In what instances can third parties or non-signatories be bound by an award? To what extent might a third party challenge the recognition of an award?
International Arbitration (4th edition)
Under Argentine law, awards exclusively produce their effects between the parties to the dispute. Third parties cannot challenge the recognition of an award.
In connection with a third-party intervention to arbitral proceedings, the Supreme Court ruled that a third party will only be bound by an arbitral award if it is a party to the arbitration agreement and if it is granted the same rights as the parties in the proceedings (in particular a right to a fair trial under Art 6 ECHR).
There is, as a general rule, no right of a third party to challenge the recognition of an award. A third party conceivably may only challenge the recognition of an award if it is the award debtor. In practice, it seems very unlikely that this situation could arise.
In case the third party is bound by the res judicata effect of the award.
As discussed above, whether a non-signatory can be bound by an arbitration agreement is governed by applicable state contract law. Although it is not settled case law, some courts have held that the same standard applies to arbitration awards.
An arbitral tribunal does not have jurisdiction over third parties unless, as between a party and non-party: a) the corporate relationship is sufficiently close to justify lifting the corporate veil; b) there is an agency relationship; c) a contract incorporates the arbitration agreement; or d) the non-party is bound by equitable estoppel. If a third party is bound by an award, it may take steps to challenge recognition and enforcement.
According to Cypriot Law on arbitration, an arbitral tribunal shall not assume jurisdiction over third parties who are not signatories and therefore not contractually bound by the arbitration agreement without their consent. However, other members may be bound to an arbitration agreement made between two parties when applying the group of companies’ doctrine. Also, third parties may be a part of a domestic or international arbitration when summoned to appear before the tribunal in order to testify or produce documents, but on the other hand they wouldn’t be bound to take part in arbitration proceedings and produce documents if they wouldn’t have been compelled to do so at a trial.
An award is binding on third parties who are bound by the arbitration agreement, as contemplated in s.82(2) of the 1996 Act.
Only a party to the arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court to challenge an award of the arbitral tribunal.
UAE- Federal Jurisdiction
There are no statutory provisions whereby a third party/non-signatory may be bound by or challenge the recognition of an arbitral award pursuant to UAE Arbitration Law.
UAE - Common Law Jurisdictions
The DIFC Arbitration Law (Article 44) and the ADGM Regulations (Regulation 53) do not provide for an arbitral award to be binding upon or challenged by a third party/non-signatory.
As noted above, Singaporean courts generally may not order third parties or non-signatories to be bound by an arbitration agreement without the consent of the parties (including the third party or non-signatory) (see The Titan Unity,  SGHCR 4 at ), and any resultant award therefore would generally not be binding on them. S 29(2) of the IAA also provides that ‘[a]ny foreign award which is enforceable under subsection (1) shall be recognised as binding for all purposes upon the persons between whom it was made and may accordingly be relied upon by any of those parties by way of defence, set-off or otherwise in any legal proceedings in Singapore’. These provisions do not allow for third-party challenges to the recognition of arbitral awards as a general matter.
In principle, only parties to an arbitration agreement are bound by the arbitral award (Article 35 of the Arbitration Act (the “Act”)). The Act is silent as to what circumstances might bind third parties or non-signatories to an arbitral award. However, a third party which becomes a successor to a contract may also be bound by the contract’s arbitration provision and ultimately its outcome (See Seoul Western District Court 2001GaHap6107, 5 July 2002). It has been settled by the Supreme Court that “although in principle an agreement on jurisdiction is a legal act which does not bind any third party other than the parties to the agreement or their respective successors, as a matter of substantive law, an agreement to change the jurisdiction modifies the terms of exercising a right and the substantive interest attached thereto, and as such, with respect to a nominative claim regarding which the parties may freely agree on the terms of the legal relationship, the successor to the claim has also become the successor to the modified legal relationship, and therefore the successor is bound by the agreement on jurisdiction” (Supreme Court 2005Ma902, 2 March 2006).
Any party that is adversely affected by the arbitration award is generally entitled to challenge the arbitration award and demand its setting aside. The extend of "adverse effect" may even be limited to the decision on costs. I.e. were the award has certain legal effect extending to the third party (res judicata effect on third party), such party is entitled to apply for a setting aside of the arbitral award.
An award can only bind the parties to it. Third parties can only be bound if they are included as parties to the arbitration proceeding (see answer 10 on the circumstances in which a third party can join an arbitration proceeding).
The Arbitration Law provides that only a party to the proceeding can file for annulment of the award. However, a third party adversely affected by the award could initiate a civil proceeding against the parties to the arbitration, which may delay the enforcement process.
Third parties or non-signatories that have not been formally joined in the arbitral proceedings are not bound by the arbitral award. As a consequence, they are not entitled to challenge the award. However, they may obtain a declaratory judgment that they are not bound by the award.
An award does not bind third parties as it operates in personam between parties, except where such third party has agreed to be bound by it.
Additionally, it appears that a third party may not challenge the recognition of an award. In this regard, Section 39(1) of the Arbitration Act provides that the recognition or enforcement of an award, may be refused only at the request of the party against whom it is invoked.
In principle, only the parties having consented to the arbitration agreement shall be bound by the arbitral award. Non-signatories can only be bound by the arbitral award if the arbitration agreement has been extended thereto during the arbitral proceedings. No third party can be bound by the award, if it was not joined as a party to the arbitral proceedings.
French courts are very reluctant to allow the attachment and seizure of assets belonging to entities other than the debtor itself. As a matter of principle, arbitral awards can be invoked against third parties (“opposables aux tiers”) in both domestic (FCCP Article 1484; Camaieu SA & Camaieu International v. Montrico, Court of Cassation, Commercial chamber, 23 January 2007, No. 05-19.523; ITM Entreprises, ITM Sud Est et Ulade & Prodim Grand Est, Court of Cassation, Commercial chamber, 2 December 2008, No. 07-17.539) and international arbitration (FCCP Article 1506).
In domestic arbitration, third parties can object to the recognition of an award through the third-party proceedings (“tierce opposition”) (FCCP Article 1500). Contrary to the setting-aside of the award which has effect erga omnes, third-party proceedings only retract or vary the award in favour of the third party who impugns it (FCCP Article 582). This proceeding is available in three situations (FCCP Article 583):
• The third party or non-signatories show “an interest” and was neither a party to nor represented in the arbitration proceedings.
• They are creditors or assignees of a party and the award violates their rights (“violent leurs droits”)
• Their objection is made in their capacity as creditors or assignees of a party.
When an award-creditor holds a debt against a State, the French courts will only allow the creditor to seize the assets of a State-owned entity in satisfaction of the State’s debt provided that the State-owned entity can be shown to be a mere “emanation” (alter ego) of the State. Under French law, this is a difficult standard to meet.
To prove that a State-owned entity is an emanation of the State, French case law requires proof that the relevant company:
• lacks functional independence from the State, which requires showing a “permanent control of the State over the entity’s day-to-day existence” (CA Paris, 31 October 2013, No 12/16888; CA Paris, 31 January 2013, No 12/10267); and
• does not have a separate asset base (“patrimoine”) from that of the State (see French Supreme Court, First Civil Section, 6 February 2007, Société Nationale des Pétroles du Congo Holdings Ltd, No 04-13.108 and 04-16.889).
In Ecuador there are no legal or regulatory norms related to non-signatory parties. However, several tribunals, using the non-signatory parties doctrine, have allowed the participation as actors or defendants of non-signatory parties; likewise, tribunals have allowed the participation of third parties not linked to the arbitration agreement to participate in said processes.
There is no legal norm in Ecuador that empowers local courts to force third parties to appear in arbitration. Notwithstanding the foregoing, arbitrators have the power to directly issue and execute precautionary measures, without the assistance of local courts, whereby they may enforce a third party to appear in arbitration, as witness to render statement.
Awards govern legal relations inter partes. Third parties and non-signatories are not bound by arbitration awards and may not therefore challenge them.
The ICA Act is silent on the matter as well as the CAM Santiago arbitration rules. There are both judicial and arbitral decision though that have exceptionally extended the arbitration agreement to non-signatories parties by applying a specific contract law doctrine namely ‘stipulation in favour of a third party.
If a non-signatory party is deemed to be bound by the arbitration agreement, such party will be naturally bound by the award as well as any other party to the arbitration.
Under Chilean law, third parties that were deemed as not bound by the arbitration agreement –and were thus not parties to the arbitration– cannot challenge the recognition of an award.
As said before, in general, arbitral awards do not bind third parties, who will likewise lack the capacity to challenge the recognition of awards.
Under the ACA, a third party cannot be bound by an arbitration agreement or award. However, section 3 of the ACA makes it possible to enforce an arbitration agreement against the personal representatives of a deceased party. Liquidators will also be bound by the decision of an arbitral tribunal if appointed by the court.
Both the Lagos Law and the ACA make no provisions on the right or the extent to which third party can challenge the recognition of arbitral awards. However, Nigerian courts have held that a third party that is likely to be affected by the outcome or the recognition of an arbitral award has the right to challenge an arbitral award on that basis. See Statoil (Nigeria) Limited et al. v FIRS (2014) LPELR-23144(CA).
A third party can be bound by an arbitration agreement if the subject matter of the agreement is transferred to such third party. Further, third parties can in some instances be bound by an arbitration agreement if they make direct claims against one of the parties to the agreement based on the agreement.
According to Norwegian rules on the binding force of judgments, arbitral awards are binding on third parties to the same extent as the third parties would have been bound by an equivalent agreement regarding the subject matter of the award.
The Arbitration Act has no specific regulation regarding to what extent a third party may challenge the recognition of an award.
Pursuant to the principle of party autonomy, Philippine jurisprudence generally prohibits the impleading of third parties into arbitrations that arise from agreements they are not parties to [Freuhalf Electronics Philippines Corp. v Technology Electronics Assembly and Management Pacific Corp. (2016)]. However, exceptions are made for parties who are bound by separate or accessory contracts which incorporate by express reference arbitration clauses in another primary contract, such as third-party beneficiaries [Bases Conversion Development Authority vs. DMCI Project Developers, Inc., (2016)] and bond issuers to a construction contract [Prudential Guarantee and Assurance, Inc. vs. Anscor Land, Inc. (2010)].
In that regard, only parties to the domestic arbitration proceedings, international commercial arbitration proceedings in the Philippines, or foreign arbitration proceedings may challenge an award. (Rules 11.1, 12.1 and 13.1, Special ADR Rules).
Typically, the award binds only the parties to the agreement. However, when enforcing the award, the Enforcement Court may issue orders that are binding on a third party (e.g., an order to a financial institution to freeze assets).
Article 37 of the AL provides that under the compulsory enforcement rules, an award may bind the following: any successor of a party after the arbitration proceeding has commenced and any one who has possession of the contested object for a party or its successor; or any entity (or its successor after the commencement of the arbitration proceeding) who is entering into an arbitration proceeding on behalf of another and any one who has possession of the contested object for said entity or its successor.
As for a third party looking to set aside an award, the AL is silent on the issue. If the tribunal has agreed to apply the Taiwan Code of Civil Procedure with respect to a third party intervening in an arbitration, then the Code of Civil Procedure rules on intervention applies to such third party, thereby giving it a right in principle to seek whatever relief a third party intervener is entitled to. However, there has been no such case in practice.
Only in exceptional cases can a third party or non-signatory be bound by an award rendered by an arbitral tribunal. Such cases include third parties being legal successors or guarantors of one of the parties to the arbitration or the awards modifying legal relationships inter-omnes (e.g. annulment of a decision by the shareholders' assembly).
As a general rule, a separate challenge of the recognition of an award is generally – for the parties bound by an arbitration award – not available under Swiss law, as there is no special separate procedure for the recognition of an award. Only the decision of the Swiss court that decides on the recognition within the enforcement procedure may be challenged.
As a rule, the effects of an award on the merits only extends to the parties involved in the arbitral proceedings and the award does generally not have any effect vis-à-vis third parties. Therefore and outside the aforementioned exceptional cases, a third party will in ordinary circumstances lack the necessary legitimate interest to challenge the recognition of an award.
Prior to answering this question, the following clarification must be made: The petition for recognition and enforcement of foreign awards is tried under the rules set forth in articles 739 et seq. GrCCP controlling the so called “non-contentious proceedings” which do not follow closely the adversarial model which presupposes the existence of a plaintiff and of a defendant in any event. A request in “non-contentious proceedings” does not need to be addressed against an opposing party. For that reason, the applicable rules do not provide a definite answer on whether the award debtor shall be named defendant and/or summoned to the proceedings. The existing law is contradictory whereas in legal literature the prevailing view is that the award debtor shall be summoned to the proceedings under the NY Convention in order to be able to raise the defenses there provided as means of resisting the recognition and enforcement of the award. In the context of this controversy, those who purport the view that the award debtor shall not be named defendant nor summoned to the proceedings necessarily treat him as “third party” in order to allow him to bring afterwards a third-party-challenge under article 583 GrCCP against the decision rendered. The same holds true as regards not summoned third parties which are bound by the res judicata effect of the award.
As regards third parties to the arbitration proceedings per se, which are not bound by the res judicata effect of the award but are nevertheless otherwise adversely affected by it, the question whether they are allowed to bring a third-party-challenge under article 583 GrCCP is disputed. As noted above (see answer to the Question 30) a similar issue is posed with regard to the award itself i.e. it is disputed whether said third parties are allowed to bring a third-party-challenge against the award per se (reference is made obviously to awards made in Greece either in domestic or international commercial arbitral proceedings). However, the question in the context discussed here is somewhat different in the sense that the third-party-challenge is not brought against a foreign award (such a challenge would not be governed by Greek law and would not be tried by Greek courts) but against the decision recognizing and declaring it enforceable. Hence, it seems that such a remedy under article 583 GrCCP which generally allows third party challenges against court decisions may not be precluded as a matter of principle, assuming always that legal standing exists.
There is no regulation or case law available under Turkish law regarding the extension of an arbitration award to non-signatory third parties. In principle, a valid and enforceable arbitration award can only bind the parties to the arbitration. Non-signatory third parties might only be bound by an arbitration award in case of a legal succession by inheritance or assignment, yet even in such instances, enforceability of an award against third parties is debated amongst the scholars.