Originally from Alternatives to the High Cost of Litigation

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Modern commercial arbitration is facing its biggest challenge to date in the task of determining the actual parties to an arbitration agreement. 

Nowadays, the practice of creating subsidiaries for different business heads by a corporation has become a common occurrence in international commercial trade. This is mainly done to shield the assets of the parent company from the creditors of its subsidiary, and vice versa. Henry Hansmann & Reinier Kraakman, The Essential Role of Organizational Law, 110 Yale L.J. 387, 440 (2000)(available at http://bit.ly/2oj7src). 

This principle of separation of legal identity and liability between the parent company and its subsidiaries is based upon the doctrine of limited liability, which is considered a cornerstone of the corporate law. See Intergen v. Grina, 344 F.3d 134 (1st Cir. 2003)(available at http://bit.ly/2nkWlNz), and Adolf A. Berle Jr., The Theory of Enterprise Entity, 47(3) Colum. L. Rev. 343, 343 (1947).

Identifying the true parties to an arbitration often has caused great difficulty for many tribunals dealing with commercial arbitration because there can be disparity between the company that has signed the contract containing the arbitration agreement, and the company that actually performs it.