Joinder and Intervention Clauses for Multi-Party Contracts - Chapter 8 - Arbitration Clauses for International Contracts - 2nd Edition
Paul Friedland is a Partner at White & Case LLP and Chair of the firm's International Arbitration Practice Group. Mr. Friedland was Chair of the Task Force that developed the recent "IBA Guidelines for Drafting International Arbitration Clauses." Mr. Friedland is Chair of the Law Committee and a Member of the Board of Directors of the AAA and a Court Member of the LCIA.
Originally from Arbitration Clauses for International Contracts - Second Edition
Chapter 8 - Preview Page
JOINDER AND INTERVENTION CLAUSES FOR MULTI-PARTY CONTRACTS
There are five practical difficulties inherent in drafting arbitration clauses in multi-party contracts where multiple parties do not have aligned interests. (Where multiple parties have aligned interests and can agree in advance upon joint arbitration nominations, see Appendix 46).
The first difficulty is that most arbitration clauses and institutional rules are written for two parties, and, unless there is certainty that multiple parties (e.g., multiple buyers) have aligned interests, substantial adaptation is required to account equally for the rights of three or more parties, in particular with respect to selection of arbitrators. Thus, for example, one cannot simply insert into a multi-party contract an arbitration clause that provides for each party to select one arbitrator and for the two partyappointed arbitrators to select the third.
The second difficulty is that one often cannot know in advance how many and which of multiple contracting parties will be parties to an arbitration. In some cases, the claimant may commence arbitration against only one other contracting party even though a third contracting party wishes to participate. In other cases, the claimant may commence arbitration against only one other contracting party, and the respondent may want to bring in a third party. In these instances, a comprehensive clause would provide for the possibility of both a two-party arbitration and a multi-party arbitration.
The third difficulty is that it often cannot be known in advance when more than two contracting parties will become parties to an arbitration. Contracting parties not joined at the outset may want to intervene at various times during the life of an arbitration.
Fourth, it may happen that different parties will commence independent but overlapping related procedures staggered over a period of months or years.