DR.

RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY, LUCKNOW

ACADEMIC SESSION: 2019-2020

Alternate Dispute Resolution: FINAL DRAFT

TOPIC:
Multiparty Arbitration: Cross Jurisdictional Analysis of Joinder and Consolidation

SUBMITTED TO: SUBMITTED BY:

Dr. Prasenjit Kundu, Utkarsh Khandelwal
Associate Professor (Law) Enrolment No. 160101162
Semester VII
B.A. LL.B. (Hons.)
 TABLE OF CONTENTS
1. Introduction ............................................................................................................................. 203

2. Types Of Multiparty Proceedings .................................................................................................

I. Consolidation:............................................................................................................................

Indian Law.....................................................................................................................................

English Law ..................................................................................................................................

United States Of America .............................................................................................................

II. Joinder And Intervention ...........................................................................................................

Extension To Non-Signatories..............................................................................................................

Theory Of Group Of Companies ...................................................................................................

Theory Of Estoppel .......................................................................................................................

3. Comparatie Analysis Of Aripous Arbitration Isntutions And Their Proisions W.R.T.

Consolidation Of Arbitration Proceedings: ..........................................................................................

SCC ...................................................................................................................................................

LCIA .................................................................................................................................................

ICC ....................................................................................................................................................

ICDR .................................................................................................................................................

SIAC .................................................................................................................................................

HKIAC ..............................................................................................................................................

4. Conclusion .....................................................................................................................................
 Acknowledgment

This work at hand is not the work of the researcher alone. A debt of gratitude goes to Mr. Prasenjit

Kundu, for guiding me whenever help was required. Also, my sincere thanks goes to my colleagues

for keeping the spirit of competition alive in me. Lastly, I would also like to thank my seniors whose

guidance helped me to complete this research.

 1. Introduction

A unique feature about the International commercial contracts is that these commercial contracts
are generally always subjected to an arbitration clause. The genesis of Arbitration lies in a Contract.
It accords greater flexibility and freedom to the parties to not only choose the law governing the
contract, the arbitration agreement, the seat of arbitration but also allows them to follow a set of
procedure of their own choice which is most suited to the dispute at hand. 1 It is not unknown that
multi contract situations do arise between two or more parties,2 which unfold with it the Pandora‟s
Box, posing startling predicaments. It is the ever changing nature of the work undertaken by the
parties that complex contracts are drafted which in turn has triggered the number of complex
arbitration cases involving multiple parties.

Since the Arbitration Tribunal can exercise jurisdiction only upon the parties who have consented
to resolve their dispute by way of arbitration, the Tribunal cannot such issue interim orders which
will have a binding effect on the third parties.3 The rationale for the same seems to be
straightforward. The Arbitral Tribunal is a creature of a contract (arbitration agreement) between a
set of parties, who agree to be subjected to the authority of the arbitral tribunal. Since no such
agreement exists for the third party, it is not subject to the control of the arbitral tribunal.

This, however, should not be a problem for the courts as they derive their authority to grant interim
measures from the sovereign authority of law4.The Arbitration is no longer classical in the sense
that one claimant is against one respondent. The arbitration has undergone a sea change and today
we are confronted with International transactions of a greater complexity.There has been an
exponential growth in multi-party arbitration over the last few years. For instance, in 1998 of all
the arbitrations administered by the ICC only 10% pertained to multi-party arbitration and today
this figure has reached to 30%.

A paradigm of this complex arrangement is best highlighted by a modern construction project which

1
Gary B. Born, International Commercial Arbitration: Commentary and Materials 8-9 (Kluwer Law International 2nd
edn., 2001)
2
Philip Leboulanger, „Multi-Contract Arbitration‟ 13(4) Journal of International Arbitration 43 (1996)
3 Nirma Ltd v LentjesEngergy (India) Pvt Ltd decided on 26 July, 2002, Gujarat High Court, FIRST APPEAL No
5252 of 2001.
4
Daniel Mathew, „Seeking Interim Relief Against Third Parties to Arbitration: Distilling the Indian Stand‟8 SCC J-
52 (2014).
usually encompasses a service recipient, a client, a service provider, a contractor, numerous
subcontractors, suppliers of materials and financiers, etc. For such a construction project several
contracts are entered into between the parties which upsurge the possibility of disputes between
multiple parties.5

The greatest ramification of the multi-party arbitration is the threat of parallel proceedings and the
situation becomes more precarious when the parallel proceeding results into conflicting awards.
Another limb of the problem that can be visualized is the appointment of arbitrators. In case of sole
arbitrator, a mutual consensus must be arrived at by all the parties, but where the arbitration tribunal
is to be headed by three or more arbitrators how the multiple parties would appoint their arbitrator
is another bewildering question.6

Most of the Legal systems around the globe and Institutions have framed mechanisms to deal
effectively with multi-party Arbitration. My endeavour would be to unfold the devised instruments
which have been fostered by various legal systems and institutions to deal with the complex issues
of multi-party arbitration. Therefore, I propose to deal with general concepts of joinder and
consolidation and how various legal systems and institutions have imbibed these concepts before
dwelling onto the existing mechanism in India.

5
T Schwarz and W Konard, The Vienna Rules: A Commentary on International Arbitration in Austria 332 (
Kluwer Law International , 1st edn., 2009).
6
Mark Aappel and John Beechey, „Other issues to consider in drafting the arbitration agreement – Multiparty
contracts‟ 18 International Contract Manual 40 (2011).
 2. Types of multiparty proceedings:
Foreseeing the difficulties, incurring huge legal representation costs and the hazards of a potential
conflicting decisions rendered by arbitral tribunal7, that arise out of disputes based on multiple
contracts involving several parties, various tools have been fostered, employing which claims
arising out several contracts or different commercial relationships can be decided jointly rather than
in parallel.8
Two types: consolidation and joinder.
I. CONSOLIDATION:
In International Commercial Arbitration, Consolidation can be understood as a procedural
mechanism via which two or more arbitration proceedings, though separate can be merged into
onein accordance with the terms of the agreement9. Thus it is a process of uniting two or more
independent arbitral proceedings that are pending. The law governing the arbitration proceeding,
the law of seat of arbitration set forth the requirements and procedures to be followed for
consolidation.
The application for consolidation advanced by one of the parties to the arbitration tribunal, is
confronted with great many obstacles before it eventually gets accepted. The party who opposes it
raises raise the argument that the arbitration being a creature of the contract only the parties who
impliedly or directly agreed to it can be a party to the arbitration and not a third party. The other
ground is the compromise of confidentiality. Confidentiality a sacrosanct feature of the arbitration
is undermined by multi-party proceeding10. The prerequisite of consolidation is the consent of all
parties to merge independent arbitration proceedings which have arisen out of different arbitration
agreements. Now the question which arises for our consideration is what persuades parties to agree
for consolidation? It is in order to prevent conflicting awards and to promote efficiency that parties
give their consent for amalgamation.11

This consent of the parties can most conveniently be manifested by incorporating a

7
Jean Francois Poudret, Sebastien Besson, Comparative Law of International Arbitration 196 ( Sweet & Maxwell ,
London, 2nd edn., 2007)
8
M Pair and P Frankenstein, „The new ICC Rule on Consolidation: Progress or Change‟ 25 Emory International Law
Review 1062 (2011)
9
S Greenberg, ChKee and R Weeramantry, International Commercial Arbitration: an Asia-Pacific perspective
174(Cambridge University Press, 2011).
10
S Brekoulakis, „The Relevance of the Interests of Third Parties in Arbitration: Taking a Closer Look at the Elephant
in the Room‟ 112:4 Penn State Law Review 1171 – 1172 (2009)
11
Alan Redfern, M Hunter et. al., Law and Practice of International Commercial Arbitration 184-187( Sweet & Maxwell,
2nd edn., 1991)
consolidation provision in the in the arbitration agreement in all independent and separate
contracts. But it is practically very difficult for the parties at the time of entering into the
contract to contemplate all possible disputes that may arise out of multiple contracts12and the
adoption of this clause may result in initiation of such arbitration proceedings, which the party
against whom it has been initiated might have never contemplated of and hence the parties may be
hesitant of proceeding ahead with such a provision.

Another major hurdle that may come in the way of consolidating separate arbitration proceedings
is that the arbitration agreement may be governed by different law in different contracts, similarly
the law governing the substantive underlying contract may be different indifferent contracts, even
though all the contracts may relate to the same commercial transaction13.

There is no scope of Multi-party arbitration if the arbitration agreement incorporated in different

contracts are incompatible and inconsistent with each other. This reflects the primacy that has to be
attributed to drafting of arbitration agreement, where there is a requirement of Multi-Party
arbitration as the only avenue to avoid conflicting awards.

In Iran-French14 dispute, a few of the arbitration agreements among a group of related contracts
provided that the law of seat of arbitration shall be France, while other arbitration agreements in
different contracts were silent on this issue. The French Cour d‟ Appel de Versailles held that on
the assumption that the parties intended law of seat of arbitration in all arbitration agreements to be
of France, there can be no consolidation of arbitration proceedings. The Court further held that if
the parties agree for different laws to govern arbitration agreements in different contracts then there
can be no consolidation of such arbitration proceedings.

INDIAN LAW
A multiparty arbitration is an arbitration that includes more than two parties: usually including parties
to the original arbitration agreement. These parties can be joined into the arbitration in certain
circumstances. The most obvious circumstance would be when an arbitral proceeding between 2
parties affects the rights and liabilities of the third parties. In this case, the third parties may be joined

12
Philip Leboulanger, „Multi-Contract Arbitration‟ 13(4) Journal of International Arbitration 72 (1996)
13
Ricardo Ugarte and Thomas Bevilacqua, „Ensuring Party Equality in the Process of Designating Arbitrators in 15
Multiparty Arbitration: An Update on the Governing Provisions‟ 27.1 Journal of International Arbitration 9 (2010)
14
Courd‟appel [CA] [regional court of appeal] Versailles, Mar. 7, 1990, Rev. Arb. 1991,note Loquin (Fr.).
in the proceeding so that all matters relating to the proceeding are heard together and in order to
avoid further litigation regarding the same matter. For similar reasons, in cases where there is one
substantive contract between two parties (a “mother agreement”) under which multiple contracts
with multiple parties exist (spiderweb contracts), and an arbitral proceeding is initiated between the
two parties, other parties may be joined in the arbitration due to the fact that they are related to the
contract.

Multiparty arbitrations have been recognised as valid by the Supreme Court in Chloro Controls India
(P) Ltd. v. Severn Trent Water Purification Inc.15, in which the Supreme Court recognised the “group
of companies doctrine”, which allows the extension of an arbitration agreement which was signed
by only one or some of the companies belonging to a group of companies, to the non-signatory
companies which are also a part of the same group, under certain conditions.
The problem, however, with such a doctrine is that the right or obligation to attend arbitral
proceedings is contractual. An arbitration agreement is the fundamental basis for an arbitral award
and hence, questions may arise as to how awards can bind those who are not parties to the original
agreement. Even the New York Convention16explicitly talks about awards only in the context of the
parties, and therefore, it is reasonable to assume that there are intricacies and difficulties in enforcing
awards against those who are third parties to the arbitral award.
However, the recognition and support for multiparty arbitration is necessary. The reason parties opt
for arbitration is for quick and speedy disposal of cases with minimal interference. If multiparty
arbitrations are not allowed, it could lead to the third parties filing separate suits in court which would
interfere with the arbitral proceeding and could lead to multiplicity of suits, adding to the confusion.

Hence, various international agreements and conventions have now begun dealing with the specific
question of multiparty arbitrations. The most recent development is the issuance of the Draft
Arbitration Rules, 2017, by the Stockholm Chamber of Commerce (SCC). The Draft Rules allows
the SCC Board of Directors to join one or more additional parties to the arbitration on the request of
an existing party.17 The Rules also allow for consolidation of a new arbitral proceeding with an
existing proceeding.18

15
(2015) 2 SCC 52
16
(2006) 11 SCC 245.
17
(2013) 1 SCC 641.
18
Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
However, various rules issued by different organisations are in contrast to the Draft Rules of the SCC
including rules of the London Court of International Arbitration (LCIA), the International Chamber
of Commerce (ICC), the Hong Kong International Arbitration Centre, and the Singapore
International Arbitration Centre. For the purposes of this paper, the rules of the LCIA are most
pertinent.

The LCIA allows the Tribunal to join additional parties to the arbitration on application of a party
provided that all parties are given a reasonable opportunity to state their views and that the applicant
and the additional party/parties give their consent to the joinder in writing. 19 Similarly, the LCIA
Tribunal can consolidate to one or more arbitral proceedings provided that all parties to the arbitration
give their consent in writing.20
In order to solve this issue of consent in multiparty arbitrations, especially in India, the authors have
the following suggestions to make enforcement against third parties legally sound:

(1) No third party may be joined in the arbitral proceeding without its consent. Such consent shall
either be recorded and submitted in writing as per the LCIA Rules, or recognised and referred to by
the Tribunal in interim or preliminary orders so that an official record of the consent remains, in case
written consent is not obtained.

(2) No third party may be joined in the arbitral proceeding without the consent of the parties to the
arbitration. This requirement may differ from the LCIA Rules to the extent that as per the LCIA
Rules, only the written consent of the applicant party is required. It may be made mandatory for all
existing parties to the arbitration to consent to the joinder, in order to prevent further issues from
arising in the future. Such consent may either be explicitly recorded and submitted to the court,
recognised and referred to by the Tribunal in interim or preliminary orders or may be implied consent
i.e. the parties have agreed to conduct the arbitration under certain rules, which allow for multiparty
arbitration.

(3) There must not be any requirement of the additional party being a party to the same arbitration
agreement. This can allow for joinder of parties even in multi-contract situations.

If this is the case, then no party can later complain that the multiparty arbitral proceeding has violated
their rights, as they would have consented to take part in the proceeding.

19
Art. 13, SCC Draft Arbitration Rules, 2017.
20
Art. 15, SCC Draft Arbitration Rules, 2017.
Closer home, in PR Shah, Shares & Stock Broker (P) Ltd. v. BHH Securities (P) Ltd. & Ors., 21 the
Supreme Court upheld the doctrine of consolidation of proceedings. This was also followed later by
the Bombay High Court22

21
P.R. Shah, Shares & Stock Broker (P) Ltd. v. BHH Securities (P) Ltd. & Ors., (2012) 1 S.C.C. 594 (India).
22
Filmwaves Combine Pvt. Ltd. v. Kochi Cricket Private Limited & Ors., Arbitration Application 352 of
ENGLISH L AW

Section 35 (1) of the English Arbitration Act 1996 enables the parties to consolidate arbitral
proceedings with other pending arbitration proceedings and the parties can in alternative also
agree for a concurrent hearing. Subsection 2 of Section 35 limits the power of arbitration tribunal
to order for forced consolidation of arbitration proceedings or conjoint hearing, unless and until
the parties have by agreement conferred such power on the Tribunal.

In Lafarge Redland v. Shepard Hill23, a contract was entered into between the employer, X, and
contractor, Y, for the construction of a road. Y, the contractor then entered into a subcontract
with Z, subcontractor. In the subcontract it w as agreed that in case of any dispute that may arise
under the contract the same would be settled by arbitration and it would be consolidated with the
arbitration under the main contract between X and Y. The House of Lords concluded that it was a
tripartite arbitration and held that X cannot be forced to take part in the arbitration proceeding as
the arbitration agreement between X and Y did not envisage any such obligation upon X.

UNITED STATES OF AMERICA

In United States the Courts have frequently used their authority to force consolidation of
pending arbitral proceedings without the consent of the parties even though no provision of
consolidation was incorporated in the arbitration agreement of the multiple contracts.

The stand of the US Courts vis a vis consolidation in multiparty arbitration is highlighted in the case
of Compania Espanola de Petroleos S.A. v. NereusShipping S.A24. A ship owner, N, agreed to charter
his vessel to a charterer, H. This charter party agreement was guaranteed by E. N and H had signed
the arbitration agreement, whereby they had expressly agreed to refer the disputesarising under
the contract between them to the arbitrator. E, had not signed the arbitration agreement. In the
guarantee contract E agreed that in case of default of payment by H, the balance would be paid by E
and he would assume all the rights and liabilities of H on same terms as comprised in the Charter
Party agreement.

Some dispute having arisen both N and H applied for arbitration. N filed an application to implead

23
Lafarge Redlands Aggregates Ltd v. Shephard Hill Civil Engineering Ltd, [2000] 1 WLR 1621
24
Compania Espanola de Petroleos SA v. Nereus Shipping SA [1975] AMC 2421
E as a party in the arbitration proceeding. E opposed this application on the ground that he was
never a party to the arbitration agreement. The court held that not consolidating two proceedings
and allowing two proceedings to continue would inevitably result into conflicting awards and
therefore the court held that there needs to be a single arbitration and impleaded E as a party to the
arbitration. The Appellate Court not only upheld the decree of the lower court but also held that
since E had agreed that in case of default he would be having the same liabilities as H was having
towards N in the Charter Party Agreement, thus there was a consensus among the parties to be have
one consolidated arbitration.

The Courts in USA have rendered divergent opinions on forced consolidation in multi-party
arbitration, while some have ruled that forced consolidation is permissible the others have held that
Courts have no authority to compel non signatories of arbitration agreement to go for
arbitration25.

Despite there being divergence of opinions among US Courts, the custom of having the consent of
all parties as a mandatory precondition for consolidation of arbitration proceedings, respects party
autonomy, a hallmark of arbitration, that is the choice of the parties to be or not to be governed
by arbitration, which is a creature of consent26.

II. JOINDER AND INTERVENTION

Joinder and Intervention are tools fostered for the protection of interest of third parties. Joinder is
the mechanism through which one of the parties in an already commenced arbitration seeks to
implead a third party so that the third parties‟ interest are subject to the outcome of the final
arbitration award. Intervention on the other hand is the mechanism through which the third party
itself seeks to be a part of the arbitration proceedings so as to have a say in it27.

Various fundamental principles of arbitration raise serious challenge to the concept of joinder and
intervention, the foremost being that arbitration being a creature of contract should bind only the
parties who have agreed to refer the dispute for arbitration and not third parties as they are not privy

25
O Kazutake, „Party Autonomy in International Commercial Arbitration: Consolidation of Multiparty and Class wide
Arbitration‟ 9 Annual Survey of International & Comparative Law 192 (2003)
26
B Lamm and J A Aqua, „Defining the party- who is proper party in an international arbitration before the American
Arbitration Association and other international institutions‟ Geo Washington International Law.
27
Supra note 9 at 175
to it. The compromise of confidentiality is another aspect which is often raised by the antagonists
of joinder and intervention28. Confidentiality a sacrosanct feature of the arbitration is undermined
by multi-party proceedings.

Extension to Non-Signatories

The extension of the concept of joinder and intervention to third parties who are not signatories to
the arbitration agreement is the most debated concept. This problem seems to be inevitable
especially in light of modern day complex commercial contracts where multiple contracts with
multiple parties itself seem to be inevitable.29

Furthermore, even though the multiple contracts pertain to same commercial contracts, the
arbitration agreements in these contracts may not contain a provision to accommodate or integrate
other arbitration agreements. Besides this, the parties may not have the same interests at stake and
similarly the third parties may not wish their disputes to be resolved by the same arbitrators30

Thus these issues raise a very pertinent and robust question for our consideration and that is whether
non-signatories can be subjected to the arbitration proceedings initiated by virtue of arbitration
agreement which has been entered into by different but related parties?

The national courts derive their authority to order for joinder of parties, in ordinary civil matters,
from the sovereign authority of law.31 This is done in order to achieve efficient administration of
justice and does not require the express consent of the parties. As far as arbitration is concerned
taking into account the above challenges, most of the legal regime across the globe do not recognize
the concept of forced joinder of third parties, that is without the consent of the parties to the
arbitration proceedings, except in few circumstances32.

The Netherlands Code of Civil Procedure provides for all the concerned parties to tender their
consent for joinder of a third party. However, the arbitration tribunal enjoys the discretion to allow
or reject joinder of third parties irrespective of the fact whether all concerned parties have given

28
S Brekoulakis, „The Relevance of the Interests of Third Parties in Arbitration: Taking a Closer Look at the Elephant
in the Room‟ 112:4 Penn State Law Review 1171 – 1172 (2009)
29
Bernard Hanotiau, Multiple Parties and Multiple Contracts in International Arbitration 35(Oxford University Press
2009)
30
Supra note 22.
31
Jean-Louis Devolve, „Final Report on Multi Party Arbitrations‟ ICC International Court of Arbitration Bulletin 26
(1995)
32
Albert Jan an den berg, Netherlands Arbitration Law 69 (Kluwer International, 1993)
their consent or not.30

Despite the significance of consent as a requirement in joinder of parties, there are certain
circumstances when the non-signatories third party, may become a party to the arbitration
proceedings which has commenced between the parties who had agreed to settle their disputes by
arbitration. Several doctrines have been tailored by courts to enable a third non-signatory party to
become a part of arbitration proceedings33.

Some of these doctrines are as follows:

1. Group of Companies

2. Estoppel
THEORY OF GROUP OF COMPANIES

This doctrine originated in France and has its genesis in the general practice followed in commercial
arbitration there. This has been very well received in France but it has not been widely accepted in
other countries, particularly in the common law countries.32As per this doctrine various companies
which form a part of a larger group must be seen and visualised as a single legal entity and therefore
the non-signatory to arbitration agreement being in the same group of another company which has
signed the arbitration agreement should be treated as the same entity, and hence they become parties
to the arbitration proceeding33.

The case which is often credited for evolving this doctrine is Dow Chemical v. Isover Saint-
Gobain 34 . In this case two distribution agreements were entered into between two Swiss
Companies, Dow Chemical AG and Dow Chemical Europe and one French Company Isover Saint
Gobain. The Swiss Companies were part of a larger group namely Dow Chemicals. It was agreed
in the contract that the Swiss Companies would supply certain equipment to Isover and Isover would
manufacture certain products which would be delivered by French Subsidiary of Dow Chemical
Group or by any other subsidiary of Dow Chemicals, even though they are not parties to the main
contract.

Certain dispute arose in relation to the quality of goods manufactured by Isover and consequently
arbitration was initiated by Dow Chemical AG, Dow Chemical Europe, Dow Chemical France and
Dow Chemical against Isover. Isover contended that the arbitration tribunal could not pass the

33
Brinsmead Simon Winston, „Extending the Application of an Arbitration Clause to Non-Signatories: Which Law
Should Apply?‟ 7 ICFAI Journal of Alternative Dispute Resolution 3 (2008)
award in this case as Dow Chemical France and Dow Chemical were not parties to the main
contract, consequently the arbitration agreement.

The Arbitration Tribunal extended the scope of arbitration agreement to Dow Chemical France and
Dow Chemical majorly on the ground that the concerned companies formed a single entity in reality
all being a part of a larger group viz. Dow Chemical Group and that they actively participated in
the performance of the contract.

In Peterson Farms Inc v. C&M Farming Ltd35 the English Court out rightly rejected to be governed
by this doctrine and categorically noted that Group of Companies Doctrine is not a part of English
Law.
THEORY OF ESTOPPEL

USA and Canada have devised a different doctrine to enable nonsignatories to become a part of
arbitration proceedings between two signatories and this is achieved by applying the principles of
estoppel36.

There are two facets of doctrine of Estoppel

a. Equitable Estoppel: When a non-signatory knowingly accepts the benefits of a contract he is

prevented (stopped) from avoiding the obligation to arbitrate which is incorporated in that contract.

b. Inextricably intertwined issues: If the issues which have been raised by the non-signatories for
resolution is inseparably linked and intertwined with contract which incorporates the arbitration
agreement and the non-signatory is closely related to a signatory37.

The landmark case that deals with the first facet of Estoppel is American Bureau of Shipping v.
Tencara38. In this case a contract was entered into between T and O whereby, T agreed to construct
yacht. T entered into an agreement with A, which contained an arbitration clause by which A was
required to classify the ship which was constructed. A classified the ship as a one belonging to a
good category by which O was able to procure for itself lower insurance rates. The ship suffered
certain damages due to its poor quality. T and O sued A in different suits. A filed an application
before the New York Court for a direction that all the claims between the three parties be resolved
by way of single arbitration on the basis of arbitration agreement which was incorporated in the
contract between A and T. O asserted that since it was not a party to the contract, thereby not being
a party to the arbitration agreement it cannot be compelled to take part in the arbitration proceedings.
The Court held that since O has derived benefits which resulted out of the contract entered into
between A and T, that being procuring for itself lower insurance premium on the basis of
classification made by A, O is estopped from claiming that the arbitration agreement was not
applicable upon them.

The second facet has two limbs:-

a. Permission to the Non-Signatories to compel Signatories to resolve the dispute by way of

arbitration

A paradigm of this limb is the case of Sunkist Soft Drinks, Inc. v. Sunkist Growers Inc. in
which a license agreement was entered into between A and B, which also embodied an arbitration
clause. A alleging that C by managing the affairs of B had caused B to violate the terms of the
license agreement filed a suit against C. C contended that the same must be referred for arbitration.
A opposed this on the ground that C was never a party to the license agreement hence there can be
no arbitration, however the Court held that since all the claims which have been raised by A are
inextricably intertwined with the license agreement, as it is the breach of the terms of license
agreement which was the cause of action for A to file the suit, and that C is closely related to B, A
is estopped from claiming that there can be no arbitration.

b. Permission to the Signatories to compel Non-Signatories to resolve the dispute by way of

arbitration

This limb is perfectly highlighted in the case of McBro Planning and Development Co. v. Triangle
Electronic Construction Co.39, where a Hospital entered into a contract with A, through which A
was to supervise the construction work. Hospital had also entered into a contract with B for setting
up of electrical works, and the contract of B provided that there would be no contractual relationship
between A and B. Both these contract provided of dispute resolution through arbitration.

Certain dispute arose between A and B and A applied for compelling B to resolve the dispute for
arbitration. B raised the opposition that there was no contractual relationship between the two
however the court held that since the ground of defence raised by B is inextricably intertwined by
the contract entered into between A and Hospital, B is estopped from claiming that there can be no
arbitration.
 3. COMPARATIE ANALYSIS OF ARIPOUS ARBITRATION ISNTUTIONS AND
THEIR PROISIONS w.r.t. CONSOLIDATION OF ARBITRATION
PROCEEDINGS:

SCC
Article 11 of the current rules allows the Board to consolidate new claims with existing
proceedings at the request of a party and subject to consulting the parties and the arbitral tribunal.

The draft Arbitration Rules 2017 seek to develop and expand this existing rule. Article 15 will
allow the Board to consolidate a newly commenced arbitration with a pending arbitration if:

 the parties agree to consolidate; or

 all the claims are made under the same arbitration agreement; or

 where the claims involve the same parties and are made under more than one arbitration
agreement, the Board considers the arbitration agreements to be compatible, and it may be
inferred, having regard to all relevant circumstances, that there is an agreement that the
claims may be determined in a single arbitration.

The Board may only do so once it has consulted with the parties and the tribunal. Where the
Board opts to consolidate proceedings, it may release any arbitrator already appointed in the
newly commenced arbitration.

LCIA
Article 22(ix) allows the tribunal, with the approval of the LCIA Court, to consolidate two or more
arbitrations where all the parties to the arbitrations agree in writing.

ICC
Article 10 allows the Court, at the request of the party, to consolidate two or more arbitrations
where any of the following criteria are satisfied:

 the parties have agreed to the consolidation; or

 all of the claims in the arbitrations are made under the same arbitration agreement; or
where the claims in the arbitrations are made under more than one arbitration agreement, the
arbitrations are between the same parties, the disputes in the arbitrations arise in connection with
the same relationship and the court finds the arbitration agreements to be compatible.

ICDR
Article 8 allows the Administrator, at the request of a party, to appoint a consolidation arbitrator
who may order the consolidation of two or more ICDR (or American Arbitration Association)
arbitrations, in circumstances where:

• the parties have agreed; or

• the claims and counter claims are made under the same arbitration agreement; or

• the claims, counterclaims or set offs are made under more than one arbitration agreement,
involve the same parties, the disputes arise in connection with the same legal relationship, and the
consolidation arbitrator finds the arbitration agreements to be compatible.

SIAC
The SIAC rules do not expressly allow consolidation.

HKIAC
Article 28 allows HKIAC, at the request of a party and after consultation with the parties and any
confirmed arbitrators, to consolidate two or more arbitrations pending under the HKIAC rules,
provided:

 the parties agree to consolidate; or

 all of the claims in the arbitrations are made under the same arbitration agreement; or

the claims are made under more than one arbitration agreement, a common question of law or fact
arises in both or all of the arbitrations, the rights to relief claimed are in respect of, or arise out of,
the same transaction or series of transactions and HKIAC finds the arbitration agreements to be
compatible.
4. CONCLUSION

Institutional arbitration thus clearly offers numerous advantages over ad hoc arbitration
and is essential for effective dispute resolution in engineering contracts. To quote the
former Chief Justice of India, “In spite of the numerous advantages of institutional
arbitration over ad hoc arbitration, there is currently an overwhelming tendency in India to
resort to ad hoc arbitration mechanisms. This tendency is counterproductive, since there is
considerable scope for parties to be aggrieved by the functioning of ad hoc tribunals.”

Institutional arbitration is not without its disadvantages in dealing with disputes arising
from engineering contracts. However the detailed analysis above clearly reveals that it still
offers the best possible solution to engineering disputes. A well drafted arbitration
provision, providing for a carefully chosen arbitral institution along with choice of rules
will go a long way in ensuring a successful and quick resolution of disputes arising out of
engineering contracts. Choosing an institution that is quick to adapt to the evolving needs
of the industry in itself will provide for an advantageous situation to parties to effectively
resolve their disputes in a speedy, transparent, effective and harmonious manner. Through
the application of carefully drafted procedural rules and the attention of a trained
secretariat, arbitral institutions are in a vantage position to protect legitimacy of awards,
monitor arbitral proceedings and also assist in customized, dispute specific approaches in
the application of best procedures for disputes arising out of engineering contracts.