Abstract
Arbitration has been recognized as one of the most popular ADRs in commercial disputes. Theoretically, arbitration is based on a valid arbitration agreement and only the parties to the agreement are forced to obey the award. However, in legal practice, it is not uncommon for arbitral awards to be enforced against non-signatories. This paper introduces some major legal basis of this situation, including the traditional principles such as agency relationship and other controversial principles, among which “the group of companies” is a typical principle. At the same time, the application of these theories is also discussed. The principle of “group of companies” is considered as a pioneering method specially created for arbitration.
Highlights
Arbitration, Arbitral Agreement, Non-Signatory, Enforcement. It has been widely accepted by both domestic and international laws that commercial arbitration is on the basis of consent, under which an arbitration is only binding to the parties of a valid arbitral agreement (Nigel et al, 2015)
Whether a party is bound by an arbitral award firstly depends on if the party is bound by a valid arbitration agreement and if the party is entitled to compel the arbitration clause
2) Agency relationship Compared with the “group of companies” doctrine, agency relationship could have been widely adopted by authorities under which a non-signatory may be bound by the arbitration agreement in line with the execution of its agent (Born, 2014)
Summary
It has been widely accepted by both domestic and international laws that commercial arbitration is on the basis of consent, under which an arbitration is only binding to the parties of a valid arbitral agreement (Nigel et al, 2015). Clear guidance in determining what the party of an arbitration agreement is rare in the international conventions or related statutes As a result, it is usually the discretion of the tribunals or the courts to identify the parties of an agreement and there are some exceptions when such an agreement is valid and enforceable to a non-signatory by virtue of consent according to a varieties of doctrines, including agency, group of companies and subrogation. Some of the doctrines are rarely accepted or the adoption of the theories may vary between jurisdictions, it is undeniable that the emphasis of consent, good faith or other fundamental principles of lex mercatoria deserves further consideration. The theories discussed below are some significant legal bases which are frequently applied by tribunals and domestic courts when identifying the parties of an arbitration agreement or those which are always discussed in practice
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