Beyond the signing party: The group of companies doctrine in international arbitration law

Abstract

Disputes arising from international business dealings can be resolved before an arbitration court provided the consent of all signing parties of the arbitration agreement. The arbitration proceedings are based on said agreement, which can be in the form of a compromise or an arbitration clause, and, hence, the sides in the proceedings are most commonly the signatories of the agreement. In practice, however, arbitration may involve parties that did not explicitly accept the arbitration agreement - such as in multiparty arbitration proceedings involving a group of companies. Multiparty arbitration where one side comprises multiple subjects bound as a group of companies bring into question numerous seemingly straightforward aspects of the arbitration process. First and foremost is the question of whether non-signatories can participate in arbitration - which is the main topic of this paper. The answer was sought through a comparative analysis of the normative rules governing the validity of arbitration agreements, as well as through a critical exploration of disputes resolved before arbitral or court councils. The application of induction to the findings of this research yielded the conclusion that a signature is not a prerequisite for participation in arbitration i.e. the scope of an arbitration agreement can be subjectively broadened. An analysis of recent arbitration practice and the majority of relevant theory has shown that, in the case of a group of companies, solutions accommodate the practical need to recognize actual relations in legal transactions resulting from the special nature of a group of companies - namely their "economic unity". The paper has been divided into four parts. The first focuses on the arbitration agreement as the basis of jurisdiction for arbitration tribunals. The second investigates the subjective scope of arbitration agreements. The third is devoted to arbitration or court proceedings where one side consists of a group of companies, while the fourth and final segment deals with many theoretical dilemmas stemming from such proceedings.

Keywords

• arbitration
• multiparty arbitration
• group of companies' doctrine
• non-signatories
• subjective scope of arbitration agreement
• economic unity