Honotiau Chapter Consolidation

KluwerArbitration
Document information Chapter 3: The Possibility of Bringing Together in One

Single Proceeding all the Parties Who Have Participated
Publication in the Performance of One Economic Transaction
Complex Arbitrations:
Multi-party, Multi-contract,
Through Interrelated Contracts
Multi-issue – A comparative
Study (Second Edition) SECTION I: INTRODUCTION
498. It frequently happens that an economic transaction involves more than one contract.
If one or more disputes arise between parties to one of the agreements of the contractual
Bibliographic structure, can all those who have participated in the economic transaction – or at least
several of them, parties to different contracts – be brought together in one single
reference arbitration, before one single arbitral tribunal, which will then have to decide all their
'Chapter 3: The Possibility disputes? And may an arbitral tribunal hearing a dispute that arises principally from a
of Bringing Together in One specific contract decide issues arising from connected agreements entered into by the
Single Proceeding all the same parties, possibly alongside other contractors?
Parties Who Have
Participated in the SECTION II: GROUPS OF CONTRACTS
Performance of One
Economic Transaction
Through Interrelated Subsection I: The Issues and the Various Contractual Schemes
Contracts', in Bernard 499. The problem of deciding in one single proceeding the disputes that arise from
Hanotiau , Complex interrelated contracts may arise in two-party as well as in multi-party situations.
Arbitrations: Multi-party,
Multi-contract, Multi-issue 500. In the first case, A and B sign two or more agreements: a supply or a sale agreement
– A comparative Study and a loan agreement, a sale-purchase agreement and an escrow agreement or a later
(Second Edition), agreement finalising the amount due to the buyer under the guarantee provisions
International Arbitration P 198 included in the first contract, or a contract for the preparation of a feasibility study
Law Library, Volume 14 and a second one for assistance in the preparation of the file to be submitted to bidders.
(© Kluwer Law 501. In multi-party situations, three contractual scenarios are encountered:
International; Kluwer Law
International 2020) pp. 197 (1) A, B and C (or a greater number of parties), members of a consortium, all sign
- 310 different contracts: a framework agreement or a Cooperation Agreement, a Joint
Venture Agreement, specific contracts (hypothesis 1).
(2) A signs a contract with B, a second contract with C and a third contract with D. In this
case, one generally talks of a horizontal contractual relationship: for example, the
employer who signs a contract with an architect, a second with a construction
company and a third with consultant engineers (516) (hypothesis 2).
(3) A contracts with B, B with C and C with D. In this case, the discussion is of vertical
contractual situations. This is notably the case with the employer who contracts
with a construction company which itself subcontracts the whole undertaking, while
the subcontractor does the same for part of the project (hypothesis 3).
502. Additional distinctions are made by French doctrine in relation to the type of
contractual structure: (517)
– complementary contracts;
– successive contracts;
– main contract and subcontract;
– main contract and accessory contract.
503. According to F.X. Train, (518) a fundamental distinction should be made between
contracts that are linked one to the other and those that are not. Contracts are linked one
to the other when they are united in a relationship of economic or functional
dependence. They fall into two categories. The first category includes groups of contracts
that coexist to reach a common goal: a framework agreement and implementation
agreements, a main contract and subcontracts, a main contract and an accessory
agreement for the financing of the main transaction, or a group of contracts of equal
importance united by a common cause or goal. The second category covers contracts that
are united in a relationship of substitution or, in other words, groups of contracts
P 199 consisting of two successive agreements between the same parties, where the second
one impacts the first one to amend it or to terminate it: the original agreement and a
contract providing for its amicable termination, a novation or a settlement. Contracts
that do not fall in either category are not linked. This is the case, for example, of
successive agreements of the same nature between the same parties.
504. The three scenarios mentioned above may in some cases be much more
complicated, as for example in Westland. (519) The states of the United Arab Emirates,
Saudi Arabia, Qatar and Egypt concluded an agreement by which they established the
Arab Organisation for Industrialisation (AOI). Three years later, the AOI and Westland
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Helicopters signed a shareholder’s agreement by which they created a joint-stock
company, the Arab British Helicopters Company (ABH). On the same day, Westland signed
a series of contracts with ABH.
505. In any case, in each hypothesis, one must start by asking whether, in the case of a
dispute originating from several of these contracts, all the disputes may be decided
together – and all the parties can be brought together – in one and the same arbitration
proceeding. (520) Other parallel questions also arise: if, in hypothesis 2 and 3 above, A
brings proceedings against B, can B join C and D as parties to the same proceedings?
From the point of view of methodology, these questions will be addressed after one has
determined who is a party to the underlying contracts containing an arbitration clause or
at least to the arbitration clause. We refer in this respect to the first and second chapters
of this book.
506. In a great number of cases, national courts and arbitral tribunals have been
confronted with the issue of whether it is possible to join and decide together in one
single set of proceedings all the disputes arising from interrelated contracts. The
problem may arise because:
– the parties to the various contracts are not identical; or
– the jurisdiction clauses in the various agreements are not identical (e.g., one
arbitration clause and one clause giving jurisdiction to national courts) or
compatible (e.g., two arbitration clauses under two different institutions), or one or
more contracts do not contain any jurisdiction or arbitration clause.
507. When the parties are the same, the issue with which the arbitral tribunal is
confronted often arises in different terms: may the arbitral tribunal, which undoubtedly
has jurisdiction to hear a dispute that arises principally from a specific contract, decide
issues arising from – or at least take into consideration – connected agreements entered
into by the same parties, possibly alongside other contractors?
508. Before starting the analysis of the case law in the following section, we will make
three general remarks and set forth a few basic principles.
P 200
Subsection II: General Remarks

509. One should not exaggerate the difficulties raised by resolving disputes pertaining to
interdependent contracts. There are many multi-party, multi-contract arbitrations. (521)
The problems they create are not always complex ones, and even if they are, more often
than not an acceptable solution is found.
510. In some, still somewhat uncommon, cases, a multi-party arbitration clause (522) has
been drafted and adopted by the various parties to the different contracts. Sometimes
this is done by drafting an umbrella arbitration agreement or by inserting a clause in a
framework agreement that is referred to in the other individual contracts. Sometimes an
identical ad hoc clause is stipulated in the different agreements. The purpose of this
clause, which permits proceedings to be commenced, regardless of the contractual
dispute, against all or some of the parties to the different instrumenta, is specifically to
allow the introduction, in the different eventualities, of a single arbitration, according to
the conditions laid down in the clause, inter alia in relation to the appointment of the
arbitrators. While one tends to come across such stipulations in large property and
industrial projects, they are less common in smaller scale projects, either because the
parties never envisaged the problem or because they deliberately wanted it that way,
one party or the other seeing no advantage in a multi-party arbitration clause. Thus, in
most cases, the employer sees only very few advantages in a consolidated arbitration. He
wants to hold the main contractor fully liable for building defects and is hardly
interested in the question of knowing whether his co-contractor can call other potentially
liable parties to the proceedings. Conversely, it will generally be in the main contractor’s
interest to make sure that one single tribunal – arbitral or judicial – decides all the
disputes that it has against the employer and the subcontractor. As for the interests of
the latter, he might prefer in the circumstances one alternative or the other, depending,
for example, upon the terms of payment for his intervention. (523) The absence of
coordination of dispute resolution clauses, therefore, is not necessarily pathological. It is
sometimes intended deliberately. The same goes for the possible refusal to consolidate
the proceedings. In addition to the questions of defence strategy, one party may very
well not want its relationship with a contractual partner to be revealed to other parties,
as would be the case in the event of a merger of separate proceedings. Thus, the desire to
keep secret information of a confidential nature, such as know-how, marketing, pricing
and profit margins, often plays an important role. (524)
P 201
511. Finally, it should be pointed out that in the US, courts and writers do not generally
refer to groups of contracts. When a claimant wants to bring together in one single
proceeding all the parties to various connected contracts, the issue is generally
perceived and dealt with as one of consolidation. A court (525) will be asked to refer all
the parties to one consolidated arbitral proceeding.
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Subsection III: Basic Principles
512. Concrete solutions to the problems dealt with in this chapter cannot be examined
without calling to mind several fundamental principles of arbitration.
513. Arbitration is consensual by nature. The arbitrators exclusively derive their
jurisdiction from the will of the parties, expressed in an arbitration agreement. Any
answer to the questions raised above must therefore start from an interpretation of the
intent of the parties in the case in question, such as it is expressed in the arbitration
clause.
514. However, if it is true that the arbitrator can only be empowered by virtue of one or
more arbitration clauses agreed between the parties, it is ultimately up to the arbitral
tribunal itself (subject to the final control of the courts) to decide upon its own
jurisdiction (the Kompetenz-Kompetenz principle) with regard to the various parties to the
proceedings. (526)
515. In the context of an institutional arbitration, the role of the institution remains very
significant. Thus, when an arbitration is brought before, for example, the ICC, and the
respondent does not file any answer or contends that there is no arbitration agreement,
the Secretary General may decide to refer the matter to the Court for decision. In this
P 202 case, the Court must first determine (527) whether there is prima facie an agreement
between the parties to submit the dispute to arbitration. This implies that if A brings
proceedings against B and C in its request and if the ICC Court considers that there is,
prima facie, no arbitration agreement between A and C, it will decide that A cannot bring
proceedings against C. (528) The validity of this practice by the ICC has been frequently
confirmed by national jurisdictions. (529)
516. On the other hand, given the contractual nature of arbitration, the arbitrator does
not have, with respect to multi-party arbitration, all the powers at the disposal of a
judge. In the absence of an agreement between the parties (either express, or by
reference to arbitration rules which authorise it, or implied), the tribunal is not entitled
to consolidate ipso jure separate arbitration proceedings. It appears however that this
lack of imperium does not prevent the arbitrator from deciding in certain cases, at the
request of one of the parties to the arbitration, to stay the proceedings if the arbitrator
judges them to be irregular, as long as another party to the contract and to the
arbitration agreement has not been joined by the claimant, in the case, for example, that
the parties’ obligations are indivisible. (530) The arbitrator could even invite the
claimant, if the defendant so requests, to introduce parallel arbitration proceedings
against a third party heavily implicated in the economic transaction by virtue of an
interrelated contract. The arbitrator could then request the merger of the two
proceedings if the applicable arbitration rules so permit – if, for example, the arbitrator
finds that the failure to join that party is motivated purely by a strategy of obstruction.
(531)
517. Indeed, if the claimant does not comply, the arbitrator could not force him to do so,
but he would be entitled to draw the resulting adverse inferences. The same situation can
be found when the arbitrator invites one party to the arbitration, in response to a claim
for provisional or conservatory measures, to refrain from carrying out an attachment, or
P 203 not to release funds, or alternatively to submit a document being held by himself or by
a third party. It is indeed another basic principle of international commercial arbitration
that the parties have the duty to cooperate in good faith in the performance of their
agreement as well as in the arbitral proceedings, for example at the stage of the
constitution of the arbitral tribunal. (532)
518. Arbitral institutions and arbitrators therefore have a correlative obligation to make
sure that the duty of good faith is respected by the parties. Consequently, they should, by
all means within the limits of their rules or prerogatives, make it impossible for a party to
jeopardise another party’s case by abusing its rights and unduly opposing the conduct of
a single arbitration. It should, however, never be overlooked that the parties’ agreement
is paramount: striking a balance between this agreement, the duty of the parties to act in
good faith, and their right to a fair trial (the latter being closely related to the right of the
parties to present their case in an equal position), is therefore probably one of the most
difficult challenges that arbitrators and arbitral institutions face. It is their duty to solve
it in the best possible way by all available means.
SECTION III: ANALYSIS OF CASE LAW

519. Analysis of the case law will be divided into six parts in which the following situations
and issues will be examined:
(1) The parties are different or not all the same but the contracts contain the same
arbitration clause or the clauses are compatible.
(2) The parties are different or not all the same and the contracts contain one or more
identical or compatible arbitration clause(s) and one or more contracts do not
contain an arbitration clause.
(3) The parties are different or not all the same and the contracts do not contain
identical or compatible dispute resolution clauses, and in some cases one or
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several of them do not contain an arbitration clause.
(4) The issue of guarantees (bank guarantees and guarantee agreements).
(5) The parties are the same and they have concluded two or more contracts, one or
several of them without an arbitration clause, or containing a clause that gives
jurisdiction to national courts, or another incompatible arbitration clause (Court
Decisions).
(6) Whether an arbitral tribunal hearing a dispute that arises principally from a
specific contract may decide issues arising from connected agreements entered
P 204 into by the same parties when one of them does not contain an arbitration clause
or contains a clause giving jurisdiction to national courts or another incompatible
arbitration clause (Arbitral Awards).
Subsection I: The Parties Are Different or Not All the Same but the Contracts Contain
the Same Arbitration Clause or the Clauses Are Compatible
I. Awards Refusing Consolidated Jurisdiction and Eventually Taking the Connected
Contract into Consideration
520. In an arbitration case decided under the auspices of the Chamber of National and
International Arbitration of Milan on 2 February 1996, (533) the tribunal concluded that
the fact that A entered into three successive similar contracts having the same purpose,
with B, C and D, was not sufficient to allow B to start an arbitration proceeding with A
against C. In the case under consideration, A had entered into identical cooperation
contracts in relation to the development of a new pharmaceutical product. The costs of
the research phase were to be shared by A, B, C and D. After termination of the research
phase by A one year later, A and B filed a joint request for arbitration against C, seeking
C’s share in the research costs to be paid to B or if necessary, to claimant A. C objected on
the ground that the request for arbitration was inadmissible, and the arbitral tribunal
indeed found that it had no jurisdiction over the dispute between claimant B and
claimant C, for lack of a valid arbitration agreement. The arbitral tribunal considered
that the three contracts were separate agreements and did not constitute one single
multilateral contract. The fact that they contained an identical arbitration clause was
found to be irrelevant. B could not therefore participate in the arbitration without the
assent of C.
521. In ICC Case no. 7453 of 1994, (534) the facts were more unusual. There was not only one
contract (between A and B) but also an arbitration agreement by implied consent
(between A and C). A, the claimant, was the exclusive sales agent in the US and Canada
for first defendant’s (B, a German company) products. The contract contained an
arbitration clause providing for ICC arbitration. After termination of the agreement by the
first defendant, the claimant instituted court proceedings in a US District Court against B
and one of its managing directors, C, the second defendant. The first and second
defendants invoked the arbitration clause in the contract and the District Court stayed
the proceedings in favour of arbitration. Subsequently, during the arbitration, the second
defendant contested the arbitral tribunal’s jurisdiction over him, as he was not a party to
the arbitration agreement. The claimant objected, citing the second defendant’s consent
to arbitration from the fact that he had invoked the arbitration agreement in the court
proceedings. The arbitral tribunal considered that even if it could be so interpreted, the
P 205 second defendant could not have been joined to the arbitration proceedings without
the consent of the first defendant, which the latter was not ready to give. Consequently,
any offers made by the second defendant that the claim against him should be subject to
arbitration were a nullity because they were incapable of being given effect. Any consent
or concurrence by the claimant to arbitration against the second defendant would
therefore be void. (535) The fact that in the US there exists a strong policy in favour of
arbitration did not alter this conclusion. (536)
522. On the other hand, ICC Case no. 6230 of 1990 (537) illustrates the possibility that an
arbitral tribunal may take into consideration a connected agreement over which it does
not have jurisdiction. The Government of Z, as owner, and the respondent, as main
contractor, had concluded a main contract for certain works relating to the construction
of a power plant. It incorporated the Fidic conditions of contract. The owner nominated
an engineer under the main contract. After the conclusion of the main contract, the
respondent entered into a subcontract with the claimant. It was composed, inter alia, of
the subcontract agreement and the Fidic conditions of contract concluded between the
respondent and the Government of Z as far as applicable to the scope of supply. With
respect to the subcontract, no additional engineer was nominated by the respondent.
Article 3 of the subcontract concerning payments corresponded exactly to the main
contract as applicable to civil works. Payments to the subcontractor were also made
dependent upon a receipt of payment (if and when) from the Government of Z. The
project became jeopardised as a result of the owner’s financial difficulties. The claimant
continued to work on the project for a period of fourteen months but was not paid. It
therefore initiated ICC arbitration. The respondent disputed the jurisdiction of the
arbitral tribunal on various grounds. The arbitral tribunal found that it had jurisdiction
and held that the claimant was entitled to claim for compensation for the construction
work performed. An action to set aside was filed before the Swiss Federal Supreme Court
which, in a judgment of 14 November 1990, rejected the appeal. (538)
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523. Although it did not have jurisdiction on the main contract, the arbitral tribunal took
it into consideration in various respects. First, the respondent objected to the jurisdiction
of the tribunal on the ground that the claimant had not resorted to the dispute
settlement mechanism of clause 67 of the Fidic conditions for the compensation claim.
The arbitral tribunal rejected this objection. It decided that the engineer nominated for
the relationship between the owner and the respondent did not automatically fulfil the
functions of an engineer in the subcontract relationship. Clause 67 of the Fidic conditions
was thus to be applied to the relationship between the parties in such a way as if the
respondent had not elected an engineer for contractual dealings in the subcontractor
relationship. On the other hand, the arbitral tribunal decided the claimant’s
compensation claim taking into consideration how the payments had been made by the
P 206 owner to the respondent. It ordered the respondent to pay the claimant in proportion
to the amounts received from the owner even though the respondent had transferred a
substantial portion of these payments as down payments for various subcontractors or
suppliers. These special arrangements could not be used against the claimant since
neither the main construction contract nor the subcontract contained any sort of
provision that would have obliged the respondent as contractor to transfer certain
payments received from the owner to specific subcontractors or suppliers.
II. Awards and Decisions Accepting Consolidated Jurisdiction
524. In the first interim award in Westland, the facts of which have been stated above,
(539) disputes arose from both the contract concluded between AOI and Westland and
the contracts concluded between Westland and ABH. All the contracts provided for ICC
arbitration. Westland filed a request for arbitration with the ICC against AOI, United Arab
Emirates, Saudi Arabia, Qatar, Egypt and ABH. In the interim award of 5 March 1984 on
jurisdiction, the arbitral tribunal declared itself competent with regard to all the
respondents. On the one hand, the arbitrators considered that the four states were bound
by the arbitration clause, although they were not signatories. On the other hand, the
arbitral tribunal refused to follow Egypt’s contention that Westland had improperly
instituted a single arbitration against six respondents with conflicting interests. The
arbitrators referred to Article 24, paragraph 2 of the Swiss Concordat which explicitly
permitted a claimant to proceed against multiple defendants jointly (a) if there was
among them ‘a community at law’, or (b), if ‘claims of the same character, founded upon
an essentially common cause of substance and law constitute the subject matter of the
dispute’. The arbitral tribunal found that the request satisfied the two conditions and
therefore had to be declared admissible. It further pointed out that everything
depended on the intention expressed by the parties in the arbitration clause:
[i]t is necessary and therefore sufficient, in principle, that they wished to bind
themselves for the arbitrators to have jurisdiction at the same time in respect
of them all and for one of them to be able to initiate proceedings against all
the others within one set of arbitration proceedings. It thus matters little that
there are several arbitration clauses when their content shows that they make
up a whole in the mind of the parties. Such are the circumstances of the
present case …
and
the series of documents concluded constitute an indivisible whole and the
four states thus truly demonstrated their desire to act together, by joining
together under one name. The similarity of the clauses used in the various
contracts can only serve to bear out this interpretation. It follows that the
tribunal is not merely competent as regards each of the states, AOI and ABH
but is justified in adjudicating upon their cases in one and the same award.
(540)
P 207
525. In the case decided by the Paris Court of Appeals on 31 October 1989, (541) Kis France,
the manufacturer of new equipment for the quick development and printing of
photographs, had set up a system with Société Générale to permit the marketing of this
equipment in various countries, including the US, under the form of leasing and through
their respective local subsidiaries. Various conventions had been signed:
– a framework agreement between Kis France and Société Générale acting in their
own name and for the account of their subsidiaries;
– agreements between local subsidiaries of Société Générale and Kis France for the
implementation of the framework agreement and, in particular, for the US:
– an agreement concluded between Sogelease Corporation, a leasing subsidiary
of Société Générale and Kis California, later renamed Kis Corporation, a
subsidiary of Kis;
– this agreement was followed by two subsequent contractual documents: an
addendum to the framework agreement signed by Société Générale acting in
its own name and for its subsidiary and by Kis France also acting in the same
qualities and, second, a contract between Société Générale acting for its own
5
account and for its subsidiary and Kis Photo Industrie, also acting for its own
account and for its subsidiary Kis USA.
526. The framework agreement contained an ICC arbitration clause to which an express
reference was made in the local agreements and the addenda. Arbitration was initiated
by Société Générale, Sogelease Pacific and Sogelease Corporation, two subsidiaries of
Société Générale against Kis France, Kis Photo Industrie and Kis Corporation. The arbitral
tribunal considered that it had jurisdiction over all claimants and respondents, as well as
jurisdiction to decide all the issues arising under the various agreements. (542)
527. An action to set aside was filed with the Paris Court of Appeals which confirmed the
arbitrators’ jurisdiction. According to the Court of Appeals:
The Local Agreement, concluded by the subsidiaries of Société Générale and
Kis France, refers to this arbitration clause. We infer from this reference that
the arbitrators may decide the disputes concerning the execution of both the
Basic and the Local Agreement, but only upon request of the two parent
companies. The position of the subsidiaries in this sense is totally
subordinate.
In granting the claim filed by Société Générale and its subsidiaries against Kis
France and Kis Photo, the arbitrators examined the agreements between the
parties and held that the parties’ mutual obligations were inexorably linked
and that the parent companies played a dominant role vis-à-vis their
subsidiaries, which were bound to abide by the former’s commercial and
financial decisions …
The arbitrators inferred from the contractual relationships between the two
groups of companies that there was a common intention of the parties to
P 208 consider Kis France and Kis Photo liable for any amounts owed by them or
their subsidiary Kis Corporation. Hence, the arbitrators deemed that the claim
filed by Société Générale and its subsidiaries was admissible. (543)
528. As was rightly pointed out by Laurent Aynès, (544) in this case it is the:
existence of a subordination which has permitted to identify the group
constituted of a main agreement and a subcontract as well as the group of
companies: the domination of the mother company vis-à-vis its subsidiaries
and the participation of the latter to the performance of a contract concluded
by the first. (545)
In other words, the existence of a group of companies has been decisive in reaching the
conclusion of the existence of a group of contracts.
529. In the landmark Brazilian case Chaval v. Liebherr, (546) two contracts were
concluded, both containing the same arbitration clause:
– a cargo ship construction agreement between Chaval Navegação Ltda (Chaval) and
Emaq Engenharia e Máquinas S/A. This agreement was later assigned to Verolme
Estaleiros Reunidos do Brasil S/A (Verolme) with Chaval as the intervening-
consenting party to the assignment agreement;
– a second contract between Verolme and Liebherr Brazil Guindastes e Máquinas
Operatrizes Ltda (Liebherr) by which Verolme commissioned deck cranes for the
cargo ship to Liebherr.
Chaval claimed that the deck cranes installed by Liebherr never functioned as expected,
significantly impairing its ability to use the cargo ship built by Verolme. As a result,
Chaval filed a damages lawsuit directly against Liebherr before a civil court in Rio de
Janeiro seeking compensation for the severe economic damages allegedly caused by the
malfunctioning deck cranes. Liebherr objected to the jurisdiction of the Court claiming
that the dispute fell under the dispute resolution framework electing arbitration as the
method to resolve the disputes between all parties involved in the construction of the
cargo ship. The objection was rejected in the first instance, but the Rio de Janeiro State
Court of Appeals decided that all agreements were connected and subject to arbitration.
The decision was upheld by the Superior Court of Justice confirming that the Court of
Appeals had rightly interpreted the agreements as a whole, underscoring the importance
of the symbiotic obligations between them. The rationale behind the Superior Court of
P 209 Justice’s decision was that all agreements were connected and intertwined, having a
common subject matter, i.e., the construction of the cargo vessel.
530. Reference may also be made in this subsection to Pertamina which is referred to in
Chapter 7 ‘Enforcement of the Award’. (547) The arbitral tribunal decided in this case to
consolidate into one single proceeding all the claims made by claimant arising from two
closely connected agreements entered into, respectively, by KBC and Pertamina, on the
one hand, and by KBC, Pertamina and PLN, on the other hand. Both contracts contained
almost identical arbitration clauses.
Subsection II: The Parties Are Different or Not All the Same and the Contracts
Contain One or More Identical or Compatible Arbitration Clause(s) and One or More
6
Contracts Do Not Contain an Arbitration Clause
531. When one or more contracts contain identical or compatible arbitration clauses and
one or more other connected agreements do not contain an arbitration clause, one
encounters a great variety of decisions on jurisdiction, depending on the particular
circumstances of the case. In ICC Case no. 8708 of 1997, (548) three companies were
involved: company A (the first claimant), company B (the second claimant) and company
C (the respondent). A and C, which were active in the same industrial sector, started a
cooperation in 1978. They created a 50/50 joint venture. In 1980, C encountered financial
difficulties and looked to A for financing. The transaction involved six contracts. The three
companies first signed a framework agreement called protocol and two amendments
thereto. The protocol envisaged the conclusion of subsequent agreements between A and
B, B and C and A and C, as follows. A lent to B the price of a property that B purchased
from C. C leased the same property from B with a purchase option. The amount of the rent
paid by C to B was equal to the amount of the instalments which B had to pay to A, which
in turn had a mortgage on the property. The lease and the loan had the same term
(fifteen years). Moreover, during the term of the loan, C put in escrow within the hands of
a third party, to the benefit of A, the shares it held in B. Finally, C promised A to stop
manufacturing a certain category of products and undertook to buy these products
exclusively from A, during a fifteen-year period. The protocol contained an ICC arbitration
clause and provided that its scope extended to all disputes that could arise at the
occasion of the interpretation and application of one of the contracts governing the
relationship between the signatories to the protocol. Moreover, all the other agreements
contained an identical ICC arbitration clause, with the exception of the sale agreement
between B and C. The main disputed issue concerned the requalification of the sale and
the lease in a loan secured by a property. The respondent objected to the jurisdiction of
the arbitral tribunal on two grounds. First, it pointed out that the protocol was of a
preliminary nature, and that from the moment the implementation agreements had
taken place, it could no longer apply, including its arbitration clause. Second, the fact
P 210 that the sale-purchase agreement was the only contract not to include an arbitration
clause was allegedly evidence that the parties did not want to have this agreement
submitted to arbitration.
532. The arbitral tribunal upheld its jurisdiction. It decided that all the agreements
constituted a group of contacts characterised by a framework agreement, followed by six
implementation agreements dealing with various aspects of the transaction defined in
the framework agreement. In these conditions, the scope of the arbitration clause
contained in the latter had to be extended to all disputes arising from the contractual
scheme, since this was clearly the will of the parties.
533. ICC Case no. 8910 of 1998 (549) raised closely related issues of group of companies
and group of contracts, like in Kis already analysed. (550) The claimant, a French
company, had concluded with the first respondent (a UAE company) an exclusive
distributorship agreement in the Emirates, governed by French law and providing for ICC
arbitration in Paris. The same day, claimant had also signed with the first and the second
respondent (a UAE company in which the first respondent had a majority participation) a
tripartite agreement in which the second respondent was substituted to the first
respondent for the performance of the distributorship agreement. Finally, the third
respondent (an individual, a UAE citizen, owner of the first respondent) had also the same
day guaranteed ‘at first demand and without any legal formality’ all payments overdue
by the second respondent in the context of the performance of the distributorship
agreement. The last two agreements did not contain an arbitration clause. When
informed that the distributorship agreement would not be renewed, the first respondent
stopped paying the invoices relating to past deliveries.
534. The claimant started an ICC arbitration in Paris and the second and third
respondents objected to the jurisdiction of the arbitral tribunal on the ground that they
were not parties to the distributorship agreement. With respect to the second
respondent, the tribunal decided that the common intention of the first and second
respondents and of the claimant to be bound by the arbitration clause of the
distributorship agreement was characterised by the first respondent’s control over the
second respondent reinforced by the fact that the function of director in the first
respondent was held by the minority shareholder of the second respondent. Beyond the
existence of a group of companies, the arbitral tribunal also based its decision on the
existence of a group of contracts and more precisely on the close interconnection among
the agreements concluded by the claimant and the first and the second respondents. It
therefore decided that it had jurisdiction over the first two agreements and over the first
and the second respondents. With respect to the third respondent and the guarantee, the
tribunal decided that it did not have jurisdiction over them by application of the group
of contracts theory, considering that the third respondent’s undertaking remained apart
from the main transaction and that only the first contract and the tripartite agreement
contributed to the performance of the main contract.
P 211
535. In ICC Award in Case no. 12605 of 2005, (551) the arbitral tribunal followed a similar
line of reasoning. Starting in 1967, M. X, the claimant, a businessman from Africa, started a
commercial relationship with group Y for the distribution abroad of various consumer
7
products. Group Y was composed of numerous companies, YA, YB, YC, YD, YE. In 1980, M. X
concluded a contract with YA for the distribution of certain brands on the Territory of an
African state A (the 1980 contract). This contract did not contain any dispute resolution
clause. In 1981, M. X concluded with company YB another contract for the distribution of
other brands in the same African state (the 1981 contract). In 1986, M. X concluded two
distribution agreements of certain brands of products in the Territory of another African
state with companies YA and YC (the 1986 contracts). In 1996, M. X concluded two new
distribution contracts with YD and YE in the Territory of the same African state (the 1996
contracts). These contracts contained an ICC arbitration clause. Finally, in February 1998,
YD, YE and YA have each, separately, informed the claimant of the resiliation of the 1996
and 1980 contracts. Following the resiliation, the claimant filed a request for arbitration
at the ICC against companies YD (first respondent) and YE (second respondent), claiming
damages for the unjustified termination of the 1996 contracts and this, for the whole
contractual relationship, including the 1980 contract concluded with YA. The respondents
objected to the jurisdiction of the Tribunal over the disputes relating to the 1980 contract
which did not contain an arbitration clause and had been concluded with company YA
which was not a party to the arbitration and had not participated in the negotiation and
performance of the 1996 contracts. Moreover, none of the respondents had participated
in the negotiation of the 1980 contract, but, on the other hand, Respondent n° 1 had
substituted YA for the performance of that contract. The objection was rejected by the
arbitral tribunal.
536. The Tribunal first determined that all the contracts concluded between X and
companies of the Y group were part of one economic transaction, i.e., the distribution of
group Y’s products in various African territories. It also noted the absence of any
formalism in the performance of those contracts and, for example, the fact that
Respondent n° 1 had taken over the performance of all the contracts concluded with the
claimant starting 1994 with the collaboration of the marketing company YF. The arbitral
tribunal also determined that the commercial relationship with the claimant had ended,
at the initiative of Respondent n° 1, through the simultaneous resiliation of all the
contracts which were still in force; and that the causes and circumstances of all these
resiliations being the same, it was not possible to divide the dispute which concerned
the conditions upon which the contracts had been terminated, between what related to
the 1980 contract, the only one which did not include an arbitration clause, and all the
others.
537. It is on the basis of the above that the arbitral tribunal has subsequently searched to
P 212 determine whether the will of the parties was to apply the arbitration clause to the
whole economic transaction. The Tribunal answered in the affirmative in consideration of
the commercial relationship between the parties which had progressively evolved year
after year without the parties feeling the need to formalise these evolutions in writing.
The Tribunal noted in particular the quasi systematic presence of arbitration clauses in
all the contracts being a manifestation of the general position of the group in favour of
arbitration. The Tribunal also noted that the wording of the arbitration clause confirmed
that the parties intended to give it a very broad application. It indeed referred to ‘all
disagreements, all problems or all eventual disputes arising from the present agreement
or relating thereto…’. (552) According to the Tribunal, this wording indicated that the
scope of the arbitration clause was not strictly limited to the agreement in which it was
contained but was susceptible to be extended to contracts having a connection with it.
538. In the Zurich Chamber of Commerce case no. 2273/95 of 31 May 1996, (553) a Russian
raw material supplier (respondent) entered, after the collapse of the Soviet Union, into a
commercial relationship with an Argentine processing group (second claimant) interested
in finding a reliable source of supply for raw materials for its works and wishing to expand
into Eastern Europe. The Argentine processing group was the main shareholder of an
Argentine processing company to which the respondent was to supply raw materials and
in which the respondent took a 20% shareholding. Later, the Argentine processing group
purchased a processing company in Hungary (first claimant) to which the respondent also
supplied raw materials, and in which it took a 15% shareholding. Finally, the raw
materials were to be supplied through a Spanish trading company, 95% of which was
owned by the respondent. The latter was subsequently privatised and stopped all
deliveries of raw materials to the claimants, who instituted arbitration in Zurich seeking
damages for breach of contract.
539. The parties were bound by various agreements: in the first place, two protocols
(protocol 1 and 2), each containing a Zurich Chamber of Commerce arbitration clause; in
the second place, two framework agreements (3 and 4), only the first of which contained a
Zurich Chamber of Commerce arbitration clause and to which apparently the two
claimants and defendant were parties. The second one did not contain any arbitration or
jurisdiction clause. It seems that not all contracts were concluded between the three
parties but the reported decision is not entirely clear in this respect.
540. To justify the jurisdiction of the arbitral tribunal to decide disputes arising under
agreement 4 (not containing any arbitration clause), the claimants relied on the
arbitration provision contained in agreement 3, invoking the group of companies theory.
The arbitral tribunal decided that this theory was not applicable in the case since there
was not really a group of companies. However, it found that it had jurisdiction to decide
8
all the claims, even those arising under agreement 4, under the group of contracts theory.
P 213 The reasoning was the following:
Where in the top layer agreements the parties have provided for a particular
type of arbitration any dispute that arises under a contract of a lower layer
such as a dispute leading to claimant’s claims will be governed by the top
layer arbitration clause unless there is a different arbitration clause or a
jurisdiction clause on a lower level or in the contract under which a particular,
specific dispute arises. … All claims … before the arbitral tribunal in this
arbitration … are covered by the arbitration clauses in the protocols … Most of
them are also covered on a lower level by the arbitration clause in the first
claimant’s framework agreement. All these arbitration clauses, even though
worded differently, mean the same thing. Under these circumstances, one
must understand them all to provide for the same arbitral jurisdiction, or for
several arbitral tribunals set up by the same institution. … Accordingly, these
claims all fall under the Zurich Chamber of Commerce arbitration and the
jurisdiction of this tribunal. (554)
541. The arbitral tribunal cited the following passage from Laurent Aynès: (555)
If the contract in which it [the arbitration clause] is contained is itself
incapable of giving rise to disputes because it needs to be completed or to be
put in precise form by other agreements, the disputes which the parties
envisioned are those which may arise from the future group of contracts. This
clause has no object if it is limited to the single agreement in which it is
contained. This is the case with an arbitral clause in a framework agreement,
followed by contracts aimed at implementing the agreement or in a letter of
intent, presupposing the conclusion of agreements on the details. Naturally, at
the time of their conclusion, the parties may renounce the initial arbitration
clause and adopt other means for settling their future disputes, for example, if
the contracts for the implementation of the agreement contain a clause which
is incompatible with that in the framework agreement. Their silence, however,
militates in favour of the coming into play of the arbitral clause. (556)
542. The issue addressed in this section has also been the subject of court decisions in
various jurisdictions. Although based on their specific facts, these decisions tend to
demonstrate the level of liberalism or restrictiveness followed by the courts in these
various jurisdictions.
543. In the English Commercial Court judgment of 17 December 2008, (557) the parties Mr
Emmott and Michael Wilson Partners Limited (MWP) entered into an agreement in 2001 to
operate a quasi-partnership to provide legal services in Kazakhstan (the 2001
Agreement). The 2001 Agreement provided for disputes to be resolved by arbitration in
London. In 2005, Mr Emmott, MWP and Mr Wilson, who was a director and shareholder of
MWP, agreed to transfer shares in another company to Mr Emmott as payment for work
done by him (the 2005 Agreement’). The 2005 Agreement did not contain an arbitration
clause. A dispute arose with regard to the transfer of the shares, and the Court had to
P 214 deal with the preliminary issue as to whether the arbitral tribunal had jurisdiction to
deal with the 2005 Agreement. MWP argued that the dispute was not subject to
arbitration because it did not fall within the 2005 Agreement. This was rejected by the
Court that held that the 2001 Agreement was part of the background factual matrix which
was relevant to the construction of the 2005 Agreement. The Court referred to Fiona Trust
v. Privalov (558) where Lord Hoffman enunciated the following presumption: ‘In my
opinion, the construction of an arbitration clause should start from the assumption that
the parties, as rationale businessmen, are likely to have intended any dispute arising out
of the relationship into which they have entered or purported to enter to be decided by
the same tribunal. The clause should be construed in accordance with this presumption
unless the language makes it clear that certain questions were intended to be excluded
from the arbitrator’s jurisdiction.’ (559) The Court applied this presumption and held that
disputes under the 2005 Agreement were likely to have been intended to be determined
by the same arbitral tribunal as provided for in the arbitration clause in the 2001
Agreement.
544. In the Philippines, in a decision of 11 January 2016, (560) the Supreme Court held that
an arbitration clause in a contract may be extended to subsequent contracts executed
for the same purpose. It found that the relevant contracts, i.e., the original contract and
the subsequent amended contracts had been executed in order to achieve a single
purpose and should thus be treated as a single contract, in part of the whole agreement.
Under such circumstances, even if an arbitration clause is not included in the amended
contract, the parties to the latter are bound by the arbitration clause provided in the
original contract. The facts were the following. On 10 June 1995, Bases Conversion
Development Authority (BCDA) entered into a Joint Venture Agreement with Philippine
National Railways (PMR) and other foreign corporations. Under that Joint Venture
Agreement, the parties agreed to construct a railroad from Manila to Clark. It provided
that BCDA would establish North Luzon Railways Corporation (North Rail) for purposes of
constructing, operating and managing the railroad system. The Joint Venture Agreement
provided for arbitration of any dispute in accordance with the Philippines Arbitration
9
Law supplemented by the Rules of Conciliation and Arbitration of the International
Chamber of Commerce. BCDA organised and incorporated North Rail. It also invited
investors to participate in the railroad project’s financing and implementation. Among
those invited was D.M. Consunji, Inc. On 8 February 1996, the Joint Venture Agreement was
amended to include D.M. Consunji, Inc. and/or its nominee as party. The amended Joint
Venture Agreement provided that D.M. Consunji, Inc. would be an additional investor of
North Rail and would subscribe to 20% of the increase in North Rail’s authorised capital
stock. On 8 February 1996, BCDA and the other parties to the Joint Venture Agreement,
including D.M. Consunji, Inc. and/or its nominee, entered into a Memorandum of
P 215 Agreement. Under this agreement, the parties agreed that the initial seed capital of
PHP 600 million would be infused to North Rail. Of that amount, PHP 200 million would be
D.M. Consunji, Inc.’s share.
545. Under BCDA and North Rail’s request, DMCI Project Developers, Inc. (DMCI-PDI)
deposited PHP 300 million into North Rail’s account. The deposit was made on 7 August
1996 for its future subscription of the North Rail shares of stocks. At that time, North Rail
had applied to increase its authorised capital stock with the Securities and Exchange
Commission. In letters dated 4 April 1997, D.M. Consunji, Inc. informed PNR and the other
parties that DMCI-PDI should be its designated nominee for all the agreements it entered
and would enter with them in connection with the railroad project. Later, North Rail
withdrew from the Securities and Exchange Commission its application for increased
authorised capital stock. Consequently, DMCI-PDI started demanding from BCDA and
North Rail the return of its PHP 300 million deposit. BCDA and North Rail refused to return
the deposit. Later, similar requests by BCDA were also rejected.
546. On 17 August 2005, DMCI-PDI served a demand for arbitration to BCDA and North Rail
citing the arbitration clause in the June 10 1994 Joint Venture Agreement. BCDA and North
Rail failed to respond. DMCI-PDI therefore filed before the regional trial court of Makati a
petition to compel arbitration. BCDA filed a motion to dismiss on the ground that there
was no arbitration clause that DMCI-PDI could enforce since it was not a party to the Joint
Venture Agreement. North Rail also filed a motion to dismiss on the ground that the Court
did not have jurisdiction over it and the DMCI-PDI had no cause for arbitration against it.
On 9 February 2006, the trial court denied BCDA’s and North Rail’s motions to dismiss and
granted DMCI-PDI a petition to compel arbitration. It ruled that the arbitration clause in
the Joint Venture Agreement should cover all subsequent documents including the
amended Joint Venture Agreement and the Memorandum of Agreement. The three
documents constituted one contract for the formation and funding of North Rail. The
decision of the trial court was appealed before the Supreme Court. The Supreme Court
first pointed out that the Philippines State had adopted a policy in favour of arbitration
and that arbitration agreements were to be liberally construed in favour of proceeding to
arbitration; that it was in light of that policy that the Court had to resolve the issue of
whether DMCI-PDI could compel BCDA and North Rail to submit to arbitration
proceedings.
547. The Court noted that a reading of all the documents of agreement showed that they
were executed by the same parties. Initially, the Joint Venture Agreement was executed
only by BCDA, PNR and foreign corporations. When the Joint Venture Agreement was
amended to include D.M. Consunji, Inc., and/or its nominee, they were deemed to have
been also a party to the original Joint Venture Agreement and therefore became bound
by the terms of both the Joint Venture Agreement and its amendment. Moreover, each
document was executed to achieve the single purpose of implementing the railroad
project, such that documents of agreement succeeding the original Joint Venture
P 216 Agreement merely amended or supplemented the provisions of the original Joint
Venture Agreement. The first agreement, the Joint Venture Agreement, defined the
project, its purposes, the parties, the parties’ equity participation and their
responsibilities. The second agreement, the amended Joint Venture Agreement, only
changed the equity participation of the parties and included the D.M. Consunji, Inc.
and/or its nominee as party to the revoked project. The third agreement, the
Memorandum of Agreement, raised the seed capitalisation of North Rail from PHP 100
million as indicated in the first agreement to PHP 600 million, in order to accelerate the
implementation of the same project defined in the first agreement. Moreover, the
Memorandum of Agreement was an implementation of the Joint Venture Agreement and
the amended Joint Venture Agreement. It could not exist without referring to the
provisions of the original and amended Joint Venture Agreement. It assumed a prior
knowledge of its terms.
548. In other words, according to the Court, each document of agreement represented a
step towards the implementation of the project, such that the three agreements had to
be read together for a complete understanding of the parties’ whole agreement. The Joint
Venture Agreement, the amended Joint Venture Agreement and the Memorandum of
Agreement had to be treated as one contract because they all formed part of a whole
agreement. Hence, the arbitration clause in the Joint Venture Agreement could not be
interpreted as applicable only to the Joint Venture Agreement’s original parties. The
succeeding agreements were deemed part of or a continuation of the Joint Venture
Agreement. The arbitration clause had therefore to extend to all the agreements and its
parties since it was still consistent with all the terms and conditions of the amendments
and supplements. With respect to DMCI-PDI, the tribunal noted that it was D.M. Consunji,
10
Inc.’s nominee and therefore undoubtedly part to the arbitration agreement. With
respect to North Rail, the Supreme Court considered that it was bound by the arbitration
agreement in its quality of third-party beneficiary. The Court noted that North Rail’s
capitalisation and the composition of its subscribers were subject to the provisions of the
original and the amended Joint Venture Agreements and the subsequent Memorandum of
Agreement. It was pursuant to the terms of these agreements that North Rail demanded
from D.M. Consunji, Inc. the infusion of its share in subscription. Therefore, North Rail
could not deny understanding that its existence, purpose, rights and obligations were
tied to the agreements. When it demanded the amount of D.M. Consunji, Inc.’s
subscription based on the agreements and later accepted the latter’s funds, it proved
that it was bound by the agreements’ terms. North Rail could not therefore choose to
demand the enforcement of some of the agreements’ provisions that were in its favour
and later deny being bound by the same terms. The Supreme Court concluded that if the
P 217 Civil Code in its Article 1311 (561) gives third-party beneficiaries to a contract the right
to demand the contract’s fulfilment in their favour, the reverse should also be true. A
beneficiary who communicated his or her acceptance to the terms of the agreement
before its revocation may be compelled to abide by the terms of that agreement,
including the arbitration clause. In this case, the Supreme Court considered that North
Rail was deemed to have communicated its acceptance of the terms of the agreements
when it accepted D.M. Consunji, Inc.’s funds.
549. In India, a very liberal approach was also followed by the Supreme Court in its
judgment of 3 May 2018 in Ameet Lalchand Shah and Ors v. Rishabh Enterprises and
Another. (562) In this case, Rishabh Enterprises (Rishabh), first respondent, owned by the
second respondent, Dr AM Singhvi, entered into two agreements with M/S Juwi India
Renewable Energies Pvt. Ltd. (Juwi India): an Equipment and Material Supply Contract for
purchase of power generating equipment (EMS) and an Engineering, Installation and
Commissioning Contract for installation and commissioning of a Solar Plant (EIC). Both
agreements contained an arbitration clause. Rishabh entered into a Sale and Purchase
Agreement (SPA) with the Second Appellant company, Astonfield Renewables Private
Limited (Astonfield), for purchasing CIS photovoltaic products. The SPA did not contain an
arbitration clause. The CIS photovoltaic products were to be leased to Appellant N°3,
Dante Energy Pvt. Ltd. (Dante), to be installed at the Solar Plant in Uttar Pradesh, in
accordance with an Equipment Lease Agreement (ELA) between Rishabh and Dante
containing an arbitration clause. Appellant N°1 was Mr Ameet Lalchand Shah, who was
said to be the promotor and controlling man of Appellant N°s 2 and 3. A dispute arose
and Dante started an arbitration procedure against Rishabh. On the other hand, the
respondents, i.e., Rishabh and its sole proprietor Dr AM Singhvi, started a civil lawsuit
before the High Court of Delhi against all the Appellants. The Appellants asked for the
disputes between the parties under the four agreements to be referred to arbitration.
The High Court dismissed the application. The decision was confirmed in appeal and was
finally brought for review before the Supreme Court which decided that all four
agreements and the parties to the dispute were to be referred to arbitration. The
Supreme Court reasoned that although there were different agreements involving several
parties, it was a single commercial project namely the operation of 2 MWp Photovoltaic
Solar Plants in Uttar Pradesh. Commissioning of the Solar Plant had been effected
through several agreements. The ELA is the main agreement. The two agreements of
Rishabh with Juwi India, the EMS and the EIC, as well as the SPA, are ancillary agreements
which led to the main purpose of commissioning the Solar Plant. Even though the SPA
does not contain an arbitration clause, it was integrally connected with the
commissioning of the Solar Plant by Dante. The intention of the parties was clearly to
facilitate procurement of equipment, sale and purchase of equipment, installation and
leasing out of the equipment to Dante. According to the Supreme Court, the dispute
between the parties to the various agreements could be resolved only by referring all
four agreements and the parties thereon to arbitration. The fact that Appellant N°1 was
not a party to any of the agreements was apparently not taken into consideration by the
Supreme Court.
P 218
550. In the People’s Republic of China, in the decision of the Intermediate Peoples’ Court,
Guangdong Province, Shenzhen of 20 November 2012, (563) the facts were the following.
On 23 February 2006, Shenzhen Yong XX Co (Shenzhen Yong) and Hong Kong Jia XX
Pharmaceutical Co (Jia Pharmaceutical) entered into an agency agreement containing an
arbitration clause providing that all disputes arising in connection with this agreement
would be referred to arbitration at the China International Economic and Trade
Arbitration Commission Shenzhen Sub-Commission. On 15 December 2007, Shenzhen Yong
and Jia Pharmaceutical also entered into a Supplementary Agreement. Finally, on 24 June
2010, Shenzhen Yong and Jia Pharmaceutical concluded a third contract, the Contract
Supplementary Terms and Conditions Agreement (the 24 June Agreement) to which Hong
Kong Jia XX Development Co (Jia Development) was also a party. The 24 June Agreement
contained supplementary terms and conditions with respect to the agency agreement
and the Supplementary Agreement. It also stated that Shenzhen Yong acknowledged that
Jia Development had the right to perform under the agency agreement and the
Supplementary Agreement in lieu of Jia Pharmaceutical. A dispute arose between the
parties under the agency agreement. Shenzhen Yong commenced arbitration against Jia
11
Pharmaceutical and Jia Development. Jia Development in turn filed an application with
the Intermediate Peoples’ Court for the Guangdong Province, Shenzhen, seeking a
declaration that there was no arbitration agreement between Jia Development and
Shenzhen Yong. The Intermediate Peoples’ Court dismissed Jia Development’s
application on the basis of the fact that even though the 24 June Agreement did not
contain an arbitration clause, it allowed Jia Development to perform the agency
agreement in lieu of Jia Pharmaceutical. Jia Development was therefore bound by the
arbitration clause contained in that agreement.
551. In Korea, in a decision of the Seoul High Court of 16 August 2013, (564) confirmed by
the Korean Supreme Court on 13 December 2018, an affiliate of the private equity
company, Lone Star Funds (LSF) formed a joint venture with Korea Resolution & Collection
Corporation (KR&C), a wholly owned subsidiary of the state-operated Korea Deposit
Insurance Corporation (KDIC). KR&C was established with the purpose of acquiring and
disposing of distressed assets. The joint venture company – the LSF-KDIC Investment
Company, Ltd. (LSF-KDIC) – would purchase these assets from KR&C, managing them until
they were ultimately sold off. KR&C and LSF each owned 50% of LSK-KDIC. Both agreed
that LSF-KDIC would periodically distribute dividends among them pursuant to a
shareholders’ agreement executed between KR&C, LSF and LSF-KDIC (the ‘SHA’). The SHA
contained an ICC arbitration clause. LSK-KDIC sold a cargo terminal site in Korea’s main
port city of Busan to a third-party buyer. The buyer made payments for the property to
LSF-KDIC, on the condition that the sale would only be consummated after the buyer had
P 219 obtained certain zoning permits. If the buyer failed to obtain these permits, the
ownership of the site would revert to LSF-KDIC, and the payments made would be
returned to the buyer.
552. LSF-KDIC distributed certain amounts from the payments received for the site to
KR&C, partly as dividends under the SHA and partly as payment of interest and principal
related to a debt KR&C had extended. LSF-KDIC sought written confirmation from KR&C
that KR&C would return the amounts distributed to it in case the buyer failed to obtain
the required permit and LSF-KDIC had to return the payments received for the sale of the
site. KR&C provided the confirmation through a written confirmation letter. This letter
did not contain an arbitration clause. When the buyer ultimately failed to obtain the
permit, LSF proposed that instead of the site and payments reverting to the respective
parties, LSF-KDIC would acquire the buyer of the property. KR&C objected, arguing that
the state-controlled entity, KR&C could not deviate from the agreement already
concluded between LSF-KDIC and the buyer. Nonetheless, LSF’s majority on LSF-KDIC’s
board of directors – 60% against KR&C’s 40% – meant that LSF-KDIC could proceed with
LSF’s proposal despite KR&C’s objection. LSF-KDIC therefore acquired the buyer’s
company. KR&C subsequently refused to return the funds previously distributed to it
from the proceeds of the sale.
553. LSF-KDIC initiated ICC arbitration seated in Tokyo against KR&C under the arbitration
clause in the SHA. KR&C objected to the jurisdiction of the arbitral tribunal, arguing that
the arbitration clause in the SHA extended only to the shareholders of LSF-KDIC, i.e.,
KR&C and LSF, and not LSF-KDIC itself. The tribunal rejected KR&C’s objection and issued
an award in favour of LSF-KDIC. LSF-KDIC sought to have the award enforced before the
Seoul Central District Court which refused enforcement. LSF-KDIC appealed to the Seoul
High Court, which upheld the refusal of enforcement considering that a valid arbitration
agreement did not exist between LSF-KDIC and KR&C. The Court’s reasoning was that the
dispute between LSF-KDIC and KR&C arose from the KR&C’s confirmation letter and not
the SHA. It held that Japanese law, the law of the place of arbitration, would govern the
question of whether the confirmation letter could be construed to contain an arbitration
clause. On this basis, the Court concluded that the confirmation letter did not contain an
arbitration clause; that the arbitration clause in the SHA could not be extended to the
confirmation letter as the confirmation letter was not an agreement revising or
supplementing the SHA; and that, even if the arbitration clause in the SHA did extend to
the confirmation letter, the arbitration clause in the SHA was binding only upon KR&C
and LSF, to the exclusion of LSF-KDIC. The latter filed an appeal to the Supreme Court of
Korea that reversed the High Court decision on 13 December 2018. The Court decided that
LFC-KDIC was a party to the arbitration clause since the wording of the clause had to be
interpreted to include all three signatories, not only the two shareholders of the joint
venture. It further decided that the advance payment was an advance on the dividends
and the principal and interest of debt securities regulated in the shareholders’
P 220 agreement. The commitment letter therefore further implemented the latter and the
dispute arose out of or in connection with it. (565)
554. In Singapore, with respect to the issue of whether an arbitration clause in one
contract can be said to apply to disputes arising under other contracts of the group, the
position of the courts has evolved from the strict rule that clear and express reference to
the arbitration agreement is required for such incorporation in a case of multiple
contracts (the ‘strict rule’) to the current contextual approach based on an enquiry into
the objective circumstances surrounding the entering into of the contracts in question,
including the parties’ intentions objectively assessed (the ‘contextual approach’).
555. The strict rule approach appeared in Singapore jurisprudence in the Court of
Appeal’s decision in Star-Trans Far East Pte. Ltd. v. Norske-Tech Ltd. and Ors. (566) Star-
12
Trans, a freight forwarder, had entered into a contract with Norske-Tech and Speditor.
The purpose of the contract was for Star-Trans and Speditor to organise ocean carriage of
plant and equipment from various parts of the world to a proposed construction site in
Riau, Indonesia, for Norske-Tech (the company that had undertaken the construction
project). That contract contained an arbitration clause. Separately, another company, PT
Riau, had furnished a performance guarantee to secure Norske-Tech’s performance of its
obligation under the above contract. The performance guarantee did not contain an
arbitration clause and bore the signatures of Star-Trans, Norske-Tech, and PT Riau. Clause
3 of the performance guarantee provided, inter alia, that ‘all rights of Norske-Tech under
the contract may be exercised by PT Riau . . . and the rights of Norske Tech under the
contract may at any time be assigned to PT Riau’ (emphasis added). Disputes later arose
between Star-Trans, Norske-Tech, and PT Riau, as a result of which Star-Trans commenced
court proceedings. Norske-Tech and PT Riau applied for a stay of the court proceedings
on the grounds that Star-Trans had agreed to submit disputes between the parties to
arbitration.
556. The issue before the Court of Appeal was whether PT Riau was a party to the main
contract as a consequence of the performance guarantee. The Court observed that the
performance guarantee was a separate and distinct contractual undertaking vis-à-vis the
main contract. Further, the use of general words such as ‘all rights’ was not sufficiently
clear to permit the incorporation by reference of the arbitration clause into the
performance guarantee. The Court cited the views of Robert Merkin according to which:
The approach taken by the courts is that the arbitration clause in the
charterparty between owner and charterer is not, in the absence of clear
wording, to be incorporated into the contract evidenced by the bill of lading
as between owner and consignee. The rule is probably not confined to bills of
lading cases, and it has been held in other contexts that an arbitration clause
P 221 in a contract between A and B is not to be incorporated by reference into a
contract between B and C unless clear words of incorporation are used. (567)
557. In the recent case of International Research Corp. PLC v. Lufthansa Systems Asia
Pacific Pte. Ltd. (Lufthansa), (568) the Court of Appeal considered that there may no longer
be a place for the strict rule in Singapore jurisprudence:
The strict rule has been overextended impermissibly from its original
application in the context of bills of lading and charterparties. It clearly
should not be taken as a rule of general application. The question in general is
one of construction: did the parties intend to incorporate the arbitration
agreement in question by referring, in their contract, to it or to a document
containing it? In our judgment, the analysis of whether a particular case is a
‘one contract’ or a ‘two-contract’ case as that notion has developed in English
law, while possibly useful in some aspects, is not helpful for our purposes. It is
ultimately a matter of contractual interpretation; and in undertaking this
exercise . . . the task is one which must be done having regard to the context
and the objective circumstances attending the entry into the contract. As the
[High Court] rightly noted, ‘[b]e it incorporation or construction, the court is
always seeking to ascertain the parties’ objective intentions’(emphasis
added). (569)
Lufthansa concerned the challenge of an arbitral tribunal’s ruling on jurisdiction pursuant
to section 10 of the International Arbitration Act. The case is quite interesting given that
the gist of the challenge was whether an arbitration clause contained in one contract
between two parties bound a third party who subsequently entered into Supplemental
Agreements with the original two parties.
558. Under an agreement between Datamat and Thai Airways International Public
Company Ltd (Thai Airways) entered into on 12 January 2005, Datamat had agreed to
provide to Thai Airways an electronic data protection system (EDP system agreement).
Two months later, on 11 March 2005, Lufthansa and Datamat entered into a Cooperation
Agreement under the terms of which Lufthansa agreed to supply, deliver, and commission
to Datamat a new Maintenance Repair and Overhaul system (MRO system), a component
of the EDP system. On 14 March 2005, Datamat entered into a Sale and Purchase
Agreement (S&P Agreement) with International Research Corporation Public Company Ltd
(IRCP), a company engaged primarily in the business of providing information, and
communication technology products and services. Under the S&P Agreement, IRCP had
three main obligations:
(i) it would provide a banker’s guarantee in the name of Datamat in order for Datamat
to comply with its obligations under the EDP system agreement;
(ii) it would supply and deliver various hardware and software for the EDP system; and
P 222
(iii) it would pay Lufthansa for the goods and services provided by Lufthansa under the
Cooperation Agreement.
Datamat assigned its rights to receive payment from Thai Airways to the Siam
Commercial Bank Public Company Ltd (SCB).
13
559. Datamat subsequently ran into financial difficulties and was unable to meet its
payment obligations to Lufthansa. On 8 August 2005, Lufthansa, Datamat, and IRCP
entered into Supplemental Agreement No. 1 (backdated to 2 May 2005), under the terms
of which Datamat was obliged to transfer to IRCP moneys received from Thai Airways.
Upon receiving these moneys, IRCP would pay Lufthansa for the works and services
rendered by Lufthansa under the Cooperation Agreement. On 3 May 2006, Lufthansa,
Datamat, and IRCP entered into Supplemental Agreement No. 2. According to this
agreement, IRCP would pay Lufthansa for sums payable by Datamat under the
Cooperation Agreement directly from IRCP’s bank account with SCB. IRCP would disburse
the payments to Lufthansa after payments by Thai Airways to Datamat were received by
Datamat and transferred to IRCP’s SCB account. The Cooperation Agreement contained a
multi-tiered dispute resolution mechanism providing, inter alia, that ‘all disputes arising
out of this Cooperation Agreement, which cannot be settled by mediation . . . shall be
finally settled by arbitration to be held in Singapore in the English language under the
Singapore International Arbitration Centre Rules’. The Supplemental Agreements did not
contain an arbitration clause.
560. It appeared that IRCP refused to pay Lufthansa. As a result, on 24 February 2010,
Lufthansa informed Datamat and IRCP that it was terminating the Cooperation Agreement
and Supplemental Agreements No. 1 and No. 2 (collectively, the ‘Supplemental
Agreements’). On 13 May 2010, Lufthansa filed its notice of arbitration with the Singapore
International Arbitration Centre. IRCP argued that it was not a party to the arbitration
agreement, an objection that the tribunal dismissed. In its decision dated 1 June 2012, the
Tribunal held that the Cooperation Agreement and the Supplemental Agreements were to
be treated as one composite agreement between Lufthansa, Datamat, and IRCP.
Accordingly, the arbitration agreement found in the Cooperation Agreement applied to
the Supplemental Agreements, to which IRCP was indisputably a party. The decision was
challenged by IRCP before the High Court. Lufthansa’s position was that IRCP was bound
by the arbitration agreement as Lufthansa, Datamat, and IRCP had intended for the
Supplemental Agreements to be an extension of the Cooperation Agreement. Lufthansa
also submitted that the Cooperation Agreement and the Supplemental Agreements were
in fact one composite agreement; in other words, the contract between Lufthansa,
Datamat, and IRCP comprised of the Cooperation Agreement and the Supplemental
Agreements and that, on this analysis, there was nothing to ‘incorporate’ into the
Supplemental Agreements as per the strict rule. Conversely, IRCP’s position was that the
Supplemental Agreements were separate and distinct from the Cooperation Agreement
and that, consequently, the arbitration clause contained in the Cooperation Agreement
did not apply to the Supplemental Agreements.
P 223
561. The High Court (570) and subsequently the Court of Appeal were in agreement that
the true issue was: ‘what were Lufthansa, Datamat and IRCP’s common intentions, if any,
when objectively ascertained, as to the applicability of the [multi-tiered dispute
resolution mechanism] to resolve their disputes . . . at the time when all of them entered
into the Supplemental Agreements’? (571) The Court of Appeal emphasised that the task
was one which must be done having regard to the context and the objective
circumstances attending the entry into the contract. (572) However, as explained below,
the Court of Appeal did not agree with the High Court’s findings on the object and
purpose of the Supplemental Agreements. The High Court took the view that ‘the object
and purpose of the Supplemental Agreements was to enforce Lufthansa’s right to
payments under the Cooperation Agreement [and that the] Supplemental Agreements
transferred Datamat’s payment obligations under the Cooperation Agreement to IRCP’.
(573) The High Court went on to hold that:
it is clear that IRCP’s payment obligations to Lufthansa are inextricably tied to
Datamat’s obligations under the Cooperation Agreement. A dispute over an
invoice issued under the Cooperation Agreement would invariably affect
IRCP’s payment obligations under the Supplemental Agreements. IRCP’s
payment obligations are not free-standing and unconnected to the terms of
the Cooperation Agreement. (574)
The High Court therefore decided that, having adequate regard to the plain language of
the Supplemental Agreements and the relevant factual matrix, the parties (i.e., Datamat,
Lufthansa, and IRCP) had intended the same dispute resolution mechanism in the
Cooperation Agreement to bind all three parties to the Supplemental Agreements. The
Court of Appeal, (575) after having considered the relevant factual matrix, disagreed with
and overturned the finding of the High Court that the parties had intended that the
dispute resolution mechanism in the Cooperation Agreement was to be incorporated as
part of the Supplemental Agreements. IRCP was therefore not bound by the dispute
resolution mechanism in the Cooperation Agreement, and the arbitral tribunal did not
have jurisdiction over Lufthansa and its dispute with IRCP. It appears that the Court of
Appeal came to this conclusion because of the manner in which it characterised the
purpose of the Supplemental Agreements:
The Supplemental Agreements were entered into not with a view to [IRCP]
guaranteeing or undertaking any obligation under the Cooperation Agreement.
14
Instead, [IRCP]’s only substantive obligation was in effect to act as a payment
agent. The primary contractual arrangement between Datamat and [Lufthansa]
as reflected in the Cooperation Agreement remained intact. Significantly, the
Supplemental Agreements were to be annexed to and made part of the
Cooperation Agreement, to which only Datamat and [Lufthansa] were party.
P 224 The point, shortly put, is that the Cooperation Agreement, which was
between [Lufthansa] and Datamat only, remained the only contract dealing
with the rights and obligations between them, save that in relation to
payment, [IRCP] agreed to act as a payment agent in accordance with the
terms of the Supplemental Agreements (emphasis added). (576)
562. In Sweden, the decision of the Supreme Court in Concorp Scandinavia AB v.
Karelkamen Confectionary AB of 5 April 2012 (577) was based on the following facts. Xcaret
Confectionary Holding (Xcaret) and Concorp Scandinavia (Concorp) had entered into a
Cooperation Agreement and a related Supplemental Agreement, each containing an
arbitration clause, and according to which Xcaret had acquired from Concorp the shares
of Concorp’s subsidiary, Karelkamen. A loan had also been granted by Concorp to
Karelkamen. A dispute arose and Concorp brought an action in the District Court against
Karelkamen alleging that it was liable to pay a certain amount pursuant to the loan.
Karelkamen argued that Concorp’s action should be dismissed, claiming that the dispute
should be resolved by arbitration, considering that disputes under the loan were covered
by the arbitration clause of the Cooperation Agreement and the related Supplemental
Agreement. Karelkamen also claimed substantively that it was not liable to pay the loan
due to certain circumstances relating to the Cooperation Agreement. Among other things,
the loan which formed the basis of Concorp’s claim had been satisfied following a set-off
against a counterclaim based on the Cooperation Agreement.
563. The District Court denied Karelkamen’s motion, finding that it was not a party to the
Cooperation Agreement and the related Supplemental Agreement. Accordingly, the
District Court had jurisdiction to determine the dispute. However, it dismissed
Karelkamen’s substantive set-off objection, which was based on a claim under the
Cooperation Agreement since that agreement contained an arbitration clause. In appeal,
the Court dismissed Concorp’s action finding that its claim was governed by the
Cooperation Agreement and that Karelkamen was bound by that agreement. The decision
was appealed to the Supreme Court. The Supreme Court decided that the District Court
had jurisdiction to determine the asserted claim under the loan. It stated that this issue
should be assessed based on what Concorp asserted regarding its right, namely that the
loan was the result of a legal relationship that was separate from, and predated, the
agreements which included the arbitration clauses.
564. In Canada, in the decision Condominiums Mont St Sauveur Inc. v. Constructions Serge
Sauvé Ltée, (578) The Quebec Superior Court had to decide a dispute involving two
contracts: a contract between the Appellant owner and the respondent general
contractor for the construction of condominiums to be built according to the plans
devised by the co-defendants’ architects, which contained an arbitration clause, and a
P 225 contract between the owner and the architects which did not. The Appellant
commenced an action before the Quebec Superior Court against both the general
contractor and the architects for defects in construction and design. The general
contractor lodged a motion to refer the parties to arbitration pursuant to the arbitration
agreement. The first instance court granted the motion and referred the parties to
arbitration. The Quebec Court of Appeal dismissed the owner’s appeal. It observed that:
‘[f]inally, there remains the appellant’s argument that the architects are not bound by
the arbitration clause so that they would have to be sued in the ordinary courts while the
claim against the builder would be decided by arbitration. In the result, appellant could
not pursue joint and several claims against the two debtors in the same action. That may
be so, but it is difficult to see how appellant can be heard to complain about the effect of
contractual arrangements it has, itself, put in place’. Good administration of justice
seems to have been the main concern of the Court.
565. In France, the issue under analysis has been addressed with respect to chains of
successive contracts, an area in which the case law has substantially evolved over the
years. Initially, the courts held that the ultimate buyer had to expressly consent to the
transfer of the arbitration agreement. Subsequently, in the Peavey Company decision,
(579) the Court of Cassation began a shift in its position, recognising the transfer of the
arbitration agreement in a homogeneous chain of successive sale contracts, ‘unless
reasonable ignorance of the existence of the clause can be proven’. This jurisprudence
was later confirmed by several decisions of the Supreme Court; in the first place, in a
decision rendered on 27 March 2007 in Alcatel Business Systems (ABS) v. Société Amkor
Technology and Others. (580) In that case, the French company Alcatel Business Systems
(ABS), manufacturer of mobile and portable terminals, had collaborated with the Belgian
company Alcatel Microelectronics (AME), member of the same group, for the
manufacturing of a new electronic chip. AME had concluded with the American company
Amkor Technology Inc. (Amkor) an agreement relating to the sale of electronic
components including an arbitration clause providing for arbitration according to the
Rules of the American Arbitration Association (AAA) in Philadelphia. Amkor was linked to a
manufacturer of components, the Korean company Anam Semiconductor Inc. (Anam),
through a contract containing an arbitration clause providing for arbitration in Santa
15
Clara, California, according to the AAA Rules. The chips manufactured by Anam were
directly remitted to AME, which after having them ‘encapsulated’ supplied them to ABS.
Certain supplies appeared to be defective. ABS was indemnified by its insurer AGF, and
they both started a lawsuit against Amkor, its two French subsidiaries, Amkor Technology
Euro Services and Amkor Wafer Fabrication Services, as well as Anam, before a Commerce
Court, claiming the payment of damages. The respondents objected to the jurisdiction
P 226 of the Court, invoking the arbitration clause providing for AAA arbitration in Philadelphia.
The Commerce Court and the Court of Appeal both sustained the objection. The French
Supreme Court confirmed the decision of the Court of Appeal. It decided that in a chain
of contracts which successively transfers title to the same goods, the arbitration
agreement is transferred automatically as an ancillary element to the right to sue, which
is itself ancillary to the transferred substantive rights without incidence of the
homogenous or heterogeneous character of that chain (‘dans une chaine de contrats
translatifs de propriété, le clause compromissoire est transmise de façon automatique en
tant qu’accessoire du droit d’action, lui-même accessoire du droit substantiel transmis,
sans incidence du caractère homogène ou hétérogène de cette chaine’). The tribunal noted
that the electronic component, object of the dispute, had been fabricated by Anam and
sold to Amkor which resold it to AME; that AME had ‘encapsulated’ the product which
remained dissociable, before supplying it to ABS which integrated it in its mobile
telephones. The Supreme Court decided that in view of these elements, the Court of
Appeal rightly decided that there existed a chain of contracts which successively
transferred title to the same goods. The arbitration clause binding Amkor and AME to
which Anam had adhered was also binding on ABS since that clause was transmitted as
an accessory of the right of action, itself an accessory of the substantive right.
566. Subsequently, the same jurisprudence was confirmed by the French Supreme Court
in a decision of 9 January 2008. (581) In this case, HGL s.a.s. (HGL) agreed to supply sheep
fat to another French company Spanghero. The sheep fat had been supplied initially to
HGL by Blue Sky Marketing Ltd. (Blue Sky), a New Zealand company, which had bought the
products from another New Zealand company, Horizon Meats New Zealand Ltd. (Horizon).
The case therefore concerned a chain of three sales of goods contracts relating to the
same product. In August 2000, Spangero found that the goods delivered by HGL were
contaminated by listeriosis. Spangero applied for a court-appointed expert who
confirmed the conclusion. Spangero subsequently sued HGL before the Commercial Court
for compensation. HGL then applied for Blue Sky and Horizon to be brought in the
proceedings. Blue Sky and Horizon challenged the Court’s jurisdiction by relying on the
arbitration clause contained in the respective standard terms and conditions of sales,
which were referred to in the invoices Blue Sky had sent to HGL. The other contracts in the
chain contained no different dispute resolution clause. On 17 July 2016, the Court
dismissed Blue Sky and Horizon’s jurisdictional challenge. Blue Sky and Horizon then
filed a jurisdictional appeal requesting the Rennes Court of Appeal to declare the
arbitration clause binding on Spangero and to refer the entire dispute to arbitration.
567. On 30 January 2007, the Court of Appeal declined jurisdiction and referred the matter
to arbitration. Regarding HGL, the Court held that the arbitration clause was not
manifestly null and void or inapplicable and there was no further need to analyse the
P 227 binding effect of the arbitration clause incorporated by reference in the parties’
agreement. Regarding Spangero, the Court decided that: ‘In a chain of contracts
transferring title to goods, the arbitration clause is transmitted together with substantive
claims unless it is shown that such a clause could reasonably have been ignored.’
568. HGL then appealed to the Supreme Court. HGL challenged the Court of Appeal’s
decision by claiming that by participating in the expertise, Blue Sky and Horizon had
waived the arbitration clause. They also challenged the decision on the ground that the
Kompetenz-Kompetenz principle did not prevent national courts from determining
whether an arbitration agreement incorporated by reference is binding on a party which
was not provided with standard terms and conditions of sale containing the clause. The
Supreme Court noted that the Court of Appeal had found Blue Sky to have supplied
products to HGL on three prior occasions and had issued invoices which contained the
same arbitration clause. It also found that Blue Sky and Horizon had not waived the right
to invoke the arbitration clause by taking part in the expert determination conducted
under the aegis of the French courts. Finally, it held that a chain of contracts existed. It
finally upheld the Court of Appeal’s decision and ruled that: ‘In a chain of agreements
that achieve a succession of transfers of title to certain goods, the arbitration agreement
is automatically transferred as an ancillary element to the right to sue, which is itself
ancillary to the substantive rights transferred pursuant to the agreements.’
569. With respect to the issue under analysis, reference may also be made – although this
case is at the edge of our analysis since it does not strictly concern a group of contracts –
to the decision rendered on 19 May 1993 by the Paris Court of Appeals in Labinal. (582) In
this case, M and W entered into a joint venture (containing an ICC arbitration clause) in
order to better compete on a bid with company L (tender made by British Aerospace for
GIE Airbus Industrie). Subsequently, following the first reactions of British Aerospace to
the bid, M, W and L entered into negotiations to determine the possibility of working
together. These negotiations were unsuccessful, but L and W reached an understanding to
the detriment of M. M therefore started an arbitration against W and L complaining that
they had entered into an unlawful understanding and that their conduct amounted to
16
unfair competition. The first court accepted its jurisdiction but the Court of Appeals
reversed and upheld its jurisdiction only over L. The Court considered that contrary to M’s
contention, the dispute was not indivisible and that consequently, ‘the existing link
between the two disputes, as well as the interest of good administration of justice, cannot
impede the arbitral tribunal from applying an arbitration clause freely agreed and
accepted by company M’.
570. Finally, reference should also be made to very specific Belgian case law arising from
a decision of the Belgian Cour de Cassation of 9 May 1963, (583) which decided that if an
indivisible dispute opposes, on the one hand, parties bound by an arbitration agreement
and, on the other hand, parties to an agreement that does not contain such a clause, only
the courts will have jurisdiction, with the consequence that the arbitration agreement is
P 228 inapplicable. This precedent has been approved by Belgian commentators, (584)
although the facts as they came before the Cour de Cassation are extremely rare. The
concept of indivisibility that is referred to in this case law, which predates the
application of the Judicial Code, (585) concerns the sole situation where the enforcement
of separate decisions that would arise from the same dispute would be materially
impossible. Commentators conclude that only indivisibility defined in this way would
nullify the effect of an arbitration agreement. (586) Notwithstanding the unusual
circumstances of the case, the decision is not correct, and it may be noted in this respect
that French courts would most probably have reached the opposite conclusion. (587) One
may wonder in particular how one reconciles the decision with Article II of the New York
Convention, (588) which obliges national courts to refer the parties to arbitration
whenever there is an arbitration clause. It is true that this Article excludes the hypothesis
where it is established that the clause is void or ‘ineffective or inapplicable’. This last
argument has sometimes been raised by a party in order to oppose the implementation
of ICC arbitration, in cases of coexistence of arbitration clauses and jurisdiction clauses
(in some cases, within the same contract), or in situations where the judicial proceedings
were already under way. The argument does not seem to have met with much success, at
least as far as the prima facie control of the arbitral institution is concerned. (589)
Subsection III: The Parties Are Different or Not All the Same and the Contracts Do
Not Contain Identical or Compatible Dispute Resolution Clauses, and in Some Cases
One or Several of Them Do Not Contain an Arbitration Clause
I. Incompatible Arbitration Clauses
571. When the parties to the various contracts are not the same and the contracts do not
P 229 contain compatible arbitration clauses, bringing the disputes together in one single
arbitration proceeding will generally not be possible. (590) One early example is Sofidif.
(591) Three different French entities, Eurodif, Sofidif and Cogema, together started ICC
arbitration against the Iranian Atomic Energy Organisation (OEAI) and the Iranian
Organisation for Investment and Economic and Technical Aid (OIAETI) under different
contracts (between different parties and containing different arbitration clauses) relating
to Iran’s cooperation with France in a uranium enrichment project. OEAI and OIAETI
objected to the tribunal’s jurisdiction but the arbitration proceeded. The arbitral
tribunal decided that it had jurisdiction given the relationship and interdependence of
the contracts. The award was annulled by the Paris Court of Appeals and, in a series of
subsequent judgments, the French courts pointed out that in the circumstances of the
case, a single arbitration could take place only with the consent of all the parties
concerned.
572. The same approach was followed by the Paris Court of Appeal in a decision of 19
February 2013. (592) The Court had to determine the validity of an award in which the
tribunal had condemned the Republic of Laos to USD 50 million in satisfaction of the
claims jointly raised by a Thai company Thaï-Lao Lignite (TLL) and another company HLL
jointly held by TLL and the Republic of Laos. A mining concession agreement had been
concluded in 1992 by TLL and the Republic of Laos. It included an optional dispute
resolution clause providing for conciliation, or for a recourse to national courts, or for a
recourse to a local Lao arbitration centre. HLL had been set up in performance of that
contract. In 1993, an amendment agreement had extended the concession and authorised
TLL to proceed to studies in view of the construction of an electric power station. To this
end, a Project’s development agreement had been concluded between TLL and the
Republic of Laos in 1994 for the construction of that power station and providing an ad
hoc arbitration in Kuala Lumpur according to the CNUDCI arbitration rules. The power
station was not built following the financial crisis in Thailand at the end of 1990. In 2006,
P 230 the State of Laos terminated at the same time the concession and the Project’s
development agreements. TLL and HLL jointly started an arbitration in Kuala Lumpur
against the Republic of Laos on the basis of the arbitration clause included in the
Project’s development agreement. As mentioned above, the arbitral tribunal decided
that it had jurisdiction and condemned Laos to a substantial amount of damages.
573. The Republic of Laos started an action to set aside, claiming that the arbitral
tribunal had exceeded its jurisdiction ratione materiae as well as ratione personae since it
had accepted its jurisdiction vis-à-vis HLL, a third party to the Project’s development
agreement, and had decided claims which were outside its jurisdiction, as they arose
under the concession agreement, subject to its own dispute resolution provision. The
17
Court of Appeal decided to set aside the award on the basis of an excess of jurisdiction
ratione materiae and therefore did not examine the other objection based on the
extension of the arbitration clause to HLL. The Court considered that the tribunal had
exceeded its jurisdiction when deciding claims based on the indemnisation of damages
resulting from contracts which were distinct from the Project’s development agreement,
and which were subject to their own dispute resolution provisions. Consequently, the
arbitrators had decided for part without arbitration clause.
574. Reference may also be made to a decision rendered in India on 31 August 2001 by the
city civil judge at Ahmedabad. (593) In this case, Nirma Ltd. had entered into an
agreement with the first respondent ‘for supply of know how and supervision for three
numbers CFB boilers of 100tph each for the purpose of steam generation to be used for
process requirement and power generation for its Soda Ash and Pure Water Plant to be
set up at its site’. The contract provided for ICC arbitration in London in case of dispute.
Subsequently, the first respondent incorporated in India the second respondent as its
wholly owned subsidiary with a view to nominating the second respondent as the
engineer, contractor and erection contractor under three agreements (detailed
engineering, supply and erection and commissioning) entered into between Nirma and
the second respondent in pursuance of the first agreement. These three agreements
provided for arbitration in India in case of dispute. Certain disputes arose between the
parties and, consequently, Nirma started arbitration in India against the first and the
second respondent. The first respondent objected to the jurisdiction of the arbitral
tribunal. The tribunal decided in favour of the first respondent and the matter was
subsequently submitted to the city civil judge at Ahmedabad which confirmed the
arbitral tribunal’s finding. In the meantime, the first respondent started arbitration
against Nirma in London under the arbitration clause contained in the first agreement.
According to the Court, the last three agreements were necessary for the implementation
of the first one. The contracts were closely intertwined. Nirma and the first respondent
P 231 were required to facilitate the performance of the first agreement. It was provided that
the appointment of the engineer, erection contractor and contractor was to be decided
by Nirma and approved by the first respondent. The latter also ensured the performance
of the three last agreements as a guarantor. But it remained that the first agreement and
the last three had incompatible arbitration clauses and that no evidence was supplied
that the first respondent had agreed to arbitration in India or had agreed to any of the
terms and conditions of the last three agreements with the consequence that it would
have accepted to be a party to them. Finally, the Court also rejected Nirma’s arguments
that by refusing to be joined to the Indian arbitration, the first respondent tried to evade
its liability or committed a fraud. Even if it would have been ideal to bring together
before the same arbitration tribunal all the disputes involving the various parties and
arising under the various agreements, the first respondent had the right to invoke the
arbitration clause contained in the first agreement and consequently, to refuse to be
impleaded in the Indian arbitration. Nothing in its conduct could justify applying the
theory of lifting the corporate veil. It is not certain, however, that this decision is still
valid jurisprudence given the decision of the Indian Supreme Court in Chloro Controls
which is examined at paragraphs 595 and following below.
575. In ICC Case no. 8035 of 1995, (594) the Libyan state, first respondent, had granted
claimant a concession on an oil field. Several years later, the second respondent, a
Libyan public oil company, the Libyan state and the claimant had concluded a
Participation Agreement for the exploitation of the concession. Following the sanctions
taken by the US against Libya (Executive Order 12543, 7 January 1986), the claimant and
the second respondent subsequently concluded a Suspension Agreement suspending the
execution by the claimant of its contractual obligations while preserving its interests. All
the agreements contained a specific arbitration clause. The Suspension Agreement
provided for ICC arbitration in Paris, Libyan law being applicable. Following the granting
by respondents to a third party of exploitation rights in a zone included in the Concession
Deeds, allegedly in breach of the Suspension Agreement, the claimant started an
arbitration against the respondents on the basis of the arbitration clause contained in
the Suspension Agreement and claimed damages.
576. The arbitral tribunal decided in the first place that it did not have jurisdiction
ratione personae over the state on the basis of the Suspension Agreement, even though a
state representative had signed the contract under the statement Approved and
Endorsed. The state was not a party to this Agreement. It signed the contract only in its
capacity of regulatory authority. On the other hand, the tribunal also decided that, even
if the Suspension Agreement, by referring to the two other agreements, created a unified
contractual scheme imposing to the second respondent and the state the same
substantial obligations, this scheme could not be taken into consideration in this
arbitration, given the fact that the other two agreements contained their own specific
P 232 arbitration clause. The jurisdiction of the tribunal could only be based on the
arbitration clause contained in the Suspension Agreement. Consequently, the arbitral
tribunal also lacked jurisdiction ratione materiae over the state.
577. In ICC Final Award on jurisdiction in Case no. 13085 of 2005, (595) supplier had entered
into an agreement with a customer, providing for arbitration of all disputes in the
International Commercial Arbitration Court of the Chamber of Trade and Commerce of
18
the Russian Federation in accordance with its rules. Supplier then concluded a
subcontract for equipment supply with a subcontractor. It provided for settlement of
disputes through arbitration in Helsinki under the rules of arbitration of the International
Chamber of Commerce. The subcontractor’s rights and obligations under the subcontract
were subsequently assigned to Assignee Subcontractor as a consequence of the
assignment of part of the subcontractor’s business to Assignee Subcontractor. Supplier
obtained a first-demand bank guarantee (the Guarantee) from a bank (First Bank) as
surety for Assignee Subcontractor’s fulfilment of its warranty obligations under the
subcontract. Supplier later assigned its rights related to the Guarantee to a bank,
Assignee Bank (the Assignment Agreement). Ten days before expiry of the Guarantee,
supplier entered into a pledge agreement (the pledge agreement) with Assignee Bank
regarding its bank account with Assignee Bank, the funds in that account and the funds to
be paid to it as well as supplier’s receivables from First Bank under the Guarantee. On
the same day, supplier and Assignee Bank also concluded an agreement regarding
supplier’s rights under the subcontract (the July Agreement). Four days later, supplier,
through Assignee Bank, made a request to First Bank for payment under the Guarantee of
a certain amount. The request was based on the supplier’s assertion that Assignee
Subcontractor had failed to perform in accordance with the subcontract. First Bank paid
the requested amount to the supplier’s bank account with Assignee Bank. A few months
later, supplier was declared bankrupt by a district court decision.
578. Assignee Subcontractor commenced ICC arbitration proceedings. It named both
supplier and Assignee Bank as the defendants, claiming that Assignee Bank, though not a
signatory to the subcontract, was bound by the arbitration clause therein as a
consequence of supplier’s assignment of all its rights under the subcontract to Assignee
Bank under the Assignment Agreement, the Pledge Agreement and the July Agreement.
The arbitrator held that these agreements constituted only pledges or agreements for
collateral purposes. Further, as a general principle of contract law, the assignment of
obligations under an agreement requires the consent of the other party, unless otherwise
provided by the agreement. In this case, there was no indication that supplier and
Assignee Subcontractor had agreed that supplier’s rights and obligations under the
subcontract were assigned to Assignee Bank. The remaining issue was whether Assignee
Bank, as pledgee of the Guarantee, was bound by the arbitration clause in the
subcontract. The arbitrator reasoned that the principle of party autonomy dictates that
the applicability of an arbitration clause may not be extended beyond what the parties
P 233 explicitly agreed upon. Here, it had not been shown that Assignee Bank, by accepting
the pledge, also agreed to be bound by the arbitration clause. The arbitrator therefore
concluded that there was no arbitration agreement between Assignee Subcontractor and
Assignee Bank and that he lacked jurisdiction over the dispute between those two
parties.
579. In Israel, the issue addressed in this subsection was the object of a decision of 17
February 2013 of the District Court of Tel Aviv and a subsequent decision of the Israeli
Supreme Court of 13 February 2014. (596) Darie Engineering Ltd. (Darie), an Israeli firm
specialised in consulting and representing foreign companies involved in the
transportation sector in Israel, and Alstom Transport SA (Alstom) and Alstom International
SAS (collectively ‘Alstom’), French corporations engaged in the transportation business,
had a twenty-year business relationship in the course of which they concluded multiple
agreements under which Darie was to act as Alstom’s representative in Israel and as its
consultant. All the agreements contained a clause providing for ICC arbitration of
disputes in either Switzerland or France, in accordance with either Swiss or French law.
On 29 June 2007, Alstom Transport and Darie signed a Memorandum of Understanding
(MOU) that did not contain an arbitration clause and provided for the following:
– a settlement payment of Darie for agent fees in respect of contracts obtained by
Alstom Transport in Israel. This led the parties to subsequently sign a debt
settlement agreement (the ‘Compromise Agreement’) which included a clause for
foreign arbitration;
– the extension and amendment of Darie’s consulting agreement in respect of the
project to electrify the Israeli train rails. The agreement was indeed amended. It
included a foreign arbitration clause;
– the undertaking to enter into a consulting agreement for a new project: the PIS
project. The parties indeed concluded a consulting agreement regarding this
project. It contained a foreign arbitration clause;
– an undertaking to enter into a consulting agreement for the Light Rail Project in
Jerusalem. This agreement was not concluded.
The parties subsequently orally concluded an agreement in respect of the Akko Train
Project.
580. In November 2009, Alstom Israel Ltd (Alstom Israel) was established to act as
Alstom’s representative in Israel. A few days later, Alstom sent a letter to Darie
terminating their business relationship. In 2011, Darie filed an action against Alstom and
Alstom Israel before the Tel Aviv District Court. Darie sought relief in respect of the Light
Rail Project and the Akko Train Project, as well as three projects which had been subject
to contracts containing an arbitration clause: the project for the maintenance of the light
rail in Jerusalem, the project for the electrification of the Israel train rails and the project
19
for a light rail in Tel Aviv. Darie submitted the MOU with its statement of claim as well as
P 234 nine agreements which it had concluded with Alstom over the years. Alstom and Alstom
Israel applied to the Court for another stay of the proceedings pursuant to Article 6 of the
Israeli Arbitration Law and Article II(3) of the New York Convention. The Tel Aviv District
Court held that the court action should be stayed in respect of all claims and defendants.
581. Darie argued that its claims were not contractual and thus did not fall within the
scope of an arbitration clause. Further, neither the Light Rail Project, which was governed
by the MOU, nor the agreement for the Akko Train Project, which was concluded orally,
was covered by an arbitration clause. The other projects were based on expired
agreements. Alstom in turn submitted that in its long-standing business relationship with
Darie, the parties had consistently expressed their intention that any dispute that might
arise between them would be resolved by arbitration, as evidenced by the practically
identical arbitration clauses that had been included by the parties in their agreements
since the 1990s. Therefore, these arbitration clauses applied to all of Darie’s claims. The
District Court dismissed Darie’s contentions. It reasoned that all the agreements between
the parties contained ICC arbitration clauses; only the MOU did not, but all the matters
dealt with in the MOU were later the object of a dedicated written agreement containing
an arbitration clause, with the sole exception of the Light Rail Project. The Court
concluded that the parties consistently and repeatedly expressed their wish and consent
that their disputes be settled by arbitration. The Court also dismissed Darie’s argument
that its claims were not contractual. Consequently, all the claims were governed by the
arbitration clauses contained in the agreements, which clauses were broadly worded and
could apply to disputes arising after the agreements’ expiry.
582. As to the claims relating to the Light Rail Project and the Akko Train Project, the
District Court held that the Compromise Agreement signed by the parties three months
after the MOU dealt with the Light Rail Project; the arbitration clause in the Compromise
Agreement therefore applied to this project. As to the Akko Train Project, which was
concluded orally, the District Court found that it was governed by the arbitration clauses
agreed upon by the parties with respect to other projects since Darie based its claims
regarding this project on those other agreements. The Court referred to its power under
Article 26 of the Israeli Law of Contracts, 1973, to fill in details that are not included in a
contract in accordance with the parties’ practice. Having found that there was a valid
agreement to arbitrate between the parties, the District Court held that there were no
grounds for refusing a stay.
583. By a decision rendered on 13 February 2014, the Supreme Court of Israel affirmed the
lower court’s decision in part and reversed it in part, to the extent that Darie’s claims
arising out of the Light Rail Project and the Akko Train Project should be heard before the
Israeli courts rather than in arbitration. The Supreme Court pointed out that a dispute
shall be submitted to arbitration only when an arbitration agreement exists, as proven by
an agreement in writing. Here, the parties did not conclude an agreement in writing that
contained an arbitration clause with respect to the Light Rail Project and the Akko Train
Project and were not otherwise covered by an arbitration clause. It disagreed with the
P 235 District Court’s finding that the Compromise Agreement dealt with the Light Rail
Project and that this agreement’s arbitration clause could be applied to this project. The
Compromise Agreement dealt with claims that could be raised by the parties up until the
day it was concluded and only mentioned the Light Rail Project. The Court added that
where the parties have concluded an agreement in writing containing an arbitration
clause that deals with their general relationship and they wish to extend or renew it, ‘it is
certainly possible that the arbitration clause could be applied to all the disputes that
will arise between the parties during their relationship and perhaps even to those that
will arise with its termination’. On the contrary, when the parties have concluded an
agreement in writing containing an arbitration clause that deals with a specific and
defined transaction, that clause cannot be read into a subsequent agreement concerning
a different transaction. The latter was the case here.
584. A different solution was reached by the Noumea (New Caledonia) Court of Appeal in
a decision of 17 March 2010, (597) in which the parties to the contracts were different and
the contracts contained incompatible dispute resolution clauses. Pacific Auto and KAP
had entered into a contract containing a dispute resolution clause providing for
arbitration under the Rules of the Singapore International Arbitration Centre (SIAC).
Separately, an affiliate of Pacific Auto had entered into similar contracts with Komatsu
Japan and Komatsu Australia that provided respectively for disputes to be resolved
through arbitration in Tokyo and before the New South Wales courts. Following
termination of the contract, Pacific Auto brought tort claims against all three Komatsu
companies before the Noumea Commercial Court. KAP raised jurisdictional objections in
light of its arbitration agreement with Pacific Auto. The Noumea Commercial Court
retained jurisdiction on the grounds that Pacific Auto’s claims were indivisible and that
the dispute resolution clauses in all contracts were incompatible. KAP appealed the
Noumea Court of Appeal’s decision before the Supreme Court. The Court found that the
alleged indivisibility of Pacific Auto’s claims did not affect the applicability of the
arbitration agreement contained in the contract between Pacific Auto and KAP and,
accordingly, reversed the decision of the Noumea Court of Appeal.
585. The following award illustrates the proposition that what appears in the first place as
20
a multi-contract situation involving different parties and incompatible arbitration
clauses may finally be interpreted by an arbitral tribunal as a bi-party contractual set-up
submitted to the arbitration clause contained in one of the agreements. (598) In ICC Case
no. 8342 of 1996, (599) the claimant (a French fashion design company) and the
respondent (a Japanese company producer and distributor of ready-to-wear) concluded
in March 1990 a Joint Venture Agreement (JVA), which set up in France a joint venture
company (JVC) for the manufacture and the distribution of two ready-to-wear clothing
P 236 lines in France and Japan. In this context, five implementation agreements were
concluded the same day (four trademark licence agreements and one distribution
agreement), some between the claimant and the JVC and others between the respondent
and the JVC. All the contracts contained the same very broad arbitration clause. It
provided for different seats, depending on the party which would initiate the procedure.
The claimant later started an arbitration against the respondent on the basis of the
arbitration clause contained in the JVA to obtain the indemnification of the damage it
had allegedly suffered as a consequence of a breach by the respondent of the
implementation agreements.
586. To determine its jurisdiction, the sole arbitrator raised two issues: did the
arbitration clause contained in the JVA apply to the implementation agreements? Was
the claimant entitled to sue on the basis of the latter, while it was not formally a party
thereto? The arbitrator answered the first question in the affirmative. He relied on the
existence of a group of contracts organised around a basic contract (the JVA) whose
realisation required implementation agreements. The framework agreement was not
extinguished once it had been executed. It was an intuitu personae agreement in which
claimant and respondent undertook to respect, through the JVC, the obligations arising
from the implementation agreements. The arbitrator therefore concluded that all the
claims could be connected to the framework agreement, which prevailed over the other
contracts and consequently all the claims were covered by the JVA arbitration clause, in
the absence of a contrary provision.
587. The arbitrator also answered the second question in the affirmative. He pointed out:
– that all the elements relating to the joint venture were contained in the JVA;
– that the JVC appeared to be only a legal vehicle designed to implement the pre-
establishment cooperation between claimant and defendant;
– that such vehicle had no real autonomy vis-à-vis its two founders, i.e., the claimant
and the defendant;
– that all the implementation agreements had been de facto negotiated and agreed
between claimant and respondent, at the exclusion of any other party;
– that therefore claimant and respondent were true parties to these agreements and
to the arbitration clauses they contained.
What is of course unusual in this award is that the arbitrator totally disregarded the legal
personality of the joint venture company, which it considered a simple vehicle without
autonomy and which, as a consequence, could not be considered a party to the
arbitration agreement.
II. Arbitration Clause(s) and Jurisdiction Clause(s)
588. It seems quite obvious that when parties to two agreements are different, and one
agreement contains an arbitration clause, while the other contains a jurisdiction clause,
bringing together in one arbitration the disputes arising under the two agreements will in
principle not be possible. For example, when A and B conclude a construction contract
P 237 containing an arbitration clause and B enters into a subcontract with C containing a
clause giving jurisdiction to local courts, the arbitral tribunal that must decide issues
arising under the A-B agreement does not have jurisdiction to decide issues arising under
the B-C contract. This was decided inter alia by an arbitral tribunal sitting under the
Rules of the Poland Court of Arbitration in an award dated 18 May 1987 in case no. 69/86.
(600)
589. In the decision of the Swiss Federal Court of 4 October 2017, (601) the parties to the
procedure were the same but not the parties to the underlying agreements. The judgment
was handed down in a dispute between two reinsurance companies. One of them
(Reinsurer A) made an offer to an international mining group to serve as its fronter, i.e.,
reinsurer of the group’s primary insurer X. The offer was turned down and the group took
Reinsurer B as its fronter. However, the mining group accepted the Reinsurer A as the
Reinsurer of the fronter. Reinsurer A and Reinsurer B entered into an insurance contract
which was to a large extent back-to-back with the main reinsurance contract between the
primary insurer X and the fronter (Reinsurer B). However, the dispute resolution clauses
in the two contracts were different. The former contained a forum selection clause, the
latter an arbitration agreement. A dispute subsequently arose between the two
reinsurers. Reinsurer B brought arbitration proceedings against its reinsurer (Reinsurer A)
despite the forum selection clause in the contract between them. According to Reinsurer
B, it was customary in the reinsurance business for the reinsurance contract to mirror the
main insurance contract. In addition, Reinsurer A had itself initially offered to reinsure
the primary insurer and was prepared to accept arbitration as a dispute resolution
mechanism under the main insurance contract. Reinsurer A resisted arbitral jurisdiction
21
and argued that the forum selection clause was plainly applicable. The arbitral tribunal
admitted its jurisdiction. It found that although there was no evidence for an actual
meeting of minds, it had to be assumed in good faith that the plaintiff had agreed to be
bound by the arbitration agreement. Reinsurer A sought to annul the award before the
Swiss Federal Court. The Federal Court set aside the award for lack of arbitral jurisdiction.
It found that the existence of a forum selection clause was evidence that the parties had
not meant to import the arbitration clause from the main contract, whatever the usages
in the reinsurance industry were. Nor was there room for the application of the principle
of effective interpretation according to which the Court should construe an alleged
arbitration clause in a manner which affirms its validity. The usefulness of an arbitration
clause does not entail its existence where none is established.
590. In the Singapore Court of Appeal’s decision in Astrata (Singapore) Pte. Ltd. v.
Portcullis Escrow Pte. Ltd. & Anor. & Other Matters, (602) Astrata had entered into a supply
agreement with Tridex to develop and supply an electronic plate system to Tridex.
Pursuant to this agreement, Astrata, Tridex, and a third entity PEPL entered into an
escrow agreement. Under this escrow agreement, PEPL was to hold in escrow certain
P 238 assets. PEPL was obliged to deliver the escrow property to Tridex if a stipulated
triggering event occurred. The supply agreement contained an arbitration clause. The
escrow agreement contained a non-exclusive jurisdiction clause in favour of the
Singapore courts. Considering that Astrata had breached its obligations, Tridex
terminated the supply agreement and wrote to PEPL stating that it was invoking its rights
under the escrow agreement. This was disputed by Astrata, which instructed PEPL not to
release the escrow property to Tridex.
591. PEPL brought the matter before the Singapore court to determine whether any
triggering event had occurred. Astrata applied to stay the court proceedings on the
ground that its dispute with Tridex was covered by the arbitration clause in the supply
agreement. According to Astrata, the non-exclusive jurisdiction clause in the escrow
agreement only covered trilateral disputes between Astrata, Tridex, and PEPL. Tridex’s
position was that the dispute over escrow assets had been carved out from the supply
agreement and had to be dealt with exclusively under the non-exclusive jurisdiction
clause in the escrow agreement. The Court of Appeal agreed with Tridex. The Court
pointed out that it was not rational for a bilateral dispute between Astrata and Tridex
over whether a triggering event had taken place under the escrow agreement to be
determined by arbitration and for a trilateral dispute involving Astrata, Tridex, and PEPL
concerning the same issue to be determined by the Singapore courts. Moreover, the
entire agreement clause in the subsequent escrow agreement suggested that the escrow
agreement and the supply agreement were intended to apply to ‘their respective
spheres’. The Court therefore held that a dispute over whether a triggering event had
occurred was a matter to be determined in accordance with the escrow agreement. On
that basis, the non-exclusive jurisdiction clause and not the arbitration agreement
applied. (603)
592. The ICC arbitral awards rendered in case nos 2745 and 2762 of 1977 (604) illustrate
how the proceedings normally result when some of the contracts of a horizontal
contractual chain contain an arbitration clause, and the others contain a clause giving
jurisdiction to national courts or do not contain any clause at all. In the case under
consideration, B, the employer, concluded a contract with A, who in turn concluded a
contract with C. C entered into an agreement with D, who had contracted with E. Only the
contracts between A and C and between C and D contained an arbitration clause.
Disputes arose and four proceedings took place. C started ICC arbitration proceedings
P 239 against A. E started a court action against D before the Belgian courts. The decision of
the Belgian court was appealed and D decided to bring C into the proceedings, who in
turn did the same with A. The purpose of the claims filed by D against C and by C against
A was limited to the request to have the decision declared common to C and A
(déclaration de jugement commun). It is accepted that such a request is acceptable
notwithstanding the existence of an arbitration clause between D and C and between C
and A since no formal condemnation is requested. The Belgian Court of Appeals
confirmed the judgment against D, which then decided to start arbitration proceedings
against C. C also started arbitral proceedings against A. The two proceedings were
consolidated by the International Chamber of Commerce.
593. On the other hand, as was already pointed out in No. 584, what appears in the first
place as a multi-contract situation involving different parties and incompatible
jurisdiction and arbitration clauses may finally be interpreted by a court as a bi-party
contractual set-up submitted to the arbitration clause contained in one of the
agreements. (605) This was the situation in a case submitted to the United States District
Court, Southern District of New York, which gave rise to a decision of 23 June 2003. (606)
On 24 April 2001, Buyers United, Inc. (Buyers) and Infotopia, Inc. (Infotopia) entered into a
loan agreement under which Buyers borrowed USD 500,000 from Infotopia by selling to
Infotopia a promissory note of the same date (the Note). In August 2001, Sea Spray
Holdings, Ltd. (Sea Spray) entered into a general security agreement with Infotopia to
secure a loan by Sea Spray to Infotopia. The security agreement provided that Infotopia
granted Sea Spray a security interest in all of Infotopia’s rights in certain designated
property. The Note was included in the collateral identified as the subject of Sea Spray’s
security interest. The security agreement further provided for the applicability of New
22
York law and the jurisdiction of New York state and federal courts. The loan agreement
between Buyers and Infotopia contained an arbitration clause providing for arbitration in
South Lake City, Utah, in accordance with the United States Arbitration Act and under the
Commercial Rules of the American Arbitration Association. On 12 December 2001, prior to
the date when repayment of the loan under the Note was due, Buyers concluded an
agreement of understanding with Pali Financial Group, Inc. (Pali). Pursuant to this
agreement, Pali purchased the Note from Infotopia. Buyers then made the necessary
payments to Pali and received the original loan agreement and Note bearing the phrase
‘obligation paid in full’. By a letter to Buyers of 22 November 2002, Sea Spray alleged that
Buyers’ repurchase of the Note through Pali was ineffective as against Sea Spray’s
security interests in the Note. On 18 February 2003, Buyers responded by commencing
AAA arbitration in South Lake City as provided for in the loan agreement. Sea Spray, in
turn, initiated two proceedings in the New York Supreme Court against Buyers and Pali,
an action to stay arbitration and an action to recover damages. On 11 March 2003, the
New York State Court granted Sea Spray’s request to stay arbitration. Buyers later
invoked the diversity jurisdiction and removed the two actions to the District Court,
Southern District of New York.
P 240
594. The District Court granted Buyers’ request to vacate the State Court’s Order to stay
arbitration. It dismissed Sea Spray’s argument that it was not bound by the arbitration
clause in the loan agreement between Infotopia and Buyers because its only interest was
in the Note, a separate and independent instrument. The Court held that the loan
agreement and the Note constituted a single transaction: both instruments were
executed on the same date and between the same parties, referenced to each other and
addressed the same subject matter, namely the making of a loan to Buyers by Infotopia.
The District Court then held that the dispute at issue fell within the broad wording of the
arbitration clause in the loan agreement and that Sea Spray, as an assignee of Infotopia’s
interests in the specified collateral including the Note, was not ‘entitled to any more
rights’ than Infotopia:
[b]ecause Infotopia acquired the Note pursuant to a loan transaction
restricting its rights to litigate disputes relating thereto and, instead,
committing it to arbitration, Infotopia’s interest in the Note, so circumscribed,
was conveyed to Sea Spray pursuant to the Security Agreement. On 18
February 2003, Buyers commenced an arbitration proceeding by filing a
demand for arbitration to address Sea Spray’s claim over the Note. Because
the Loan Agreement circumscribed Infotopia’s right to proceed to litigation
under such circumstances, compelling it instead to proceed to arbitration,
Sea Spray’s options are accordingly restricted. Therefore, Sea Spray is not
entitled to proceed with the present litigation. (607)
595. If, in the scenario where the parties to various agreements are different and some of
them contain arbitration clauses while other contain jurisdiction clauses, bringing
together in one arbitration the disputes arising under these agreements will usually not
be accepted, this is no longer the position in India, since the landmark decision of the
Supreme Court in Chloro Controls. (608) In this case, the claimant was Chloro Controls
India Pvt Ltd, a company carrying on business for the manufacture of chlorination
equipment and incorporated under Indian laws by Madhusudan Kocha (Respondent 9)
and his group (the ‘Kocha’ group). This company had been negotiating since 1988 with
Respondent 1 for entering into a JV agreement to deal with the manufacture, distribution
and sale of gas chlorination equipment in India. This led to the execution of a Joint
Venture Agreement between the Appellant and Respondent 1, providing for the creation
of a joint venture which was going to become R5.
Respondent 1 was Severn Trent Water Purification Inc. (originally Capital Controls
Company, Inc., Colmar, Pennsylvania, USA), a company held by Severn Trent
Services Plc UK.
Respondent 2 was Capital Control (Delaware) Co. Inc., a company held by Severn
P 241 Trent Services ‘Delaware) Inc., itself a 100% subsidiary of Severn Trent (Delaware)
Inc. (formerly known as Severn Trent U.S. Inc.). Respondents 1 and 2 developed and
sold electro-chlorination equipment under the brand ‘Hypogen’, which was
subsequently replaced by the brands ‘Sanilec’ and ‘Omnipure’.
Respondent 3 was Titanor Components and Respondent 4 was Hi Point Services.
They were both in the business of electro-chlorination equipment. In 1998 Severn
Trent Services (Delaware) Inc. acquired Excel Technologies, a company dealing in
the manufacture of two brands of chlorination products, ‘Omnipure’ and ‘Sanilec’.
Later, Excel Technologies entered into a JV agreement with De Nora North America
Inc. and created another JV company, Severn Trent De Nora LLC for dealing in the
above brands and ‘Seaclor Mac’, a product distributed by Respondent 3. The
distribution rights of all the three products in India were given by Severn Trent De
Nora LLC to Respondent 4.
Respondent 5 was Capital Controls (India) Pvt Ltd, a joint venture between
Appellant and R1, that had merged in between with R2 and whose purpose was to
design, manufacture, import, export and do the marketing of gas and electro-
23
chlorination equipment.
Respondents 6 and 8 were the Directors of Respondent 5 appointed by the Capital
Controls group, owned by Severn Trent Services Plc. (UK).
Respondent 7 was the chairman of the JVC.
Respondents 9 to 11 were the shareholders of the claimant and the Directors
nominated by the Kocha group. Respondent 9 was also the managing director of the
JVC.
596. The parties to the Joint Venture Project had entered into seven agreements:
(1) A shareholders’ agreement (the ‘SHA’, also referred to as the ‘Principal Agreement’)
between Appellant, Respondent 2 and Respondent 9, containing an ICC arbitration
clause providing for arbitration in London and application of English law. Its
purpose was to start a JV company for manufacture, sale and services of the
products defined in the Financial and Technical Know-How License Agreement.
(2) An International Distributor Agreement (the ‘IDA’) between Respondent 1 and
Respondent 5, appointing the JV as the exclusive distributor for the distribution in
India, Afghanistan, Bhutan and Nepal, of the products manufactured by Respondent
1. The contract was governed by the laws of Pennsylvania and contained a clause
giving jurisdiction to the Courts of that state in case of dispute.
(3) A Managing Director’s Agreement between Respondent 5 and Respondent 9, not
containing an arbitration clause. This agreement, like the IDA, was executed in
accordance with the terms of the SHA.
(4) An Export Sales Agreement (the ‘ESA’) between Respondent 1 and Respondent 5,
P 242 relating to the export of the products manufactured by Respondent 5. It provided
for arbitration in Pennsylvania under the Rules of the American Arbitration
Association.
(5) A Financial and Technical Know-How License Agreement (the ‘FTKHLA’) between
Respondent 1 and Respondent 5, containing an ICC arbitration clause providing for
ICC arbitration in London and application of English law.
(6) A Trademark Registered user License Agreement (the ‘TRULA’) between Respondent
1 and Respondent 5, not containing an arbitration clause. This Agreement and the
FTKHLA were interdependent and referred one to the other. They were executed in
accordance with the provisions of the SHA that required the parties to cause the
joint venture company to enter into the FTKHLA under which Respondent 1 was to
grant the JVC the right and licence to manufacture the products in India in
accordance with the Technical Know-How and other technical information
possessed by Respondent 1; and to enter into the TRULA for obtaining the right to
use certain trademarks and trade names in relation to the goods in the Territory.
(7) A Supplementary Collaboration Agreement between Respondent 1 and Respondent
5, executed to comply with the conditions of the letter of approval of the
Government of India for the commencement of the joint venture operation.
Except Respondents 3 and 4 who were not signatories to any agreement, all other parties
were not parties to all the agreements but had signed one or more agreement(s).
Disputes arose between the parties that resulted in the termination by Respondents 1
and 2 of all the Joint Venture Agreements, which included agreement 1, 2, 4, 5, 6 above.
The claimant started a court action before the Bombay High Court in the course of which
Respondents 1 and 2 prayed for reference of the suit to arbitration. This application was
contested but was finally decided by the High Court in favour of the applicants. The
claimant appealed invoking in particular Section 45 of the Indian Arbitration Act
providing that ‘a judicial authority, when seized of an action in a matter in respect of
which the parties have made an agreement referred to in Section 44 [an arbitration
agreement in writing], shall, at the request of one of the parties or any person claiming
through or under him, refer the parties to arbitration unless it finds that the said
agreement is null and void, inoperative or incapable of being performed’. (609)
P 243
597. According to the claimant, the judgment of the High Court, in referring the entire suit
to arbitration, suffered from error of law. As mentioned above, the various agreements
did not all include arbitration clauses and the arbitration clauses contained in some of
the agreements were not all identical or compatible. Moreover, Respondents 3 and 4
were not signatories to any agreement.
598. At the term of a very detailed judgment, the Supreme Court confirmed the High Court
decision. The Court focussed all along its judgment on the wording of Section 45 of the
1996 Act, referring specifically to a party or ‘person claiming through or under him’. In this
respect, it noted in the first place that, if normally arbitration takes place between the
persons who have, from the outset, been parties to both the arbitration agreement and
the substantive contract containing that agreement, arbitration is possible in certain
circumstances between a signatory and a third party. (610) The Court referred in its
judgment to the cases mentioned by Sir Michael Mustill in his Law and Practice of
Commercial Arbitration:
1. The Claimant was in reality always a party to the contract, although not
24
named in it.
2. The Claimant has succeeded by operation of law to the rights of the
named party.
3. The Claimant has become a party to the contract in substitution for the
named party by virtue of a statutory or consensual novation.
4. The original party has assigned to the Claimant either the underlying
contract, together with the agreement to arbitrate which it incorporates,
or the benefit of a claim which has already come into existence. (611)
599. The Supreme Court also referred to the principle applied in a number of arbitral
awards, according to which a non-signatory affiliate or sister or parent company can be
subjected to arbitration provided the disputed transactions were within a group of
companies and there was a clear intention of the parties to bind both the signatory and
the non-signatory parties. (612)
600. Finally, the Court also emphasised that in exceptional cases, a non-signatory or third
party could be subjected to arbitration without its prior consent. According to the Court,
these exceptions should be examined from the touchstone of direct relationship to the
P 244 party signatory to the arbitration agreement, direct commonality of the subject matter
and the agreement of the parties being a composite transaction: ‘[t]he transaction should
be of a composite nature where performance of mother agreement may not be feasible
without aid, execution and performance of the supplementary or auxiliary agreements,
for achieving the common object and collectively having bearing on the dispute. Besides
all this, the Court would have to examine whether a composite reference of such parties
would serve the ends of justice. Once this exercise is completed and the Court answers
the same in the affirmative, the reference of even non-signatory parties would fall within
the exception afore-discussed’. (613) The Court further stated that ‘[w]here the
agreements are consequential and in the nature of a follow-up to the principal or mother
agreement, the latter containing the arbitration agreement and such agreement being so
intrinsically intermingled or inter-dependent that it is their composite performance that
which shall discharge the parties of their respective mutual obligations and
performances, this would be a sufficient indicator of intent of the parties to refer
signatory as well as non-signatory parties to arbitration’. (614)
601. In its application of these principles to the facts of the case, the Court first noted
that:
– With respect to formal validity, the requirement that an arbitration agreement be
in writing requires to be constituted liberally. (615) Once it is determined that a
valid arbitration agreement exists, it is a different step to establish which parties
are bound by it. Third parties, who are not explicitly mentioned in an arbitration
agreement made in writing, may enter into its rationae personae scope. (616)
– The intention of the Legislature when incorporating in Section 45 the words ‘or any
person claiming through or under him’ was to give them a liberal meaning. (617) The
intent of the framers of the statute was to encourage arbitration (618) and ‘[o]nce
the words used by the Legislature are of a wider connotation or the very language of
section is structured with liberal protection then such provision should normally be
constituted liberally’. (619)
– The words ‘or any person claiming through or under him’ should be read in harmony
with the concept of ‘legal relationship’ as incorporated in Article II(1) of the New
York Convention: ‘the expression ‘legal relationship connotes the relationship of the
party with the person claiming through or under him. A person may not be signatory
to an arbitration agreement, but his cause of action may be directly relatable to
that contract and thus, he may be claiming through or under one of the parties’.
(620)
P 245
602. Taking all these principles into consideration, the Supreme Court decided that:
– all the disputed agreements – signed on the same day and in furtherance of the SHA
– formed one composite transaction for attaining the purpose of business of the
joint venture company. They were so intrinsically connected to each other that it
was neither possible nor probable to imagine the execution and implementation of
one without collective performance of all the other agreements. The intention of the
parties was clear that all these agreements were being executed as integral parts of
a composite transaction; (621)
– even if all the parties to the arbitration were not signatory to all the agreements in
dispute, they were covered under the expression ‘claiming through or under’ the
parties to the agreements. ‘The interests of these companies are not adverse to the
interest of the principal company and/or he joint venture company. On the
contrary, they derive their basic interest and enforceability from the Mother
Agreement and performance of all the other agreements by the respective parties
had to fall in line with the contents of the Principal Agreement’; (622)
– the arbitration clause contained in the SHA is widely worded. It requires that any
dispute or difference which could not be settled by friendly negotiation and
25
agreement between the parties would be finally settled by arbitration conducted in
accordance with the Rules of the ICC. It is comprehensive enough to include the
disputes arising under and in connection with the SHA; (623)
– where the parties to such composite transaction provide for different alternative
forums, ‘it has to be taken that real intention of the parties was to give effect to the
purpose of agreement and refer the entire subject matter to arbitration and not to
frustrate the remedy in law’. (624) In the present case, ‘the court can safely gather
definite intention on behalf of the parties to have their disputes collectively
resolved by the process of arbitration. Even if different forums are provided,
recourse to one of them which is capable of resolving all their issues should be
preferred over a refusal of reference to arbitration. There appears to be no
uncertainty in the minds of the parties in that regard, rather the intention of the
parties is fortified and clearly referable to the mother agreement’. (625)
P 246
Consequently, the Supreme Court decided that the disputes arising from all the disputed
agreements were capable of being referred to the arbitral tribunal ‘in accordance with
the agreement of the parties’.
603. The same liberal approach was followed by the High Court of New Delhi in a
subsequent decision of 16 April 2013. (626) In this case, the plaintiff, Havells India, and a
UK company, Electrium, had certain business dealings in terms of a supply agreement.
The respondent, Electrium Sales Ltd., a co-subsidiary of Electrium, had made an
independent Purchase Order to the plaintiff, providing for the submission of all disputes
to English courts. A dispute arose and the co-subsidiary filed a request for arbitration
before the ICC in accordance with the arbitration clause contained in the supply
agreement. The supply agreement indeed provided for mediation and arbitration for all
disputes arising between them as well as related persons. Clause 4 of the supply
agreement also provided that ‘all the sales of the Products between the Parties or their
Related Persons, shall be subject to the terms and conditions of this agreement only’. The
term ‘Related Person’ was defined as ‘in relation to any party, its subsidiaries, its holding
companies (if any) and the subsidiary companies of any such holding company from time
to time, all of them and each of them as the context admits’. The plaintiff filed a civil suit
before the High Court of Delhi, seeking declaration to the effect that there was no
arbitration agreement between itself and the defendant. It also sought a judicial order
restraining the defendant from pursuing its claim before the ICC. The action was
dismissed by the High Court of Delhi. The High Court decided that by its terms, the supply
agreement was an umbrella agreement between the parties, wherein it was not only the
signatories to the supply agreement who could place the Purchase Orders upon the
P 247 plaintiff but also that the Related Persons were equally entitled to place such orders.
Conversely, the Related Persons could also be made liable for the defaults of either of
the signatories to the supply agreement. The Court therefore found that the disputes
relating to the Purchase Order were to be decided under the arbitration clause of the
supply agreement; this notwithstanding that the relevant Purchase Order contained a
jurisdiction clause submitting all disputes to the exclusive jurisdiction of the English
courts.
III. Even If an Arbitral Tribunal Does Not Have Jurisdiction on a Contract, It May Take It into
Consideration
604. Even in cases where the arbitral tribunal does not have jurisdiction over a contract,
it may take this contract into consideration in deciding issues over which it has
jurisdiction. But conversely, the fact that the arbitral tribunal has to take into
consideration one or more connected agreements to decide the disputed issues may not
have an impact on the arbitral tribunal’s decision on jurisdiction in relation to these
connected contracts. In ICC Case no. 6829 of 1992, (627) the arbitral tribunal pointed out
that if various parties conclude a series of contracts that are interrelated or interlocked,
the fact that the contracts are interrelated is not sufficient to permit the arbitral tribunal
to extend its jurisdiction based on one contract to another contract to which only one of
the parties to the arbitration is a party. The fact that the termination of disputed
agreements has been triggered by the termination of another agreement in the
contractual chain is not a sufficient element. In the case under reference, the arbitral
tribunal also pointed out that the fact that certain provisions of the disputed agreement
referred to provisions of another agreement did not afford the tribunal jurisdiction on
any issue relating to the interpretation or application of this second agreement. The
arbitrators also emphasised that the decision of the tribunal could in no way be affected
by the fact that in order to decide under the disputed agreement, the tribunal would
have to take into consideration the second agreement over which it did not have
jurisdiction.
605. Such a distinction between deciding issues arising under a contract – which the
arbitral tribunal refuses to do – and taking into consideration the provisions of this
contract – which the arbitrators will accept or even will be bound to do – is a traditional
distinction in private international law that has been illustrated in numerous cases. (628)
It was clearly formulated in ICC Case no. 8764 of 1997. (629) The claimant (a French
company) and the respondent (a Portuguese company) were parties to a great number of
contracts – including a framework agreement and implementation contracts, some of
26
them also involving a third party – in the context of their common activity, the
P 248 production and commercialisation of automatic distributors in Portugal. The claimant
initiated the arbitration on the basis of the ICC arbitration clause contained in contract
A1, claiming damages for an alleged breach of the contract and its exclusivity provisions,
as well as for unfair competition and fraudulent misappropriation of know-how. The
parties did not dispute that the jurisdiction of the tribunal was restricted to contract A1.
(630) The jurisdictional issue was therefore whether the claims did find their source in the
obligations arising from this contract, or from other agreements between the parties or
with third parties. Whatever the answer to this question, it did not mean that these other
contracts could not be taken into consideration to decide the disputed issues. The
distinction was formulated as follows by the arbitral tribunal:
the circumstance that in order to decide a dispute, the Arbitral Tribunal must
take into consideration, beyond the disputed agreement, other contracts
concluded by the parties, or even the way they were performed, is not of such
a nature as to have an incidence on the jurisdiction of the Arbitral Tribunal. A
distinction should indeed be made between, on the one hand, the submission
to arbitration of a dispute which finds its source in a specific contract and on
the other hand, the taking into consideration, as a fact, of contracts and the
way they were performed, in the context of the decision of a dispute which has
its source in another agreement. In this case, the Arbitral Tribunal is asked to
decide disputed issues which find their source in the performance of the
[framework agreement]. The fact that to decide the claims, the Arbitral
Tribunal must take into consideration a series of facts some of which concern
projects governed by other agreements [among which an implementation
contract between the parties and two contracts jointly concluded by the
parties with a third party, all of which fall outside the jurisdiction of the
Arbitral Tribunal] does not at all affect the jurisdiction of the arbitrators. (631)
606. In case no. 1491 of 1992, decided under the Rules of the Chamber of National and
International Arbitration of Milan, (632) a contract had been concluded between the main
contractor and an Iraqi employer for the supply of parts for a plant to be built in Iraq.
The main contractor had entered into a subcontract with a subcontractor. The dispute
resolution clause included in the subcontract provided that in the case of disputes
P 249 involving the customer, an Iraqi ministry, the subcontractor was bound by the
agreement reached by way of settlement of these disputes by the main contractor and
customer with the participation of the subcontractor. Should an amicable settlement not
be reached, the subcontractor would be bound by an arbitral award made in arbitration
proceedings between the customer and the main contractor. However, all disputes that
did not involve the customer and the documents issued by the customer were referred to
a sole arbitrator to be appointed according to the national rules of the Milan Chamber of
National and International Arbitration. On 8 August 1990, EC Council regulation no. 2340,
declaring an embargo against Iraq, was issued. On 27 August 1990, the main contractor
informed the subcontractor that the subcontract was suspended. On 17 October 1991, the
subcontractor notified a request for arbitration to the main contractor.
607. The arbitrator decided that he only had jurisdiction to decide the issue of the effect
of the embargo legislation on the contract between the main contractor and
subcontractor but not on the contract between the main contractor and the Iraqi
customer. The arbitrator also decided that he could not limit his analysis to a mere
interpretation of EC provisions. A connection existed between the main contract and the
subcontract at the economic and functional level. The arbitrator therefore had to reach
his conclusion on the impossibility to perform in a broader context, taking into
consideration the main contract and the fact that the subcontractor and main contractor
knew at the time of the negotiations that the final destination of the supply was Iraq. The
impossibility to perform, based on the embargo legislation, affected the whole
performance, with the consequence that the subcontractor’s claim for indemnification
could not be granted. The damage did not result from a fact imputable to the main
contractor but from an impossibility to perform.
608. Another illustration of the issue under reference is the decision of the Paris Court of
Appeal of 10 May 2016. (633) A Swiss company, Ascot, and a businessman from Senegal, Mr
Dieew, had concluded four contracts for the sale of rice, three of which had been
submitted to the arbitration of the Chambre Arbitrale Internationale de Paris and the
fourth one to the arbitration of the Grain and Food Trade Association (GAFTA). Following
the non-payment of the supplies by the buyer, the parties had concluded a pledge and
an escrow agreement to guarantee the progressive repayment of the buyer’s debt, both of
which including a clause giving jurisdiction to the Dakar courts. Mr Dieew failed to fulfil
his undertakings with the consequence that Ascot initiated arbitration proceedings
before the Chambre Arbitrale Internationale de Paris. It was undisputed that the arbitral
tribunal had jurisdiction over three of the four sale contracts and did not have
jurisdiction over the pledge and escrow agreements. However, the tribunal could not
decide the claims without taking into consideration the fourth sale agreement and the
P 250 pledge and escrow agreements which were outside its jurisdiction. This is what he did.
The tribunal issued an award deciding that the conclusion of the two above agreements
had not postponed the exigibility of Mr Dieew’s debt and it also determined the
27
remaining balance on Mr Dieew’s debt taking into consideration the payments that had
been made. Mr Dieew filed an action to set aside the award on the ground that in
deciding the exigibility and quantum of his debt, the tribunal had necessarily decided on
the validity and the performance of the pledge and escrow agreements. Mr Diew’s action
was dismissed. The Paris Court of Appeal decided that in taking into consideration, to the
extent that it was necessary for the resolution of the dispute and in particular for the
research of the common intention of the parties relating to the exigibility of the debt, the
existence of the pledge and escrow agreements which provided for the jurisdiction of
Senegalese courts, the tribunal had not exceeded its competence.
609. The issue analysed in this section is not always clearly understood, as is evidenced
by a decision of the Beirut Court of Appeals of 5 February 2008. (634) The case concerned
a dispute between the Appellant, an engineer, and the respondent company, who had
concluded a contract in which the respondent were to provide assistance in the
execution of certain works that the Appellant had to execute by virtue of an agreement
between himself and the Council for Development and Reconstruction. The agreement
contained an arbitration clause. A dispute arose between the Appellant and the
respondent. The respondent started an arbitration procedure based upon the arbitration
clause. In order to determine the amount of damage incurred by the respondent, the
arbitral tribunal relied on contracts signed by the respondent and third parties – which
did not contain an arbitration clause. The Appellant sought annulment of the award
alleging that the arbitral tribunal had exceeded its mission by taking into consideration
agreements concluded by one party to the dispute and third parties that were not
concerned by the arbitration. However, the contracts concluded with third parties were
only referred to as a source of information for the evaluation of the damage. The action
was dismissed. To justify the dismissal, the Beirut Court of Appeals pointed out that the
arbitration clause stipulated in one of several contracts forming one single economic
transaction empowered the arbitral tribunal, within the limits of the issues submitted
before it, to decide all claims concerning these contracts, even if they did not include an
arbitration clause and even if they did not bind both parties to the arbitration dispute,
as long as these contracts constituted one single economic transaction. This is not the
reasoning that one would have expected. The Court could have dismissed the action
simply by pointing out that the contracts concluded with third parties were only referred
to as a source of information for the evaluation of the damage, in other words that they
were only taken into consideration to decide disputes under the agreement containing
the arbitration clause.
P 251
Subsection IV: The Issue of Guarantees (Bank Guarantees and Guarantee

Agreements)
610. The issue of whether it is possible to consolidate in one arbitration the disputes
arising from connected agreements when the parties to these agreements are not the
same has frequently arisen in relation to bank and other guarantees concluded in
connection with a main agreement. In many cases, courts and arbitral tribunals had to
address the issue of whether the creditor under the main agreement could invoke the
arbitration clause contained therein against the surety or whether the surety could
invoke the arbitration clause against the creditor. The majority of courts in civil law
jurisdictions tend to consider that, absent any specific language of incorporation, the
guarantee agreement is independent from the main agreement and, consequently, the
arbitration clause contained in the latter does not extend to the former. The approach
seems however to be different in common law jurisdictions.
611. For example, in two cases in which A concluded a main contract with B containing an
arbitration clause and B contracted a guarantee agreement with C that did not include
such a clause, the French Supreme Court decided that the guarantor, not being a party to
the main contract, could not invoke clauses included in that contract and in particular
the arbitration clause. This was said to be a consequence of the principle of privity of
contracts (effet relatif des conventions). (635) More recently, the Paris Court of Appeal
confirmed that jurisprudence in relation to promissory notes. (636) A protocol of
agreement had been concluded between several people and contained, among other
provisions, a loan and an arbitration clause. Since the loan had not been fully
reimbursed, the parties concluded an addendum in which the borrowers recognised that
they were debtors of the balance and undertook to reimburse it in two instalments with
interest. In compliance with this undertaking, they subscribed the same day and
endorsed two promissory notes. Since they were not honoured, the beneficiary started an
action before the Commerce Court of Paris and obtained a judgment in its favour. The
debtors appealed the decision. Before the Court of Appeals, the borrowers complained
that the first Court had accepted its jurisdiction notwithstanding the arbitration clause.
The Court of Appeal rejected the objection, ruling that the arbitration clause had been
stipulated in contractual undertakings taken by debtors in an addendum to the protocol
of agreement and not at the occasion of the undertakings subsequently subscribed by the
issuance of promissory notes. According to the Court, these promissory notes represented
an autonomous undertaking which was not governed by the protocol nor its addendum.
The decision is correct. The autonomy of the legal relationship arising from a bill of
exchange or a promissory note from the underlying agreements which have motivated
P 252
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P 252 their issuance or subscription is a classic characteristic of the law of negotiable
instruments, accepted by all legal systems which have adopted the Geneva Convention of
1930.
612. The same solution seems to prevail in Germany, as illustrated by a case decided by
the Regional Court of Hamburg on 8 November 2001. (637) The case involved a parent
company and its subsidiary. The subsidiary had entered into a contract containing an
arbitration clause. The subsidiary apparently received instructions not to honour the
contract, but its parent sent a note to the Seller making clear that it would itself fulfil the
agreement. Finally, the parent company denied to take over the goods and to pay for
them because of an alleged deficient delivery. The Seller initiated an arbitration
procedure. An award was rendered. The parent company started an action to set aside
the award contending that it had not agreed to arbitration. The request was granted. The
Court considered that the note that the parent company sent to the Seller only referred
to matters of fulfilment of the contract and could not be understood as an accession or
adhesion to the whole contract. It had to be considered a guarantee or an assumption of
debt to which the arbitration agreement did not extend, the obligations under this
guarantee or assumption of debt being self-standing and having their own legal fate.
613. In Switzerland, the Federal Court issued a very detailed decision on the issue on 19
August 2008. (638) X Ltd., a company incorporated in Cyprus, and Y, a Qatari company
entered into a contract in the context of a construction of an industrial project in Qatar. X
undertook to perform the construction work and Y to pay the price and supply a
guarantee of payment. The contract was governed by Swiss law and provided for ICC
arbitration with seat in Geneva. Subsequently, Z S.p.A. (hereinafter ‘Z’), the Italian parent
company of Y, issued a guarantee of payment. A dispute arose, and X started an ICC
arbitration against Y and Z requesting that they be jointly condemned to pay various
amounts. The arbitral tribunal decided that it did not have jurisdiction over Z. X started
an action to set aside before the Swiss Federal Court. The Court dismissed the claim and
confirmed the award. It made a thorough analysis of the issue of whether, and in which
cases, an arbitration clause included in the main agreement can be extended to a non-
signatory having issued a guarantee of payment.
614. According to Swiss law, assumption of debt involves the transfer from the debtor to
the transferee of all accessory rights, within the meaning of Article 178 Al.1 of the Swiss
Code of Obligations. And this includes the arbitration agreement. This is valid for what
Swiss law refers to as ‘reprise de dette privative’ where a new debtor is substituted to the
former one and ‘reprise cumulative de dette’ where there is no change of debtor but the
intervention of a second debtor who becomes joint debtor with the original one. The
same solution does not apply to other forms of sureties: personal guarantee
(cautionnement), bank guarantee, guarantee clause (porte-fort). Indeed, the guarantors, in
P 253 the context of those other sureties, do not become the passive recipients of the debt
which is the object of the guarantee but contract another obligation, which is
independent or accessory in order to secure the payment of that debt. It is not therefore
possible to consider the arbitration clause contained in the main contract as an
accessory of the debt arising from the contract of guarantee. Consequently, an arbitral
tribunal cannot accept its jurisdiction to decide on the rights of a creditor vis-à-vis the
guarantor from the sole fact that the contract binding the creditor and the debtor
contains an arbitration agreement.
615. The Swiss Federal Court concluded that for the arbitral tribunal to have jurisdiction
on the dispute arising from the guarantee, the arbitration provision contained in the
latter must make specific reference to the arbitration agreement in the main contract or
the guarantor must have, expressly or by conduct, manifested an intention that the
creditor could interpret in good faith, according to the principle of confidence (principe
de confiance), as being the guarantor’s will to submit itself to the arbitration agreement
included in the main contract.
616. In Croatia, the Supreme Court, in a decision of 2 September 2014, (639) set aside an
arbitral award rendered by the Permanent Arbitration Court at the Croatian Chamber of
Economy in Zagreb. The dispute concerned a ship remount contract concluded in 1996
between Shipyard K. Ltd., the contractor, and TP, the employer. The contract was
governed by Croatian law and provided for arbitration according to the Rules of the
Permanent Arbitration Court at the Croatian Chamber of Economy in Zagreb. In 1997, the
same parties concluded an annex to the contract regarding additional works and their
payment. A third party, the Slovenian Shipping Agency C.K. Ltd, also signed the annex
committing itself as a guarantor for the entire debt. The annex provided: ‘[t]he Employer
T.P. and C.K. are jointly and severally liable for the payment of the performed works,
whereby C.K. commits as a subsidiary guarantor for the entire debt’. The annex did not
reiterate the arbitration clause from the main contract but contained a clause which
read: ‘All the other conditions remain unchanged.’
617. A dispute arose between the parties and in the arbitration that followed, the arbitral
tribunal accepted the claim brought against C.K. and awarded remuneration to Shipyard
K. C.K. filed a motion to set aside the award with the Commercial Court in Zagreb and
subsequently appealed to the High Commercial Court. The two Courts held that the
guarantor by accepting the guarantee commitment for all the duties from the ship
remount contract (which included the arbitration clause) also accepted that the said
29
arbitration clause be applied to the guarantee. They pointed out that the guarantor knew
or should have known the entire content of the contract to which it was acceding to,
especially since it was clearly stated that all the other contract conditions remained
unchanged. The Courts concluded that the arbitration clause stayed in force by the
signature of the said annex, thus extending it to C.K., the guarantor. Seized of the
claimant’s appeal against the lower instance judgment, the Croatian Supreme Court set
aside the award. It found that there were two separate legal transactions containing the
P 254 annex: one being the annex to the ship remount contract and the other independent
transaction being the guarantee agreement. The Court held that those two agreements
were not functionally connected to the extent that they would form a unity in a way that
the guarantor, by signing the guarantee, accepted all the conditions from the original
contract, including the arbitration clause. The Court determined that the clause ‘All the
other conditions remain unchanged’ solely concerned the ship remount contract and not
the guarantee agreement.
618. In the People’s Republic of China, the independence of the guarantees in relation to
the main contract has been confirmed in various decisions of the People’s Supreme
Court. In Huizhou Weitong Property Co., Ltd. v. Huizhou Municipal Government, (640)
Huizhou Weitong Property Co., Ltd. (Weitong) and Huizhou Jiacheng Group Co., Ltd.
(Jiacheng) had signed a general contract for a construction project providing that all
disputes were to be submitted to SIAC arbitration. In the meantime, the Huizhou
Government provided a performance guarantee letter to Weitong and guaranteed that if
Jiacheng failed to perform its obligations, the Huizhou Government would undertake the
corresponding responsibilities. The performance guarantee letter did not contain a
dispute resolution clause. Litigation was initiated by Weitong against the Huizhou
Government before the Guangdong High Court. The Huizhou Government objected to the
jurisdiction of the High Court and requested that the case be transferred to CIETAC. The
High Court held that the dispute should have been submitted to arbitration and
dismissed the case. Weitong then appealed to the Supreme People’s Court. The Supreme
People’s Court held that the disputes concerned the performance guarantee relationship
between Weitong, the creditor, and the Huizhou Government, the guarantor, which was
separate from the contractual disputes between Weitong and Jiacheng. The guarantee
relationship was therefore not subject to the arbitration clause contained in the general
construction contract. Moreover, since there was no arbitration clause in the performance
guarantee letter, the Guangdong High Court should not have dismissed the claim brought
by Weitong. The Huizhou Government had no reason to obtain the benefit of the
arbitration agreement contained in the principal contract.
619. The same solution was confirmed in a further decision of 2006 in Dongxun Investment
v. Yulin Hengtong. (641) The case concerned a Cooperation Agreement entered into by
Guangxi Yulin Hengtong Co., Ltd. (Hengtong), a PRC company, and Dongxun Investment
Co., Ltd. (Dongxun), a Hong Kong incorporated company. On 2 November 1996, Hengtong
and Dongxun signed a cooperation contract under which the parties agreed to establish a
Sino-foreign cooperative enterprise and providing that any related dispute was to be
submitted to CIETAC arbitration. At the same time, the Yulin government signed a letter
of guarantee for Hengtong to Dongxun that did not contain an arbitration clause or a
P 255 forum selection clause. In 2003, Dongxun initiated an arbitration against Hengtong and
the Yulin government. The Yulin government raised an objection to the jurisdiction of the
tribunal. CIETAC rejected the objection and held that the Yulin government was bound by
the arbitration clause of the Cooperation Contract. The arbitral tribunal issued an
arbitral award in favour of Dongxun.
620. The case was submitted to the Yulin Intermediate People’s Court (the ‘Intermediate
Court’) for enforcement. The Court suspended the enforcement. Dongxun applied for
reconsideration to the High People’s Court of the Guangxi Zhuang Autonomous Region (the
High Court) which held that the Yulin government was not the correct respondent given
the absence of an arbitration agreement. The High Court submitted a request to the
Supreme People’s Court which decided that the parties to the Cooperation Contract were
Hengtong and Dongxun and not the Yulin government. Therefore, the Yulin government
was not bound by the arbitration clause contained in the Cooperation Contract.
Moreover, there was no arbitration agreement contained in the letter of guarantee and no
other arbitration agreement covering disputes arising from the guarantee between the
Yulin government and Dongxun. The Supreme People’s Court therefore found that the
arbitration tribunal had gone beyond the scope of the arbitration agreement by ruling on
a dispute concerning the guarantee.
621. More recently, in You Bang v. Wang Giojian, (642) You Bang, a Hong Kong company,
and Chengdu You Bang, a PRC company, signed a trademark licensing contract (the
‘Contract’). Under the Contract, You Bang agreed to licence the trademark ‘YOBO You
Bang’ to Chengdu You Bang for a term of five years. Disputes were to be submitted to the
Shenzhen Arbitration Commission (SAC). As You Bang did not have an office in Mainland
China, the Contract was to be performed by Shenzhen Changyou Co. Ltd. (Changyou), a
joint venture established by You Bang. On 1 February 2007, Chengdu You Bang and
Changyou signed an agreement under which the parties agreed to cooperate within the
scope of the trademark licensing contract. A few days later, three individuals, namely
Wang Guojian, Qi Xiang and Chen Gianjun, co-signed a letter of guarantee to provide a
joint and several guarantee for Chengdu You Bang to You Bang. The guarantee letter did
30
not contain an arbitration clause.
622. In January 2011, You Bang filed an arbitration against the guarantor based on the
arbitration clause of the trademark licensing contract. Wang Guojian challenged the
tribunal’s jurisdiction arguing that he was not a party to the trademark licensing contract
and was therefore not bound by the arbitration clause. The SAC rendered a decision on
jurisdiction whereby Wang Guojian was bound by the arbitration clause and therefore
rejected the objection. The arbitral tribunal rendered an arbitral award in favour of You
Bang reasoning that because the principal contract contained an arbitration clause and
the guarantee contract was an accessory contract, the parties to the guarantee should be
bound by the arbitration clause in the principal contract. Chengdu You Bang and Wang
P 256 Guojian applied to the Shenzhen Intermediate People’s Court (Shenzhen Intermediate
Court) to set aside the arbitral award. The Shenzhen Intermediate Court submitted the
matter to the Guangdong High People’s Court (Guangdong High Court) which then
submitted the matter to the Supreme People’s Court. The Supreme People’s Court
disagreed and found that the guarantee letter did not contain an arbitration agreement
and, therefore, the arbitral tribunal did not have jurisdiction.
623. The same jurisprudence was recently confirmed by the Wuhan Intermediate People’s
Court, (643) in a case where the claimant had given an independent bank guarantee in
favour of the respondent in relation to a construction project. A dispute arose, and in the
arbitration proceedings, the claimant claimed that the respondents had to return the
original of the bank guarantee to the claimant and asked the tribunal to discharge the
bank’s obligation as guarantor. The tribunal granted the relief. Its award was set aside by
the Wuhan Intermediate People’s Court which decided that the tribunal had exceeded its
jurisdiction since the bank’s guarantee forms a separate legal relationship between the
contractor, the project owner as beneficiary and the bank as the issuer of the guarantee.
Consequently, the arbitration clause contained in the contract between the contractor
and the project owner did not apply to the bank guarantee.
624. The above jurisprudence has been confirmed by the Supreme People’s Court in a
decision of 31 October 2017. (644) The facts were as follows. On 31 August 2011, Dalian
Huarui Heavy Industry Group Co. Ltd., an equipment supplier, entered into a supply
agreement with an Australian company, Forge Group Constructions Pty. Ltd. The contract
contained an arbitration clause which stipulated that ‘the place of arbitration is
Singapore and Arbitration shall be conducted in accordance with UNCITRAL Arbitration
Rules in force on the date of signature of this agreement’. Further, Attachment E to the
underlying contract stipulated that: ‘when the guarantor is a non-Australian company,
any disputes, claims arising directly or indirectly from, or in connection with, this
Contract shall be submitted for arbitration and finally settled by arbitration in
accordance with the Arbitration Rules of the Australian International Chamber of
Commercial Arbitration Centre’. Subsequently, the buyer changed from Forge Group to
Duro Felguera Australia Pty. Ltd. (Duro). On 18 September 2013, Dalian Huarui requested
the Liaoning branch of Bank of China to issue a letter of guarantee to Duro. The letter of
guarantee did not contain an arbitration clause.
625. In March 2016, Duro invoking a breach of the underlying contract asked Dalian Huarui
to suspend performance of the contract and to pay the amount of the bank guarantee
within a time limit or the contract would be terminated immediately. In April 2016, Duro
requested immediate payment of the guaranteed amount. Dalian Huarui therefore filed a
complaint against Duro and the Liaoning branch of Bank of China before the Liaoning First
Instance Court. It asked the Court to suspend the payment of the letter of guarantee. Duro
P 257 filed an objection to jurisdiction, but the Court dismissed it considering that the legal
relationship in the case was the guarantee legal relationship between the Liaoning
branch of Bank of China and Duro and not the underlying contractual relationship
between Dalian Huarui and Duro. Duro appealed to the Supreme People’s Court. The
Supreme Court rejected the appeal and upheld the original ruling. The Court decided
that the dispute was not subject to the arbitration clause in Attachment E in the absence
of the issuer’s consent. The arbitration clause was indeed an agreement between Dalian
Huarui and Duro and did not bind the bank. The First Instance Court of the Liaoning
province had therefore jurisdiction.
626. The same approach also prevails in Japan where it has been held that an arbitration
agreement entered into by the principal debtor will not extend to the guarantor. It is
suggested, however, that where the principal debtor is a closely held corporation that is
an alter ego of its owner, who has signed a guarantee, the owner might be bound by the
arbitration agreement entered into by the corporation, either on the basis of the theory
of piercing the corporate veil or by application of the general duty of good faith. (645)
627. The same line of reasoning was followed in Ecuador in a 2012 arbitral award in Cesar
Rohon v. Florifrut S.A. and Produbank S.A., issued under the Rules of the Centre of
Mediation and Arbitration of the Chamber of Commerce of Quito. (646) The claimant, a
stockholder of Florifrut S.A. (a flower exporter), guaranteed the repayment of a loan
granted by Produbank (Panama) S.A. to Florifrut S.A., with a time deposit certificate (TDC)
from the same bank. The original loan was granted in October 2006 and was renewed
several times. When the claimant ceased to be a stockholder of Florifrut in 2010, he
communicated to Produbank that the guarantee he had originally granted through the
TDC (of which he owned 34%) also ceased to be applicable from the next renewal of the
31
loan that took place on 30 September 2010. Therefore, 34% of the TDC funds that he
owned should not be used without his consent. In December 2010, Florifrut requested
Produbank to cash the TDC to pay the loan. As a result, the claimant lost his investment in
the TDC and he pursued his claim against Produbank and Florifrut in arbitration.
628. The respondents argued that the claimant did not have a right to pursue the claim in
arbitration since he had not signed the loan agreement including the arbitration clause.
The arbitral tribunal upheld the objection and found that it lacked jurisdiction on the
basis that the guarantee lacked any dispute resolution provision. As a result, the
claimant had to bring his claim before a civil court of Ecuador. According to the arbitral
tribunal: ‘the loan contract and the deposit contract for a term are independent and
autonomous with their own identity … Each one of the agreements … is independent and
P 258 has its own autonomy, and neither the loan agreement nor the term deposit contain a
clause linking one with the other, or empowering a third party to sue unilaterally subject
to the provisions of the loan agreement, without the consent or acceptance of the
signatories of the latter. … The Claimant did not execute the loan agreement as
guarantor, but the space concerning the joint guarantor was left blank. Therefore, it is not
possible to consider the Claimant as a party to the loan agreement and, as such, of its
provisions, one of them concerning the submission to arbitral jurisdiction’. (647)
629. The same jurisprudence prevails in Qatar. In a recent Qatari case, a subcontractor
had entered into a facility agreement with a bank, which also provided the main
contactor with a performance bond. The contract between the contractor and its
subcontractor contained an arbitration clause. The facility agreement provided for court
jurisdiction. The performance bond did not contain a dispute resolution clause. The
subcontractor had originally sued both the contractor and the bank in two separate court
proceedings, which were ultimately joined by the Court and dismissed for lack of
jurisdiction on account of the arbitration agreement. The judgment was subsequently
reformed. The Qatari Court of Cassation found that an arbitration agreement in a
construction contract cannot be extended to the guarantor of the contractor, i.e., the
bank. (648) The Court held that the scope of an arbitration clause cannot extend to a
contract that the dispute did not intend to adjudicate by arbitration or to a subsequent
agreement, unless there is an inseparable link between the two contracts. This was not
the case here. The Court decided that the performance bond was an independent
contractual relationship from the construction contract and could not be considered a
performance thereof. As such, the bank could not be considered a representative or an
agent of the subcontractor.
630. In Egypt, the Court of Cassation has also confirmed the independence of the bank
guarantee vis-à-vis the main agreement. Consequently, the arbitration agreement
contained in the main contract between party A and party B cannot be ‘extended’ to the
letter of guarantee issued by a bank in favour of party B, unless the letter of guarantee
itself refers to the arbitral clause. (649)
P 259
631. By contrast, in Sweden, in a decision of 16 May 2002, the Svea Court of Appeal (650)
held that the supplier, which was party to a contract containing an arbitration clause, was
entitled to rely on the clause to institute arbitration proceedings against a guarantor,
even though the guarantee itself did not include an arbitration clause. The supplier, a
Middle Eastern company, had entered into the agreement with a certain agro-industrial
grouping (the buyer) in one of the recently founded republics of the former Soviet Union.
The buyer was described as a corporate type enterprise in public ownership. The
agreement provided for arbitration by a sole arbitrator according to the Rules of the
Stockholm Chamber of Commerce. Following the conclusion of the agreement, the buyer’s
government issued a guarantee according to which the state guaranteed the buyer’s
payment obligations under the agreement (the guarantor). The guarantee did not include
an arbitration clause or any reference to the arbitration clause in the main agreement.
No payment was ever made by the buyer and its business was eventually dissolved. As a
result, the supplier instituted arbitral proceedings against the guarantor for the
outstanding moneys owed by the buyer. The guarantor challenged the arbitrator’s
jurisdiction. The arbitrator declared himself competent and ordered the guarantor to pay
the supplier the substantial outstanding sums of money. In reaching his decision, he
relied heavily on the fact that the buyer’s and the guarantor’s respective obligations were
identical and that the guarantor was aware of the presence of an arbitration clause in the
main agreement. The arbitral award was challenged before the Stockholm District Court,
which dismissed the action. A further appeal was made to the Svea Court of Appeal,
which arrived at the same conclusion.
632. A same approach was followed by the Spanish Supreme Court in a judgment of 6 May
2005. (651) In that case, the Court decided that the Spanish bank that had acted as
guarantor of a transaction was bound by the arbitration agreement contained in the
contract between a Spanish company and another foreign company. The Court justified
its decision on the basis that the clause or arbitration agreement embodied in a contract
implies its necessary extension to the parties directly involved in the execution of that
contract. It further stated that this interpretation found its justification in the Preamble
of the Arbitration Act of 2003, which, although not applicable, had relevance to that issue
referring as it does to an ‘arbitration clause by reference’ which can be defined as a
32
clause which is not included in the main contractual document, but rather in a separate
document, which is understood to be incorporated into the content of the first contract
by virtue of the reference it makes to the primary contract. This case has been criticised
by the Spanish doctrine. (652)
633. The Jurisprudence prevailing in a vast majority of civil law jurisdictions does not
P 260 seem to be followed in common law countries. In the US, in Kvaerner v. Bank of Tokyo-
Mitsubishi, (653) the United States Court of Appeals for the Fourth Circuit required a bank
to arbitrate disputes under a guarantee that did not have an arbitration clause. The main
contract, which contained a broadly phrased clause, had been concluded between an
employer and a joint venture, acting as general contractor, to design and construct a
waste-to-energy plant. A syndicate of banks, with one bank acting as lead agent, financed
the project. The parties to the joint venture executed guarantee agreements in favour of
the banks to guarantee performance of the joint venture under the construction
agreement. When the joint venture defaulted on its obligation to make payment to the
bank, the bank instituted a court action on the basis of the guarantees. The guarantors
then brought an action in the Federal District Court in North Carolina to compel the banks
to arbitrate. The District Court, whose decision was affirmed by the United States Court of
Appeals, ruled that the banks were required to arbitrate because the arbitration clause
of the construction agreement was incorporated into the guarantees, and the dispute
related to the construction agreement. This incorporation was accomplished, according
to the Court, by a provision in the guarantees that gave the guarantors the same ‘rights
and remedies’ as were available to the joint venture under the construction agreement.
634. A similar decision was rendered by the English High Court in Stellar Shipping Co. LLC
v. Hudson Shipping Lines. (654) A contract of affreightment (CoA) had allegedly been
concluded between Hudson and Phiniqia and a guarantee of the obligations under the
CoA had allegedly been given by Stellar to Hudson. Phiniqia allegedly failed to perform
the main agreement, and two arbitrations were initiated, respectively by Hudson against
Phiniqia and by Hudson against Stellar. In this second arbitration, the arbitral tribunal
decided that Stellar had indeed guaranteed the performance of the obligations under
the CoA and also decided that the arbitration clause incorporated into the CoA
encompassed Stellar’s obligations to guarantee the performance by Phiniqia of its
obligations under the main agreement. The English Court upheld the award confirming
the tribunal’s view that a guarantor who endorses a contract is generally bound by the
arbitration clause contained in that contract. The Court held that ‘it is commercially
sensible because the parties were entering into a tripartite relationship (…) and would
reasonably be expected to intend that all disputes arising out of that relationship be
dealt with in a like manner’. To reach this conclusion, the Court referred to the decision of
Lord Hoffmann in the Fiona Trust v. Provalov decision analysed above at paragraph 543.
635. An opposite decision was, however, rendered by an ICC Tribunal in Case no.18830.
(655) A Chinese buyer, a Singapore seller and an Indonesian supplier had entered into an
agreement for the sale and purchase of certain products to be supplied by the
Indonesian supplier. The contract that contained an ICC arbitration clause providing for
the application of Singapore law was signed by the Chinese buyer, the Indonesian
P 261 supplier and on behalf of the Singapore seller by its director who also undertook to
personally guarantee all obligations of the Singapore seller under the contract. A dispute
arose and the Chinese buyer commenced ICC arbitration against the Singapore seller and
the director, who objected to the jurisdiction of the tribunal, as he was not a party to the
arbitration agreement. While acknowledging the close relationship between the contract
and the guarantee, the majority of the tribunal concluded that the personal guarantee
did not contain explicit or specific incorporating language that could be deemed to
make the arbitration clause part of the guarantee. Nor could the guarantee and the
contract be said to be so intertwined to be deemed one composite document. The
guarantee was executed by the director for the Chinese buyer only. The obligations of the
director were secondary to those of the Singapore seller. Each of the documents created
different rights and obligations and such rights were exercisable at different stages.
636. In various ICC cases, the issue also arose whether the arbitral tribunal, seized of a
dispute under the main agreement, could issue decisions relating to the validity of the
guarantee or of the call upon the guarantee, entered into by the debtor and the
guarantor. In ICC Case no. 3896 of 1982, (656) various European companies started
arbitration proceedings against an Asian respondent in relation to the construction of a
power plant, alleging defaults of payment. The claimants had terminated the agreement.
Bank guarantees had been issued by Banque de l’Union Européenne in favour of the
respondent. These guarantees created a direct contractual relationship between the
bank and the respondent. They contained the following arbitration clause: ‘Any dispute
arising under this guarantee shall be settled in accordance with the contractual
provisions relating to the settlement of disputes.’
637. In the course of the arbitration, the claimants requested from the arbitral tribunal a
decision that the bank guarantees were null and void and that the call to the guarantees
should be considered fraudulent and abusive. The arbitral tribunal decided that it could
not and did not intend to decide a dispute arising among the parties to the bank
guarantees, but that this did not prevent the arbitrators from discussing issues relating to
these guarantees and, among other things, the issue of their validity between the parties
33
to the arbitration. The arbitral tribunal decided that it had jurisdiction to decide
between the parties to the arbitration the issue of whether the call to the guarantees was
abusive and also to decide in due course, together with the merits, whether the
guarantees – in the relationship between claimants and respondent – were to be
considered null and void.
638. The same result, on the basis of the same reasoning, was reached by the arbitral
tribunal in ICC Case no. 5721 of 1990. (657) The case concerned a dispute that had arisen in
relation to a construction project in Egypt. An employer had concluded a main agreement
with X Egypt (main contractor) and had appointed SA (claimant), a European company, as
subcontractor. SA had concluded two subcontracts with X Egypt, which had presented
P 262 itself as a subsidiary in formation in Egypt of a US company X USA and was in fact a
branch – without legal personality – of the latter. X Egypt did not perform its obligations,
and therefore the employer decided to expel it from the site and to give the direct
responsibility of the project to SA. X Egypt then tried to call several first-demand
guarantees, which had been supplied by SA. SA started an arbitration against various
parties, including X USA and X Egypt, and requested the arbitral tribunal to decide that
the subcontracts had been terminated and that the letters of guarantee were null and
void. The arbitral tribunal decided that it had jurisdiction to decide these issues. It
pointed out that a bank guarantee – a contract concluded between the guarantor and the
beneficiary – is independent of the underlying agreement. (658) However, since the bank
guarantee finds its foundation in the latter, the arbitrators have jurisdiction in the
context of the relationship between the donneur d’ordre and the beneficiary. In the words
of the arbitral tribunal:
It is not disputed that the relationships created between the guarantor (the
bank) and the beneficiary and between the donor or principal (the applicant)
and the sub-guarantor (the European bank) are not covered by the arbitration
clause contained in the contracts of June 1983. The arbitration is therefore only
concerned with the relations between the applicant and X.
The arbitral tribunal therefore lacks jurisdiction to give orders to either of the
banks. On the other hand, it does have jurisdiction to rule whether the
beneficiary of the letters of guarantee, X, is entitled, with respect to the
applicant, to take advantage of the guarantees.
It also has jurisdiction to rule whether the guarantees are valid in the context
of the relations between the principal and the beneficiary. These guarantees
have their foundation in the contracts of June 1983 and are linked, for the
parties to the arbitration, to the validity, the scope and the termination of the
underlying contracts. …
P 263
The arbitral tribunal may rule on the beneficiary’s right to call the guarantees.
It is also entitled to rule on the illicit nature of a call upon the guarantee …
(659)
639. In ICC Award of 2002 in Case no. 10964, (660) the claimant, a Dutch company, had
concluded a construction contract with the respondent, a Korean company, according to
which it undertook to perform works relating to the installation of a commercial port. The
respondent had previously signed a contract with a joint venture, the main contractor,
according to which it was entrusted with part of the works as subcontractor. According to
the terms of the construction contract, which contained an arbitration clause, the
claimant had the obligation to supply a performance guarantee. An irrevocable letter of
credit was therefore issued in favour of the respondent. The parties were in disagreement
concerning the issue of whether the guarantee had been prorogated or renewed. The
claimant therefore requested from the sole arbitrator sitting in Rotterdam a declaration
that the guarantee had expired, was therefore no longer in force and that the respondent
could not call upon it. In limine litis, the respondent argued that the arbitrator had no
jurisdiction upon it, in particular on the basis that the guarantee did not contain an
arbitration clause and that the dispute did not fall within the scope of the arbitration
clause included in the construction contract. The sole arbitrator decided that even if the
mechanism of the guarantee was independent and autonomous from the construction
contract, it had jurisdiction to decide a dispute relating to the right of the beneficiary to
call upon the guarantee.
Subsection V: The Parties Are the Same and They Have Concluded Two or More
Contracts, One or Several of Them Without an Arbitration Clause, or Containing a
Clause That Gives Jurisdiction to National Courts, or Another Incompatible
Arbitration Clause (Court Decisions)
I. Connected Agreements. Absence of an Arbitration Clause in One of Them
640. The situation where the parties are the same and have concluded two or more
P 264 agreements, one without an arbitration clause or containing a clause that gives
jurisdiction to national courts, or another incompatible arbitration clause, is quite
common and has been dealt with by a great number of courts and arbitral tribunals. We
34
will analyse in this subsection the court decisions and in the following subsection the
arbitral awards.
641. In the cases that will be examined below, the courts have generally concluded that if
two agreements between the same parties are closely connected and one finds its origin
in the other, or is the complement or the implementation of the other, the absence of an
arbitration clause in one of the contracts does not prevent disputes arising from the two
agreements from being submitted to an arbitral tribunal and decided together. (661)
642. In a situation involving a series of agreements between the same parties, the main
problem is determining whether these contracts constitute an indivisible whole
(ensemble contractuel unique). The solution will rest on an interpretation of the will of the
parties. As was pointed out by Laurent Aynès, the Court will recognise the existence of an
indivisible whole ‘if each of the partial agreements exists only by the preceding and calls
on the following; a will, unique in its aim, is expressed in a variety of complementary
instruments. It is also the existence of a subordination that makes it possible to identify
the group formed by a main contract and a sub-contract …’. (662)
643. In a case decided by the French Supreme Court on 14 May 1996, (663) an exclusive
distribution agreement had been concluded by two companies and contained an
arbitration clause providing that any dispute resulting from the agreement or its
termination, or relating thereto, would be decided through arbitration. A dispute had
arisen, and the parties had concluded an additional agreement providing for the
payment of commissions to the distributor for sales performed outside the scope of the
distribution agreement. This second agreement did not contain any arbitration or
jurisdiction clause. A dispute arose under the second agreement and the distributor
started an action before the Commerce Court of Bobigny. The Court upheld its jurisdiction
considering that the second agreement was not an accessory of the first one since the two
agreements concerned different types of transactions and the absence of any explicit
reference to the arbitration clause in the second agreement excluded any acceptance of
the said clause in the context of this second agreement. The French Supreme Court
reversed, deciding that the second agreement was based on a breach of the first
agreement and was thus its complement, with the consequence that it fell within the
scope of the arbitration clause contained in the first contract.
P 265
644. In another case decided by the Paris Court of Appeal on 28 June 2018, (664) Mr L, a
commercial agent, had collaborated with Del Monte from 1973 to 1979 and had received
further missions starting 2006 through successive contracts of limited duration providing
in appended general conditions that all disputes would be submitted to arbitration
according to the Rules of the International Center for Dispute Resolution (ICDR) in Miami,
Florida. In August 2005, Del Monte informed Mr L that it would not renew the contract and
Mr L started an action before the Commerce Court of Paris to obtain damages. The Court
decided that it did not have jurisdiction given the existence of an arbitration clause. Mr L
appealed the decision before the Court of Appeal which confirmed the judgment. Mr L
contended that the last contract of 2015 and its appendix had not been signed by Del
Monte and that this demonstrated that he had not accepted the arbitration clause
contained in that appendix. He also submitted that the arbitration clauses included in
the previous contracts could not apply to the dispute since those contracts had expired
and could not apply to a subsequent contract which did not refer to the former ones. The
Court noted that the provisions of the 2013 contracts were identical to the previous ones
and therefore concluded that there was an established business relationship between
the parties, that since the arbitration clause in the previous agreements had been
accepted by Mr L, they constituted the agreement of the parties and Mr L could not
contend that he did not know the existence of the arbitration clause. Mr L, who said that
he was himself arbitrator, had therefore agreed that all disputes arising from its business
relationship with Del Monte would be decided through arbitration.
645. In another case decided by the Paris Court of Appeal on 22 November 2012, (665) a
company Evrygis, in order to access the network of retail businesses of the ED Group, had
concluded the same day with the company ED five agreements, including a franchise
agreement and a computer system agreement which contained an arbitration clause and
a contract of lease management which did not contain any dispute resolution clause. A
dispute arose under the lease management agreement and Evrygis started court
proceedings. ED objected to the jurisdiction of the Court invoking the arbitration clause
contained in the franchise agreement. The jurisdictional objection was admitted by the
Court but later dismissed by the Paris Court of Appeal which considered that since the
franchise agreement was the central element of the contractual structure, its arbitration
clause could be extended to all the other contracts.
646. The existence of a close connection between the various agreements was also
central to the decision of the French Cour de Cassation in its decision of 29 January 2014.
(666) The Congolese company Commissions Import-Export and the Republic of Congo had
P 266 concluded from 1984 to 1986 various contracts of public works and supplies of
materials including jurisdiction clauses. They subsequently signed on 14 October 1992 a
protocol which determined the payment terms of various sums which remained
outstanding and contained an arbitration clause. Subsequently, on 23 August 2003, the
35
parties concluded a second protocol whose purpose was to determine the payment
terms of various debts which were covered by the 1992 protocol, as well as other debts. It
did not contain a dispute resolution clause. Since the Republic of Congo did not comply
with the terms of this second protocol, the company Commissions Import-Export started
an arbitration on the basis of the arbitration clause contained in the 1992 protocol to
obtain the condemnation of the Republic of Congo to the payment of all the outstanding
amounts. The arbitral tribunal (667) declared that it had jurisdiction. The Republic of
Congo started an action to set aside the award. The action was dismissed by both the
Paris Court of Appeal and the Supreme Court. Since the 2003 protocol did not contain a
dispute resolution clause, and since it found its origin in the non-compliance with the
terms of the 1992 protocol and could be considered as its complement, the Court
considered that this second agreement entered into the scope of the arbitration clause
contained in the 1992 protocol. The Court also noted that the latter expressly provided in
its Article 8 that it replaced all the agreements previously concluded between the
parties.
647. In a previous case decided by the French Supreme Court on 5 March 1991, (668) the
dispute arose from a share transfer agreement concluded between A and B and
containing a guarantee in favour of the purchaser. It contained an arbitration clause. Two
months later, another agreement was concluded by the same parties to the effect that
after the establishment of a final accounting, the debt of the Seller amounted to a
certain sum. This second agreement did not contain any arbitration clause. A dispute
arose and the purchaser started an action before the French courts. The French Supreme
Court considered that the second contract was only the implementation of the first, that
both formed a whole and that therefore the force obligatoire of the arbitration clause
included in one agreement extended to the other.
648. The same approach was confirmed in a decision of the French Supreme Court dated
30 March 2000. (669) In this case, a businessman residing in France agreed to sell his
shares in two companies to a German firm. The share sale agreement contained an
arbitration clause and stipulated that the price had been determined in accordance with
the companies’ December 1995 accounts and would be revised should there be a
difference between the 1997 and the 1995 accounts. The parties also entered into an
escrow agreement with two French escrow agents whereby they would jointly hold nine
million French francs in escrow and would pay the money to the Seller a month after the
price had finally been determined. A dispute arose between the French seller and the
German buyer over the price. As a consequence, the Seller initiated two sets of
P 267 interlocutory proceedings before the French courts. Among other matters, he applied
for a court order providing that the escrow agents should release the sum they were
holding. The escrow agreement did not contain an arbitration clause. However, the share
sale agreement referred to the escrow agreement by providing that the nine million
French francs would only be released after the final determination of the price. The
German buyer argued that as the arbitration clause purported to apply to all disputes
arising from the share sale agreement, it also applied to the escrow agreement. Contrary
to this, the Seller pointed out that the application relied solely upon a contract that
contained no arbitration clause and that the Court therefore had jurisdiction to order the
release of the money.
649. The French Supreme Court held that (a) there was a link between the share sale
agreement and the escrow agreement; and (b) the arbitration clause contained in the
first agreement also applied to the escrow agreement. Therefore, the Supreme Court
ruled that French courts did not have jurisdiction to order the escrow agents to release
the nine million French francs that they were holding.
650. The same reasoning was applied by the Paris Court of Appeals in a decision of 23
November 1999. (670) A Dutch company, G, had sold a large quantity of rice to a Congolese
company, A. The contract contained an arbitration clause and provided for the
application of French law. Following the war in Congo, the two companies subsequently
agreed that the Dutch company would repossess the goods and would repay the price
that it had already received. A dispute arose and the Congolese company started an
arbitration against G. The latter claimed that the arbitration tribunal had no jurisdiction
since the dispute arose from the second agreement which did not contain an arbitration
clause. The arbitral tribunal rejected the argument considering that there had been only
one agreement whose initial terms had been subsequently novated. An action to set
aside was introduced against the award but was rejected by the Paris Court of Appeals,
which did not rely upon the argument regarding the novation, but rather based its
decision on the implicit will of the parties and on the existence of two ‘complementary or
at least connected’ agreements, the second being ‘the follow-up and the consequence’ of
the first. (671)
651. In another decision of the Paris Court of Appeal of 21 February 2002, (672) the Société
de Location de Matériel (SLM) and the company Groupe des Sablières Modernes (GSM)
had entered into two contracts: one contract of rental of a tug boat and two barges and
one subsequent contract of transportation concerning the same equipment. The first
contract contained an arbitration clause, the second one did not. SLM had an insurance
contract with a company Navigation et Transports which later became Groupama
Transports. Following an accident, the insurance company indemnified SLM and became
36
subrogated in its rights. It started an arbitration against GSM. The arbitral tribunal
P 268 decided that it had jurisdiction and condemned GSM. GSM started an action to set
aside the award considering in the first place that the arbitral tribunal did not have
jurisdiction over the second agreement which did not contain an arbitration clause. The
Court concluded that even if the first contract was a rental agreement and the second
one a contract of transportation, they concerned one economic transaction, having the
same finality, i.e., putting at the disposal of GSM the same tug boat and barge to perform
the transportation of gravel. The Court noted that the second contract had been
concluded shortly after the first one and that, in the absence of any contrary provision,
the silence of the parties had to be interpreted as the expression of their common will to
submit an eventual dispute to arbitration.
652. The same approach prevails in Singapore. One example is Tjong Very Sumito and Ors
v. Antig Investments Pte. Ltd. (673) In that case, the appellants and the respondent had
entered into a Share Sale and Purchase Agreement (SPA) which contained a clause
providing for disputes to be resolved by arbitration. The same parties subsequently
entered into four further Supplemental Agreements. Each Supplemental Agreement was
expressed to be supplemental to the SPA. A dispute arose as to whether a payment
arrangement under the fourth Supplemental Agreement (that did not contain an
arbitration clause) was subject to the arbitration clause in the SPA. The Court of Appeal
held that it was since the fourth Supplemental Agreement ‘could not exist independently
without the SPA; nor would it make sense on its own. Like the first three supplemental
agreements, its purpose was to supplement and/or modify certain terms of the SPA’. (674)
The dispute therefore arose in connection with the SPA. The Court concluded that the
intention of the parties to be bound by the arbitration clause in the SPA extended to the
fourth Supplemental Agreement.
653. In Lebanon, in a decision of 19 June 2007, (675) the Mount Lebanon Court of First
Instance had also to address the issue. One of the shareholders in two companies sold his
shares in these two companies to a third company in consideration of a specific amount
of money by virtue of a contract dated 27 August 1999. On the same date and based on the
aforementioned agreement, another agreement was signed between the Seller and the
purchasing company in which the latter undertook to pay a specific amount of money to
be added to the amount determined in the first agreement, the payment having to be
made in accordance with the Rules set forth in the first agreement. Pursuant to the
second agreement, the heirs of the Seller filed a case before the Mount Lebanon Court of
First Instance requesting, by virtue of the second agreement, the payment of the balance
of the shares sold by their bequeather which the purchasing company failed to pay.
654. The first agreement contained an ICC arbitration clause. The second agreement did
not include such a clause. The purchasing company objected to the jurisdiction of the
Court alleging that the arbitration clause in the first agreement also applied to the
P 269 disputes arising from the second agreement. The Court determined that what was
important was to determine the intention of the parties and concluded that in this case,
the parties had clearly intended that the arbitration clause in the first agreement
extended to the second one. It deduced this explicit intention from the following
evidence: the second agreement explicitly referred to the first one; the two agreements
had been signed on the same date; the second agreement pertained only to the price
and to its increase and stated that the payment thereof had to take place in accordance
with the conditions and time limits determined in the first agreement; the two
agreements were interdependent, the second agreement existing only as long as the first
one remained in existence and the performance of the second one was conditional on the
performance of the first one; and finally, the inclusive and complete referral in the
second agreement to the first one necessarily meant the referral to the arbitration clause
contained therein.
655. Economic connection and intention of the parties were also central to the decision of
the Supreme Court of Portugal of 10 March 2011. (676) The parties had entered into three
contracts: a promissory sale and purchase agreement for real estate, which contained an
arbitration clause; a sale and purchase agreement for the real estate in question, and a
promissory agreement for payment of part of the price of the real estate. The third
contract contained an explicit reference to the first one but did not contain an
arbitration clause. One of the parties filed suit against the other in court over an alleged
default on the terms of the third contract. The defendant objected, stating that the
arbitration clause in the first contract meant that the matter could not be referred to
court but only to an arbitral tribunal. The plaintiff objected. The First Instance Court held
that the parties should have resorted to arbitration. The Lisbon Court of Appeal reversed
the decision considering that the arbitration agreement in the first contract applied only
to that contract. The Supreme Court disagreed with the Lisbon Court of Appeal and found
in the defendant’s favour. The Court noted the closeness in time of the contracts, which
were signed within a day of each other, as well as the obvious functional and economic
connection between them, which was expressed particularly in the reference in clause 6
of the third contract which incorporated the first one, providing that ‘the parties
expressly undertake the obligations included in the sale promissory agreement entered
into by them … particularly those arising out of the so-called Phase 2, said sale
promissory agreement being annexed to this agreement’. The Court considered that it
was clear that despite the autonomy of the contracts, the arbitration clause in the first
37
contract applied to the third one.
656. What is the situation when the parties perform additional services not contemplated
in the first agreement or continue to perform after the expiration of the agreement or
continue to perform after a settlement which does not contain an arbitration clause?
These issues were addressed in several court decisions. In a case decided on 29 March
1990 by the Commercial Court of Bobigny, (677) a French company had concluded two
contracts with a company from Mauritius, one for a feasibility study, the other one for the
P 270 preparation of a tender for the exploitation of a mine. The contracts contained an ICC
arbitration clause. A dispute arose between the parties in relation to work which, in part,
had been supplied beyond the scope of the two contracts. The Court decided that the
case should be decided through arbitration since these subsequent contracts – which did
not contain an arbitration clause – were concluded ‘in the frame’ of the two original
agreements and were to be considered as an accessory thereof.
657. In Malaysia, in a decision of the High Court of Kuala Lumpur of 5 May 2008, (678) the
defendant had applied for a stay of the proceedings pending arbitration. At issue was
whether extended project services negotiated by the parties after the execution of a
technical services agreement fell within the ambit of the arbitration clause provided for
in the agreement. The Court answered in the affirmative. It held that the plaintiff had
authorised in writing the performance of the extended project services under the terms
of the technical services agreement. These authorisations were not rescinded or
superseded either in writing or orally, and the defendant relied on the written
authorisations for the continued performance of its extended project services beyond the
term of the technical services agreement. As such, the extended project services
performed by the defendant were governed by the technical services agreement, which
necessarily included the arbitration clause.
658. In the US, in a decision of the District Court for the Western District of Wisconsin of 20
June 2016, (679) Roberts and Hortau had entered into a Distribution Agreement under
which Roberts agreed to distribute certain Hortau agricultural products. The agreement
was governed by Canadian law and provided for arbitration under the Rules of the
Canadian Commercial Arbitration Centre. When the Distribution Agreement expired, the
parties continued to do business with each other under an implied distributorship
agreement. A dispute arose between the parties when Hortau allegedly failed to pay
certain service commissions or repurchase inventory. Roberts therefore filed a complaint
before the Circuit Court for Portage County, Wisconsin. Hortau moved to dismiss the
complaint or to stay the proceedings pending arbitration. The Court denied the motion
finding that Hortau failed to show that a written arbitration agreement was in force
between the parties.
659. According to the Court, while it is true that when parties to a contract continue their
course of dealing after the contract’s expiration, an implication arises that they have
mutually assented to a new contract containing the same provisions, it remains that
arbitration agreements must be in writing and Hortau adduced no evidence that the
terms of the implied distribution agreement were written down. Moreover, it could not be
said that the original arbitration agreement continued to apply to disputes arising under
the new implied business relationship. The arbitration clause expressly referred to
disputes arising under ‘the present contract’; also, when the parties intended a specific
P 271 provision to survive the expiration of the Distribution Agreement, they said so
explicitly, as they did for instance in respect of two provisions governing the use of
trademarks and intellectual property. No similar carve-out existed for the arbitration
agreement. Finally, the current dispute did not ‘arise from’ that agreement which had
expired.
660. In France, in a decision of 2 April 2014, (680) the French Supreme Court confirmed
that the arbitration clause inserted in the initial agreement survived the settlement – not
containing a dispute resolution clause – concluded by the parties, unless otherwise
agreed by the latter. The arbitration clause continued to apply to the disputes arising
from the settlement itself, its existence, validity, scope, the consequences of any non-
performance, the liability of the parties as well as to the disputes arising from the
remaining contractual obligations in case of partial settlement.
661. This is not the solution which was adopted by the Singapore High Court in Coop
International Pte. Ltd. v. Ebel S.A. (681) In that case, the parties had entered into a
distribution agreement which contained an arbitration clause. Subsequently, the parties
terminated the distributorship agreement by entering into a termination agreement that
did not contain an arbitration clause. They then entered into a settlement agreement. A
dispute arose as to the payment of sums under the settlement agreement as a result of
which Coop commenced proceedings in the Singapore courts. Ebel applied for a stay of
the proceedings on the basis of the arbitration agreement in the distributorship
agreement. Coop objected, stating that the dispute did not arise out of the
distributorship agreement which had been terminated; instead, the parties’ respective
rights were now governed by the settlement agreement. Before reaching its decision, the
High Court enunciated the following principles:
If the parties subsequently enter into a new agreement or a series of new
agreements which do not have any arbitration clause, and the dispute
38
concerns these new agreements and not the original distributorship
agreement, it becomes much less clear (a) whether the dispute in fact has any
connection at all with the original agreement; and (b) whether the arbitration
clause contained in the original agreement is applicable at all to the later
agreements . . . It is therefore a question of construction whether the new
agreement is merely supplemental to or a variation of the first agreement, or
it is one which is wholly separate and independent of the first agreement . . .
Where two agreements can be regarded substantially as one agreement rather
than two separate agreements, then it is likely that the arbitration clause in
one agreement would govern disputes arising out of the other agreement.
However, if in reality, the two agreements are distinct and separate
agreements which cannot be viewed properly as one agreement with varied or
additional terms, it would be much less likely for an arbitration clause in one
agreement to be construed as having been imported or incorporated into the
other agreements without there being some appropriate words in either
agreement indicating that there was such an intention by the parties to have it
P 272
construed in that way. There is no presumption that the parties, after having
agreed to refer to arbitration disputes arising out of one agreement must
necessarily have agreed also to refer disputes in all subsequent agreements to
arbitration. (682)
662. On the basis of these principles, the High Court decided that the settlement
agreement was not a variation of the distributorship agreement since it did not make any
sense to vary or supplement an agreement which had been terminated. At the time the
settlement agreement was concluded, it was clear that the parties considered the
distributorship agreement ‘dead’. The absence of a new arbitration clause or any
reference to the arbitration clause in the distributorship agreement was an indication
that the parties did not intend to resolve disputes under the settlement agreement by
arbitration. (683)
663. An issue to which courts are sometimes confronted is whether the dispute under a
relationship for which no arbitration clause has been provided can be considered as
falling within the scope rationae materiae of an arbitration agreement contained in
another agreement between the same parties. In England, in the Queen’s Bench Decision
Fletamentos Maritimos SA v. Effjohn International BV, (684) the plaintiff and the defendant
entered into a Cooperation Agreement to set up a cruise business. The agreement
contained an arbitration clause. The parties subsequently purchased a vessel in the
name of a Bermudian company X. Disputes arose between the plaintiff and the defendant
and they referred them to arbitration on the basis of the arbitration clause contained in
the Cooperation Agreement. The plaintiff alleged that the defendant had failed to pay its
share of the costs of the acquisition of X’s vessel and sought interest on the outstanding
sum. The defendant challenged the arbitrators’ jurisdiction. The Court held that the
plaintiff’s claim was within the arbitrators’ jurisdiction. Indeed, the evidence showed that
the purchase of the vessel was within the context of the Cooperation Agreement
containing the arbitration clause.
664. The situation is different if the dispute relates only to the one agreement that does
not contain an arbitration clause. (685) In a case that was decided on 8 March 1995 by the
Paris Court of Appeals, (686) X and Y had concluded a franchise agreement that did not
contain an arbitration clause. Following difficulties of payment by the franchisee, X and Y
concluded three additional agreements. Two of these did not contain any arbitration
P 273 provision. The third one, which provided for the transfer of the shares of the franchisee
to the franchisor in the event of default of payment up to a certain date, contained an
arbitration clause. However, the option had expired when a new dispute arose between
the parties. It could not therefore fall within the scope of this expired agreement. The
Court considered that the dispute concerned the execution by the franchisee of its
obligations in the context of the franchise agreement which did not contain an
arbitration clause. The decision of the Commercial Court upholding its jurisdiction was
confirmed by the Court of Appeals.
665. A similar conclusion was reached by the French Supreme Court in a decision of 14
May 2014. (687) Ten partners of the société des Mousquetaires which had been excluded
from the company by various decisions taken in general assembly had started court
actions to obtain the payment of the value of their shares. The société des Mousquetaires
objected to the jurisdiction of the Court on the basis of the arbitration clauses contained
in the franchise agreements between itself and the various claimants. The objection was
upheld by the Court of Appeal, but the decision was set aside by the Supreme Court
considering that the quality of holder of a franchise agreement and the quality of partner
in the company originated in two distinct and totally different legal relationships, even if
they were between the same parties. Therefore, the arbitration clause contained in the
franchise agreement was obviously inapplicable to the dispute relating to the rights of
claimants as partners.
666. However, if a dispute arises under two totally separate agreements, and only the
first one contains an arbitration clause, courts will entertain jurisdiction over disputes
brought in the context of the second contract. This was decided by the Paris Court of
Appeals in a decision of 21 June 1990 in a case where the French company, Honeywell Bull,
39
had concluded with the Venezuelan company, Sistemas Ancater, a contract for the
exclusive distribution of its computer products in Venezuela (containing an arbitration
clause) and subsequently a maintenance agreement for limited interventions in Ecuador
outside the scope of the distribution agreement in Venezuela and without any reference
to the latter. (688)
II. Incompatible Arbitration Clauses
667. In a case decided by the Paris Court of Appeal on 16 November 2006, (689) the
parties had concluded three contracts. The first two contracts, a loan agreement and an
agreement for the assignment of rights, indicated Paris, France, as the seat of the
arbitration and the third one, a second loan agreement, provided for Madrid, Spain, as
the seat of the arbitration. A dispute arose and Empresa de Telecommunicaciones de
P 274 Cuba (ETECSA) started an arbitration against Telefonica Antillana and Bancomext
before the ICC on the basis of the arbitration clauses contained in the first two contracts.
The arbitral tribunal decided that it had jurisdiction on a counterclaim filed by
Bancomext on the basis of the third contract given the existence of a clear and
unequivocal connection between the two loan agreements and considering also that
these two contracts were compatible at the sole difference of the seat of the arbitration.
ETECSA filed a request to set aside the award. The Paris Court of Appeal granted the
request deciding that the Tribunal had neglected the will of the parties clearly expressed
in favour of distinct procedures, one arbitration in Paris for the disputes arising from the
first loan agreement and the assignment agreement and one arbitration in Madrid for the
disputes relating to the second loan agreement.
668. In the same vein, in a dispute which was submitted to an ICC arbitral tribunal whose
award was subsequently confirmed by the Swiss Federal Supreme Court in a decision of
20 February 2015, (690) the parties had concluded three distinct contracts. The first one, a
sales agreement, referred disputes to ICC arbitration with seat in Zurich, Switzerland, and
the second one, a debt transfer agreement, to arbitration in Zurich under the Swiss Rules.
The third contract, a Memorandum of Understanding, did not contain a dispute resolution
clause. A dispute arose and one of the traders submitted it to an ICC arbitral tribunal
claiming damages under all three contracts. The arbitral tribunal ruled that it had no
jurisdiction to deal with claims under the debt transfer agreement. The Swiss Federal
Court found the plaintiff’s challenge to this ruling to be inadmissible. The arbitrators had
assessed all available evidence and concluded that the parties had deliberately
selected two distinct arbitral tribunals for disputes under the respective contracts.
Disputes under the debt transfer agreement (which provided for Swiss Rules arbitration)
could therefore not be dealt with by the ICC Tribunal.
669. The question may also arise regarding the point at which two arbitration clauses
become incompatible. And furthermore, what happens if the agreements composing the
group of contracts contain not only arbitration clauses but also at the same time clauses
giving jurisdiction to ordinary courts? In its decision of 11 April 2002, (691) the Paris Court
of Appeals was confronted with both issues. The parties had concluded a framework
agreement and three addenda, according to which JDA Software and JDA Worldwide
granted Kiabi a licence to use software and provided various services connected to its
implementation. Three weeks later, the parties concluded a fourth addendum, whose
purpose was to clarify the conditions of the licence. The framework agreement contained
an ad hoc arbitration clause providing for arbitration in the French language under the
UNCITRAL Rules and a tribunal composed of three arbitrators. The fourth addendum
provided for a similar ad hoc arbitration under the UNCITRAL Rules but provided for a
tribunal composed of one or three arbitrators and further provided that the seat of the
arbitration would be Paris and that the procedure would be conducted in English, the
language of the addendum. The framework agreement and its fourth addendum also gave
P 275 exclusive jurisdiction to French state courts in very ambiguous terms (in the arbitration
clause for addendum No. 4 and in a separate clause for the framework agreement).
670. An arbitration was started by Kiabi against JDA Software and JDA Worldwide. The
arbitral tribunal rendered a preliminary award on jurisdiction and on the language of the
procedure. It decided that it had jurisdiction on the basis of a combination of the two
arbitration clauses. Concerning the language of the procedure, the arbitrators decided
that it would be French for the framework agreement and the first three addendums, and
English for addendum No. 4. However, the parties would be authorised to express
themselves in English or French in both their written and oral submissions.
671. The respondents started an action to set aside the preliminary award. The Paris Court
of Appeals dismissed the action. In accordance with case law, (692) the Court considered
that the jurisdiction clauses, which did not refer to the arbitration clauses, did not ‘ruin’
the content of the latter. It further confirmed the jurisdiction of the arbitral tribunal on
the basis of the two clauses. It pointed out, however, that these two clauses had distinct
scopes of application: the dispute arising from the framework agreement and the first
three addenda belonged to the clause contained in the framework agreement, and the
dispute arising from addendum No. 4 had to be referred to the clause contained in the
latter.
672. As far as the language of the arbitration was concerned, the Paris Court of Appeals
decided that the arbitrators did not exceed their mandate by providing – to satisfy the
40
requirement of the European Convention on Human Rights – that notwithstanding the fact
that French would be the language of the procedure for the disputes falling within the
arbitration clause of the framework agreement and English for the disputes falling within
the scope of the clause contained in the fourth addendum, the parties could express
themselves in both languages in their written and oral submissions. It should, however,
be noted that the parties had provided in the Terms of Reference that the issue of
language of the arbitration would be decided by the arbitral tribunal.
673. In his comment, Professor Train approves the solution and points out that two
arbitration clauses are not incompatible by the sole circumstance that they are different.
The compatibility test amounts to the determination of the will of the parties as to the
respective scope of the various clauses. In other words, one has to determine whether the
parties intended to renounce the extension of the main arbitration clause by providing a
different arbitration provision in another contract of the group. Clauses will be
considered incompatible if the difference relates to a fundamental element of the
arbitration agreement: the institutional or ad hoc nature of the arbitration, the seat, the
P 276 number of arbitrators, the appointment procedure. If, however, the difference relates
to a secondary element (law applicable to the merits, steps to be taken before the
initiation of the procedure, etc.), the clauses will be considered compatible. The
difference of language is certainly a delicate issue. In this particular case, the Paris Court
of Appeals considered that it did not make the clauses incompatible. The decision is
based on the particular circumstances of the case. It is not at all certain that it can be
generalised to all cases where the arbitration clauses contained in the various
agreements provide for arbitration in different languages.
III. One or More Contracts Containing an Arbitration Clause and One or More Contracts
Containing a Jurisdiction Clause
674. In the presence of a dispute relating to one or more contracts containing an
arbitration clause and one or more contracts containing a jurisdiction clause, courts and
arbitral tribunals usually refrain from deciding under the arbitration clause contained in
one agreement disputes falling into the scope of another agreement containing a
jurisdiction clause. In a case decided by the Brussels District Court on 6 September 2007,
(693) the companies M and S had entered into a Protocol of Agreement in view of a
merger. The Protocol of Agreement contained an arbitration clause. Subsequently, the
parties had entered into various agreements, an agreement of temporary association, a
subcontract and a loan agreement which contained distinct dispute resolution clauses.
The agreement of temporary association on which one claim was based contained an
arbitration clause different from the one contained in the Protocol of Agreement. The
subcontract and the loan agreement contained a clause attributing jurisdiction to
national courts. A dispute arose under the various agreements and an arbitration was
started on the basis of the clause contained in the Protocol of Agreement. The arbitral
tribunal decided that the Protocol of Agreement was void and that M had to pay certain
amounts to S. M started an action to set aside the award, alleging that the tribunal had
exceeded its jurisdiction. The Brussels District Court annulled the award. It considered
that notwithstanding the fact that all the agreements were part of one economic
transaction, they all contained different dispute resolution clauses and that
consequently, the tribunal could not base its jurisdiction on the arbitration clause
contained in the Protocol of Agreement to decide claims based on the other contracts.
675. The same reasoning was followed by the French Cour de Cassation in a decision of 6
November 2013. (694) A French company Bioalliance Pharma had concluded with a Dutch
company Spepharm Holding a governing agreement for the international distribution of a
medicine. It contained an arbitration clause providing for ICC arbitration in Paris. It also
provided for the constitution of a joint company to which would be granted the rights of
P 277 commercialisation of the medicine in the relevant territory as well as the necessary
exploitation licences. The Joint Company was set up and the implementation agreements
were concluded. They contained specific dispute resolution provisions, including clauses
giving jurisdiction to national courts. A dispute arose between the parties and Bioalliance
initiated ICC arbitration on the basis of the clause included in the governing agreement.
The arbitral tribunal decided that it did not have jurisdiction to decide the disputes
arising from the implementation agreements as well as those relating to the Joint
Company. The decision was confirmed by the Paris Court of Appeal which mentioned that
it did not result from the record that the common intention of the parties had been to
have the arbitration clause of the governing agreement prevail over the jurisdiction
clauses included in the implementation contracts. Had such a common intention been
established, the solution could have been different.
676. The French Cour de Cassation confirmed again its jurisprudence in a decision of 12
February 2014. (695) The parties had included in their partnership agreements a clause
giving jurisdiction to a commerce court. However, they had included an arbitration clause
in a contract of transfer of shares. Considering that the subject matter of the two
contracts was different and that the parties had intended to distinguish them by contrary
jurisdictional clauses, the French Supreme Court decided that the arbitration clause
included in the share transfer agreement was inapplicable to the disputes arising from
the partnership agreements.
677. In Brazil, the Superior Court of Justiça reached a similar decision on 17 May 2017. (696)
41
It granted recognition of an award of the Sugar Association of London, rendered in
respect of a 2008 contract for the sale and purchase of cane sugar. The parties had
subsequently concluded in 2009 a novation agreement containing a forum selection
clause. The tribunal decided that it appeared from the text of the clause that it only
applied to disputes arising from the novation agreement and that the 2008 agreement
remained in force.
678. In more complex cases, an issue may arise as to which dispute resolution provision
prevails over the other. This is the issue to which the Swiss Federal Supreme Court was
confronted in its decision of 17 January 2013. (697) On 6 June 2009, the parties and W
GmbH (W) had entered into an agreement entitled ‘Employment Agreement’ according to
which FC X undertook to hire Y as coach. Article 7 of the agreement provided that any
dispute arising from or related to the contract would be submitted exclusively to the
Court of Arbitration for Sport in Lausanne (CAS) and resolved definitely in accordance
with the Code of Sports-related Arbitration. Section 25 of the same contract, entitled
P 278 ‘Governing law’, provided that the agreement was to be governed and construed in
accordance with Swiss law and that each of the parties submitted to the non-exclusive
jurisdiction of the Swiss courts. Subsequently, the parties (at the exclusion of W) had
entered into a second agreement which also concerned the claimant’s employment as
chief coach for the same period than the first agreement. This time, it provided that the
parties would not submit their disputes to courts of general jurisdiction but rather would
use the appropriate bodies of a professional football league of the football federation of
the country concerned. Finally, on 26 May 2010, the parties and W had entered into a
‘Settlement Agreement’ which provided for the termination of the Employment
Agreement and payment of certain sums to Y. The agreement provided that it was to be
construed in accordance with Swiss law and that each of the parties submitted to the
non-exclusive jurisdiction of the Swiss courts.
679. The payments to the claimant agreed in the Settlement Agreement failed to
materialise, and consequently, on 16 August 2010, Y filed an arbitral request with the CAS
against FC X. The latter challenged the jurisdiction of the CAS. The CAS, however, decided
that it had jurisdiction and ordered the defendant to pay Y certain amounts. The FC X
filed a civil law appeal before the Swiss Federal Tribunal asking the tribunal to annul the
award and deny the jurisdiction of the CAS to adjudicate the dispute. The Federal
Tribunal annulled the award. In the first place, the Federal Tribunal pointed out that
renouncing access to the state courts drastically limits legal resources and that,
consequently, a restrictive interpretation is required in case of doubt. With respect to the
contrary dispute resolution provisions in the Employment Agreement, the Federal Court
pointed out that there was no indication that the jurisdictional clause had to be
understood as a pure substitute jurisdiction for the case where the arbitration clause
would have no effect and that, furthermore, the interpretation of the Employment
Agreement according to the principle of reliance did not show a clear hierarchy between
the two clauses; and no clear intent of the parties to remove certain disputes from the
jurisdiction of the state courts and to submit them to an arbitral tribunal. The Federal
Court further noted that the Settlement Agreement merely contained a non-exclusive
jurisdiction clause. It did not contain an arbitration clause. The Court expressed its
disagreement with the CAS panel that an arbitration clause by reference to paragraph 7
of the Employment Agreement could be seen in paragraph 5.1 of the Settlement
Agreement which provided that ‘The Employment Agreement dated 6 June 2009 will have
no further effect thereafter save in respect of those clauses expressed to apply following
the Termination Date.’ It noted that according to the case law of the Federal Tribunal, a
jurisdiction clause contained in an out-of-court settlement agreement between
contractual parties substitutes the arbitration clause contained in the contract
previously concluded and renders it ineffective unless the parties express a different
intention in their settlement. Contrary to the position of the arbitral panel, paragraph 8
of the Settlement Agreement clearly led to the conclusion that it was intended to retain
the jurisdiction of the state courts. Consequently, there was no valid arbitration clause
and the CAS, called upon to decide the dispute, was wrong to accept jurisdiction.
P 279
680. In Singapore, in Econ Piling Pte. Ltd. v. NCC International A.B., (698) the High Court
resolved the issue in favour of the jurisdictional clause. The two parties had entered into
a Joint Venture Agreement which contained an arbitration clause. Less than a year later,
Econ Piling faced difficulties and the two parties then entered into a variation agreement
which contained an exclusive jurisdiction agreement in favour of the Singapore courts. A
dispute arose and the issue before the High Court was which one of the two dispute
resolution clauses was operative. After observing that the purpose of the variation was to
‘reconstitute, in very significant ways, the commercial relationship between the parties’,
the Court held that:
it is counterintuitive for two contracts that are meant to be read together to
have different dispute resolution regimes. Therefore unless there is a clear
and express indication to the contrary, it may usually be assumed that parties
to two closely related agreements involving the same parties and concerning
the same subject matter would not have intended to refer only disputes
arising under one contract to court and not those arising under the second
42
contract (699) ... A different approach would result in the wholly uncommercial
position that some disputes under what is in substance a composite
agreement between the parties, are to be referred to arbitration while others
are to be resolved in court. This difficulty becomes especially acute, even
impossible, in situations such as the present where a subsequent agreement
varies an earlier agreement, and where it is therefore conceivable, even likely,
that many disputes might straddle both contracts. (700)
681. On this basis, the Court held that the exclusive jurisdiction clause in the variation
agreement applied to all disputes arising under both the Joint Venture Agreement and
the variation agreement. By contrast, in a decision of 29 November 1991, (701) the Paris
Court of Appeals disregarded the jurisdiction clause contained in one of the agreements,
considering that the agreements under reference constituted a contractual whole. The
Court was indeed confronted with the situation where one of the connected agreements
contained an arbitration clause and the other one contained a clause giving jurisdiction
to ordinary courts. In the first place, a protocol containing an arbitration clause had been
concluded between two car distributors. They had decided to unify their distribution
network in France and to entrust it to a new company, through the conclusion of contracts
of leasing-management (location-gérance) of their business. The said contracts were
signed two years later. They contained a clause giving jurisdiction to the courts of Paris.
An action was started before the latter. On appeal, the Paris Court of Appeals decided in
favour of arbitral jurisdiction:
In the presence of a protocol constituting the basic agreement between the
parties, and lease-management contracts signed in performance of this
framework agreement and in accordance with the terms and conditions it had
laid down, it is worth pointing out that such agreements constitute a
contractual whole, a group of contracts, in which the lease-management
P 280 appears as a means of implementing the protocol. The arbitration clause,
which reveals the common will of the parties to the contract, concerns all
disputes pertaining thereto and in particular those relative to the
consequences of the termination of the lease-management contracts
concluded in performance of said protocol.
The scope of the arbitration clause as an expression of the will of the parties is
far wider than that of a jurisdiction clause, in that it has the effect of vesting
the arbitrators with the power to judge, thereby excluding the intervention of
State courts, whereas the jurisdiction clause only designates the court which is
territorially competent to decide the disputes.
682. It was indeed obvious that the two contracts, a framework agreement and its
implementation, constituted a group, but this determination was not enough to solve the
issue before the Court. As was rightly pointed out by Laurent Aynès, the two parties signed
two agreements because they did not want to have one single contract. The second
agreement was concluded two years after the first one. The Court should have
determined whether the dispute was the type of controversy that the parties to the
framework agreement had in mind when they drafted this agreement. According to Aynès,
this implies a two-step approach:
(1) Is the framework agreement enforceable in itself or does it necessarily imply the
conclusion of additional agreements? In the latter case, the disputes that the
parties intended to submit to arbitration could only be those that would arise from
the subsequent contracts (contrats d’exécution);
(2) Proceeding also to an analysis of the dispute itself: does it call into consideration
the elements that were agreed to in the framework agreement?
In this respect, the Court of Appeals decided that the dispute concerning the
consequences of the termination of the leasing-management contracts related to the
initial agreement since the termination called into question the whole contractual
relationship between the parties. (702)
683. The decision of the Court of Appeals can certainly be criticised. It would probably
have been correct if the second agreement did not contain a clause giving jurisdiction to
the Paris courts. In the presence of such a provision, the Court of Appeals should probably
have upheld its jurisdiction. This is what it did in a slightly different context, in a decision
of 9 December 1987, (703) ‘notwithstanding the existence of a unified contractual scheme’.
The economic interest grouping ACADI (composed of stockbrokers associated for the
development of computer programs) and Thomson-Answare had signed various
agreements for the supply of programs for stockbrokers. ACADI complained about the
quality of the programs and stopped paying Thomson’s invoices. Thomson therefore
started an arbitration procedure in accordance with a clause inserted in the parties’
initial agreement. Their subsequent agreements did not contain an arbitration clause.
ACADI, on the other hand, started a procedure before the Paris courts to obtain the
P 281 termination of all the contracts and the payment of damages. The Paris District Court
decided that it did not have jurisdiction, relying on the phrasing of the initial agreement
which referred to ‘all disputes’ arising therefrom and considering that all the contracts
were closely connected and that the subsequent agreements were implementations of
43
the main contract. The Paris Court of Appeals set aside the first decision and upheld its
jurisdiction to decide the case. It pointed out that one of the subsequent agreements
contained a clause giving jurisdiction to the courts of Paris. According to the Court of
Appeals, this ‘new’ provision could only be interpreted as a waiver of the original
arbitration clause, since the parties were undoubtedly aware that the disputes that could
be generated by the various agreements were indivisible (indissociables).
684. The Superior Court of Justice of Brazil recently issued a judgment in Paranapanema
which is to a large extent similar to the decision rendered by the Paris Court of Appeals of
29 November 1991. (704) The dispute arose in the context of the financial restructuring of
Paranapanema S/A (Paranapanema), which signed a ‘loan agreement’ with the banks BTG
Pactual S/A (BTG) and Santander Brasil S/A (Santander’) (jointly the ‘Banks’), pursuant to
which the banks would lend BRL 200 million to Paranapanema. Clause 9 of the loan
agreement provided that the debt could be paid in two different manners: first by
payment in national currency or, second, by issuing new shares in the company
(Paranapanema) in favour of the banks. Paranapanema opted for the second form of
payment. The loan agreement contained an arbitration agreement in Clause 21, which
provided that: ‘Any disputes, conflicts, issues, discrepancies or controversies of any kind
… shall be settled by arbitration, governed by Brazilian law ….’
685. Concurrent with the subscription of Paranapanema shares by the banks,
Paranapanema and the banks entered into additional agreements, named ‘Swap
Agreements’. The purpose of these agreements was to ensure that if the price of the
shares were lower than the minimum value contractually agreed during the reference
period set in the loan agreement, Paranapanema would pay the difference to the banks,
thus assuring a minimum of market value per share. Contrary to the loan agreement, the
Swap Agreements did not include an arbitration clause, but contained a choice of forum
clause, attributing exclusive jurisdiction to the courts of the District of Sao Paulo to
assess any dispute relating to the above-mentioned Swap Agreements.
686. After the banks subscribed to Paranapanema’s new shares, Paranapanema notified
the banks that it would not comply with its obligations under the Swap Agreements for
the payment of the difference of the market value of the shares. It alleged that this
obligation was null and void. Santander submitted to Paranapanema a payment request
under the Swap Agreements and, subsequently, initiated arbitral proceedings against
both Paranapanema and BTG. Among other things, Santander sought the declaration of
the validity of Clause 9 of the loan agreement as well as the declaration of the validity of
Paranapanema’s obligation under the Swap Agreements, i.e., to pay the difference
P 282 between the market value of the shares and the value of the credit. The arbitral
tribunal issued an award declaring the validity of the obligation assumed by
Paranapanema in Clause 9 of the loan agreement and ordering Paranapanema to pay a
certain amount in favour of Santander. Paranapanema started setting aside proceedings
before the Sao Paulo lower courts invoking among others the lack of jurisdiction of the
arbitral tribunal on the basis that the contract under which Santander filed its claims was
the Swap Agreements which did not contain an arbitration clause, but a choice of forum
clause. The lower court rejected the allegation of lack of jurisdiction, considering that the
arbitration agreement contained in the loan agreement extended its effects to the Swap
Agreements. The award was, however, set aside due to a violation of the parties’ equality
in the constitution of the arbitral tribunal. Santander and BDG filed an appeal before the
Sao Paulo of Appeals, which dismissed the appeals and upheld the terms of the first
instance judgment in its entirety.
687. Two special appeals were filed before the Superior Court of Justice (STJ), one by BTG
and the other one by Paranapanema. One of the questions that the Court had to address
was the issue of the rationae materiae extension of the arbitration agreement contained
in the main contract to accessory agreements. The STJ rejected the special appeals on
this issue. It decided that: ‘having identified the existence of connected contracts, the
extension of the arbitration clause contained in the main contract to the ‘Swap’
agreements becomes possible, since they form a single economic transaction. In the
system of connected contracts, the contract considered to be the main contract
determines the rules that shall be followed by the other agreements that are connected
to it. It is not reasonable to consider that an arbitration clause contained in a main
contract does not extend its effects to the others’. As pointed out by the commentator,
the decision can be criticised. He notes that under Brazilian law, there can only be a
valid arbitration if the parties consent to arbitrate their disputes, even if the consent is
implicit. (705) The economic unity of the transaction and the interdependence of the
contracts are not sufficient criteria to justify the consolidation under the arbitration
clause of all disputes arising under the various agreements when some of them contain
jurisdiction clauses. Disregarding the choice of forum and consolidating all disputes
under the arbitration clause contained in one agreement is contrary to the will of the
parties and constitutes a violation of the principles of party autonomy and pacta sunt
servanda. If the parties chose to organise their economic relationship in more than one
agreement with different dispute resolution regimes, that choice must be respected.
Subsection VI: May an Arbitral Tribunal Hearing a Dispute That Arises Principally
from a Specific Contract Decide Issues Arising from Connected Agreements Entered
into by the Same Parties When One of them Does Not Contain an Arbitration Clause
44
or Contains a Clause Which Gives Jurisdiction to National Courts, or Another
Incompatible (706) Arbitration Clause? Arbitral Awards
P 283
I. Identical Arbitration Clauses

688. If the dispute submitted to the arbitral tribunal arises principally from one
agreement, which is closely connected to another contract containing an identical
broadly phrased arbitration clause, the tribunal will usually decide that it also has
jurisdiction to decide disputes arising under this second contract. However, in ICC Case
no. 7893 of 1994, (707) the arbitral tribunal reached a different conclusion. The claimant
(licensor) and the respondent (licensee) had concluded a License and Technical
Assistance Agreement. The claimant alleged that the respondent had breached the
agreement. According to the respondent, the allegation was unfounded. It resulted from
another agreement concluded by the parties ten years later that the respondent had
been granted the rights disputed by the claimant. Both contracts contained an ICC
arbitration clause that did not specify the seat of the arbitral tribunal and referred to
disputes arising from the interpretation and execution of ‘this’ agreement. The claimant
objected to the jurisdiction of the arbitrators on the second agreement. The arbitral
tribunal agreed, considering that its jurisdiction was based on the arbitration clause
contained in the first agreement and that the clause limited its scope to the disputes
arising therefrom. (708) In other words, in this case, the fact that each contract had its
own arbitration clause was for the arbitral tribunal an argument in favour of an
individualisation of the disputes arising from the two contracts, while for most
arbitrators, it is rather an argument in favour of a consolidation of the disputes arising
from both agreements. This award may therefore be considered quite unusual.
II. One or More Contracts Contain an Arbitration Clause (Identical or Compatible); the
Other(s) Does (Do) Not
689. As will be seen from an analysis of the following cases, arbitral tribunals that have
jurisdiction under an arbitration clause contained in an agreement concluded between
two or more parties will generally extend their jurisdiction to disputes arising under a
closely connected agreement between the same parties that does not contain an
arbitration clause, at least as long as the second agreement does not contain a clause
giving jurisdiction to ordinary courts and may be considered an implementation or
amendment of the first agreement. More restrictive positions are the exception rather
than the rule.
690. Of course, no real problem arises if, in a contractual chain, the parties have
P 284 extended the scope of the arbitration clause contained in the last contract to all the
previous agreements they entered into, as was the case in ICC award no. 6070. (709) Such
a situation is however relatively rare.
691. In the ICSID case Soabi v. Republic of Senegal, (710) the Republic of Senegal had
entered into an agreement with a Panamanian corporation (the developer) for the
construction of low-cost dwellings on land provided by the Government and to be leased
by the developer. The developer undertook to create a Senegalese corporation to be the
owner of a plant to be erected by it for the manufacture of prefabricated elements for
the construction programme. The first agreement was therefore followed by an
agreement between the Republic of Senegal and Soabi, a Senegalese corporation in the
process of formation (the Soabi Agreement). It repeated the undertakings with respect to
the building programme, including those concerning the negotiation of a loan to be
granted under the Senegalese Investment Code. None of these contracts contained an
arbitration clause. Subsequently, the Government and Soabi concluded the
Establishment Agreement relating to a plant for the prefabrication of elements of
reinforced concrete. It provided for ICSID arbitration.
692. A dispute arose between the parties. Soabi claimed that it had met all its
obligations but that the Government had defaulted on its obligations to make land with
site utilities available. On the other hand, the Government asserted that Soabi had not
conformed to the contract prices for the units and had failed to meet its obligations with
respect to financing. The Government filed objections to the jurisdiction of ICSID claiming
that the dispute was not within the scope of the arbitration clause in the Establishment
Agreement. It based its objections on the fact that the agreement for the construction of
15,000 dwelling units, which it was said to have breached, was not part of the
Establishment Agreement; the dispute between the parties concerning the alleged
breach of that contract was not just a dispute relating to the execution of that agreement
or to rights and obligations resulting therefrom, the only category of disputes that the
parties had consented to submit to ICSID.
693. According to Soabi, this was not an obstacle to the jurisdiction of ICSID: the first
agreement and the Soabi Agreement were preliminary contracts followed by a definitive
contract, the Establishment Agreement. The first one was no more than a statement of
intent. According to the Government of Senegal, the absence of an arbitration clause in
the first two agreements proved the will of the parties to submit to the jurisdiction of the
Senegalese courts, which was in no way changed by the arbitral clause in the
Establishment Agreement that was aimed exclusively at the construction of the plant.
45
694. Finally, the arbitral tribunal considered that the agreements between the parties,
other than the Establishment Agreement, were implicitly encompassed by the
Establishment Agreement and that the disputes related to their execution or to the rights
and obligations arising thereunder therefore fell within the scope of the arbitration
clause contained therein. It pointed out that the parties had defined in the three
P 285 agreements the totality of the project which they envisaged carrying out jointly: to wit,
the construction of a prefabrication plant in a first phase followed by the construction of
15,000 dwelling units in a second phase. The construction of the prefabrication plant
envisaged by the Establishment Agreement constituted the realisation of the first phase
of the project for the construction of the 15,000 dwelling units. The parties’ will did not
therefore relate to the execution of two independent projects, but to the execution of a
single project consisting of two closely related parts, one of which was the technical
precondition for the implementation of the other and therefore had to precede it.
695. The Soabi award was criticised by various commentators. (711) The three contracts
undoubtedly formed a unified contractual scheme. But, on the other hand, it would have
been more justified to conclude to the incorporation of the Establishment Agreement in
the first two agreements than the contrary. The first two agreements concerned the whole
transaction, while the Establishment Agreement only concerned the execution of part of
it, namely the setting up of the prefabrication plant. In other words, for these
commentators, even if the solution reached by the tribunal was justified, the reasoning
was subject to criticism.
696. The Soabi award was referred to in an interim award in ICC Case no. 7929 of 1995, (712)
in which two Finnish companies, A and its wholly owned subsidiary B (collectively
referred to as A), had started an arbitration in Zurich against C, an Oregon Corporation. A
and C had entered into a series of agreements including a Partnership Agreement (the
1986 Agreement) containing an arbitration clause and a Cooperation Agreement (the 1987
Agreement) not containing such a clause. C objected to the jurisdiction of the arbitral
tribunal. The latter rendered an interim award in which it decided that it had jurisdiction
over any claims arising from the 1986 Agreement; that as far as the 1987 Agreement was
concerned, it had jurisdiction over any claims arising from it ‘if and to the extent that this
is shown to be part of a unified contractual scheme with the 1986 Agreement but not from
the 1987 Agreement on its own’. (713) To define the phrase ‘unified contractual scheme’,
the arbitrators referred to the words used by Craig, Park and Paulsson: ‘Complex
situations where numerous contractual documents relate to one organic relationship’.
(714)
697. The same issue had to be subsequently decided in ICC Case no. 8420 of 1996, (715) a
case where a Syrian agent (claimant) and an Italian supplier (respondent) had concluded
P 286 an agreement whereby the agent undertook to promote the sale of the supplier’s
products. Four years later, the parties had entered into two secondary contracts (a
protocol and a Customs clearance letter). The main agreement contained an ICC
arbitration clause providing for arbitration in Geneva. The secondary contracts contained
no arbitration clause. However, disputes arising from the agency agreement and the
secondary contracts were all submitted to a sole arbitrator. The supplier objected to the
tribunal’s jurisdiction over the protocol and the Customs clearance letter.
698. The sole arbitrator decided that he did not have jurisdiction over disputes arising
from the secondary contracts. He referred in the first place to cases in which the validity
of arbitration by a tacit reference was accepted on the ground that the subsequent
secondary contracts were just an implementation, amendment or fulfilment of the
previous principal contractual relationship or constituted the necessary consequence of
the first principal contract, a consequence already known at the signing of the latter.
However, he concluded his analysis of the facts of the case by a determination that the
two secondary contracts represented neither a fulfilment nor an amendment of the
previous contractual relationship but something completely new which gave the parties
different duties and obligations that were not directly connected with the agency.
Therefore, the arbitrator did not have jurisdiction over a protocol and a Customs
clearance letter that did not form an economic unit (unité économique) with the agency
agreement, and were neither an accessory agreement (contrat accessoire) nor a necessary
and previously agreed consequence of the agency agreement. (716)
699. The very close connection between two contracts has often been the basis on which
an arbitral tribunal has consented to extend its jurisdiction under one contract to a
second agreement not containing an arbitration clause. In case no. 60/1980 of the Court
of Arbitration at the Chamber of Commerce and Industry in Sofia, (717) a sales contract
containing an arbitration clause and a loan agreement not containing such a clause had
been concluded between a Bulgarian seller (claimant) and a German buyer (defendant).
The German enterprise refused to repay the loan, contending a set-off based on the sales
agreement. The Bulgarian enterprise sought recovery of the loan before the German
courts. The Court of Appeal in Nuremberg held that because of the narrow link between
the sales contract and the loan agreement, the arbitration clause contained in the former
extended also to disputes arising out of the latter. This decision was affirmed by the
German Federal Supreme Court.
700. The Bulgarian enterprise subsequently started arbitration in Sofia. The arbitration
court examined its jurisdiction ex officio and followed the view of the German courts in
46
stating that the sales contract and the loan agreement were mutually connected and that
the loan was given in order to finance the purchase under the sales contract.
Furthermore, the loan agreement had been contemplated at the time the sales contract
was concluded. In this context, the loan agreement could be regarded as a clause of the
sales contract, albeit embodied in a separate agreement.
P 287
701. In ICC Case no. 5546 of 1994, (718) an arbitral tribunal sitting in Geneva also decided
to extend to a subsequent settlement agreement the arbitration clause contained in two
sales contracts that were at the origin of the dispute, the drilling materials supplied
being defective. The settlement agreement could be analysed as a complex contract of
supply and installation of new machinery in which the parties had also agreed to
negotiate at a later date, to be determined by them, a contract of supply of spare parts
necessary for the maintenance of the machinery. The arbitral tribunal considered that
the settlement agreement determined the modalities of performance of the obligation of
supply and installation contained in the main agreements. It was therefore part of it, an
extension thereof. There was consequently a direct relationship between the settlement
agreement and the original contracts containing the arbitration clause. The arbitrators
pointed out at the same time that usually arbitration clauses contained in sales
contracts do not apply to all subsequent relationships between the same parties when
there does not exist a close relationship between the new agreements and the original
contracts. In this case, the settlement agreement also envisaged new relationships
between the parties that were foreign to the dispute. The arbitral tribunal therefore
decided, that except for these new relationships, the settlement agreement was an
extension of the original sales contracts and could not be separated therefrom.
702. The arbitral tribunal proceeded to the same extension in ICC Case no. 5759 of 1989.
(719) The parties (the main contractor and a subcontractor) were bound by a subcontract
and a Memorandum of Agreement, whose purpose was to determine the modalities of
performance of obligations already contained in the subcontract and to settle various
issues connected to it. The Memorandum was therefore complementary to the
subcontract containing the arbitration clause.
703. In ICC Case no. 5675 of 1988, (720) the parties had concluded a contract in 1966 for the
distribution of chemical products. It provided that any dispute relating to the agreement
would be submitted to ICC arbitration. In 1985, the principal shipped products to the
distributor but the invoices remained unpaid. The principal therefore started an ICC
arbitration procedure. The distributor disputed the jurisdiction of the sole arbitrator. The
latter decided that it had jurisdiction on the basis of German law, the law of the seat of
the arbitral tribunal. Even if the orders did not contain an arbitration clause and did not
P 288 refer to the main agreement, the deliveries had been made on the basis of the 1996
framework agreement and therefore entered into the scope of the arbitration clause.
704. The same approach was followed by an arbitral tribunal (721) that had jurisdiction
under an arbitration clause contained in a protocol in which the buyer of the company
undertook that the chairman of the Board would have his director’s mandate renewed.
The renewal took place and the director’s contract was reconfirmed. However, sometime
later, the director was dismissed and his contract was terminated. He started an
arbitration procedure and the arbitral tribunal rendered an award on the claim for
damages based on both the breach of the undertaking contained in the protocol and the
termination of the contract of employment (which did not contain an arbitration clause).
An action to set aside was introduced before the Paris Court of Appeals. The Court of
Appeals dismissed the claim considering that the arbitrators rightly decided that at the
occasion of the sale of the shares, the parties had intended to establish between
themselves a new relationship, which included the confirmation of the contract. The
dispute was therefore linked to the obligations undertaken in the protocol and hence fell
under the arbitration clause.
705. The close interrelation between the second disputed agreement that did not contain
an arbitration clause and the first one that did contain such a clause also explains the
decision of the arbitral tribunal in ICC Case no. 5954 of 1991. (722) A contract for the
management of agricultural land (contrat de gestion en régie intéressée) had been
concluded in 1981 among the three claimant companies and the two public-entity
defendants. A second contract had been concluded in 1984 among the same parties to
transform, subject to various conditions precedent, the initial management contract into
a long-term lease (bail emphytéotique). The arbitral tribunal decided that it had
jurisdiction to decide whether the second agreement had entered into force. It further
determined that two conditions precedent had not been fulfilled and that, therefore, the
1981 contract remained valid. It consequently rendered a decision on the liability of the
defendants in relation to the non-fulfilment of the conditions.
706. In ICC Case no. 7210 of 1994, (723) a state of Western Africa had granted a foreign
company the right to exploit a mining zone. In this context, four contracts had been
concluded the same day:
(1) a mining concession agreement according to which the grantee (claimant), in
consideration of the exploitation rights, agreed to abandon to the state (defendant)
one-third of the production: the contract was governed by the law of that state;
47
P 289
(2) a loan agreement, governed by the law of the UK, to finance the purchase by the
state (borrower) of the results of the underground drilling performed by a third
party, part of which also had to be communicated to the grantee (lender);
(3) a promissory note in which the state acknowledged its debt towards the grantee
resulting from the loan, and providing for penalties in case of late payment of the
instalments: the note was also submitted to the law of the UK;
(4) an escrow agreement, governed by Swiss law, appointing an escrow agent to whom
the parties had to deliver the borrowed money and various documents and who
would be in charge of the processing of the extracted minerals and of their
distribution between the parties. Each agreement, with the exception of the
promissory note, contained an ICC arbitration clause. In the arbitration, the
claimant claimed the repayment of the loan in principal and interest and sought an
order requiring the state to perform the concession agreement.
707. The arbitral tribunal upheld its jurisdiction in relation to all the agreements
including the promissory note. It did so, not on the basis of the common purpose of the
four agreements and consequently of the existence of a unified scheme, but on the basis
of the close relationship existing between the loan and the promissory note.
708. In ICC Case no. 4367, (724) the defendant contended that the claimant’s claim for
interest arose out of, or was related to, promissory notes that were contracts, separate
and independent from the basic supply agreements, which provided for arbitration. The
promissory notes did not contain any arbitration clause. According to the defendant, the
arbitral tribunal did not therefore have jurisdiction. The tribunal disagreed and pointed
out that a bill or note does not discharge a debt unless it is part of the contract that it
shall do so, for a mere promise to pay cannot be regarded as an effective payment. It
added that in the case under reference, the promissory notes were not considered
payments in discharge of obligations under the contract. Under the terms of the contract,
the parties intended that they were to operate as conditional payments. The tribunal
added that in any event, even if the promissory notes were separate contracts, it would
find that the arbitration clause was sufficiently broad in scope to embrace disputes
among the parties arising from them. (725)
709. In ICC Case no. 5117 of 1986, (726) the arbitration took place in Paris. The dispute
related to the performance of two agreements for the study, prefabrication and
construction of pipes in Mexico. Both contracts contained an identical arbitration clause
providing for ICC arbitration. In the course of performance, the contracts were followed
by orders relating to contractual works. The defendant challenged the jurisdiction of the
arbitrators in relation to two of these orders because they did not contain an arbitration
P 290 clause. The arbitral tribunal decided that it had jurisdiction because the two orders
did not have any autonomy. They were to be considered amendments to, or complements
of, the initial agreement and were therefore an integral part thereof. It was not necessary
that they also contain the arbitration clause included in the original agreement. The
solution would have been different if the amendment or appendix to the original
agreement had included another provision for the solution of the dispute arising
therefrom. The arbitral tribunal would then have had to determine whether the parties
had the intention to modify the original arbitration clause or if the amendments should
be considered a contract that, even though accessory to the main agreement, would
enjoy total legal autonomy.
710. On the other hand, the sole circumstance that the additional agreements – in
relation to which a dispute arose – were concluded in the context of the original
contractual relationship between the parties is not enough to justify the extension to the
former of the arbitration clause contained in the main agreement. The will of (or
acceptance by) the parties to submit to arbitration the disputes arising from the
additional, complementary, agreements, which is the basis upon which the arbitrators
may decide to extend the clause, must be determined by reference to the purpose of the
main contract, as evidenced by the arbitral tribunal’s decisions in ICC Case nos 7844 of
1994, 8420 of 1996 and 7305 of 1993.
711. In ICC case no. 7844, (727) the claimant (an Austrian company) and the respondent
were bound by a subcontract framework agreement containing an arbitration clause and
concluded under the condition precedent of attribution of the main contract to the
claimant. The parties were also bound by two exclusivity agreements (which did not
contain an arbitration clause): a special exclusivity agreement providing for the duty of
the respondent, in the perspective of the main contract, to deal only with the claimant;
and a general exclusivity agreement according to which the respondent guaranteed to
the claimant the commercialisation in Austria of (a certain category of) its products. A
dispute arose after the respondent directly concluded a contract for the project with
another company that had been awarded the main contract. The claimant started an
action before the Commerce Court of the Canton of Zurich, which declared itself
incompetent and referred the parties to arbitration. It indeed considered that the
special exclusivity agreement fell within the scope of the arbitration clause of the
framework agreement. None of the parties subsequently disputed the jurisdiction of the
arbitral tribunal.
48
712. In his award on the merits, the sole arbitrator, sitting in Zurich, decided that the
special exclusivity was only one aspect of the subcontract framework agreement. The
purpose of both agreements was to organise the relationship of the parties in relation to
a particular project. This was not the case of the general exclusivity which only concerned
sales, while the main project concerned services. The two exclusivities therefore
concerned two separate contractual relationships between the parties. Consequently,
P 291 only the special exclusivity followed the same regime (including the arbitration clause
and the condition precedent) as the framework agreement. The arbitrator finally decided
that the conclusion of a contract by the respondent directly with the main contractor
could not be criticised in the context of the general exclusivity, nor on the basis of the
special exclusivity since the condition precedent did not materialise. But, on the other
hand, he decided that according to Austrian law, the claim was justified, to the extent
that the realisation of the condition precedent had been prevented by the respondent.
713. In ICC case no. 8420, (728) the parties were bound by an agency contract, according to
which the agent undertook to promote the products of the principal in the Territory (an
Arab country) and was to receive a percentage of the contracts concluded as a result of
its services. The agency contract contained an ICC arbitration clause. The parties
subsequently concluded two assistance agreements, which did not contain such a clause:
a first contract according to which offices and personnel were put at the disposal of the
principal in the Arab country concerned in order to facilitate the performance of a supply
agreement concluded with a third party at the agent’s intervention; and a second
contract, linked to the first, providing that the agent would be in charge of the various
performances (shipment and Customs clearance) necessary for the implementation of the
supply agreement. The agent – whose commissions remained unpaid – started an
arbitration against the principal, both on the basis of the agency agreement and of the
two other contracts.
714. The sole arbitrator sitting in Geneva declined its jurisdiction to hear the claims
connected to the two additional agreements. He considered that:
[t]he two secondary contracts do represent neither a fulfillment nor an
amendment of the previous contractual relationship, i.e. the agency
agreement, but something completely new, which gives the parties different
duties and obligations which are not directly connected with the agency. One
thing is to promote the sale of products, another thing is ‘renting’ premises
and personnel for carrying out a contract of sale […] as well as taking care of
shipments and customs clearance. (729)
In other words, the assistance in the performance of the supply agreement could not be
considered a ‘necessary consequence’ of the agency agreement. It did not therefore fall
within the scope of the arbitration clause.
715. In ICC case no. 7305, (730) the dispute, submitted to an arbitral tribunal sitting in
Rome, opposed SubA and SubB, the Italian subsidiaries of two competing multinationals
A and B. A and B had concluded a Memorandum of Agreement, according to which SubA
and SubB would create a service company that would distribute A and B’s products in
Italy and would also perform the commercial, administrative and accounting services
necessary for the joint distribution. The two subsidiaries did not set up the service
P 292 company but in order to achieve the objectives determined by their parent companies
in the Memorandum of Agreement concluded three contracts of the same duration (three
years):
(1) a commercial services agreement, according to which SubA would provide
commercialisation and distribution services to SubB for its products;
(2) an administrative services agreement, according to which SubB would provide
administrative and accounting services to SubA for its products;
(3) a sublease agreement, by which SubB agreed to put one-half of its offices at the
disposal of SubA for the distribution activity.
The parties also executed mandates that were necessary for the performance of the
services agreements and agreements of exchange of personnel also concluded by the
parties.
716. Less than two years later, A transferred the control of SubA to a company that was not
an affiliate. Consequently, SubB terminated all contracts with SubA, invoking a breach of
the services agreements that imposed the agreement of the transferee in case of such
transfer. SubA then started an arbitration procedure on the basis of the two – identical –
arbitration clauses contained in the services agreements in order to have the tribunal
declare them terminated as a consequence of SubB’s breach.
717. The arbitral tribunal decided not to extend the arbitration clause to the sublease
agreement which was not linked to the services agreements by a relation of dependence.
However, the extension was granted for the mandates and the agreements for the
exchange of personnel, the arbitral tribunal considering that they were necessary for the
performance of the services agreements. They therefore fell under the scope of the
arbitration clause.
718. On the other hand, in ICC case no. 8203 of 1996, (731) an arbitral tribunal sitting in
49
Paris extended its jurisdiction to all the contracts concluded by the parties although only
one of them contained an arbitration clause. Company X (claimant), wishing to acquire a
majority participation in another company Y (the fourth respondent) concluded with its
majority shareholders (the first, second and third respondents) a Memorandum of
Agreement (protocole d’accord) in which the parties determined the conditions of
negotiation of the acquisition, the conditions according to which the claimant would have
a loan granted by a third party to the fourth respondent in order to acquire two other
companies (not parties to the arbitration) as well as the conditions according to which
the loan should be secured. It did not provide anything concerning the nature and the
number of agreements that its implementation would require. Various agreements were
subsequently concluded and a dispute arose in relation to the financial situation of one
of the companies purchased by claimant, which the first, second and third respondents
had guaranteed.
P 293
719. The arbitral tribunal upheld its jurisdiction over all the agreements and all the
parties to the arbitral procedure on the basis of the arbitration clause contained in the
Memorandum of Agreement, which referred to ‘all disputes resulting from this
agreement’. The Memorandum indeed determined the aim of the parties – in relation to
the overall transaction – which could only be achieved through the agreements that were
subsequently concluded.
720. In some – fortunately rare – cases, legal requirements relating to the form of the
arbitration clause may have a decisive influence on the final decision of the arbitral
tribunal. In ICC case no. 7154 of 1993, (732) three of the four contracts binding the parties
(a shipbuilder Y and a shipowner X) contained an ICC arbitration clause. Y argued that the
arbitral tribunal did not have jurisdiction in relation to the fourth contract, which did not
contain an arbitration clause. For the arbitral tribunal, the question was whether one
could accept an implied arbitration clause to the extent that there would have been a
practice to insert an arbitration clause in contracts to repair ships, or alternatively
whether one could accept the existence of an arbitration clause to the extent that the
parties would have referred in their agreement to another document containing such a
clause. By reference to Swiss law, the law of the seat of the arbitration, the arbitral
tribunal gave a negative answer to both questions and therefore decided that it had no
jurisdiction in relation to the fourth agreement. Concerning the first question, the tribunal
decided that an implied arbitration clause was not sufficient on the basis of Article 178 of
the Swiss law on private international law and even added that the same solution would
prevail on the basis of Article 6 of the Swiss Concordat and of Article II, al. 2, of the New
York Convention. In relation to the second question, the arbitrators concluded that in the
system of Article 178, the contract containing the reference and the document to which it
is referred must both present the character of a text. But here, the disputed contract did
not contain such a reference. In other words, Article 178 did not authorise the admission
of an implied arbitration clause based on past business relationships or past agreements
containing such a clause. (733)
721. In the final award in ICC Case no. 13646 of 2007, (734) the arbitral tribunal reached an
opposite conclusion taking into consideration the intention of the parties and the new
jurisprudence of the Federal Supreme Court relating to the form of arbitration
agreements. (735) The dispute concerned two sales of ethanol by a Swiss company to a
Nigerian company. Before concluding the disputed agreements, the parties had already
concluded eleven nearly identical agreements including a dispute resolution clause
providing for ICC arbitration in Geneva and the application of Swiss law. The first
disputed agreement, K1, submitted for resolution to the arbitral tribunal contained the
same ICC arbitration clause. With respect to the second contract, K2, the parties had
P 294 agreed to the supply of six lots of ethanol but had not agreed on the volume of these
lots. A document containing the usual ICC arbitration clause and signed by the
respondent was sent to the claimant that requested amendments. They were refused by
the respondent that declared the contract K2 null and void. The claimant started an
arbitration in Geneva alleging breaches of K1 and K2.
722. To determine whether it had jurisdiction on K2, the arbitral tribunal first
endeavoured to determine what was the common intention of the parties. In order to do
this, the tribunal noted first that in all their previous dealings, the parties had concluded
nearly identical agreements containing the same ICC arbitration clause and that the
latter had never been questioned during their negotiations; that consequently, by
application of a test of reasonableness, it would be unthinkable to conclude that they
had the intention to subtract to arbitration the resolution of potential disputes arising
from the K2 agreement. The tribunal therefore concluded that the intention of the parties
was to submit to arbitration the disputes arising from their verbal K2 agreement.
723. The tribunal then examined whether this intention had materialised in a way such as
to comply with the conditions of form required by Swiss law. It noted in this respect that
according to the most recent Swiss jurisprudence and doctrinal writings, Article 178(1) of
the Swiss law on private international law does not require the signature of the
arbitration agreement but rather the evidence thereof by a text (la preuve par un texte).
The tribunal concluded that the test was satisfied since the intention of the parties to
have recourse to ICC arbitration resulted from the correspondences exchanged by the
50
parties and had subsequently materialised in the K2 document signed by the respondent
and sent to the claimant.
III. One Contract Containing an Arbitration Clause, Another One Containing a Jurisdiction
Clause
724. If one of the contracts – even if they are complementary – contains a jurisdiction
clause, while the other contains an arbitration clause, the problem of extension of the
clause will normally be much easier to decide. In ICC case no. 4392 of 1983, (736) the
arbitral tribunal refused to extend its jurisdiction under a first contract containing an
arbitration clause to issues arising under a second agreement containing – by
incorporation of general conditions – a clause giving jurisdiction to the courts of
Gaggenau. The main agreement related to the construction of a plant for the manufacture
of concrete beams. The second agreement concerned an order for an industrial saw and
could be considered an accessory of the first contract. After pointing out that arbitration
clauses had to be restrictively construed and taking into consideration the existence of a
jurisdiction clause in the second contract, the arbitral tribunal refused to extend its
jurisdiction to disputes arising under the additional order.
P 295
725. In ICC case no. 6998 of 1994, (737) the facts were more unusual. A settlement
agreement had been concluded by the parties following a dispute relating to a complex
investment transaction involving the construction and management of a hotel in Monaco.
The settlement incorporated by reference a clause providing for submission to
arbitration of all disputes relating to ‘this agreement’ and to ‘the agreements which will
implement its terms … unless expressly provided otherwise’. One of these agreements
was a letter of the same day signed by not only its author but also the addressee under
the words ‘read and accepted’. The letter contained a provision according to which its
author ‘hereby consents to the jurisdiction of the courts of Hamburg, Germany, with
regard to any legal action brought to enforce the provisions of this agreement’.
726. The arbitral tribunal sitting in Paris (laws of Monaco and Germany applicable)
considered that this unilateral acceptance of a state court’s jurisdiction did not amount
to a waiver of the arbitration clause since it did not exclude a recourse to arbitration.
According to the tribunal, ‘there is indeed a different provision in the [disputed
implementation agreement] but it does not exclude arbitration; it merely gives
[claimant] an option to sue [defendant] in Hamburg, in addition to arbitration’. (738) The
arbitrators therefore decided that they had jurisdiction on the implementation
agreement, considering that the option had been exercised in favour of arbitration.
727. Finally, in ICC case no. 2272 of 1975, (739) two contracts had been concluded by the
parties, one containing an arbitration clause and the other one a clause giving
jurisdiction to state courts. The tribunal, sitting in Paris, decided that the will of the
parties had to be respected. It further pointed out that the same solution should have
prevailed even if the two agreements had been objectively indivisible. This approach,
which gives pre-eminence to the will of the parties notwithstanding the indivisibility of
the dispute, seems to be the one followed by the great majority of arbitral tribunals but
not always by national courts. (740)
IV. Incompatible Arbitration Clauses and the Difference Between Giving Effect to an
Agreement and Taking This Agreement into Consideration
728. What happens when one contract contains an arbitration clause and the other one,
entered into by the same parties, contains another, incompatible, arbitration provision?
In principle, the arbitral tribunal will accept its jurisdiction only on the basis of one of
the arbitration clauses. (741) But this is not always the case as demonstrated by ICC case
P 296 no. 7325 of 1993. (742) The arbitral tribunal had its seat in Brussels. The two parties to
the procedure were bound by two contracts: the first one entitled Insurance Program for
[x] Cars Leased / Rented in Belgium and the other one, General Reinsurance Agreement.
The first agreement contained an ICC arbitration clause and provided for application of
Belgian law. The second one contained an ad hoc arbitration clause, gave the arbitrators
the power to decide in amiable composition and further provided that the arbitrators had
to be ‘Managers or Chairmen of insurance and/or reinsurance companies’. Given the
incompatibility of the two clauses, the arbitral tribunal pointed out that it had
jurisdiction over the issues arising from the second agreement only to the extent that the
latter came into the scope of the ICC arbitration clause of the first agreement and were
not covered by the specific arbitration clause contained therein. In other words, the
arbitral tribunal had to determine whether the parties had truly intended that the ad hoc
arbitration provision be part of their relationship. The ICC Tribunal finally decided that it
had jurisdiction over all the claims, thereby depriving the ad hoc arbitration clause of its
effects. According to the tribunal, the Insurance Program incorporated the Reinsurance
Agreement by its broad purpose and the reference it made to the latter. Each contract
found its cause in the other. The arbitrators noted, ‘it is unlikely that the parties really
wanted two different arbitration boards and possibly two different national laws for a
performance and quid pro quo for it so intimately connected’. (743) They could not have
wanted to have the first contract declared valid by one tribunal and the other one
declared void by another tribunal. And beyond the fact that the parties’ consent to the
51
ad hoc clause was therefore doubtful, the clause itself was pathological: the appointment
authority in case of default of one party was ‘the Notary Public of Brussels’, an authority
that does not exist. For all these reasons and given the indivisibility of the programmes of
insurance and reinsurance and of the disputes which arose therefrom, the arbitral
tribunal found that it had jurisdiction over all the claims whether they originated in the
first or in the second agreement.
729. However, no problem will arise, even if the contracts of the contractual chain contain
incompatible arbitration clauses, when it finally appears that the disputed issues arise
only from one contract, the one containing the arbitration clause on which the claimant
has relied to initiate the arbitration. For example, in ICC case no. 7928 of 1995, (744) the
respondent, a Spanish company, had entered into a main agreement with company X.
Subsequently, it concluded a master subcontract agreement in 1992 with the claimant, a
French company. The scope of the work to be subcontracted was determined in an
appendix to the 1992 agreement, but the details and terms of the deliveries had to be
determined in a subsequent order. The order was issued but the deliveries remained
unpaid. The claimant therefore started an arbitration procedure on the basis of the
arbitration clause contained in the order that referred to the conditions of the main
agreement between the respondent and X. These conditions referred to ICC arbitration
without mention of a seat and of the number of arbitrators. They also referred to French
P 297 law as the law applicable to the merits. A sole arbitrator was appointed by the ICC,
with its seat in Paris. The respondent challenged the jurisdiction of the arbitral tribunal,
pointing out that the arbitration clause contained in the master subcontract agreement
provided for ICC arbitration in Madrid. The sole arbitrator decided that he had
jurisdiction since the claims concerned the payment of the deliveries. Indeed, the 1992
master subcontract agreement only contained the respondent’s undertaking to
subcontract certain works to the claimant. The details of this undertaking and the terms
of payment were determined in the subsequent order. The contractual document
governing the performance of the subcontract relationship was therefore the order and
not the 1992 agreement.
730. The famous ICSID case Klöckner v. Cameroon (745) is highly interesting in many
respects. Klöckner, a German company, and the United Republic of Cameroon had
entered into a protocol of agreement and a supply agreement for a fertiliser plant in
Cameroon, each of which contained an ICSID arbitration clause. They had also entered
into a management contract containing an ICC arbitration clause. Klöckner was to supply
and erect a fertiliser plant, and the factory was then to be operated by a Cameroonian
joint venture company in which Klöckner was to be responsible for the technical and
commercial management. Due to the inadequate operation under Klöckner’s
management, the factory was finally shut down. Klöckner filed a request for arbitration,
claiming the outstanding balance of the price for supplying the factory. Cameroon
counterclaimed, alleging mismanagement by Klöckner. The protocol of agreement
provided that Klöckner ‘shall have responsibility for the technical and commercial
management of the company (Socamé) which shall be ensured by a management
agreement’.
731. The arbitrators resolved the question as to whether the counterclaim was to be
decided in ICSID arbitration or ICC arbitration, by holding that they were competent to
decide on the execution of the obligations undertaken by the parties as to Klöckner’s
responsibility for the technical and commercial management of the company, which was
to be assured by means of a management agreement, but that they were not competent
to decide the dispute arising exclusively out of the management agreement itself.
Klöckner challenged the decision. It contended that in so deciding, the arbitrators had
exceeded their competence because disputes concerning the alleged mismanagement
by Klöckner of Socamé were, following the intention of the parties, clearly meant to be
referred to ICC arbitration. The ad hoc committee which had to decide on the recourse
rejected this contention and very wisely made the following distinction, which should be
kept in mind by all arbitrators confronted with the same type of situation:
It is appropriate to distinguish between two aspects: (i) giving effect (which
includes interpretation) to the management contract, which escapes the
jurisdiction of the tribunal in the latter’s opinion, and (ii) taking the same
contract into consideration for the purposes of interpretation and application
of the protocol of agreement and in order to understand the general context of
the relationship between the parties to the arbitration. As the consistent
P 298 practice of international arbitral tribunals demonstrates, the second type of
activity is perfectly possible, normal and called-for and need not be inhibited
by the lack of jurisdiction of the tribunal over the management contract. By
contrast, the first type of activity is not open to a tribunal lacking jurisdiction,
as the award itself expressly recognises: ‘the tribunal lacks jurisdiction to rule
on the management contract itself or on its interpretation’. (746)
732. Another arbitral tribunal was confronted with a situation comparable to Klöckner in
ICC case no. 7484 of 1994. (747) The claimant (a Belgian company, consultant in
sponsoring) and the defendant (a Luxembourg company) had concluded two agreements:
a first agreement providing for a general programme of sponsoring in two parts, one
relating to the races of the Belgian Championship (Group N) and one relating to the races
52
of the European Championship (group A). Given the failure of this second part, the parties
decided to redefine the sponsorship in a new tripartite agreement also involving Mr X
(not party to the arbitration). According to this agreement, Mr X would provide one car
and its technical team for their participation in two races of the European Championship.
It also determined the terms of the organisation and financing of the event by the
claimant and the defendant and the sharing between themselves of the advertising
space on the car. This agreement contained an ICC arbitration clause. The first agreement
provided for the jurisdiction of Belgian courts. The claimant started an ICC arbitration
against respondent, claiming reimbursement of expenses allegedly paid on its behalf in
the context of the sponsoring organisation. It requested the extension of the arbitration
clause to the first agreement since the two contracts were closely linked.
733. The sole arbitrator decided that the tripartite agreement was not an implementation
of the first agreement, but rather a novation, which settled the problems generated by
the partial failure of the first agreement and which left within the domain of the latter
the races of Group N. The two agreements were independent agreements, as confirmed
by the provision contained in the tripartite agreement, according to which ‘this
agreement constitutes the entire agreement between the parties’. The sole arbitrator
therefore declined jurisdiction over the first agreement but took it into consideration in
determining the exact scope of the parties’ obligations. He decided in particular that
part of the obligations contained in the first agreement was incorporated into the
tripartite agreement. He also took into consideration the total relationship between the
parties, including the first agreement and other contracts concluded with third parties, to
determine the role played by the claimant in the success of the project, and
consequently the amount of damages owed to it. As pointed out by Train, (748) this case
is just the reverse of Klöckner. In Klöckner, the arbitral tribunal had jurisdiction over the
framework agreement and not over its implementation. In ICC case no. 7484, the sole
P 299 arbitrator had jurisdiction over the second contract – which to some extent could be
assimilated to an implementation agreement – and not over the framework agreement.
V. Different Wording of the Clauses: Are They Incompatible?
734. It results from the principles laid down in the previously analysed awards that if, like
in ICC case no. 6768 of 1996, (749) three parties enter into a series of connected
agreements, all of which contain incompatible arbitration clauses, the arbitral tribunal
constituted in the context of one agreement will usually refuse to entertain jurisdiction
over the other agreements, even on the ground of good administration of justice.
735. But does it imply that if two parties enter into a series of agreements, all of which,
except for one, contain an ICC arbitration clause, the phrasing of which is slightly
different, and disputes arise under the various agreements, the parties might not have all
the issues arising thereunder decided by one single arbitral tribunal. This question was
addressed in ICC case no. 5989 of 1989 and received a negative answer. (750) A state
organisation wished to reorganise its fuel distribution network. The parties agreed to
conclude a basic agreement and several application contracts, further to specify their
contractual obligations in the course of their relationship. Article 4.3 of the basic
agreement provided that in case of termination, the employer would have the right to
purchase the materials imported into the country by the contractor. Article 20 provided
for the creation of a coordination committee that would ‘co-ordinate the activities of
each of the parties and solve disputes which may arise in the course of the execution of
the contractual obligations’. Article 21 further provided that all disputes that could not
be amicably settled with the intervention of the coordination committee were to be
settled by ICC arbitration in Geneva according to the law of country X.
736. Three years later, the employer terminated Application Contract no. 1 and further
expressed its intention to discuss the modalities of the purchase of the materials. A
purchase contract was signed by the contractor and initialled by the employer. It
provided that all disputes were to be referred to a sole arbitrator and if the parties could
not agree on a sole arbitrator, the dispute was to be settled by ICC arbitration in Geneva,
according to law X. A few months later, a technical assistance and services contract was
signed by the contractor and initialled by the employer. The contract was
complementary to the purchase agreement. It did not contain a separate arbitration
clause.
737. Three years later, the contractor formally requested payment of certain amounts due
under the purchase and the technical assistance contracts. It further asked for a meeting
of the coordination committee and proposed that a sole arbitrator be appointed to
settle the dispute. It also stated that it would initiate arbitration proceedings if the
coordination committee did not meet or reach a solution or the parties did not agree on
P 300 a sole arbitrator. A meeting took place, and an agreement was reached concerning the
payment of the amounts claimed by the contractor. A termination agreement was
subsequently prepared and signed by the parties. It provided that any dispute would be
settled according to the arbitration clause contained in the basic agreement.
738. Payment of the amounts agreed upon by the parties was not made in full and the
contractor initiated ICC arbitration against the employer. It requested the arbitral
tribunal to declare that the basic agreement was terminated because of a breach of
contract by the employer and claimed various amounts under the technical assistance
53
contract and the purchase contract and interests thereon. The contractor based its
request for arbitration on the two clauses contained in the basic agreement and in the
purchase contract. The employer contended that the request was inadmissible because
it was based on two different arbitration clauses. It asked the arbitral tribunal to declare
that it had no jurisdiction over the request by the contractor based on the purchase
contract. The reasoning of the employer was that the two clauses provided for two
different mechanisms for the settlement of disputes: the purchase contract did not
provide for the intervention of the coordination committee but provided that any
dispute that could not be amicably settled should be referred to a sole arbitrator. Only if
the parties could not agree on the arbitrator should the dispute be submitted to ICC
arbitration. The employer further stressed that the law applicable to the merits of the
dispute arising under the two contracts was different, the law applicable to the basic
agreement being fixed at the date of signature of the agreement. The employer argued
that these differences demonstrated that the parties intended to avoid application of
the arbitration clause in the basic agreement to the disputes arising under the purchase
contract. It finally alleged that even if the contractor’s requests were admissible, the
arbitral tribunal could only decide on the basis of one of the two arbitration clauses and
not on both clauses at the same time. In this case, it should find that it could not decide
on the dispute based on the purchase contract since this arbitration clause was invoked
after the arbitration clause in the basic agreement.
739. The arbitral tribunal found that the differences invoked by the employer were non-
existent or irrelevant in the context of the issue of jurisdiction. The request for arbitration
was filed only after the amicable settlement proceedings under both contracts had been
exhausted. Hence, at this point, the only clause that was still in operation for each of the
contracts was the ICC arbitration clause. According to the arbitral tribunal:
It is beyond doubt that the parties intended to have their disputes settled by
arbitration, that both the arbitration clauses and the parties are identical and
that the claims are connected in such a manner that in the context of an
international arbitration we must find that their joint examination is
admissible in the light of the intention of the parties, as expressed in the
arbitration clauses. In fact, the purchase contract has been concluded in
application … of the basic agreement.
Thus, … the mere fact that a new arbitration clause has been included does
not show the unequivocal intention of the parties to rule out the arbitral
proceedings provided for in the basic agreement. On the contrary, the
purchase contract falls squarely within the contractual provisions of the basic
agreement.
P 301
740. The arbitral tribunal also decided that the fact that an arbitration clause had been
inserted in the purchase agreement did not rule out ‘the possibility of hearing all
disputes in one arbitration concerning the claims arising between the parties under a
group of contracts concluded in the framework of one international commercial
operation’. (751) Finally, the arbitral tribunal found that the contractor’s request to have
the disputes heard in one arbitration proceeding was admissible and that it had
jurisdiction over all disputes between the parties. (752)
741. The above case clearly confirms that a different wording of the arbitration clauses
contained in the various agreements of the contractual chain does not necessarily result
in incompatible clauses. In this respect, another example is ICC case no. 7710 of 1994.
(753) In this case, the first contract contained a broadly phrased arbitration clause giving
the arbitral tribunal jurisdiction over all disputes relating thereto. The second contract
limited the tribunal’s jurisdiction to disputes relating to the contract’s interpretation and
performance. The arbitral tribunal decided that it did not have jurisdiction to decide a
claim of nullity of the second agreement on grounds that were particular to this
agreement. The tribunal did conclude, however, that it had jurisdiction to decide on the
second contract’s validity if and to the extent the latter depended upon the validity of
the first contract.
Subsection VII: Conclusions

742. A first conclusion from the above analysis is that the awards and court decisions are
based on a close analysis of the particular facts of the dispute. Any attempt to induce
general principles should never overlook the very important factual dimension of any
given case.
743. A second conclusion is that the case law that has been analysed focuses on the
interpretation of the will of the parties, the research of a common intention. This is why
courts and arbitral tribunals, in the absence of an agreement of the parties to that effect,
will generally refuse to unify in one proceeding under one arbitration clause all the
disputes arising under various agreements, when they contain truly incompatible
arbitration clauses or jurisdiction clauses, unless it undoubtedly appears that all the
disputes fall within the scope of the relevant arbitration clause or that the jurisdiction
clause does not amount to a waiver of the said arbitration clause.
54
744. However, the fact that the arbitral tribunal only has jurisdiction to decide disputes
arising under one contract does not prevent the arbitrators from taking another related
contract into consideration. The case law indeed clearly emphasises the difference
between giving effect to another contract X, by deciding issues arising under it, and
P 302 taking the same contract into consideration for the purposes of interpretation and
application of agreement Y, falling within the jurisdiction of the arbitral tribunal. This
second type of activity is not inhibited by the lack of jurisdiction of the arbitral tribunal
over contract X. On the contrary, giving effect to the latter is not open to a tribunal having
only jurisdiction in relation to agreement Y.
745. If, however, the various agreements of the group do contain the same arbitration
clause or do not contain the same clause but at least do not contain incompatible
arbitration or jurisdiction clauses (e.g., when only one contract of the group contains an
arbitration clause and the others do not contain a jurisdiction clause), the will of the
parties will be investigated to determine whether they conceived of the various contracts
as one contractual entity, one single multilateral contract or forming together one single
economic transaction. The fact that the contracts form an indivisible whole, or are very
closely connected, (754) or that there is a close linkage of the reciprocal rights and
obligations and in some cases that the parties belong to the same group, tends to
support the existence of such a will. The conclusion will of course be easier to reach if the
parties to the various contracts are the same. If this is not the case, courts and arbitral
tribunals will more rarely decide that they have jurisdiction to hear all the disputes
arising under the various agreements, unless they all contain identical arbitration
clauses, as one arbitration clause in one of the agreements seems often not to be enough,
or unless the exceptional circumstances of the case warrant a different conclusion.
746. Finally, particular mention should be made of the courts of the US. On the one hand,
as was already pointed out, they appear to be more liberal in their approach than most
Western European jurisdictions. (755) On the other hand, they rarely reason in terms of
groups of contracts. Even in multi-contract situations, they either tend to decide the case
– whenever appropriate – in terms of arbitrability (that is, according to the American
terminology, whether the relevant arbitration clause is wide enough to encompass all the
disputes arising from various connected agreements) or in terms of whether non-
signatories to one or more connected agreements may be authorised, or must be
compelled, to arbitrate with the signatories. In other instances, they approach the issue
in terms of consolidation: is it possible to ‘consolidate’ in one arbitral proceeding
disputes arising from various connected agreements?
SECTION IV: TO WHAT EXTENT IS IT POSSIBLE TO START ONE ARBITRATION

PROCEDURE ON THE BASIS OF VARIOUS SEPARATE AGREEMENTS?
Subsection I: General Principles
747. It has become usual to have a network of connected agreements which form a
P 303 contractual whole. When a dispute arises, the party who intends to initiate the
arbitration will potentially wish to do it under several of these contracts. Whether it is
possible will depend upon the terms of the parties’ agreements and in particular whether
they provide for an institutional or an ad hoc arbitration.
748. If the arbitration is institutional, initiating one single arbitration under various
agreements will only be possible if it is authorised by the rules of the relevant institution.
This was recently illustrated by a decision of the English Commercial Court of 2017. (756)
In that case, the Commercial Court in London set aside an LCIA arbitration award finding
that the original Request for Arbitration filed by the claimant impermissibly included
claims under two contracts, although closely related, both containing the same LCIA
arbitration clause. The judge rooted his analysis in the text of the 2014 LCIA Rules and in
particular in the absence in their Article 1 (757) of a reference to the plural, in contrast
with the revised rules of other institutions such as the ICC, SIAC, HKIAC and the SCC, all of
which refer to the possibility of starting one arbitration procedure under multiple
contracts. According to the judge, it was entirely plain that the LCIA Rules treat a single
request as giving rise to a single arbitration, the payment of fees for one arbitration and
the formation of a single arbitral tribunal. The judge further noted that Article 22.1(ix)
gives an arbitral tribunal (once formed) the power to consolidate the arbitration with one
or more other arbitrations into a single arbitration, but only where all parties agree. The
outcome in that decision can be contrasted with the approach that was taken by the
English Court in relation to non-institutional arbitration. As referred to in the A v. B
P 304 judgment, the earlier judgment of The Biz (758) indeed recognised that a single notice
of arbitration could be sufficient to commence arbitration under ten bills of lading, each
containing a London arbitration clause.
749. However, if the arbitration is ad hoc, initiating one single arbitration procedure on
the basis of various connected agreements will depend not only on the compatibility of
the arbitration clauses but also on the parties’ agreement and in the absence of
agreement, on the applicable law. In Italy, in a decision of 25 May 2007, (759) the Italian
Supreme Court held that the initiation of a single arbitral procedure in respect of
identical arbitration clauses in a number of separate but related contracts was
legitimate. Therefore, the award issued could not be set aside on such ground. The Court
55
took the view that when the parties are the same, the contracts are connected and the
arbitration clauses are identical, the principle of good faith justifies the consolidation of
the claims in a single proceeding. Aliman, a real estate company, had entered into a
number of contracts for the sale of plots of land to Meridiana, a building company. The
contracts each contained an identical arbitration clause. A dispute arose between the
parties with regard to two of the contracts, which had been entered into in 1996 and 1997.
Meridiana initiated an arbitration procedure in respect of both contracts; it appointed
an arbitrator and brought a claim for, among other things, the return of money advanced
under the contracts. Aliman objected that it was impossible to conduct a single
arbitration procedure in respect of two contracts. The arbitral tribunal rejected Aliman’s
objection since the contracts, although separate, had been executed by the same parties
and were identical in content. The tribunal issued an award in favour of Meridiana.
Aliman filed an application to set aside the award. The Trento Court of Appeal rejected
the appeal. Aliman subsequently appealed to the Supreme Court. The Supreme Court
upheld the Trento Court of Appeal decision. It held that a single arbitral procedure could
be instituted under more than one agreement and the relevant arbitration clauses
therein between the same parties, provided that such clauses are substantially identical
and the contracts are related, so that each disputed agreement affects the others and
the resolution of each dispute will have an impact on the relationships arising from all
the related contracts. (760)
750. The Courts of British Colombia reached an opposite decision in South Coast British
P 305 Columbia Transportation Authority v. BMT Fleet Technology Ltd, (761) a case where the
dispute arose from four related contracts for the design and construction of a new
passenger ferry to run between Downton Vancouver and North Vancouver, British
Columbia. Each of the contracts contained an arbitration clause providing for arbitration
under the Rules of the British Columbia International Commercial Arbitration Center
(BCICAC). Two separate contracts were concluded with one respondent, one contract with
another respondent and the last one still with another respondent. This notwithstanding,
the claimant started arbitration against all respondents under the various agreements.
One of the respondents immediately objected to the single notice. The dispute was
submitted to the courts of British Columbia. In appeal, the British Columbia Court of
Appeal held that the notice to arbitrate was a nullity because it sought to commence four
separate arbitrations against three different parties under four separate agreements and
this was contrary to the express requirements of the British Columbia Arbitration Act
which required the consent of all the parties for such consolidation to take place. It was
also contrary to the parties’ contracts which contained separate arbitration agreements
and were anchored in fundamental principles of consent and privacy since the parties’
contracts contained separate arbitration agreements.
Subsection II: Institutional Rules (762)

I. ICC
751. Article 9 of the 2017 ICC Rules (763) provides that ‘[s]ubject to the provisions of
Articles 6(3)-6(7) and 23(4), claims arising out of or in connection with more than one
contract may be made in a single arbitration, irrespective of whether such claims are
made under one or more than one arbitration agreement under the Rules’. According to
Article 6-3, if any party raises an objection concerning whether all of the claims made in
the arbitration may be determined together in one single procedure, the arbitration shall
proceed and the issue shall be decided directly by the arbitral tribunal, unless the
Secretary General refers the matter to the ICC Court for its decision pursuant to Article
6(4). In this latter case, the arbitration shall proceed as to those claims with respect to
which the Court is prima facie satisfied (a) that the arbitration agreements under which
P 306 those claims are made may be compatible, and (b) that all parties to the arbitration
may have agreed that those claims can be determined together in a single procedure.
The ICC Tribunal will not be bound by the Court’s decision and will be able to make its
own determination, unless the ICC Court has decided not to let all or part of the claims
proceed in the same arbitration. In this case, the ICC Court’s decision is final but any
party may ask any court of competent jurisdiction to determine whether or not, and in
respect of which of the claims, there is a binding arbitration agreement. (764)
II. CEPANI
752. Article 10 of the CEPANI 2020 Rules provides that claims arising out of or in
connection with more than one contract may be made in a single arbitration, irrespective
of whether such claims are made under one or more than one arbitration agreement
under the Rules. If objections are made by any party on whether the claims may be made
in one single arbitration, the arbitral tribunal will decide on them, taking into account
any circumstances it considers to be relevant.
III. LCIA
753. Further to the decision of the English Commercial Court of 2017, referred to above,
the LCIA is considering amending its Rules but is waiting for the English Court of Appeal’s
decision in that case before doing so. Meanwhile, the issue of multi-contract arbitration
remains addressed by way of a procedure of consolidation under Article 22.1(ix)
56
according to which the arbitral tribunal has the power, upon the application of any party
to order, with the approval of the LCIA Court, the consolidation of an arbitration with one
or more other arbitrations into a single arbitration subject to the LCIA Rules where all the
parties to the arbitrations to be consolidated so agree in writing.
IV. Stockholm Chamber of Commerce
754. Article 14 of the 2017 Rules of the Stockholm Chamber of Commerce (SCC) provides
that the parties may make claims arising out of or in connection with more than one
contract in a single arbitration. If any party raises any objections as to whether all of the
claims made against it may be determined in a single arbitration, the claims may
proceed in a single arbitration provided that the SCC does not manifestly lack
jurisdiction over the dispute between the parties. In deciding whether the claims shall
proceed in a single arbitration, the Board of the SCC shall consult with the parties and
shall have regard to: (i) whether the arbitration agreements under which the claims are
made are compatible; (ii) whether the relief sought arises out of the same transaction or
P 307 series of transactions; (iii) the efficiency and expeditiousness of the proceedings; and
(iv) any other relevant circumstances. If the Board decides that the claims may proceed
in a single arbitration, the final decision as to the arbitral tribunal’s jurisdiction over the
claims shall be made by the arbitral tribunal.
V. SIAC
755. The SIAC Rules 2016, like the LCIA Rules, address the issue in terms of consolidation.
According to Rule 6, where there are disputes arising out of or in connection with more
than one contract, the claimant may either file a Notice of Arbitration in respect of each
arbitration agreement invoked and concurrently submit an application to consolidate
the arbitrations pursuant to Rule 8.1 or file a single Notice of Arbitration in respect of all
the arbitration agreements invoked and the Notice of Arbitration shall be deemed to be
an application to consolidate all such arbitrations pursuant to Rule 8.1 which provides
that consolidation will be admitted if any of the following criteria is satisfied in respect
of the arbitrations to be consolidated: all parties have agreed to the consolidation; all
the claims in the arbitrations are made under the same arbitration agreement; or the
arbitration agreements are compatible and (i) the disputes arise out of the same legal
relationship(s); (ii) the disputes arise out of contracts consisting of a principal contract
and its ancillary contract(s); or (iii) the disputes arise out of the same transaction or
series of transactions.
VI. HKIAC
756. Article 29 of the 2018 HKIAC Rules also provides that claims arising out of or in
connection with more than one contract may be made in a single arbitration, provided
that: (a) a common question of law or fact arises under each arbitration agreement giving
rise to the arbitration; and (b) the rights to relief claimed are in respect of, or arise out of,
the same transaction or a series of related transactions; and (c) the arbitration
agreements under which those claims are made are compatible.
VII. CIETAC
757. The CIETAC Arbitration Rules 2015 provide in their Article 14 that the claimant may
initiate a single arbitration concerning disputes arising out of or in connection with
multiple contracts, provided that: (a) such contracts consist of a principal contract and
its ancillary contract(s), or such contracts involve the same parties as well as legal
relationships of the same nature; (b) the disputes arise out of the same transaction or the
same series of transactions; and (c) the arbitration agreements in such contracts are
identical or compatible.
P 308
VIII. ICSID
758. The issue of whether a party may start an ICSID arbitration procedure involving
claims arising from various agreements was addressed in ICSID Case no. ARB/09/18,
Cambodia Power Company v. Kingdom of Cambodia and Electricité du Cambodge. (765) The
arbitration arose under three different agreements, a Power Purchase Agreement entered
into between the Kingdom of Cambodia (KOC) (‘first respondent’), Cambodia Power
Company (CPC) (the claimant) and Electricité du Cambodge (EDC) (second respondent)
dated 20 March 1996 (PPA), an Implementation Agreement (IA) entered into between KOC
and CPC dated 20 March 1996 and a Deed of Guarantee (DOG) entered into between KOC
and CPC dated 24 March 1998. The three agreements contained an ICSID arbitration
clause. The clauses were compatible. They only differed on minor aspects. The claimant
started ICSID arbitration in one request for arbitration, based on the three arbitration
clauses included in the three contracts. The ICSID arbitral tribunal had in the first place
to determine whether it was admissible to have one ICSID arbitration procedure
involving claims arising from three different agreements.
759. The tribunal decided that there was nothing in the ICSID Convention which prevented
parties to commence three concurrent arbitrations with the same tribunal by filing a
single request. It pointed out to the following statement in the Noble Energy decision:
57
‘Article 44 of the ICSID Convention provides that arbitration proceedings are governed by
the Convention, and, unless the parties agree otherwise, by the ICSID Arbitration Rules.
Whenever the ICSID Convention and Rules are silent on an issue, the tribunal shall decide
the question in the exercise of its general powers.’ The tribunal noted in this respect that
there was nothing in either the Convention or the Rules which expressly prohibits an
investor using a single Request to commence ICSID arbitration proceedings pursuant to
more than one arbitration agreement relating to the same project and involving a single
investment. After having carefully examined the facts of the case, the arbitral tribunal
concluded that the claimant was entitled to commence proceedings under the three
agreements and at the same time by way of a single request for arbitration and to
compel the respondents to appoint a single tribunal to hear and determine all such
claims.
760. The tribunal pointed out that the uncontroversial starting point was that the
consolidation of claims in ICSID arbitration depended upon the consent of the parties.
Such consent can be express or also be implied from the circumstances. The tribunal
further noted that establishing the requisite consent entailed a further level of analysis,
namely identifying the precise mechanism by which it had been agreed that claims
would be coordinated. Taking into consideration the drafting history of the agreements,
the arbitral tribunal reached the conclusion that the three agreements all arose from a
single investment for a single power project; that the parties structured the project
P 309 through these three separate agreements in order to attract potential lenders and as a
matter of general efficiency; that the structure by way of three contracts had nothing to
do with any motivated desire to have three separate agreements in the event of a
dispute. The tribunal also concluded that concerning the mechanism by which it had
been agreed that claims be coordinated, the parties intended the separate proceedings
flowing from each of the separate clauses to be merged into one proceeding and heard
and determined by a single tribunal in a single award. The tribunal further noted that
both the PPA and the IA provided that they together represented the entire
understanding between the parties in relation to the subject matter therein and that the
agreements also contained default provisions showing an interdependence of the
parties’ rights and obligations.
P 309
References
516) In one variation, A – for example, the purchaser of all the shares of a company –
enters into the same contract with B, C, D and E, various sellers. Karrer also refers to
the case of the issue of bonds, each bond containing the same arbitration clause:
Pierre Karrer, ‘Multi-Party and Complex Arbitration under the Zurich Rules’, in
Aspekte des Wirtschaftsrecht (Zurich, 1994) 268.
517) See for example L. Aynès, note under Paris Court of Appeal (1st Suppl. Ch.) 29 Nov.
1991, 1993 Rev. Arb. 617.
518) Supranote 6, at ¶¶17 to 25.
519) ICC Interim Award of 5 Mar. 1984 in case no. 3879, 11 Y.B. Com. Arb. 127 (1986). See
supranote 245.
520) In Professor Train’s words, the question may be summarised as follows: is the
procedural regime of the group of contacts in harmony or in conflict with its
substantial regime? Supranote 6 at ¶6.
521) They represent one-third of the ICC and LCIA arbitrations. On this subject see Anne-
Marie Whitesell and Eduardo Silva-Romero in Complex Arbitrations, Perspectives on
their Procedural Implications, Special Supplement, ICC Ct. Bull. 2003, 7 and
Darwazeh and Marc, supranote 2. See also Stephen Bond, ICC Multi-party Arbitration,
supra, p. 40 and Schwartz, Multi-party Arbitration and the ICC – in the Wake of Dutco,
10 J. Int. Arb. 5, 6 (1993).
522) See a selection of such clauses in Appendix 2 to this book. See also ICC Institute,
Multi-party Arbitration: Views from International Arbitration Specialists, ICC
Publishing, 1991, 24 et seq. and 63 et seq.
523) Humphrey Lloyd, A National Experience, ICC Multi-party Arbitration, supra, 64 et seq.
524) Sigvard Jarvin, Issues Relating to Consolidation, ICC Multi-party Arbitration, supra,
209.
525) See below, ¶¶845 and 846.
526) Subject to a proviso in the US. Following First Options v. Kaplan, issues of validity
and scope (the US notion of ‘arbitrability’) of the arbitration clause are in principle
for the courts to decide.
58
527) Under Article 6(3) of the 2017 Rules: ‘If any party against which a claim has been
made does not submit an Answer, or raises one or more pleas concerning the
existence, validity or scope of the arbitration agreement or concerning whether all
of the claims made in the arbitration may be determined together in a single
arbitration, the arbitration shall proceed and any question of jurisdiction or of
whether the claims may be determined together in that arbitration shall be
decided directly by the arbitral tribunal, unless the Secretary General refers the
matter to the Court for its decision pursuant to Article 6(4).’ This Article provides
that ‘[i]n all cases referred to the Court … the Court shall decide whether and to
what extent the arbitration shall proceed. The arbitration shall proceed if and to
the extent that the Court is prima facie satisfied that an arbitration agreement
under the Rules may exist...’. Article 6(5) further provides that any decision as to the
jurisdiction of the arbitral tribunal, except when the Court decides that the
arbitration cannot proceed, shall be taken by the arbitral tribunal itself. Finally,
Article 6(6) stipulates that if the Court decides that the arbitration cannot proceed,
any party retains the right to refer the matter to any court having jurisdiction. The
scope of the prima facie review was much broader under the 1998 Rules and still
broader under the 1988 Rules. According to the 1998 ICC Rules (Art. 6(2)): ‘If the
Respondent does not file any Answer, as provided by Article 5, or if any party raises
one or more pleas concerning the existence, validity or scope of the arbitration
agreement, the Court may decide, without prejudice to the admissibility or merits
of the plea or pleas, that the arbitration shall proceed if it is prima facie satisfied
that an arbitration agreement under the Rules of Arbitration of the ICC may exist. In
such a case, any decision as to the jurisdiction of the Arbitral tribunal shall be taken
by the Arbitral tribunal itself. If the Court is not so satisfied, the parties shall be
notified that the arbitration cannot proceed. In such a case, any party retains the
right to ask any court having jurisdiction whether or not there is a binding
arbitration agreement.’ Article 7 of the 1988 Rules provided that: ‘When there is no
prima facie agreement between the parties to arbitrate or where there is an
agreement but it does not specify the International Chamber of Commerce and if
the Defendant does not file an Answer within the period of 30 days provided by
paragraph 1 of Article 4 or refuses arbitration by the International Chamber of
Commerce, the Claimant shall be informed that the arbitration cannot proceed.’
The contents of this Article were developed in Art. 12 of the Internal Rules. Article
8(3) of the 1988 ICC Rules further provided that: ‘Should one of the parties raise one
or more pleas concerning the existence or validity of the agreement to arbitrate,
and should the International Court of Arbitration be satisfied of the prima facie
existence of such an agreement, the Court may, without prejudice to the
admissibility or merits of the plea or pleas, decide that the arbitration shall
proceed. In such a case any decision as to the arbitrator’s jurisdiction shall be taken
by the arbitrator himself.’
528) For some cases of application under the 1988 Rules, see Théodore Klein,
‘Disagreement on the Scope of an Arbitration Clause’, 7(2) ICC Ct. Bull. 26 (1996).
529) Stephen Bond, The Experience of the ICC Court of Arbitration, ICC Multi-party
Arbitration, supranote 522, at 43.
530) Yves Derains and Eric Schwartz, A Guide to the New ICC Rules of Arbitration, Kluwer,
1998, 64.
531) In this context, see Patrice Level, ‘Joinder of Proceedings, Intervention of Third
Parties and Additional Claims and Counterclaims’, 7 ICC Ct. Bull. 38, 38 (1996).
532) Felix Dasser and Danielle Gauthey, La bonne foi dans l’arbitrage, 33 ASA Bull. 239
(2015); Duarte Henriquez, The role of good faith in arbitration: are arbitrators and
arbitral institutions bound to act in good faith?, 33 ASA Bull. 514 (2015); Bernardo
Cremades, La Buena Fe en el Arbitraje Internacional, 5 Revista de Arbitraje Comercial
y de Inversiones, 13 (2012); La bonne foi, Conférence Libre du Jeune Barreau de Liège
(1990), at 411 et seq; Sigvard Jarvin, ‘L’obligation de coopérer de bonne foi,
exemples d’application au plan de l’arbitrage international’, in L’apport de la
Jurisprudence Arbitrale (ICC Institute, 1986), at 157; Philippe Leboulanger, ‘Multi-
contract Arbitration’, 13 J. Int’l Arb. 43, 91 (1996).
533) 22 Y.B. Com. Arb. 191 (1997).
534) 124 J. Droit Int’l 107 (1997).
535) Ibid., at 113.
536) Ibid., at 115.
537) 17 Y.B. Com. Arb. 164 (1992).
538) 17 Y.B. Com. Arb. 279 (1992).
539) Supra ¶204 and following. The award was set aside by the Swiss Federal Court in
relation to the Republic of Egypt.
540) 11 Y.B. Com. Arb. 133 (1986).
541) 1st Suppl. Ch., Société Kis France et Autres v. Société Générale et Autres, 1992 Rev. Arb.
90; 16 Y.B. Com. Arb. 145 (1991). See also Fouchard, Gaillard and Goldman, supranote
361, ¶506.
542) ICC Partial Awards nos 5894 and 5895 (Paris, French law). The first award was
partially published in 2 ICC Ct. Bull., p. 25 (1991, No. 2).
543) 16 Y.B. Com. Arb. at 147.
544) 1992 Rev. Arb. 72.
59
545) ‘C’est l’existence d’une subordination qui permet d’identifier le groupe formé d’un
contrat principal et d’un sous-contrat ainsi que le groupe de sociétés: la domination
de la société-mère à l’égard de ses filiales et la participation de celles-ci à l’exécution
d’un contrat conclu par la première.’
546) Recurso Especial No 653.733, Brazilian Superior Tribunal de Justiça, third chamber,
RJ 2004/0102276-0, reporting Justice Nancy Andrighi, decided on 3 Aug. 2006, cited
by Serec and Kent Coes, supranote 336 14 VJ 67, 72 (2010).
547) See infra, ¶967 and following.
548) Final award (Paris, French and Italian law), unpublished, analysed by Train,
supranote 6, at ¶¶131, 134, 159, 196, 230, 551, 558, 665, 666, 733.
549) 127 J. Droit Int’l (Clunet) 1085 (2000), obs. D. Hascher, 4 ICC Awards, 569 and note D.H.
550) Supra, ¶524 and following.
551) X v. YD and YE., J. Droit Int’l 2008, 1193, 4 ICC Awards 729.
552) « Toutes contestations, tous problèmes ou tous différends éventuels afférents au
présent contrat ou y relatifs … ».
553) 23 Y.B. Com. Arb. 128 (1998).
554) Ibid., at 136.
555) 1992 Rev. Arb. 71-72.
556) 23 Y.B. Com. Arb. 128 at 137(1998).
557) High Court of Justice, Queen’s Bench Division, Commercial Court, judgment of 17 Dec.
2008, [2009] EWHC1 (Comm.).
558) [2008] 1 Lloyd’s Rep. 254.
559) It is on this basis of the exact same reasoning that the sole arbitrator in ICC Case no.
20103 decided that the arbitration clause included in the Joint Venture Agreement
could be presumed to cover all disputes arising from the parties’ contractual
relationship, including the agreements which did not contain an arbitration clause.
44 Y.B. Com. Arb. 334 (2019).
560) Bases Conversion Development Authority v. DMCI Project Developers (G.R. No. 173137).
561) Article 1311. ‘Contracts take effect only between the parties, their assigns and heirs,
except in case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law. The heir is not
liable beyond the value of the property he received from the decedent.
If a contract should contain some stipulation in favor of a third person, he may
demand its fulfillment provided he communicated his acceptance to the obligor
before its revocation. A mere incidental benefit or interest of a person is not
sufficient. The contracting parties must have clearly and deliberately conferred a
favor upon a third person.’
562) (2018) 15 SCC 678.
563) Case no. 226 of 2012, 38 Y. B. Com. Arb. 351 (2013). Hong Kong Jia XX Development Co.
v. Shenzhen Yong XX Co.
564) LSK-KDIC Investment Company, Ltd. v. KR&C Corporation, Seoul High Court, 19th Civil
Department, 2012 Na 88930, 16 Aug. 2013, [2015] 1 APAR 65 and note John P. Bang and
43 Y.B.Com. Arb. 508 (2018).
565) Supreme Court, Third Division, 2013 Da 74868, 29 Oct. 2015, 43 Y.B. Com. Arb. 508
(2018).
566) [1996] 2 S.L.R.(R) 196.
567) Arbitration Law, Lloyd’s 1991, para. 4.22. See also L&M Concrete Specialists Pte. Ltd. v.
United Eng. Contractors Pte. Ltd., [2000] 2 S.L.R.(R) 852, para. 18 where the Court held
that for an arbitration agreement in one contract to be incorporated into another, it
must be brought to the attention of the other contracting party with a ‘red hand
pointing to it’.
568) Int’l Research Corp. PLC v. Lufthansa Systems Asia Pacific Pte. Ltd., [2013] S.G.C.A. 55.
569) [2013] S.G.C.A. 55, para. 34.
570) Int’l Research Corp. v. Lufthansa Systems Asia Pacific Pte. Ltd. & Anor, [2013] 1 S.L.R.
973.
571) Ibid., para. 48.
572) [2013] S.G.C.A. 55, para. 34. See Zurich Insurance (Singapore) Pte. Ltd. v. B-Gold
Interior Design & Construction Pte. Ltd., [2008] 3 S.L.R.(R) 1029.
573) [2013] 1 S.L.R. 973, para. 60.
574) Ibid., para. 62.
575) [2013] S.G.C.A. 55.
576) Ibid., para. 38.
577) Case no. Ö5553-09, The decision is published on the Swedish Supreme Court
website.
578) [1990] R.J.Q. 2783 (C.A). Voyez sur les décisions canadiennes: Babak Barin, ‘Non-
Signatories in International Arbitration: Some Thoughts from Canada’, ICCA Congress
Series, 2007, 375.
579) Cas. 1re civ., 6 Feb. 2001, n° 98-20776. The decision was commented by Christophe
Seraglini, ‘Le transfert de la clause compromissoire dans les chaines de contrats
après l’arrêt Peavey’, Gaz. Pal., 15 Nov. 2001, n° 319, 6.
60
580) 2007 Rev. Arb. 785 and note Jalal El Ahdab; F.-X. Train, ‘Arbitrage et action directe: A
propos de l’arrêt ABS du 27 mars 2007’, Gaz. Pal., 22 Nov. 2007, n° 326, 6; Christophe
Seraglini, ‘L’irrésistible circulation de la clause d’arbitrage international’, JCP G, n°
26, 27 Jun. 2007, L168).
581) Cas. 1re civ., 9 Jan. 2008, n° 10F-D, 33 Y. B. Com. Arb. 478 (2008).
582) 1st Ch. A., 1993 Rev. Arb. 645 and note by C. Jarrosson.
583) Pas. I at p. 956, confirming an old precedent of 10 Jul. 1875, Pas. I at p. 357.
584) See in particular van Compernolle, L’arbitrage multipartite, in Lambert Matray and
Georges de Leval (eds), L’arbitrage-Travaux offerts au Professeur Albert Fettweis,
1989, p. 83 and references quoted.
585) See nevertheless Article 31 of the Belgian Judicial Code.
586) Van Compernolle, ibid., 84.
587) See the references cited by Train, supranote 6, at No. 482 and following.
588) Convention for the recognition and enforcement of foreign arbitral awards of 10 Jun.
1958. Article II(3) effectively provides that: ‘The court of a Contracting State, when
seized of an action in a matter in respect of which the parties have made an
agreement within the meaning of this article, shall, at the request of one of the
parties, refer the parties to arbitration, unless it finds that the said agreement is
null and void, inoperative or inapplicable of being performed.’ See also ICC arbitral
award no. 2272, of 1975, 2 Y.B. Com. Arb. 151 (1977), in which the arbitral tribunal
accepted to decide a dispute involving an Italian patent owner, A, against his
Belgian exclusive licensee B, where the contract contained an arbitration clause. B
had entered into an exclusive distribution agreement in Belgium with C, which
contained a clause giving jurisdiction to ordinary courts. B had brought an action
against A and C before the Brussels courts and had requested the arbitral tribunal
to decline jurisdiction by reason of the connexity of the matters. The arbitral
tribunal refused to accede to B’s request.
589) Antonias Dimolitsa, ‘Issues Concerning the Existence, Validity and Effectiveness of
the Arbitration Agreement’, 7 ICC Ct. Bull. 2 (1996), pp. 19-20.
590) For example, French courts have refused to accept jurisdiction over a dispute
arising from a contract containing an arbitration clause even if they have
jurisdiction to decide another dispute arising from a connected agreement and the
disputes are considered indivisible. See the note by Daniel Cohen under Cass. (First
Civil Ch.) 16 Oct. 2001, 2002 Rev. Arb. 919. In this case, an English editor had started
two actions before French courts: a first one against a French company relating to
the extent of the rights granted to the company by virtue of a distribution contract
in France of a book edited by claimant and a second one, an action in copyright
infringement (action en contrefaçon) against a Canadian company which was selling
an identical book in France. The agreement between the French and the English
companies contained an arbitration clause. The Paris Court of Appeals decided that
since the disputes were indivisible – the existence of an infringement depending
upon the determination of the rights resulting from the agreement – it had
jurisdiction to decide both cases. The French Supreme Court set aside the decision
considering that the sole circumstance of an indivisibility was not enough to
prevent the setting in motion of the arbitration clause.
591) Paris Court of Appeal (1st Suppl. Ch.), 19 Dec. 1986, 1987 Rev. Arb. 359 and Cass., 8
Mar. 1988, 1989 Rev. Arb. 481 and note Ch. Jarrosson. For references and a comment,
see Emmanuel Gaillard, ‘L’affaire Sofidif ou les difficultés de l’arbitrage
multipartite’, 1987 Rev. Arb. 275 and Derains and Schwartz, supranote 530, 98.
592) Paris, 19 Feb. 2013, République démocratique populaire du Laos c/ société Thaï Lao
Lignite Co. Ltd. et autre., 2013 Rev. Arb., 299 and comment by François-Xavier Train,
L’extension de la clause compromissoire, Chronique des années 2012-2017, Rev. Arb.
388, 421 (2017).
593) Court No. 11, Civil Miscellaneous Application No. 155 of 2001, Nirma Limited v. Lurgi
Lentjes Energietechnik GmbH (Germany) and Lentjes Energy (India) Pvt. Ltd. For an
overview of Indian cases dealing with these issues at the beginning of the century,
see Dushyant Dave, ‘Non-Party Participation – The Extent to which Non-Contracting
Parties Can Be Encouraged or Compelled to Join the Proceedings’, Int. A.L.R. 78
(2000).
594) Final Award (Paris, Libyan law), 124 J. Droit Int’l 1040 (1997) and note Dominique
Hascher, also cited by Train, supranote 6 at ¶¶461, 674 and 675 and footnote 57, p.
467.
595) 4 ICC Awards 311, 34 Y.B. Com. Arb. 2012 (2009).
596) 39 Y. B. Com. Arb. 413 (2014).
597) Pacific Auto (France) v. Komatsu Asia & Pac. Pte Ltd. (Singapore), 17 Mar. 2010. 25
Mealey’s Int. Arb. Rep., 8 (n° 6), June 2010.
598) See also infra at ¶592.
599) Interim Award (Tokyo, French law), unpublished, analysed by Train, supranote 6, at
No. 150.
600) 14 Y.B. Com. Arb. 183 (1989).
601) First civil chamber, 4A_150/2017, decision, A. Ltd. v. B. AG, 36 ASA Bull. 2018, p. 116.
602) [2011] 3 S.L.R. 386, [2011] S.G.C.A. 20.
61
603) See also Transocean Offshore Int’l Ventures Ltd. v. Burgundy Global Exploration Corp.,
[2010] 2 S.L.R. 821, [2010] S.G.H.C. 31, in which the High Court decided that ‘Where
different but related agreements contain overlapping and inconsistent dispute
resolution clauses, the nature of the claim and the particular agreement out of
which the claim arose ought to be considered. Where a claim arose out of or was
more closely connected with one agreement than the other, the claim ought to be
subject to the dispute resolution regime contained in the former agreement, even if
the latter was on a literal reading, wide enough to cover the claim’ (para. 7 of the
judgment). Considering that the dispute arose due to the non-payment of moneys
into the escrow account as required by the escrow agreement, the Court decided
that the jurisdiction clause in the latter prevailed over the arbitration clause
contained in the main contract and consequently dismissed the application to stay
the court proceedings.
604) 1 ICC Awards, 325.
605) See also supra ¶584.
606) See Spray Holdings Ltd. v. Pali Fin. Group, Inc., 269 F. Supp. 2d 356 (S.D.N.Y. 2003); 29
Y.B. Com. Arb. 990 (2004).
607) Ibid., p. 996.
608) Supreme Court of India, 28 September 2012, Civil Appeal No. 7134 of 2012 with Civil
Appeal Nos. 7135-7136 of 2012. Chloro Controls (I P.) Ltd. v. Severn Trent Water
Purification Inc. (US) et al. (2013) 1 SCC 641 and 38 Y. B Com. Arb. 392 (2013). See also
Mahajan Kartikey and Bhatt Malak, ‘Reference of Non-Signatories to Arbitration in
Composite Transactions: Did the Indian Supreme Court Get It Right?’, 30 J. Int. Arb.
711 (2013).
609) The provisions of Section 45 are somewhat similar to Article II(3) of the New York
Convention. However, Section 45 includes the wording ‘or any person claiming
through or under him’ that is not part of Article II(3), which provides that: ‘[t]he court
of a Contracting State, when seized of an action in a matter in respect of which the
parties have made an agreement within the meaning of this article, shall, at the
request of one of the parties, refer the parties to arbitration, unless it finds that the
said agreement is null and void, inoperative or incapable of being performed’.
According to Article II(1), ‘[e]ach Contracting State shall recognize an agreement in
writing under which the parties undertake to submit to arbitration all or any
differences which have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not, concerning a subject matter
capable of settlement by arbitration’. Section 44 of the Indian Arbitration Act
provides in its relevant parts that ‘“foreign award” means an arbitral award on
differences between persons arising out of legal relationships, whether contractual
or not, considered as commercial under the law in force in India ... in pursuance of
an agreement in writing for arbitration ...’.
610) ¶65.
611) Ibid. See also ¶100: ‘Various legal basis may be applied to bind a non-signatory to
an arbitration agreement. The first theory is that of implied consent, third party
beneficiaries, guarantors, assignment and other transfer mechanisms of contractual
rights. This theory relies on the discernible intentions of the parties and to a large
extent, on good faith principle. They apply to private as well as public legal
entities. The second theory includes the legal doctrines of agent-principal relations,
apparent authority, piercing the veil (also call the “alter-ego”), joint venture
relations, succession and estoppel. They do not rely on the parties’ intention but
rather on the force of the applicable law.’
612) ¶¶66 and 67.
613) ¶68.
614) ¶71.
615) ¶72.
616) ¶103.
617) ¶89.
618) ¶91.
619) ¶90.
620) ¶92.
621) ¶139.
622) ¶143.
623) ¶144.
624) ¶154.
62
625) ¶158. In its decision of 8 Aug. 2019, Mahanagar Telephone Nigam Ltd. v. Canara Bank
and Ors (2019 SCC Online SC 995), the Indian Supreme Court has laid down the
circumstances in which the ‘group of companies’ doctrine can be invoked by the
Court. After referring to the ICC award in Dow Chemical, the Court observed as
follows:
The ‘Group of Companies’ Doctrine has been invoked by courts and
tribunals in arbitrations, where an arbitration agreement is entered into
by one of the companies in the group; and the non-signatory affiliate, or
sister, or parent concern, is held to be bound by the arbitration
agreement, in the facts and circumstances of the case demonstrate that
it was the mutual intention of all parties to bind both the signatories and
the non-signatory affiliates in the group.
The doctrine provides that a non-signatory may be bound by an
arbitration agreement where the parent or holding company, or a
member of the group of companies is a signatory to the arbitration
agreement and the non-signatory entity on the group has been engaged
on the negotiation or performance of the commercial contract or made
statements indicating its intention to be bound by the contract, the non-
signatory will also be bound and benefitted by the relevant contracts.
The circumstances in which the ‘Group of Companies’ Doctrine could be
invoked to bind the non-signatory affiliate of a parent company, or
inclusion of a third party to the arbitration, if there is a direct
relationship between the party which is a signatory to the arbitration
agreement; direct commonality of the subject matter; the composite
nature of the transaction between the parties.
A ‘composite transaction’ refers to a transaction which is inter-linked in
nature; or, where the performance of the agreement may not be feasible
without the aid, execution, and performance of the supplementary or the
ancillary agreement, for achieving the common object, and collectively
having a bearing on the dispute.
10.5. The ‘Group of Companies’ Doctrine has also been invoked in cases
where there is a tight group structure with strong organisational and
financial links, so as to constitute a single economic unit, or a single
economic reality. In such a situation, signatory and non-signatories have
been bound together under the arbitration agreement. This will apply in
particular where the funds of one company are used to financially
support or re-structure other members of the group.
626) Havells India Ltd v. Electrium Sales Ltd., 16 Apr. 2013, 2013 (2) ARBLR 117 (Delhi).
627) 19 Y.B. Com. Arb. 167 (1994).
628) See also the Klöckner award, infra ¶729.
629) Final award (Paris, Portuguese law), unpublished, cited by Train, supranote 6, ¶¶621
and 634 and footnotes 82 p. 836, 22 p. 407, 50 p. 420 and 58 p. 468.
630) Providing for ICC arbitration in Paris. Two contracts provided for ICC arbitration in
Madrid and another contract did not contain an arbitration clause.
631) Train, supra, at ¶621 (‘La circonstance que, pour trancher tout ou partie d’un litige qui
lui est soumis, le tribunal arbitral doive prendre en considération, au-delà du contrat
litigieux, d’autres contrats conclus par les parties, voire l’exécution qui leur a été
donnée, n’est pas de nature à avoir une incidence sur la compétence du tribunal
arbitral. Une distinction doit être faite en effet entre, d’une part, la soumission à
l’arbitrage d’un litige qui trouve sa source dans un contrat déterminé et, d’autre part,
la prise en considération au titre de fait, de contrats et de leur exécution, dans le
cadre de la décision d’un différend prenant sa source dans une autre convention. En
l’occurrence, il est demandé au Tribunal Arbitral de trancher des questions litigieuses
trouvant leur source dans l’exécution du [contrat – cadre]. Le fait que pour trancher
les demandes qui lui sont soumises, il doive prendre en considération un ensemble de
faits dont certains ont trait à des marchés régis par d’autres conventions [dont un
contrat d’application entre les parties et deux contrats conclus conjointement par les
parties avec un tiers, et tous trois exclus de la compétence], n’affecte aucunement la
compétence des arbitres’).
632) 18 Y.B. Com. Arb. 80 (1993).
633) Paris Court of Appeal, Ch. 1, 10 May 2016, M.B.S. Dieew v. SA Ascot Commodities, 2017
Rev. Arb. 592 and comment by François-Xavier Train, L’extension de la clause
compromissoire, Chronique des années 2012-2017, 2017 Rev. Arb. 388, 424.
634) Third Chamber, decision n° 192/2008 of 5 Feb. 2008, Engineer Mounir Abu Ezzi v.
United Company for Development, J. Arab Arb., 279 (n° 1, 2009) and commentaries by
Professor Fayez Hage-Shahine, Professor Soumrani and Claudine Helou.
635) Cass. Com., 22 Nov. 1977, 1978 Rev. Arb. 461 and Cass. (1st Civ. Ch.), 16 Jul. 1992, 1993
Rev. Arb. 611 and note by Philippe Delebecque. See also in this respect Bernard
Hanotiau, ‘Arbitration and Bank Guarantees – An Illustration of the Issue of Consent
to Arbitration in Multicontract-Multiparty Disputes’, 16(2) J. Int’l Arb. 15 (1999).
63
636) Paris Court of Appeal, 28th Chamber A, 3 Dec. 2008, Deguette and Others v. Fournier,
Rev. Arb. 547 (2009) and note Jean-Jacques Daigre.
637) OLGR Hamburg 2002, 305 (Order of 8 Nov. 2001-6 Sch 4/01).
638) Swiss Federal Court, First Civil Court, X Ltd. v. Y and Z S.p.A., 4 A_128/2008 of 19 Aug.
2008, Schiedsgerichtsbarkeit, 134 III, 565, ASA Bull. 777 (2008).
639) VSRH REVT-321/2013-2. Reported in Kluwer Arbitration Blog by Tamara Manasijevič.
640) Supreme People’s Court decision [2001] MEZZi n° 177. Commented by Giovanni
Pisacane and Lea Murphy, IBA Arbitration Newsletter, August 2016, p. 33.
641) Dongxun Investment v. Yulin Hengtong, Supreme People’s Court [2006] MSTZi N° 24.
Commented by Giovanni Pisacane and Lea Murphy, IBA Arbitration Newsletter,
August 2016, p. 31.
642) Supreme People’s Court decision [2011] SZCZi n° 601 (document N° (2013 (Sczi N°09)
(replied on 20 Mar. 2013))). Commented by Giovanni Pisacane and Lea Murphy, IBA
Arbitration Newsletter, August 2016, p. 32.
643) Case n° (2018) E.01.M.T.441, published online by China Judiciary Case Database.
644) Contributed by International Law Office, on 17 Oct. 2019.
645) Hiroyuki Tezuka, Who Is a Party to an Arbitration Agreement: Case of the Non-
Signatory, Institutional Arbitration in Asia, 2005, 1 (Collection of Papers presented at
the ICC and SIAC Symposium on Institutional Arbitration in Asia, 18-19 Feb.
Singapore), at 70.
646) Unpublished, cited by Alejandro Ponce Martinez, ‘An arbitral tribunal seated in
Ecuador rejects jurisdiction over a non-signatory to an arbitration agreement’, IBA
Arbitration Newsletter, September 2015, p. 75.
647) According to Mr Ponce Martinez, who criticises the award, the possibility of a non-
signatory party consenting to an arbitration agreement when the underlying
relationship affects his rights has been widely accepted in Ecuador. The author
refers to an article by Hugo García Larriva, ‘Partes no signatarias del convenio
arbitral: entre la realidad económica y la ficción jurídi’, Revista Ecuatoriana de
Arbitraje, 2011, pp. 109-110, in which Mr Garcia Larriva submits that it is possible for
a tribunal to extend the effects of an arbitration agreement to a non-signatory party
when (i) the consent of the non-signatory party may be inferred unequivocally and
(ii) the failure to extend the effects of the arbitration agreement to a non-signatory
party may lead to a violation of the principle of good faith.
648) Qatari Court of Cassation, Civil and Commercial Chamber, Challenge N° 119 of
Judicial Year 2015, 26 May 2015, World J. Arb., N° 37, January 2018, pp. 469-499,
commentary by Nader Mohamed Ibrahim.
649) Court of Cassation, Challenge N° 495, JY72, hearing dated 13 Jan. 2004. See also Cairo
Court of Appeal, Challenge N° 94, JY121, hearing dated 30 May 2006.
650) The Svea Court of Appeal case no. T4496-01, judgment rendered on 16 May 2002,
Stockholm Arbitration Report, 2003-1, 273 and observations by Hans Smit, ‘When
Does an Arbitration Clause Extend to a Guarantee That Does Not Contain It?’.
651) RJ 2005/4140.
652) See Gómez Jene, supranote 84, §836.
653) 210 F.3d 262 (4th Cir. 2000).
654) [2010] EWHC 2985 (Comm.) (18 Nov. 2010).
655) 43 Y.B. Com. Arb. 153 (2018).
656) 1 ICC Awards, 481.
657) 117 J. Droit Int’l (Clunet) 1020 (1990) and 2 ICC Awards, 400 and observations.
658) The issue has been often addressed by courts in France. As we have seen, the
position in French law is that the creditor under the main agreement may not in
principle invoke the arbitration clause (contained in said agreement) against the
surety. It is also agreed that the surety may not invoke the arbitration clause
against the creditor. However, if the surety pays the creditor under the suretyship
agreement, he is subrogated in his rights against the main debtor and any dispute
between the main debtor and the surety will therefore be submitted to arbitration
under the clause contained in the main agreement. In relation to counter-
guarantees, see for example Paris, 1st Ch. A, 14 Dec. 1987, Dalloz, 1988, 248 and note;
1989 Rev. Arb. 240 and note Vasseur. CSEE had concluded a supply agreement with
an Algerian company. The agreement provided for the setting up of guarantees in
favour of the Algerian party (which were later issued by Crédit Populaire d’Algérie)
and of counter-guarantees (which were issued in favour of CPA by BNP). Following a
dispute between the parties to the underlying agreement, CPA called on the
counter-guarantees and CSEE immediately started an action (en référé) to obtain an
injunction against BNP. The underlying agreement contained an ICC arbitration
clause, as did the contracts between BNP and CPA. However, there was no
arbitration clause in the agreement concluded between BNP and CSEE. To obtain
the injunction, CSEE invoked among other arguments that it had started an
arbitration procedure against BNP and CPA on the basis of the arbitration provision
contained in the agreement between the two banks. French courts refused to grant
the injunction on the following grounds: the independence of the guarantee creates
a separation not only between the underlying agreement and the guarantee
agreement but also between the parties to these contracts. The fact that they make
reference to each other is irrelevant; there was no arbitration clause between CSEE
and BNP. Therefore, CSEE could not start an arbitration procedure against the
French bank.
64
659) ‘Il n’est pas contesté que la relation établie entre le garant (la banque) et le
bénéficiaire, entre le donneur d’ordre (demanderesse) et la sous-garante (banque
européenne) ne soit pas couverte par la clause d’arbitrage des contrats de juin 1983.
Le contrat de garantie est indépendant des contrats de juin 1983. L’arbitrage ne
concerne donc que les relations entre la demanderesse et X. Le tribunal serait donc
incompétent pour donner des ordres à l’une ou l’autre banque. En revanche, il est
compétent pour dire si le bénéficiaire des lettres de garantie, X, est en droit de se
prévaloir des garanties par rapport à la demanderesse. Il l’est également pour dire si
les garanties sont valables dans le contexte des relations entre donneur d’ordre et
bénéficiaire. Ces garanties ont leur fondement dans les contrats de juin 1983. Elles
sont, pour les parties à l’arbitrage, liées à la validité, la portée et la résiliation du
contrat de base. … Le tribunal peut se prononcer sur le droit du bénéficiaire de faire
valoir les garanties. Il est en droit de se prononcer sur le caractère illicite d’un appel
en garantie …’
660) Unpublished, commented by Emmanuel Jolivet in Chronique de Jurisprudence
arbitrale de la Chambre de Commerce Internationale (CCI): Les Banques dans
l’arbitrage CCI, Second Part, Gaz. Pal., 15 Dec. 2007, 21.
661) Even in a domestic context. See for example Paris Court of Appeals, 1st Ch. C, 21 Feb.
2002, 2002 Rev. Arb. 955 and note Eric Loquin.
662) 1992 Rev. Arb. 66, at 72: ‘si chacun des accords partiels n’existe que par le précédent et
appelle le suivant; une volonté, unique par son objet, s’exprime en une pluralité
d’instruments complémentaires. C’est aussi l’existence d’une subordination qui permet
d’identifier le groupe formé d’un contrat principal et d’un sous-contrat …’
663) 1st Civ. Chamber, 14 May 1996, 1997 Rev. Arb. 535.
664) N° 17/23250, M. L. v. Del Monte International, commented by Denis Bensaude,
Chronique de Jurisprudence de Droit de l’Arbitrage, Gaz. Pal., 6 Nov. 2018, 21, 23.
665) Paris, 22 Nov. 2012, Société ED Franchise et autre c/ Sarl Evrygis, 2013 Rev. Arb. 282
and comment by François-Xavier Train, L’extension de la clause compromissoire,
Chronique des années 2012-2017, 2017 Rev. Arb., 388, 417.
666) Cass. Civ. 1re, 29 Jan. 2014, F-D n°12-26597, République du Congo v. Commissions
Import-Export, unpublished (not published in the Bulletin).
667) ICC Case no. 16257, Commissions Import Export s.a., ayant pour dénomination
commerciale Commisimpex (République du Congo) v. République du Congo Brazzavile,
unpublished.
668) Commercial Ch., 1992 Rev. Arb. 66 and note by L. Aynès.
669) Kaeuffer v. Bastuck and others, 18 ASA Bull. 381 (2000).
670) 2000 Rev. Arb. 501 and note by X-Y Li.
671) Ibid., at 503.
672) S.A. Groupe des Sablières Modernes v. S.A. Groupama Transport and Others, 2002 Rev.
Arb. 955 and note Eric Loquin, Rivista del Arbitrato, 2002, 801 and note Marco Perrini
‘La Clausola Compromissoria nei Gruppi di Contratti’.
673) [2009] 4 S.L.R.(R) 732, [2009] S.G.C.A. 41.
674) Ibid., para. 67.
675) Third Chamber, Decision N° 60/2007, 19 Jun. 2007, 2 J. Arab Arb., 165 (n° 1, 2010) and
commentary by Salah El Dine Al-Dabagh.
676) Supreme Court of Portugal, Case 5961/09, 1TVLSB.L1.S1.
677) 1992 Rev. Arb. 66 and note by L. Aynès. See also infra, the case referred to in ¶708.
678) Malaysian Newsprint Industries Sdn Bhd v. Bechtel International, Inc., High Court of
Kuala Lumpur, 5 May 2008 [2008] MLJU 0241.
679) 42 Y.B. Com. Arb., 591 (2017).
680) Cass. civ. 1re, 2 Apr. 2014, JCP, 2014, Doctr. 857, n° 1, obs. Ch. Seraglini; AJCA, 2014.177,
obs. M. de Fontmichel; Rev. Sociétés, 2014.584, note B. Le Bars, Procédures, 2014,
175, note L. Weiller.
681) [1998] 1 S.L.R.(R) 615, [1998] S.G.H.C. 425.
682) Ibid., paras 26 and 30-31.
683) See by contrast SIAC Award of 21 Oct. 2011 in Singapore Arbitral Awards 2012, volume
1, 127, where the parties had concluded a sales contract containing an arbitration
agreement and had subsequently entered into a settlement agreement that did not
contain an arbitration clause. The arbitral tribunal rejected the respondent’s
objection to the jurisdiction of the tribunal on the basis that the claimant had
expressly reserved its right to bring its claims against the respondent pursuant to
the terms of the sales contract in the event of the respondent’s breach of the
settlement agreement.
684) [1996] 2 Lloyd’s Rep 304; 15 ASA Bull. 1997, 131 (summary).
685) When the parties have signed a series of agreements containing incompatible
arbitration clauses, the issue before the Court is sometimes under which agreement
the dispute arose and, consequently, under which clause the arbitration should be
initiated. J. Ray McDermott v. Bay Ltd, 2003 U.S. Dist. Lexis 23604 (S.D.Tex., 10 Nov.
2003).
686) 1st Ch. D., 1997 Rev. Arb. 547.
687) Cass. civ. 1re, 14 May 2014, M.B. Crégniot et al. c/ société civile des Mousquetaires,
2017 Rev. Arb. 498, D. 2014, Pan. 2541, obs. Th. Clay; Procédures, 2014, 2006, obs. L.
Weiller.
688) 1st Suppl. Ch., 1991 Rev. Arb. 96.
65
689) Paris Court of Appeal, Decision of 16 Nov. 2006, First Chamber, Section C, Empresa de
Telecommunicaciones de Cuba S.A. v. Telefónica Antillana and Banco Nacional de
Comercio Exterior-Bancomext, Case no. 04/24238.
690) Swiss Federal Supreme Court, decision 4A_390/214 of 20 Feb. 2015, ASA Bull. 641
(2016).
691) First Ch. C., 2003 Rev. Arb. 1252 and note by Train.
692) See for example Paris, 18 Apr. 1989, 1990 Rev. Arb. 915, with note by J-H. M. and C.V.;
Paris, 1 Dec. 1995, 1996 Rev. Arb. 456, with note by J-M. Talau; Paris, 11 Jan. 1995, cited
by Daniel Cohen, Arbitrage et groupes de contrats, 1997 Rev. Arb. 471, 490, footnote 52
confirmed by Cass. Civ. 2d, 26 Nov. 1997, 1997 Rev. Arb. 544.
693) Brussels District Court, 4th Chamber, RG 2006/419/A, Decision of 6 Sep. 2007: M and
Ors v. S and Ors, Les Cahiers de l’Arbitrage, N° 2009/1, Gaz. Pal., 21 Mar. 2009, p. 56.
694) Cass. civ. 1re, 6 Nov. 2013, Société Bioalliance Pharma c/ société Spepharm Holding
BV et autre, JCP, 2014, I, 1075, n° 4, obs. Ch. Seraglini.
695) Cass. civ. 1re, 12 Feb. 2014 (n° 13-18059), JCP, 2014, 857, n° 3, obs. Ch. Seraglini. See
also Cass. 1st Civ. Ch., 4 Dec. 2019, n° 18-23395, Russian Satellite Communications
Company (RSCC) v. Orion Satellite Communications Inc. (Orion) and Holding
Financière Céleste (HFC), with observation by Denis Bensaude, Chronique de
Jurisprudence de droit de l’arbitrage, Gaz. Pal. 10 Mar. 2020, 29, 30.
696) Bunge International Commerce Ltd. v. Parapuã Agroindustrial S/A, 17 May 2017, SEC
11.116-EX, 17 May 2017, 43 Y.B. Com. Arb. 433 (2018).
697) FC X v. Y, 4A_244/2012.
698) [2007] S.G.H.C. 17.
699) Referring to the decision of Tay Yong Kwang, J. in Mancon (BVI) Investment Holding v.
Heng Holdings SEA, [2000] 3 S.L.R. 220.
700) Ibid., paras 16-17.
701) 1st Suppl Ch., 1993 Rev. Arb. 617 and note by L. Aynès.
702) At 622.
703) 1998 Rev. Arb. 573, note G. Pluyette.
704) Brazilian Special Appeal n° 1.639.035-SP, 18 Sep. 2018, Paranapanema S/A v. BTG
Pactual S/A and Santander Brasil S/A, commented by Gustavo Scheffer da Silveira,
37 ASA Bul. 853 (2019).
705) Ibid., p. 859 and the jurisprudence cited.
706) According to Whitesell and Silva-Romero in Complex Arbitrations, supranote 251, 15,
under the 1998 ICC Rules, the ICC Court decided prima facie that an arbitration
would not proceed when the clauses provided one for Paris and the other one for
Geneva as the seat of the arbitration, or referred to different methods for
constituting the arbitral tribunal. In one case, the fact that the clauses provided for
different applicable substantive laws was not considered relevant.
707) Partial award (Paris, New York law), 27 Y.B. Com. Arb. 139 (2002), 5 ICC Awards 67,
analysed by Train, supranote 6, ¶¶496, 497, 742 and footnote 78, p. 385.
708) The tribunal judged irrelevant the American case law according to which ‘related
agreements are arbitrable together … even if one of the agreements lacks an
arbitration clause’. Train, ibid., ¶497.
709) Unpublished, cited by Train, ibid., ¶289.
710) 117 J. Droit Int’l (Clunet) 191 (1990), obs. E. Gaillard; 17 Y.B. Com. Arb. 42 (1992).
711) Gaillard, ibid., p 216; Train, supranote 6, No. 92. See also the dissenting opinion of
arbitrator M.K. Mbaye in 118 J. Droit Int’l, 202, 205 (1991) and in 6 ICSID Review, p. 233.
712) 14 ASA Bull. 544 (1996) and 25 Y.B. Com. Arb. 312 (2000); also cited by Train, ibid., at
¶¶282 and 286.
713) 14 ASA Bull. 562 (1996)
714) Lawrence W. Craig, William W. Park, & Jan Paulsson, ICC Arbitration, 2d edn, ICC
Publications, 1990, 94. The arbitral tribunal also referred to the ICC award in the
Pyramids arbitration (SSP v. Arab Republic of Egypt and EGOTH, 9 Y.B. Com. Arb. 115
(1984)) where it was held that the transaction as a whole (involving the proposed
construction of an international tourist complex at the site of the pyramids in Cairo)
‘although structured in the form of separate agreements … is to be viewed as a
unified contractual scheme …’.
715) Partial award, 25 Y.B. Com. Arb. 328 (2000), 4 ICC Awards 389.
716) At 340.
717) Award of 1 Oct. 1980, 12 Y.B. Com. Arb. 84 (1987).
718) Final award, unpublished, cited by Train, supra, at footnote 10, p. 49 and at nr 274,
279, 519 and 558. The contract was governed by the law of the purchaser, established
in a French-speaking North African country.
719) 18 Y.B. Com. Arb. 34 (1993) also cited by Train, ibid., at footnote 11, p. 50 and at
¶¶706, 711 and 712. The arbitration clause provided: ‘(1) Tout litige entre
l’entrepreneur et le sous-traitant en relation avec le présent sous-contrat et qui
n’implique pas l’ouvrage à construire sera tranché définitivement conformément au
Règlement de conciliation et d’arbitrage de la Chambre de Commerce Internationale
[…]. (2) Tout litige en relation avec le présent sous-contrat et qui concerne, de quelque
façon que ce soit, l’ouvrage à construire […] sera soumis au mode de résolution des
litiges prévu … aux conditions générales du contrat [principal].’ In this case, the
contractor had undertaken to pay to the subcontractor all the taxes that he would
have to pay to the administrations of the state of the place of construction.
720) Final award, unpublished, cited by Train, ibid., at ¶130.
66
721) The award is known through the decision of the Paris Court of Appeal which
dismissed an action to set aside. Paris Court of Appeals, 1st Suppl. Ch., 28 Feb. 1992,
1992 Rev. Arb. 649 and note by Cohen.
722) Final award (Paris, law of a French-speaking African state), unpublished, cited by
Train, ibid., ¶¶256-258.
723) Final award, unpublished, analysed by Train, ibid., ¶¶133, 160 and 742 and footnotes
3 p. 150 and 68 p. 317.
724) ICC Interim Award of 16 Nov. 1984, 11 Y.B. Com. Arb. 134 (1986).
725) Ibid., at 138.
726) 113 J. Droit Int’l (Clunet) 1113 (1986); 2 ICC Awards, 275, note by Yves Derains.
727) Partial award, unpublished, commented by Train, ibid., ¶¶72, 77, 555 and footnote
45, p. 64. The dispute was governed by Austrian law.
728) Partial award, 28 Y.B. Com. Arb. 328 (2000), 4 ICC Awards 389, commented by Train,
ibid., at ¶¶73, 78 and 80. The dispute was governed by Swiss law.
729) Cited by Train, ibid., at ¶80.
730) Final award, unpublished, commented by Train, ibid., at ¶¶74, 81, 166, 219, 229 and
695. The dispute was governed by Italian law.
731) Final award, unpublished, analysed by Train, ibid., ¶¶132-134 and 164.
732) 121 J. Droit Int’l (Clunet) 1059 (1994); 2 ICC Awards, 555 and note by Yves Derains.
733) Swiss courts have since then relaxed their interpretation of the requirement of a
writing. See in this respect the decision of the Swiss Federal Court of 16 Oct. 2003,
supra, ¶249.
734) Final Award in ICC Case no. 13646 of 2007, JDI 2010, 1434, 6 ICC Arbitral Awards, 859
and note FMS.
735) See above ¶249 the decision of the Swiss Federal Court of 16 Oct. 2003.
736) 1 ICC Awards, 473 and note by Yves Derains.
737) Final award, 21 Y.B. Com. Arb. 54 (1996), also cited by Train, ibid., ¶¶561, 563 and 654
and footnote 178, p. 265.
738) Train, ibid., at ¶561.
739) 2 Y.B. Com. Arb. 151 (1977), I ICC Awards, 11. Also cited by Train, ibid., at ¶598 and
footnote 138, p. 254. Cumulative application of Belgian and Italian law.
740) See the numerous references cited by Train, ibid., ¶¶482 and following. See however
in Belgium the decision analysed at ¶569 above.
741) See infra ¶731.
742) Final award, unpublished, cited by Train, ibid., ¶727 and footnotes 52, p. 68 and 91,
p. 326.
743) Train, ibid., footnote 8, p. 444.
744) Final award, unpublished, cited by Train, ibid., at ¶662.
745) Arbitral award of 21 Oct. 1983, 10 Y.B. Com. Arb. 71 (1985) and ICSID annulment
decision of 3 May 1985, 11 Y.B. Com. Arb. 162 (1986).
746) At 164.
747) Final award (Paris, Luxembourg law), unpublished, cited by Train, supranote 6, at
¶¶629 and 630 and footnotes 34 p. 456 and 58 p. 468.
748) Ibid., footnote 34, p. 456.
749) Partial award, unpublished, cited by Train, ibid., at ¶2 and footnotes 235 p. 137, 345
p. 306 and 59 p. 375. The seat of the Tribunal was Amsterdam and Italian law was
applicable.
750) 15 Y.B. Com. Arb. 74 (1990).
751) At 77.
752) At 78.
753) Paris. Portuguese law. Unpublished, cited by Train, supranote 6, at ¶599 and
footnotes 91 p. 326, 100 p. 328, 101 p. 329.
754) According to Train, supranote 6, at ¶42, the economic unity of the group is becoming
one of the most important criteria to determine the scope of the arbitration
agreement within the group. At least when it appears to be in line with the will of
the parties. Ibid., at ¶¶45 and 46.
755) But not as liberal as Indian Courts.
756) A v. B [2017] EWHC 3417 (Comm.) (21 Dec. 2017).
67
757) Article 1 of the Rules provided as follows:
1.1. Any party wishing to commence an arbitration under the LCIA Rules
(the ‘Claimant’) shall deliver to the Registrar of the LCIA Court (the
‘Registrar’) a written request for arbitration (the ‘Request’),
containing or accompanied by:
…
(ii) the full terms of the Arbitration Agreement (excepting the
LCIA Rules) invoked by the Claimant to support its claim,
together with a copy of any contractual or other
documentation in which those terms are contained and to
which the Claimant’s claim relates;
(iii) a statement briefly summarising the nature and
circumstances of the dispute, its estimated monetary amount
or value, the transaction(s) at issue and the claim advanced
by the Claimant against any other party to the arbitration
(each such other party being here separately described as a
‘Respondent’);
(iv) a statement of any procedural matters for the arbitration
(such as the arbitral seat, the language(s) of the arbitration,
the number of arbitrators, their qualifications and identities)
upon which the parties have already agreed in writing or in
respect of which the Claimant makes any proposal under the
Arbitration Agreement;
…
(vi) confirmation that the registration fee prescribed in the
Schedule of Costs has been or is being paid to the LCIA,
without which actual receipt of such payment the Request
shall be treated by the Registrar as not having been delivered
and the arbitration as not having been commenced under the
Arbitration Agreement; …
1.4. The date of receipt by the Registrar of the Request shall be treated
as the date upon which the arbitration has commenced for all
purposes (the ‘Commencement Date’), subject to the LCIA’s actual
receipt of the registration fee.
758) [2011] 1 Lloyd’s Rep. 188.

759) Aliman Immobiliare del Geom. Roberto Gufler & C.S.A.S., v. Meridiana Costruzioni srl.,
Rivista del’ Arbitrato, 2008, 601 and note Francesco P. Luiso.
760) A more restrictive approach was adopted by the arbitral tribunal in the ad hoc
award of 17 May 2006, cited by Polinari J., Pluralità di parti e pluralità di
convenzioni d’arbitrato, 3 Rivista dell’ Arbitrato 531 (2006) at 531. Forty-one
franchisees had entered into independent franchise agreements with a franchisor,
each of them containing identical standard terms and arbitration clauses. All of the
franchisees submitted a single request for arbitration for all disputes arising from
their various contracts and appointed an arbitrator. The franchisor, after appointing
its arbitrator, objected to the admissibility of the claims, arguing that multiple
arbitration clauses contained in distinct and independent contracts could not give
rise to a single arbitration. The Tribunal dismissed the objection. It held that
although joining in one arbitration all the claims arising from various contracts
requires the consent of all the parties involved, such consent can be implied and
this was the case here: the franchisor had definitely given his consent by appointing
its arbitrator.
761) 218 BCCA 468.
762) See also the Rules of the Deutsche Institution for Schiedsgerichtsbarkeit (DIS)
(Article 17) and of the Vienna International Arbitration Center (Articles 17 and 18).
763) The 1998 Rules were silent as to the setting in motion of multi-contract arbitrations.
As a matter of practice, when a party objected to multi-contract claims proceeding
in a single arbitration, the objection was dealt with under Article 6(2) of the Rules.
According to the Court’s practice, a multi-contract arbitration could proceed where
the following conditions were satisfied: all contracts had been signed by all of the
parties; the dispute resolution mechanisms in the three contacts were compatible
and all contracts were related to the same economic transaction. However, with
respect to the first element, the Court exceptionally decided to allow a single
arbitration on the basis of multiple contracts not signed by all parties in situations
where: the signatory parties belonged to the same group of companies; or at least
one of the arbitration agreements had been signed by all of the parties. Greenberg,
Feris and Albanesi, Consolidation, Joinder, Cross-Claims, Multiparty and
Multicontract Arbitrations: Recent ICC Experience, in Bernard Hanotiau and Eric
Schwartz (eds), Multiparty Arbitration, Dossiers VII, ICC Institute of World Business
Law, 2010, 161, pp. 166 and following and the multiple examples cited.
764) Articles 6(5) and 6(6).
68
765) Decision on jurisdiction of 22 Mar. 2011.
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Document information Chapter 3: The Possibility of Bringing Together in One

Subsection II: General Remarks

SECTION III: ANALYSIS OF CASE LAW

Subsection IV: The Issue of Guarantees (Bank Guarantees and Guarantee

I. Identical Arbitration Clauses

Subsection VII: Conclusions

SECTION IV: TO WHAT EXTENT IS IT POSSIBLE TO START ONE ARBITRATION

Subsection II: Institutional Rules (762)

758) [2011] 1 Lloyd’s Rep. 188.

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