Binding Sovereign States as Non-Signatories to Arbitration Agreements

Abstract

The jurisdiction of arbitral tribunals is restricted to the parties of the arbitration agreement. As formal signatories of the contract containing the arbitration clause, those parties are usually easy to determine. In some situations, however, attempts are made to compel persons or entities to arbitrate that have neither signed the arbitration agreement nor have in any other way expressed their consent to be bound to it. Those parties are commonly referred to as non-signatories to the arbitration agreement. Although predominantly occurring in commercial contracts between private corporations, also states frequently face situations where a private party, after having entered into an arbitration agreement with a state-owned entity, claims that the state itself has to be considered as true party to the agreement. Apart from the problems arising from non-signatory situations in general, those constellations give rise to a number of specific issues, primarily rooted in the distinctive features of state contracts compared to private sector contracts. Against the background of those characteristics, the paper makes an argument for a more practical approach towards non-signatory issues. Instead of purely relying on the determination of the parties’ common intention, closer account should be taken of considerations of good faith and equity.