Source: https://pl.b-ok.org/book/3377614/c33f28
Timestamp: 2019-11-22 18:19:37
Document Index: 482693808

Matched Legal Cases: ['§ 219', 'arty19', '§ 3', '§ 3', '§ 2', '§ 2', '§ 2', '§ 2', '§ 6', '§ 12']

Multi-party and multi-contract arbitration in the construction industry | Kondev, Dimitar | download
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Kondev, Dimitar
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arbitration5008
party arbitration1261
clause1176
contractor1058
disputes849
consolidation841
arbitral668
subcontract665
employer622
contracts576
subcontractor560
tribunal550
icc539
main contractor532
joinder490
clauses447
proceedings445
arbitrator425
arbitrations397
arbitration rules392
international arbitration388
sub384
consent372
accessed370
agreements347
provisions311
fidic299
contractual271
contract arbitration256
resolution253
arbitration agreement232
arbitration clause232
arbitral tribunal227
arbitration clauses224
award208
appointed201
party and multi201
arbitration agreements197
ltd193
contract dispute192
accessed 25 july190
commercial arbitration176
arbitrators173
dispute resolution166
appointment161
arising157
main contract dispute153
edn153
arbitration act149
subcontract dispute143
engineer142
subcontractors139
pending137
international commercial arbitration136
subsection136
wording135
Multi‐Party and Multi‐Contract Arbitration
Multi‐Party and
Multi‐Contract Arbitration
Ph.D., LL.M., Mag. Jur., MCIArb, MIR
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ISBN: 9781119251729
Cover image: Omar Jabri / EyeEm/Gettyimages
1.1 General background and research problem
1.2 Scope of the book, limitations and literature review
Scope of the book
Limitations
Literature review
1.3 Sources used
1.4 Structure of the book
1.5 Aims and contribution of the book
Multi‐Party Arbitration in General
2.1 Terminology notes
Definition of multi‐party arbitration
2.1.2	Multi‐party and multi‐contract arbitration: divergent or similar
concepts?12
Group of contracts doctrine
2.2 Legal techniques introducing multi‐party arbitration
Single request for arbitration
Joinder
Intervention
Consolidation
2.3 Advantages of multi‐party arbitration
Avoids risk of inconsistent findings
Less time and fewer costs
Fewer factual errors
2.4 Obstacles to multi‐party arbitration
Consensual nature of arbitration
Arbitration as a two‐party setup
Arbitration as a confidential process
2.4.4	Setting aside proceedings and non‐recognition and / or
non‐enforcement of arbitral awards
Practical difficulties
The Need for Multi‐Party Arbitration in the Construction Sector
3.1 Specifics of construction disputes and construction arbitration
3.2 Introduction to international standard form construction agreements
FIDIC Conditions of Contract
NEC contracts
ICC contracts
ENAA model forms
IChemE contracts
PPC International and SPC International
3.3 Contractual structures in construction projects
‘Build‐only’ projects
‘Design‐build’ or ‘turnkey’ projects
Construction management
Management contracting
‘Design‐build‐operate’ (‘DBO’) model
Partnering and alliancing
3.4 Parties’ interests in multi‐party arbitration
Employer
Contractor
Subcontractor
Designer
Engineer
Suppliers
Technical consultants
Guarantors
Concluding remarks
Multi‐Party Arbitration Solutions under Arbitration Rules
4.1 ICC Rules
Multi‐contract claims and prima facie assessment
4.2 CEPANI Rules
Multiple parties and multi‐contract claims
Joinder and intervention
4.3 LCIA Rules
4.4 UNCITRAL Rules
4.5 Swiss Rules
Prima facie test
Rules adopted by the American Arbitration Association (‘AAA’)
Construction Industry Arbitration Rules (‘CIAR’)
ICDR Rules
Vienna Rules
DIS Arbitration Rules
SCC Rules
DIA Rules
Arbitration rules in Asia
4.11.1 CIETAC Rules
4.11.2 SIAC Rules
4.11.3 HKIAC Rules
4.11.4 JCAA Rules
Concluding remarks regarding arbitration rules
Multi‐Party Arbitration Solutions under Arbitration Laws
5.1 UNCITRAL Model Law
5.2 The United Kingdom
5.3 The Netherlands
5.4 Belgium
5.5 New Zealand
5.6 Hong Kong
5.7 Canada
5.8 Australia
5.9 Other countries
5.10 Multi‐party arbitration in the United States
5.10.1 Legal framework
5.10.2 United States’ case law on multi‐party arbitration
5.11 Should arbitration laws deal with multi‐party arbitration?
5.12 Concluding remarks regarding arbitration laws
Contractual Solutions to Multi‐Party Arbitration
6.1 FIDIC Conditions of Contract
6.2 Blue Form
Clause 18(2) of the 1984 Blue Form
6.2.2	Use of the Blue Form in conjunction with
the FIDIC Conditions of Contract
Commentary on clause 18(2)
Clause 18(8) of the 1991 Blue Form
Clause 18(10) of the 1998 Blue Form
Clause 18C(4) of the 2008 Blue Form
6.3 JCT Contracts
JCT 80 approach to multi‐party arbitration
Commentary on the JCT 80 approach
New JCT approach
ACA standard forms
NEC3
Main contract provisions
Subcontract provisions
6.5.3	Do NEC3 provisions create a self‐contained mechanism
for joint adjudication?
6.5.4	Compatibility between the joint adjudication provisions
and the dispute n
­ otification requirements
PPC and SPC International
AIA standard forms
ConsensusDocs
AB 92 and ABT 93
Concluding remarks regarding contractual approaches
Proposed Solutions
Jurisdictional approach
Abstract consensual approach
Proposed contractual solutions
7.3.1	IBA guidelines for Drafting International
Arbitration Clauses
7.3.2	AAA Guide to Drafting Alternative Dispute Resolution
Clauses for Construction Contracts
Drafting Multi‐Party Arbitration Clauses
Sample multi‐party arbitration clause
Institutional approach
7.4.1	How to create a workable multi‐party arbitration
mechanism under arbitration rules?
Compatibility of arbitration agreements
Other circumstances
Table 1 Summary of Multi-Party Arbitration Provisions under
the Reviewed Arbitration Rules
Table 2 Summary of Multi-Party Arbitration Provisions under
Arbitration Laws
Appendix 1 Second Alternative Clause of Clause 20 of the FIDIC
Subcontract337
Appendix 2 Multi‐Party Arbitration Provisions under the Blue Form
Appendix 3 Multi‐Party Arbitration Clauses under the ENAA Model
Form – International Contract for Process Plant
Construction, 2010 and Related Subcontracts
Bibliography358
Dimitar Kondev, Ph.D., LL.M., Mag. Jur., MCIArb, MIR, is an international lawyer
­specializing in construction law and dispute resolution.
Dimitar has dealt with international construction agreements based on the FIDIC
Conditions of Contract and bespoke contracts for over a decade. He is currently working
for White & Case LLP Paris on a research project in construction law. Before joining
White & Case he worked as a senior associate and practising attorney‐at‐law at DGKV,
one of the largest law firms in Bulgaria, where he provided legal advice on all aspects and
stages concerning the realization of large‐scale construction projects. Dimitar has also
worked as of counsel at the family‐owned law firm Law House Kondevi, Bourgas,
Besides his professional background as an attorney, Dimitar has dealt with international
construction law on an academic level. He obtained his LL.M. degree in international
­business law from the Vrije Universiteit Amsterdam. Dimitar’s doctoral dissertation at
Aarhus University in Denmark, which forms the basis of this book, focuses on construction
law and dispute resolution.
Dimitar has written several articles for international peer‐reviewed construction law
journals such as the International Construction Law Review and Construction Law
International. He has been teaching international construction law at Aarhus University
since 2015. Dimitar is registered as a dispute adjudicator under the Bulgarian list of
FIDIC adjudicators (BACEA National List).
Contact details: d_kondev@mail.bg.
I am delighted to have been invited to write a foreword to this book. A proper discussion
of multi‐party and multi‐contract arbitration issues in the construction sector is long
Disputes are inherent in the construction industry. Large construction projects invariably
involve a multitude of contracting parties, who are generally bound by a series of bilateral
contracts. Controversies arising under one of these contracts often have repercussions on
parties not directly bound by that contract. For example, an employer’s claim against the
main contractor based on alleged defects in the subcontractor’s work will often trigger a
recourse claim by the main contractor against the subcontractor.
Parties to international commercial contracts, including construction contracts,
regularly resort to arbitration as a main dispute resolution method because of the
advantages that arbitration offers over litigation. Arbitration proceedings typically
take place only between the (typically two) parties to the contract. Third parties, who
are non‐signatories to that contract, may not participate in the same proceedings. As a
result, related disputes on similar points of law and fact, such as the one mentioned
above, often have to be resolved in parallel arbitrations. This takes time, incurs costs
and may result in inconsistent findings.
Multi‐party arbitration is not a new topic. It has been the focal point of discussion and
debate for several decades. Numerous articles and a number of other contributions have
been written on the topic. In this context, it may seem surprising that very few of these
contributions focus on the construction industry, where multi‐party disputes occur on a
regular basis. The present book is the first book on the market that provides for an
in‐depth analysis of the legal issues associated with multi‐party and multi‐contract
­arbitration in the construction industry.
Having the background of a practising lawyer and a scholar, the author has approached
this intrinsically difficult subject and its attendant problems from both a theoretical and
a practical perspective. In Chapters 1 and 2, the book opens with an introduction to the
problem of multi‐party arbitration. In Chapter 3, the author steps into the shoes of each
major participant in construction projects with the purpose of identifying their potential
interests in participating in this type of arbitration. Chapter 4 contains an in‐depth
­analysis of the approaches to multi‐party arbitration under arbitration rules commonly
encountered in construction disputes. In this analysis, the author draws upon numerous
articles and commentaries. In Chapter 5, different legislative approaches to the problem
are described and evaluated. In Chapter 6, the book then focuses on the contractual
solutions to multi‐party arbitration in a wide range of popular international and ­domestic
standard forms together with case law pertaining to them. The author critically analyses
the contractual solutions available so far. The purpose is to inform users of the forms of
potential pitfalls and complexities that may result from the application of these s­ olutions.
The guidelines for drafting multi‐party arbitration clauses suggested by the author in
Chapter 7 are of particular interest for practitioners. This chapter contains a ­practitioner‐
oriented discussion of how to create a proper multi‐party arbitration clause. Last, but not
least, the author has proposed an intriguing redraft of the arbitration clause in the FIDIC
Red Book, which contracting parties willing to engage in multi‐party arbitration may
want to adopt.
The book is the first comprehensive work on the topic. It is well thought out, clearly
structured and written in a straightforward style. It offers an up‐to‐date and comprehensive coverage of existing materials and case law, tacked with the author’s original ideas as
to how the current regulation of multi‐party arbitration may be improved. In view of the
importance of the issues it addresses, this book will be a precious reference work for
practitioners and scholars alike.
Professor Torsten Iversen LL.D., Ph.D., LL.M. (Frankfurt a.M., Germany)
The University of Aarhus, Denmark
The topic of multi‐party arbitration is not new. The perennial problems pertaining to
multi‐party arbitrations have been the subject of extensive debate and scholarly writings
for more than two decades. Several books and numerous articles have been written on
There are several reasons why I decided to choose to write a book related to a subject
that has received such extensive comment in recent years. First, most of the existing
contributions focus on multi‐party arbitration from a general perspective. Because of
their broad scope they fail to consider in sufficient detail and precision the problems
arising in the construction sector. Even though the construction sector does not have
monopoly over multi‐party disputes, the frequency of such disputes there is greater
than in other commercial sectors. Moreover, multi‐party construction disputes
­commonly arise under two or more contracts at the same time. For example, a main
contract dispute concerning defects in the subcontractor’s work may trigger a related
subcontract dispute whereunder the main contractor will pursue his recourse claim
against the subcontractor. The consistent resolution of these two disputes may require
the conduct of a single arbitration with the participation of all three parties, which will
bear the characteristics of both multi‐party and multi‐contract arbitration. This book
aims at covering exactly this type of arbitration. Multi‐party arbitrations based on
­multiple contracts often give rise to a number of challenges that are even more intricate
than those arising in a mere multi‐party arbitration.
Secondly, construction contracts and disputes have their own specifics, which distinguish them from other commercial sectors and deserve a separate analysis. For example,
construction agreements commonly require the fulfilment of certain procedural requirements in order for a ‘claim’ to crystalize into a ‘dispute’. Moreover, complex multi‐tier
­dispute resolution provisions demanding dispute adjudication and other legal mechanisms
as preconditions to arbitration are commonplace in the construction sector. All these procedural requirements can have a significant impact on the conduct of multi‐party arbitral
proceedings and are therefore discussed thoroughly in this book. In scholarly writings this
is a subject that is commonly left in the dark.
Finally yet importantly, even though many scholarly writings have the potential to
contribute to arbitration theory, they are of limited use to those practising in the field.
These contributions confine themselves to identifying the problems pertaining to multi‐
party arbitration but they do not give any practical suggestions on how these problems
can be solved. This book also aspires to contribute on a theoretical level but it has a clear
practical approach to the problems discussed. It provides detailed guidelines for drafting
multi‐party arbitration clauses and contains some other practical suggestions as to how
the current legal regulation of multi‐party disputes can be improved in order to accommodate better the increased demand for efficient resolution of these disputes.
Therefore, I hope that this book will be useful to both scholars and practitioners.
I have endeavoured to state the law as it stood on 1 November 2016.
Throughout my work on this book I enjoyed the assistance of many individuals whom I
would like to thank.
First, I would like to thank Professor Torsten Iversen from Aarhus University who
acted as a main supervisor of my doctoral dissertation, a modified version of which
formed the basis of the present book.
I would also like to thank the following individuals who contributed to this project
with their ideas and suggestions: Christopher Seppälä (White & Case, Paris), His Honour
Humphrey Lloyd (Atkin Chambers, London), Professor John Uff (Keating Chambers,
London), John Marrin (Keating Chambers, London), Paul Buckingham (Keating
Chambers, London), Anthony Lavers (White & Case, London), Professor David Mosey
(King’s College London), Professor Renato Nazzini (King’s College London), Professor
Ingeborg Schwenzer (University of Basel, Switzerland), Philipp Habegger (LALIVE,
Zurich), Professor Sébastien Besson (Python & Peter, Geneva), Tobias Zuberbühler
(Lustenberger, Zurich), Paolo Marzolini (Patocchini & Marzolini, Geneva), Dr Dorothee
Schramm (Sidley, Geneva), Dr Herman Verbist (Everest, Ghent), Ian Heaphy (Turner &
The views expressed in this book are, however, those of the author and do not necessarily reflect the views and opinions of the abovementioned persons.
I am also indebted to the following organizations and other entities for the permissions
granted to me to quote and reproduce some material from the various standard forms
examined in this book: ACA, AIA, CECA, ConsensusDocs, ENAA, FIDIC, IChemE,
JCT, and NEC (Thomas Telford Ltd.). Similarly, I would also like to thank all the arbitral
institutions mentioned in the book for granting me permissions to quote certain clauses
from their arbitration rules.
Special thanks to Stephan Kyutchukov from DGKV, Sofia, who was the first who
introduced me to the FIDIC Conditions of Contract many years ago.
On the personal side, I would like to say special thanks to those who supported me
and encouraged me throughout my work on this book. They know how they are. Thank
you for your endless support, understanding and patience.
Construction Industry Arbitration Rules
Danish Institute of Arbitration
Deutsche Institution für Schiedsgerichtsbarkeit e.V. (German Institution
of Arbitration)
Federal Arbitration Act (USA)
Fédération Internationale des Ingénieurs Conseils (International
Federation of Consulting Engineers)
International Chamber of Commerce, France
Revised Uniform Arbitration Act (USA)
Voldgiftsnævnet for bygge‐ og anlægsvirksomhed (Danish Arbitration
Board for Building and Construction)
The present book deals with multi‐party and multi‐contract international arbitration
in the construction sector. This chapter provides an introduction to the topic. The
introduction starts with a brief overview of arbitration, its advantages over litigation and
its general inability to deal sufficiently well with multi‐party and multi‐contract disputes
arising in the construction sector (Section 1.1). Then, the scope of this book and its
limitations are described, with a brief overview of the existing literature in the field
(Section 1.2). The introduction also contains a concise description of the legal sources
utilized in this book (Section 1.3). Finally, the structure of the book is outlined
(Section 1.4) and its contribution and goals are stated (Section 1.5).
1.1 General background and research problem
Arbitration is the preferred method for resolution of disputes under international
commercial transactions, including in the construction sector1. The perceived advantages of arbitration over litigation include the possibility to choose a neutral forum, to
have a neutral tribunal in the constitution of which the parties may participate, the
flexibility of the arbitral proceedings due to the lack of formal rigid rules of evidence,
and the confidentiality of the arbitration process. Contracting parties also prefer arbitration because of the nature of the arbitral awards, which are binding and not subject
to court review on the merits. This, in principle, makes arbitration faster than court
proceedings. The direct recognition and enforceability of arbitral awards under the
New York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (the ‘New York Convention’)2 is pointed out as a further and probably the
most significant advantage of arbitration.
Gary Born (2009) International Commercial Arbitration, Kluwer Law International, The Hague, pp. 67–70, See
also Julian Lew, Loukas Mistelis and Stefan Kröll (2003) Comparative International Commercial Arbitration,
Kluwer Law International, The Hague, pp. 1–8, Alan Redfern and Martin Hunter with Nigel Blackaby and
Constantine Partasides (2004) Law and Practice of International Commercial Arbitration, 4th edn, Sweet &
Maxwell, London, pp. 22–27.
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 10 June 1958, available at
http://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/XXII_1_e.pdf (accessed 25 July 2016).
Multi-Party and Multi-Contract Arbitration in the Construction Industry, First Edition.
Dimitar Kondev.
The growing international interdependency of commerce and the globalization of
today’s business world have led to complex contractual relations, which very often
involve more than two parties bound by a multitude of contracts3. The relationships
between the contracting parties are often intricate and frequently involve multilateral
and divergent interests. As a result, there is a permanent trend for the number of multi‐
party actions in international commercial arbitration to increase, which is evident from
recent statistical reports4. The increasing number of multi‐party disputes has led to a
higher demand for dispute resolution mechanisms capable of handling such disputes,
such as joinder or intervention of third parties into pending proceedings and consolidation of parallel arbitrations.
Despite the predominant position of arbitration over litigation, today it is still argued
that arbitration is not well equipped to handle a certain category of disputes arising
under international business transactions, including in the construction sector5. From
the perspective of the construction industry, this category comprises multi‐party
construction disputes and especially those arising under multiple contracts. As His Honour
Humphrey Lloyd has pointed out:
Given the complexity of construction work and the prevalence of contractual disputes in
­certain sections of the industry, it is not clear why multi‐party arbitrations are so thin on the
Nathalie Voser (2009) ‘Multi-party Disputes and Joinder of Third Parties’, in Albert Jan van den Berg (ed.) 50
Years of the New York Convention, ICCA International Arbitration Conference, ICCA Congress Series No. 14,
Kluwer Law International, Alphen aan den Rijn, p. 343.
In 1998, approximately one-fifth of the cases administered by the ICC International Court of Arbitration
involved more than two parties, whereas in 2007 the percentage of multi-party cases reached 31.1%. See Anne
Marie Whitesell (2009) ‘Multiparty Arbitration: The ICC International Court of Arbitration Perspective’, in the
Permanent Court of Arbitration (ed.) Multiple Party Actions in International Arbitration, Oxford University
Press, New York, NY, p. 203. For a more recent statistical analysis about the ICC cases, see ‘2014 ICC Dispute
Resolution Statistics’, in 1 ICC Dispute Resolution Bulletin, no. 1 (2015), p. 8, where it has been stated that
one-third of the total number of filings in 2014 comprised multi-party cases. Similar information has been
disclosed in an earlier ICC report: see ‘2012 Statistical Report’, in 24 ICC International Court of Arbitration
Bulletin, no. 1 (2013), p. 10. A statistical analysis of all the disputes brought before the Swiss Federal Supreme
Court revealed that the percentage of multi-party arbitration disputes grew from 25% in the early 1990s to 40%
in 2005. See Felix Dasser, ‘International Arbitration and Setting Aside Proceedings in Switzerland: A Statistical
Analysis’, in 25 ASA Bulletin, no. 3 (2007), pp. 462–463. In 2002, more than 50% of the London Court of
International Arbitration cases were multi-party proceedings. See Martin Platte, ‘When Should an Arbitrator
Join Cases?’ in 18 International Arbitration no. 1 (2002), pp. 71–75. See also Ruth Stackpool-Moore (2014)
‘Joinder and Consolidation – Examining Best Practice in the Swiss, HKIAC and ICC Rules’, in Nathalie Voser
(ed.) 10 Years of the Swiss Rules of International Arbitration, ASA Special Series No. 44, JurisNet LLC, New York,
NY, p. 16, where the author has stated that more than one third of the new cases filed under the 2013 arbitration
rules of the Hong Kong International Arbitration Centre involve multiple parties or multiple contracts.
Nathalie Voser (2009) ‘Multi-party Disputes and Joinder of Third Parties’, in Albert Jan van den Berg (ed.)
50 Years of the New York Convention, ICCA International Arbitration Conference, ICCA Congress Series
No. 14, Kluwer Law International, Alphen aan den Rijn, p. 343. See also Kristina Maria Siig, ‘Multi-party
Arbitration in International Trade: Problems and Solutions’, in 1 International Journal of Liability and Scientific
Enquiry, no. 1/2 (2007), p. 72, Richard Garnett, Henry Gabriel and Jeff Waincymer (2002) A Practical Guide to
International Commercial Arbitration, Oceana Publications, New York, NY; Alan Redfern and Martin Hunter
with Nigel Blackaby and Constantine Partasides (2004) Law and Practice of International Commercial
Arbitration, 4th edn, Sweet & Maxwell, London, p. 200, and Clive Hardy, ‘Multi-Party Arbitration: Exceptional
Problems Need Exceptional Solutions’, in 66 Arbitration: The Journal of the Chartered Institute of Arbitrators,
no. 1 (2000), p. 15.
ground, whereas the courts are full of actions involving many parties bound by contracts
incorporating arbitration clauses6.
This observation was made in 1991 but it still concerns a question of interest, which
remains unsettled. Unlike judges in national courts, who usually have the power to review
multi‐party disputes by way of ordering consolidation of parallel proceedings or joinder
of third parties in existing litigation on the basis of statutory provisions contained in civil
procedure codes, arbitral institutions and tribunals do not have similar powers, mainly
because of the consensual nature upon which their jurisdiction is based.
The attempts of the international arbitration community to provide for solutions for
satisfactory resolution of multi‐party disputes have resulted in the revision of the major sets
of arbitration rules in recent years and also in the introduction of multi‐party arbitration
provisions in the national arbitration laws of some states. The present book examines the
legal regulation in these rules and laws to identify whether this regulation provides for workable solutions that contracting parties in the construction industry may readily utilize. As it
will be seen, a workable solution, in the author’s opinion, is a solution that provides for a selfcontained mechanism of resolution of multi-party and multi-contract disputes – a solution
that can be put into operation upon the request of a contracting party without the need to
obtain the explicit ad hoc consent of the other ­parties. Such ad hoc consent can hardly be
obtained once the parties have entered into the contentious stage of their contractual relations. At the same time, a workable ­solution should necessarily result in an arbitral award that
is capable of being recognized and enforced internationally without any difficulties.
In addition to the legal regime contained in the arbitration rules and laws, the author
­analyses the contractual regulation of multi‐party arbitration in order to ascertain whether a
workable solution can be found in parties’ contracts. At a contractual level, however, relatively
few international standard forms have dealt with this type of arbitration. The FIDIC Conditions
of Contracts7 and the NEC38, which are probably the most popular and widely used
­international standard forms, do not contain standard provisions dealing with multi‐party
arbitrations. Furthermore, ad hoc multi‐party arbitration clauses are rarely met. Therefore,
there is still a gap related to the lack of multi‐party arbitration provisions in the contracts that
the parties conclude. The present book aims, inter alia, to address this gap. It will analyse the
­available contractual provisions on multi‐party arbitration, which are mostly contained in
domestic standard forms, and provide some suggestions as to how this gap can be overcome.
On the basis of the analysis of the current regulation of multi‐party disputes, as contained in the parties’ contracts and the applicable arbitration rules and laws, the book
provides some practical suggestions as to how the current regulation can be improved
in order to meet the increasing demands of the business community for workable
multi‐party arbitration solutions.
Humphrey Lloyd (1991) ‘A National Experience’, in P. Bellet, P. Bernardini, G. Bernini et al. (eds) Multi-Party
Arbitration: Views from International Arbitration Specialists, Publication No. 480/1, ICC Publishing SA,
Paris, p. 63.
FIDIC is the French acronym of the International Federation of Consulting Engineers (www.fidic.org,
accessed 25 July 2016) and the FIDIC Conditions of Contracts are a suite of contracts drafted by FIDIC. For
further details about these contracts, please see Subsection 3.2.1 of this book.
The original version of the NEC3 suite of contracts was launched in 2005, and it was drafted by the Institution
of Civil Engineers in London. These standard forms were amended in 2006 and in 2013. For more details about
NEC3, please see www.neccontract.com (accessed 25 July 2016) and Subsection 3.2.2 of this book.
1.2 Scope of the book, limitations and literature review
1.2.1 Scope of the book
As the title of the book suggests, it deals with arbitration of construction disputes that
involve multiple parties and arise under two or more contracts9. More particularly, the
book deals with those construction disputes that are multi‐party and multi‐contract at
the same time, for example related disputes involving an employer, a main contractor
and a subcontractor arising under a main contract and a subcontract.
The focus of this book is on construction arbitration for several reasons. These reasons
have been described in more detail in Section 3.1 but will be briefly reiterated here. First,
even though the construction industry does not have a monopoly over multi‐party
and multi‐contract disputes and the problems pertaining thereto, the frequency of
such ­disputes in the construction sector is generally greater than in other commercial
­sectors10. This is due to the multitude of parties and contracts involved in large construction projects. Therefore, construction disputes are very illustrative of the type of issues
arising in multi‐party and multi‐contract arbitrations. Furthermore, construction projects
have their own specifics, which deserve a separate analysis. Due to the long‐term nature of
many construction projects, there is a necessity for a prompt resolution of construction
disputes while works are still under way. This has led to the emergence of multi‐tier d
­ ispute
resolution clauses in construction agreements, which add a further level of complexity to
multi‐party arbitration problems. In addition, there is a proliferation of standard form
agreements in the construction industry. Some of these contracts, mostly domestic forms,
contain multi‐party arbitration provisions and have from time to time been subject to
arbitral proceedings or litigated before local courts. Therefore, the provisions contained in
these contracts, together with the case law pertaining to them, represent fruitful ground
for specific sector‐oriented research in construction arbitration.
The present book deals with construction disputes that are both multi‐party and multi‐
contract. Therefore, multi‐party arbitral proceedings arising under a single contract (e.g. a
consortium agreement) or those arising under several agreements executed between the
same two parties (e.g. multiple main contracts between an employer and the same main
contractor executed in relation to different construction projects) are outside the scope of
this book. Furthermore, it is not the intention of this book to explore the notion of extension of an arbitration agreement to non‐signatories, which has been subject to an extensive
Strictly speaking, the use of the word multiple in respect of contracts may be understood as denoting more
than two contracts. However, in international commercial arbitration it is commonly accepted that arbitrations
arising under two or more contracts can be classified as multi-contract arbitrations. Therefore, for the purposes
of this book, the existence of two contracts will be sufficient to categorize the disputes arising thereunder as
multi-contract disputes or certain arbitration based on these disputes as multi-contract arbitration.
John Marrin (2009) ‘Multiparty Arbitration in the Construction Industry’, in the Permanent Court of Arbitration
(ed.) Multiple Party Actions in International Arbitration, Oxford University Press, New York, NY, pp. 398–399.
debate in recent years11. This notion has been invoked with regard to situations that are
principally different from those discussed here. Unlike multi‐contract arbitrations, which
in most cases imply the existence of two or more arbitration agreements contained in
several contracts, the notion of extension of the arbitration agreement to non‐signatories
presupposes the existence of one arbitration agreement only, which is extended to a third
party or non‐signatory on the basis of some of the theories employed to justify this notion12.
Another limitation stems from the type of arbitration discussed here. The focus of the
book is on international commercial arbitration. Some states have adopted a dual
approach to commercial arbitration – they distinguish between domestic and international commercial arbitration in their statutes. This book mostly considers arbitration
laws governing international commercial arbitration. However, on some occasions domestic arbitration statutes have also been considered because of their peculiar approach to
multi‐party arbitration. Other types of arbitration, which are not mentioned above, such
as multi‐party investor‐state arbitration, mass claims and class‐wide arbitration, are also
outside the scope of the book. Contractual adjudication and other dispute resolution
techniques, such as expert determination, are also not within the main focus of the book.
However, the book occasionally touches upon the topic of construction adjudication13.
This is necessary because of the direct relevance of adjudication to the conduct of multi‐
party arbitrations in some cases.
This book deals with multi‐party arbitration in the strict sense of the term: arbitration
where each of the multiple parties participates as a formal party in a proceeding that may
result in a single arbitral award binding all parties. Therefore, related legal institutes,
such as concurrent hearing of disputes and name borrowing, which are mainly known in
common law countries, are also outside the scope of the book.
Multi‐party arbitration is not a new topic. Some of the first publications in the field are
from the early 1980s14. Since then multi‐party arbitration has been discussed extensively
See, for example, Bernard Hanotiau (2005) Complex Arbitrations: Multiparty, Multicontract, Multi-issue
and Class Actions, Kluwer Law International, The Hague. See also Pierre Mayer (2009) ‘Extension of the
Arbitration Clause to Non-signatories under French Law’, in the Permanent Court of Arbitration (ed.)
Multiple Party Actions in International Arbitration, Oxford University Press, New York, NY, pp. 189–199, and
William Park (2009) ‘Non-signatories and International Contracts: An Arbitrator’s Dilemma’, in the
Press, New York, NY, pp. 3–31.
These theories include, inter alia, consent on the basis of conduct, the group of companies doctrine, the
doctrine of piercing the corporate veil, representation and agency, assignment, etc.
See, for example, Section 6.5 and Subsection 7.3.3.3 of this book.
The International Council for Commercial Arbitration (ICCA) dealt with the topic of multi-party arbitration
at the Warsaw Conference of 1980, a full report of which was published (see Polish Chamber of Foreign Trade
(1982) International Arbitration in Multi-Party Disputes, Materials of an International Symposium Warsaw June
29th – July 2nd 1980, Wydawnictwo Prawnicze, Warsaw). See also Cornelis Voskuil and John Wade (eds)
(1985) Hague–Zagreb Essays 5 on the Law of International Trade, Reservation of Title, Multiparty Arbitration,
Martinus Nijhoff, The Hague.
in the legal literature in the form of several books15 and numerous articles. Most of these
legal sources have been quoted throughout this book on several occasions. The contributions in the field mostly focus on multi‐party arbitration from a general perspective.
Because of their broad scope, they fail to consider in sufficient detail and precision the
problems arising in the construction sector. These contributions discuss issues such as
the advantage of having multi‐party arbitration in general, the general obstacles that
such arbitration may cause and the extension of arbitration agreements to non‐signatories.
The present book aims at addressing an existing gap in the legal literature. As far as
the author is aware, there is no book written with a specific focus on multi‐party and
multi‐contract arbitration problems arising in the international construction industry.
The only contributions in the field are in the form of few articles. The author has found
two of these articles especially stimulating. The first article was written by His Honour
Humphrey Lloyd in 199116. It is an excellent thought‐provoking article. It briefly considers
the interests of the different parties in the construction industry and poses a list of
matters that should be considered by those drafting multi‐party arbitration clauses.
However, some of the content of this article is outdated because of some new developments in the field. The second article was published by John Marrin in 200917. It is a very
useful article, which provides a concise overview of the regulation of multi‐party arbitration
in the construction sector but does not go into detail about each of the reviewed levels of
regulation due to the natural volume constraints stemming from the form of the contribution. Both articles recognize that further work is necessary in the field, especially with
a view to the lack of contractual solutions to multi‐party arbitration18.
1.3 Sources used
Unlike research in domestic fields of law, where the available sources are more or less
limited to those existing in the specific country, research in international commercial
arbitration requires the use of a unique blend of legal sources, which are mutually
intertwined19. The diversity of legal sources available in commercial arbitration is one of
its specific features. Some of these sources are national (e.g. arbitration laws, case law)
See, for example, Bernard Hanotiau (2005) Complex Arbitrations: Multiparty, Multicontract, Multi-Issue and
Class Actions, Kluwer Law International, The Hague, and the Permanent Court of Arbitration (ed.) (2009)
Multiple Party Actions in International Arbitration, Oxford University Press, New York, NY.
Arbitration: Views from International Arbitration Specialists, Publication No. 480/1, ICC Publishing SA, Paris,
pp. 61–79.
John Marrin (2009) ‘Multiparty Arbitration in the Construction Industry’, in the Permanent Court of
Arbitration (ed.) Multiple Party Actions in International Arbitration, Oxford University Press, New York, NY,
pp. 395–425.
Ibid., p. 412. See also Humphrey Lloyd (1991) ‘A National Experience’, in P. Bellet, P. Bernardini, G. Bernini
et al. (eds) Multi-Party Arbitration: Views from International Arbitration Specialists, Publication No. 480/1,
ICC Publishing SA, Paris, pp. 63, 74.
S. Strong (2009) Research and Practice in International Commercial Arbitration. Sources and Strategies, Oxford
University Press, New York, NY, pp. 1–2 (para. 1.01), 12 (paras 2.11–2.12).
and others are international in their nature (e.g. international conventions). Furthermore,
we can also speak of ‘anational’ or transnational sources, such as standard form contracts
and arbitration rules20. Standard form agreements may be applied in different jurisdictions.
Moreover, they can be subject to different governing laws. This is a consequence of the
widely recognized principle of freedom of contract. Arbitration rules are published by
arbitral institutions and other non‐state bodies. They are detached from the peculiarities
of any national legal system and may be applied to disputes irrespective of the governing
law of the underlying contracts and the seat of arbitration. Some of the legal sources in
international commercial arbitration are created by states (e.g. arbitration laws, case law)
whereas others are drafted by private parties or institutions (e.g. arbitration agreements,
arbitral awards, arbitration rules, or guidelines).
Regulation of multi‐party arbitration can be found in three main types of legal sources.
These sources can also serve as legal bases for the conduct of multi‐party arbitrations21.
These include the arbitration agreements contained in the parties’ contracts, the arbitration
rules referred to in these agreements, and the arbitration laws of the seat of arbitration
(lex arbitri). All of these primary legal sources have been examined because they have
direct relevance to the conduct of multi‐party arbitrations.
As regards the first legal source, the arbitration agreements, the focus of the book is on
both standard and ad hoc clauses contained in international construction agreements.
Even though domestic construction agreements are in principle outside the scope of this
book, some standard clauses in domestic forms addressing multi‐party arbitration have
also been examined. They can serve as a useful source of inspiration for the finding of
contractual solutions on an international level. Most of these domestic forms originate
from England or the United States.
As regards arbitration rules, the focus is on the rules published by the most prominent
arbitral institutions not only in Europe but also worldwide22. The main criterion for the
selection of these rules is their frequent application to construction disputes. Sometimes
arbitration rules drafted for use in specific commercial sectors are published by entities,
mostly private organizations, which are not arbitral institutions23. Some of these rules are
also considered in this book to the extent they contain regulation of multi‐party and
multi‐contract disputes in the construction sector.
The choice of a certain seat of arbitration will generally trigger the application of the
arbitration law of that state (lex arbitri). Most states do not regulate multi‐party arbitration
in their legislation. Therefore, the rationale for the choice of the reviewed arbitration
laws differ from the one adopted with regard to the arbitration rules. The emphasis is not
Kristina Maria Siig, ‘Multi-party Arbitration in International Trade: Problems and Solutions’, in 1 International
Journal of Liability and Scientific Enquiry, no. 1/2 (2007), pp. 77–78.
These include the ICC International Court of Arbitration with the International Chamber of Commerce in
Paris, France, the LCIA in London, the Swiss Chambers’ Arbitration Institution, the International Centre for
Dispute Resolution, the Arbitration Institute of the Stockholm Chamber of Commerce, some other nascent
arbitral institutions in Asia and so forth.
Examples of this type of rules are the ICE Arbitration Procedure, published by the Institution of Civil
Engineers, and the Construction Industry Model Arbitration Rules (CIMAR) drafted by the Society of
Construction Arbitrators.
on the arbitration laws of the states that are the most preferred seats of arbitration but on
the laws of the states that have addressed multi‐party arbitration in their statutes. The
UNCITRAL Model Law on International Commercial Arbitration (the ‘UNCITRAL
Model Law’)24 has also been taken into account. Even though this law is not binding in
itself, it has been incorporated as arbitration law governing international commercial
arbitration in many states.
National arbitration laws are of relevance not only because of the multi‐party arbitration solutions they may contain. These laws will also come into play at the post‐award
stage if a setting aside of the award is requested or if the prevailing party tries to enforce
the award. If the recognition or enforcement of the award is sought in third countries,
certain international instruments, such as the New York Convention, may also apply.
Therefore, the provisions of these instruments are also taken into consideration.
Apart from the legal sources described above, certain other sources have been used.
Case law on multi‐party arbitration has been examined, particularly in England and the
United States, which are major contributors not only of domestic standard forms
containing multi‐party arbitration clauses but also of court decisions interpreting these
clauses. The case law represents a persuasive source of authority because it sheds some
light on various issues, such as the authority of courts to order consolidation in cases
where parties’ contracts are silent on the matter and the application of multi‐party
arbitration clauses contained in parties’ contracts. Even though this case law may not be
considered as a formal source of law outside the country where it has its origin, a judge
or an arbitrator who is faced with a new controversial issue or is not certain as to how to
approach a certain problem or to deal with a certain argument may want to consider this
foreign case law if it deals with the same issue, problem or argument25. Moreover, case
law from countries, which are considered as leaders in international commercial arbitration due to their longstanding expertise in the field, such as England, can be considered
as a highly persuasive source of authority regardless of the place where arbitration takes
place26. The same holds true about arbitral awards issued by arbitral tribunals acting
under the auspices of reputable arbitral institutions. Even though arbitral awards are in
principle not publicly available, certain arbitral institutions, such as, for example, the
ICC International Court of Arbitration and the Swiss Chambers’ Arbitration Institution,
publish excerpts of some arbitral awards in their bulletins. Furthermore, certain awards
or other information concerning the conduct of the proceedings have come within the
public domain in other ways, for example, in the stage of enforcement of an award or in
cases of statutory court‐ordered consolidation of arbitrations.
Besides the abovementioned relevance of case law and arbitral awards, these two
sources may be useful in other ways. In many cases, case law and arbitral awards deal
UNCITRAL Model Law on International Commercial Arbitration, 1985, as amended in 2006, http://www.
uncitral.org/pdf/english/texts/arbitration/ml-arb/07-86998_Ebook.pdf (accessed 25 July 2016).
See Jan Smits (2006) ‘Comparative Law and its Influence on National Legal Systems’, in Mathias Reimann and
Reinhard Zimmermann (eds) The Oxford Handbook of Comparative Law, Oxford University Press, Oxford,
pp. 520, 525, 531–532.
University Press, New York, NY, pp. 27–28 (paras 2.52–2.53), 85 (para 5.23).
with the question of how certain legal rules should be applied, for example how a certain
multi‐party arbitration clause should be construed and applied in practice, whether the
preconditions for the application of this clause have been fulfilled and so forth. These
sources are therefore particularly useful for those drafting multi‐party arbitration
clauses. They show the draftsman the pitfalls that he should try to avoid and may give
him some ideas as to how to approach a certain matter.
Secondary legal sources have been used extensively in this book. These include
treatises and articles on multi‐party and multi‐contract arbitration. Some soft law
instruments have also been considered27. Even though these instruments are not
binding, they can be indicative, for instance, of how an arbitrator may approach a
request for multi‐party arbitration or how a multi‐party arbitration clause can be
drafted. Statistical information provided by arbitral institutions has also been used
The book aims at dealing with multi‐party arbitration from the perspective of the
construction industry and it addresses some substantive and procedural legal problems
in relation to this type of arbitration. In order to enable a better understanding of the
problems described in the book, the latter begins with two introductory chapters. First,
Chapter 2 provides a concise introduction to the topic of multi‐party arbitration in
general. The chapter deals with some terminology clarifications, explains how multi‐
party arbitration takes place in practice, and reveals the advantages and obstacles to
the conduct of multi‐party arbitrations. Chapter 3 focuses on the divergent economic
interests pursued by the different stakeholders in construction projects on the basis of
the different contractual models used in these projects. Chapter 4 scrutinizes the available
solutions to multi‐party arbitration problems in the arbitration rules most often applied
in construction disputes. Chapter 5 deals with the approaches to multi‐party arbitration problems available in the arbitration laws or case law of some states. Chapter 6
focuses on some contractual multi‐party arbitration clauses. More particularly, this chapter investigates the approach of some of the most popular international standard form
construction agreements to multi‐party arbitration. In addition, the chapter discusses
some popular domestic standard forms available in England, the United States and
Denmark, which specifically address the matter. Chapter 7 reveals the author’s ideas of
how the current legal framework of multi‐party arbitration can be improved in order to
accommodate in a better way the type of construction disputes examined in the book.
The final Chapter 8 summarizes the main observations and proposals made throughout
Some of the soft law instruments considered comprise the IBA Guidelines for Drafting International
Arbitration Clauses, published by the International Bar Association, and Practice Guideline 15: Guidelines for
Arbitrators on how to approach issues relating to Multi-Party Arbitrations, published by the Chartered
Institute of Arbitrators (CIArb).
1.5 Aims and contribution of the book
The aims of the book are manifold. First, it aims to increase the awareness of the different
stakeholders in the construction industry of the need for multi‐party and multi‐contract
arbitration in the construction sector. As described in Chapter 3, there are often occasions where it can be beneficial for the parties to resolve their disputes in a multi‐party
context. Contracting parties in the construction industry should be aware of the solutions currently available and should ascertain whether these solutions respond to their
needs. Secondly, the book aims to show these parties how to address the problem of
multi‐party arbitration in their contracts. Thirdly, the book aims to inform readers of the
attempts undertaken by legislators, arbitral institutions and drafters of standard form
agreements to handle multi‐party arbitrations.
The book aims to be the first published monograph focusing on multi‐party and
multi‐contract arbitration in the international construction sector. The present book
also addresses the gap concerning the lack of contractual self‐contained multi‐party
arbitration clauses by providing some guidelines for drafting of such clauses. Thus, the
author’s ideas in the book will not only contribute to the theoretical knowledge in the
field of multi‐party arbitration but will also be of practical value for scholars, practitioners and contracting parties. Furthermore, the book may provide incentives for draftsmen
of standard form agreements to implement standardized solutions on multi‐party
arbitration issues in the near future.
The book may also be particularly useful for arbitrators who have to conduct multi‐party
arbitrations in the construction sector. These arbitrators will often face jurisdictional
objections to the conduct of multi‐party proceedings raised by a party not willing to
participate in these proceedings. The content of the book can be useful for arbitrators
when they have to take a decision on these jurisdictional objections. Furthermore, the
book contains a detailed analysis on the interpretation of multi‐party arbitration clauses
contained in both standard form and some ad hoc contracts, and thus could facilitate
arbitrators when dealing with contracts containing identical or similar clauses.
Likewise, the book might also be beneficial to judges when they are dealing with
motions for setting aside, non‐recognition or non‐enforcement of arbitral awards
rendered in a multi‐polar setting, as the book contains an analysis of all grounds upon
the occurrence of which such motions may be granted.
Finally, the book also proposes certain changes to the regulation of multi‐party arbitration on the level of institutional arbitration rules. This book may therefore also serve
arbitral institutions in their attempts to accommodate multi‐party disputes arising under
multiple contracts in a better way.
Multi‐Party Arbitration in General
This chapter provides a concise general introduction to the topic of multi‐party arbitration.
Its purpose is to enable a better understanding of the specific features of multi‐party
arbitration issues in the construction industry. The chapter briefly deals with the definition of multi‐party arbitration, its relation with multi‐contract arbitration and the
group‐of‐contracts doctrine (Section 2.1). The chapter continues with an explanation of
the legal techniques through which multi‐party arbitration may take place in practice
(Section 2.2). Finally, the advantages of multi‐party arbitration (Section 2.3) and the
obstacles to the conduct of such type of arbitration (Section 2.4) are discussed.
2.1 Terminology notes
2.1.1 Definition of multi‐party arbitration
Several definitions of multi‐party arbitration have been proposed in the legal doctrine.
Pursuant to the most popular one, multi‐party arbitration is ‘an arbitration which deals
with a dispute involving more than two parties’1. Two types of multilateral disputes can be
distinguished within this definition. First, a dispute involving more than two parties can
look like a pure bipolar dispute involving two parties. A bipolar multi‐party dispute
would be a dispute where ‘the parties can normally be divided into two camps: a Claimant
camp and a Respondent Camp’2, where the interests of the parties within each camp are
coinciding or substantially the same. The second situation concerns multi‐polar disputes
where the parties cannot be divided into two camps because of their divergent interests.
The International Court of Arbitration with the International Chamber of Commerce in
Paris (‘ICC’) perceives a multilateral dispute as one falling within the second category. Thus,
multi‐party arbitration is defined by the ICC as an ‘arbitration involving a confrontation
Olivier Caprasse, ‘The Setting up of the Arbitral Tribunal in Multi-Party Arbitration’, in International Business
Law Journal, no. 2 (2006), p. 197.
Yves Derains and Eric Schwartz (2005) A Guide to the ICC Rules of Arbitration, 2nd edn, Kluwer Law
International, The Hague, pp. 70–71.
between more than two parties with opposing interests’3, thereby implying that cases
where the parties within each camp have identical interests (such as those in the first
situation described above) will de facto constitute a normal bilateral arbitration4. Indeed,
most of the complexities in today’s international commercial arbitration are rooted
exactly in this second type of multi‐party arbitration.
Numerous situations may arise in the international business sector that can give rise to
multi‐party arbitrations5. To enumerate all such situations would be neither possible nor necessary for the purposes of this book. Multi‐party disputes frequently occur in the construction
sector as well. As mentioned in Section 1.2, the focus of this book is on multi‐party construction disputes arising under two or more contracts concluded by different parties, for example,
a dispute arising under a subcontract related to a dispute arising under a main contract. These
disputes can give rise to the second type of multi‐party arbitration, as defined by the ICC, since
the different parties involved in the related disputes, for example the employer, the main contractor and the subcontractor, pursue their own economic interests, which are rarely identical.
2.1.2 Multi‐party and multi‐contract arbitration: divergent or similar concepts?
In addition to multi‐party arbitration, the term multi‐contract arbitration is also
mentioned in the legal literature with regard to complex arbitrations. Both terms have
often been used interchangeably in case law and legal doctrinal writings to designate
the same thing, which has caused considerable confusion6. Indeed, these terms could
sometimes be overlapping. However, it is very important to draw a clear distinction
between them in order to avoid any misunderstanding.
2.1.2.1 Divergent concepts
The terms have two different variables, which result in different conceptual meanings. In
its essence, multi‐party arbitration is an arbitration that involves multiple parties with
opposing interests. On the other hand, multi‐contract arbitration is an arbitration based
on two or more contracts. These terms have different ambits. Multi‐party arbitration
ICC Commission on International Arbitration, ‘Final Report on Multi-party Arbitrations’, in 6 ICC
International Court Arbitration Bulletin, no. 1 (1995), pp. 26–50.
Christopher Stippl, ‘International Multi-party Arbitration: The Role of Party Autonomy’, in 7 The American
Review of International Arbitration, no. 1 (1996), pp. 48–49.
Traditionally, multi-party disputes involve construction and major industrial projects (with related subcontracts), guarantees, defective products, commodities transactions, supply chains, or, more generally, backto-back purchases / sales. In more recent times, other types of disputes have been mentioned, such as
shareholders’ and joint-venture arbitration, multi-party merger and acquisitions, trust arbitration, insurance
and reinsurance disputes, maritime arbitration disputes and sports-related disputes. See Nathalie Voser (2009)
‘Multi-party Disputes and Joinder of Third Parties’, in Albert Jan van den Berg (ed.) 50 Years of the New York
Convention, ICCA International Arbitration Conference, ICCA Congress Series No. 14, Kluwer Law International,
Alphen aan den Rijn, p. 343.
Fernando Mantilla-Serrano (2010) ‘Multiple Parties and Multiple Contracts: Divergent or Compatible
Issues?’, in Bernard Hanotiau and Eric Schwartz (eds) Multiparty Arbitration, Dossiers VII, ICC Institute of
World Business Law, ICC Publication No. 701E, ICC Publishing SA, Paris, pp. 11–33. See also Bernard
Hanotiau (2010) ‘Introduction’, in Bernard Hanotiau and Eric Schwartz (eds) Multiparty Arbitration, Dossiers
VII, ICC Institute of World Business Law, ICC Publication No. 701E, ICC Publishing SA, Paris, pp. 7–8.
does not always result in multi‐contract arbitration and vice versa. For example, multi‐party
arbitration is also possible in single‐contract situations. This will be the case, for example,
when an employer concludes a construction agreement containing an arbitration clause with
a consortium of multiple contractors. The different members of the consortium are
considered as separate legal entities and therefore the contract will involve more than
two parties. Multi‐party disputes thereunder could be either disputes between the
employer and the members of the consortium or among the members of the consortium themselves. A contract between a single buyer and many sellers on the other side
(e.g. a contract where the buyer purchases all the shares of a company from numerous
sellers) will also fall within the group of single‐contract situations.
This type of multi‐party arbitration raises less intricate problems than disputes arising
under multiple contracts. For example, if all the multiple parties are bound by a single
contract containing a standard arbitration clause, which does not explicitly address
multi‐party arbitration, it can be assumed that all the parties should have anticipated
that they might be involved in multi‐party arbitration with the participation of the other
parties bound by the same contract. On that basis it can be argued that all the parties
have consented to multi‐party arbitration. Such a conclusion, however, can hardly be
made in cases of multi‐contract disputes arising under two or more arbitration
agreements binding non‐identical parties.
It is also important to note that multi‐contract arbitration does not necessarily
presuppose the involvement of multiple parties. For example, disputes under multiple
bilateral contracts executed between the same parties could give rise to multi‐contract
arbitration if the arbitral proceedings dealing with the disputes under the different contracts
are consolidated in a single arbitration. This will be a pure bipolar multi‐contract dispute,
which does not bear the characteristics of multi‐party arbitration.
2.1.2.2 Overlapping concepts
Arbitral proceedings may bear the characteristics of both multi‐party and multi‐contract
arbitrations in a diversity of practical scenarios. These proceedings may concern both
horizontal and vertical contractual relations. In the case of horizontal contractual relations, one party signs two or more separate contracts with different parties7. In the
construction sector, this is the case where an employer signs separate agreements with
different parties, for example with a designer and a main contractor or with several main
contractors for the completion of different sections of the construction works. Vertical
contractual relations comprise situations where each party signs two related contracts
with two different parties8. For example, an employer concludes a contract with a main
contractor, and the latter signs a separate contract with a subcontractor. The subcontractor, on his part, may have contracted with a sub‐subcontractor or a supplier and so forth.
Chain contracts of this kind can be found in other commercial sectors as well, for
Bernard Hanotiau, ‘Multiparty – Multicontract Arbitration: A General Presentation with Special Emphasis
on Energy Disputes’, in The Lebanese Review of Arbitration, no. 27 (2003), p. 9.
instance in commodities trade where goods pass through different parties before reaching
the end purchaser9.
As mentioned in Section 1.2, this book focuses on related construction disputes
arising under several agreements binding non‐identical parties. These disputes can
involve both the horizontal and vertical contractual relations discussed above. What
is common in both types of contractual relations is that the parties under the
executed multiple agreements are not identical but there may be a common legal
and / or factual link in the disputes arising under these contracts, which may require
their resolution in a single multi‐party arbitration with the involvement of all parties
with legal standing. For example, in the case of horizontal contractual relations, there
might be defects in the construction works caused by multiple main contractors hired
by the employer. Similarly, in the case of vertical contractual relations, there may be
a subcontract dispute concerning a delay in the delivery of drawings for which the
employer was ultimately responsible. If these disputes are to be reviewed in a single
arbitration, this arbitration will bear the characteristics of both multi‐party and
multi‐contract arbitrations. Therefore, in these cases the concepts of these two types
of arbitration overlap. For the sake of brevity, only the term multi‐party arbitration
will be used throughout this book. However, the reader should bear in mind that
whenever a reference has been made to multi‐party arbitration, this reference also
implies arbitration based on multiple contracts10.
2.1.3 Group of contracts doctrine
Legal doctrinal writings dealing with complex arbitrations often refer to the so‐called
group‐of‐contracts doctrine. The doctrine concerns multiple related contracts not linked
to the same arbitration agreement – multiple contracts each of which contains a separate
arbitration agreement11. In principle, these contracts could be entered into either by the
same or by different parties. In the latter case, the notion behind the group‐of‐contracts
doctrine is very closely interwoven with the type of construction disputes examined in
Pursuant to the group‐of‐contracts doctrine, disputes arising under multiple contracts can in certain cases be subject to a single unified jurisdiction if the undertakings
of the different parties are indivisible12. Multi‐party arbitration based on this doctrine
For example, this is the case with regard to raw materials heavily traded on specialized commodity exchanges,
where traders are usually bound to standard arbitration clauses under the rules of the respective commodity
exchange. Examples of such commodity exchanges are the Grain and Feed Trade Association and the Sugar
Association of London.
For a detailed analysis of multi-contract arbitration from a general perspective, see Philippe Leboulanger,
‘Multi-Contract Arbitration’, in 13 Journal of International Arbitration, no. 4 (1996), pp. 43–99.
World Business Law, ICC Publication No. 701E, ICC Publishing SA, Paris, p. 13.
Philippe Leboulanger, ‘Multi-Contract Arbitration’, in 13 Journal of International Arbitration no. 4 (1996),
pp. 46–47.
requires the existence of an economic link between the different contracts. As Philippe
Leboulanger has pointed out:
Contractual relations usually involve long‐term economic operations comprising a large
number of distinct, but interrelated, contracts. In many cases, the different kinds of agreements
seem to give rise to an indivisible transaction, an economical and operational unit ‘hidden’
behind a multi‐contract façade, that actually amounts to one fundamental relationship13.
Furthermore, F. X. Train has stated that two or more contracts are linked to each other
when they are united in a relationship of economic or functional dependence14. A group
of contracts that coexist to reach a common goal, such as a main contract and a subcontract,
belongs to this category of linked contracts. Arguably, such a link can be found in international construction projects where the multiple contracts underlying the project are
somehow related to its completion. These contracts contribute to the implementation
of one and the same economic transaction, which, allegedly, creates a basis for the
application of the group‐of‐contracts doctrine. However, under this doctrine the existence
of an economic tie between several contracts is not the only precondition to the conduct
of multi‐party arbitration. Other important elements are the consent of the parties to
resolve their disputes in a multi‐party context and the compatibility of the arbitration
agreements under the different contracts.
In order to avoid any terminological confusion, the author will not refer to the group‐of‐
contracts doctrine as such in the present book. However, the theoretical observations
underlying the doctrine, including in respect of the parties’ consent and the compatibility
of the arbitration agreements, will be duly explored in the following chapters. Thus, the
notion of consent to multi‐party arbitration in the construction industry will be systematically discussed in Chapters 4, 5, 6 and 7, and the issue of compatibility will be dealt
with in Section 7.4.
2.2 Legal techniques introducing multi‐party arbitration
Multi‐party arbitration may be initiated in the following four ways: (i) by filing a single
request for arbitration against multiple parties, (ii) joinder of a third party in a pending
arbitration, (iii) intervention of a third party in a pending arbitration and (iv) consolidation of parallel arbitrations. Each of these legal techniques will be examined briefly
below in order to facilitate the reader’s apprehension of how multi‐party arbitration
may take place in practice. The issue pertinent to all these techniques is how to justify
the participation in a single arbitration of parties that do not have a direct contractual
relation and have arguably never agreed to arbitrate between themselves.
Francois-Xavier Train (2003) Les Contrats liés devant l’arbitre du commerce international, Bibliothèque de
Droit Privé, LGDJ, Paris, quoted by Bernard Hanotiau (2005) Complex Arbitrations: Multiparty, Multicontract,
Multi-issue and Class Actions, Kluwer Law International, The Hague, pp. 101–102 (§ 219).
Provisions introducing these legal techniques can be found in the parties’ contracts,
the arbitration rules chosen by the parties as applicable to their disputes or in the arbitration laws of some states. The particular procedural and other requirements concerning
the application of these legal techniques will be discussed in the subsequent chapters.
2.2.1 Single request for arbitration
The first way to commence multi‐party arbitration is by means of filing a single request
for arbitration against multiple parties. This would be the case, for example, when an
employer files a single request for arbitration against both a designer and a main
contractor with whom the employer has contracted separately. Unlike the other legal
techniques for multi‐party arbitration, which presuppose the existence of one or more
pending arbitrations, the single request for arbitration gives the start of the arbitration.
This legal technique is explicitly addressed in some of the most popular institutional
arbitration rules15.
2.2.2 Joinder
The term joinder is often defined as the introduction of a new party in a pending arbitration upon the initiative of one of the disputants16. The third party could be either a
signatory to the same arbitration agreement or a non‐signatory. There are two classic
examples of joinder. Under the first one, a claimant who has started proceedings
against a respondent tries to join a third party in the pending case as an additional
respondent. For instance, an employer has started an arbitration against one of the two
main contractors working on the same construction project, and at a later stage decides
to bring the second main contractor as an additional respondent in the same arbitration. In the second example, the respondent tries to join a third party in a pending
arbitration. For instance, a main contractor may require the joinder of a subcontractor
in his arbitration with the employer where the main contractor is a respondent. Joinder
provisions can be found in most modern sets of institutional arbitration rules and in
some national arbitration laws.
2.2.3 Intervention
Intervention is the acceding of a third party in a pending arbitration upon its own
motion with the purpose of filing a claim against one or all of the parties to the pending
arbitration. For example, a design professional may want to intervene in an arbitration
See, for example, Article 9 of the ICC Rules of Arbitration and Article 10 of the CEPANI Rules.
Martin Platte (2008) ‘Multi-Party Arbitration: Legal Issues Arising Out of Joinder and Consolidation’,
in E. Gaillard and D. Di Pietro (eds) Enforcement of Arbitration Agreements and International Arbitral Awards:
The New York Convention in Practice, Cameron May, London, pp. 481–499.
between an employer and a main contractor in order to introduce his claim against one
of these disputants. The main difference from the joinder is that in the latter case the
participation of the third party is requested by one of the parties to the pending arbitration.
Arbitration rules rarely deal with the question of intervention17. Furthermore, very few
states have addressed intervention in their arbitration laws18.
The abovementioned observations concern the so‐called main intervention – the
intervention of a third party that introduces its own claim against one of the parties to
the arbitration. Other forms of intervention are sometimes referred to in the legal
literature. These may include the notion of side intervention and amicus curie. Side
intervention (in German known as einfacher Nebenintervenient) generally designates
the intervention of a third party that does not have a separate claim against one of
the disputants. Such a party is not considered as a formal party to the proceedings,
and it intervenes in the latter in order to assist one of the formal parties. For example,
a s­ubcontractor may intervene in proceedings between an employer and a main
­contractor in order to help the main contractor in better substantiating his claim
against the employer. It is argued that the outcome of the proceedings will be binding
on the intervening party19.
The present book only deals with main intervention. Side intervention is a peculiar
legal mechanism, which is primarily known in a few countries belonging to the Germanic
legal system, such as Germany, Austria and Switzerland. Therefore, this mechanism is
covered under the arbitration rules adopted by arbitral institutions in these countries20.
While amicus curiae are typical for investment arbitration, they are rarely met in international commercial arbitrations21.
2.2.4 Consolidation
In the legal literature, different connotations have been attributed to the term consolidation,
which has caused much confusion. For example, the joinder of a third party in a pending
arbitration is sometimes referred to as consolidation of disputes. In this book, consolidation is used as a term that denotes the act of uniting several pending arbitrations into a
For example, the ICC Rules of Arbitration and the UNCITRAL Rules do not address intervention at all. An
example of arbitration rules that envisage the possibility for intervention is the Swiss Rules of the Swiss
Chambers’ Arbitration Institution (‘Swiss Rules’). See Article 4 (2) of the Swiss Rules.
This is the case in Belgium and the Netherlands.
See Nathalie Voser (2009) ‘Multi-party Disputes and Joinder of Third Parties’, in Albert Jan van den Berg
(ed.) 50 Years of the New York Convention, ICCA International Arbitration Conference, ICCA Congress Series
No. 14, Kluwer Law International, Alphen aan den Rijn, p. 381. The author further explains that this form of
participation in the proceedings is possible not only by way of intervention by the third party on its own notion
but also upon the request of one of the formal parties to the proceedings.
See, for example, Article 4(2) of the Swiss Rules and Article 14 of the Vienna Rules.
Nikolaus Pitkowitz (2015) ‘Chapter II: The Arbitrator and the Arbitration Procedure, Multi-Party
Arbitrations – Joinder and Consolidation under the Vienna Rules 2013’, in Christian Klausegger, Peter Klein,
Florian Kremslehner et al. (eds) Austrian Yearbook on International Arbitration, Volume 2015, Manz’sche
Verlags- und Universitätsbuchhandlung, Vienna, pp. 308–309.
single arbitration conducted before a single arbitral tribunal. In ICC arbitrations, the
term consolidation is used in the same way22.
Theoretically, consolidation of pending proceedings is possible with regard to two or
more disputes arising under one and the same bipartite agreement and also with regard
to disputes based on several agreements executed between the same two parties. However,
these cases are not examined in the book. The focus hereof is on consolidation of disputes
arising under separate agreements concluded between different parties. For example,
there are two separate arbitrations. The first one is between an employer and a main
contractor, and the second one – between the main contractor and a subcontractor, and
the main contractor files a request for the merging of the two arbitrations. This legal
mechanism finds regulation in most modern institutional arbitration rules. In some
states, consolidation can also be ordered on the basis of provisions contained in national
arbitration laws or on the basis of case law. The latter policy is addressed in Chapter 5.
2.3 Advantages of multi‐party arbitration
2.3.1 Avoids risk of inconsistent findings
One of the main advantages of multi‐party arbitration is that it avoids the risk of having
inconsistent or conflicting arbitral awards in cases that face the same or similar points of
law and / or fact23. This increases the efficiency of the dispute resolution process as a
whole. This advantage can be easily seen in cases concerning recourse claims. A respondent
in a pending arbitration might want to file a recourse claim against a third party that is not
participating in the arbitration. In principle, the respondent will not be able to pursue this
claim in the same arbitration if the third party does not have direct contractual relations
with the claimant. Therefore, the respondent will have to introduce his claim against the
third party in a separate arbitration, which will be conducted without the participation of
the claimant in the first arbitration. However, the new arbitral tribunal dealing with this
second arbitration will not be bound by the findings of the first tribunal as regards the
facts of the case and the scope of liability of the respondent. As a result, the recourse claim
may be dismissed in the second arbitration despite the fact that the claimant’s identical
claim against the respondent was successful in the first arbitration.
See Jason Fry, Simon Greenberg and Francesca Mazza (2012) The Secretariat’s Guide to ICC Arbitration, ICC
Publication No. 729, ICC Publishing SA, Paris, pp. 111 (§ 3-347).
Sigvard Jarvin (1991) ‘Issues Related to Consolidation’, in P. Bellet, P. Bernardini, G. Bernini et al. (eds)
Multi-Party Arbitration: Views from International Arbitration Specialists, Publication No. 480/1, ICC Publishing
SA, Paris, p. 200. See also Alan Redfern and Martin Hunter with Nigel Blackaby and Constantine Partasides
(2004) Law and Practice of International Commercial Arbitration, 4th edn, Sweet & Maxwell, London, p. 200
(&3–73), Martin Platte (2008) ‘Multi-Party Arbitration: Legal Issues Arising Out of Joinder and
Consolidation’, in E. Gaillard and D. di Pietro (eds) Enforcement of Arbitration Agreements and International
Arbitral Awards: The New York Convention in Practice, Cameron May, London, p. 497, and Andreas Austmann,
‘Commercial Multi-party Arbitration: A Case-By-Case Approach’, in 1 The American Review of International
Arbitration, no. 3 (1990), pp. 347–348.
In the construction sector, such a situation can be observed in a scenario where the
employer files a request for arbitration against a main contractor due to defects in the
completed construction works, and the main contractor is of the opinion that these
defects have been caused by a subcontractor. If the employer is awarded compensation,
the main contractor would certainly like to pass on his liability towards the employer to
the subcontractor who ultimately caused the defects. In principle, he would have to do
that in a separate arbitration (provided, of course, that the subcontract also contains an
arbitration agreement) because the subcontractor and the employer are not privy to each
other. However, the second arbitral tribunal dealing with the main contractor’s recourse
claim against the subcontractor is not bound by the findings of the first tribunal.
Therefore, the second tribunal may even reach the conclusion that there are no defects
in the construction works. As a result, the main contractor will have to pay to the
employer under the first arbitral award and will not be in a position to pass on the paid
indemnification to the subcontractor under the second arbitral award. Apparently, this
is an undesirable situation, which the main contractor would like to avoid. This risk will
not occur if both claims – the employer’s claim against the main contractor and the
latter’s recourse claim against the subcontractor – are to be reviewed in a single arbitration with the participation of all three parties.
However, the advantages resulting from such a single arbitration, including the avoidance
of the risk of having inconsistent or conflicting awards, should always be considered in
the light of the economic interests pursued by the different participants in construction
projects. Multi‐party proceedings can be advantageous for some parties but disadvantageous for other parties. This question will be further discussed in Chapter 3. It suffices
to mention here that there might be parties that would actually benefit from the existence
of inconsistencies in the separate awards. In the abovementioned scenario, for example,
it will be the subcontractor who would benefit from an arbitral award that is inconsistent
with a preceding award confirming the existence of defects in his works.
2.3.2 Less time and fewer costs
From an overall perspective, the conduct of a single arbitration instead of separate parallel
proceedings dealing with identical or similar points of law and / or fact saves costs and
time. As stated by Martin Platte: ‘One of the main advantages joinder and consolidation
provide is that they reduce the administrative and legal effort and thereby reduce cost,
increase speed and – from a general point of view – make proceedings more efficient’24.
This is especially true with regard to parties pursuing recourse claims against third
­parties – non‐participants in the initiated arbitration. In the scenario discussed in
Subsection 2.3.1, the main contractor will most likely invest less money and time in a
single arbitration with the participation of all three parties than in two separate
­arbitrations against the employer and the subcontractor. However, this advantage
Martin Platte (2008) ‘Multi-Party Arbitration: Legal Issues Arising Out of Joinder and Consolidation’, in
E. Gaillard and D. di Pietro (eds) Enforcement of Arbitration Agreements and International Arbitral Awards: The
New York Convention in Practice, Cameron May, London, p. 496.
should not be overestimated. The time and cost factor will ultimately depend on the
circumstances of the specific case. Some authors argue, with some justification, that
multi‐party arbitration might sometimes increase the number of arbitrators in the panel,
thus inflating the costs of the proceedings as well as the time needed to deliberate and
arrive at the final disposition of the case25. Furthermore, joint hearings and presentation
of evidence by multiple parties can also increase the time and costs involved in the
­proceedings26. Finally, the time and cost factor does not equally affect all parties. The
party subject to more than one set of proceedings (e.g. the main contractor in the discussed scenario) will benefit from this factor but other parties involved in small parts of
the dispute (e.g. the subcontractor) will most likely have to invest additional time and
money because multi‐party arbitration will trigger more costs and require more time
than a bipolar arbitration27.
2.3.3 Fewer factual errors
It is also often argued that multi‐party arbitration decreases the risk of factual errors
in arbitral awards. The arbitrators have to take into account the submissions and pleas
made by multiple parties. This facilitates the understanding of the tribunal of the
mutual rights and obligations under the related bilateral contracts. They are able to
acquire a more complete and detailed picture of all the facts of the case because of the
participation of all the parties in the dispute which may decrease the risk of factual
errors28.
Andreas Austmann, ‘Commercial Multi-party Arbitration: A Case-By-Case Approach’, in 1 The American
Review of International Arbitration, no. 3 (1990), p. 349. See also Fritz Nicklisch, ‘Multi-party Arbitration and
Dispute Resolution in Major Industrial Projects’, in 11 Journal of International Arbitration, no. 4 (1994),
pp. 64–68.
See Fritz Nicklisch, ‘Multi-party Arbitration and Dispute Resolution in Major Industrial Projects’, in 11
Journal of International Arbitration, no. 4 (1994), pp. 64–65. The author cited a report commenting on a
real arbitration case. The case was commenced with a contractor’s claim against the employer, who joined
the architect and the technical consultant in the proceedings as third-party defendants. The author stated
that ‘the articulation of indemnity claims against the architect and the technical consultant involved
substantial problems and a very considerable delay in the proceedings. Immediately after finalization of
the terms of reference, it became apparent that, due to the various submission schedules, the first hearing
addressing procedural issues … could take place, at the earliest two years after the claimant’s request for
Review of International Arbitration, no. 3 (1990), p. 349. See also Emmanuel Gaillard, ‘The Consolidation of
Arbitral Proceedings and Court Proceedings’, in 14 ICC International Court of Arbitration Bulletin, Complex
Arbitrations – Special Supplement (2003), p. 37.
Irene Ten Cate ‘Multi-party and Multi-contract Arbitrations: Procedural Mechanisms and Interpretation of
Arbitration Agreements under U.S. Law’, in 15 The American Review of International Arbitration, no. 1 (2004),
pp. 137–138. See also Ruth Stackpool-Moore (2014) ‘Joinder and Consolidation – Examining Best Practice in
the Swiss, HKIAC and ICC Rules’, in Nathalie Voser (ed.) 10 Years of the Swiss Rules of International Arbitration,
ASA Special Series No. 44, JurisNet LLC, New York, NY, pp. 17–18.
2.4 Obstacles to multi‐party arbitration
2.4.1 Consensual nature of arbitration
The main obstacle to the conduct of multi‐party arbitration is the consensual nature of
arbitration29. Unlike state courts, which derive their jurisdiction from the state and the
state legislation, the jurisdiction of arbitral tribunals is based on the agreement of the
parties. Furthermore, arbitral tribunals do not have the wide‐ranging powers of state
judges to consolidate parallel proceedings or order joinder of third parties into existing
The main principle in arbitration is that arbitral proceedings may only be held among
parties that have agreed to submit their disputes to arbitration30. Therefore, the question
of whether or not multi‐party arbitration should be admitted should start from the interpretation of the intent of the parties as expressed in the relevant arbitration clause31.
Construction projects are often characterized by a multitude of bilateral contracts: a
main contract, a subcontract, a sub‐subcontract, a supply agreement, a consultancy or
professional services agreement with a project manager or a designer, and so forth. Even
though these contracts are interlinked in the sense that they all pertain to the completion
of the construction project, they remain distinct agreements with distinct scopes of
works and responsibilities concluded by parties that are not identical. In the author’s
opinion, the presence of separate arbitration clauses contained in two or more of these
contracts, which are silent on the question of multi‐party arbitration, constitutes a strong
presumption that each contracting party expects to resolve its dispute in a bipolar setting
with its counterparty only32. Even if the separate arbitration clauses are identical or
substantially similar, it cannot be assumed on the basis of this similarity per se that
Kristina Maria Siig, ‘Multi-party Arbitration in International Trade: Problems and Solutions’, in 1
International Journal of Liability and Scientific Enquiry, no. 1/2 (2007), p. 73: ‘[The] Achilles heel of arbitration
is its core feature; that arbitration as a means of dispute resolution presupposes consensus between parties.’
As stated in the ad hoc award of 17 November 1994 in Banque Arabe et Internationale d’Investissement et. al.
v. Inter-Arab Investment Guarantee Corporation, in XIII Yearbook Commercial Arbitration, 1998, pp. 644–654:
‘Contrary to litigation in front of state courts where any interested party can join or be adjoined to protect its
interests, in arbitration only those who are parties to the arbitration agreement expressed in writing could
appear in the arbitral proceedings either as claimants or defendants.’
Bernard Hanotiau, ‘Problems Raised by Complex Arbitrations Involving Multiple Contracts-Parties-Issues,
An Analysis’, in 18 Journal of International Arbitration, no. 3 (2001), p. 302. See also Kristina Maria Siig, ‘Multiparty Arbitration in International Trade: Problems and Solutions’, in 1 International Journal of Liability and
Scientific Enquiry, no. 1/2 (2007), p. 78.
See also Gary Born (2014) International Commercial Arbitration, Volume II: International Arbitral Procedures,
2nd edn 2014, Kluwer Law International, Alphen aan den Rijn, p. 2075, where the author has stated: ‘Further,
there is a substantial argument that, by not agreeing affirmatively to permit consolidation (or joinder / intervention), the parties have agreed on arbitral procedures that exclude or are inconsistent with such measures;
this is consistent with notions of privity of contract and confidentiality concerns.’ See also Keechang Kim and
Jason Mitchenson, ‘Voluntary Third-Party Intervention in International Arbitration for Construction Disputes:
A Contextual Approach to Jurisdictional Issues’, in 30 Journal of International Arbitration, no. 4 (2013), p. 413,
where the authors have stated: ‘Where an agreement is silent on third-party intervention, the presumption will
be against multiparty proceedings.’
the parties have tacitly consented to multi‐party arbitration. A similar view has been
expressed by Fritz Nicklisch who has stated that ‘The mere inclusion of a standard ICC
arbitration clause in a number of contracts jointly serving the realisation of a large‐scale
project is not normally a conclusive indication of consent to multi‐party arbitration’33.
When commenting on the relation between a main contract and a subcontract, the same
author was even more explicit:
[In] terms of both substantive and procedural law, arbitration must take place inter partes, i.e.
in a linear way between the individual contracts and not in proceedings involving three or
more parties. In this instance, there is not the slightest indication of implied consent to multi‐party
arbitration. Indeed, the strict separation of contractual relationships by the parties themselves
would appear to indicate precisely the opposite34.
Therefore, an arbitration clause contained in a bilateral contract can, in principle, be
invoked only by the parties bound by that contract. Thus, from a contractual standpoint
a subcontractor is not bound by an arbitration clause contained in a main contract,
and a main contractor is not bound by an arbitration clause contained in a contract
concluded between an employer and a design professional35. Similarly, an employer is
not bound by an arbitration clause contained in a subcontract, and an architect or an
engineer hired by the employer is not bound by an arbitration clause contained in a main
contract. As a result, multi‐party arbitral proceedings may only be conducted if all the
parties under the different bilateral contracts have agreed to resolve their disputes in
a multi‐party context. Otherwise, multi‐party proceedings will infringe the parties’
consent for the resolution of their contractual disputes in a bipolar context, and, most
notably, the mechanism for appointment of arbitrators stipulated in their contracts,
especially if the parties have agreed on a three‐member arbitral tribunal where each
party has the right to appoint an arbitrator. As will be seen in Chapter 5, the conduct
of multi‐party proceedings without parties’ authorization on the basis of statutory
­provisions or case law may raise similar concerns.
Fritz Nicklisch, ‘Multi-Party Arbitration and Dispute Resolution in Major Industrial Projects’, in 11 Journal
of International Arbitration, Issue 4 (1994), pp. 60–61, 71.
Ibid. A similar statement has been made by Stavros Brekoulakis, see Stavros Brekoulakis (2010) Third Parties
in International Commercial Arbitration, Oxford University Press, Oxford, pp. 100–101 (§ 3.16). According to
the author: ‘It would seem, however, that when there are several arbitration clauses in several contracts any
attempt to ascertain consent to multiparty proceedings or third-party claims will be problematic. Unless clear
evidence exists that the several parties wanted to allow for multiparty proceedings despite the fact that they
signed different arbitration clauses, the presumption should be against multiparty proceedings and third-party
claims.’ See also Karim Youssef (2009) Consent in Context: Fulfilling the Promise of International Arbitration.
Multi-Party, Multi-Contract and Non-Contract Arbitration, West Thomson, Eagan, MN, pp. 142–143, and
Andrea Marco Steingruber (2012) Consent in International Arbitration, Oxford University Press, Oxford,
para. 9.70. For an opposite opinion, see Jean-Francois Poudret and Sébastien Besson (2007) Comparative Law
of International Arbitration, 2nd edn, Sweet & Maxwell, London / Schulthess, pp. 198–199, 898.
Stavros Brekoulakis (2010) Third Parties in International Commercial Arbitration, Oxford University Press,
Oxford, pp. 84–87 (§ 2.273, § 2.279 and § 2.284–§ 2.287), 186 (§ 6.42), 276 (§ 12.25).
In the United Kingdom, the consensual nature of arbitration is further underpinned
with the doctrine of ‘privity of contract’36. According to this doctrine ‘no person can sue
or be sued on a contract unless a party to it’37. Thus, only parties to a contract can enjoy
the benefits and liabilities envisaged thereunder. Hence, a party’s right and obligation to
arbitrate its dispute under a contract applies only in respect of its contractual counterparty
and cannot be extended to third parties outside the contract because these situations fall
short of privity.
2.4.2 Arbitration as a two‐party setup
Originally, arbitration was predominantly dealing with the resolution of bipolar disputes.
Therefore, arbitration had a two‐party setup. This did not suit the complexity of multi‐
polar arbitration disputes in cases where parties pursued their own specific interests,
which were different from and sometimes contrary to the interests of the other parties38.
This perception of arbitration as a mechanism for resolution of bipolar disputes has not
been completely eradicated yet. This, for example, can be