The Shortcoming of Arbitration in the Modern World: the Third Parties Limitation

Max D. Passey

Global Politics Review
Vol. 2, No. 2 (October 2016): 74-89.
DOI: 10.5281/zenodo.1238539
GPR ID: 2464-9929_v02_i02_p074
Published: 30 October 2016

Abstract: Arbitration offers a unique and practical tool for solving private disputes between commercial parties. International commercial arbitration has traditionally been considered a creature of consent. Generally, arbitration is only able to compel willing parties, or those privy to the contract, to arbitrate. Therefore, arbitral tribunals have been unwilling to entertain claims by a non-signatory to arbitrate which leads some critics to consider the lack of extension to third parties a major short-coming of arbitration in the modern world. This paper concludes that the general consensus has become increasingly more willing to extend the arbitration agreement to third parties who were not signatories of the main contract. This conclusion is drawn from recent case law and amendments to the UNCITRAL Model Law on International Commercial Arbitration. The paper also highlights the utilisation of common law principles derived from agency and contract law as a means of facilitating a more inclusive approach from arbitral tribunals, with heavy focus on the five common theories first identified in the Thomson case and their further development in later cases.

Keywords: international commercial arbitration, third-party problem, commercial law.

Copyright by the Author.  This is an Open Access article licensed by Global Politics Review under the terms and conditions of the Creative Commons Attribution-NonCommercial 4.0 License  Creative Commons License// Disclaimer: the copyright and license of this article changed on October 30, 2017, when GPR became Open Access. The PDF file has not been updated for archival purposes. //

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