Skip main navigation

New lower prices! Get up to 50% off 1000s of courses. 

Explore courses

Multi-party and multi-contract arbitration clauses

Let's consider the types of issues that might arise in relation to multi-party disputes.

Multi-party arbitration agreements The types of issue that might arise in relation to multi-party disputes include: • whether a respondent may join a third party in order to claim contribution or an indemnity • whether a third party may intervene to bring claims which overlap with those in the arbitration • whether two sets of parallel proceedings, which raise similar or overlapping issues, may be consolidated or heard concurrently, and • how an arbitral tribunal is to be appointed where there are more than two parties and, in particular, how equal treatment of the parties in this regard can be ensured.

Some institutional rules contain provisions addressing multi-party disputes. However, the only sure way of ensuring that multi-party arbitral disputes are determined economically and conveniently is to draft a clause specifically dedicated to this. When drafting multi-party and multi-contract arbitration clauses, the International Bar Association (IBA) Guidelines for Drafting International Arbitration Clauses (2010) is a useful starting point. The IBA Guidelines provide sample arbitration clauses for multi-party and multi-contract arbitration with drafting notes. Some institutional rules contain provisions addressing, to a limited extent, multi-party disputes. However, the only sure way of ensuring that multi-party arbitral disputes are determined economically and conveniently is to draft a clause specifically focusing on this.

Multi-party arbitration The term “multi-party” usually refers to the situation where there is a single contract to which there are more than two parties. The IBA Guidelines suggest a comprehensive clause as a starting point for multi-contract arbitration (see paragraph 105). This is a comprehensive clause and may be used (in part or in whole) as a starting basis for drafting a multi-party arbitration clause. It should be read in conjunction with the IBA Guidelines.  

The clause provides that: All disputes arising out of or in connection with this agreement, including any question regarding its existence, validity or termination, shall be finally resolved by arbitration under [selected arbitration rules], except as they may be modified herein or by mutual agreement of the parties. The place of arbitration shall be [city, country]. The language of arbitration shall be […].

There shall be three arbitrators, selected as follows: In the event that the request for arbitration names only one claimant and one respondent, and no party has exercised its right to joinder or intervention in accordance with the paragraphs below, the claimant and the respondent shall each appoint one arbitrator within [15] days after the expiry of the period during which parties can exercise their right to joinder or intervention.

If either party fails to appoint an arbitrator as provided, then, upon the application of any party, that arbitrator shall be appointed by [the designated arbitral institution].

The two arbitrators shall appoint the third arbitrator who shall act as presiding arbitrator. If the two arbitrators fail to appoint the presiding arbitrator within [45] days of the appointment of the second arbitrator, the presiding arbitrator shall be appointed by the [designated arbitral institution/appointing authority].

In the event that more than two parties are named in the request for arbitration or at least one contracting party exercises its right to joinder or intervention in accordance with the paragraphs below, the claimant(s) shall jointly appoint one arbitrator and the respondent(s) shall jointly appoint the other arbitrator, both within [15] days after the expiry of the period during which parties can exercise their right to joinder or intervention.

If the parties fail to appoint an arbitrator as provided above, [the designated arbitral institution/appointing authority] shall, upon the request of any party, appoint all three arbitrators and designate one of them to act as presiding arbitrator. If the claimant(s) and the respondent(s) appoint the arbitrators as provided above, the two arbitrators shall appoint the third arbitrator, who shall act as presiding arbitrator. If the two arbitrators fail to appoint the third arbitrator within [45] days of the appointment of the second arbitrator, the presiding arbitrator shall be appointed by [the designated arbitral institution/appointing authority].

Any party to this agreement may, either separately or together with any other party to this agreement, initiate arbitration proceedings pursuant to this clause by sending a request for arbitration to all other parties to this agreement [and to the designated arbitral institution, if any].

Any party to this agreement may intervene in any arbitration proceedings hereunder by submitting a written notice of claim, counterclaim or cross-claim against any party to this agreement, provided that such notice is also sent to all other parties to this agreement [and to the designated arbitral institution, if any] within [30] days from the receipt by such intervening party of the relevant request for arbitration or notice or cross claim, counterclaim or cross-claim.

Any party to this agreement named as respondent in a request for arbitration, or a notice of claim, counterclaim or cross-claim, may join any other party to this agreement in any arbitration proceedings hereunder by submitting a written notice of claim, counterclaim or cross-claim against that party, provided that such notice is also sent to all other parties to this agreement [and to the designated arbitral institution, if any] within [30] days from the receipt by such respondent of the relevant request for arbitration or notice of claim, counterclaim or cross-claim.

Practical experience indicates that it is good practice for multi-party arbitration clause to provide: • for joinder of, or intervention by, each of the parties • for a time limit for third party intervention in order to limit delays, and • a mechanism for the appointment of arbitrators, for example, by stipulating that all arbitrator appointments are to be made by a third party, such as an arbitral institution. Alternatively, parties can be aligned into two sides, with one arbitrator to be appointed by each side

Multi-contract arbitration The term “multi-contract” refers to the position where there are several contracts, possibly with different parties. There are limited model clauses to use, but the American Arbitration Association (AAA) provides a helpful sample multi-contract arbitration clause that was originally intended for use in respect of construction projects.

The AAA sample clause provides: Any controversy or claim arising out of or relating to [specify contract], or the breach thereof, shall be settled by arbitration administered by [the American Arbitration Association under its Construction Industry Arbitration Rules] and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

The owner, the contractor, and all subcontractors, specialty contractors, material suppliers, engineers, designers, architects, construction lenders, bonding companies, and other parties concerned with the construction of the structure] are bound, each to each other, by this arbitration clause, provided that they have signed this contract or a contract that incorporates this contract by reference or signed any other agreement to be bound by this arbitration clause.

Each such party agrees that it may be joined as an additional party to an arbitration involving other parties under any such agreement. If more than one arbitration is begun under any such agreement and any party contends that two or more arbitrations are substantially related and that the issues should be heard in one proceeding, the arbitrator(s) selected in the first-filed of such proceedings shall determine whether, in the interests of justice and efficiency, the proceedings should be consolidated before that (those) arbitrator(s).

The effect of the above sample clause is to set out a formulation that binds multiple parties to a standalone arbitration clause, including options for joinder and consolidation. It may be suitable where there is a string or web of contracts, and all the parties are amenable to signing up to a separate, standalone arbitration agreement governing disputes arising out of the various contracts.

Alternatively, such a provision could be incorporated by reference. In multi-contract disputes, the following should always be considered: • consolidation of arbitral references • concurrent hearings and common evidence, and • appointment of a common arbitrator to determine the dispute arising under the various contracts.

© College of Law
This article is from the free online

International Arbitration: Frameworks and Drafting an Arbitration Agreement

Created by
FutureLearn - Learning For Life

Reach your personal and professional goals

Unlock access to hundreds of expert online courses and degrees from top universities and educators to gain accredited qualifications and professional CV-building certificates.

Join over 18 million learners to launch, switch or build upon your career, all at your own pace, across a wide range of topic areas.

Start Learning now