Multi-party or multi-contract arbitration proceedings are common, and sometimes referred to as “complex arbitration”, reflecting how international commercial relationships and transactions can be complicated in nature.
Multi-Party Arbitration
This involves three or more parties, or multiple interconnected contracts in a single proceeding and arise when there are either multiple different agreements relating to different parties, such as supply chains, or when multiple parties are involved in a single contract, such as joint ventures.
Multi-Contract Arbitration
This arises when there is a single overarching dispute involving multiple interrelated and interconnected contracts relating to the same arbitration agreement, such as construction and infrastructure projects. For example, there could be various agreements governing different aspects of the same transaction or business relationship between parties.
Joinder
Joinder is the mechanism adding third parties into ongoing or impending arbitration proceedings as a claimant or a respondent. This helps save time and costs in multi-party or multi-contract disputes.
Consolidation
Consolidation is a procedural tool to merge two or more arbitrations into one single legal procedure. There are a few scenarios where consolidation is usually permitted, including:
- When all parties agree to consolidation
- When all the claims are made under the same arbitration agreement
- When the arbitrations are amongst the same parties, the disputes are in connection with the same legal relationship or issues, and the arbitration agreements are compatible
Whether joinder or consolidation will be permitted often depends on how far the arbitration has progressed. Allowing a party to join at a late stage may raise fairness concerns because they may have had no opportunity to participate in selecting the arbitrator. They may also have less opportunity to present its case than parties that have been involved from the outset.
Not only is the combination of different arbitration proceedings (if allowed and reasonable) more cost-effective than funding separate proceedings, but they may also prevent inconsistent arbitration outcomes with one unified, overarching award.
Different arbitrational institutions have varying requirements for joinder and consolidation requests, but they share a general overarching theme that it must be reasonable, include consent from all parties (but exceptions may be made if the tribunal believes this is necessary), and arise from the same legal relationship. Two examples include:
- ICC Rules
Article 7 of the ICC Rules allows requests for joinders to be filed with the Secretariat of State so long as the arbitrator has not yet been appointed in the proceedings. However, once an arbitrator has been appointed, consent from all parties involved (and the additional party) is required for a joinder request to be eligible.
For a consolidation request to be eligible, the ICC Rules require that claims are made under the same arbitration agreement or that the arbitrations must arise from the same legal relationship between the same parties (and correspondingly have the same arbitration clauses).
- The London Court of International Arbitration (LCIA)
Under the 2020 LCIA Rules, a tribunal may allow a third party to join an arbitration where both the third party and the party requesting joinder have given their express written consent after the arbitration has begun. A general provision for multi-party arbitration in the relevant contracts may not, by itself, be sufficient; consent to the particular joinder must be clearly and separately given. Once the third party has consented, the tribunal may permit the joinder even if another party to the arbitration objects.
If all parties agree to consolidation in writing, or if multiple arbitrations were commenced under the same arbitration agreement, the tribunal has power to make an order (after the approval of the LCIA Court).