United States: The More The Merrier? Increase In Multiparty Arbitrations Spawns New Institutional Rules

Originally published by Metropolitan Corporate Counsel, May 2015

Over the last several years, the world's leading arbitral institutions have adopted new rules, recognizing that the growth in international arbitration has been accompanied by the increasing complexity and sophistication of disputes. Institutional statistics reveal increases in disputes involving multiple parties, multiple contracts and multiple arbitration agreements. Parties to a dispute subject to arbitration are also increasingly seeking interim and emergency measures relating to their disputes.

Adapting to this new reality, arbitral institutions that have changed their rules on these points include the American Arbitration Association/International Centre for Dispute Resolution (AAA/ ICDR), International Court of Arbitration at the International Chamber of Commerce (ICC), and London Court of International Arbitration (LCIA).

Those who will find the new rules regarding multiparty practice to be of particular interest include companies involved in ventures with multiple partners (including parents and subsidiaries), policyholders with large insurance programs involving multiple insurance companies, and cedents with reinsurance programs including multiple reinsurers. Often, these types of claimants seek to have a single proceeding cover the entire program in dispute rather than moving forward in individual proceedings against each member of a program. In addition to the obvious cost savings in having a single proceeding, it may also be most efficient and avoid inconsistent determinations where common factual or legal issues feature in the dispute.

New Institutional Approaches to Multiparty Arbitrations

AAA/ICDR Rules The 2014 AAA/ ICDR Rules contained a number of changes over prior versions of the Rules.1 Most importantly, for the purposes of this article, Article 7 ( Joinder) and Article 8 (Consolidation) were added to the Rules.

Under Article 7, "A party wishing to join an additional party to the arbitration shall submit to the Administrator a notice of Arbitration against the additional party."2 The rule also requires that notice be provided to the additional party and all other parties at the same time.3 However, critically, it should be noted that Article 7 provides that "No additional party may be joined after the appointment of any arbitrator, unless all parties, including the additional party, otherwise agree."4

Article 8 provides rules governing consolidation of disputes, providing:

At the request of a party, the Administrator may appoint a consolidation arbitrator, who will have the power to consolidate two or more arbitrations pending under these Rules, or these and other arbitration rules administered by the AAA or ICDR, into a single arbitration where:

  • the parties have expressly agreed to consolidation; or
  • all of the claims and counterclaims in the arbitrations are made under the same arbitration agreement; or
  • the claims, counterclaims, or setoffs in the arbitrations are made under more than one arbitration agreement; the arbitrations involve the same parties; the disputes in the arbitrations arise in connection with the same legal relationship; and the consolidation arbitrator finds the arbitration agreements to be compatible.5

Article 8, which requires detailed study by any party seeking to consolidate under the rules, further provides that the Consolidation Arbitrator may take into account all relevant circumstances including: applicable law; whether one or more arbitrators have been appointed in more than one of the arbitrations and, if so, whether the same or different persons have been appointed; the progress already made in the arbitrations; whether the arbitrations raise common issues of law and/or facts; and whether the consolidation of the arbitrations would serve the interests of justice and efficiency.6

ICC Rules The ICC revised its Arbitration Rules in 2012 to address, among other things, "disputes involving multiple contracts and parties."7 To that end, the ICC added Articles 7-10 covering multiple parties, multiple contracts and consolidation.

Under Article 7 ( Joinder of Additional Parties), "A party wishing to join an additional party to the arbitration shall submit its request for arbitration against the additional party."8 No additional party may be joined after the confirmation or appointment of any arbitrator unless all parties, including the additional party, agree.9

Articles 8 and 9 apply, respectively, to "claims between multiple parties" and "multiple contracts." As to arbitration with multiple parties, claims may be made by any party against any other party provided that "no new claims may be made after the Terms of Reference are signed or approved by the Court without authorization of the arbitral tribunal."10 As to arbitration with multiple contracts, "claims arising out of or in connection with more than one contract may be made in a single arbitration irrespective of whether such terms are made under one or more than one arbitration agreement under the Rules."11

Under Article 10 (Consolidation of Arbitrations), which, like Article 8 in the AAA/IDCR rules, should be a focal point for any party seeking to consolidate under the rules, the Court may consolidate arbitrations pending under the ICC Rules under the following circumstances:

  • the parties have agreed to consolidation; or
  • all of the claims in the arbitration are made under the same arbitration agreement; or
  • where the claims in the arbitrations are made under more than one arbitration agreement, the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the Court finds the arbitration agreements to be compatible.12

In determining whether to consolidate, the Court may take into account any circumstance it considers to be relevant, including whether arbitrators have been confirmed or appointed in the arbitrations and whether the same or different arbitrators were already confirmed or appointed.13

LCIA Rules The 2014 LCIA Rules also contain express provisions regarding joinder and consolidation.14

In Article 22 (Additional Powers), the LCIA Rules provide the Arbitral Tribunal with the power to decide, among others, the following issues:

  1. to allow one or more persons to be joined in the arbitration as a party provided any such person and the applicant party have consented to such joinder in writing following the Commencement or (if earlier) in the Arbitration Agreement; and thereafter to make a single final award, or separate awards, in respect of all parties so implicated in the arbitration;
  2. to order, with the approval of the LCIA Court, the consolidation of the 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;
  3. to order, with the approval of the LCIA Court, the consolidation of the arbitration with one or more other arbitration subject to the LCIA Rules commenced under the same arbitration agreement or any compatible arbitration agreement(s) between the same disputing parties, provided that no arbitral tribunal has been formed by the LCIA Court for such other arbitration(s) or, if already formed, that such tribunal(s) is(are) composed of the same arbitrations;15

Conclusion

Rules pertaining to multiparty arbitration were also recently adopted by, among others, the Hong Kong International Arbitration Centre in the latest iterations of their rules.16

Given this trend, parties to arbitration agreements may seek to invoke the rules, where applicable, to seek to join parties to arbitrations or to seek to consolidate arbitrations. In institutions where such rules have not yet been expressly included, parties may seek to persuade tribunals that they have the power to join or consolidate arbitrations on the basis of the trend.

Careful attention must be paid, however, to the rules that apply in a given situation. In particular, timing requirements can bar a party seeking to add additional parties to an active or contemplated arbitration (or to consolidate arbitrations). Accordingly, parties seeking to add additional parties to an active or contemplated arbitration (or to consolidate arbitrations) should do so as early as possible in the proceeding.

Likely claimants who may want to have a single proceeding with a number of parties should pay careful attention to the applicable arbitral rules when drafting a dispute resolution clause. While an express pre-dispute agreement for all parties to participate in a single arbitration is ideal for a potential claimant seeking to include all potential parties in a dispute, the use of arbitral rules that expressly contemplate multiparty proceedings can assist in the absence of an express agreement.

As noted above, claimants as well as respondents can benefit from the invocation of such multiparty provisions to ensure the efficient resolution of disputes.

Originally published by Metropolitan Corporate Counsel.

Footnotes

1. "The New ICDR International Arbitration Rules," Paul Friedland & John Templeman, available online at: http://images.go.adr.org/Web/AmericanArbitrationAssociation/%7Ba522394f-fbe3-41ef-874f-e085f5806c08%7D_ICDR_Procedures_Changes.pdf. In this commentary, Mr. Friedland and Mr. Templeman note that the old Rules had no prior provisions addressing, among other things, joinder or consolidation.

2. International Dispute Resolution Procedures (including Mediation and Arbitration Rules) – Rules Amended and Effective June 1, 2014, International Centre for Dispute Resolution, at Art. 7(1), available online at: http://images.go.adr.org/Web/AmericanArbitrationAssociation/%7B882b243b-d143-4be5-89e0-6aa7f3125560%7D_ICDR_Rules.pdf

3. See id.

4. See id.

5. See id. at Art. 8(1).

6. See id. at Art. 8(3).

7. Arbitration Rules: Rules of Arbitration of the International Chamber of Commerce (in force from 1 January 2012) at Forward, available online at: http://www.iccwbo.org/Data/Documents/Buisness-Services/Dispute-Resolution-Services/Mediation/Rules/2012-Arbitration-Rules-and-2014-Mediation-Rules-ENGLISH-version

8. See id. at Art. 7(1).

9. See id.

10. See id. at Art. 8(1).

11. See id. at Art. 9.

12. See id. at Art. 10.

13. See id.

14. LCIA Arbitration Rules effective 1 October 2014, LCIA, available online at: http://www.lcia.org/media/download.aspx?MediaId=379. Article 22.1(h) of the prior iteration of Rules contained a more limited joinder provision. See LCIA Arbitration Rules effective 1 January 1998, at Art. 22.1(h), available online at: http://www.lcia.org/Dispute_Resolution_Services/LCIA_Arbitration_Rules.aspx.

15. See id. at Article 22.1.

16. HKIAC Administered Arbitration Rules 2013, HKIAC, Art. 27-29, available online at http://www.hkiac.org/en/arbitration/arbitration-rules-guidelines/hkiac-administered-arbitration-rules-2013.


Finley T. Harckham A shareholder in the New York office of Anderson Kill. Mr. Harckham regularly represents corporate policyholders in insurance coverage matters and has successfully litigated, arbitrated and settled hundreds of complex coverage claims, including those involving property loss, business interruption, directors and officers liability, construction, professional liability and general liability claims.

Peter A. Halprin An attorney in the firm's New York office and a member of CIArb. Mr. Halprin's practice concentrates in commercial litigation and insurance recovery, exclusively on behalf of policyholders. He also acts as counsel for U.S. and foreign companies in domestic and international arbitrations. He is a member of the Chartered Institute of Arbitrators and earned a postgraduate diploma in International Commercial Arbitration at Queen Mary, University of London.


About Anderson Kill

Anderson Kill practices law in the areas of Insurance Recovery, Commercial Litigation, Environmental Law, Estate, Trusts and Tax Services, Corporate and Securities, Antitrust, Banking and Lending, Bankruptcy and Restructuring, Real Estate and Construction, Foreign Investment Recovery, Public Law, Government Affairs, Employment and Labor Law, Captive Insurance, Intellectual Property, Corporate Tax, Hospitality, and Health Reform. Recognized nationwide by Chambers USA for Client Service and Commercial Awareness, and best-known for its work in insurance recovery, the firm represents policyholders only in insurance coverage disputes - with no ties to insurance companies and has no conflicts of interest. Clients include Fortune 1000 companies, small and medium-sized businesses, governmental entities, and nonprofits as well as personal estates. Based in New York City, the firm also has offices in Ventura, CA, Philadelphia, PA, Stamford, CT, Washington, DC, Newark, NJ and Dallas, TX.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
McLane Middleton, Professional Association
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
McLane Middleton, Professional Association
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions