The interim award of 22 April 1987 in ICC case 5625 has already been the subject of a number of commentaries in the past.1 This award not only relates to the question of the effect of an arbitration agreement within a group of companies but also to a specific procedural issue, that of the identification of the claimant or respondent in an arbitration where one party claims that the arbitration agreement is binding on a non-signatory party.

Can a party that has not signed the arbitration agreement present itself as a claimant in an arbitration? The answer to this first question is yes, as shown by the Paris Court of Appeal's decision of 21 October 1983 in the Dow Chemical case.2

Can a party that has signed an arbitration agreement and is a claimant in arbitration proceedings based on that agreement name as respondent a party that has not signed the arbitration agreement? There again, the answer is obviously yes, and there is little need, in the scope of this commentary, to list all the judgments and the many scholarly writings dealing with the question of the effect of an arbitration agreement within a group of companies, or more generally, the extension of the effects of an arbitration agreement to non-signatory parties.

The ICC award of 22 April 1987 raises a different issue, that of whether a respondent in an arbitration may, in the same way as a claimant and in the same proceedings, request the joinder of a party that has not signed the arbitration agreement, notably if that party belongs to the same group as the claimant.

As Sigvard Jarvin has pointed out in his commentary:

The arbitrators decided that only those can become parties in an ICC arbitration who name themselves as such in the request for arbitration or are identified as defendants in the claimants' request for arbitration. Arbitrators have no general discretion to add as parties to the arbitration persons or companies who were not identified as claimant or defendant in the request. 3

In this case, the question was whether X, the respondent in arbitration proceedings instituted by A, the claimant, could, in those proceedings, not only file a counterclaim against A but also join other parties in the proceedings, namely C and Y, which controlled A and X respectively and, according to X, had played an important part in the whole operation, and B, which had signed the arbitration agreement and had an interest in the outcome of the proceedings. [Page20:]

The fundamental argument of company X was that the parties to arbitration proceedings are the same as those to the arbitration agreement, the proceedings being simply the performance of the agreement.

This view was rejected, however, by the arbitral tribunal on interesting grounds:

The question is not whether B, Y and C are, or are not, bound by the agreement to arbitrate.

It is perfectly conceivable that a person is bound by one and the same agreement to arbitrate as are other persons but that does not prevent him from initiating an arbitration without joining as claimants those other persons nor does it oblige those other persons or any of them to join in an arbitration initiated by him. It is equally conceivable that a particular agreement entered into by other signatories is also binding on him, without his being a party in an arbitration initiated by those other signatories, against whoever they wish to identify as defendant.

Pursuing its analysis and drawing conclusions from its dissociation of the arbitration agreement and the arbitration proceedings, the arbitral tribunal saw the very question of the effects of an arbitration agreement on non-signatory parties as a procedural matter. In the tribunal's view, this question can arise only if there is a claimant and a respondent and the situation can occur only if one or more claimants have identified themselves as claimants and identified the respondents. In the words of the arbitral tribunal:

The arbitration clause (D.4) in fact clearly recognises the right of claimant A to bring arbitration proceedings without company B. . . . The question whether a person is or not bound by an agreement to arbitrate, and the debate whether and under what circumstances companies belonging to one group are bound by an agreement to arbitrate which has been signed by other companies belonging to that same group, can only arise in a situation where they identify themselves as claimants, or are being identified by a claimant as defendants, in a request for arbitration.

The arbitral tribunal then sought to define a claimant, as well as a respondent, in the light of the ICC Rules of Arbitration. Having no doubt rightly concluded that under these rules the claimant is the person that has filed a request for arbitration and the respondent the person that has been identified as such by the claimant and, if need be, is entitled to file a counterclaim, if such be the case, the arbitral tribunal found as follows:

There is one way only in which one can become a party in an arbitral procedure under the ICC rules: that is by way of Article 3,[4] by a Request in which one constitutes oneself a claimant or is being identified by such a claimant as a defendant.

Accordingly, in the case in question, the arbitral tribunal held that the respondent did not have grounds to request that companies B, C and Y join the proceedings. Should this finding be endorsed?

As we explained in 1990, there is reason to think not. 5 Of course, it is clear that in an ICC arbitration, the respondent is free to file a separate request for arbitration against the non-signatory companies, on the basis of the doctrine of the effects of an arbitration agreement within groups of companies. However, such parallel arbitration proceedings would be only one of the two options available to the respondent. The other is to request that the companies that have not signed the arbitration clause join the arbitration. This option is justified by the special nature of arbitration. [Page21:]

The award referred to mechanically transposes the principles of court proceedings to arbitration. This transposition causes the arbitrator to adopt a line of reasoning which puts the claimant at a considerable advantage. According to this line of reasoning, a claimant in arbitration is authorized to identify its respondents, but the respondent(s) is (are) not authorized, in the same proceedings, to identify other companies as opposing parties. An imbalance ensues between the legal situation of the claimant and that of the respondent, which goes against the principle of equality of the parties. Above all, however, this solution gives rules of procedure superiority over the legal effects of the arbitration clause, whereas in arbitration, proceedings are initiated on the basis of, and even in performance of, the arbitration agreement.

A request for arbitration will start arbitration proceedings, but the parties are in the end determined in accordance with the legal effects of the arbitration agreement, at the request of any party. This was clearly explained by Bernard Hanotiau in his article on complex arbitrations:

Arbitral proceedings, whatever institutional rules or national rules apply to them, are simply the implementation of a contract, namely the arbitration agreement. One party to the arbitral proceedings, claimant or defendant, is always entitled to request other parties to participate in the proceedings, as long as it can prove that they are indeed parties, not to the proceedings, but to the arbitration agreement. 6

It may of course be objected that this solution has its limits, especially as far as the rules of procedure applicable to arbitral proceedings are concerned. Certain specific rules, be they statutory or contractual, could explicitly prohibit the respondent from requesting that non-signatory parties join the proceedings. Moreover, this was the position taken by the arbitral tribunal in ICC case 5625, through an interpretation of Article 3 of the former version of the ICC Rules of Arbitration. In truth, this interpretation does not seem correct to us. Moreover, there would appear to be no clear provisions on the subject in any arbitration rules available for parties to chose.

On the other hand, the moment at which the respondent (and likewise the claimant) may request that non-signatory parties join the proceedings is likely to be problematic. As regards the claimant, must it be when the arbitration request is filed? As regards the respondent, must it be when the answer to the arbitration request is filed?

The answers to these questions obviously depend on the applicable rules of procedure. In the case of the ICC rules, it would doubtless be difficult to imagine a claimant or respondent requesting the joinder of a third party after the Terms of Reference have been signed.

An unpublished ad hoc award of 3 March 1999 dealt with this issue. It did not concern a respondent but a claimant that sought to bring in three additional respondents, not signatories to the arbitration agreement, several years after it had filed its request for arbitration against a respondent that had signed the arbitration agreement. It should be noted that this arbitration had been suspended, to all intents and purposes, between its beginning and the moment when the claimant requested the joinder of the three non-signatory companies. These three companies claimed that they should have been asked to participate in the proceedings 'from the very beginning of the arbitration'.

The arbitral tribunal made reference to the interesting study by Professor Bernard Hanotiau: [Page22:]

This issue has been succinctly dealt with by Professor Bernard Hanotiau in his recent article: 'Complex - multicontract-multiparty - arbitration', in: Arbitration International, 1998, Volume 11, n° 4, p. 383: 'Once an arbitration has started, can the claimant decide to join, at a later stage of the procedure, other parties to the contract or third parties? Can the defendant do the same? As far as other parties are concerned, it appears that the answer must be a priori affirmative, as much for the claimant as for the defendant, whenever the arbitration clause binding the three parties provides that all the disputes which might arise between them, and which relate to the interpretation or performance of the contract, are to be settled through arbitration. This is of course subject to the particular provisions of the arbitration rules to which the parties have referred.'

The arbitral tribunal then observed that in this ad hoc arbitration there was no procedural rule precluding the claimant's request:

On the other hand, an arbitration procedure is extremely different by nature, even though there may be several similarities with a judicial procedure. An arbitration procedure merely entails the performance of the arbitration agreement. As a result, the parties to the arbitration agreement are parties to the arbitration procedure. Conversely, the identification of parties to an arbitration procedure is in fact akin to the identification of the parties to the arbitration agreement.

This is why Bernard Hanotiau, in another passage from his article, writes: 'One party to the arbitral proceedings, claimant or defendant, is always entitled to request other parties to participate in the proceedings, as long as it can prove that they are indeed parties, not to the proceedings, but to the arbitration agreement.' (idem, p. 384.) This conclusion, overlooked far too often (or not understood), is in fact inherent to the very essence of arbitration.

The issue may be more complex, of course, in cases where the parties make reference to rules of procedure imposing terms and conditions, deadlines, and solutions for settling this or that difficulty in the procedure or for taking this or that procedural measure. It is conceivable, for example, that parties may have provided that the claimant must immediately identify all defendants once a request for arbitration has been made.

In such a case, these rules must be deemed part and parcel of the arbitration agreement and emanated from the will of the parties.

This led to controversy regarding ICC award no. 5625 dated 22nd April 1987 (ICC Arbitral Awards Volume 2 p. 185), which did not authorise a defendant to identify as 'opposing parties' in the same procedure other companies which it considered as belonging to the same group as the claimant. (cf. on this point, de Boisséson, 'French Law of Internal and International Arbitration' ('Le Droit Français de l'Arbitrage interne et International', 1990, Joly, p. 585 [sic]).

In reality, the arbitral tribunal based its arguments on ICC regulations in order to arrive at such a decision. In this respect, it is true that reference to detailed arbitration regulations somewhat narrows the gap between arbitration procedure and judicial procedure, by laying down a procedural form, deadlines, and rules to be complied with by the parties just as the parties must comply with the provisions of a code of procedure.

The situation is quite different in the case at hand involving ad hoc arbitration to be conducted under [X] law. That law, as already seen . . ., not only does not require the application of any set of detailed rules of procedure, but expressly states that 'arbitrators are not bound by the rules applicable to judicial proceedings'. There is, therefore, no rule here requiring the identification of all the defendants in the request for arbitration, or preventing the naming of additional defendants at a subsequent stage of the proceedings, subject of course to the parties' right to due process of law. [Page23:]

It may doubtless be thought that this solution could cause difficulties in the constitution of the arbitral tribunal. In the case which led to the ad hoc arbitral award of 3 March 1999, the three non-signatory companies also claimed that they should have participated in the constitution of the arbitral tribunal. The arbitral tribunal rejected this objection because it considered that the respondent that had signed the arbitration agreement and the other respondents formed a consortium subject to the 'required cohesion' provided by Swiss law and that consequently the four respondents formed a single party which had agreed in advance to the constitution of the arbitral tribunal.

In this particular case, it was possible to overcome the undeniable difficulty arising from the requirement that parties have an equal say in the constitution of the arbitral tribunal. In other cases, where the arbitral tribunal has already been constituted, the legal situation with which it is confronted will be more problematic, although, it should be stressed, not insurmountable. 7

1
See S. Jarvin, Comment on the 1987 award in case 5625, in S. Jarvin, Y. Derains & J.-J. Arnaldez, Recueil des sentences arbitrales de la CCI 1986-1990 (ICC Publishing/Kluwer Law International, 1994) at 484-485; B. Hanotiau, 'Complex - Multicontract-Multiparty - Arbitrations' (1998) 14 Arbitration International 369 at 384; M. de Boisséson, Le droit français de l'arbitrage interne et international (Paris: GLN, 1990) at 533ff.

2
Paris, 21 October 1983, Rev. arb. 1984.98 (Annot. Chapelle).

3
S. Jarvin, supra note 1 at 484.

4
[Article 3 of the ICC Rules of Arbitration of 1988.]

5
M. de Boisséson, supra note 1 at p. 534.

6
B. Hanotiau, supra note 1 at p. 384.

7
On this point, see B. Hanotiau, supra note 1 at p. 384: 'It is true that the joinder of several parties, either by the claimant or by the defendant, often creates a difficulty for the constitution of the arbitral tribunal. Nonetheless, this difficulty may not constitute an objection to the solution advocated above. The rules chosen by the parties, in this case the Arbitration Rules of the International Chamber of Commerce, have only been selected with regard to the implementation of the arbitration agreement; issues concerning its validity, effects and scope are matters for the arbitral tribunal alone.'