Originally from World Arbitration and Mediation Review

Compelling Non-Signatories to Arbitrate: Balancing the Promotion of
International Arbitration with Protecting the Corporation
Wayne N. Cleghorn∗
Abstract
International Arbitration is often facilitated by creatively applying
key legal principles including agency and estoppel to compel arbitration.
This is apparent even where these and other principles do not strictly
apply. Even so, non-signatories of arbitration clauses can still be joined.
Is this militant march of arbitration against the spirit of arbitration itself?
Could it damage the corporate form and does compulsion provide only
weak evidence? Procedural recommendations are put forward to protect
corporations and the quality of the tribunal’s evidence. Compulsion,
however, does not inextricably harm arbitration. It can fulfill the parties’
intentions while benefiting international commerce generally.
Introduction
International arbitration is founded on contractual agreement, noncompulsion,
minimal formality, and good faith. It is a clear alternative to
litigation in international commerce in which jurisdictional issues and high
costs can be prohibitive. There are cases, however, in which nonsignatories
to arbitration clauses have been compelled to arbitrate in
matters in which they would not otherwise have been a party. This often
occurs when a party seeks to compel another to arbitrate pursuant to an
arbitration clause or when a party requests a stay of litigation so that
arbitration can take place. The following discussion evaluates the
presumptions that have operated to allow such compulsion. These include
alter ego theory, agency, and equitable estoppel. Are these presumptions
consistent with the spirit of the international arbitral system? Do they
abuse the protection given to corporations to prevent gratuitous liability?
What incentive would a third party have for co-operating with the tribunal
and can such evidence be trusted? Will the evidence from parties who
have been compelled lack weight and are the means justified by the ends?
The Theories
There are five established theories around which U.S. courts have
compelled non-signatory third parties to arbitrate commercial disputes.
The first is the alter ego or the lifting of the veil theory. The others
include: incorporation by reference, agency, equitable estoppel, and
assumption. These principles have also been applied by courts around the