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assignment of contract arbitration clause

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  • > EXPLAINING ASSIGNMENTS OF ARBITRATION AGREEMENTS

assignment of contract arbitration clause

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Explaining assignments of arbitration agreements.

Published online by Cambridge University Press:  30 March 2021

The case law and literature to date have struggled to locate the rationale for the assignability of arbitration agreements. While different justifications have been proffered, each of them rests on questionable premises. This has given rise to a host of uncertainties over the rules which apply in practice. This paper proposes that a satisfactory rationale can be found in the “acceptance principle”. This principle indicates, first, that arbitration agreements which are not actual burdens can be assigned, and second, that the assignability of arbitration agreements is grounded in the assignee's acceptance in the form of non-disclaimer of the assignment. Bringing the acceptance principle to the fore not only provides a theoretically sound justification for the assignability of arbitration agreements; it also suggests how the practical uncertainties in this area of law can be resolved satisfactorily.

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Associate Professor in Law, University of Melbourne.

I thank Ed Taylor for drawing my attention to this topic, and Michael Bryan, Tony Guest, Lusina Ho, Lionel Smith and Chee Ho Tham for their comments on an earlier draft. I am also grateful to Priyanka Banerjee and Robin Gardner at the MLS Academic Research Service for research assistance.

1 Jagusch , S. and Sinclair , A.C. , “ The Impact of Third Parties on International Arbitration: Issues of Assignment ” in Mistelis , L.A. and Lew , J.D.M. (eds.), Pervasive Problems in International Arbitration ( Alphen aan den Rijn 2006 ) Google Scholar , [15-6].

2 See generally Garnuszek , A. , “ The Law Applicable to the Contractual Assignment of an Arbitration Agreement ” ( 2016 ) 82 Arbitration 348 Google Scholar .

3 See e.g. Aspell v Seymour [1929] W.N. 152 (C.A.); Shayler v Woolf [1946] 1 Ch. 320; Rumput (Panama) S.A. v Islamic Republic of Iran Shipping Lines (hereafter “ The Leage ”) [1984] 2 Lloyd's Rep. 259 (Q.B.); Court Line v Aktiebolaget Gotaverken AB (hereafter “ The Halcyon the Great ”) [1984] 2 Lloyd's Rep. 283 (Q.B.); Socony Mobil Oil Co. Inc. v The West of England Ship Owners Mutual Insurance Association (London) Ltd. (hereafter “ The Padre Island ”) [1984] 2 Lloyd's Rep. 408 (Q.B.); Kaukomarkkinat O/Y v Elbe Transport-Union GmbH (hereafter “ The Kelo ”) [1985] 2 Lloyd's Rep. 85 (Q.B.); Montedipe SpA v JTP-RO Jugotanker (hereafter “ The Jordan Nicolov ”) [1990] 2 Lloyd's Rep. 11, 15 (Q.B.). Cf. Cottage Club Estates Inc. v Woodside Estates Co. (Amersham) Ltd. [1928] 2 K.B. 463; The London Steamship Owners Mutual Insurance Association Ltd. v Bombay Trading Co. Ltd. (hereafter “ The Felicie ”) [1990] 2 Lloyd's Rep. 21, 25 (Q.B.).

4 Throughout this paper, the “obligor” is the assignor's contractual counterparty.

5 The Halcyon the Great [1984] 2 Lloyd's Rep. 283, 289 (Q.B.); The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 19 (Q.B.).

6 Through Transport Mutual Insurance Association (Euroasia) Ltd. v New India Assurance Co. Ltd. [2005] EWHC 455 (Comm.), at [25]. See also The Leage [1984] 2 Lloyd's Rep. 259, 261–62 (Q.B.), where the Act's predecessor, the Arbitration Act 1975, was in issue.

7 Section 82(2).

8 The Kelo [1985] 2 Lloyd's Rep. 85, 89 (Q.B.); Baytur S.A. v Finagro Holdings S.A. [1992] 1 Q.B. 610.

9 See generally Liew , Y.K. , Guest on the Law of Assignment ( London 2018 ) Google Scholar , ch. 4.

10 In the arbitration context, see e.g. The Kelo [1985] 2 Lloyd's Rep. 85 (Q.B.); in the litigation context, see e.g. Trendtex Trading Corp. v Credit Suisse [1982] A.C. 679 (H.L.).

11 Lew , J.D.M. , Mistelis , L.A. and Kröll , S.M. , Comparative International Commercial Arbitration ( London 2003 ) Google Scholar , [7-53].

12 Shayler v Woolf [1946] 1 Ch. 320, 322.

13 Lew, Mistelis and Kröll, Comparative International Commercial Arbitration , [7-55]; Jagusch and Sinclair, “The Impact of Third Parties on International Arbitration”, [15-14].

14 Yeandle v Wynn Realisations Ltd. (1995) 47 Con. L.R. 1, 11 (C.A.); Herkules Piling Ltd. v Tilbury Construction Ltd. (1992) 32 Con. L.R. 112 (Q.B.).

15 Tolhurst v Associated Portland Cement Manufacturers (1900) Ltd. [1902] 2 K.B. 660, 668; Nokes v Doncaster Amalgamated Collieries Ltd. [1940] A.C. 1014, 1019; Davies v Collins [1945] 1 All E.R. 247, 249 (C.A.); Southway Group Ltd. v Wolff (1991) 57 B.L.R. 33, 52; Linden Gardens Trust Ltd. v Lenesta Sludge Disposals Ltd. [1994] 1 A.C. 85, 103 (H.L.); Don King Productions Inc. v Warren [2000] Ch. 291.

16 D. Girsberger, “The Law Applicable to the Assignment of Claims Subject to an Arbitration Agreement” in F. Ferrari and S. Kröll (eds.), Conflict of Laws in International Commercial Arbitration (Munich 2010), 385 (footnote omitted).

17 The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 15 (Q.B.).

18 Schiffahrtsgesellschaft Detlev von Appen GmbH v Voest Alpine Intertrading GmbH (hereafter “ The Jay Bola ”) [1997] 2 Lloyd's Rep. 279, 286 (C.A.).

20 R. Zakrzewski, Remedies Reclassified (Oxford 2005).

21 Ibid ., at ch. 2.

22 Ibid ., at 17. See e.g. W. Blackstone, Commentaries on the Laws of England , 1st ed., vol. 3 (Oxford 1768), 396; P. Birks, “Three Kinds of Objection to Discretionary Remedialism” (2000) 29 U.W.A.L.R. 1, 5; and the cases and commentators cited in Zakrzewski, Remedies Reclassified , 17, 44.

23 Zakrzewski, Remedies Reclassified , 44.

24 Ibid ., at ch. 4.

25 Ibid ., at ch. 6, as refined in Y.K. Liew, “Reanalysing Institutional and Remedial Constructive Trusts” [2016] C.L.J. 528, 534–37, and Y.K. Liew, Rationalising Constructive Trusts (London 2017), 18–23.

26 The Jay Bola [1997] 2 Lloyd's Rep. 279, 286 (C.A.) (emphasis added).

27 Rals International Pte Ltd. v Cassa di Risparmio di Parma e Piacenza SpA [2016] SGCA 53, at [55]. In the judgment, this idea was presented as closely linked to the “conditional benefit” analysis, discussed below.

28 Heyman v Darwins Ltd. [1942] A.C. 356, 373 (H.L.).

29 Cassa di Risparmio di Parma e Piacenza SpA v Rals International Pte Ltd. [2015] SGHC 264, at [102].

30 See, to the same effect, Privity of Contract: Contracts for the Benefit of Third Parties (Law Com. No. 242), [14.18]: “arbitration … must be seen as both conferring rights and imposing duties and do not lend themselves to a splitting of the benefit and the burden.”

31 Tito v Waddell (No. 2) [1977] Ch. 106, 290.

32 See generally C.J. Davis, “The Principle of Benefit and Burden” [1998] C.L.J. 522.

33 See e.g. The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 15 (Q.B.); Phoenix Finance Ltd. v Federation Internationale De L'Automobile [2002] EWHC 1028 (Ch), at [82]; Jones v Link Financial Ltd. [2012] EWHC 2402 (Q.B.), [2013] 1 W.L.R. 693, at [32]; Hatzl v XL Insurance Co. Ltd. [2009] EWCA Civ 223, at [52], [66]; Through Transport v New India Assurance [2005] EWHC 455 (Comm), at [22]. Cf. Rals v Cassa di Risparmio [2016] SGCA 53, at [54].

34 The Jay Bola [1997] 2 Lloyd's Rep. 279, 291 (C.A.).

35 Rhone v Stephens [1994] 2 A.C. 310.

36 Davies v Jones [2009] EWCA Civ 1164, [2009] 2 WLR 1286, at [27].

37 Thus, “It is, I think, quite clear that neither at law nor in equity could the burden of a contract be shifted off the shoulders of a contractor on to those of another without the consent of the contractee ”: Tolhurst v Associated Portland Cement Manufacturers (1900) [1902] 2 K.B. 660, 668 (emphasis added). See also Linden Gardens v Lenesta Sludge Disposals [1994] 1 A.C. 85, 103 (H.L.).

38 See main text from note 31 above.

39 Further on in the judgment, Megarry V.C. also noted that the conditional benefit principle imposes an “obligatory” burden, in the sense that the burden binds immediately when the benefit is transferred ( Tito v Waddell (No. 2) [1977] Ch. 106, 290). This was distinguished from certain cases falling within the “pure principle of benefit and burden”, where “optional burdens” are imposed: in those cases, the transferee has the option of refusing the benefit which would also avoid the burden (ibid., at 290–91). The “pure principle” was decisively rejected in Rhone v Stephens [1994] 2 A.C. 310.

40 Ostensibly, because there are problems with this explanation, as discussed earlier.

41 See e.g. Firma C-Trade S.A. v Newcastle Protection and Indemnity Association (hereafter “ The Fanti ”) [1991] 2 A.C. 1, 33 (H.L.); Phoenix Finance v Federation Internationale De L'Automobile [2002] EWHC 1028 (Ch), at [82]; Charterers’ Mutual Assurance Association v British and Foreign [1997] I.L.Pr. 838, at [44] (Q.B. Comm.).

42 See e.g. The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 15 (Q.B.); Jones v Link Financial [2012] EWHC 2402 (QB), at [32]; Aspen Underwriting Ltd. v Credit Europe Bank NV [2020] UKSC 11, at [27].

43 The Jay Bola [1997] 2 Lloyd's Rep. 279, 286, 291 (C.A.); Aline Tramp S.A. v Jordan International Insurance Company [2016] EWHC 1317 (Comm), at [40]. See also G.J. Tolhurst, The Assignment of Contractual Rights , 2nd ed. (Oxford 2016), [6.177].

44 At [34] (emphasis added).

45 Through Transport v New India Assurance [2005] EWHC 455 (Comm), at [22] (emphases added). See also The Jay Bola [1997] 2 Lloyd's Rep. 279, 291 (C.A.), and Aspen Underwriting v Credit Europe Bank [2020] UKSC 11, at [27], where, respectively, Scott V.C. and Lord Hodge erroneously attribute the enforcement approach to Tito v Waddell (No. 2) [1977] Ch. 106.

46 Three Rivers District Council v Bank of England (No 1) [1996] Q.B. 292, 307–08.

47 This is an adaptation of one of the ways in which the decision in Tolhurst v Associated Portland Cement Manufacturers (1900) Ltd. [1903] A.C. 414 (H.L.) can be understood: see the discussion in Liew, Guest on the Law of Assignment , [9–08].

48 Mangles v Dixon (1852) 10 E.R. 278, 290.

49 Cockell v Taylor (1852) 51 E.R. 475, 481. See also Coles v Jones and Coles (1715) 23 E.R. 1048; Ord v White (1840) 49 E.R. 140; Smith v Parkes (1852) 51 E.R. 720; Wakefield and Barnsley Banking Co. v Normanton Local Board (1881) 44 L.T. 697, 700; Roxburghe v Cox (1881) 17 Ch.D. 520, 526; Dixon v Winch [1900] 1 Ch. 736, 742; Turner v Smith [1901] 1 Ch. 213, 219; Edward Nelson & Co. Ltd. v Faber & Co. [1903] 2 K.B. 367, 375.

50 The Leage [1984] 2 Lloyd's Rep. 259, 262 (Q.B.).

51 STX Pan Ocean v Woori Bank [2012] EWHC 981 (Comm), [2012] 2 Lloyd's Rep. 99, at [9]. See also discussion in C. Ambrose, “When Can a Third Party Enforce an Arbitration Clause?” [2001] Journal of Business Law 415, 421–22.

52 Similarly, Cassa di Risparmio v Rals International [2015] SGHC 264, at [106], and Jagusch and Sinclair, “The Impact of Third Parties on International Arbitration”, [15]–[43] treats The Jay Bola [1997] 2 Lloyd's Rep. 279 (C.A.), as reflecting the “subject to equities” principle.

53 To paraphrase Megarry V.C. in Tito v Waddell (No. 2) [1977] Ch. 106, 290.

54 Phillips v Phillips (1861) 45 E.R. 1164, 1166. See also M. Smith and N. Leslie, The Law of Assignment , 3rd ed. (Oxford 2018), [26.45]; Tolhurst, The Assignment of Contractual Rights , [1.03].

55 D. Girsberger and C. Hausmaninger, “Assignment of Rights and Agreement to Arbitrate” (1992) 8 Arb.Intl. 121, 142. It is also “an escape from judicial appeals”: N. Andrews, Arbitration and Contract Law (Switzerland 2016), [1.06].

56 Investors Compensation Scheme Ltd. v West Bromwich Building Society (No. 1) [1998] 1 W.L.R. 896, 915 (H.L.).

57 Snell's Equity , 33rd ed. (London 2016), [2-006]. See also Smith and Leslie, The Law of Assignment , [2.98], [2.104]–[2.105].

58 Prosser v Edmonds (1835) 160 E.R. 196 (K.B.); Fitzroy v Cave [1905] 2 K.B. 364, 371.

59 Dickinson v Burrell (1866) L.R. 1 Eq. 337; Seear v Lawson (1880) 15 Ch.D. 426; Gross v Lewis Hillman Ltd. [1970] 1 Ch. 445, 460.

60 See e.g. Aspell v Seymour [1929] W.N. 152 (C.A.); Shayler v Woolf [1946] 1 Ch. 320; The Leage [1984] 2 Lloyd's Rep. 259 (Q.B.); The Halcyon the Great [1984] 2 Lloyd's Rep. 283 (Q.B.); The Padre Island [1984] 2 Lloyd's Rep. 408 (Q.B.); The Kelo [1985] 2 Lloyd's Rep. 85 (Q.B.); The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 15 (Q.B.). Cf. Cottage Club Estates v Woodside Estates [1928] 2 K.B. 463; The Felicie [1990] 2 Lloyd's Rep. 21, 25 (Q.B.).

61 Smith and Leslie, The Law of Assignment , [26.37].

62 As was the case in The Jay Bola [1997] 2 Lloyd's Rep. 279 (C.A.): see, in particular, statements at 286.

63 This being the definition of a defence: see J. Goudkamp, Tort Law Defences (Oxford 2013).

64 See also Privity of Contract , [14.17]: “it is clear law that an arbitration agreement (or a jurisdiction agreement) cannot be regarded as a defence to an action … Rather the agreement is simply enforceable by and against the parties to it through a stay of litigation.”

65 C.H. Tham, Understanding the Law of Assignment (Cambridge 2019).

66 Ibid ., at 104, note 110.

67 Ibid ., at 345.

68 Ibid ., at 360.

69 C.J. Davis, “The Principle of Benefit and Burden” [1998] C.L.J. 522.

See e.g. The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 15 (Q.B.); Phoenix Finance v Federation Internationale De L'Automobile [2002] EWHC 1028 (Ch), at [82]; Jones v Link Financial [2012] EWHC 2402 (Q.B.), [2013] 1 W.L.R. 693, at [32]; Hatzl v XL Insurance [2009] EWCA Civ 223, at [52], [66]; Through Transport v New India Assurance [2005] EWHC 455 (Comm), at [22]. Cf. Rals v Cassa di Risparmio [2016] SGCA 53, at [54].

70 See cases cited in Liew, Guest on the Law of Assignment , [9-08].

71 The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 15 (Q.B.).

72 Ibid . See also NBP Developments v Buildko & Sons Ltd. (1992) 8 Constitutional. L.J. 377; BXH v BXI [2020] SGCA 28, at [74]–[75].

73 See e.g. Standing v Bowring (1885) 31 Ch.D. 282, 290; Re Gulbenkian's Settlements (No 2) [1970] A.C. 508, 518 (H.L.).

74 See Y.K. Liew and C. Mitchell, “The Creation of Express Trusts” (2017) 11 J.Eq. 133, 152ff.

75 See e.g. Liew, Guest on the Law of Assignment , [3-13]; Smith and Leslie, The Law of Assignment , [13.86].

76 This is why if a trustee wrongfully pays trust money into an overdrawn account there is no fund over which any proprietary claim can operate: Moriarty v Atkinson [2008] EWCA Civ 1604, at [15].

77 Jervis v Wolferstan (1874) L.R. 18 Eq. 18, 26. See also Whittaker v Kershaw (No 2) (1890) 45 Ch.D. 320, 326, where Cotton L.J. used the terminology of a “shadowy” liability.

78 Thompson v Leach (1690) 86 E.R. 391, 396 (K.B.).

79 Townson v Tickell (1819) 106 E.R. 575, 577. See also Hardoon v Belilios [1901] A.C. 118, 123 (P.C.); JW Broomhead (Vic) Pty Ltd. v JW Broomhead Pty Ltd. [1985] V.R. 891, 931 (V.S.C.); N. Crago, “Principles of Disclaimer of Gifts” (1999) 28 U.W.A.L.R. 65, 71; J. Hill, “The Role of the Donee's Consent in the Law of Gift” (2001) 117 L.Q.R. 127, 142.

80 Naas v National Westminster Bank [1940] A.C. 366, 400.

83 JW Broomhead (Vic) v JW Broomhead [1985] V.R. 891, 931 (V.S.C.).

84 Re Paradise Motor Co. Ltd. [1968] 1 W.L.R. 1125, 1143.

85 Mallott v Wilson [1903] 2 Ch. 494, 501.

86 Bence v Gilpin (1868) L.R. 3 Exch. 76, 81.

87 Tolhurst v Associated Portland Cement Manufacturers (1900) [1902] 2 K.B. 660, 668; Nokes v Doncaster Amalgamated Collieries [1940] A.C. 1014, 1019; Davies v Collins [1945] 1 All E.R. 247, 249 (C.A.); Southway Group v Wolff (1991) 57 B.L.R. 33, 52; Linden Gardens Trust v Lenesta Sludge Disposals [1994] 1 A.C. 85, 103 (H.L.); Don King Productions v Warren [2000] Ch. 291.

88 The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 15 (Q.B.).

89 A “cause of action” entails “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person”: Letang v Cooper [1965] 1 Q.B. 232, 243.

90 The Kelo [1985] 2 Lloyd's Rep. 85, 89 (Q.B.); Baytur v Finagro Holdings [1992] 1 Q.B. 610.

91 The Halcyon the Great [1984] 2 Lloyd's Rep. 283 (Q.B.).

92 Jones v Link Financial [2012] EWHC 2402 (Q.B.).

93 See e.g. The Halcyon the Great [1984] 2 Lloyd's Rep. 283, 289 (Q.B.); The Felicie [1990] 2 Lloyd's Rep. 21, 26; The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 15 (Q.B.); Baytur v Finagro Holdings [1992] 1 Q.B. 610, 619; NBP v Buildko & Sons (1992) 8 Const L.J. 377; A v B [2016] EWHC 3003 (Comm), [2017] 1 W.L.R. 2030, at [48].

94 J.C. Landrove, Assignment and Arbitration: A Comparative Study (Zurich 2009), 26. It also precludes access to legal aid: Ambrose, “When Can a Third Party Enforce an Arbitration Clause?”, 417.

95 See e.g. Shayler v Woolf [1946] 1 Ch. 320; STX v Woori Bank [2012] EWHC 981 (Comm), [2012] 2 Lloyd's Rep. 99; Rals v Cassa di Risparmio [2016] SGCA 53.

96 Three Rivers District Council v Bank of England (No 1) [1996] Q.B. 292, 307–08.

97 See e.g. The Fanti [1991] 2 A.C. 1 (H.L.).

98 Jones v Link Financial [2012] EWHC 2402.

99 Baytur v Finagro Holdings [1992] 1 Q.B. 610, 619.

101 See Young v Kitchin (1878) 3 Ex.D. 127, discussed in Liew, Guest on the Law of Assignment , [7-32].

102 See e.g. The Felicie [1990] 2 Lloyd's Rep. 21, 26; The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 19 (Q.B.); Baytur v Finagro Holdings [1992] 1 Q.B. 610, 619.

103 Baytur v Finagro Holdings [1992] 1 Q.B. 610, 619.

104 See, in relation to costs, The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 19 (Q.B.). Cf. The Felicie [1990] 2 Lloyd's Rep. 21, 26, where this is explained on the basis that those costs “are personal to the parties and cannot properly be the subject of a transfer”.

105 Jagusch and Sinclair, “The Impact of Third Parties on International Arbitration”, [15-22].

106 The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 19 (Q.B.).

107 See e.g. Tate v Leithead (1854) 69 E.R. 279; Bill v Cureton (1835) 39 E.R. 1036; Standing (1885) 31 Ch.D. 282, 288, 290; Naas [1940] A.C. 366, 375; Grey v Australian Motorists & General Insurance Co. Pty Ltd. [1976] 1 N.S.W.L.R. 669, 673. Cf. Alexander v Steinhardt, Walker & Co. [1903] 2 K.B. 208, which, however, is capable of being explained on other grounds: see Smith and Leslie, The Law of Assignment , [13.28].

108 See main text to note 97 above.

109 Cf. Cassa di Risparmio v Rals International [2015] SGHC 264, at [121].

110 See Liew, Guest on the Law of Assignment , [2-19], [3-50].

111 See BXH v BXI [2019] SGHC 141, at [139].

112 As occurred in Herkules Piling v Tilbury Construction (1992) 32 Con. L.R. 112 (Q.B.).

113 See Chitty on Contracts , 32nd ed., vol. 1 (London 2015), [13-041]; IRC v Electrical and Musical Industries Ltd. [1949] 1 All E.R. 120, 126.

114 Re Gillott's Settlement [1934] 1 Ch. 97, 111.

115 Byrnes v Kendle [2011] HCA 26, at [55]–[56] (trusts). Cf. Girsberger and Hausmaninger, “Assignment of Rights”, 144, who suggest that assignments ought to require the assignee's written consent in order to inform the assignee “about the extent of the commitment to arbitrate”. This does not represent English law.

116 See e.g. A. Lista, “International Commercial Contracts, Bills of Lading, and Third Parties: In Search of a New Legal Paradigm for Extending the Effects of Arbitration Agreements to Non-signatories” [2019] J.B.L. 21, 21; J.M. Hosking, “The Third Party Non-signatory's Ability to Compel International Commercial Arbitration: Doing Justice without Destroying Consent” (2004) 4 Pepperdine Dispute Resolution Law Journal 469, 472; B. Hanotiau, “Problems Raised by Complex Arbitrations Involving Multiple Contracts-parties-issues: An Analysis” (2001) 18 Journal of International Arbitration 253, 255.

117 Girsberger, “Law Applicable to the Assignment of Claims”, 381. See also Jagusch and Sinclair, “The Impact of Third Parties on International Arbitration”, [15-4].

118 Harbour Assurance Co. (UK) Ltd. v Kansa General International Insurance Co. Ltd. [1992] 1 Lloyd's Rep. 81, 83.

119 See e.g. The Felicie [1990] 2 Lloyd's Rep. 21, 26; Lista, “International Commercial Contracts”, 24–25; BXH v BXI [2019] SGHC 141, at [136]; Girsberger and Hausmaninger, “Assignment of Rights”, 136–39.

120 The Jay Bola [1997] 2 Lloyd's Rep. 279, 291 (C.A.).

121 Belmont Park Investments Pty Ltd. v BNY Corporate Trustee Services Ltd. [2011] UKSC 38, [2012] 1 A.C. 383, at [167].

122 See e.g. Sir Holdsworth , W. , “ The History of the Treatment of Choses in Action by the Common Law ” ( 1920 ) 33 Harv.L.Rev. 997 CrossRef Google Scholar , 1016ff; Macleod , H.D. , Principles of Economical Philosophy , vol. 1 ( London 1872 ), 481 Google Scholar .

123 Cf. the suggestion in Smith and Leslie, The Law of Assignment , [21.21], that future assignees may always be bound where the main contract specifically provides for this. The freedom of a future assignee to disclaim an assignment cannot be curbed in such a manner.

124 West Tankers Inc. v Ras Riunione Adriatica Di Sicurta (The Front Commor) [2005] 2 Lloyd's Rep. 257, at [33]. See also The Fanti [1991] 2 A.C. 1, 33 (H.L.).

126 Baytur v Finagro Holdings [1992] 1 Q.B. 610, 617–18.

127 Ibid ., at 618. See also The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 18 (Q.B.).

128 See Section V(B)(1) above.

129 See Liew, Guest on the Law of Assignment , [3-50].

130 See Herkules Piling v Tilbury Construction (1992) 32 Con. L.R. 112, 120 (Q.B.), and Liew, Guest on the Law of Assignment , [3-50], for a detailed discussion.

131 This is not to say that the assignee automatically becomes party to the arbitration proceedings upon the equitable assignment: notice must be given to the tribunal and the assignee must submit to the tribunal's jurisdiction: see e.g. The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 18 (Q.B.); NBP v Buildko & Sons (1992) 8 Const.L.J. 377; Baytur v Finagro Holdings [1992] 1 Q.B. 610, 618; Charles M Willie & Co. (Shipping) Ltd. v Ocean Laser Shipping Ltd. (The Smaro) [1999] 1 Lloyd's Rep. 225, 243 (Q.B.).

132 Herkules Piling v Tilbury Construction (1992) 32 Con. L.R. 112, 120 (Q.B.), relying on Warner Bros Records Inc. v Roll Green Ltd. [1976] Q.B. 430.

133 These are discussed in Liew, Guest on the Law of Assignment , [3-14].

134 The Leage [1984] 2 Lloyd's Rep. 259, 262 (Q.B.).

135 Sim Swee Joo Shipping Sdn Bhd v Shirlstar Container Transport Ltd. [1994] C.L.C. 188 (Q.B.).

136 BXH v BXI [2019] SGHC 141, at [177] (emphasis in original).

137 Jagusch and Sinclair, “The Impact of Third Parties on International Arbitration”, [15-22]. See also Hosking, “The Third Party Non-signatory's Ability”, 492.

138 The Halcyon the Great [1984] 2 Lloyd's Rep. 283, 289 (Q.B.).

139 The Jordan Nicolov [1990] 2 Lloyd's Rep. 11, 15 (Q.B.).

140 NBP v Buildko & Sons (1992) 8 Const L.J. 377. See also BXH v BXI [2019] SGHC 141, at [137].

141 See Lew, Mistelis and Kröll, Comparative International Commercial Arbitration , [7-55].

142 See e.g. ibid .; Girsberger and Hausmaninger, “Assignment of Rights”, 147.

143 If the obligor's consent is obtained then what we have is a novation and not an assignment: Linden Gardens v Lenesta Sludge Disposals [1994] 1 A.C. 85, 103 (H.L.); Alina Budana v The Leeds Teaching Hospitals NHS Trust [2017] EWCA Civ 1980, at [68], [118]; Liew, Guest on the Law of Assignment , [1-56]–[1-58].

144 Yeandle v Wynn Realisations (1995) 47 Con. L.R. 1, 12 (C.A.).

145 Lew, Mistelis and Kröll, Comparative International Commercial Arbitration , [7-53].

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  • Volume 80, Issue 1
  • Ying Khai Liew
  • DOI: https://doi.org/10.1017/S0008197321000039

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Assignment and Separability: Can an Assignor Compel Arbitration? The South Carolina Supreme Court Says the Arbitrators Get to Decide

Introduction: assignment and the separability doctrine .

Separability and Assignment

Suppose A and B enter a contract imposing mutual obligations on them. The contract contains an arbitration agreement requiring arbitration of all disputes arising out of or related to the contract. The contract does not purport to prohibit assignment, and the parties’ rights under the contract are otherwise capable of assignment.

A assigns to assignee C its rights to receive performance under the contract. B commences an action against A under the contract and A demands arbitration. B resists arbitration, arguing that A has assigned to C its right to enforce the contract (we’ll call it a “container contract” because it contains an arbitration agreement) and thus there is no longer any arbitration agreement that A can enforce against B. Judgment for whom?

In Sanders v. Svannah Highway Auto Co. , No. 28168, slip op. (July 26, 2023),  the Supreme Court of North Carolina said that, under the Federal Arbitration Act’s “separability” doctrine, the claim that the contract—including the arbitration agreement— could no longer be enforced was an issue that concerned the enforceability of the container contract as a whole, not the enforceability of the arbitration agreement specifically. And because the assignment concerned only the continued existence of the container contract, and not a claim that the container contract was never formed, the exception to the separability doctrine under which courts get to decide whether a contract has been concluded did not apply.

Accordingly, explained the South Carolina Supreme Court, it was for the arbitrator to decide what effect, if any, the assignment had on A’s right to enforce the container contract, including the arbitration agreement.

Sanders: Background

The contract in Sanders was an installment sales contract for the purchase of a vehicle by buyer. The dealership assigned the contract to a bank. The installment sales contract contained an arbitration clause, which stated:

Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Clause, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract, or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action.

Slip op. at 2-3.

The buyer made various claims against the dealership and its representatives, including an assertion that those persons had misrepresented the buyer’s income to the bank, which resulted in the bank accepting a contract that imposed a monthly payment on the buyer that was 37% of buyer’s actual pre-tax income.

The dealership moved to compel arbitration and the buyer opposed the motion, claiming that the assignment extinguished the dealership’s right to enforce the arbitration agreement in the container contract. The trial court and the intermediate court of appeals determined that the question whether the matter was arbitrable was for the court, and the matter was not arbitrable because the dealership had assigned the contract to the bank and therefore could no longer enforce the arbitration agreement. The South Carolina Supreme Court reversed. Slip op. at 2, 13.

The Court’s Decision: Separability Doctrine Governs

Separability doctrine.

Rather than rule on whether the contract clearly and ambiguously delegated arbitrability questions to the arbitrators, the Court premised its decision on the separability doctrine of Prima Paint Corp. v. Flood & Conklin Mfg. Co. , 388 U.S. 395, 404-06 (1967);  Buckeye Check Cashing, Inc. v. Cardegna , 546 U.S. 440, 444-46, 448-49 (2006); and Rent-A-Ctr., W., Inc. v. Jackson , 561 U.S. 63 (2010). We have discussed the separability doctrine in prior posts. (See, e.g., here and here .)

The so-called doctrine of “separability” (sometimes referred to as the doctrine of “severability”) was first articulated by the U.S. Supreme Court in  Prima Paint , and reaffirmed in  Buckeye Check Cashing . Grounded in Federal Arbitration Act Section 2, the separability doctrine permits courts to compel arbitration of fraudulent inducement claims and defenses—and other contract-validity or contract-enforceability claims and defenses—that fall within the scope of a broad arbitration clause, provided that they relate to the contract as a whole, and do not specifically and independently relate to the arbitration agreement itself (and thus give rise to a bona fide question of arbitrability within the meaning of FAA Section 2).

The doctrine of separability helps implement the Federal Arbitration Act’s enforcement command by preventing courts from being inundated with non-arbitration-agreement-specific contract enforceability and validity claims and defenses. That is important not only to preserve arbitration as a viable alternative to litigation, but also, and relatedly, to discourage parties from asserting contract-enforceability or contract-validity defenses as a pretext to delay or avoid arbitration of disputes for purposes of obtaining an unwarranted strategic advantage in the dispute resolution process.

There is an important exception to the separability doctrine: if the defense is that the container contract never existed (and thus was never concluded) then the question whether the parties agreed to arbitrate the dispute is for the Court. See, e.g., Buckeye , 546 U.S. at 444 n.1 (“The issue of the contract’s validity is different from the issue whether any agreement between the alleged obligor and obligee was ever concluded.”); Henry Schein, Inc. v. Archer & White Sales, Inc. , 139 S. Ct. 524, 530 (2019) (“To be sure, before referring a dispute to an arbitrator, the court determines whether a valid arbitration agreement exists.”) (citation omitted).

Separability: Arguments on Appeal

The dealer did not request the Court to reverse the lower appellate court’s finding that the assignment extinguished the buyer’s right to compel arbitration. While it argued that the assignment of a container contract does not always divest the assignor’s right to compel arbitration under the Federal Arbitration Act, the seller requested the Court to hold only that the question of whether the assignment had such an effect was a “gateway question” to be decided by the arbitrators.

The seller’s appeal made two principal arguments: (1) the gateway question was for the arbitrator because the buyer did not argue that the arbitration agreement itself was invalid or unenforceable (a separability argument); and, alternatively, (2) the arbitration agreement contained a delegation provision under which the parties clearly and unmistakably agreed to arbitrate arbitrability issues.

The Court explained that when one challenges another’s right to invoke arbitration, “the gateway question sometimes becomes: Does the court or arbitrator decide whether the dispute is arbitrable.” Slip op. at 6 (citations omitted).  That was true, said the Court, whether: (1) under the separability doctrine—according to which “challenges to the. . . ‘container contract’[] are for arbitrator to decide, while challenges to the arbitration provision itself are for the court to decide,” slip op. at 6 (citations omitted); or (2) the parties have “delegated threshold arbitrability issues to the arbitrator” by “clear and unmistakable evidence.” Slip op. at 6 (citations and quotation omitted).

The Court discussed the separability doctrine in some detail in the opinion, and noted that “[t]he Prima Paint doctrine has been roundly criticized, and applying the doctrine is unnecessarily muddled.” Slip op. at 6; see slip op. at 6-10.)  Applying it to the “set of facts” before it, was “not so simple.” Slip op. at 8.

Separability: Application of the Law to the Sanders Facts

Was the assignment challenge directed at the container contract as a whole or to the arbitration agreement itself? The Court agreed with the seller that the assignment challenge was not “directed” “specifically” to the arbitration agreement. Slip op. at 8. But the buyer argued that because of the assignment, the agreement between the buyer and the dealer “ceased to exist[,]” and that, accordingly, the “court must decide the challenge—even though it is directed to the contract as a whole.” Slip op. at 8.

That required the Court to determine whether the assignment raised a question of whether the arbitration agreement was concluded, a contract formation question that the Court had to decide before it could legitimately compel arbitration.

The Court concluded that the assignment challenge was not a claim that the contract never existed; it was a claim that the contract, indisputably formed, ceased to exist. Slip op. at 11-12. Reviewing pertinent case law, the Court concluded there were two reasons why the buyer’s “‘contract existence’” argument had no merit. Slip op. at 11-12. First, the contract formation cases lent “no support for the conclusion that a challenge to he continued existence of a container contract is for the court to decide under the Prima Paint doctrine.” Slip op. at 11.

Second, there are good grounds for distinguishing between contract formation challenges and “continued existence” challenges. Slip op. at 11. In contract formation challenges the question of whether an agreement was ever concluded necessarily arises. Slip op. at 11. Given arbitration is a matter of consent, “it would be illogical for an arbitrator to resolve such a challenge.” Slip op. at 11. But by allowing arbitrators to resolve “continued existence” challenges courts never “risk. . . sending a party to arbitration when that party never agreed to arbitration.” Slip op. at 11 (emphasis in original).

The Court summed up by saying the separability “doctrine is not the model of clarity[,]” but nevertheless “requires us to hold that the arbitrator must decide the gateway question of whether [the seller] retained the right to compel arbitration after assignment of [the retail instalment sales contract].” Slip op. at 13.

The Dissent: Contract Existence Exception Applies

Associate Justice George C. James, Jr. wrote the majority opinion in which two other members of the Court joined. Acting Justice Kaye Gorenflo Hearn wrote a thoughtful  dissenting opinion in which Acting Justice James E. Lockemy joined.

The dissent thought the “majority place[d] too fine a point on the slight distinction between whether an agreement to arbitrate ever existed versus if one continues to exist.” Slip op. at 16. It also disputed the majority’s characterization of certain cases from other jurisdictions that had concluded that an assignment precluded the assignor from enforcing an arbitration agreement. Slip op. at 14-15.  The dissent “would [have] follow[ed] the general rule that an assignment extinguishes the rights under a contract. . . .” Slip op. at 16. “Without an agreement to enforce,” said the dissent, it follows that the [Court] must generally resolve this threshold question.” Slip op. at 16 (citing and quoting Schein , 139 S. Ct. at 530).

Contacting the Author

If you have any questions about this article, arbitration, arbitration-law, arbitration-related litigation, or the services that  The Loree Law Firm  offers, then please contact the author, Philip J. Loree Jr., at (516) 941-6094 or  [email protected] .

Philip J. Loree Jr.  has more than 30 years of experience handling matters arising under the Federal Arbitration Act and in representing a wide variety of clients in arbitration, litigation, and arbitration-related litigation. He is licensed to practice law in New York and before various federal district courts and circuit courts of appeals.

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Tags: Agreement , Assignee , Assignment , Assingnor , Buckeye , Compel Arbitration , Consent , Continued Existence , Existence of Contract , Prima Paint , Rent-A-Center , Separability , severability , South Carolina , Supreme Court

This entry was posted on Wednesday, August 2nd, 2023 at 2:08 pm and is filed under Application to Compel Arbitration , Arbitrability | Clear and Unmistakable Rule , Arbitrability | Existence of Arbitration Agreement , Arbitration Agreements , Arbitration as a Matter of Consent , Arbitration Law , Arbitration Practice and Procedure , Clear and Unmistakable Rule , Contract Defenses , Existence of Arbitration Agreement , FAA Chapter 1 , Federal Arbitration Act Section 1 , Federal Arbitration Act Section 2 , Federal Arbitration Act Section 3 , Federal Arbitration Act Section 4 , Federal Policy in Favor of Arbitration , Gateway Disputes , Gateway Questions , Practice and Procedure , Questions of Arbitrability , Section 4 , Separability , Severability , South Carolina Supreme Court , United States Supreme Court . You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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Assignment of Arbitration Agreements

23/01/2023 by Aceris Law LLC

The assignment of a contract containing an arbitration agreement to a third party raises several questions. [1] The first question is whether the arbitration agreement is automatically transferred. [2] If so, what is the legal basis for such a transfer ? [3] Other issues concern the validity of the assignment of the main contract itself and whether evidence of the intent of the various parties is required to validate the assignment of the arbitration agreement. [4]

In this post, we will explore some of the issues that commonly arise in the contractual assignment of arbitration agreements.

Assignment arbitration agreement

The Applicable Law to the Question of the Assignment of Arbitration Agreements

The assignment of an arbitration agreement begs the question of the applicable law to its assignment. Such a determination may be made by the pertinent State court or the arbitral tribunal. Depending on whether the case is brought before a State judge or arbitrators, the conflict of law analysis may vary. [5] The most typical laws considered for the issue of the assignment of arbitration agreements are the following: [6]

  • the law of the court where the proceeding is brought (i.e., the lex fori );
  • the law of the seat of the arbitration (i.e., the lex loci arbitri );
  • the law governing the underlying contract (i.e., the lex causae ); and
  • the law applicable to the arbitration agreement (i.e., the lex compromissi ).

Unlike State courts, arbitrators do not have a lex fori , as their jurisdiction is based on the parties’ consent or, to some extent, on the lex arbitri . [7]

Some authors suggest that State courts will determine the law applicable to the assignment by way of their own conflict of law rules. [8] For instance, in Switzerland, the question of whether the parties are bound by the assignment is determined by the law governing the arbitration agreement under the Swiss conflict of laws rules. [9]

On the other hand, the lex fori  may encourage forum shopping in a search to find a more favourable legal framework for the assignment. [10] In addition, the judicial forum will not necessarily have a real connection with a dispute that would justify the application of its own law. [11]

Lex Loci Arbitri

The lex arbitri is understood as the law of the seat of arbitration. It should not be confused with the law establishing the framework of the arbitral proceedings, known as the lex arbitri. [12]

The New York Convention and the UNCITRAL Model Law give the lex loci arbitri a prominent role. Therefore, it is sometimes argued that it shall govern questions pertaining to the arbitration, including the question of the assignment of the arbitration agreement. [13]

Nevertheless, the lex loci arbitri does not govern the arbitration agreement itself. It is also difficult to understand the connection between the seat of the arbitration and the issue of assignment. Moreover, parties usually seek a neutral seat for their arbitration, considering, among other factors, the proximity, convenience, and pro-arbitration reputation of one jurisdiction. It is difficult to see how these factors would be relevant to determine the law governing the assignment of the arbitration agreement. [14] Thus, the lex loci arbitri may not be seen as the deciding law governing the assignment of an arbitration agreement.

It may be argued that issues concerning the assignment of arbitration agreements should be regulated by the law governing the underlying contract or the lex causae .

Indeed, the use of the lex causae ensures that questions arising out of the assignment of the arbitration agreement and the underlying contract will be treated by the same legal framework. Additionally, only this rule ensures the parties’ typical expectation that the arbitration agreement will be transmitted in the same conditions as the underlying contract. [15]

This also avoids the difficulties associated with dépeçage , which can be defined as the use of different legislations to address various issues of the same contract. [16]

Lex Compromissi

A traditional rule is to subject the assignment to the law governing the arbitration agreement itself. Today, it is widely accepted that the arbitration agreement is governed by its own law, which may be chosen by the parties or defined by rules of conflict of laws. [17]

The advantages of applying the lex compromissi to the question of the assignment are: [18]

  • it is in line with other general approaches in private international law; and
  • it provides a clear answer to the question of which law applies to the assignment of arbitration agreements.

The applicability of the lex compromissi , on the other hand, may lead to a situation where the arbitration agreement and the underlying contract are governed by different laws giving rise to the problems associated with dépeçage. [19]

Substantive Law Governing the Assignment of the Arbitration Agreement

French courts have created a substantive rule, or a “ règle matérielle ”, whereby the arbitration agreement binds the assignee and the obligor based on the parties’ intent. Arbitral tribunals applying this rule need not rely on any national law, as the assignment will be transmitted based on the consent of the parties to the assignment. [20] Consequently, the validity of the assignment cannot be challenged on the ground that the assignment of the main contract is invalid.

In practice, French courts or arbitral tribunals will ascertain whether the assignor and assignee have consented to the transfer of the arbitration clause. [21] Under this approach, the validity of the assignment of the arbitration agreement will be analysed apart from the underlying contract. This may lead to a peculiar situation where the assignee becomes bound by the arbitration agreement but does not acquire rights or obligations under the underlying contract if the assignment of the main contract is deemed invalid. [22]

The Principle of Automatic Transfer of Arbitration Agreements

Most international instruments, such as the New York Convention and the UNCITRAL Model Law, are silent to the question of assignment. [23] However, many scholars, courts, and arbitral tribunals advocate for the principle whereby the assignee of the underlying contract becomes bound by the arbitration agreement once the assignment takes place. [24]

This ensures predictability and fulfils the expectation of the original obligor, who expects that disputes will be resolved by arbitration. In this regard, many scholars support the view that the fact that the assignee may be unaware of the existence of the arbitration agreement should be of no relevance in the context of an assignment. [25]

Nevertheless, some courts have departed from the principle of automatic transfer. In Bulgaria, for instance, the Supreme Court of Cassation set aside an arbitral award on the ground that the sole arbitrator lacked jurisdiction to decide a dispute arising out of a rental agreement where the debtor did not expressly agree to the assignment of the arbitration agreement. [26]

In Switzerland, the Supreme Court found that a sole arbitrator correctly declared himself incompetent over a dispute arising from an assigned contract. Interestingly, this contract expressly prohibited the assignment of the agreement without the other party’s written consent. [27] Thus, whereas under Swiss law, an arbitration clause is transferred to the assignee without the need for the consent of the debtor, in this specific case the arbitration agreement suggested that the arbitration clause was intended to be effective between the original parties only. [28]

The Principle of Separability in the Context of an Assignment of an Arbitration Agreement

Separability is a theory in which the arbitration clause is an independent agreement from the underlying contract itself. In the context of an assignment, this would mean the transfer of an arbitration agreement would not operate automatically in case of an assignment of the main contract.

Many authors suggest that the separability principle is not absolute, however. In this respect, it has been accepted that the arbitration clause is separated from the underlying contract to the extent that it helps to ensure and promote the effectiveness of arbitration. [29] In other words, the arbitration agreement does not need to be treated separately from the main contract for the purpose of a contractual assignment.

[1]             J. Waincymer, Chapter 7: “Part II: The Process of an Arbitration: Complex Arbitration” in Procedure and Evidence in International Arbitration (2015), pp. 517-518.

[2]             Garnuszek, “The Law Applicable to the Contractual Assignment of an Arbitration Agreement” in Michael O’Reilly (ed), The International Journal of Arbitration, Mediation and Dispute Management , 82(4), p. 349.

[3]             Ibid.

[4]             Waincymer, supra fn. 1, pp. 517-518.

[5]             See , Garnuszek, supra fn. 2, p. 350.

[6]             Id. , 349.

[7]             Id. , 350.

[8]             I. Chuprunov, “Chapter I: The Arbitration Agreement and Arbitrability: Effects of Contractual Assignment on an Arbitration Clause – Substantive and Private International Law Perspectives” in C. Klausegger, P. Klein, et al. (eds), Austrian Yearbook on International Arbitration 2012 (2012), p. 54.

[9]             Garnuszek, supra fn. 2, p. 352.

[10]            Chuprunov, supra fn. 8, p. 54.

[11]            Ibid.

[12]            Garnuszek, supra fn. 2, p. 354.

[13]            Chuprunov, supra fn. 8, p. 56.

[14]            Id. , p. 56.

[15]             Id ., p. 59.

[16]             Ibid .

[17]             Id. , p. 57.

[18]             Ibid .

[19]             Id. , p. 58.

[20]            Garnuszek, supra fn. 2, p. 351.

[21]            Chuprunov, supra fn. 8, p. 52.

[22]             Id. , pp. 52-53.

[23]            Id. , p. 39.

[24]            Id ., p. 31 .

[25]            Id. , p. 61.

[26]           V. Hristova, Bulgaria: Assignment of an Arbitration Clause – Is Debtor’s Consent Required? (Kluwer Arbitration Blog, 17 August 2019).

[27]            J. Werner, Jurisdiction of Arbitrators in Case of Assignment of an Arbitration Clause: On a recent decision by the Swiss Supreme Court J. of Intl. Arb. 8(2), pp. 14-15.

[28]            Id. , pp. 16-17.

[29]            Chuprunov, supra fn. 8, pp. 40-41.

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Arbitration clause defined.

Arbitration clauses, also known as arbitration agreements or arbitration provisions, are alternative dispute resolutions. Both parties essentially agree to settle disputes out-of-court with an arbitrator. Decisions coming from arbitration are legally binding unless the parties otherwise stipulate that the outcome is non-binding.

Laws apply to arbitration hearings at the local, state, and federal levels. You should understand how these laws apply to your situation before making legal decisions that can impact your future.

Here is an article on the definition of Arbitration Clauses.

Arbitration Clause Explained

A standard arbitration clause defines the terms and conditions surrounding the dispute resolution process. Dispute resolution addresses legal concerns that go beyond customer service issues. However, arbitration clause signers should understand that they limit their right to civil court redress when they sign them.

Here is an article on Arbitration Agreements .

Purpose of an Arbitration Clause

The purpose of an arbitration clause is to reduce costs associated with settling disputes. Arbitration proceedings are faster and private. Parties can also choose whom they want to handle the proceedings.

For example, international contracts follow an arbitral tribunal process where proceedings consist of one or three arbitrators. Other laws apply to other locations.

Here is deeper look into Arbitration Clauses by the International Chamber of Commerce.

Arbitration Clause Examples

Examples of arbitration clause use include:

  • Example 1: Keeping divorce proceedings more private
  • Example 2: Settling disputes with insurance companies
  • Example 3: Working through issues with business partners
  • Example 4: Not hiring employees until they sign the arbitration clause
  • Example 5: Not taking personal injury cases to civil court

Arbitration Clause Samples

Sample 1 - employment contract :.

Arbitration . Except for disputes, controversies or claims arising out of or related to the Proprietary Agreement and/or the Non-Competition Agreement attached as  Annex A  and  B , respectively, any dispute, controversy or claim arising out of or relating to this Agreement, including but not limited to its existence, validity, interpretation, performance or non-performance, or breach, shall be decided by a single neutral arbitrator agreed upon by the parties hereto in Wilmington, North Carolina in binding arbitration pursuant to the commercial arbitration rules of the American Arbitration Association then in effect. The parties to any such arbitration shall be limited to the parties to this Agreement or any successor thereof. The written decision of the arbitrator shall be final and binding and may be entered and enforced in any court of competent jurisdiction. Each party waives any right to a jury trial in any such forum. Each party to the arbitration shall pay its fees and expenses, unless otherwise determined by the arbitrator.

Reference :

Security Exchange Commission - Edgar Database, EX-10.281 4 d226725dex10281.htm EMPLOYMENT AGREEMENT , Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/1003124/000119312511292827/d226725dex10281.htm >.

Sample 2 – Sales Contract :

Any dispute arising from or in connection with the Sales Contract shall be settled through friendly negotiation. In case no settlement can be reached, the dispute shall be then submitted to china international economic and trade arbitration commission for arbitration in accordance with its rules in effect at the time of applying for arbitration. The arbitral award is final and binding upon both parties.

Security Exchange Commission - Edgar Database, EX-10.52 9 dex1052.htm SALES CONTRACT , Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/1481513/000119312510025743/dex1052.htm >.

Sample 3 – Share Purchase Agreement :

12.10  Mediation; Binding Arbitration.

(a) Except as otherwise provided in Sections 2.3(c)(v), 6.14, 7.6 and 12.11, any controversy or claim arising out of or relating to this Agreement and the rights of the parties will be submitted to JAMS, or its successor, for mediation, and if the matter is not resolved through mediation as provided herein, then it will be submitted to JAMS, or its successor, for final and binding arbitration in accordance with the provisions of this Section. The agreement of the parties to arbitrate covers all disputes of every kind relating to or arising out of this Agreement, including actions for breach of contract with respect to this Agreement, as well as any claim based upon tort or any other causes of action relating to this Agreement, such as claims based upon an allegation of fraud or misrepresentation and claims based upon a federal or state statute. The arbitrator selected according to procedures set forth below will determine the arbitrability of any matter submitted, and that determination will be final and binding on the parties.

(b) Either party may commence mediation by providing to JAMS and the other party a written request for mediation, setting forth the subject of the dispute and the relief requested.

(c) The parties will cooperate with JAMS and with one another in selecting a mediator from the JAMS panel of neutrals and in scheduling a mediation meeting (in person or via teleconference). The parties will share equally the costs of the mediation.

(d) All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the mediator or any JAMS employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any arbitration or other proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation.

(e) Either party may initiate arbitration with respect to the matters submitted to mediation by filing a written demand for arbitration at any time following the initial mediation session or at any time following 30 days from the date of filing the written request for mediation, whichever occurs first (“Earliest Initiation Date”). The mediation may continue after the commencement of arbitration if the parties mutually agree.

(f) At no time prior to the Earliest Initiation Date shall either side initiate an arbitration or litigation related to this Agreement except to pursue a provisional remedy that is authorized by law or by JAMS Rules or by agreement of the parties. However, this limitation is inapplicable to a party if the other party refuses to comply with the requirements of subsection (c) above.

(g) All matters arising out of or relating to this Agreement and the rights of the parties (whether in contract, tort, or otherwise) will be governed by and construed and interpreted under the Laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of Delaware. The arbitration will be conducted in Minneapolis, Minnesota. The arbitration will be administered by JAMS pursuant to JAMS’ Comprehensive Arbitration Rules and Procedures (the “JAMS Rules”), subject to the agreements set forth herein. The arbitrator will not have the power to add to, modify or change any of the provisions of this Agreement, or to make mistakes of law. The parties may conduct discovery, including document requests, depositions and interrogatories, in accordance with Delaware law.

(h) The arbitration will be conducted by one neutral arbitrator mutually agreed upon by the parties. If no arbitrator is agreed upon within 10 days following commencement of arbitration, or if the arbitrator selected by the parties is unable or unwilling to arbitrate the dispute, the arbitrator will be such neutral arbitrator as is selected by JAMS. The award in writing of the arbitrator will be final and binding upon the parties.

(i) The arbitrator will be bound to honor claims of privilege or work-product doctrine recognized at law, but the arbitrator will have the discretion to determine whether any such claim of privilege or work product doctrine applies based upon applicable law or ethical rules.

(j) The arbitrator will provide a reasoned basis for the resolution of each dispute and for any award. The arbitrator will have power and authority to award any remedy or judgment that could be awarded by a court of law or equity in the State of Delaware not inconsistent with or in addition to the provisions of this Agreement.

(k) Except as set forth in this subsection (k) or in subsection (l) below, each party will bear its own costs in connection with any arbitration or mediation proceeding. The costs of the arbitration and mediation, including any JAMS administration fee, and arbitrators’ and mediators’ fees, and costs of the use of facilities during the hearings, will be borne equally by the parties in the first instance. The arbitrator shall, as part of the award, apportion the costs of arbitration and mediation based on the extent to which each Party prevailed.

(l) If a party to this Agreement brings any arbitration action, or any other action, suit, counterclaim or appeal, for any relief against the other parties, declaratory or otherwise, to enforce the terms hereof or to declare rights hereunder (referred to herein as an “Action”), the non-prevailing party in such Action will be required to pay to the prevailing party in such Action a reasonable sum for the prevailing party’s attorneys’ fees and expenses incurred in prosecuting or defending such Action and/or enforcing any judgment, order, ruling or award (referred to herein as a “Decision”), granted therein. Any Decision entered into in such Action will contain a specific provision providing for the recovery of attorneys’ fees and expenses incurred in enforcing such Decision. The court or arbitrator may fix the amount of reasonable attorneys’ fees and expenses upon the request of any party. For purposes of this Section, attorneys’ fees will include, without limitation, fees incurred in connection with (1) postjudgment motions and collection actions, (2) contempt proceedings, (3) garnishment, levy and debtor and third party examination, (4) discovery, and (5) bankruptcy litigation.

(m) Nothing in this Section will limit a party’s ability to (i) enforce an arbitration award in a court of appropriate jurisdiction, or (ii) obtain specific performance or other injunctive relief.

Security Exchange Commission - Edgar Database, EX-2.1 2 d557691dex21.htm SHARE PURCHASE AGREEMENT , Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/842023/000119312513262619/d557691dex21.htm >.

Common Contracts with Arbitration Clauses

Common contracts with arbitration clauses include:

  • International contracts
  • Insurance contracts
  • Employment agreements
  • Partnership agreements
  • Prenuptial agreements
  • Credit card agreements
  • Purchase agreements

Arbitration Clause FAQs

Arbitration clauses limit both party’s rights to file a civil claim in court. It’s essential to understand what you are signing or drafting beforehand.

Below, please find the answers to some common arbitration clause FAQs:

Are arbitration clauses legal?

Yes, arbitration clauses are legal. However, they don’t apply to cases challenging the enforceability of the agreement.

For more information about how to beat an arbitration clause or draft one, speak with arbitration lawyers for advice.

Is it OK to sign an arbitration agreement?

It’s OK to sign an arbitration agreement when you understand the legal implications involved. Some companies won’t work with you unless you sign their arbitration agreement. For instance, employers won’t hire employees who don’t sign their arbitration clause.

Arbitration attorneys can help you review the agreement before signing.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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  • Arbitration

Arbitration Clauses Binding on Contract Assignees

Photo of Andrea Peraner-Sweet

Mandatory arbitration clauses present in contracts are binding on assignees of those contracts, even where the transfer agreements assigning those contracts do not themselves contain arbitration clauses, the United States Court of Appeals for the First Circuit has ruled.

The plaintiffs in Awuah, et al. v. Coverall North America, Inc. , No. 12-1301, slip op. (1st Cir. December 27, 2012), signed “Consent to Transfer Agreements” or “Guaranties to Coverall Janitorial Franchise Agreements,” assigning the franchise contracts to the plaintiffs. While the transfer agreements did not contain arbitration clauses, the underlying franchise agreements contained mandatory arbitration clauses. The plaintiffs filed suit in United States District Court and sought class action certification. The District Court found that the plaintiffs were not bound by the arbitration clauses, holding that actual notice of the arbitration clauses was necessary to bind them, certified the plaintiffs as a class, and entered judgment in their favor against the defendant franchisor.

The First Circuit disagreed. Although the Court noted that the transfer agreements did not all use explicit language “incorporating by reference” the franchise agreements’ arbitration clauses, no such language was required. “Massachusetts law is explicit that it does not impose a special notice requirement upon agreements containing arbitration clauses,” according to Chief Judge Sandra L. Lynch, writing for the unanimous panel. The plaintiffs’ argument that they had not received copies of the franchise agreements containing the arbitration clauses likewise was unavailing. There was no evidence that they had requested or been denied copies of the franchise agreements. As Chief Judge Lynch noted, “it has long been the rule that ‘typically, one who signs a written agreement is bound by its terms whether he reads and understands them or not.'”

Further, even if state law contained a special notice provision, or other particular requirement for arbitration clauses, federal law would preempt any such provision. The Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq., requires courts to treat arbitration clauses in the same manner as all other contracts. Under the FAA, the Court noted, arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract…even if the district court had identified a principle of state law that imposed a special notice requirement before parties such as these could enter into an arbitration agreement, as it did not, such a principle would be preempted by the FAA.”

The lesson, as it often is, is caveat emptor. No special notice or other provisions apply to contractual arbitration clauses. A party that signs an assignment of contract, incorporating by reference an original agreement, is bound to the terms of the original contract by reference, whether it reads the original contract or not.

Arbitration , Arbitration Agreements , Assignments , First Circuit

by Andrea Peraner-Sweet | Jan 16, 2013

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Arbitration agreements

Global |  Publication |  October 2014

Introduction

The “group of companies” doctrine, universal succession, rights of third parties in the united kingdom, rights of third parties in hong kong, shareholder disputes.

There are instances where parties have been bound by arbitration agreements to which they were not originally party. We give an overview of some of the more common scenarios and examples including the ‘group of companies’ doctrine, assignment, universal succession and rights of third parties statutory provisions.

The usual rule is that only parties who have executed an arbitration agreement are bound to resolve their disputes by way of arbitration. Arbitration is a consensual process and the arbitration agreement acts to waive a party’s right to invoke the jurisdiction of otherwise competent courts in favour of arbitration.

But there are cases where parties have been allowed recourse to or have been bound by arbitration agreements to which they were not originally party. Even in the context of an arbitration agreement, it is not always the case that the concepts of separate legal personality of corporate entities and privity of contract are sacrosanct.

As a general rule, the English courts have shown great reluctance to lift the corporate veil (i.e. to treat two related separate corporate entities as one legal entity) unless exceptional circumstances exist.

One rare example was the 1978 decision in Roussel-Uclaf v GD Searle & Co Limited and GD Searle & Co in which a stay of court proceedings in favour of arbitration was granted under section 1 of the Arbitration Act concerning a subsidiary company whose parent was party to an arbitration agreement. In 2008 this decision was overturned in City of London v Sancheti by the English Court of Appeal, which held that Roussel-Uclaf was wrongly decided.

In some other jurisdictions the corporate veil has been lifted in the arbitration context in what has become known as the ‘group of companies’ doctrine following the ICC decision in Dow Chemical v Isover Saint Gobain , which was subsequently approved by the Paris Court of Appeal. A feature of the claim in that case was that the third party parent company effectively and individually participated in the conclusion, performance and termination of the relevant contract containing the arbitration agreement.

The doctrine has been applied in cases involving arbitrations in Singapore, Egypt, Brazil and Switzerland.

The group of companies doctrine is seen to have no place in English law. This was confirmed in Peterson Farms Inc v C&M Farming Ltd, in which the English High Court was asked to consider an application to set aside an ICC tribunal’s award. The tribunal had decided it did have jurisdiction, by application of the group of companies doctrine. Langley J in his judgment held: ‘English law treats the issue as one subject to the chosen proper law of the Agreement and that excludes the doctrine which forms no part of English law.’;

The benefit of contracts may be assigned for various reasons as security for loans, as part of a corporate restructuring or acquisition or in settlement of a claim. A common question that arises is whether the assignee thereby becomes bound by an arbitration clause contained in the contract and what rights are assigned to them as they were not an original contracting party.

The Court of Appeal case of Shayler v Woolf established that arbitration agreements and agreements containing arbitration agreements were capable of assignment. Section 82(2) of the English Arbitration Act 1996 provides that references to a party to an arbitration agreement include any persons ‘claiming under or through a party to the agreement’, which allows an assignee to pursue a claim under an assigned arbitration agreement.

In some civil law jurisdictions, it is common for mergers and reorganisations to take place by means of universal succession which results in the full assignment of all assets, rights and liabilities from one entity to another entity by operation of law. This may be carried out without requiring the participation of the transferor entity’s creditors or counterparties.

Whilst universal succession cannot occur under English law, English law does recognise the effect of merger by universal succession with respect to foreign companies domiciled in jurisdictions that apply the concept. In Eurosteel Ltd v Stinnes AG , the High Court considered what the effect of a merger of a German party by universal succession would be on arbitration proceedings that were current at the time. It was upheld that as a matter of English law, all matters relating to the rights and obligations of a new merged company were governed by the law of the country of domicile and, if the law of the domicile clothed the new company with the rights and liabilities of the old company, that part of the status of the new company should be recognised by the English court.

The Contract (Rights of Third Parties) Act 1999 abolished the long-standing doctrine of privity of contract (that only a party to a contract can enforce its terms). Under the Act, a third party can enforce a term of the contract if the contract provides that the third party can do so (section 1(a)), or if the term provides a benefit to the third party (section 1(b)).

Section 8 of the Act makes limited provision for arbitration agreements to have a binding effect upon third party claims. A third party is required to bring a claim by way of arbitration to enforce the obligations owed to it by a party to the contract. However, where the third party is a defendant it is entitled to elect whether to submit to the jurisdiction of an arbitration tribunal or that of the court. The application of the Act to third parties in the context of contracts containing arbitration provisions was confirmed in Nisshin Shipping Co Ltd v Cleaves & Co Ltd and others.

Ironically, it is now quite common for commercial contracts in the UK to exclude the applicability of the Act. Several other common law jurisdictions, including Australia, New Zealand and Singapore, have introduced similar legislation restricting the ambit of the doctrine of privity of contract.

In Hong Kong, the Contracts (Rights of Third Parties) Bill was gazetted on February 28, 2014 and will be introduced into the Legislative Council this year. It is proposed that if a third party and the promisor have a dispute regarding the enforcement of a term in a contract, the third party is to be treated as a party to the arbitration agreement for the purposes of the Arbitration Ordinance (Cap 609), unless the third party is not intended to be so treated according to the contract (section 12 of the Bill).

In Fulham Football Club (1987) Ltd v Richards the English Court of Appeal confirmed that the unfair prejudice remedy for shareholders is not an unalienable statutory right and that shareholders and companies themselves can agree to refer disputes which might otherwise support unfair prejudice petitions to arbitration provided that third parties are not bound by the award and that the relief sought is of a type that an arbitrator can grant. The Court of Appeal upheld the lower court’s decision that the unfair prejudice proceeding should be stayed in favour of arbitration.

An interesting feature of the case was that the arbitration agreement in question was not contained in a shareholder agreement to which the shareholder was a party but was included in the Football Association rules which applied to the club by virtue of its membership of the league.

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Assignment of Rights and Agreement to Arbitrate

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Daniel Girsberger, Christian Hausmaninger, Assignment of Rights and Agreement to Arbitrate, Arbitration International , Volume 8, Issue 2, 1 June 1992, Pages 121–166, https://doi.org/10.1093/arbitration/8.2.121

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Table of Contents

I. Effects of Assignments of Contractual Rights on Arbitration Agreements – A Jurisdictional Overview

II. Factors to be Considered in Resolving the Issue of Transfer of the Arbitration Agreement

III. The Question of Applicable Law

IV. Competency To Resolve the Issue of Transfer: Court or Arbitral Tribunal?

V. Conclusion: Proposal for Uniform Rules in the Context of International Commercial Arbitration

in the context of domestic and international business transactions, parties routinely assign to third parties legal rights arising from their contractual relationships. While the assignment of such contractual rights and their eventual enforcement by third parties usually pose no specific procedural problems, several issues are likely to emerge in case the contract concluded between the original parties (the ‘main contract’) contains an arbitration clause. Questions arising in this instance are not only whether the arbitration clause travels automatically with the assigned contractual right to the assignee, but also what law is applicable to this issue, and who – arbitrator or domestic court – is competent to rule on the matter.

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  • Practical Law

Assignment of arbitration clauses

Practical law uk legal update 3-106-9445  (approx. 2 pages).

618. Assignment of a contract containing an arbitration clause.

In cases where the benefit of a contract which contains an arbitration clause has been assigned, the issue of the effect of the assignment on the arbitration clause is often also discussed in terms of assignment. However, generally only the benefit and not the burden of a contract

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Legal analysis of enforceability of assignment of arbitration clause in the light of Dubai Court of

Ahmed Elmahdy

Thara Kumar

ARTICLE 21 June 2023

Dubai Court of Cassation 1603/ 2022 (Commercial) verdict dated 30 March 2023 is a noteworthy verdict in the domestic legal landscape of Arbitration law and practice.

In a nutshell, this judgement illustrates how Arbitration clause assignment is interpreted in the backdrop of the underlying transactions and wider contract between the parties in an enforceability perspective clearly demarcating between assignment of agreement that contains arbitration clause (assignment of arbitration clause) and Arbitration Clause Incorporated by Reference.

Features of Arbitration agreements

Let us have a quick look at the salient features of arbitration prior to dissecting assignment of Arbitration clause that is at the core of the aforementioned verdict.

As we all know, the very foundation of every arbitration and of the international arbitral process itself is an arbitration agreement. Absent a valid agreement to arbitrate, there are absolutely no legal grounds for requiring a party to arbitrate a dispute or for enforcing an arbitral award against a party. “Arbitration is a matter of contract, and a party cannot be required to submit to arbitration any dispute which he has not agreed to so submit” (Howsam v. Dean Witter Reynolds, Inc., 537 U.S 79,83 (U.S S.Ct.2002).

As all may be aware, the UAE enacted a separate arbitration law to govern arbitration proceedings: Federal Law No.6 of 2018 (the “New Law”). Under Article 5.1 of the New Law and according to UAE Case Law, the parties to contract may agree to refer to any or all disputes to arbitration by either concluding a separate arbitration agreement or may agree upon an arbitration clause in the main contract (Case No.873/JY3, Federal Court of Cassation, 22October 2009; and Case No.33/2009, Dubai Court of Cassation 22 March 2009.

Arbitration agreements can be drafted in numerous different ways. Typically, an arbitration agreement is a provision in an underlying commercial contract, requiring arbitration of any future disputes relating to the contract. Such a provision can be either short and standardized or even customized for a particular transaction. (It is also possible for parties to an existing dispute, not otherwise subject to arbitration, to agree to submit that dispute to arbitration. The agreement doing so is typically a standalone arbitration agreement often called a “submission agreement” or “compromis”. A compromis is made after a dispute has already arisen rather than before.)

When we look at the factual details of the Appeal No. 1603 of 2022, a commercial appeal, before the Court of Cassation in UAE we are reminded of the basic issues affecting the enforceability of arbitration agreements like the allocation of authority between arbitrators and national courts to decide disputes over the interpretation, validity and enforceability of arbitration agreements including the “competence-competence” doctrine. The law applicable to the formation, validity and interpretation of an arbitration agreement may be different from both the law applicable to the substance of the parties’ underlying contract and the law applicable to the arbitral procedure. Given the separability presumption, a separate choice-of -law analysis is required to determine the law governing the substantive validity of the arbitration agreement itself as distinguished from the underlying contract.

An important aspect relating to validity of the arbitration agreement is non signatory issues like assignment. It is common knowledge that arbitration is fundamentally consensual. Therefore, it is argued that an arbitration agreement obligates only the parties to the agreement and not others. Presumptively and in most instances the parties to an arbitration agreement are its formal signatories. However, there are circumstances in which non-signatories may be held to be parties to and consequently bound by an arbitration agreement. These include alter-ego, agency (actual and apparent), group of companies, estoppel, legal succession, 3rd party beneficiary, implied consent, guarantor, ratification, assignment and assumption theories. It is important to note that in each instance non-signatories of a contract can be bound by and may invoke the contract’s arbitration clause.

When we analyze the topic of assignment of Arbitration clause, it further draws our attention to the contextually relevant theory of separability of international arbitration agreements. Separability Presumption is a striking feature of arbitration clause. Arbitration clauses are presumptively “separable or “severable” from the contract (main or underlying contract) within which they are found. The separability presumption provides that an arbitration agreement, even though included in and related closely to an underlying commercial contract is presumptively a separate and autonomous agreement.

How assignment or transfer impacts an arbitration clause or agreement is very relevant in the context of aforementioned latest verdict. Contracts are frequently transferred from one party to another by way of assignment, novation or assumption.

 Arbitration Clause Incorporated by Reference: An arbitration clause may be incorporated by an express reference to a document which contains an arbitration clause. In such a case, the arbitration clause will be deemed to have been incorporated into the contract provided such reference is made clear, i.e., with specific mention of the arbitration clause contained in the referenced document. This form of arbitration agreement is common in construction contracts where parties refer to the FIDIC General Conditions of Contract.

The Arbitration clause widely used in UAE is that stipulated in FIDIC Edition 1999 Clause 20.6. It states that:

“Unless settled amicably, any dispute in respect of which the DAB’s decision (if any) has not become final and binding shall be finally settled by international arbitration. Unless otherwise agreed by both Parties: (a) the dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce, (b) the dispute shall be settled by three arbitrators appointed in accordance with these Rules, and (c) the arbitration shall be conducted in the language for communications defined in Sub-Clause 1.4 [Law and Language]. The arbitrator(s) shall have full power to open up, review and revise any certificate, determination, instruction, opinion or valuation of the Engineer, and any decision of the DAB, relevant to the dispute.”

An arbitration agreement shall be valid only if it is in writing irrespective of whether an arbitration agreement is contained within a contract or as a separate document. The UAE courts have established that an arbitration agreement in writing also refers to any instrument signed by the two parties or any correspondences, letters, or any other means of written communication exchanged between the parties (Art.35(2) UNICITRAL Model Law).

If there are annexes and schedules to the contract between the parties, it is not essential that the parties sign the annexes and schedules, but it is sufficient if the schedules are referred to in the contract as being an integral part of it. Nonetheless, if a schedule contains an exceptional clause which is an arbitration clause, this condition shall not be binding upon the two parties unless they have signed such schedule. (Case No.22/JY 22, Abu Dhabi Court of Cassation, 3 March 2002, and the Case No.51/19992, Dubai Court of Cassation.

In Dubai Court of Cassation case in 2012 (Real Estate appeal 153 of 2011 issued on 19 February 2012) the Court explained on what conditions arbitration clause might be incorporated by reference. In the light of this ruling, it is crucial that parties should explicitly state their agreement to arbitrate.

It is in this backdrop that Dubai Court of Cassation 1603 – 2022 (Commercial) dated 30 March 2023 is significant as it clearly demarcates between assignment of agreement that contains arbitration clause (assignment of arbitration clause) and Arbitration Clause Incorporated by Reference.

 The relevant portion of the verdict is as follows:

 “Whereas one of the reasons the appellant mourns is the inadequacy of causation and errors in the application of the law in the challenged judgement. The appellant states that she insisted at all stages of the lawsuit, even before delving into the subject, on dismissing the claim due to the existence of an arbitration clause based on September 1st, 2019, Sales and Purchase agreement that was executed between the plaintiff as the buyer and the seller.

Verdict observes that the transfer of fixed rights in those agreements related to the invoices issued by the two supplier companies is capable of transferring the assigned right to the aggrieved company in all its elements, characteristics, payments, and consequences, making it an authentic party to the arbitration agreement stipulated in the purchase agreements concluded between the two supplier companies and the aggrieved party, Clause 13 of that agreement included that all disputes or disagreements arising from these agreements between the parties shall be governed by English law and interpreted accordingly, and any dispute arising from or related to this agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996, and arbitration shall be conducted in accordance with the terms of the London Maritime Arbitrators Association in force at the time of commencing arbitration proceedings. Unless it is proven that the agreement on the transfer has included indications to the contrary, the assigned company shall have the right.

It should adhere, in the face of the company being sued against it, to argue against accepting the lawsuit due to the existence of an arbitration clause. This is because the contested judgment contradicted this perspective and confused the transfer of the arbitration clause through contract assignment or assignment with the incorporation by reference, which does not exist at all in the circumstances of the present lawsuit. This condition is only met when the arbitration clause is not explicitly mentioned in the original contract between the parties and is solely referred to in another document that includes this clause. The confusion led to the claim that the company being sued against is not a party to those agreements and that the documents lacked any letters, telegrams, or other written means of communication between the parties, indicating a clear and explicit reference to the adoption of the arbitration clause for resolving disputes that arise between them. Therefore, the court erred in applying the law, as this error led it to refrain from examining the provisions of the sales and purchase agreements and the purchase orders to verify whether each of them includes the arbitration clause or not, and the validity of the claimant’s insistence on this argument was not investigated……and the court re-ruled by rejecting the law suit due to the existence of an arbitration clause in it….”

Thus, in principle the assignment of a contract should have the effect of conveying the arbitration clause associated with the underlying contract, either absolutely or without its counterparty’s consent unless expressly repudiated.

In the present times it has been accepted that the arbitration clause is separable from the underlying contract to the extent that it helps to ensure and promote the effectiveness of arbitration. In other words, an arbitration agreement need not be treated separately from the main contract for the purpose of a contractual assignment.

Thus, this subject verdict Dubai Court of Cassation 1603/ 2022 (Commercial) verdict dated 30 March 2023 reinforces the above stand. This verdict thus ushers in further clarity as to how the Assignment of Contract with Arbitration Clause is treated demarcating it from Arbitration Clause Incorporated by Reference in UAE.

…………………………………………………………………………………………………………………………………

 References & Bibliography

https://www.acerislaw.com/assignment-of-arbitration-agreements/#_ftn24

Garnuszek, “The Law Applicable to the Contractual Assignment of an Arbitration Agreement” in Michael O’Reilly (ed), The International Journal of Arbitration, Mediation and Dispute Management, 82(4), p. 349.

Articles of New York convention

court decision No. 70/2012 from 15th of June 2012, the Bulgarian Supreme Court of Cassation

Gary B Born International Arbitration: Law and Practice

International Commercial Arbitration by G. Borne

LexisNexis E journal dated 7 April 2016

LexisNexis E journal dated 25 April 2016

A Guide to Arbitration in the UAE By Hassan Arab, Gordon Blanke, Alain Farhad, Mahmood Hussain, Philip Punwar.

Kluwer Arbitration Blog

Kluwer Arbitration Blog

Does the assignment of a contract assign the arbitration agreement: the indian perspective.

Under the Indian Contract Act 1872 (“ ICA ”), an arbitration agreement is a distinct and separate contract. Like all other contracts, it can be transferred by way of assignment to third parties under Section 37 of the ICA. The Supreme Court of India in Khardah Company Ltd vs Raymon & Co. (India) Private Ltd has held that there is a distinction between the assignment of “rights” and “liabilities.” A contract stands novated when assigning rights and liabilities to a third party. This raises a fundamental question – does the arbitration agreement also stand novated when the principal contract is assigned to a third party? If it does, then as held by the Supreme Court in Kapilaben v. Ashok Kumar Jayantilal Sheth the assignment of every obligation, such as the obligation to refer the dispute to arbitration, requires the parties’ fresh consent.

If, on the other hand, the arbitration agreement does not stand novated on assignment of the principal contract, does it mean that the arbitration agreement is automatically transferred along with the principal contract to the third party without the need for fresh consent (“ Automatic Transfer Approach ”)?

The United States courts have always been divided in their approach. Some earlier decisions, such as Hosiery Mfrs’ Corp. v. Goldston and Nissan Motor Acceptance Corp v. Ross , support the Automatic Transfer Approach. On the contrary, decisions like Lachmar v. Trunkline LNG Co . require express consent of the assignee (third party). However, in recent years courts have critically analysed the principal contract than merely choosing sides to ascertain assignment of the arbitration agreement, adopting an approach similar to the highest court of Bulgaria .

In similar vein, the Indian courts have been inconsistent in their decisions on whether the assignment of a contract also amounts to the assignment of the arbitration agreement to a third party.

Requirement of Specific Consent

In Delhi Iron and Steel Co. Ltd. v. U.P. Electricity Board , the Delhi High Court took the view that the assignment of the principal contract does not ipso facto result in the assignment of the arbitration agreement. The principal contract is assignable, but the arbitration agreement is not. Since an arbitration agreement is a distinct and separate agreement, the arbitral intent between the original party and the assignee of the other party must be made manifest. A similar view was adopted in Vishranti CHSL v. Tattva Mittal Corpn. (P) Ltd . holding that in the absence of specific consent to the assignment of the arbitration agreement, the arbitration agreement would not be assigned to the third party, even if the principal contract has been assigned.

The basis for this view can be found in the judgement of the Indian Supreme Court in M.C. Chacko v. State of Travancore which held that a person who is not a party to the contract cannot enforce the terms of the contract. However, it is pertinent to note that even in this judgement, the Supreme Court had recognised the assignment exception. Thus, the requirement of specific consent by the assignee to transfer the arbitration agreement is an approach adopted by Indian courts only in a handful cases.

No Separate Consent Required

The predominant view by Indian courts has been that the doctrine of separability enshrined under Section 16 of the Arbitration and Conciliation Act 1996 (“ Act ”) relates to the right of the arbitral tribunal to rule on its own jurisdiction. The doctrine of separability and its jurisprudence cannot be extended to mean that a separate arbitration agreement is to be executed between the parties at the time of assignment of a contract. Therefore, as held by the Bombay High Court in DLF Power Ltd. v. Mangalore Refinery & Petrochemicals Ltd . (“ DLF ”), a third party, to whom the principal contract is assigned, can enforce the arbitration agreement.

Specifically, if the rights and obligations under the principal contract are assigned to a third party and this third party also performs obligations under the contract, such as making payments, seeking extension of time or approval, joint survey, etc., this third party is entitled to invoke arbitration.

Consensual Theory of Arbitration

Taking a similar approach, the Delhi High Court in Rajesh Gupta v. Mohit Lata Sunda held that if the parties to the principal contract knew of the assignment and were fully aware that a third party ‘had stepped into the shoes’ of another party, the arbitration agreement stood assigned. These views are essentially based on the consensual theory in arbitration stated in Aerens Goldsouk International Co. Ltd. v. Samit Kavdia , which recognises that non-signatories to the arbitration agreement can invoke the arbitration clause and are thus ‘parties’ to the arbitration agreement under Section 2(1)(h) of the Act.

Consequently, the consensual theory aims to infer consent from the parties’ behaviour if an agreement is not self-evident. Agency, assignment, and group of companies doctrine are among such theories. Recently, the Delhi High Court in Tomorrow Sales Agency (P) Ltd. v. SBS Holdings Inc. , held that the non-signatories may either invoke the arbitration agreement, being the beneficiaries of the contract, or otherwise be bound by the same. The Court noted, “ 30. Gary B. Born, has explained that the legal basis for holding that a non-signatory is bound by an arbitration agreement includes “both purely consensual theories (e.g., agency, assumption, assignment) and non-consensual theories ( e.g. , estoppels, alter ego).” However, this decision has been challenged in an appeal which is currently pending. It would be interesting to see how the court deals with the question of third parties invoking arbitration, especially in cases of assignment of the principal contract.

Nonetheless, the Bombay High Court in DLF echoed a similar view and held that the arbitration clause does not take away the right of assignment of a party to a contract if it is otherwise assignable. The High Court noted that there is a clear distinction between the assignment of rights under a contract by a party who has performed its obligations under the contract and the assignment of a claim. The latter is a mere claim which cannot be assigned in law. It further observed that once the other party has accepted the assignment and insisted on compliance with rights, duties and obligations, the assignee steps into the shoes of the assignor and will be entitled to all rights, obligations and benefits, including the arbitration agreement forming part of the said agreement.

Similarly, in Bestech India (P) Ltd. v. MGF Developments Ltd. , the Delhi High Court considered the parties’ conduct post-assignment of the contract and rejected the submissions of the original party that the assignee had no locus standi to file an application for appointment of an arbitrator or that the assignee had no privity of the contract with the original party.

While Indian courts have been inconsistent in following the Automatic Transfer Approach when the principal contract is assigned, the predominant view aligns with international practices. Though the minority view requiring specific consent for assignment of the arbitration agreement may be correct on a strict reading of the requirement of express consent to refer the dispute to arbitration, a more practical and pragmatic approach requires inferring such consent by the assignment.

As explained by the Singapore Court of Appeal in the case of BXH v. BXI , “an arbitration agreement does not have a purpose or life independent of the substantive obligations that it attaches to.” Thus, the requirement of express consent, though sound, defies a more holistic understanding of the purpose of the arbitration agreement, i.e. , to refer disputes arising out of the obligations under the principal contract to arbitration.

While the views discussed above were from different Indian High Courts, the applicability and binding nature of the arbitration agreement to non-signatories through assignment has now been recognised in the recent landmark judgment by the Indian Supreme Court in Cox and Kings Ltd. v. SAP India Pvt. Ltd. and Another which has been discussed on the Blog here . Though the Supreme Court has not explicitly addressed the issue of the requirement of express consent for assignment of the arbitration agreement, the extension of the arbitration agreement to non-signatories implies that specific consent may not be required for assignment of the arbitration agreement when the principal contract is assigned.

The author would like to thank Mr. Ankit Singh, Senior Associate, Mr. Ayush Kumar, Associate, ANR LAW LLP and Ms. Ramya Singh, Final Year Student, Ram Manohar Lohia National Law University, Lucknow for their research assistance.

________________________

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References [ + ]

References
1 , Thomson Reuters: Legal Archives (Aug. 2002)
2 Anita Garnuszek, , 82 Arbitration: The International Journal of Arbitration, Mediation and Dispute Management 4, 350 (2016).
3 Julian D. M. Lew, Loukas A Mistelis & Stefan M Kröll, Comparative International Commercial Arbitration 147-48 (2003).
4 Chee Ho Tham, 37 Butterworths Journal of International Banking and Financial Law 4, 234-35 (2022).
5 Albana Karapanco, , Central European University 39 (Mar. 2015).

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Practical Law

Arbitration blog, arbitration under unilateral documents: how to avoid enforcement risk.

  • by Nicholas Peacock
  • by Vanessa Naish
  • Professional support consultant & arbitration practice manager
  • by Jerome Temme

The problem in a nutshell: consent

Documents executed by only one party in favour of a non-signatory are commonplace in commercial transactions, for example in the financial services and construction sectors where guarantees and bonds are often issued in this way. However, when parties are trying to resolve disputes arising under what are, for convenience, referred to as “unilateral documents” in this blog, they may encounter a number of legal hurdles.

Arbitration is based on the consent of all parties to arbitrate rather than to resolve their disputes in the local courts. Given the important nature of this agreement , it is generally required to be “in writing”. The English Arbitration Act 1996 defines “in writing” relatively widely, accepting that agreements to arbitrate may be “evidenced” in writing or even be non-written agreements referring to written terms. An arbitration agreement in a unilateral document is therefore generally seen as enforceable under English law.

Other jurisdictions, however, follow more closely the stricter requirement in the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 . Under the New York Convention, an “‘agreement in writing’ shall include… an arbitration agreement, signed by the parties or contained in an exchange of letters…”. This is generally seen as requiring all parties to execute the arbitration agreement.

Where the arbitration clause provides for an arbitral seat in one of these foreign jurisdictions, or where the seat is in England but enforcement of an award may take place abroad, there is a risk that a foreign court will refuse enforcement of any award issued pursuant to an arbitration clause in a unilateral document .

While the New York Convention generally allows parties to enforce arbitral awards in most countries worldwide, enforcement may be refused by local courts on the ground that the award is contrary to the jurisdiction’s public policy by virtue of a lack of consent to arbitrate.

To avoid this enforcement risk from the outset, this blog sets out practical solutions to ensure that arbitral awards will be enforceable, thus avoiding incurring time and expense resulting in an unenforceable award.

Unilateral documents in commercial practice

A number of common commercial transactions involve the use of unilateral documents, and often these will contain arbitration clauses , especially when this is consistent with the remainder of the transaction documents. Where the unilateral document is subject to English law, it is most commonly executed in the form of a deed poll, which is a deed signed by one party in favour of another party.

Such unilateral documents are used, for example, in the following scenarios:

  • Company A contracts with foreign company B and requests a guarantee from B’s parent company C which is incorporated in A’s jurisdiction.
  • Contractor A subcontracts works in relation to its construction project to subcontractor B; the subcontract may envisage B obtaining a performance or on-demand bond from its bank C as security in favour of A.
  • Company A  novates or assigns its contract with B to its subsidiary C which is a project company without significant assets; A may issue a guarantee in favour of B in order to give B confidence that it will receive what it is promised under the contract, even where C defaults.

None of these guarantees or bonds is necessarily signed unilaterally; in many instances parties opt for “traditional” execution by two or more parties. Where parties opt for unilateral execution, this can be for a number of reasons: in some cases, it is simply faster and more convenient to execute the document unilaterally rather than to send a physical copy to the counterparty. In other cases, tax or regulatory reasons prevent the party receiving the bond or guarantee from signing the document; this can be particularly relevant where the parties are not based in the same jurisdiction. A further situation where parties tend to sign documents unilaterally is where a benefit is conferred upon a large number of counterparties, or a varying class of counterparties (for example, employees, bondholders or shareholders in a publicly traded company); in such cases, it would be impractical to arrange for signature by every member of the class and to obtain further signatures whenever an individual joins the “class” of individuals identified.

Solutions in practice: making it clear from the outset

The remainder of this blog will be dedicated to pointing out various practical drafting tips by which parties can ensure their dispute resolution clauses are as consistent and effective as possible.

Unilateral documents often fulfil ancillary functions in larger commercial transactions, or guarantee the obligations in a main contract. In most (but not all) cases, the subject matter of the unilateral document and the other, related contracts overlaps. This makes it desirable to provide for the same dispute resolution mechanism in all contracts, whether arbitration or court litigation.

Practitioners may face a scenario where a party is about to execute a unilateral document containing an arbitration clause and the other party’s assets are in a jurisdiction where the enforceability of arbitration clauses in unilateral documents is in question, due to the lack of written consent to arbitrate. How can practitioners seek to ensure that the parties’ choice of arbitration will be respected?

Is unilateral execution really necessary?

Where the use of unilateral documents results in an enforcement risk, the obvious solution is to avoid their use altogether. By making the party in whose favour the bond or guarantee is to be executed a signatory, concerns about the parties’ consent to arbitrate fall away. However, this may not always be an option, for example, where signature by all parties is not possible within the available timeframe, or for tax or regulatory reasons. Where a guarantee is issued in favour of a varying class of shareholders or employees, it may also not be practical to make all beneficiaries signatories to the agreement.

Is an umbrella agreement an option?

Where unilateral execution of a document cannot be avoided, a preferred dispute resolution option in complex commercial transactions is for all parties to enter a so-called umbrella agreement.

The most common approach is to include mirror image arbitration clauses in each transaction document, ensuring (through complex and bulky drafting) that disputes under different contracts can be consolidated and that transaction parties can be joined to arbitrations even where they are non-parties for the purposes of the relevant arbitration agreement. An umbrella agreement, instead, is a separate agreement between all parties involved in the transaction (including the issuer of the unilateral document), providing for a consistent dispute resolution mechanism for all disputes arising under any of the transaction documents.

The arbitration clause in a unilateral document will be replaced with a short clause incorporating the umbrella agreement’s dispute resolution provision by reference. Under English law, express and clear language is required to do so. In this way, the arbitration agreement incorporated into the unilateral document is an arbitration agreement signed by all relevant parties, and thereby complying with the formality requirements set out in the New York Convention and any corresponding local law.

While this is a clean solution in theory, it can be difficult to implement in practice. For example, it is possible that some of the transaction documents will have already been signed by the time the parties are drafting or negotiating the guarantee or bond. In that case, an umbrella agreement may no longer be practical. There may also be significant reluctance from some parties to enter into what is perceived as another legal document produced at further cost in the context of an already complex commercial transaction with various inter-related contracts.

Before entering an umbrella agreement, local law advice should also be sought in the jurisdiction where any award may need to be enforced to ensure that the umbrella agreement (and awards made pursuant to such agreements) are enforceable in that jurisdiction.

Umbrella-“light”: can an arbitration agreement in another contract cover the unilateral document?

Where the party executing the unilateral document and the party in whose favour the unilateral document is issued are both parties to another transaction document, a further solution is to amend the drafting of the arbitration clause in that bilateral or multilateral contract to effectively become a kind of umbrella agreement covering the unilateral document.

In practice, this can be achieved by drafting the arbitration clause in the multilateral contract so as to refer to disputes arising under the multilateral contract, as well as under the unilateral document. Care should be taken that all references in the arbitration clause are amended accordingly, including any joinder and consolidation provisions. In return, the arbitration clause in the unilateral document will be replaced with wording incorporating by reference the arbitration clause from the multilateral contract.

This option can be preferred in some cases. It dispenses with the need for an additional document while also reducing any enforcement risk. This option will not be available in practice, however, where the unilateral document is the issuing party’s only involvement in the transaction. This is the case, for example, where a bank issues a bond in favour of a construction contractor.

Dealing with risk: what to do when a dispute has arisen?

Where a dispute arises under a unilateral document and the above options were either not available or not used, parties should seek advice in relation to the risk of proceeding to resolve the dispute by arbitration. In particular, local law advice from the jurisdiction where enforcement would likely be sought can shed light on how significant the enforcement risk will be in the particular factual scenario.

Another relevant factor will be which party is contemplating bringing a claim under the arbitration clause contained in the unilateral document. Where the non-signatory party is commencing the arbitration, the enforcement risk may be lower, because the argument that there was a lack of consent to arbitrate will be less convincing. Indeed, commencement of the arbitration by the non-signatory party could likely indicate that consent. If, however, the issuer of the bond or guarantee is bringing the claim, the enforcement risk will tend to be higher. In this case, the non-signatory party might bring a jurisdictional challenge. Even if this was to fail, the challenge could be relied upon at the enforcement stage as evidence indicating that there was no consent to arbitrate. If the resisting party chooses not to participate in the arbitration, this might lend further weight to any application resisting enforcement in foreign courts at a later stage.

A practical solution to avoid legal uncertainty would be for both the non-signatory and the signatory party to enter into a written agreement to submit their dispute to arbitration after it has arisen. This should significantly reduce the enforcement risk, as the enforcing party will be able to point to an arbitration agreement which satisfies the formality requirements set out in the New York Convention and, as a consequence, of any local law.

In practice, however, where a dispute has arisen, parties tend to be reluctant to agree even on basic points. Any party which contemplates that an arbitral tribunal may issue an award which is not in its favour may be unwilling to facilitate enforcement of such an award. As a consequence, an arbitration agreement post-dating the dispute is only likely to be an option where both parties have advanced claims against each other and both have concerns about the enforceability of a potential award because the other side’s assets are located outside the jurisdiction, or where the alternative dispute resolution venue (for example, a local court) is unattractive to both disputing parties.

Key takeaway

Parties negotiating a unilateral document should consider carefully whether or not to include an arbitration clause in this contract. While some jurisdictions may recognise arbitration agreements in unilateral documents as enforceable, this does not necessarily mean that a resulting arbitral award will be enforceable in the usual way under the New York Convention. Wherever possible, an arbitration agreement should be concluded between all relevant parties, whether in the guarantee or bond, or in a separate document incorporated by reference.

Careful planning is crucial when it comes to structuring the dispute resolution mechanism in a complex commercial transaction. Dealing with the arbitration agreement at the eleventh hour often means that it is no longer practical to put in place alternative arrangements, such as creating an umbrella arbitration agreement.

Where a guarantor is unwilling to accommodate the non-signatory’s request to adopt one of the practical approaches set out above, parties should carefully consider how significant the enforcement risk is in their particular case and whether it can be mitigated in any other way.

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Does the assignment of a claim in respect of which arbitration has been agreed lead to a lack of jurisdiction of the court?

Nowadays, parties are increasingly choosing to have their disputes settled by means of arbitration. An arbitration agreement results in, among other things, a lack of jurisdiction of the court. However, the arbitration clause Provision in which parties agree to settle any future disputes by arbitration » Meer over arbitration clause arbitration clause only has effect between the parties. So what happens if a third party takes over a claim in respect of which arbitration has been agreed by the original creditor and debtor? Onno Hennis, a lawyer specializing in procedural law, explains who is competent in such a case: the judge or the arbitrator.

Arbitration

Parties may agree to arbitration in the case of disputes in which they are free to determine the legal consequences. Arbitration can be described as a private form of settling disputes. Instead of referring the dispute to the court, the parties appoint an arbitrator to judge their dispute. The judgment of the arbitrator is binding on the parties and results in an enforceable title.

Benefits of arbitration

There are various reasons to agree to arbitration. For example, the parties can choose their arbitrator(s) themselves. This can be useful when, for example, specific technical expertise is required to properly judge a dispute. Furthermore, the arbitration procedure is generally confidential (as opposed to government courts, where hearings and the verdict are public). However, the main reason for choosing arbitration is usually the fact that arbitral awards can easily be enforced internationally.

Government courts

By agreeing on arbitration, the parties will block regular legal proceedings. The law requires a judge to decline jurisdiction when one of the parties invokes a valid arbitration agreement. The same applies in the reverse situation: an arbitration court is only competent if and insofar as there is a legally agreed arbitration clause between the parties. If there is no valid arbitration agreement, only the “normal” court has jurisdiction.

Claim transfer

In practice, the parties often transfer claims. The transfer of a legal claim is called an assignment. The “assignor” is the person who transfers the claim to the “assignee”. The original debtor of the assignor is called the “assigned debtor”.

Assignment of a claim with an arbitration clause

Now imagine the following scenario. A contract has been concluded between A and B. On the basis of this contract, A has a monetary claim against B. In the contract, A and B have agreed to arbitration. A transferred his claim to C at one point. If C wants to collect his claim against B, the question arises whether he should initiate court proceedings or settle the dispute through arbitration.

Transfer does not affect defenses

The law states that assignment does not affect the means of defense of the assigned debtor. The idea behind this is that the legal position of the debtor should not become worse as a result of the transfer, which takes place entirely without his involvement.

The defenses also include all formal defenses.

Therefore, if C were to initiate court proceedings, B would be able to invoke the court’s lack of jurisdiction, because a valid arbitration agreement was concluded between B and A, and C was bound by that agreement. The court will then decline jurisdiction. C will therefore have to refer his claim to the court.

Obligation of the assignee

The fact that C is bound by the arbitration clause (despite the fact that he was not involved in its establishment) is justified, among other things, by the fact that C knew or at least could have known that the contract between A and B included arbitration when he took over the claim. If he did not want to be bound by it, he could have decided not to take over the claim.

The reverse situation

What about the reverse situation? What if C wants to enforce his claim through arbitration, but B prefers to settle the dispute in court? Can B dispute the competence of the arbitrator in the arbitration proceedings initiated by C on the ground that no arbitration has been agreed between him and C? Or is B (also) bound by the arbitration clause vis-à-vis C?

Transfer of ancillary rights

The answer is that B is also bound by the arbitration clause vis-à-vis C. This is because the law stipulates that in the case of assignment all ancillary rights (such as agreed interest, etc.) are also transferred to the assignee along with the right to claim. The Supreme Court of the Netherlands already determined in 1933 that an arbitration clause is an ancillary right and that this clause can therefore successfully be invoked against the assigned debtor by the assignee.

Obligation of the assigned debtor

It is logical that B is bound by the arbitration clause vis-à-vis C (although they never agreed on arbitration with each other). When concluding the contract, B chose arbitration instead of a government court. The fact that he now has a new counterparty does not alter that fundamental choice. If B had wanted to ensure that he would only be bound by arbitration with A and not with C, he should have stipulated that in the contract.

AMS Advocaten: legal assistance in arbitration proceedings

Are you involved in arbitration proceedings or do you wish to initiate arbitration proceedings, and are you looking for experienced and expert assistance? If so, please contact one of the specialists of AMS Advocaten without obligation.

Onno Hennis

Onno Hennis

At AMS Advocaten Onno focuses on corporate and commercial litigation . He advises clients on various legal issues in the areas of company law, contract law and tort. Follow Onno on LinkedIn .

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Assignment In Arbitration: Scope And Issues In India

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Arbitration is a binding voluntary alternative dispute resolution process by a private forum chosen by the parties. It can broadly be divided into three stages, first being the pre-arbitration stage (prior to the time when the dispute arises), second is during the course of arbitration proceeding and last is following the passing of arbitral award.

The term 'assignment' is defined as the transfer by a party of all its rights to some kind of property, usually intangible property such as rights in a lease, mortgage, agreement of sale or partnership. The arbitration clause/agreement provides the right to arbitrate to the concerned parties of that agreement. Therefore, the question arises as to whether such right can be transferred through assignment to some other party. The authors in this post have discussed the scope of assignment in arbitration and the issues that arise in making such assignment.

Assignment in Arbitration: An Overview

Arbitration is a separate contract by the separability principle as envisaged under section 16(1)(b) of the Arbitration and Conciliation Act, 1996. An assignment of a contract might result from a transfer either of the rights or of the obligations thereunder. As a result, obligations under a contract cannot be assigned except with the consent of the promisee and then it is a novation resulting in substitution of liabilities. On the other hand, rights under a contract are assignable unless a contract is personal in nature or the rights are incapable of being assigned. This view has been upheld in DLF Power Limited v. Mangalore Refinery & Petrochemicals Limited & Ors. , 2016 SCC Online Bom 5069. The Bombay High Court in its judgment stated that the arbitration clause does not take away the right of assignment of a party to a contract if it is otherwise assignable. The Court noted that there is a clear distinction between assignment of rights under a contract by a party who has performed its obligations thereunder and the assignment of a claim. The latter is a mere claim which cannot be assigned in law. It was further held in this case that once the other party has accepted the assignment and had insisted for compliance of rights, duties and obligations, the assignee steps into the shoes of the assignor and will be entitled to all rights, obligations and benefits including the arbitration agreement forming part of the said agreement.

Alternatively, parties may expressly prohibit assignment. The benefits of the contract are not then assignable. In such a case, a purported assignment by one party of the contract is invalid as against the other party, but it is valid and enforceable between the assignor and the assignee. The terms of a contract could be expressed, or may be implied as it is legitimate to take the surrounding circumstances into account.

Taking into consideration the general principles relating to the concept of assignment in arbitration, it is to be considered whether the situation for assignment remains same throughout different stages of arbitration (pre-arbitration, during the course of the arbitral proceedings and following the passing of arbitral award).

Pre-Arbitration

The Calcutta High Court in Hindustan Steel Works Construction Ltd. v. Bharat Spun Pipe Co. , AIR 1975 Cal 8, while deciding the application for setting aside an arbitral award, discussed the scope of assignment and held that the correct position in law seems to be that whether the contract is assignable or not depends upon the nature of the contract. A contract in the nature of a personal covenant cannot be assigned. Secondly, the rights under a contract can be assigned, but the obligations under a contract lawfully cannot be assigned. Thirdly, the intention about assignability would depend upon the terms and the language used in a contract. Lastly, existence of an arbitration clause per se does make neither the contract non-assignable or assignable.

The Delhi High Court in Kotak Mahindra Bank v. S. Nagabhushan & Ors. , 2018 SCC OnLine Del 6832, while deciding the application under section 34 was faced with the question whether there was valid assignment of arbitration agreement or not. The arbitrator decided that since the claimant is not signatory to the arbitration agreement the matter cannot be decided through arbitration. However, the Court held that the loan agreement by its very nature was assignable. The Court viewed that once the rights under the loan agreement are assigned in favour of the petitioner, the rights under the arbitration agreement, being only in the nature of a remedy for enforcement of such rights, are equally assignable and have been duly assigned in favour of the petitioner in the present case by way of the assignment agreement. The Court followed Bestech India Private Ltd. v. MGF Developments Ltd. (2009) 161 DLT 282 and held that if a contract is assignable, an arbitration clause will follow the assignment of the contract.

During the Course of the Arbitral Proceedings

The Bombay High Court in Agri Marketing Co. SARL v. Imperial Exports Ltd. , (2002) 2 Bom CR 646, while deciding the enforcement application of an arbitral award, stated that the right under an arbitration clause is assignable even after arbitration proceedings have commenced and that the assignee may simply take over the assignor's proceedings without the need to start afresh. However, the right was subject to two important qualifications:

  • the notice to the arbitrator must be given within a reasonable time;
  • in writing.
  • with notice to the other party (and the arbitrators).

Following the Passing of Arbitral Award

By virtue of section 36 of the Arbitration and Conciliation Act, 1996, on expiry of the period for an application of setting aside, an arbitral award shall be enforceable in accordance with the provisions of Civil Procedure Code, 1908 in the same manner as a decree of a court. Therefore, the award is assignable according to the provisions of the Civil Procedure Code, 1908 dealing with assignment of decree.

Champerty & Assignment

A claim for damages for breach of contract, after breach, is not an 'actionable claim', within the meaning of section 3 of the Transfer of Property Act, 1882, but a mere right to sue within the meaning of section 6(e) of that Act, and it cannot therefore be assigned. Rights of action arising out of or incidental to rights of property can be assigned with the property transferred. An assignment of a bare right of action may also be upheld if the assignee has a genuine commercial or financial interest in taking the assignment; but a step towards the sale of bare cause of action to a third party who had no genuine commercial interest in the claims will be void as champertous since it involves trafficking in litigation.

The Privy Council has generally held that champertous agreements are void in England as it violates the statute of champerty. However, it also recognized that this principle is inapplicable in India. The courts have looked the champertous agreements with caution as they may violate the public policy of the country. But the Indian courts have not faced any situation where the issue involved the funding arrangement with any party to the arbitration proceedings.

The concept of assignment in arbitration is based on the principles of transfer of contractual rights. Assignment can be undertaken during any of the stages and this is beneficial to the parties involved in arbitration. Assignment may be beneficial in various ways. Prior to the dispute if there is some acquisition which occurs or the party does not want to further invest in the project then it can assign the contractual rights (including right to arbitrate to the other parties). During the proceedings, the stressed companies with no real assets but pending arbitration claims can assign their claim to the party whom the debt is own. However, all of this will depend on the agreement of the concerned parties.

It is to be noted that Indian courts have held that assignment of claim is not allowed. However, assignment has been allowed during the arbitral proceedings. This is contradictory, since the pending arbitration proceeding will be considered as a claim only. The courts or the legislature should address this issue.

Therefore, Indian courts may have taken the view that assignment in arbitration is permissible. However, its scope is not clarified and therefore it should be included in the Arbitration and Conciliation Act, 1996 as well, so that the unaddressed issues can be settled and assignment becomes a right in the hand of a party having a legitimate claim. Such a statutory recognition will introduce certainty in the arbitral regime of the country and will help India in its stride to become a hub for international arbitration.

Originally published by IndiaCorp Law Blog .

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.

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Top 10 Issues in Arbitration Clauses in Singapore and Hong Kong

If you can't read this PDF, you can view its text here . Go back to the PDF .

Paul Tan, Alex Wong, Jonathan T.R. Lai, and Viraen Vaswani1

In this article, the authors consider the top 10 issues regarding arbitration clauses that arise nowadays, and the extent to which the courts of Singapore or Hong Kong have dealt with them.

International transactions with Asian parties using arbitra- tion as their preferred mode of dispute resolution continue to rise. In recent years, U.S. and European counterparties feature among the most frequent users of Singapore and Hong Kong as seats of arbitration.

Singapore and Hong Kong are regarded as two leading, pro-arbitration seats for international arbitration. As com- mercial transactions become more complex, parties have been seeking variations to the standard model arbitration clause to fit the specifics of their transactional requirements. No longer “midnight clauses,” arbitration agreements deserve attention and scrutiny by parties because they can greatly influence how a dispute could unfold.

This article considers the top 10 issues regarding arbitration clauses that arise nowadays, and the extent to which the courts of Singapore or Hong Kong have dealt with them.

1 The authors, attorneys with Gibson, Dunn & Crutcher LLP, may be contacted at [email protected] , [email protected] , jlai@gibson dunn.com, and [email protected] , respectively.

Dispute Resolution Journal® | May-June 2024, Vol. 78, No. 1, pp. 93–99.

© 2024 American Arbitration Association®. All rights reserved. ISSN 1074-8105 (print) |ISSN 25733-606X (digital).

Issue 1: Are Optional or Asymmetrical Clauses Enforceable?

Summary: Yes.

Both Singapore and Hong Kong have confirmed that optional arbitration clauses (giving parties the option, not obligation, to arbitrate their disputes), and asymmetrical arbitration clauses (entitling only one party the right to refer the dispute to arbitra- tion) are enforceable. A lack of mutuality in obligations per se does not render the clause unenforceable.

In an optional clause, it is advisable to stipulate whether the other party is bound by the other party’s choice (i.e., whether the first mover dictates the forum).

In an asymmetrical clause, it is advisable to stipulate a pro- cess (e.g., written notice of a dispute arising) that would trigger a longstop date by which the party holding the right to refer the dispute to arbitration has to exercise or forfeit it.

Issue 2: Are Pre-Arbitration Requirements

(a) Enforceable, and (b) Treated as a Question of Admissibility or Jurisdiction?

Summary: Yes, pre-arbitration requirements are enforce- able. Singapore and Hong Kong take different positions on whether such questions are treated as going to admissibility or jurisdiction.

Pre-arbitration requirements or arb-med-arb protocols or multi-tiered dispute resolution clauses are enforceable. The stringency with which such clauses will be enforced depends on the language used. Where clear obligations are imposed and expressed as mandatory, the court will require full and not merely substantial compliance.

A party’s failure to adhere to conditions precedent to the arbitration is currently viewed as a matter going to admissibility under Hong Kong law such that it is only for the tribunal to decide

if the preconditions are met, and if not, to decide whether to stay proceedings pending satisfaction of those conditions.

Singapore law is not settled on this but there is authority suggesting that the tribunal lacks jurisdiction to proceed if the preconditions are not met. A party that disagrees whether the preconditions are satisfied may challenge jurisdiction before the tribunal and ultimately in court.

Issue 3: Can Parties Mix and Match Institutions and Arbitral Rules?

Summary: Possible; not advisable.

Only Singapore law has confirmed that a clause mixing institutions (e.g., ICC rules administered by the SIAC) and their arbitral rules can be enforced. However, this is not advisable and institutions like the ICC have now stipulated in their rules that only they can administer their own rules.

Issue 4: Are There Presumptions Relating to Parties’ Choice of the Law Governing the Arbitration Agreement?

Summary: Yes; recommend stating the law governing the arbitration agreement.

The law governing the main contractual obligations of the parties is, in principle, distinct from the law governing the arbi- tration, which in turn need not follow the law of the seat (i.e., the procedural law).

Most contracts will at least stipulate the law governing the contract, and by the choice of the seat, they will have chosen the procedural law.

However, many contracts remain silent on the law governing the arbitration agreement itself (possibly on the assumption that the law governing the contract governs the arbitration agreement

as well). This has spawned a series of cases. It is advisable to specifically stipulate the law that parties desire to govern the arbitration agreement (which affects validity and interpretation). In the absence of an express choice, the court will examine whether there is an implied choice of law. There is a presumption that the law governing the main contract governs the arbitration agreement. That presumption can be displaced by (1) the terms of the arbitration agreement, or (2) whether the effectiveness and validity of the arbitration agreement would be impacted by

applying the presumption.

In the absence of an express or implied choice, the system of law that has the closest and most real connection to the arbitra- tion agreement will govern.

It should be noted that this test follows the English position, which is about to be changed by statutory reform such that the law of the arbitration agreement will be presumed to follow the law of the seat. It remains to be seen whether the Singapore or Hong Kong courts adopt the new English position.

Issue 5: Can the Allocation of Costs and Interest Be Dealt with by Agreement, Including the Costs of Third-Party Funding?

The allocation of costs and interest is a matter for the tribu- nal and the courts would not generally interfere in their award. The default rule in both jurisdictions is that costs follow the event. Parties may agree for each party to bear their own costs. Unlike in England, there is no statutory prohibition in Singa- pore and Hong Kong against allocating all the costs to one party

regardless the outcome.

Tribunals tend to award pre-award interest on a compounded basis to compensate the claimant for being out of the money, and post-award interest based on the prevailing statutory rate. Par- ties may also wish to stipulate whether and at what rate interest should apply.

Third-party funding is permitted in Singapore and Hong Kong for international arbitrations. There is no reason in princi- ple why the costs of third-party funding cannot be awarded to the successful claimant and tribunals have allowed this. To avoid any dispute, parties may stipulate the tribunal may award such costs.

Issue 6: Can Parties Carve Out Issues for Judicial Determination? By Extension, May Parties Appeal Questions of Law?

Summary: Yes, parties can carve out issues for judicial determination, but no, parties may not appeal questions of law.

The scope of the arbitration clause is a matter for agreement by parties, and it can be as wide or narrow as parties deem appro- priate. This means it is possible to carve out certain issues for judicial determination. This could be useful to obtain a ruling on a certain definition or clause that parties might be using across multiple contracts, or a standard term.

However, neither Hong Kong nor Singapore permits appeals on issues of law if otherwise those questions are referable to arbitration.

It is unclear whether parties can agree to refer certain issues to an “appellate tribunal,” which some industry arbitration rules provide for. How such agreements square with the legislation in Singapore and Hong Kong remains untested.

Issue 7: Can Parties Address Multiparty or Consolidation Issues by Agreement?

Summary: With great caution.

Depending on the arbitral rules adopted, there may be default provisions as to the process to be undertaken in a multiparty or consolidated arbitration. The most important of which is that the original parties may not be able to appoint their own arbitrators.

It could be possible for parties to stipulate that the “anchor” parties get their choice of arbitrator. But this could raise issues of due process and equality. This explains why most institutional rules provide, e.g., that where a party is joined, the tribunal is then appointed only by the institution and not the parties, or that if there are multiple claimants or respondents, they have to agree on their arbitrator or the institution will appoint the arbitrators. What can be useful is an express provision stipulating that parties agree that disputes arising out of a defined group of contracts are to be capable of consolidation and/or that parties to the defined group of contracts agree to be joined in any such

proceedings.

Issue 8: Can Parties Agree on Expedition?

It is possible for parties to stipulate that their arbitration should be conducted in accordance with the expedited rules of the institution, or simply that the arbitration is conducted and completed within a defined period of time.

Conversely, parties may stipulate that their arbitration will not be expedited even if it may qualify for expedition under the relevant rules.

Issue 9: Should Parties Pay Attention to Questions of Arbitrability?

Summary: Yes; ensure the disputed subject matter is arbi- trable under laws of the arbitration agreement and the seat.

Typically, the law governing the arbitration agreement deter- mines whether the dispute is arbitrable. This could be a trap for the unwary, and makes the choice of the law governing the arbitration agreement important (see above).

The Singapore courts have recently ruled that at the pre- award stage, a dispute cannot be referred to arbitration if it is

not arbitrable by both the law of the arbitration agreement and the law of the seat. Thus, while the choice of a “safe” seat like Singapore or Hong Kong should avoid most arbitrability issues, advice should be taken in relation to whether the governing law of the contract would regard any potential dispute as not being arbitrable.

In the commercial context, the question of arbitrability often arises when the dispute involves the validity of intellectual prop- erty rights and minority oppression claims.

Issue 10: Can Parties Choose Their Supervisory Court?

Summary: Yes, in Singapore.

In Singapore, the default supervisory court is the General Division of the High Court. However, parties may choose the Singapore International Commercial Court as their supervisory court.

In Hong Kong–seated arbitrations, the Hong Kong courts (specifically the Court of First Instance) will be the court of supervisory jurisdiction.

Notwithstanding the permutations open to parties to cre- ate bespoke arbitration agreements, one must be careful not to add unnecessary complexity. While some variations can be useful (e.g., provisions on costs and interest), one counterpoint to balance is that the further an agreement deviates from the standard model clause, the more opportunities a recalcitrant respondent may have to raise arguments challenging jurisdiction or admissibility.

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assignment of contract arbitration clause

EXPERT OPINION

What You Need to Know: Cooley Lawyers on 4 Things Changing International Arbitration

Cooley's international arbitration chair Charlie Lightfoot and associate Juan Nascimbene discuss the four key developments that are changing the arbitration scene as we enter the second half of 2024.

July 01, 2024 at 05:27 AM

6 minute read

Alternative Dispute Resolution

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From landmark decisions shaping the procedural landscape to the U.K.’s commitment to modernization, 2023 was a year of both evolution and anticipation in the international arbitration arena.

As we enter the second half of 2024, Cooley’s arbitration chair Charlie Lightfoot and associate Juan Nascimbene discuss the four key developments that are changing the arbitration scene as 2025 approaches.

1) Review and Reform of the 1996 Arbitration Act

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IMAGES

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COMMENTS

  1. Explaining Assignments of Arbitration Agreements

    This paper proposes that a satisfactory rationale can be found in the "acceptance principle". This principle indicates, first, that arbitration agreements which are not actual burdens can be assigned, and second, that the assignability of arbitration agreements is grounded in the assignee's acceptance in the form of non-disclaimer of the ...

  2. Separability Doctrine

    No. 28168, slip op. (July 26, 2023), the Supreme Court of North Carolina said that, under the Federal Arbitration Act's "separability" doctrine, the claim that the contract—including the arbitration agreement— could no longer be enforced was an issue that concerned the enforceability of the container contract as a whole, not the ...

  3. Assignment of Arbitration Agreements • Aceris Law

    The assignment of an arbitration agreement begs the question of the applicable law to its assignment. Such a determination may be made by the pertinent State court or the arbitral tribunal. Depending on whether the case is brought before a State judge or arbitrators, the conflict of law analysis may vary. [5]

  4. Arbitration Clause: Meaning & Samples (2022)

    Examples of arbitration clause use include: Example 1: Keeping divorce proceedings more private. Example 2: Settling disputes with insurance companies. Example 3: Working through issues with business partners. Example 4: Not hiring employees until they sign the arbitration clause. Example 5: Not taking personal injury cases to civil court.

  5. Arbitration Clauses Binding on Contract Assignees

    The Federal Arbitration Act ("FAA"), 9 U.S.C. § 1, et seq., requires courts to treat arbitration clauses in the same manner as all other contracts. Under the FAA, the Court noted, arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract ...

  6. Arbitration agreements

    Assignment. The benefit of contracts may be assigned for various reasons as security for loans, as part of a corporate restructuring or acquisition or in settlement of a claim. ... A common question that arises is whether the assignee thereby becomes bound by an arbitration clause contained in the contract and what rights are assigned to them ...

  7. Assignment of Rights and Agreement to Arbitrate

    II of the New York Convention. 62 Zimmer involved the assignment of a distributorship agreement containing an arbitration clause. The assignment, however, did not specifically mention the arbitration clause. ... Absent a mutual intent to the contrary of the original parties to the contract, an arbitration clause is transferred together with a ...

  8. PDF Assignment of The Arbitration Agreement: Perspectives of Leading

    The assignment of the arbitration agreement or clause involves issues of the rights and. itial contractual parties, the assignee (as a third party non-signatory of theunderlying agreeme. ers the effects of the assignment depending on the time when the agreement wasassigned, the dif. a det.

  9. Assignment of arbitration clauses

    In the case of assignment of the main contract, the rights and obligations under the arbitration clause are also assigned, in the absence of a condition to the contrary. In order to decide on its own jurisdiction, the arbitral tribunal may have to determine, as an incidental matter, whether the rights under the contract have been validly ...

  10. Arbitration Clauses in Contracts

    Arbitration is an out-of-court proceeding in which a neutral third party called an arbitrator hears evidence and then makes a binding decision. Arbitration is the most commonly used method of alternative dispute resolution (ADR), and you'll find an arbitration clause in the fine print of all kinds of contracts these days. Read on to find out whether you should include an arbitration clause in ...

  11. Assignment of arbitration clauses

    The separability of an arbitration clause from a contract does not necessarily imply its independence. In the case of assignment of the main contract, the rights and obligations under the arbitration clause are also assigned, in the absence of a condition to the contrary. In order to decide on its own jurisdiction, the arbitral tribunal may ...

  12. The Effect of an Assignment of Contractual Rights on Arbitration Clauses

    It held that as a rule the assignment of rights under a contract does not result in the assignee stepping into the arbitration clause. The Court reasoned that the assignee as a third party may only be bound by an arbitration clause if he has replaced one of the initial parties to the arbitration clause with the consent of these initial parties ...

  13. 6.4: Assignment, Delegation, and Commonly Used Contracts Clauses

    As a preliminary matter, it is important to realize that contracts are, by law, assignable and delegable. This means that the rights conveyed by the contract may be transferred to another party by assignment, unless an express restriction on assignment exists within the contract, or unless an assignment would violate public policy. Likewise ...

  14. 618. Assignment Of A Contract Containing An Arbitration Clause

    In cases where the benefit of a contract which contains an arbitration clause has been assigned, the issue of the effect of the assignment on the arbitration clause is often also discussed in terms of assignment. However, generally only the benefit and not the burden of a contract.

  15. PDF Drafting the Arbitration Clause

    Drafting the Arbitration Clause. DANIEL YAMSHON. I. Importance of Clause. Arbitration is a creature of contract. With few exceptions, an arbitrator has no jurisdiction to hear a case without a written agreement, whether in the form of a submission or a contract clause.1The arbitration clause defines and may limit the powers of the arbitrator ...

  16. Legal analysis of enforceability of assignment of arbitration clause in

    In a nutshell, this judgement illustrates how Arbitration clause assignment is interpreted in the backdrop of the underlying transactions and wider contract between the parties in an ...

  17. Legal analysis of enforceability of assignment of arbitration clause in

    Thus, this subject verdict Dubai Court of Cassation 1603/ 2022 (Commercial) verdict dated 30 March 2023 reinforces the above stand. This verdict thus ushers in further clarity as to how the Assignment of Contract with Arbitration Clause is treated demarcating it from Arbitration Clause Incorporated by Reference in UAE.

  18. Assignment of arbitration clause

    The assignment of contractual rights is a common business practice. An important question concerning the assignment of rights under a contract is the fate of the arbitration agreement related to those rights and whether it is transferred automatically to the assignee so that such arbitration agreement becomes effective and binding in the relationship between the…

  19. 4.10.5 Can Assignor Enforce Agreement After Its Assignment

    An assignee of a contract containing an arbitration clause can typically seek to enforce the arbitration agreement. However, can the assignor, no longer having rights in the contract, also continue to enforce the arbitration requirement? The argument can be made that in such a situation the assignment extinguishes a party's right to enforce an arbitration clause if state law and the language ...

  20. Does the Assignment of a Contract Assign the Arbitration Agreement: The

    References; ↑ 1: Assignment of an Arbitration Agreement, Thomson Reuters: Legal Archives (Aug. 2002): ↑ 2: Anita Garnuszek, The Law Applicable to the Contractual Assignment of an Arbitration Agreement, 82 Arbitration: The International Journal of Arbitration, Mediation and Dispute Management 4, 350 (2016). ↑ 3: Julian D. M. Lew, Loukas A Mistelis & Stefan M Kröll, Comparative ...

  21. Arbitration under unilateral documents: how to avoid enforcement risk

    In return, the arbitration clause in the unilateral document will be replaced with wording incorporating by reference the arbitration clause from the multilateral contract. This option can be preferred in some cases. It dispenses with the need for an additional document while also reducing any enforcement risk.

  22. Does the assignment of a claim in respect of which arbitration has been

    Assignment of a claim with an arbitration clause. Now imagine the following scenario. A contract has been concluded between A and B. On the basis of this contract, A has a monetary claim against B. In the contract, A and B have agreed to arbitration. A transferred his claim to C at one point.

  23. Can An Arbitration Agreement Be Assigned?

    Assignee of contract. An arbitration clause will bind a valid assignee of a contract containing it; and the presence of an arbitration clause will not normally cause a court to hold that a contract is not assignable." 7. Looking at the contract containing arbitration clause in this case it appears to me that the contract was not personal.

  24. Assignment In Arbitration: Scope And Issues In India

    The authors in this post have discussed the scope of assignment in arbitration and the issues that arise in making such assignment. Assignment in Arbitration: An Overview. Arbitration is a separate contract by the separability principle as envisaged under section 16(1)(b) of the Arbitration and Conciliation Act, 1996. An assignment of a ...

  25. ASSIGNMENT OF AN ARBITRATOR Sample Clauses

    Sample Clauses. ASSIGNMENT OF AN ARBITRATOR a. The parties to the hearing and to the selection of the arbitrator shall be the Association and the County. ASSIGNMENT OF AN ARBITRATOR a. An impartial arbitrator shall be selected jointly by the parties within ten (10) working days of receipt of the written demand.

  26. Just Resolutions June 2024

    Effective Strategies for Implementing Arbitration Clauses in Healthcare Contracts. Harshitha Ram. This article highlights best practices for drafting and implementing arbitration clauses in healthcare contracts. It examines the legal framework governing these clauses and emphasizes the importance of clear and understandable language.

  27. Effective Strategies for Implementing Arbitration Clauses in Healthcare

    Implementing arbitration clauses in healthcare contracts requires a careful and balanced approach to ensure they are enforceable, ethical, and fair. By following best practices—focusing on clear language, informed patient consent, transparency, and regulatory compliance—healthcare providers can create effective arbitration agreements that ...

  28. Top 10 Issues in Arbitration Clauses in Singapore and Hong Kong

    In this article, the authors consider the top 10 issues regarding arbitration clauses that arise nowadays, and the extent to which the courts of… Toggle navigation Search

  29. What You Need to Know: Cooley Lawyers on 4 Things Changing Arbitration

    In Chechetkin v Payward Ltd & Ors [2023] EWHC 1780 (Comm), the High Court refused the claimants' claim for the enforcement of a U.S. arbitration award against a U.K.-based consumer.The case ...

  30. Arbitration Implications Of High Court Coinbase Ruling

    The U.S. Supreme Court's recent Coinbase v. Suski ruling not only reaffirmed the long-standing principle that arbitration is a matter of contract, but also established new and more general ...