
natory issues requires considering the specific legal theory that is relied upon to subject a party
to the arbitration agreement. In particular, the same law will not necessarily govern purely
consensual non-signatory theories (such as agency, third party beneficiary, guarantor rela-
tions, assumption, or assignment), on the one hand, and nonconsensual doctrines (such as
estoppel, apparent authority and alter ego), on the other.

[1] Future Directions: Application of National Law to Non-Signatory Issues

In principle, issues of implied consent, assumption, ratification, third party beneficiary status,
joint venture relations and the group of companies doctrine should be subject to the same
choice-of-law rules and analysis as the underlying arbitration agreement.508 Issues of ratifica-
tion and assumption are questions directly concerning either the interpretation or formation
of an arbitration agreement under generally-applicable contract law mechanisms, and would
therefore be governed by the law applicable to the arbitration agreement under most conflicts
systems.509 Conversely, there is no reason not to apply the law governing the arbitration agree-
ment to these issues.510

506 As discussed elsewhere, the Sarhank approach is a clear violation of the uniform choice-of-law rules pre-
scribed by Article V(1)(a) of the New York Convention. See §4.04[A][2][j][v](8); §10.05[C][3]; §26.05[C]
[1][e][i]. As also discussed elsewhere, the most credible defense of results such as Sarhank is that they rest on
an application of local public policy considerations. See §4.04[A][2][j][v](8); §10.05[C][3]; §26.05[C][1]
[e][i].
507 See §10.02.
508 See §10.02[A] (agency); §10.02[E] (group of companies); §10.02[F] (third party beneficiaries);
§10.02[L] (ratification); §10.02[O] (joint venture relations).
509 See §§4.04 et seq. (especially §4.04[B][6]); Restatement (Second) Conflict of Laws §218 (1971); L. Col-
lins et al. (eds.), Dicey, Morris and Collins on The Conflict of Laws ¶16-022 (15th ed. 2012 & Supp. 2019) (“All
questions relating to the formation of an arbitration agreement are governed by the law which would govern
if it were validly concluded, i.e. by its putative applicable law. The law governing the arbitration agreement will
determine its validity, effect and interpretation. … That law will normally determine whether the clause re-
mains binding on the parties although one of them alleges that the contract is void, voidable or illegal, or that
it has been discharged by breach or frustration. The governing law will also determine whether an arbitration
agreement can be imported by implication into a different contract between the same parties, or between
one of them and a third party.”); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International
Commercial Arbitration ¶475 (1999); Münch, in W. Krüger & T. Rauscher (eds.), Münchener Kommentar zur
Zivilprozessordnung §1031, ¶18 (5th ed. 2016).
510 As discussed above, consistent with generally-applicable choice-of-law rules, the law that would gov-
ern the putative arbitration agreement would apply to the formation of that agreement. See §4.04[B][6]. This
applies to the question whether a non-signatory became party to the agreement pursuant to doctrines such as
implied consent, assumption, ratification, third party beneficiary status and group of companies doctrine. In
each instance, the issue is whether or not an arbitration agreement was formed insofar as the relevant non-sig-
natory is concerned.
Similarly, the law governing the arbitration agreement would also be applicable to its interpretation. See
§9.05[B].

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§10.05[C] Parties to International Arbitration Agreements

The application of national law in this manner entails application of a validation princi-
ple (for the reasons discussed above), which is mandated by the New York Convention and
many national arbitration regimes.511 That principle provides for the validity of the arbitration
agreement, including as to the status of non-signatories as parties to the agreement, whenever
provided for by any of the laws potentially applicable to the agreement (in particular, the law
of the underlying contract and the law of the arbitral seat).512
Questions of implied consent to an arbitration agreement, as well as application of the
group of companies doctrine, should also in principle be subject to the law governing the arbi-
tration agreement. This is consistent with general choice-of-law analysis with regard to implied
consent to other contracts.513 For the reasons discussed above, it makes particular sense for the
law governing the arbitration agreement to extend to application of the group of companies
doctrine (which was developed for specific application only to agreements to arbitrate).514
The effects of agency, assignment, guarantee and subrogation agreements on the parties to
international arbitration agreements are more complex, but should be treated similarly, by ap-
plying the law governing the original agreement to arbitrate. It is appropriate to apply the rules
prescribed by the law governing the original arbitration agreement because, where actions
by third parties (e.g., assignees, guarantors) purportedly impact the substantive rights of the
original parties to the arbitration agreement, those original parties’ ability to arbitrate disputes
concerning those rights should not be altered by a “foreign law” (e.g., the law of an agency,
assignment, or subrogation agreement which they had no role in selecting). Rather, the law
governing the arbitration agreement should be available to preserve the original parties’ abil-
ity to arbitrate concerning their substantive rights. Conversely, a “foreign” law, selected in a
new agreement (of assignment, guarantee, or the like), should not be permitted to intrude and
affect the rights and obligations of the original parties to the arbitration agreement, who did
not agree to application of the new law.
In principle, the effect of a merger (or other legal succession) should also be governed
by national law. In particular, the effects of succession are properly governed by the law of
the state under which the relevant corporate entities (or other persons) are organized (e.g.,
a merger between Dutch companies is governed by Dutch law). At the same time, the vali-
dation principle should also apply, to ensure that corporate reorganizations or similar events
under a foreign law do not have the effect of circumventing the arbitration agreement.

[2] Future Directions: Application of International Principles to Non-Signatory

Issues
More difficult choice-of-law considerations arise with regard to issues of alter ego status,
apparent authority and estoppel. In each of these cases, the better approach in international

511 See §4.04[A][1][b][i]; §4.04[A][3].

512 See §4.04[A][1][b][i]; §4.04[A][3].
513 See, e.g., Restatement (Second) of Conflict of Laws §§187-88, 218 (1971); L. Collins et al. (eds.), Dicey,
Morris and Collins on The Conflict of Laws ¶¶16-022, 32R-106 (15th ed. 2012 & Supp. 2019) (“All questions
relating to the formation of an arbitration agreement are governed by the law which would govern if it were
validly concluded, i.e. by its putative applicable law.”; “Rule 225 – (1) Subject to clause (2) of this Rule, the
existence and validity of a contract, or of any term of a contract, are determined by the law which would govern
it under the Rome I Regulation if the contract or term were valid. (2) A party, in order to establish that he did
not consent, may rely upon the law of the country in which he has his habitual residence if it appears from the
circumstances that it would not be reasonable to determine the effect of his conduct in accordance with the law
specified in clause (1).”).
514 See §10.02[E].

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Gary B. Born §10.05[C]

matters is to apply international principles.515 Each of these doctrines rests on noncontractual

theories, and doctrines based on general principles of equity and justice, as to which there is
ordinarily little principled basis in an international setting for choosing a particular national
law and where international principles of good faith have particular applicability. In the con-
text of international arbitration agreements, international principles of apparent authority,
veil-piercing and estoppel, which are formulated to take into account the transnational char-
acter of the parties and their international dealings, are more appropriate than application of
one state’s domestic law.

[3] Future Directions: International Limitations on National Law Applicable to

Non-Signatory Issues
As discussed elsewhere, national laws in the context of non-signatory issues should be subject
to international limitations, forbidding discriminatory or idiosyncratic rules.516 For example,
the New York Convention would not permit a Contracting State to prohibit the assignability,
subrogation, or ratification of any arbitration agreement or to forbid parties from entering
into an arbitration agreement through an agent. Similarly, the Convention would not permit
giving effect to a Contracting State’s rule that a merger transferred all substantive obligations,
but not arbitration agreements. In each case, such rules would both discriminate against arbi-
tration agreements and be out-of-step with the treatment of arbitration agreements in most
developed jurisdictions.
Finally, as discussed above, it is generally inappropriate for a national court to apply the
law of the judicial forum in which an award might be, or is, enforced to non-signatory issues
in judicial enforcement proceedings.517 As already noted, one U.S. decision – Sarhank Group
v. Oracle Corp.518 – departs from this approach, instead holding that “[a]n American nonsig-
natory cannot be bound to arbitrate in the absence of a full showing of facts supporting an
articulable theory based on American contract law or American agency law.”519
This analysis is impossible to reconcile with either the New York Convention or general-
ly-accepted choice-of-law principles. There is generally no justification for a Contracting State
to apply its own substantive law to all claims that one of its nationals is bound by an arbitration
agreement. On the contrary, as discussed above, Article V(1)(a) of the New York Convention
prescribes a choice-of-law rule for the existence and validity of the arbitration agreement –
being the law selected by the parties or (absent such choice) the law of the arbitral seat.520 The
Sarhank analysis flatly contradicts this rule, instead adopting a parochial preference for local
law, applied to protect local businesses. The Sarhank analysis also contradicts contemporary
international conflicts rules – none of which would permit application of local law to protect
local residents in such circumstances. There would not be an objection in principle to a Con-
tracting State applying public policy, under Article V(2)(b) of the Convention, to deny rec-
ognition of an award on the basis that the award upheld jurisdiction over a party in violation

515 See §10.02[B] (apparent authority); §10.02[D] (alter ego); §10.02[K] (estoppel).
516 See §4.04[A][4]; §4.05[C][5]; §4.07[B][3]; §5.02[C].
517 See §4.04[A][2][j][v](6); §10.05[C][1]. See also Partial Award in ICC Case No. 8910, 127 J.D.I. (Clu-
net) 1085, 1091 (2000) (“The arbitral tribunal is fully aware that its decision may not be recognized in the
United Arab Emirates. However, if it is true that a tribunal must not act in such a way that its award may be
legally sanctioned (cf. [1998] ICC Rules, Article 26), it may not be bound by the rules of the country or coun-
tries where its award may be enforced.”).
518 Sarhank Group v. Oracle Corp., 404 F.3d 657, 657 (2d Cir. 2005).
519 Id. at 661-62.
520 See §§4.04 et seq. (especially §4.04[A][1]; §4.04[B][2]).

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§10.06 Parties to International Arbitration Agreements

of local public policy.521 Any such result could not, however, merely reassess choice of law or
factual matters decided by the arbitrators and could only rely upon clearly articulated, funda-
mental public policies.522 The Sarhank court (arguably) could have properly invoked Article
V(2)(b)’s public policy exception, given the breadth of the arbitral tribunal’s conception of
consent, but this was not the analysis the court’s opinion appears to have adopted.

§10.06 ALLOCATION OF COMPETENCE TO DETERMINE PARTIES TO

ARBITRATION AGREEMENT
As with other disputes over the validity and interpretation of international arbitration agree-
ments, determining the identities of the parties to such an agreement gives rise to questions
concerning the allocation of jurisdictional competence between national courts and arbitra-
tors.523 Consistent with more general approaches to the competence-competence doctrine,524
arbitral tribunals have almost uniformly concluded that they have the authority to consider
whether the parties’ arbitration agreement was binding on particular entities.525 Indeed, there
are virtually no instances in which a tribunal has refused on jurisdictional grounds to consider
arguments that an arbitration agreement binds particular non-signatories.
National courts have reached less consistent results in addressing the competence of
arbitrators to resolve disputes over the parties to an international arbitration agreement. As
discussed above, many national arbitration statutes (and/or judicial authorities) address the
allocation of competence between national courts and arbitrators to decide disputes over
the enforceability and interpretation of arbitration agreements.526 These general principles
of competence-competence are applicable, with few peculiarities, in the specific context of
determining the parties to arbitration agreements.
The Model Law’s regime for competence-competence, in Articles 8 and 16,527 applies to
disputes over the parties to an arbitration agreement. Consistent with that regime, most courts
applying the Model Law have affirmed the power of arbitral tribunals to consider disputes
over the identities of the parties to arbitration agreements.528 At the same time, courts have

521 See §26.03[C][9].

522 See id.
523 The same issues may arise before an arbitral institution, which may be required (like the ICC and
ICSID) to make a determination regarding prima facie jurisdiction (see §15.08[I]) or to decide whether a par-
ticular entity may be served or permitted to participate in constituting a tribunal. See J. Fry, S. Greenberg &
F. Mazza, The Secretariat’s Guide to ICC Arbitration 78 (2012); Werner, Jurisdiction of Arbitrators in Case of As-
signment of An Arbitration Clause: On A Recent Decision by the Swiss Supreme Court, 8(2) J. Int’l Arb. 13 (1991);
Whitesell & Silva-Romero, Multiparty and Multicontract Arbitration: Recent ICC Experience, in ICC, Complex
Arbitrations: Perspectives on Their Procedural Implications 7, 8-10 (2003).
524 See §7.02.
525 See, e.g., Award in ICC Case Nos. 7604 & 7610, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection
of ICC Arbitral Awards 1996-2000 510 (2003); Final Award in ICC Case No. 6519, 2(2) ICC Ct. Bull. 34, 35
(1991); Partial Award in ICC Case No. 6000, 2(2) ICC Ct. Bull. 31, 32 (1991); Interim Award in ICC Case No.
5920, 2(2) ICC Ct. Bull. 27, 28 (1991); Partial Award in ICC Case No. 4402, IX Y.B. Comm. Arb. 138 (1984);
Dow Chem. France v. ISOVER St. Gobain, Interim Award in ICC Case No. 4131 of 23 September 1982, IX Y.B.
Comm. Arb. 131, 138 (1984). See also authorities cited above in §10.02[B], n. 106; §10.02[C], nn. 122-123;
§10.02[D], nn. 150-151, nn. 211-213; §10.02[E], n. 237; §10.02[H], n. 328; §10.02[M], n. 401; Pimm, Juris-
diction over Non-Signatories to the Arbitration Agreement: Can Arbitrators Pierce the Corporate Veil?, 2003 Asian
Disp. Rev. 5.
526 See §7.03.
527 See §7.03[A].
528 Pan Liberty Navigation Co. Ltd v. World Link (H.K.) Res. Ltd, [2005] BCCA 206 (B.C. Ct. App.) (staying

1616
Gary B. Born §10.06

also entertained interlocutory litigation concerning jurisdiction over non-signatories529 and

reviewed awards addressing the subject (while taking differing views on the level of deference
to be afforded to the arbitral tribunal’s jurisdictional findings).530
French courts have also concluded (consistent with general French principles of compe-
tence-competence)531 that arbitral tribunals have the competence to decide initially what par-
ties are bound by an arbitration agreement;532 the arbitrator’s jurisdictional award is subject to
subsequent de novo judicial review by French courts.533 Once arbitral proceedings have been
commenced, no interlocutory judicial consideration of jurisdictional issues is available in
French courts; even before an arbitration is commenced, no judicial consideration is permit-
ted, save for a manifest nullity of the arbitration clause towards the non-signatories.534 Other
national courts have also recognized the arbitral tribunal’s competence to decide on whether
non-signatory parties are bound by an arbitration agreement.535

litigation under Article 8 of Model Law; holding that question whether non-signatory was bound by arbi-
tration agreement was for arbitral tribunal to resolve); Gulf Canada Res. Ltd v. Arochem Int’l Ltd, (1992) 66
BCLR2d 113 (B.C. Ct. App.) (“But it is not for the court, on an stay application for a stay of proceedings, to
reach any final determination as to the scope of the arbitration agreement or whether a particular party to the
legal proceedings is a party to the arbitration agreement because those are matters within the jurisdiction of the
arbitral tribunal. Only where it is clear that the dispute falls is outside the terms of the arbitration agreement, or
that a party is not a party to the arbitration agreement, or that the application is out of time, should the court
make reach any final determination. …”); NetSys Tech. Group AB v. Open Text Corp., (1999) 1 BLR (3d) 307
(Ontario Super. Ct.). See also P. Sanders, The Work of UNCITRAL on Arbitration and Conciliation 98 (2d ed.
2004).
529 See, e.g., Fibreco Pulp Inc. v. Star Shipping A/S, [1998] 145 FTR 125 (Canadian Fed. Ct.), aff’d, [2000] 184
FTR 98 (Canadian Fed. Ct. App.); Décarel Inc. v. Concordia Project Mgt Ltd, [1996] RDJ 484 (Québec Ct. App.);
Endoceutics Inc. v. Philippon, [2013] QCCS 1742 (Québec Super. Ct.), aff’d, [2015] QCCA 1347 (Québec Ct.
App.); World LLC v. Parenteau & Parenteau Int’l Inc., [1998] AQ No. 736 (Québec Super. Ct.); ABN Amro Bank
Canada v. Krupp Mak Maschinenbau GmbH, (1996) 135 DLR4th 130 (Ontario Super. Ct.); Rio Algom Ltd v.
Sammi Steel Co. Ltd, XVIII Y.B. Comm. Arb. 166 (Ontario Super. Ct. 1991) (1993); §7.03[A][2][b].
530 See, e.g., Dallah Real Estate & Tourism Holding Co. v. Ministry of Religious Affairs, Pakistan [2010] UKSC
46, ¶83 (U.K. S.Ct.) (in considering jurisdiction over non-signatory, “arbitral tribunals are entitled to consider
their own jurisdiction, and to do so in the form of an award. But the last word as to whether or not an alleged
arbitral tribunal actually has jurisdiction will lie with the court”); D. Frampton & Co. Ltd v. Thibeault, [1988]
FCJ No. 305, 381 (Canadian Fed. Ct.); Aloe Vera of Am., Inc. v. Asianic Food (S) Pte Ltd, [2006] SGHC 78, ¶63
(Singapore High Ct.) (refusing to reconsider arbitral tribunal’s jurisdiction over non-signatory on grounds that
court is “not the supervisory court and cannot review the arbitrators’ decision in the same way that an Arizona
court could”); IMC Aviation Solutions Pty Ltd v. Altain Khuder LLC, [2011] VSC 1 (Victoria Sup. Ct.), rev’d on
other grounds, [2011] VSCA 248, ¶¶266-69 (Victoria Ct. App.). See also §7.03[A][5]; §26.05[C][1].
531 See §7.03[B][1]; Judgment of 26 June 2001, Am. Bureau of Shipping v. Copropriété Maritime Jules Verne,
2001 Rev. Arb. 529 (French Cour de Cassation Civ. 1).
532 See, e.g., Judgment of 6 October 2010, Blonde Génétique v. SCEA Plante Moulet, 2010 Rev. Arb. 971, 971-72
(French Cour de Cassation Civ. 1); Judgment of 9 June 2010, Evekas v. Macifilia, 2010 Rev. Arb. 396 (French
Cour de Cassation Civ. 1) (applying general rules of French competence-competence to hold that arbitral tri-
bunal should initially consider jurisdictional objection of non-signatory); Strickler, Chronique de Jurisprudence
Française, 2011 Rev. Arb. 191.
533 See §7.03[B][3].
534 See §7.03[B][2]; Judgment of 4 December 2002, 2003 Rev. Arb. 1291 (Paris Cour d’Appel), Note,
Gaillard.
535 See, e.g., Aloe Vera of Am., Inc. v. Asianic Food (S) Pte Ltd, [2006] SGHC 78, ¶47 (Singapore High Ct.)
(“It is an accepted principle of arbitration law that an arbitral tribunal has jurisdiction to determine whether
a particular person is a party to an arbitration agreement”); Judgment of 19 October 2016, Energia Eolica SA v.
Montealto Peru, Case. No. 0045-2016-0 (Lima Corte Superior de Justicia) (“there is a partial award whose

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§10.06 Parties to International Arbitration Agreements

In contrast, U.S. courts have reached divergent results with regard to the allocation of com-
petence to decide non-signatory issues. Some U.S. courts have upheld the arbitral tribunal’s
authority to decide what parties are bound by an arbitration agreement,536 while others have
reached the opposite result, reasoning that an “arbitration proceeding [is] not the proper fo-
rum for deciding whether an arbitrator may afford relief against a non-signatory who is not
covered by an arbitration agreement.”537
The former position is clearly correct: as discussed above, it is well-settled under the FAA
that an arbitral tribunal has the inherent power to consider jurisdictional disputes and make
awards or orders on them.538 Those determinations will generally be subject to de novo judi-
cial review,539 except where the parties have agreed to submit jurisdictional issues for arbitral
determination.540 As discussed above, the U.S. Supreme Court held in First Options that so-
called “arbitrability questions” could be finally resolved by the arbitral tribunal, provided that
the parties agreed to grant the arbitrators such power.541 Additionally, the Court held that an
agreement to arbitrate “arbitrability” issues must be established by “clear and unmistakable”
evidence.542 These requirements were formulated by the First Options Court in the specific

recognition is requested [that] defines the subjective scope of the arbitration agreement, ruling in a negative
and definitive manner on the incorporation to the arbitration of third parties as non-signatory parties. This, as
is evident, constitutes a matter intrinsically include within the objective competence of the arbitral tribunal, in
the exercise of its special jurisdiction and in accordance with the kompetenz-kompetenz principle. …”).
536 See, e.g., Contec Corp. v. Remote Solution Co., 398 F.3d 205 (2d Cir. 2005); Builders Fed. (H.K.) Ltd v.
Turner Constr., 655 F.Supp. 1400 (S.D.N.Y. 1987).
537 Fiat SpA v. Ministry of Fin. & Planning of Suriname, 1989 WL 122891, at *5 (S.D.N.Y.). See also Microchip
Tech. Inc. v. U.S. Philips Corp., 367 F.3d 1350 (Fed. Cir. 2004) (court must determine whether non-signatory
is successor corporation before compelling arbitration); Orion Shipping & Trading Co. v. E. States Petroleum
Corp., 312 F.2d 299, 301 (2d Cir. 1963); Oriental Commercial & Shipping Co., Ltd v. Rosseel, NV, 609 F.Supp. 75
(S.D.N.Y. 1985); Benaroya v. Willis, 23 Cal.App.5th 462, 469 (Cal. Ct. App. 2018) (“Although a nonsignatory
can be compelled to arbitrate, California case law is clear that ‘an arbitrator has no power to determine the
rights and obligations of one who is not a party to the arbitration agreement. The question of whether a non-
signatory is a party to an arbitration agreement is one for the trial court in the first instance.’”) (quoting Am.
Builder’s Ass’n. v. Au-Yang, 226 Cal.App.3d 170, 179 (Cal. Ct. App. 1990)); D.R. Horton-Emerald, Ltd v. Mitchell,
2018 Tex. App. LEXIS 731, at *6-7 (Tex. App.) (“As a gateway matter involving validity, whether an arbitration
agreement binds a non-signatory must be decided by the court”). See also Restatement of the U.S. Law of Inter-
national Commercial and Investor-State Arbitration §2.3 comment g (2019) (“Just as a court decides whether an
arbitration agreement or the underlying contact exists, a court also decides whether an arbitration agreement
or the underlying contract binds or may be invoked by a non-signatory”).
538 See §7.03[E][4].
539 See §7.03[E][7]; Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1371 (Fed. Cir. 2006) (“A determina-
tion of the arbitrability of a dispute, like the interpretation of any contractual provision, is subject to de novo
review”); Local Union No. 38, Sheet Metal Workers’ Int’l Ass’n v. Custom Air Sys., Inc., 357 F.3d 266, 268 (2d Cir.
2004) (“arbitrability vis a vis a non-signatory is for the district court to decide”); Bridas SAPIC v. Turkmenistan,
345 F.3d 347, 347 (5th Cir. 2003); Nazar v. Wolpoff & Abramson, LLP, 2007 U.S. Dist. LEXIS 11027 (D. Kan.)
(granting non-signatory’s motion to compel arbitration against signatory of contract that clearly contemplated
arbitration of jurisdictional issues).
540 See §7.03[E][7][c].
541 See §7.03[E][2][a]; First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943-44 (U.S. S.Ct. 1995).
542 See §7.03[E][2][a]. See also Microchip Tech. Inc. v. U.S. Philips Corp., 367 F.3d 1350 (Fed. Cir. 2004);
In re Toyota Motor Corp. Unintended Acceleration Mktg, Sales Practices & Prod. Liab. Litg., 838 F.Supp.2d 967,
981 (C.D. Cal. 2012) (“Generally, the issue of whether a particular dispute is subject to arbitration is an issue
decided by the courts”); Awuah v. Coverall N. Am., Inc., 843 F.Supp.2d 172, 177 (D. Mass. 2012) (“the question
of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator”).

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Gary B. Born §10.07

context of a dispute over the identity of parties to an arbitration agreement, and they clearly
apply to disputes over the status of non-signatories.
In general, however, it is difficult to see how a non-signatory can be shown to have clear-
ly and unmistakably agreed to arbitrate the question whether it ever agreed to the arbitra-
tion clause (save in after-the-fact submission agreements).543 Nevertheless, some recent U.S.
decisions applying First Options have found this standard satisfied, typically by arbitration
agreements incorporating institutional arbitration rules: these decisions have held that “a
non-signatory can compel a signatory to arbitrate under an agreement where the question
of arbitrability is itself subject to arbitration.”544 As discussed above, it is difficult to reconcile
these decisions with the consensual nature of arbitration.545

§10.07 ARBITRATION IN CORPORATE AND PARTNERSHIP

CONTEXTS546
It is common in some legal systems to include arbitration clauses in the constitutive docu-
ment for a legal entity. Examples include arbitration clauses in articles of association (or cor-
porate charters) of a company or the deed of a partnership.547 Parties include such provisions

543 See, e.g., Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1371 (Fed. Cir. 2006); Sarhank Group v. Oracle
Corp., 404 F.3d 657, 661-62 (2d Cir. 2005) (“An agreement between Sarhanks and Systems which does not
mention Oracle does not evidence a ‘clear and unmistakable’ intent by Oracle to arbitrate or permit the arbitra-
tor to decide the issue of arbitrability”); Bridas SAPIC v. Turkmenistan, 345 F.3d 347, 354 n.4 (5th Cir. 2003).
For U.S. interlocutory judicial decisions determining the parties to international arbitration agreements,
see MJR Int’l, Inc. v. Am. Arb. Ass’n, 596 F.Supp.2d 1990 (S.D. Ohio 2009) (denying non-signatory principal’s
injunction to stay arbitration because it had been bound to the arbitration agreement through its agent);
Jakubowski v. Nova Beverage Inc., unreported decision (N.Y. Sup. Ct. 1995) (issuing injunction against arbitra-
tion of claims against individual officer of corporate signatory).
544 Ecuador v. Chevron Corp., 638 F.3d 384 (2d Cir. 2011) (arbitration agreement in BIT incorporated
UNCITRAL Rules, demonstrating parties’ intention for arbitrability issues to be decided by arbitral tribunal).
See Belnap v. Iasis Healthcare, 844 F.3d 1272, 1283 (10th Cir. 2017) (“all of our sister circuits to address the issue
have unanimously concluded that incorporation of the substantively identical (as relevant here) AAA Rules
constitutes clear and unmistakable evidence of an agreement to arbitrate arbitrability”); Alliance Bernstein Inv.
Research & Mgt, Inc. v. Schaffran, 445 F.3d 121, 125 (2d Cir. 2006) (jurisdictional issues properly addressed
by arbitral tribunal when contract incorporated reference to code unequivocally providing for arbitration of
dispute at issue); Contec Corp. v. Remote Solution Co., 398 F.3d 205, 209-11 (2d Cir. 2005) (dispute between
signatory and non-signatory so intertwined with signatory’s contract that included arbitration clause, signatory
estopped from denying obligation to arbitrate all disputes, including jurisdictional issue); WTA Tour, Inc. v.
Super Slam Ltd, 339 F.Supp.3d 390, 399 (S.D.N.Y. 2018) (noting that while general presumption is that issue
of arbitrability should be resolved by courts, “[t]his presumption may be overcome by clear and unmistakable
evidence that the parties intended to arbitrate issues of arbitrability”); Neal v. Asta Funding, Inc., 2016 U.S. Dist.
LEXIS 85163, at *46 (D.N.J.) (“By agreeing to arbitrate in accordance with AAA rules, the parties to the ITS
Agreement clearly and unmistakably agreed to arbitrate the issue of arbitrability”).
545 See §10.01[A].
546 For commentary, see de Boisséson & Duprey, L’Arbitrabilité Subjective en Matière de Droit des Sociétés,
2004 Paris J. Int’l Arb. 121; Hornstein, Stockholders’ Agreements in the Closely Held Corporation, 59 Yale L.J.
1040 (1950); Kessler, Arbitration of Intra-Corporate Disputes Under New York Law, 19 Arb. J. 1 (1964); Mourre,
L’Impact de la Réforme de la Clause Compromissoire sur les Litiges Relatifs aux Sociétés, 2004 Paris J. Int’l Arb. 125;
Müller & Keilmann, Beteiligung am Schiedsverfahren Wider Willen?, 2007 SchiedsVZ 113; Sandrock, “Intra” and
“Extra-Entity” Agreements to Arbitrate and Their Extension to Non-Signatories Under German Law, 19 J. Int’l Arb.
423 (2002); Shell, Arbitration and Corporate Governance, 67 N.C. L. Rev. 517 (1989).
547 See, e.g., U.S. Small Bus. Admin. v. Chimicles, 447 F.3d 207, 210 (3d Cir. 2006) (arbitration clause in
partnership agreement); U.S. v. Am. Soc’y of Composers, Authors & Publ’rs, 32 F.3d 727, 732 (2d Cir. 1994)

1619
§10.07 Parties to International Arbitration Agreements

in corporate/partnership documents for obvious commercial and business reasons: the

members of a corporate body or partnership wish to have their disputes resolved in a private,
commercially-oriented manner, over which they have a substantial degree of control.548 The
ongoing, cooperative nature of corporate or partnership relations makes arbitration particu-
larly well-suited for resolving shareholder or partnership disputes.
In most legal systems, arbitration clauses in corporate or partnership documents are valid
and enforceable.549 This is merely a straightforward and commercially-sensible application of
the general rule under leading international arbitration conventions and national legislation
that arbitration agreements are presumptively valid.550 This rule applies with particular force in
corporate or partnership contexts, where parties have special reasons for desiring a commer-
cially-experienced tribunal and the privacy and informality of the arbitral process.
Questions sometimes arise as to the effect of arbitration agreements in the case of transfers
of shares or partnership interests to new shareholders or partners. It is relatively clear that any
new partner or shareholder will be subject to the arbitration provision in a company’s charter
or a partnership’s deed, regardless of its specific acceptance thereof. Instead, exercising rights
and deriving benefits as a shareholder or partner within a corporate or partnership agreement,
which itself contains an arbitration clause, suffices to subject the new party to that clause.551 As
one authority explains, with reference to German law:

(arbitration clause in articles of association); Armoudlian v. Zadeh, 323 N.W.2d 502, 506 (Mich. Ct. App. 1982)
(arbitration clause in partnership agreement); 21 Williston on Contracts §57.44 (4th ed. 1990 & Update 2013)
(arbitration clauses in partnership agreements); 8 Fletcher Cyclopedia Corporations §4187 (2012) (arbitration
provisions for resolution of disputes between members and corporation frequently included in bylaws).
548 W. Callison & M. Sullivan, Partnership Law and Practice: General and Limited Partnerships §13:5 (2006)
(“a partnership agreement can contain an arbitration clause through which a partner can compel his or her
co-partners to submit disputes arising from the partnership relation to arbitration”); 19 Fletcher Cyclopedia
Corporations §§3:20, 5:16 (2007).
549 See §6.04[K]; U.S. Revised Uniform Arbitration Act, §6 comment 1 (2000); German ZPO, §1066 (ar-
bitration statute applies mutatis mutandi to arbitral tribunals “lawfully established on the basis of … other dis-
positions than an agreement”); Nova (Jersey) Knit Ltd v. Kammgarn Spinnerei GmbH [1977] 1 Lloyd’s Rep. 463
(House of Lords) (accepting validity of arbitration clause in German partnership agreement); Fulham Football
Club (1987) Ltd v. Richards [2011] EWCA Civ 855 (English Ct. App.) (upholding arbitration agreement in
articles of association in respect of unfair prejudice proceedings); M. Domke, G. Wilner & L. Edmonson (eds.),
Domke on Commercial Arbitration §16.92 (3d ed. 2013 & Update July 2020) (U.S. courts generally enforce
arbitration provisions in partnership agreements); Sandrock, “Intra” and “Extra-Entity” Agreements to Arbitrate
and Their Extension to Non-Signatories Under German Law, 19 J. Int’l Arb. 423 (2002); 8 Fletcher Cyclopedia Cor-
porations §4187 (2007) (corporate bylaws containing arbitration provisions generally upheld by U.S. courts).
See also Powell Duffryn plc v. Wolfgang Petereit, Case No. C-214/89, [1992] E.C.R. I-1769 (E.C.J.) (jurisdiction
clause in company’s articles of association is binding on shareholders). Compare Russian Commercial Arbi-
trazh Procedure Code, Arts. 33(1)(2), 225(1); C. Liebscher & A. Fremuth-Wolf, Arbitration law and Practice
in Central and Eastern Europe RUS-63 (2011).
550 See §2.01[A]; §5.01[B].
551 Final Award in ICC Case No. 9762, XXIX Y.B. Comm. Arb. 26 (2004). See also Hanotiau, Problems Raised
by Complex Arbitrations Involving Multiple Contracts-Parties-Issues: An Analysis, 18 J. Int’l Arb. 253, 257 (2001)
(“Persons other than the formal signatories may be parties to the arbitration agreement … because they are
… members with the signatories of a general partnership or a community of rights and duties”); Müller &
Keilmann, Beteiligung am Schiedsverfahren Wider Willen?, 2007 SchiedsVZ 113, 115; Sandrock, “Intra” and “Ex-
tra-Entity” Agreements to Arbitrate and Their Extension to Non-Signatories Under German Law, 19 J. Int’l Arb. 423,
428 (2002) (“the arbitration agreement automatically travels with the partnership contract. It is regarded as an
accessory and incidental right of the general partner and therefore binds all new general partners, irrespective
of whether they have attached their signature to the arbitration agreement or not.”).

1620
Gary B. Born §10.07

“when a person becomes the holder of a general or a limited share in a partnership

which had already been organized before he joined it, he will be bound by an ‘in-
tra-partnership’ agreement which had been attached to the original partnership con-
tract before he joined the partnership. It is wholly irrelevant whether he acquired a
general or a limited share. It also does not matter on which legal basis his entry into the
partnership rests: on a statutory succession (for example, as an heir, a receiver or a liq-
uidator), or upon a corporate transaction (for example, as a purchaser or a donee).”552
The same analysis applies to transfers of corporate shares.553 New shareholders are automati-
cally bound by the arbitration clause contained in a company’s constitutive documents, sim-
ply by virtue of their status as shareholders, without the need for a separate agreement.554
Equally, a party’s purported acquisition of corporate shares or partnership interests – even
if invalid – also generally subjects it to the corporate charter’s or partnership deed’s arbitration
clause with regard to disputes over the validity of that acquisition. The act of exercising rights
attached to corporate shares or partnership interests is sufficient to subject the party claiming
such rights to the arbitration clause associated with them.
It would be theoretically possible to include arbitration agreements in the constitutive
documents of publicly-held companies, requiring public shareholders to arbitrate claims
against the company and its management. As discussed above, such provisions are not widely
used in practice.555
In the United States, the Securities and Exchange Commission has an informal policy
of discouraging the registration of securities whose documentation includes mandatory ar-
bitration provisions.556 Nonetheless, there are exceptions to this general approach and there
are, in principle, no reasons that an arbitration clause could not validly be included in the

552 Sandrock, “Intra” and “Extra-Entity” Agreements to Arbitrate and Their Extension to Non-Signatories Under
German Law, 19 J. Int’l Arb. 423 (2002). German courts have recognized the application of an arbitration
clause to the (general) partners of the partnership that signed it. See Judgment of 12 November 1990, 1991 NJW-
RR 423, 424 (German Bundesgerichtshof).
553 Judgment of 28 May 1979, 1979 NJW 2567 (German Bundesgerichtshof); Judgment of 2 March 1978,
1978 NJW 1585 (German Bundesgerichtshof); Judgment of 25 October 1962, 1963 NJW 203, 204 (German
Bundesgerichtshof); Geimer, in R. Zöller (ed.), Zivilprozessordnung §1066, ¶9 (32d ed. 2018); Sandrock, “In-
tra” and “Extra-Entity” Agreements to Arbitrate and Their Extension to Non-Signatories Under German Law, 19 J.
Int’l Arb. 423, 432-34 (2002).
554 Judgment of 2 October 1997, 1998 NJW 371 (German Bundesgerichtshof); Diwan v. EMP Global LLC,
2012 WL 252430 (D.D.C.) (under Delaware law, which governed LLC agreement, members of an LLC are
bound by terms of LLC agreement and its arbitration clause); Judgment of 8 December 2009, Benladen v.
Mohammed Benladen Sarl, 2(2) Int’l J. Arab Arb. 235 (Paris Cour d’Appel) (2010) (arbitration agreement was
not manifestly void because, although respondent did not sign arbitration agreement, she arguably became
shareholder in company whose by-laws contained arbitration agreement); Judgment of 3 May 2007, 2007 DStR
1880 (Oberlandesgericht Koblenz) (arbitration agreements also apply to shareholders that have sold shares;
dispute between new and old shareholder subject to arbitration agreement); Judgment of 25 October 2001,
2002 DStR 557 (Bayerisches Oberstes Landesgericht). See also Sandrock, “Intra” and “Extra-Entity” Agreements
to Arbitrate and Their Extension to Non-Signatories Under German Law, 19 J. Int’l Arb. 423, 436 (2002).
555 See §6.04[K].
556 See Carter, Class Arbitration in the United States: Life After Death?, in B. Hanotiau & E. Schwartz (eds.),
Class and Group Actions in Arbitration 13 (2016); Frankel, SEC Chair Clayton Is in No Rush for Mandatory
Shareholder Arbitration, Reuters (27 April 2018) (“Clayton notably did not pledge the SEC would engage in a
formal rulemaking process under the Administrative Procedure Act before changing its longstanding policy of
discouraging mandatory shareholder arbitration”); Schneider, Arbitration in Corporate Governance Documents:
An Idea the SEC Refuses to Accelerate, 4(5) INSIGHTS 21 (1990); Sockol, A Natural Evolution: Compulsory
Arbitration of Shareholder Derivative Suits in Publicly Traded Corporations, 77 Tul. L. Rev. 1095, 1111 (2003).

1621
§10.08[A] Parties to International Arbitration Agreements

constitutive instruments of a public company, binding all shareholders in the company with
respect to defined categories of claims.557
As discussed above, national courts have generally rejected arguments that shareholders’
disputes and the “internal affairs” of corporate governance are nonarbitrable.558 There is no
reason that arbitral tribunals cannot satisfactorily resolve issues of corporate law, just as they
resolve other legal issues. Nonetheless, in some jurisdictions, questions have arisen as to the
arbitrability of particular matters typically involving the rights of third parties (such as the
validity of shareholder resolutions).559 Additionally, questions also arise as to the scope of the
claims covered by arbitration provisions in corporate constitutive instruments.560

§10.08 CLASS ARBITRATIONS561

[A] United States
Under some legal systems, “class actions” are an important part of the domestic litigation sys-
tem. A class action is a civil suit, often a mass torts or consumer litigation, in which one or

557 See §6.04[K].

558 See id. See also JSC Surgutneftegaz v. Pres. & Fellows of Harvard College, 2005 WL 1863676, at *4 (S.D.N.Y.)
(“The FAA does not carve out disputes relating to the internal affairs of corporations as an exception to the
general enforceability of arbitration agreements”).
559 See §6.04[K].
560 See Judgment of 8 December 2009, DFT 136 III 107 (Swiss Fed. Trib.) (refusing to apply arbitration
agreement in company’s articles of association to statutory claim by creditor against board members of insol-
vent company; although any amounts awarded against board members would be paid to company, claim was
that of creditors, who were not bound by arbitration agreement).
561 For commentary, see Baker, Class Arbitration in the United States: What Foreign Counsel Should Know, 1
Disp. Resol. Int’l 4 (2007); P. Billiet (ed.), Class Arbitration in the European Union (2013); Born & Salas, The
United States Supreme Court and Class Arbitration: A Tragedy of Errors, 2012 J. Disp. Resol. 21; Buckner, Due
Process in Class Arbitration, 58 Fla. L. Rev. 185 (2006); Carter, Class Arbitration in the United States: Life After
Death?, in B. Hanotiau & E. Schwartz (eds.), Class and Group Actions in Arbitration 13 (2016); Dunin-Waso-
wicz, Collective Redress in International Arbitration: An American Idea, A European Concept?, 22 Am. Rev. Int’l
Arb. 285 (2011); M. Domke, G. Wilner & L. Edmonson (eds.), Domke on Commercial Arbitration §§32:31-42
32.3 (3d ed. 2013 & Update July 2020); Glover, Beyond Unconscionability: Class Action Waivers and Mandatory
Arbitration Agreements, 59 Vand. L. Rev. 1735 (2006); González-Arango & Cruz-Mantilla, Class Arbitration:
Here to Stay? The Potential Objections Against Recognition and Enforcement of Class Arbitral Awards Under the
New York Convention, 2017:30 Spain Arb. Rev. 19; Hagans & J. Rustay, Class Actions in Arbitration, 25 Rev. Litg.
293 (2006); B. Hanotiau & E. Schwartz (eds.), Class and Group Actions in Arbitration (2016); Hanotiau, A New
Development in Complex Multiparty-Multicontract Proceedings: Classwide Arbitration, 20 Arb. Int’l 39 (2004);
B. Hanotiau, Complex Arbitrations ¶557 (2005); Kaplinsky, Arbitrations and Class Actions: A Contradiction in
Terms 7 1302 PLI/Corp. (2002); Lacovara, Class Action Arbitrations: The Challenge for the Business Community,
24 Arb. Int’l 541 (2008); Nater-Bass, Class Action Arbitration: A New Challenge?, 27 ASA Bull. 671 (2009);
T. Oehmke, Commercial Arbitration Chp. 16 (2003 & Update 2013); Smit, Class Actions in Arbitration, 14
Am. Rev. Int’l Arb. 175 (2003); Smit, Class Actions and Their Waiver in Arbitration, 15 Am. Rev. Int’l Arb. 199
(2004); Stipanowich, The Third Arbitration Trilogy: Stolt-Nielsen, Rent-A-Center, Concepcion and the Future
of American Arbitration, 22 Am. Rev. Int’l Arb. 323 (2011); Strong, Class Arbitration Outside the United States:
Reading the Tea Leaves, in ICC, Arbitration and Multiparty Contracts 183 (2010); S. Strong, Class, Mass, and
Collective Arbitration in National and International Law (2013); Strong, Enforcing Class Arbitration in the Interna-
tional Sphere: Due Process and Public Policy Concerns, 30 U. Pa. J. Int’l L. 1, 36-37 (2008); Strong, From Class to
Collective: The De-Americanization of Class Arbitration, 26 Arb. Int’l 493 (2010); Strong, The Sounds of Silence:
Are U.S. Arbitrator Creating Internationally Enforceable Awards in Cases of Contractual Silence or Ambiguity, 30
Mich. J. Int’l L. 1017 (2009); Tuchmann, The Administration of Class Action Arbitrations, in PCA, Multiple Party
Actions in International Arbitration 337 (2009).

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Gary B. Born §10.08[A]

more named plaintiffs represent a large, sometimes indeterminate, number of similarly-situat-

ed individuals in pursuing related claims against one or more defendants.562 The logic of class
actions is to permit large numbers of comparatively small claims that would not otherwise
readily be pursued to be heard efficiently in a single proceeding.
Class actions are frequently used in the United States, and broadly similar devices are
available in some other common law systems.563 The historical development of so-called
“class arbitration” in the United States illustrates, however, the complexities and difficulties
that arise from efforts to implement such a system of dispute resolution.

[1] Historical Background

Historically, courts in the United States held that only the parties to a particular contract (or
set of contracts) could participate in an arbitral proceeding and, thus, that class action arbi-
trations were impermissible, because they involved nonparties to the particular contract in
question. In Vernon v. Drexel Burnham & Co., for example, a 1975 state court decision denied
the claimants’ request to order a class arbitration of claims by multiple claimants and instead
ordered individual arbitrations.564 The court rejected the argument that a consolidated arbi-
tration could be ordered because all of the claimants were party to contracts, each one with
the defendant and each one containing an arbitration clause, relying instead on traditional
notions of privity of contract:
“A class action cannot be used to subvert an otherwise enforceable agreement to arbi-
trate contained in a valid contract merely because other individuals, who might qualify
as members of a class, were subject to the same provision.”565

562 See generally Bourdeau et al., Class Actions, 32B Am.Jur.2d Fed. Cts. §§1578 et seq. (2013) (“The Federal
Rules of Civil Procedure governing class actions lists four prerequisites to the certification of a class and the
maintenance of a class action. Under Rule 23, the listed prerequisites are: (1) that the members of the class
are so numerous that the joinder of all class members is impractical, (2) that there are questions of law or fact
common to the class, (3) that the claims or defenses of the representative parties are typical of the claims or
defenses of the class, and (4) that the representative parties will fairly and adequately protect the interests of
the class. In addition to the four listed prerequisites, it is generally accepted that Rule 23 includes two addi-
tional requirements by implication, namely that a class must exist and that the representative parties must be
members of such class.”); H. Newberg & A. Conte, Newberg on Class Actions §§1:1, 1:5 (5th ed. 2012); Pinna,
Multinational Corporations and U.S. Class Action Procedures (Les Groupes Internationaux de Sociétés Face aux
Class Actions Américaines), in X. Boucobza & G. Mecarelli (eds.), Groupes Internationaux de Sociétés: Nouveaux
Défis, Nouveaux Dangers (2007).
563 See, e.g., Canadian Federal Courts Rules, Part 5.1 (Class Proceedings); Ontario Class Proceedings Act;
Robertson v. Thomson Corp., [2006] 2 SCR 363 (Canadian S.Ct.); Garland v. Consumers’ Gas Co., [2004] 1 SCR
629 (Canadian S.Ct.) (class action on behalf of more than 500,000 customers of gas company); Andersen v. St.
Jude Med., Inc., [2012] ONSC 3660 (Ontario Super. Ct.). See also Murphy v. Amway Canada Corp., [2014] 3
FCR 478 (Canadian Fed. Ct. App.); Timbercorp Fin. Pty Ltd v. Collins, [2016] HCA 44 (Australian High Ct.)
(whether defendants in recovery proceedings precluded from raising defences not raised at earlier unsuccessful
group proceeding); Winterford v. Pfizer Australia Pty Ltd, [2012] FCA 1199 (Australian Fed. Ct.); Australian
Federal Court of Australia Act, Part IVA (Representative Proceedings). See also Andrews, Multi-Party Proceed-
ings in England: Representative and Group Actions, 11 Duke J. Comp & Int’l L. 249 (2001); Dunning, All for One
and One for All: Class Action Litigation and Arbitration in New Zealand, 3 Pub. Interest L.J. N.Z. 68 (2016).
564 Vernon v. Drexel Burnham & Co. Inc., 52 Cal.App.3d 706, 716 (Cal. Ct. App. 1975).
565 Id. At the same time, Georgia state courts first allowed and then rejected class arbitration of taxpayers’
claims against a board of tax assessors. See Boynton v. Carswell, 238 Ga. 417 (Ga. 1977); Callaway v. Carswell, 240
Ga. 579, 582 (Ga. 1978); N.W. Civic Ass’n, Inc. v. Cates, 241 Ga. 39 (Ga. 1978).

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§10.08[A] Parties to International Arbitration Agreements

Despite this, other U.S. courts held that class actions could, in principle, be asserted in arbi-
tral proceedings. In Keating v. Superior Court, franchisees of a grocery chain argued that their
claims against the grocery chain franchisor under state law were nonarbitrable and that, if this
objection were rejected, arbitration should proceed as a class action, rather than in multiple
individual arbitrations.566 The franchisor responded that class procedures in arbitration were
impermissible, insisting that its various bilateral agreements to arbitrate with individual fran-
chisees contemplated only individual arbitrations.567
On appeal, the California Supreme Court ordered arbitration on a class basis, describing
class arbitration as “giv[ing] expression to the basic arbitration commitment of the parties.”568
The court’s analysis began from the premise that a class action is an important means of vindi-
cating the rights of large groups of persons and that adhesion contracts involving consumers,
franchisees and similar parties present an ideal setting for class actions (and class arbitrations).
The court reasoned:
“An adhesion contract is not a normal arbitration setting, however, and what is at
stake is not some abstract institutional interest but the interests of the affected parties.
Classwide arbitration, as Sir Winston Churchill said about democracy, must be eval-
uated, not in relation to some ideal but in relation to its alternatives. If the alternatives
in a case of this sort is to force hundreds of individual franchisees each to litigate its
cause with Southland in [a] separate arbitral forum, then the prospect of classwide
arbitration, for all its difficulties, may offer a better, more efficient, and fairer solution.
Where that is so, and gross unfairness would result from the denial of opportunity to
proceed on a classwide basis, then an order structuring arbitration on that basis would
be justified.”569
After the California Supreme Court’s decision in Keating, authorizing class arbitration, Cali-
fornia state courts ordered class arbitration in a wide variety of circumstances.570
A few other state courts adopted conclusions similar to that in Keating,571 while courts in
a number of other U.S. states rejected the possibility of class arbitration.572 At the same time,
federal courts generally refused to order class arbitration unless the arbitration agreement

566 Keating v. Super. Ct., 167 Cal.Rptr. 481, 490 (Cal. Ct. App. 1980), aff’d, 31 Cal.3d 584, 610-12 (Cal. 1982).
The franchisees’ argument that their state law statutory claims against the franchisor were nonarbitrable was
rejected by the U.S. Supreme Court in a classic decision regarding nonarbitrability under the domestic FAA.
See Southland Corp. v. Keating, 465 U.S. 1, 10 (U.S. S.Ct. 1984); §6.04[P].
567 Keating, 167 Cal.Rptr. at 490.
568 Keating, 31 Cal.3d at 610. The California Court of Appeals had reached the same conclusion. Keating,
167 Cal.Rptr. at 490 (“there is no insurmountable obstacle to conducting an arbitration on a class-wide basis.
In an appropriate case, it would undoubtedly be the fairest and most efficient way of resolving the parties’
dispute.”).
569 Keating, 31 Cal.3d at 610.
570 See, e.g., Anesthesia Care Assocs. Med. Group, Inc. v. Blue Cross of Cal., 2002 WL 484662, at *7 (Cal.);
Garcia v. DIRECTV, Inc., 115 Cal.App.4th 297 (Cal. Ct. App. 2004); Sanders v. Kinko’s, Inc., 99 Cal.App.4th
1106, 1113-14 (Cal. Ct. App. 2002); Lewis v. Prudential-Bache Sec., Inc., 179 Cal.App.3d 935, 946 (Cal. Ct. App.
1986); Izzi v. Mesquite Country Club, 86 Cal.App.3d 1309, 1323 (Cal. Ct. App. 1986).
571 State courts in Pennsylvania and South Carolina followed the California state courts’ approach. See
Green Tree Fin. Corp. v. Bazzle, 569 S.E.2d 349 (S.C. 2002); Dickler v. Hearson Lehman Hutton, Inc., 408 Pa.
Super. 286 (Pa. Super. Ct. 1986).
572 See Med Ctr Cars, Inc. v. Smith, 727 So.2d 9 (Ala. 1998); Stein v. Geonerco, Inc., 105 Wash.App. 41 (Wash.
Ct. App. 2001); Steinberg v. Prudential-Bache Sec., Inc., 12 Del. J. Corp. 371, 380 (Del. Ch. 1986) (ordering class
arbitration was impermissibly “rewriting the contract”).

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contained express provisions to that effect.573 A representative decision was Champ v. Siegel
Trading Co., which refused to order class arbitration absent a specific agreement between the
parties authorizing it.574 Given that the vast majority of arbitration agreements did not provide
expressly for class arbitration, these decisions appeared to render class arbitration, at least out-
side of California, extremely unusual.575

[2] Green Tree Financial Corp. v. Bazzle and Its Progeny

Beginning in 2003, the U.S. Supreme Court issued a series of decisions on the subject of class
arbitration which initially appeared to authorize (and encourage) class arbitration. It was only
subsequently that the Court substantially retrenched, producing a resolution that remains
unclear but that generally appears inhospitable to class arbitration absent a clear agreement
providing for class procedures.
The Supreme Court’s first consideration of class arbitration was in Green Tree Financial
Corp. v. Bazzle.576 There, the South Carolina Supreme Court had adopted the reasoning of the
California courts, holding that “class-wide arbitration may be ordered when the arbitration
agreement is silent if it would serve efficiency and equity, and would not result in prejudice.”577
The U.S. Supreme Court reviewed the South Carolina decision and, in a fragmented set of
opinions, reversed and remanded to the arbitral tribunal. The Supreme Court held that class
action arbitrations are not inconsistent with the FAA and that the availability of class arbitra-
tion depends on the terms of the parties’ arbitration agreement; the Court’s divided plurality
decision also appeared to leave resolution of the question whether an arbitration agreement
authorized class arbitration largely to the arbitrators, subject only to minimal judicial review.578
Justice Breyer’s plurality opinion in Bazzle initially considered whether the South Car-
olina court had correctly decided that the parties’ arbitration agreement was silent on the
issue of class arbitration or whether the agreement in fact, as Green Tree contended, affirma-
tively forbade class arbitration.579 The plurality opinion concluded that this question was for
the arbitrators, not the courts, to decide: according to the plurality, the question whether an
arbitration agreement authorized class arbitration did not fall within the category of “gate-
way matters” (such as the validity or scope of an arbitration agreement) that are for courts

573 See, e.g., Gammaro v. Thorp Consumer Discount Co., 828 F.Supp. 673, 674 (D. Minn. 1993) (court had
no authority to order class arbitration because it had to “give effect to the agreement of the parties, and this
arbitration agreement makes no provision for class treatment of disputes”).
574 Champ v. Siegel Trading Co., Inc., 55 F.3d 269, 275 (7th Cir. 1995). See also McCarthy v. Providential Corp.,
122 F.3d 1242, 1246 (9th Cir. 1997); Bischoff v. DirecTV, Inc., 180 F.Supp.2d 1097, 1109 (C.D. Cal. 2002); Gray
v. Conseco, Inc., 2001 WL 1081347, at *3 (C.D. Cal.).
575 Mogilnicki & Cochran, Current Issues in Consumer Arbitration, 60 Bus. Law. 785, 791 (2005) (“mythical
beast: half litigation, half arbitration and rarely seen”).
576 Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (U.S. S.Ct. 2003). See also T. Oehmke, Commercial Arbitra-
tion §16:4 (2003 & Update 2013); Pierce, Down the Rabbit Hole: Who Decides What’s Arbitrable?, 21 J. Int’l Arb.
289 (2004).
577 Bazzle v. Green Tree Fin. Corp., 351 S.C. 244, 266 (S.C. 2002). See also id. (“If we enforced a mandatory,
adhesive arbitration clause, but prohibited class actions in arbitration where the agreement is silent, the drafting
party could effectively prevent class actions against it without having to say it was doing so in the agreement.
… Under those circumstances, parties with nominal claims, but significant collective claims, would be left with
no avenue for relief and the drafting party with no check on its abuses of the law. Further, hearing such claims
(involving identical issues against one defendant) individually, in court or before an arbitrator, does not serve
the interest of judicial economy.”).
578 Id. at 447.
579 Id.

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presumptively to decide on an interlocutory basis.580 Rather, the plurality thought the ques-
tion whether an arbitration agreement permits class arbitration “concerns contract interpreta-
tion and arbitration procedures. Arbitrators are well situated to answer that question.”581 The
plurality therefore remanded the case to the arbitral tribunal to determine whether the parties’
arbitration agreement authorized class arbitration; moreover, the almost inevitable corollary
of Justice Breyer’s plurality analysis was that an arbitral tribunal’s interpretation whether an ar-
bitration agreement authorized class arbitration would be subject to de minimis judicial review
in a vacatur action.582
This conclusion was bolstered by Justice Stevens’ opinion, concurring in the judgment.
Justice Stevens wrote that the plurality’s opinion was “close to [his] own” and that he con-
curred so that there would be a controlling opinion.583 Nonetheless, Justice Stevens would
have affirmed the South Carolina court on other grounds – in particular, because he thought
that its decision compelling class arbitration was “correct as matter of law.”584 Justice Stevens
reasoned:
“The Supreme Court of South Carolina had held as a matter of state law that class-ac-
tion arbitrations are permissible if not prohibited by the applicable agreement, and
that the agreement between these parties is silent on the issue. … There is nothing
in the [FAA] that precludes either of these determinations by the Supreme Court of
South Carolina.”585
The Court’s decision in Bazzle ushered in a very substantial increase in class arbitrations in
the United States, with numerous requests for class arbitration being filed in the wake of the
decision. The AAA alone administered over 500 class arbitrations, collectively involving
billions of dollars in claims, which were filed over the space of several years,586 while JAMS

580 Id. at 453. The allocation of jurisdictional competence between arbitral tribunals and courts under the
FAA is discussed above. See §7.03.
581 Bazzle, 539 U.S. at 453.
582 Technically, the Bazzle plurality did not reach the question of whether the FAA permits class arbitration
where an arbitration agreement is silent. Conceivably, on remand, an arbitrator could have found the arbi-
tration agreement silent on the issue and ordered class arbitration, only for a court, in a subsequent action to
vacate, to hold that class arbitration was impermissible under the FAA. Under the plurality’s analysis, however,
that result appeared very unlikely: having categorized the question of class arbitration as a matter of contract
interpretation and arbitration procedures, not a gateway issue of arbitrability, the plurality strongly suggested
that decisions on these questions by arbitral tribunals would be subject only to the very limited judicial review
generally available for such issues. That is also the result mandated by prior (and later) U.S. decisions regarding
the allocation of jurisdictional competence. See §7.03[E][2]; First Options of Chicago, Inc. v. Kaplan, 514 U.S.
938, 942-43 (U.S. S.Ct. 1995); Burlington N. & Santa Fe Railway. Co. v. Pub. Serv. Co. of Okla., 636 F.3d 562,
567-68 (10th Cir. 2010); Nat’l Postal Mail Handlers Union v. Am. Postal Workers Union, 589 F.3d 437, 441-42
(D.C. Cir. 2009).
583 Bazzle, 539 U.S. at 455 (Stevens, J. concurring in the judgment and dissenting in part).
584 Id.
585 Id. at 454-55. Chief Justice Rehnquist’s dissent disagreed with the plurality as to who should decide
whether the parties’ arbitration clause permitted class arbitration, opining that “the determination is one for
the courts, not [the] arbitrator.” Id. at 455 (Rehnquist, C.J., dissenting). Justice Rehnquist also disagreed with
Justice Steven’s concurrence, going on to conclude that “the holding of the Supreme Court of South Carolina
contravenes the terms of the contracts and is therefore pre-empted by the FAA.” Id. On his reading, the arbitra-
tion agreements at issue permitted parties to choose an arbitrator for each individual contract and set of claims,
a requirement that would be contravened by a single arbitrator hearing all claims by all class members in a single
arbitration.
586 As of April 2020, the AAA’s Class Arbitration Docket of arbitrations filed as arbitrations contained over

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administered a smaller, but substantial, number of additional class arbitrations.587 Both the
AAA and JAMS also adopted institutional rules designed specifically for class arbitrations.588
Some of these class arbitrations proceeded pursuant to arbitration agreements that ex-
pressly provided for class arbitration or pursuant to the parties’ stipulation that an arbitration
clause allows class arbitration.589 A large number of class arbitrations proceeded, however,
under arbitration provisions that were silent as to class arbitration, where the arbitral tribunals
– exercising their authority under Bazzle to interpret the parties’ arbitration agreement – con-
strued silence in the parties’ agreement to allow class arbitration.590

[3] Class Action Waivers and Unconscionability: Discover Bank Rule

Following Bazzle, a number of corporations began to include so-called “class arbitration waiv-
ers” in their standard form arbitration agreements (precisely to avoid the possibility of being
subjected to class arbitrations brought by large numbers of customers or employees). Some
courts held, however, that these provisions were unenforceable (on unconscionability, public
policy, or other grounds), ordering or permitting arbitrations to proceed on a class-wide basis
notwithstanding the putative waiver. One U.S. court adopting this position explained:
“Corporations should not be permitted to use class action waivers as a means to ex-
culpate themselves from liability for small-value claims. We thus conclude that the
enforceability of a particular class action waiver in an arbitration agreement must be
determined on a case-by-case basis, considering the totality of the facts and circum-
stances. Relevant circumstances may include, but are not limited to, the fairness of the
provisions, the cost to an individual plaintiff of vindicating the claim when compared
to the plaintiff’s potential recovery, the ability to recover attorneys’ fees and other costs
and thus obtain legal representation to prosecute the underlying claim, the practical

500 items. See www.adr.org/ClassArbitration.

587 JAMS reported over 20 consumer arbitrations that have proceeded on a class-wide basis. See www.jam-
sadr.com.
588 In its policy on class arbitrations, the AAA explained its reasons for adopting class arbitration rules as
follows: “On October 8, 2003, in response to the ruling of the United States Supreme Court in Green Tree
Financial Corp. v. Bazzle, the American Arbitration Association issued its Supplementary Rules for Class Arbi-
trations to govern proceedings brought as class arbitrations. In Bazzle, the Court held that, where an arbitration
agreement was silent regarding the availability of class-wide relief, an arbitrator, and not a court, must decide
whether class relief is permitted. Accordingly, the American Arbitration Association will administer demands
for class arbitration pursuant to its Supplementary Rules for Class Arbitrations if (1) the underlying agreement
specifies that disputes arising out of the parties’ agreement shall be resolved in accordance with the Associ-
ation’s rules, and (2) the agreement is silent with respect to class claims, consolidation or joinder of claims.”
See AAA, Policy on Class Arbitrations, available at www.adr.org. See also Mogilnicki & Cochran, Current Issues
in Consumer Arbitration, 60 Bus. Law. 785, 792 (2005); Strong, Enforcing Class Arbitration in the International
Sphere: Due Process and Public Policy Concerns, 30 U. Pa. J. Int’l L. 1, 36-37 (2008).
589 See, e.g., Johnson v. Morton’s Rest. Group, Inc., Clause Construction Award in AAA Case No. 11 160 01513
05 of 2007; Molfetas v. Stainsafe Inc., Clause Construction Award in AAA Case No. 11 181 00300 06 of 2006. See
also Jones v. Chubb Inst., 2007 U.S. Dist. LEXIS 72606, at *9-11 (D.N.J.); Cheng v. Oxford Health Plans, Inc., 45
A.D.3d 356, 357 (N.Y. App. Div. 2007).
590 See, e.g., Tomeldon Co. v. Medco Health Solutions Inc., Clause Construction Award in AAA Case No. 11 193
00546 06; Jost v. Sizzler USA Rests., Inc., Clause Construction Award in AAA Case No. 11 160 01721 05 of 2006;
Anderson v. Check ‘N Go of Cal., Inc., Partial Final Clause Construction Award in AAA Case No. 11 160 03021 04
of 2005. See also Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (U.S. S.Ct. 2013).

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affect [sic] the waiver will have on a company’s ability to engage in unchecked market
behavior, and related public policy concerns.”591
In turn, the application of state unconscionability (or other) rules to invalidate class action
waivers presented the question whether the FAA preempted this application of state law (and
instead required enforcement of the parties’ bilateral or individual arbitration agreements in
accordance with their terms). The California Supreme Court addressed this issue in a decision
titled Discover Bank v. Superior Court of Los Angeles.592
The California Supreme Court emphasized the importance of class action proceedings in
protecting consumers by deterring fraudulent business practices and reducing the burden of
duplicative litigation involving identical claims and small amounts in dispute.593 The Discover
Bank court announced a generally-applicable rule of unconscionability with regard to class
action waivers:
“when the waiver is found in a consumer contract of adhesion in a setting in which dis-
putes between the contracting parties predictably involve small amounts of damages,
and when it is alleged that the party with the superior bargaining power has carried out
a scheme to deliberately cheat large numbers of consumers out of individually small
sums of money, then, at least to the extent the obligation at issue is governed by Cal-
ifornia law, the waiver becomes in practice the exemption of the party ‘from respon-
sibility for [its] own fraud, or willful injury to the person or property of another.’”594
The Discover Bank court also held that the FAA did not preempt this unconscionability rule.
The court’s analysis focused on Perry v. Thomas,595 where the U.S. Supreme Court held that
the FAA preempted a California statutory provision that authorized claims for the collection
of wages “without regard to the existence of any private agreement to arbitrate.”596 According
to the California Supreme Court, Perry rested on a “critical distinction … between ‘a state-
law principle that takes its meaning precisely from the fact that a contract to arbitrate is at
issue,’ which is preempted by the FAA, and a state law that ‘govern[s] issues concerning the
validity, revocability, and enforceability of contracts generally,’ which is not [preempted by
the FAA].”597 Applying this distinction, the court held in Discover Bank that California’s un-
conscionability rule prohibiting class action waivers was not preempted because “it applie[d]
equally to class action litigation waivers in contracts without arbitration agreements as it does
to class arbitration waivers in contracts with such agreements.”598
Adopting this or similar analysis, a number of U.S. lower courts held that arbitration agree-
ments excluding class actions were unconscionable (typically applying state law unconscio-
nability doctrines).599 In cases where courts found a waiver of class actions unconscionable,

591 Dale v. Comcast Corp., 498 F.3d 1216, 1224 (11th Cir. 2007).
592 Discover Bank v. Super. Ct. of Los Angeles, 36 Cal.4th 148, 163-64 (Cal. Ct. App. 2005).
593 Id. at 156. The court also reasoned that contractual waivers of class actions allow wrongdoers to retain
the benefits of their misdeeds. Id. at 157.
594 Id. at 162-63.
595 Perry v. Thomas, 482 U.S. 483 (U.S. S.Ct. 1987).
596 Id. at 484, 491.
597 Discover Bank, 36 Cal.4th at 165 (quoting Perry, 482 U.S. at 493 n.9).
598 Id. at 165-66.
599 See, e.g., Omstead v. Dell, Inc., 594 F.3d 1081, 1086 (9th Cir. 2010); Lowden v. T-Mobile USA Inc., 512
F.3d 1213, 1215 (9th Cir. 2008) (class action waiver unconscionable under Washington law); Shroyer v. New
Cingular Wireless Servs., Inc., 498 F.3d 976, 981 (9th Cir. 2007); Dale, 498 F.3d 1216 (class action waiver uncon-
scionable because cost of bringing individual claim was excessive when measured against potential recovery);

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they sometimes overturned the waiver and allowed arbitration to proceed as a class action,600
and in other cases held that the class action waiver rendered the entire arbitration agreement
unenforceable.601 Some courts and arbitrators reasoned that interpreting a silent arbitration
agreement to allow class arbitration was necessary to give effect to the parties’ agreement to
arbitrate, even if the parties did not necessarily contemplate a class proceeding.602
At the same time, other U.S. courts rejected arguments that class action waivers in the
context of arbitration agreement are unconscionable.603 According to one such decision, the
“right to a class action … is ‘merely procedural’ and ‘may be waived,’” and therefore that “an
arbitration agreement barring class wide relief for claims … is not unconscionable.”604

Luna v. Household Fin. Corp., III, 236 F.Supp.2d 1166, 1178-83 (W.D. Wash. 2002) (class-action prohibition in
arbitration clause “is likely to bar actions involving practices applicable to all potential class members, but for
which an individual consumer has so little at stake that she is unlikely to pursue her claim” and finding prohibi-
tion on class action was “used as a sword to strike down access to justice instead of a shield against prohibitive
costs”); Leonard v. Terminix Int’l Co., 854 So.2d 529, 539 (Ala. 2002) (arbitration agreement substantively “un-
conscionable because it is a contract of adhesion that restricts the [plaintiffs] to a forum wherein the expense of
pursuing their claim far exceeds the amount in controversy … by foreclosing the [plaintiffs] from an attempt to
seek practical redress through a class action and restricting them to a disproportionately expensive individual
arbitration”); Dunlap v. Berger, 567 S.E.2d 265 (W. Va. 2002); Eagle v. Fred Martin Motor Co., 809 N.E.2d
1161 (Ohio Ct. App. 2004); Powertel, Inc. v. Bexley, 743 So.2d 570, 575-76 (Fla. Dist. Ct. App. 1999); Aksen,
Class Actions in Arbitration and Enforcement Issues: An Arbitrator’s Point of View, in B. Hanotiau & E. Schwartz
(eds.), Multiparty Arbitration 215 (2010); Carbonneau, Liberal Rules of Arbitrability and the Autonomy of Labor
Arbitration in the United States, in L. Mistelis & S. Brekoulakis (eds.), Arbitrability: International and Compara-
tive Perspectives 151 (2009); Glover, Beyond Unconscionability: Class Action Waivers and Mandatory Arbitration
Agreements, 59 Vand. L. Rev. 1735 (2006).
600 See, e.g., Kristian v. Comcast Corp., 446 F.3d 25, 63-64 (1st Cir. 2006) (permitting class arbitration of
antitrust claims to proceed by severing class arbitration waivers from arbitration agreements); Skirchak v. Dy-
namics Research Corp., Inc., 432 F.Supp.2d 175 (D. Mass. 2006); Discover Bank v. Super. Ct. of Los Angeles, 36
Cal.4th 148, 170 (Cal. Ct. App. 2005); Szetela v. Discover Bank, 97 Cal.App.4th 1094 (Cal. Ct. App. 2002).
601 See, e.g., Omstead v. Dell, Inc., 594 F.3d 1081, 1086 (9th Cir. 2010) (unconscionable class action waiver
cannot be severed because it is “central” to arbitration provision); Shroyer, 498 F.3d 976; Dale, 498 F.3d 1216;
D’Antuono v. Serv. Road Corp., 789 F.Supp.2d 308 (D. Conn. 2011) (if class action wavier were found unenforce-
able, it would require invalidating entire arbitration agreement, whereas other unenforceable provisions may
simply be severed, leaving arbitration agreement intact); Creighton v. Blockbuster Inc., 2007 WL 1560626 (D.
Or.); Murphy v. Check ‘N Go of Cal., Inc., 2007 WL 3016414 (Cal. Ct. App.).
602 See, e.g., Bazzle, 539 U.S. at 447; Pedcor Mgt Co., Welfare Benefit Plan v. Nations Personnel of Tex., Inc., 343
F.3d 355, 357 (5th Cir. 2003); Sprague v. Quality Rests. N.W., Inc., 162 P.3d 331 (Or. Ct. App. 2007).
603 See, e.g., Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d 868, 877 (11th Cir. 2005) (arbitration
agreements precluding class action relief are valid and enforceable); Livingston v. Assocs. Fin., Inc., 339 F.3d
553, 559 (7th Cir. 2003) (“The Arbitration Agreement at issue here explicitly precludes the [borrowers] from
bringing class claims or pursuing ‘class action arbitration,’ so we are therefore ‘obliged to enforce the type of
arbitration to which these parties agreed, which does not include arbitration on a class basis’”) (quoting Champ
v. Siegel Trading Co., Inc., 55 F.3d 269, 277 (7th Cir. 1995)); Snowden v. CheckPoint Check Cashing, 290 F.3d
631, 638 (4th Cir. 2002) (rejecting borrower’s argument “that the Arbitration Agreement is unenforceable as
unconscionable because without the class action vehicle, she will be unable to maintain her legal representa-
tion given the small amount of her individual damages”); Randolph v. Green Tree Fin. Corp.-Ala., 244 F.3d 814,
819 (11th Cir. 2001); Johnson v. W. Suburban Bank, 225 F.3d 366, 369 (3d Cir. 2000) (arbitration “clauses are
effective even though they may render class actions to pursue statutory claims under the TILA or the EFTA
unavailable”); Clerk v. ACE Cash Express Inc., 2010 WL 364450, at *15 (E.D. Pa.) (opt-out provision).
604 Lloyd v. MBNA Am. Bank, NA, 27 F.App’x 82, 84 (3d Cir. 2002) (quoting Johnson v. W. Suburban Bank,
225 F.3d 366, 369 (3d Cir. 2000)).

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[4] Post-Bazzle U.S. Supreme Court Decisions

The U.S. Supreme Court revisited the issue of class arbitration in a series of later decisions
– Stolt-Nielsen SA v. AnimalFeeds International Corp.,605 AT&T Mobility LLC v. Concepcion,606
American Express Co. v. Italian Colors Restaurant,607 Oxford Health Plans LLC v. Sutter,608
DIRECTV, Inc. v. Imburgia,609 and Lamps Plus Inc. v. Varela.610 Considered together, these deci-
sions substantially retrenched from the Court’s apparent treatment of class arbitration in Ba-
zzle. The Court’s decisions leave the status of class arbitration in the United States uncertain,
although it appears that class arbitration is permitted only where both parties have affirmative-
ly and expressly consented to it.

[a] Stolt-Nielsen SA v. AnimalFeeds International Corp.

The Supreme Court again considered issues concerning class arbitration in Stolt-Nielsen SA v.
AnimalFeeds International Corp., which arose in unusual procedural circumstances (including
an ambiguous stipulation concerning the meaning of the parties’ arbitration agreement). In
Stolt-Nielsen, the claimant, AnimalFeeds, had brought a class arbitration against Stolt-Nielsen,
a major ocean shipping company, asserting antitrust claims (based on allegedly illegal price
fixing by shipping companies).611 The arbitration agreement in the AnimalFeeds-Stolt-Nielsen
contract was silent on whether class arbitration was permitted; indeed, pursuant to the par-
ties’ stipulation, there was “no agreement” on the subject of class arbitration.612 In the arbitral
proceedings, the tribunal considered whether class arbitration was nonetheless permissible,
given the concededly silent arbitration agreement, and concluded that it was, issuing an award
requiring class arbitration between Stolt-Nielsen and its various customers (who had similar
arbitration clauses in their shipping contracts). Stolt-Nielsen then applied to vacate the arbi-
trators’ award construing the parties’ arbitration agreements.
The U.S. Supreme Court vacated the arbitrators’ award requiring class action arbitration.
Applying the “excess of authority” provision of §10(a)(4) of the FAA, the Court held that
the arbitral tribunal had not actually interpreted the parties’ various arbitration agreements in
making its determination and had instead “simply imposed its own conception of sound pol-
icy” and view “that class arbitration is beneficial in ‘a wide variety of settings.’”613 The Court’s
decision noted, in particular, that the parties had stipulated that “no agreement” had been
reached as to class arbitration (which resulted in the arbitrator, in ordering class arbitration, to
look outside the parties’ agreement).614
In Justice Alito’s view, writing for the Court, “the panel proceeded as if it had the authority
of a common-law court to develop what it viewed as the best rule to be applied in such a

605 Stolt-Nielsen SA v. AnimalFeeds Int’l Corp., 559 U.S. 662 (U.S. S.Ct. 2010).
606 AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. S.Ct. 2011). See also Epic Sys. Corp. v. Lewis, 138
U.S. 1612 (U.S. S.Ct. 2018) (applying Concepcion to arbitration agreement subject to National Labor Relations
Act).
607 Am. Express Co. v. Italian Colors Rest., 570 U.S. 228 (U.S. S.Ct. 2013).
608 Oxford Health Plans, 569 U.S. at 570-73.
609 DIRECTV, Inc. v. Imburgia 136 S.Ct. 403 (U.S. S.Ct. 2015).
610 Lamps Plus, Inc. v. Varela, 139 S.Ct. 1407 (U.S. S.Ct. 2019).
611 Stolt-Nielsen, 559 U.S. at 667.
612 Id. at 668-69.
613 Id. at 675.
614 Id.

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situation,” ignoring the supposed fact that “the task of an arbitrator is to interpret and enforce
a contract, not to make public policy.”615 The Court concluded:
“the panel regarded the agreement’s silence on the question of class arbitration as dis-
positive. The panel’s conclusion is fundamentally at war with the foundational FAA
principle that arbitration is a matter of consent. … An implicit agreement to authorize
class-action arbitration … is not a term that the arbitrator may infer solely from the
fact of the parties’ agreement to arbitrate. This is so because class-action arbitration
changes the nature of arbitration to such a degree that it cannot be presumed the par-
ties consented to it by simply agreeing to submit their disputes to an arbitrator.”616
As a consequence, the Court held that the arbitrators’ decision to proceed with class arbitra-
tion exceeded their authority, requiring that their award be vacated.617 The Court also held that
an arbitration agreement could not be interpreted to permit class arbitration unless it was clear
that “the parties agreed to authorize class arbitration.”618
The Supreme Court’s Stolt-Nielsen decision appeared to undo, in substantial part, the re-
sults in Bazzle, which had left to arbitrators the largely unreviewable authority of determining
whether particular arbitration agreements permitted class arbitration. In its place, Stolt-Nielsen
suggested that the availability of class arbitration was a matter for de novo judicial determi-
nation in a vacatur action; at the same time, the Court also suggested that silent arbitration
clauses did not provide the basis for class arbitrations under the FAA.619 More generally, the
relatively discursive text of the Stolt-Nielsen opinion also suggested that the scope of judicial
review under §10(a)(4)’s “excess of authority” basis for vacatur was expansive, permitting
courts to review the substantive correctness of arbitrators’ contract interpretations.620
Finally, Justice Alito went out of his way in Stolt-Nielsen to note that, in Bazzle, a plurality,
rather than a majority, of the Court had said that “an arbitrator, not a court, [must] decide
whether a contract permits class arbitration.”621 While evidently skeptical of this notion, Jus-
tice Alito stated that the Court did not need to revisit the question because the parties had

615 Id. Justice Alito’s passing suggestion that an arbitral tribunal does not have the authority of a “common
law court” to develop “the best rule” applicable to interpretation of the parties’ arbitration agreement or to
“make public policy” is ill-considered. Arbitral tribunals in the United States and elsewhere do, of course, func-
tion with at least the authority of “common law courts” to interpret agreements, identify both the applicable
and “best rule” and “public policy” and then apply that rule or public policy to the evidence. That is illustrated
most clearly by the extensive U.S. authority recognizing the capacity of U.S. courts to apply antitrust, securities
and other statutory claims, as well as other mandatory laws and public policies. See §6.04[A][1] (antitrust);
§6.04[B][1] (securities); §6.04[D] (intellectual property rights). The suggestion that arbitrators cannot either
identify or apply the “best rule” of law or contractual interpretation is retrograde and contrary to well-estab-
lished authority from U.S. and other courts.
616 Stolt-Nielsen, 559 U.S. at 685.
617 Id. at 686-87.
618 Id. (emphasis in original). The Court, arguably, left the door open for arbitrators to find implicit consent
to class arbitration if an applicable rule of law “contains a ‘default rule’ under which an arbitration clause is
construed as allowing class arbitration in the absence of express consent.” Id. at 672-74.
619 See Id. at 687 n.10. The Court left open the question of what contractual basis might support a finding
that the parties did agree to authorize class-action arbitration. See also Catamaran Corp. v. Towncrest Pharmacy,
946 F.3d 1020, 1023 (8th Cir. 2020) (“silence does not provide a sufficient basis for concluding that the parties
agreed to class arbitration”); Catamaran Corp. v. Towncrest Pharmacy, 864 F.3d 966, 973 (8th Cir. 2017) (“But
regarding class arbitration, there is complete silence. And silence is insufficient grounds for delegating the issue
to an arbitrator.)
620 See §25.04[F][3].
621 Stolt-Nielsen, 559 U.S. at 664.

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“expressly assigned this issue to the arbitration panel.”622 In sum, the Court’s Stolt-Nielsen deci-
sion placed substantial limits on class arbitration, in the form of judicial review of arbitrators’
determinations that class arbitration was appropriate, while raising the possibility of further
obstacles to class arbitrations.

[b] AT&T Mobility LLC v. Concepcion

In AT&T Mobility LLC v. Concepcion,623 some eight years after its decision in Bazzle opened
the door to class arbitration in the United States, the Supreme Court further closed what was
left of that door after Stolt-Nielsen. Concepcion arose from a class action filed in U.S. courts
by customers of AT&T, a U.S. telephone company, alleging that AT&T had defrauded
them by charging sales tax (about $30) on mobile telephones that were advertised as free.
AT&T sought dismissal of the claims, moving to compel individual arbitrations pursuant to
an arbitration clause contained in AT&T’s contracts with its customers. The relevant clause
contained a detailed class action waiver providing that all claims be brought in the parties’
“individual capacity, and not as a plaintiff or class member in any purported class or represen-
tative proceeding.”624
Despite these provisions, the customers argued that they were free to pursue a class action,
on the grounds that their class action waiver was unconscionable. The lower federal courts
agreed, rejecting AT&T’s motion to compel individual arbitrations and holding that the class
action waiver was unconscionable; instead, the lower courts permitted the customers’ class
action litigation to proceed.625 In a 5-4 decision, which was only slightly less fragmented than
that in Bazzle,626 the Supreme Court reversed. Writing for the Court, Justice Scalia concluded
that California’s Discover Bank rule of unconscionability (discussed above) was preempted
by the FAA because it permits consumers to demand class arbitration, which, in his view, is a
procedure that is incompatible with the character of arbitration under the FAA.
In concluding that class arbitration was contrary to the “fundamental” character of ar-
bitration, Justice Scalia reasoned that “the point of affording parties discretion in designing
arbitration processes is to allow for efficient, streamlined procedures tailored to the type of
dispute.”627 In contrast, he said, “class arbitration requires procedural formality” and “the switch
from bilateral to class arbitration sacrifices the principal advantage of arbitration – its infor-
mality – and makes the process slower, more costly, and more likely to generate procedural

622 Id.
623 AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. S.Ct. 2011).
624 Id. at 336. In addition, the arbitration clause provided (if any doubt remained) that “the arbitrator may
not consolidate more than one person’s claims, and may not otherwise preside over any form of a representa-
tive or class proceeding.” Id. at 336 n.2.
625 Id. at 338. The lower courts were unmoved by the relatively “consumer-friendly” aspects of the arbitra-
tion agreement at issue in AT&T’s cell phone contracts. Among other things, the agreement provided for arbi-
tration in a convenient situs (where the consumer is billed); arbitration in person, by telephone or online, at the
consumer’s choice, for amounts less than $10,000; the availability of injunctive relief and punitive damages; no
right by AT&T to claim attorneys’ fees; and an option to choose small claims court (rather than arbitration).
626 The Concepcion opinion was joined by five Justices. The fifth vote was provided, however, by Justice
Thomas, who also concurred. Justice Thomas would have reversed the Ninth Circuit not because class wide
arbitration is contrary to the “fundamental” character of arbitration, but rather because under his reading of the
FAA, an agreement to arbitrate must be enforced “unless a party successfully challenges the formation of the
arbitration agreement.” Id. at 352 (Thomas, J. concurring).
627 Id. at 345.

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morass than final judgment.”628 The Court also found it significant that class arbitration did
not exist in 1925, when the FAA was enacted – apparently suggesting that class arbitration was
thus inconsistent with “arbitration as envisioned by the FAA.”629
Justice Scalia concluded that state law may not require procedures that are “not arbitration
as envisioned by the FAA,” and that “[r]equiring the availability of classwide arbitration inter-
feres with fundamental attributes of arbitration and thus creates a scheme inconsistent with
the FAA.”630 The Court therefore held that California’s unconscionability rule (formulated in
Discover Bank) “stands as an obstacle to the accomplishment and execution of the full purpos-
es and objectives of Congress” and is preempted by the FAA.631
Although its ultimate holding was likely correct, as a matter of interpreting the FAA, the
Supreme Court’s apparent analysis in Concepcion was, in important respects, misconceived.
Justice Scalia’s opinion suggested that the FAA only contemplates, and protects, a particular
type of arbitration – the archetype of arbitration supposedly envisioned by the U.S. Congress
in 1925. On this view, class arbitration is simply “not arbitration as envisioned by the FAA,”
and class arbitration “interferes with fundamental attributes of arbitration and thus creates a
scheme inconsistent with the FAA.”632
Justice Scalia’s reasoning – which, if given effect on its own terms, would apparently with-
hold the statutory protections of the FAA from any type of arbitration not envisioned by Con-
gress in 1925 – is impossible to accept. Taken at face value, this reasoning suggests that class
arbitration agreements – including express class arbitration agreements – would be denied the
protections of §§2 and 4 of the FAA, because class arbitration is supposedly not arbitration
within the meaning of the FAA at all. In Justice Scalia’s view, those arbitration agreements
would be “inconsistent with the FAA.”
It is very difficult to imagine that this result is what the Court intended or would hold in fu-
ture cases; both this result and the reasoning underlying it contradict the language of §2, which
requires that “agreements to arbitrate” be enforced, and the Court’s repeated pronouncements
that the FAA “ensur[es] that private arbitration agreements are enforced according to their
terms.”633 Likewise, that conclusion contradicts the fundamental purpose of the FAA, which
is to give effect to parties’ agreements to submit their disputes for final resolution by an arbi-
trator – which is plainly what a class arbitration clause does.634

628 Id. at 349 (emphasis in original). The Court said that ordering an arbitration to proceed on a class basis
would be as antithetical to arbitration as ordering parties in an arbitration to incorporate “judicially monitored
discovery,” the Federal Rules of Evidence, or “ultimate disposition by a jury.” Id. at 362. The Court also thought
that arbitration, because it does not provide for appellate review, is “poorly suited to the higher stakes of class
litigation.” Id. at 350. The Court reasoned that “class arbitration greatly increases risk to defendants” by aggre-
gating claims without providing for appellate review.
629 Id. at 352. The Court also suggested that the California rule could result in fewer companies choosing to
arbitrate, although the factual support for that premise is obscure.
630 Id. at 344.
631 Id. (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (U.S. S.Ct. 1941)). Writing for the dissent, Justice Breyer
declared that the FAA’s purpose is not “to guarantee these particular procedural advantages,” but to treat arbi-
tration on equal footing as other contracts. Id. at 360 (Breyer, J., dissenting) (citing §2 of FAA). The dissent
reasoned that “California is free to define unconscionability as it sees fit,” and as long as it “applies the same legal
principles to address the unconscionability of class arbitration waivers as it does to address the unconscionabil-
ity of any other contractual provision, the merits of class proceedings should not factor into our decision.” Id. at
364.
632 Id. at 344.
633 Volt Info. Sciences, Inc. v. Stanford Univ., 489 U.S. 468, 478 (U.S. S.Ct. 1989).
634 Where parties agree to class arbitration, Justice Scalia’s suggestion that this “is not arbitration” – because

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Moreover, the Court’s suggestion that arbitration is somehow limited to what Congress
supposedly envisioned in 1925 is also incorrect. Arbitration in the 21st century has no neces-
sary resemblance to that in 1925 – nor should it. Arbitration has historically evolved and been
tailored to respond to economic, social and technological developments. As a consequence,
contemporary arbitration now routinely addresses statutory claims (under legislation enacted
decades after 1925),635 using telecommunications, online and other technologies (developed
decades after 1925),636 dealing with new commercial businesses and industries (again, devel-
oped decades after the FAA was enacted).637
Ironically, the result reached in Concepcion could have been arrived at in a sensible man-
ner, without threatening to limit the protections of the FAA. Concepcion could readily, and
correctly, have been decided on the basis that the California Supreme Court’s Discover Bank
rule is preempted because it does not comply with §2 of the FAA – providing that arbitration
agreements “shall be valid, irrevocable and enforceable,” subject only to a “saving clause” for
generally-applicable contract law defenses that apply to “the revocation of any contract.”638
Contrary to §2’s requirements, the “unconscionability” rule announced in Discover Bank does
not treat arbitration agreements as valid and enforceable, but instead invalidates them – on the
basis of a rule not designed for or applicable to contracts generally.
The Discover Bank rule clearly did not accord with §2’s basic requirement that arbitration
agreements are “valid, irrevocable and enforceable.” Instead of treating AT&T’s arbitration
agreements – which provided expressly and only for bipartite arbitration – as valid and en-
forceable, the Discover Bank rule did the opposite. It invalidated a central provision of those

class arbitration is not informal, not bipartite and involves large stakes – is simply wrong. In fact, contrary to the
Court’s supposed archetype of the arbitral process, arbitration has historically taken widely varying forms, in
widely varying settings – as discussed above, ranging from institutional to ad hoc arbitration; from trade, com-
mercial, religious, community, and international to investor-state arbitration; and from documents only, online,
or quality arbitrations to arbitrations resembling trial court litigations. See §1.01[B][1] (religious arbitration
in antiquity); §1.01[B][8][b] (community arbitration); §1.04[A][7] (investor-state arbitration); §1.04[C]
[2] (ad hoc arbitration); §2.02[C][2][g] (trade group arbitration); §2.02[C][2][d] (quality arbitration);
§2.02[C][2][i] (arbitrations resembling trials). Likewise, again contrary to Justice Scalia’s analysis, arbitration
has historically encompassed a vast range of different procedures, depending on the parties’ particular objec-
tives and interests – very often including formal, multi-party and high stakes dispute resolution proceedings.
635 See §6.04[D].
636 See, e.g., 2010 IBA Rules on the Taking of Evidence, Art. 8 (witness may appear at evidentiary hearing by
videoconference).
637 Indeed, the bipartite arbitration agreement at issue in Concepcion, which Justice Scalia sought to protect
as an archetypal arbitration clause, contained an elaborate, very formal procedural regime that provided for
online or telephonic consumer arbitration of cell phone disputes involving multiple statutory claims. Concep-
cion, 563 U.S. at 336 (“The revised agreement provides that customers may initiate dispute proceedings by
completing a one-page Notice of Dispute form available on AT&T’s Web site. AT&T may then offer to settle
the claim; if it does not, or if the dispute is not resolved within 30 days, the customer may invoke arbitration by
filing a separate Demand for Arbitration, also available on AT&T’s Web site. In the event the parties proceed to
arbitration, the agreement specifies that AT&T must pay all costs for nonfrivolous claims; that arbitration must
take place in the county in which the customer is billed; that, for claims of $10,000 or less, the customer may
choose whether the arbitration proceeds in person, by telephone, or based only on submissions; that either
party may bring a claim in small claims court in lieu of arbitration; and that the arbitrator may award any form
of individual relief, including injunctions and presumably punitive damages. The agreement, moreover, denies
AT&T any ability to seek reimbursement of its attorney’s fees, and, in the event that a customer receives an
arbitration award greater than AT&T’s last written settlement offer, requires AT&T to pay a $7,500 minimum
recovery and twice the amount of the claimant’s attorney’s fees.”).
638 U.S. FAA, 9 U.S.C. §2 (emphasis added).

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Gary B. Born §10.08[A]

agreements (the class action waiver) and required either litigation or a form of arbitration not
provided for, and indeed expressly excluded, by the parties’ agreement. That violated the basic
requirements in §§2 and 4 of the FAA: namely, that arbitration agreements be enforced in
accordance with their terms.
The disputed issue in Concepcion was instead whether, as Justice Breyer’s dissent conclud-
ed, the Discover Bank rule was nonetheless permitted by the FAA because it was a general-
ly-applicable rule of contract law, applicable to all contracts within the meaning of §2’s “savings
clause.” On this question, the proper interpretation of the savings clause is that it does not res-
cue the asserted rule of “unconscionability” adopted by the California courts in Discover Bank.
The Discover Bank rule was tailored for, and specifically directed, only to class action waiv-
ers, in both arbitration and forum selection (choice-of-court) agreements. Under that rule,
class action waivers in both arbitration and forum selection clauses are invalid whenever they
involve adhesion contracts, multiple small claims and an alleged scheme to defraud consum-
ers;639 no further inquiry into the generally-applicable criteria of unconscionability is required
to invalidate a class action waiver under Discover Bank.
As such, the Discover Bank rule was not a generally-applicable rule of contract law, appli-
cable to “any contract,” as required by §2’s savings clause. Rather, the rule created a unique
standard of invalidity, not requiring any showing of most traditional unconscionability factors,
that was necessarily applicable to only class action waivers and not to other contractual pro-
visions (i.e., the price, delivery, warranty and other provisions of consumer contracts, which
were not, and never could be, affected by the Discover Bank rule).640 Because the California
rule automatically applied only to this fairly narrow subset of contractual provisions, it was
not, as demanded by §2, an unconscionability rule generally-applicable to all contracts. It was,
instead, a specially-tailored rule applicable only to class action waivers. As such, the Discover
Bank rule was not rescued by §2’s savings clause and is instead preempted by the requirement
of §§2 and 4 that arbitration agreements be enforced in accordance with their terms.
Contrary to Justice Breyer’s dissent, the fact that the Discover Bank rule applied to both fo-
rum selection clauses and arbitration agreements does not bring it within §2’s savings clause.
That conclusion is clear from a few examples.
A state law that invalidated all agreements to resolve disputes in either out-of-state courts
or out-of-state arbitrations would be preempted by §2 no less than §2 would preempt a law
that invalidated only agreements to arbitrate in an out-of-state location. Similarly, a state law
that required all forum selection and arbitration clauses to be signed separately, or to be reaf-
firmed by both parties after a dispute arose, would violate §2 no less than a law that imposed
these requirements only on arbitration agreements. Likewise, a state law that invalidated any
forum selection clause or arbitration agreement as applied to disputes below (or above) a
specified monetary sum would again plainly violate §2, once more, no less than a provision
applying only to arbitration agreements. The fact that the Discover Bank rule also invalidates
class action waivers in forum selection agreements does nothing to save it, as applied to arbi-
tration agreements, under §2.641

639 Discover Bank v. Super. Ct. of Los Angeles, 36 Cal.4th 148, 162-63 (Cal. Ct. App. 2005).
640 Id.
641 Concepcion, 563 U.S. at 357-58. Justice Breyer’s dissent was also wrong to rely on the fact that the Dis-
cover Bank rule applied to only some class action waivers. The essential point is that the Discover Bank rule
invalidated the provisions of arbitration agreements that are plainly subject to the FAA. The fact that the rule
might have invalidated a broader range of class action waivers does nothing to alter its effects on those waivers
to which it applies. A state law rule providing for the invalidity of any agreement to arbitrate state securities law
claims in excess of $50,000 would be preempted no less than a rule invalidating all such arbitration agreements.

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Moreover, as already noted, the Discover Bank rule applied a flat rule of unenforceability
to a substantial subset of all class action waivers – invalidating all class action waivers in adhe-
sion contracts in cases involving claims of fraud seeking small amounts of damages, without
any further requirement for proof of traditional indicia of unconscionability. Although de-
nominated “unconscionability,” the California rule was in fact an automatic rule of invalidity
directed at a defined, and fairly substantial, set of arbitration and forum selection agreements.
Thus, the Discover Bank rule is precisely the type of state law invalidation of arbitration
agreements that the FAA has repeatedly been held to prohibit. As applied in Concepcion, the
Discover Bank rule required resolution of a defined category of disputes (involving specified
types of fraud claims arising from particular types of contract) in a different forum from the
bipartite arbitral forum agreed to by the parties. In particular, following Stolt-Nielsen, the Dis-
cover Bank rule required that disputes which are subject to bipartite arbitration agreements
nonetheless be brought in class action litigation.642

[c] American Express Co. v. Italian Colors Restaurant and DIRECTV, Inc. v.
Imburgia
Following Concepcion, claimants sought other ways to circumvent class waivers in arbitration
agreements. In American Express Co. v. Italian Colors Restaurant,643 a group of restaurant own-
ers alleged that their antitrust claims against American Express were too small to bring indi-
vidually given the cost of obtaining the necessary expert testimony, alleging that an individual
claimant would be required to spend several hundred thousand dollars to pursue a claim
worth less than forty thousand dollars.644 Given that it was not cost-effective to bring these
claims in individual arbitrations, the restaurant owners argued that the arbitration agreement
was invalid because its class action waiver prevented the “effective vindication” of a federal
statutory regime and the associated statutory right.645
In Italian Colors, the Supreme Court held that the asserted “effective vindication” excep-
tion did not apply because “the fact that it is not worth the expense involved in proving a stat-
utory right remedy does not constitute the elimination of the right to pursue that remedy.”646
The Court reasoned that Concepcion dictated this result:

A state law rule requiring that arbitration clauses in all real estate or all distribution agreements be in capital let-
ters or be reaffirmed after a dispute arises would be preempted no less than a rule imposing such requirements
on all arbitration agreements.
642 As discussed above, Stolt-Nielsen required an affirmative, and likely express, agreement providing for
class arbitration before permitting class arbitration to be compelled. See §7.03[E][2][d]. It is clear that provi-
sions like the AT&T arbitration agreement do not – even after invalidating their class action waivers – provide
affirmatively for class arbitration. Thus, after Stolt-Nielsen, when a class action waiver was invalidated under the
Discover Bank rule, the only available remedy would be to order class litigation. See, e.g., Fensterstock v. Educ. Fin.
Partners, 611 F.3d 124, 140-41 (2d Cir. 2010); Ruhl v. Lee’s Summit Honda, 322 S.W.3d 136 (Mo. 2010). See also
Rau, Power and the Limits of Contract: The New Trilogy, 22 Am. Rev. Int’l Arb. 435 (2011).
643 Am. Express Co. v. Italian Colors Rest., 570 U.S. 228 (U.S. S.Ct. 2013).
644 Id.
645 Id. at 235. The asserted “effective vindication” exception to enforcing an arbitration agreement was
derived from Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. S.Ct. 1985). There,
the Court said that it would invalidate an arbitration agreement as against public policy if it “operated … as a
prospective waiver of a party’s right to pursue statutory remedies for antitrust violations,” but the Court would
not do so as “long as the prospective litigant effectively may vindicate its statutory cause of action in the arbitral
forum.” Id. at 637.
646 Italian Colors Rest., 570 U.S. at 236.

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Gary B. Born §10.08[A]

“Truth to tell, our decision in [Concepcion] all but resolves this case. There we invali-
dated a law conditioning enforcement of arbitration on the availability of class proce-
dure because that law ‘interfere[d] with fundamental attributes of arbitration.’ ‘[T]he
switch from bilateral to class arbitration,’ we said, ‘sacrifices the principal advantage of
arbitration—its informality—and makes the process slower, more costly, and more
likely to generate procedural morass than final judgment.’ We specifically rejected the
argument that class arbitration was necessary to prosecute claims ‘that might other-
wise slip through the legal system.’”647
Thus, the Court’s decision in Italian Colors further narrowed the grounds on which the va-
lidity or enforceability of a class action waiver or prohibition in arbitration agreements could
be challenged: only in unusual cases involving prohibitively expensive filing fees or similar
financial burdens, likely in cases involving federal statutory claims, can class action waivers be
challenged.648
In DIRECTV Inc. v. Imburgia,649 the Supreme Court foreclosed a different argument aimed
at circumventing a class action waiver. That case began as a putative class action in state court
claiming that DIRECTV’s early-termination fees violated California’s consumer protection
laws. DIRECTV’s arbitration agreement with the plaintiffs included a class action waiver, and
then provided that “if the ‘law of your state’ makes the waiver of class arbitration unenforce-
able, then the entire [arbitration] provision ‘is unenforceable.’”650 At the time of the agreement,
California’s Discover Bank rule prohibited class action waivers. By the time DIRECTV sought
to compel individual arbitration, however, the Court’s decision in Concepcion had preempted
the Discover Bank rule. Nevertheless, the state trial court denied DIRECTV’s request for arbi-
tration, holding that the class action waiver was invalid and, as a result, the entire arbitration
clause was (in accordance with its terms) unenforceable. On appeal, the California Court of
Appeal affirmed.
On appeal, the court interpreted the phrase “law of your state” to mean the law in Califor-
nia as it would have been, had the Discover Bank rule not been preempted, thus invalidating
the class action waiver. The California Court of Appeal went on to hold the entire arbitration
agreement unenforceable, relying on its text.651
The U.S. Supreme Court reversed. The Court first questioned whether the phrase “law
of your state” referred to law that was no longer valid, but accepted the California Court of
Appeal’s finding since “California courts are the ultimate authority on [California] law.”652
The U.S. Supreme Court then analyzed whether the California court’s interpretation of the
arbitration agreement was preempted by the FAA. The Court concluded that it was because
the interpretation disfavored arbitration agreements as compared to other types of contracts.
Among other things, the Court found that “nothing in the Court of Appeal’s reasoning sug-
gests that a California court would reach the same interpretation of ‘law of your state’ in any
context other than arbitration.”653 Accordingly, the Court held that this interpretation was

647 Id. at 238.

648 Id. at 237 (“the exception … would perhaps cover filing and administrative fees attached to arbitration
that are so high as to make access to the forum impracticable”).
649 DIRECTV, Inc. v. Imburgia, 136 S.Ct. 463, 466 (U.S. S.Ct. 2015).
650 Id. at 466.
651 Id. at 467.
652 Id. at 468.
653 Id. at 469.

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preempted by the FAA because it did not “place arbitration contracts ‘on equal footing with
all other contracts.’”654

[d] Oxford Health Plans LLC v. Sutter and Lamps Plus Inc. v. Varela
Finally, in Oxford Health Plans LLC v. Sutter and Lamps Plus Inc. v. Varela, the U.S. Supreme
Court considered whether an arbitration agreement could provide for class arbitration if it is
ambiguous. That question was closely related to the issues addressed in the Court’s prior deci-
sions in Green Tree Financial Corp. v. Bazzle and Stolt-Nielsen SA v. AnimalFeeds, both of which
considered whether and when parties had consented to class arbitration. In Oxford Health,
the arbitration agreement provided that “no civil action concerning any dispute arising under
this Agreement shall be instituted before any court, and all such disputes shall be submitted to
final and binding arbitration.”655 The parties agreed that the arbitrator should decide whether
their arbitration agreement permitted class arbitration, and he determined that it did, reason-
ing that that the “intent of the clause” was “to vest in the arbitration process everything that is
prohibited from the court process.”656 Among other things, the arbitrator found that a “class
action” was one of the civil actions that “could be brought in a court absent the agreement”
and therefore could be brought in arbitration.657
The Supreme Court held that, in challenging the arbitrator’s ruling, the award-debtor bore
the burden of proving an excess of authority under §10(a)(4), that this was a very significant
burden and that it had not been satisfied.658 The Supreme Court emphasized the unusual cir-
cumstances of its decision in Stolt-Nielsen, effectively confining the decision to its facts:
“In Stolt-Nielsen, the arbitrators did not construe the parties’ contract, and did not
identify any agreement authorizing class proceed­ings. So in setting aside the arbitra-
tors’ decision, we found not that they had misinterpreted the contract, but that they
had abandoned their interpretive role. … Nor, we continued, did the panel attempt to
ascertain whether federal or state law established a ‘de­fault rule’ to take effect absent
an agreement. Instead, ‘the panel simply imposed its own conception of sound policy’
when it ordered class proceedings. But ‘the task of an arbitrator,’ we stated, ‘is to inter-
pret and enforce a contract, not to make public policy.’ In ‘impos[ing] its own policy
choice,’ the panel ‘thus exceeded its powers.’”659
Underscoring this point, the Court in Oxford Health refused to vacate the arbitral tribunal’s
award requiring class arbitration on excess of authority grounds. Reaching the opposite result
from that in Stolt-Nielsen, the Oxford Health Court reasoned:
“Here, [in contrast to Stolt-Nielsen,] the arbitrator did construe the contract (focusing,
per usual, on its language), and did find an agreement to permit class arbitration. So
to overturn his decision, we would have to rely on a finding that he misapprehended
the par­ties’ intent. But §10(a)(4) bars that course: It permits courts to vacate an arbi-
tral decision only when the arbi­trator strayed from his delegated task of interpreting a

654 Id. at 471.

655 Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 566 (U.S. S.Ct. 2013).
656 Id. at 567.
657 Id.
658 Id. at 568-69 (“A party seeking relief under that provision [§10(a)(4)] bears a heavy burden”: “Under
the FAA, courts may vacate an arbitrator’s decision ‘only in very unusual circumstances’”) (quoting First Op-
tions of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942 (U.S. S.Ct. 1995)).
659 Id. at 571.

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Gary B. Born §10.08[A]

contract, not when he performed that task poorly. Stolt-Nielsen and this case thus fall
on opposite sides of the line that §10(a)(4) draws to delimit judicial review of arbitral
decisions.”660
Thus, the Court reemphasized the very narrow scope of the FAA’s “excess of authority” ground
for vacatur in Oxford Health, underscoring that the function of judicial review is not to deter-
mine whether the arbitrator committed “error” – or even “grave error” – but solely to consider
whether the arbitrator refused to perform his “delegated task of interpreting a contract.”661
More recently, in Lamps Plus Inc. v. Varela, the arbitration agreement provided that “ar-
bitration shall be in lieu of any and all lawsuits or other civil legal proceedings relating to my
employment.”662 As a textual matter, this agreement could be interpreted in the same manner
that the arbitrator had interpreted the agreement in Oxford Health, namely, that “any and all
lawsuits” that could be brought in court absent the agreement could be brought in arbitration,
including a class action. On appeal, the Ninth Circuit considered whether this was the correct
interpretation of the arbitration agreement, concluding that the agreement was ambiguous
and that it could be interpreted as permitting class arbitration. The Court of Appeals then
held that in the case of an ambiguous contract, the general contra proferentem rule applied,
and that the ambiguity should be interpreted against the drafter, Lamps Plus, to permit class
arbitration.663
The Supreme Court granted review (making Lamps Plus the eighth class arbitration case
that the Court considered in the space of barely a decade). Because the arbitral tribunal had
not made any jurisdictional ruling, Lamps Plus did not concern a claim of excess of authority
under §10(a)(4) of the FAA. Instead, the question was “whether, consistent with the FAA,
an ambiguous agreement can provide the necessary ‘contractual basis’ for compelling class
arbitration.”664 The Supreme Court held that it could not:
“Class arbitration is not only markedly different from the ‘traditional individualized
arbitration’ contemplated by the FAA, it also undermines the most important benefits
of that familiar form of arbitration. The statute therefore requires more than ambiguity
to ensure that the parties actually agreed to arbitrate on a classwide basis.”665
The Court reasoned that the contra proferentem rule could not be applied to resolve the ambi-
guity. Because that rule does not seek to interpret the intent of the parties, its use was “flatly
inconsistent with ‘the foundational FAA principle that arbitration is a matter of consent.’”666
Therefore, even though the contra proferentem rule is of general application, it is preempted by
the FAA when applied to permit class arbitration without the parties’ consent, as this “inter-
feres with fundamental attributes of arbitration.”667
Two factors explain the differences in result in Oxford Health and Lamp Plus. First, the
arbitrator in Oxford Health did not find that the arbitration agreement at issue was ambigu-
ous while the Court of Appeals in Lamps Plus did. Second, and more importantly, the Court
accorded greater deference to the interpretation of an arbitration agreement of an arbitrator

660 Id. at 571-72.

661 Id.
662 Lamps Plus, Inc. v. Varela, 139 S.Ct. 1407, 1413 (U.S. S.Ct. 2019).
663 Id. at 1417.
664 Id. at 1415.
665 Id.
666 Id. at 1418.
667 Id.

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§10.08[A] Parties to International Arbitration Agreements

than that of a lower court. The different results in Oxford Health and Lamps Plus thus highlight
the importance of who decides whether an arbitration agreement permits class arbitration.
Nonetheless, in Oxford Health, the Court again suggested pointedly that its earlier (plural-
ity) decision in Bazzle – holding that the question whether an arbitration agreement provides
for class arbitration is not a jurisdictional or “gateway” issue – may have been wrongly decided.
In particular, the Oxford Health Court noted that “Stolt-Nielsen made clear that this Court has
not yet decided whether the availability of class arbitration is a question of arbitrability.”668
Lower courts have reached divergent conclusions on the question whether an arbitration
agreement authorizes class arbitration is for interlocutory judicial determination (as Justices
Alito and Kagan suggested in Stolt-Nielsen and Oxford Health) or initial arbitral determination
(as the plurality opinion in Bazzle held). Nonetheless, recent cases have generally adopted the
former position.669 It appears likely, given the Supreme Court’s enduring interest in the issue,
that it will revisit the question.
Despite the Supreme Court’s attention, the future of class arbitration in the United States
remains unsettled. It appears likely, however, that the Supreme Court will reverse its prior
(plurality) decision in Bazzle, and instead hold, as intimated by the Court in both Stolt-Nielsen
and Oxford Health, that the question whether an arbitration agreement authorizes class arbi-
tration is a jurisdictional (or gateway) issue, for resolution by courts, rather than arbitrators.
Additionally, as decided in Lamps Plus, the Court will require a clear affirmative basis for con-
cluding that an arbitration agreement authorizes class arbitration (while also upholding waiv-
ers of class action arbitration, as the Court did in Concepcion, Italian Colors and DIRECTV).
If these predictions are correct, class arbitrations will become a relatively unusual creature in
the United States, theoretically possible where parties have clearly consented, but rare as a
practical matter.

668 Oxford Health Plans, 569 U.S. at 569.

669 Harrington v. Waterstone Mortg. Corp., 907 F.3d 502, 508 (7th Cir. 2018) (availability of class arbitration
is gateway issue of arbitrability to be decided by courts); JPay, Inc. v. Kobel, 904 F.3d 923, 935-36 (11th Cir.
2018) (while availability of class arbitration is gateway issue, parties had expressly delegated arbitrability ques-
tion to arbitrator through multiple references to AAA Rules, which include supplementary rules empowering
arbitrator to decide whether class action is permitted); Spirit Airlines v. Maizes, 899 F.3d 1230 (11th Cir. 2018)
(same); Dish Network v. Ray, 900 F.3d 1230 (10th Cir. 2018) (same); Catamaran Corp. v. Towncrest Pharmacy,
864 F.3d 966, 971-73 (8th Cir. 2017) (presumption that question of class arbitration belongs with courts is
substantive question but parties may delegate the question to an arbitrator); Dell Webb Communities, Inc. v.
Carlson, 817 F.3d 867, 875 (4th Cir. 2016) (“The evolution of the [Supreme] Court’s cases are but a short
step away from the conclusion that whether an arbitration agreement authorizes class arbitration presents a
question as to the arbitrator’s inherent power, which requires judicial review”); Reed Elsevier, Inc. v. Crockett,
734 F.3d 594, 598 (6th Cir. 2013) (“recently the Court has given every indication, short of an outright holding,
that classwide arbitrability is a gateway question rather than a subsidiary one”); Cent. W. Va. Energy, Inc. v. Bayer
Cropscience LP, 645 F.3d 267, 275 n.7 (4th Cir. 2011) (question whether parties had decided to arbitrate “at all”
is for courts to decide); Mork v. Loram Maint. of Way, Inc., 2012 WL 38628, at *2 (D. Minn.) (“Without clear
guidance from the Supreme Court, the Court is left with Eighth Circuit precedent which indicates that it is
appropriate for the Court, not an arbitrator, to resolve [the class arbitration] question”). Compare Sandquist v.
Lebo Auto., 376 P.3d 506, 511 (Cal. 2016) (applying state law principles of statutory interpretation to ambiguous
contract to conclude that arbitrator, not court, should decide if class arbitration was permitted); Guida v. Home
Sav. of Am., Inc., 793 F.Supp.2d 611, 616 (E.D.N.Y. 2011) (following plurality in Bazzle: “ability of a class to
arbitrate a dispute where the parties contest whether the agreement to arbitrate is silent or ambiguous on the
issue is a procedural question that is for the arbitrator to decide”); Jock v. Sterling Jewelers Inc., 646 F.3d 113 (2d
Cir. 2011) (no excess of authority where award permitted class arbitration); S. Commc’ns Servs., Inc. v. Thomas,
829 F.Supp.2d 1324 (N.D. Ga. 2011) (no excess of authority where award permitted class arbitration).

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Gary B. Born §10.08[B]

[B] Other Jurisdictions

In principle, class arbitrations should be possible in jurisdictions outside the United States.670
Nonetheless, with the exception of Canada, there are few reported judicial decisions or ar-
bitral awards addressing the question.671 Some Canadian courts have invalidated contractual
provisions including waivers of class action rights and requiring individual arbitration of con-
sumer claims.672 In one court’s words:
“Clauses that require arbitration and preclude the aggregation of claims have the effect
of removing consumer claims from the reach of class actions. The seller’s stated prefer-
ence for arbitration is often nothing more than a guise to avoid liability for widespread
low-value wrongs that cannot be litigated individually but when aggregated form the
subject of a viable class proceeding.”673
Other Canadian courts, however, have upheld waivers of class action in contexts where such
result was not prohibited by legislation.674 Because Canadian claimants have thus far been

670 See, e.g., P. Billiet (ed.), Class Arbitration in the European Union (2013); Dunning, All for One and One for
All: Class Action Litigation and Arbitration in New Zealand, 3 Pub. Interest L.J. N.Z. 68 (2016); González-Aran-
go & Cruz-Mantilla, Class Arbitration: Here to Stay? The Potential Objections Against Recognition and Enforcement
of Class Arbitral Awards Under the New York Convention, 2017:30 Spain Arb. Rev. 19; B. Hanotiau & E. Schwartz
(eds.), Class and Group Actions in Arbitration (2016); B. Hanotiau, Complex Arbitrations ¶¶557-613 (2005);
Mariani, Class Arbitrations in Brazil? Kluwer Arb. Blog (14 May 2014); Marseille, Arbitration and Class Actions
in Canada: Where Do We Stand?, 28 Class Action Reports 5 (April 2007); Neumeier, Class Arbitration in Aus-
tralia: A Bright Future or A Pipe Dream?, 14 Asian Int’l Arb. J. 143 (2018); S. Strong, Class, Mass, and Collective
Arbitration in National and International Law (2013); Strong, Resolving Mass Legal Disputes Through Class Ar-
bitration: The United States and Canada Compared, 37 N.C. J. Int’l L. & Comm. Reg. 921, 972-75 (2012); Van
Zelst, Class Actions and Arbitration: Alternative Approaches Based on the (Ever Evolving) Dutch Experiences with
Collective Redress, 35(2) J. Int’l Arb. 203 (2018).
671 González-Arango & Cruz-Mantilla, Class Arbitration: Here to Stay? The Potential Objections Against
Recognition and Enforcement of Class Arbitral Awards Under the New York Convention, 2017:30 Spain Arb. Rev.
19, 25-28 (only one class arbitration reported outside United States, from Columbia, and in very specific
circumstances).
672 See, e.g., Seidel v. TELUS Commc’ns, Inc., [2011] SCC 15, 33-42 (Canadian S.Ct.) (class action legislation
barred arbitration of claims arising under British Columbia statute); Heller v. Uber Techs. Inc., [2019] ONCA 1
(Ontario Ct. App.) (“I conclude that the Arbitration Clause amounts to an illegal contracting out of an em-
ployment standard, contrary to [§]5(1) of the ESA, if the drivers are found to be employees as alleged by the
appellant. I reach the separate and independent conclusion that the Arbitration Clause is unconscionable at
common law.”); Griffin v. Dell Canada Inc., [2010] ONCA 29 (Ontario Ct. App.) (applying Ontario Consumer
Protection Act, 2002, to deny enforcement of arbitration clauses (which included class action waivers) in both
consumer and non-consumer contracts). See also Strong, Resolving Mass Legal Disputes Through Class Arbitra-
tion: The United States and Canada Compared, 37 N.C. J. Int’l L. & Comm. Reg. 921 (2012); Young v. Dollar
Fin. Group Inc., [2012] ABQB 601 (Alberta Q.B.), aff’d, [2013] ABCA 264 (Alberta Ct. App.) (dismissing
application for stay on basis that arbitration clause had not been approved as required by Alberta Fair Trading
Act).
673 Griffin v. Dell Canada Inc., [2010] ONCA 29, ¶30 (Ontario Ct. App.).
674 Dell Computer Corp. v. Union des Consommateurs, [2007] SCC 34, 87 (Canadian S.Ct.) (referring parties
to arbitration and dismissing motion to certify class action under applicable Québec law); Murphy v. Amway
Canada Corp., [2014] 3 FCR 478 (Canadian Fed. Ct. App.) (dismissing appeal and referring, parties to arbitra-
tion: “The Supreme Court has made it clear that express legislative language in a statute is required before the
courts will refuse to give effect to the terms of an arbitration agreement. In that regard, the Competition Act
does not contain language which would indicate that Parliament intended that arbitration clauses be restricted
or prohibited. More particularly, there is no language in the Competition Act that would prohibit class action
waivers so as to prevent the determination of a claim by way of arbitration.”); Wellman v. TELUS Commc’ns Co.,

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§10.08[B] Parties to International Arbitration Agreements

permitted to proceed in court class actions or have been referred to individual arbitrations
(not class arbitrations), there is no reported experience with class arbitration in Canada.675
Similarly, arbitral institutions outside the United States have not adopted rules or other-
wise taken a position on administering class arbitrations. Nonetheless, where the parties have
provided for class arbitrations in their arbitration agreements, then applicable national law in
most developed jurisdictions (and the New York Convention) should in principle give effect
to such agreements.676
There is much to recommend the use of class arbitrations in international disputes involv-
ing consumers, employees and similarly-situated claimants. That is particularly true where
“negative value” claims are involved, which cost more in unrecoverable expenses to pursue by
individual claimants than any recovery would warrant.677 In many jurisdictions, class action
claims cannot presently be pursued in national courts, including with regard to such claims.
Properly administered, permitting arbitration of such class claims could enhance, not detract
from, the rights of consumers, employees and others in international disputes.678

[2017] ONCA 433 (Ontario Ct. App.) (distinguishing Seidel based on discretion under Ontario arbitration
legislation to deny enforcement of arbitration clauses for non-consumer contracts).
675 See, e.g., Chatfield v. Saskatchewan Telecommc’ns, [2014] SKCA 29, ¶14 (Saskatchewan Ct. App.) (“there
is no Canadian jurisprudence which even remotely suggests that class-wide arbitration can be ordered within
the context of a class action. Mr. Chatfield cites only some American authorities for this proposition and [§]14
of The Class Actions Act. No lower level court has thoroughly considered this issue.”).
676 It is difficult to see what public policy or nonarbitrability objections could be raised to class arbitra-
tions. The fact that class actions are not recognized or available in many national litigation systems should
not preclude the use of class action arbitrations (just as the unavailability of documents only, fast-track, or
similar dispute resolution mechanisms in litigation does not invalidate arbitration agreements requiring such
procedures). There may be requirements regarding procedural regularity and an opportunity to be heard, im-
posed by national law, but these would involve the implementation of the class action arbitration, not its basic
enforceability.
677 Craver, The Use of Non-Judicial Procedures to Resolve Employment Discrimination Claims, 11 Kan. J. L. &
Pub. Pol’y 141 (2001) (“Fair arbitral procedures can provide a more expeditious and less expensive alternative
that may benefit workers more than judicial proceedings”); Sherwyn, Tracey & Eigent, In Defense of Mandatory
Arbitration of Employment Disputes: Saving the Baby, Tossing out the Bath Water, and Constructing A New Sink in
the Process, 2 U. Pa. J. Lab. & Emp. L. 73 (1999); Ware, Paying the Price of Process: Judicial Regulation of Consumer
Arbitration Agreements, 2001 J. Disp. Resol. 89.
678 While investor-state arbitration is different from international commercial arbitration in many respects,
and mass arbitration is different from class arbitration, mass arbitration was permitted by an ICSID tribunal
to resolve the claims of 60,000 bondholders against Argentina in Abaclat v. Argentina, Decision on Jurisdiction
and Admissibility in ICSID Case No. ARB/07/5 of 4 August 2011. While the bondholders in that case consented
to having a third party represent their interests and bring a mass arbitration on their behalf, Argentina claimed
that it had not consented to mass arbitration and that the ICSID rules, which were silent on the matter, did not
permit such proceedings. The Tribunal rejected Argentina’s position in part because “where the BIT covers
investments, such as bonds, which are susceptible of involving in the context of the same investment a high
number of investors, and where such investments require a collective relief in order to provide effective protec-
tion to such investment, it would be contrary to the purpose of the BIT and to the spirit of ICSID, to require
in addition to the consent to ICSID arbitration in general, a supplementary express consent to the form of
such arbitration.” Abaclat v. Argentina, Decision on Jurisdiction and Admissibility in ICSID Case No. ARB/07/5 of
4 August 2011, ¶490. The case later settled. Abaclat v. Argentina, Consent Award Under ICSID Arbitration Rule
43(2) in ICSID Case No. ARB/07/5 of 29 December 2016.
Abaclat has been relied upon in a number of subsequent awards: Adamakopoulos v. Cyprus, Decision on
Jurisdiction in ICSID Case No. ARB/15/49 of 7 February 2020, ¶¶188-266; Alemanni v. Argentina, Decision on
Jurisdiction and Admissibility in ICSID Case No. ARB/07/8 of 17 November 2014, ¶¶261-325; Ambiente Ufficio
SpA v. Argentina, Decision Jurisdiction and Admissibility in ICSID Case No. ARB/08/9 of 8 February 2013, ¶¶7-13.

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