Author: Irene M. Ten Cate**
Published: May 2005
Practice and Procedure
Consolidation of Proceedings
Arbitration is typically characterized as a creature of contract. The contractual nature of arbitration affords parties greater control over who adjudicates their disputes and more freedom to adjust the procedure to the particular demands of their case than they would have in proceedings before national courts. This flexibility is an important reason why parties opt for arbitration.
However, arbitration may pose unforeseen problems in situations involving more than two parties and/or more than one contract. Multi-contract situations can arise between two or more parties. For instance, the parties may enter into a general agreement (often called master or head agreement) and several ancillary agreements. In a second scenario, the parties enter into a long-term framework agreement which sets forth more general conditions of the parties’ transaction, and conclude successive application agreements specifying in greater detail the performances required of the parties in relation to the transaction. Third, the parties may conclude several distinct agreements in relation to the same economic operation.
Multi-party contractual relationships also arise in different contexts, which partly overlap with the multi-contract situations. A first scenario is when A, B and C (and possibly additional parties) all sign the same agreements, for instance, as part of a cooperation or joint venture transaction. Second, there may be a horizontal relationship, where A enters into separate contracts with B, C, and possibly other parties. Finally, the parties may enter into “chain contracts,” where A contracts with B, B with C, and so forth.
*Notes & Comments
**LL.B., University of Amsterdam, 1998; J.D., Columbia University School of Law, 2003. The author is a litigation and international arbitration associate at the New York office of Skadden, Apps, Slate, Meagher & Flom LLP. This Note is a revised edition of a paper written for the seminar “International Commercial Arbitration” at Columbia Law School. The author would like to thank Professor George Bermann, Matthew Secomb, and Professor Hans Smit for their insightful comments on earlier drafts.