The Issue of Non-Signatory States – Vol. 23 No. 3-4

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Author: Bernard R. Hanotiau*

Published: August 2012

Description: Whether the scope of an arbitration clause extends not only to signatories of the arbitration agreement or underlying contract, but also to non-signatories, has become a classic problem in international arbitration. This is attributable to the increasing volume and complexity of commercial transactions, the proliferation of national and international groups of companies and the fact that for financial, tax or other commercial reasons, there is not always symmetry between the individuals or companies that sign an agreement and those that perform it. Moreover, as this author demonstrated in his 2010 Freshfields lecture, the fact that an individual or a company has not signed an agreement through its duly appointed representative does not mean a priori and per se that it is not a party to it or to the arbitration clause contained therein. Indeed, in most legal systems, the conduct of an individual or company’s representative may provide conclusive evidence that it has consented to the relevant contract or at least to its arbitration clause. In many civil-law systems this can even be proven by post-contractual conduct.

The issue arises not only in relation to individuals and groups of companies but also in relation to states, in particular when a state entity is a signatory to an agreement. In this respect, there has been some debate as to whether the issues of extension to a state, on the one hand, and to a company, on the other, arise in the same terms. According to Fouchard, Gaillard and Goldman, the answer is in the affirmative, notwithstanding that in relation to states the issue may raise additional problems such as immunity from jurisdiction. They submit that in both cases, it is the intention of the parties that is the main criterion in determining the scope rationae personae of an arbitration clause. Other authors, such as Professor Hans Smit and Professor Roger Alford, have expressed doubts over the suitability of applying the same reasoning to states as to groups of companies, for example by application of the alter ego, agency or third-party beneficiary theories.

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*Member of the Brussels and Paris bars; Professor Emeritus at the University of Louvain; Member of the Governing Board of the International Council for Commercial Arbitration.