Can local courts order third parties to participate in arbitration proceedings in your country?
International Arbitration (4th edition)
As a general rule, local courts cannot order third parties to participate in arbitration proceedings. However, under special circumstances (i.e., when the veil-piercing doctrine is applicable) a local court may extend arbitration agreement to a third party considering that it should be considered a party to the arbitration agreement.
Third parties may not be ordered by courts to participate in arbitration proceedings.
No, local courts can only assist in collecting evidence.
There is no legislative regime in Canada to enable the joinder of third parties to arbitration. Courts will usually stay proceedings against third parties until the arbitration is resolved. Despite no legislative regime, courts across the country have ordered non-parties to the arbitration agreement to submit to arbitration. In certain circumstances, non-signatories can be parties to an arbitration agreement such as when the plaintiff treats the defendant as the true party to the contract or where there are multiple defendants and splitting between arbitration and court would lead to parallel proceedings.
Generally, arbitration awards are not binding on persons who were not parties to the arbitration. However, in certain circumstances, non-parties to the arbitration agreement can be bound by the arbitral award. This generally is through contract law doctrines such as agency, assignment or novation. Additionally, courts may also bind third parties in instances of piercing the corporate veil or by estoppel. As a general rule, the binding force of the arbitral decision is a matter of contract and so, there must be privity between the parties to the arbitration agreement. Local courts will, however, facilitate arbitration proceedings by requiring witnesses (who may be third parties) to attend and give evidence or produce evidence to the arbitral tribunal.
As discussed above, courts can compel third parties or non-signatories to participate in arbitration, and default awards can be issued against them, to the extent that third parties or non-signatories are determined to be bound by an arbitration agreement.
Article 22 of the UAE Arbitration Law empowers an Arbitral Tribunal to authorise the joinder of a third party to the arbitral proceedings. The Arbitral Tribunal may do so upon the request by a party or by the joining party.
The request to the Arbitral Tribunal, must, however, be made by a party to the arbitration agreement, and provided all parties are given an opportunity for their views to be heard.
This provision could find its application where subcontracts validly incorporate the arbitration clause of a main contract.
The DIFC-LCIA Arbitration Rules (Article 22) further provides that one or more third parties may to be joined to the arbitration subject to the agreement of the third party and the applicant party.
Third parties cannot be compelled by the UAE Courts to participate in arbitral proceedings.
A third party may participate—and may be ordered to participate—in an arbitration but only if the third party and all of the other parties concerned consent. Consent may be given by adopting institutional rules that provide for joinder.
Please see Question 10 above (in regard to whether third parties or non-signatories may be bound by an arbitration agreement) and Question 26 below (in regard to the role of local courts in the obtainment of evidence, including witness testimony).
There is no provision in the Arbitration Act empowering courts to compel third parties to participate in arbitration, and it has been established that courts may intervene only in matters empowered by the Arbitration Act.
Local courts cannot compel third parties to participate in arbitration proceedings under German law.
The Courts or the Tribunal, normally, do not have any power conferred upon them as per the Arbitration & Conciliation Act, 1996 to order third parties to participate in arbitration proceeding. However, at the same time, it can be noted that for the purpose of interim relief, the Court/Tribunal can direct impleadment of a third party for effective implementation of the interim order.
Further, in its judgment in Chloro Controls (I) P Ltd v Severn Trent Water Purification Inc ( JT 2012 (10) SC 187), the Supreme Court of India held that the phrase ‘persons claiming through or under’ used in Section 45 of the Arbitration Act covers within its ambit multiple and multi-party agreements, though in exceptional cases. It further held that arbitration is possible between a signatory to an arbitration agreement and a third party; however, a heavy onus lies on the third party to show that, both in fact and in law, it is claiming ‘through’ or ‘under’ the signatory party, as contemplated under Section 45 of the Arbitration Act.
No. The Arbitration Law does not empower local courts to compel third parties to join arbitration proceedings.
As a matter of principle (fair trial), third parties can only be joined in arbitral proceedings when there is an agreement between all parties to that effect. If a third party joins the arbitral proceedings after the arbitral tribunal’s constitution, it is advisable to expressly submit to the jurisdiction of the arbitral tribunal and hence to accept the proceedings at the stage they are in. The Liechtenstein CCP therefore does not contain a legal basis for compelling third parties to arbitrate against their will.
There are no provisions under the Arbitration Act which confers local courts the power to compel/order third parties to participate in arbitration proceedings.
See above at 10.
Ordering third parties to participate in the arbitration proceedings is within the discretionary authority of the arbitral tribunal. The EAL expressly provides for the cases where local courts can intervene in the arbitration proceedings. In this regard, the EAL is silent on the local courts’ authority to order third parties to participate in the arbitration proceedings. Furthermore, in institutional arbitration, the CRCICA arbitration rules grants the arbitral tribunal the authority to decide over any of the parties’ request for joinder of a party to the arbitration proceedings.
Third parties or non-signatories cannot be bound by an arbitration agreement, and local courts do not have faculties to order them to participate in arbitration agreements because consent is a non-voidable requirement under Mexican law to be bound by an arbitration agreement.
Except with the consent of the parties and the third-party, a third party cannot be made a party to an arbitration proceeding. It is essential that a person must be a party to an arbitration agreement before he is made a party to an arbitration proceeding. The court may command third parties within Nigeria to appear as witnesses or produce evidence in an arbitral proceeding. See section 23 of the ACA.
Neither the Tribunal nor the local courts can order third parties to participate in the arbitration proceedings. The arbitral tribunal or a party with the consent of the arbitral tribunal may ask the court to take testimony from parties and witnesses and take other evidence.
Local courts have the authority to issue orders to direct a third party, who may be a witness, to comply with a subpoena issued by an arbitral tribunal. (Rule 9, Special ADR Rules).
Courts cannot compel third parties to join an arbitration without their consent. However, an arbitration panel can, either through the courts if the arbitration is ad hoc or through the SCCA, subpoena witnesses to appear in the arbitral proceeding.
No. Neither the parties themselves nor any third parties may be ordered to participate in the arbitration proceedings.
In Switzerland, state courts cannot order parties or third parties to arbitrate. However, if the taking of evidence or other procedural acts require the assistance of the state courts (e.g. due to the fact that arbitral tribunals do not have coercive powers), such participation may be requested from the state court at the seat of the arbitral tribunal either by the arbitral tribunal itself or by a party to the arbitration with the consent of the arbitral tribunal (art. 184 para 2 PILA and art. 375 para 2 CPC). In particular, state courts have the power to order third parties to give evidence in the course of an arbitration proceeding (cf. also below question 26).
Only signatories are bound by the arbitration agreement. This is the principle informed by the consent maxim. That being said, an arbitration agreement is binding upon third parties in cases of assignment, assumption of debt, succession, merger or other types of corporate transformations, and subrogated claims. Also in the rare cases in which a piercing of the corporate vail is justified a stakeholder may be bound by the arbitration agreement concluded by the legal entity. Under similar substantive law arrangements, the arbitration agreement may be deemed binding upon non-signatory companies of the same group. These however are to be understood as exceptional cases. Greek case law confirms this assessment.
A third party not bound by the arbitration agreement may not be compelled to participate in the arbitration proceedings. Same holds true as regards third parties exceptionally bound be the arbitration agreement which are nevertheless not willing to participate. They may not be compelled to do so (see also Answer to Question 21 above). For that reason, procedural devises provided for under the GrCCP as regards State Court proceedings, such as compulsory joinder of third parties, are not applicable to arbitration.
GrCCP provides for specific instances in which a state court decision produces effects (res judicata, enforceability) against or in favor of third parties. The same provisions apply also with regard to arbitral awards. However, the prevailing view is that the third parties which will be bound by the award are nevertheless not permitted to intervene in the pending arbitration proceedings unless they have signed or they are bound under any applicable legal theory by the arbitration agreement. The debate which obviously touches upon constitutional principles of procedural fairness is still ongoing.
That being said, in case the third party consents and the initial parties agree to it, the third party may participate in the arbitral proceedings.
See also Answer to Question 36 below.
As stated above, local courts cannot compel third parties to participate in arbitration proceedings under Turkish law.