Multi-Party Arbitration - (SAR) 2002 - 1
Mary Woollett, Assistant Solicitor, Herbert Smith, London.
Monique Sasson, Admitted as a Solicitor in Italy, assistant in the arbitration group of Herbert Smith, London.
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In recent years there has been increasing discussion concerning the
problems encountered in multi-party arbitrations. Various efforts have
been made to solve these problems, but with limited success.
The term “multi-party” can apply to a number of different situations. First,
it is used, perhaps inaccurately, to describe a dispute which involves a
claimant and a respondent which each comprise several individuals or
entities. Thus two joint creditors may together assert their rights against a
common debtor or vice versa. In this case the dispute is between two
distinct camps, one claimant and one respondent. There are unlikely to be
any conflicting interests within either camp and the interests of one side
are opposite to those of the other. This is the simplest form of multi-party
dispute and is perhaps more accurately described as a “multi-participant”
dispute. The typical problems associated with multi-party disputes rarely
arise in these situations.
True multi-party arbitrations, which present significant practical
difficulties are those which arise under a contract to which there are more
than two parties and therefore more than two parties bound by the same
arbitration clause (for example, a joint venture or a consortium
agreement). When a dispute arises, it is often the case that all these parties
will be drawn into the dispute, bringing with them all their own differing
interests. It is therefore unlikely that there will be a neat split of the parties
into two opposing “sides”. Instead, there may by three or more “sides”,
each asserting its own rights and interests and each being entitled to be
heard and considered in the resolution of the dispute.
The term “multi-party arbitration” also applies to more complex
arbitrations arising among parties linked together by a series of related
contracts, where there is no single contract or single arbitration clause
linking all the parties together (for example, in the case of construction
contracts, disputes often arise involving the employer, the contractor and
the subcontractor. Although there are contracts between the employer and
the contractor and between the contractor and the subcontractor, no
contract links the employer and the subcontractor). If a dispute arises,
between two parties, the respondent is likely to seek to blame a third party.
The difficulty then is obvious, not only are there more than two sides to
the dispute, but also there may be conflicting agreements between the
parties as to how that dispute should be resolved.