EXTENSION TO NON-SIGNATORIES OF INTERNATIONAL ARBITRATION PROCEEDINGS: WHAT LAW SHOULD APPLY?
The case referred to in this note, which has already generated a lot of comments, deals with the extension or transfer of arbitration proceedings to a non-signatory of the business contracts that gave rise to the dispute. It illustrates the complexities involved where such an extension is requested, including the divergent approaches of French and English jurisdictions. The limits and shortfalls of the revered concept of the severability or autonomy of the arbitration agreement are also highlighted.
The arbitration case
On 18 September 2017, an international arbitration award was rendered by an arbitral tribunal comprised of three arbitrators, including a seasoned and renowned French arbitration specialist acting as chairman. Proceedings were subject to the ICC Arbitration Rules, the tribunal was seated in Paris and the underlying business contract, which contained the agreement to arbitrate disputes under the Rules, was governed by English law.
The parties initially involved were a Lebanese licensor/franchisor and a Kuwaiti licensee/franchisee. Alleging breaches of the licence, the licensor launched arbitration proceedings not against the licensee, the signatory of the licence, but against the licensee’s parent company which was not a signatory. Thus, the licensor effectively requested the extension or transfer to the parent of the licence and the agreement to arbitrate included in the licence.
The 2017 award accepted the extension and sentenced the parent to pay several million US dollars to the licensor.
Apr-Jun 2021 issue
FLV & Associés