Citation: 3 In-House Persp. 17 2007 Content downloaded/printed from HeinOnline (http://heinonline.org)Mon Mar9 11:38:24 2015-- Your use of this HeinOnline PDF indicates your acceptance of HeinOnline's Terms and Conditions of the license agreement available at http://heinonline.org/HOL/License-- The search text of this PDF is generated from uncorrected OCR text.-- To obtain permission to use this article beyond the scope of your HeinOnline license, please use: https://www.copyright.com/ccc/basicSearch.do? &operation=go&searchType=0 &lastSearch=simple&all=on&titleOrStdNo=1814-0408recentdecisionof the arbitrator.on-iestovation:developmentsneoftheperceivedadvantagesofarbitrationasaform ofdisputeresolutionisthatitischosenconsensually bycontractingparties. Itwouldthereforeseemlogicalthatonlyapartytoanarbitrationagreementcanbecompelledtoarbitratewiththeotherparty(ies)tothatagreement, and that any arbitrationnecessarilyinvolves onlythe partiesto theagreement.However,insomecircumstancescertainnationallawspermitapartywhichisnotasignatorytoanarbitrationagreementtoparticipateinanarbitration,eitherasclaimantorrespondent.joindermaybedesirableinanumberof situations.Forexample,disputesoftenarisewheretherearemultiplebutinterdependentcontracts,or wheremultiplepartiesareinvolvedinacommercialtransactionbut only some of themare partytotheagreementcontainingthearbitrationclause.This canariseparticularlywhereacontractingpartyisamemberof agroupof companiesandwhereitsparentortheothersubsidiarieshavebeeninvolvedinthecommercialtransactionunderlyingtherelevant contract, eventhough they may not besignatories to that contract.While in nationalcourt proceedings joinder is commonin mostjurisdictions,ininternationalarbitrationjoinder is generallynot possiblewithout someformof contractual relationshipbetween theparties.Againstthisbackground,thisarticleconsiders the extent to whichvarious nationallaws permitjoinderin arbitration even thoughthere may be no strict contractual relationshipbetween the parties, and how this concept hasdeveloped.Inparticular, it examines:* Joinder ofanon-signatoryin the US, throughat least fivedistinctlegalprinciples.* Joinderofanon-signatoryinEurope(specifically, France,England, Switzerland,Russiaand Germany).oJoinder when states and state-ownedentitiesare involvedinthedispute.The UnitedStatesThe USapproach towhether a non-signatoryto anarbitrationagreementcanbebound byit isprincipally governed,at bothfederalandstatecourtlevels,bycommon-lawprinciplesof contract and agency. Thiswassummarisedinthe judgmentof theSecondCircuitcourtin Thomson-CSP;SAv Ameican ArbitrationAssocand Evans &SutherlandComputer Corp, 63 F3d773,766:'Arbitrationiscontractualbynature...Itdoesnotfollow,however,thatunderthe[FederalArbitration]Actanobligationtoarbitrateattachesonlytoonewhohaspersonallysignedthewrittenarbitrationprovision.Thiscourthasmadeclearthatanon-signatorypartymaybeboundtoanarbitrationagreementif sodictatedbytheordinaryprinciplesofcontractandagency.'Significantly, the court identified five principlesunder which a non-signatorycan be bound byan arbitrationagreement:ThIN-HOUSEPERSPECTIVEVolume3Issue3"estoppel;*incorporationby reference;"assumption;*agency;andveilpiercing/alterego.Equitable estoppelUSfederalcourtsdrawonthedoctrineofequitableestoppeltobindnon-signatoriestoarbitrationagreementsinthefollowingcircumstances:*Whenthesignatory'sclaimspresumetheexistenceof a written agreement containinganarbitrationclause."If the signatory alleges concerted misconductbetweena non-signatoryand asignatory.TheFourth,Fifth,andEighthCircuitshaveexpresslyadoptedthisapproachbutothercircuits,suchastheSecondCircuit,haveusedaslightlydifferentformula,althoughthe effectisbroadlythe same.Intherecentcaseof MeyervWMCO-GPLLC,211SW3d302,305(Tex2006),theTexasSupreme Court concisely explained thedoctrine of estoppel and held that any person(including a non-signatory)claiming a benefitfromacontractcontaininganarbitrationagreement is equitably estopped from refusingto arbitrate.Thecaseinvolvednon-signatoriestoanarbitrationagreementseekingtorelyonit.ThedisputearoseoutofWrMCO'sproposaltobuyBullock'sForddealership.Bullock'sdealershipagreementwithFordMotorCompany,themanufacturer,gaveFordacontractualrightof firstrefusaltobuythedealership.SinceFordhadtheoptiontoexerciseitsright orallowBullocktosellthedealershipto another buyer, Bullockdecidedto enter a purchase and sale agreement(PSA)with WMCO.The PSAacknowledgedFord'sright of first refusal and stipulated that if Fordexerciseditsoption,BullockwaspermittedtoterminatethePSAandselltoFord.ThePSAalsocontainedanarbitrationclauserequiringWVMCOtoarbitrateanydisputeswithBullock.Ultimately,Fordexerciseditsrightof first refusalandBullockterminatedits PSA with WMCO.Ford assigned its right toacquirethe dealershiptoMeyer andBullocksoldto Meyer.BasedonthePSA,WMCOsuedFordandMeyerincourtfortortiousinterferenceandBullockforbreachof contract.EventhoughFordandMeyerwerenot partiestothe arbitrationagreementwith WMCO,theydemandedarbitrationunderthePSA.Thetrialcourt refusedtocompelarbitrationandthis wasupheld bythe Court of Appeals.TheTexas SupremeCourt, however, reversedthosedecisionsbasedonthe doctrineof equitableestoppel.Thecourtheldthatequitableestoppel appliesintwocircumstances:"Ifthesignatory'sclaimspresumetheexistence of a written agreement containinganarbitrationclause,arbitrationiswarranted.Theclaimant'cannot,ontheonehand,seekto holdthenon-signatoryliablepursuanttodutiesimposedbytheagreement,whichcontainsanarbitrationprovision,but,ontheotherhand,denyarbitration'sapplicabilitybecausethedefendant isa non-signatory'."Ifthesignatoryallegessubstantiallyinterdependentand concertedmisconductbetweenanon-signatoryandasignatory,arbitrationis appropriate.(This is sometimesreferredto as the'inextricablyintertwined'or'inherentlyinseparable'test.)TheSupremeCourtheldthatbothcircumstancesappliedtobindWMCOtoarbitration.Allof WMCO'sclaimsanddamagesdependedontheexistenceofthePSAandwereintertwinedwithitsclaimsagainstBullock.Thecourtalsoheldthattrialcourtsdonothavediscretiontoapplyequitableestoppel.Equitableestoppelhasalsobeenappliedincasesbythecourtsof otherstatessuchasNew York, Hawaiiand Florida, but not all statecourtsadheretotheprinciple.StatecourtsinbothMissouriandIllinoishaveheldthatequitableestoppelisinconsistentwiththepolicy that arbitrationis a matter of agreementbetweenthe parties.Incorporation byreferenceApplying ordinary principles of incorporationbyreference,statecourtshaveincorporatedan arbitration agreement from onedocumentinto another merely by reference.In a disputebetweenacontractorandsubcontractor,aFloridacourtheldthatthesubcontractincorporatedbyreferencethetermsof theheadcontract.TheheadcontractreferredtotheprovisionsoftheAmericanInstituteofArchitects,whichinturncontainedanarbitrationclause.Thesubcontractorwasthereforeentitledtoarbitratethedisputearisingfromthesubcontract(FrankjRooneyInc vCharles WAckermanof Fla Inc, 219So2d110(Fla3d DCA1969)).TheIN-HOUSEPERSPECTIVEVolume3 Issue3USfederalcourtshavetakenadifferentapproach. While a Florida state court in Rooneyacceptedincorporationof thearbitrationagreement bywayof generalreferenceto thetermsoftheheadcontract,federalcourtshaveonlyallowedincorporationbyspecificreferencetothearbitrationclauseintheother document.InGrundstad v Ritt 106F3d201(7thCir1997),theCourtofAppealsforthe7thCircuitheldthattherewasnoincorporationbyreferenceof anarbitrationclause intoa guarantee whichappeared belowthesignaturesattheendof thecontractbecausethere wasno clearexpressionof theguarantor'sintentionto be personally boundby the arbitrationclause.The clausereferredto'anydisputebetweentheparties'anditwasheldthat guarantorswerenotpartiestothe contract.AssumptionTheprincipleof assumptionisbasedonthenotionofconsentwhichcanbeinferredfromaparty'sconduct.Forexample,intheclassactionGvozdenovicvUnited Air LinesInc933F2d1100(2nd Cir1991),theclaimantsappealedajudgmentofthetrialcourtdismissingaclassactiontheyhadbroughtinwhichtheysoughttovacateanarbitralaward.Intheappeal,theyarguedthatthetrialcourthadimproperlydismissedtheirpetitionforvacatingtheawardbecausetheywerenot partiesto the arbitration agreement.However,theSecondCircuitfoundthattheclaimantshadbeenrepresentedinthearbitrationby counsel whohad been selectedandinstructedbyacommitteespecificallydesignated by the claimantsto represent theminthearbitration.Thecourtheldthattheclaimantshadvoluntarilyandactivelyparticipatedinthearbitrationprocess and were therefore boundby its outcomeasif they had been signatoriestothearbitrationagreement.The doctrine of assumption may overlap withother contractualor equitableprinciples andtheremaybesome varianceinthedifferentcourts'analysisofhowanon-signatoryhasbeenheldtobeboundbyanarbitrationagreement.InWetzelvSullivan,King&Sabom,PC745SW2d78(TexApp- Hous[1stDist]1998),aTexascourtheldthatacompany'sconduct in accepting the benefit ofshareholders'and compensationagreementsmeant that thecompany wasdeemedto haveratifiedthem and wasestopped fromdenyingtheexistenceof thearbitrationagreements,eventhoughit hadnot signedthem.AgencyOrdinary principlesof agency havealsobeenjudicially appliedto the issueof identificationofthepartiestoanarbitrationagreement.Anundisclosedprinciplecanenforceanarbitrationagreementmade forits benefit byan agent, despite the fact that the signatory tothe arbitration agreement did not know of theexistenceof the undisclosedprinciple.Veilpiercing/alter egoWherea signatory to anarbitration agreementismerelythealteregoofanon-signatory,theUScourtshaveallowedthepiercingofthe corporateveilof theentity whichagreedto arbitrate,sothatthenon-signatoryisalsoboundbythearbitrationagreement.Thiswill bethe casewhere it can be shownthat inthe circumstances,to distinguish between thesignatory and non-signatory tothe arbitrationagreementwould be perpetuatinga fraudorinjustice. A likely scenario is where a subsidiaryhassignedanarbitrationagreementonitsownbehalfbutinfactitsparentcompanyiscontrollinganddirectingthesubsidiaryinrespectofthecommercialtransactiontowhichthearbitrationagreement relates.Similarly, inthe caseof Bridas SAPIC v Gov'tof Turkmenistan 345F3d347(5thCir2003),anofficerorshareholderofthecorporatesignatorytothearbitrationagreementwasheldto be bound by the arbitration agreementwheretherewasaunityof ownershipandinterestbetweenthecorporatesignatoryandtheindividual,suchthattheirdistinctpersonalities no longer existed, and to adheretothatshamdistinctionwouldpromoteafraudor perpetuatean injustice.EuropeanjurisdictionsFranceUnderFrenchlaw,it maybepossibleforanon-signatorytoanarbitrationagreementtobe joinedtothearbitration,eitherasclaimantorrespondent,underthe'groupof companiesdoctrine'.Asits nameimplies,where a signatory to an arbitration agreementispart of a groupof companies,thedoctrineallowsfortheextensionoftheapplicationofthearbitrationagreementtooneorTheIN-HOUSEPERSPECTIVEVolume3 Issue3morecompaniesinthesamegroupasthesignatory.However,FrenchcourtsandarbitraltribunalsapplyingFrenchlawhavetendedonlyto extend arbitration agreements to othercompany(ies)in thesame groupifboth:*Thenon-signatoryhasplayeda part in theconclusion,performanceorterminationofthecontractcontainingthearbitrationagreement.*Itwasthecommonintention(expressorimplied)ofthepartiesthatthenon-signatory be bound by the contract and thearbitrationagreementwithinit.The first and best-knowncaseonthis issue wastheDowChemicalGroup vIsover-Saint-Gobain(ICC CaseNo4131)(DowChemical).TwocompanieswithintheDowChemicalgroupeachenteredintodistributionagreementswithanumberofcompaniestherightsofwhichweresubsequentlyassumedbyIsover-Saint-Gobain.Eachagreementcontainedanarbitrationclause.Whenadisputearose,arbitrationproceedingswerecommencedagainst Isover-Saint-Gobainby not only the twoDow Chemicalcompanieswhichhad signedthe agreements,but also their parent companyand another subsidiary, neither of which hadsignedtheagreements.Isover-Saint-Gobainobjectedtotheclaimsbroughtbythenon-signatoryclaimantcompanies,astheywerenot partiestotheagreementscontainingthearbitrationclauses.Thetribunalrejectedthechallenge,consideringthat:"One of the non-signatory companieshad infactmadeallthedeliveriesto Isover-Saint-Gobainundertheagreements.- Theothernon-signatorycompanywastheparentofoneofthesignatories,theownerof thetrademarksunderwhichtheproducts weremarketed, and hadabsolutecontrol overthosesubsidiariesthatweredirectlyinvolvedorcouldcontractuallyhavebecomeinvolvedintheconclusion,performanceorterminationofthedistributionagreements.The tribunal thereforeconcludedthat, giventherolethatthenon-signatoriesplayedinthe conclusion,performanceor terminationofthecontractscontainingthearbitrationagreementsandthemutualintentionofallparties to the proceedings,the non-signatorieswere defactopartiestothecontractsandshould thereforebe bound by the arbitrationclausescontainedwithinthem.ThiswasupheldbytheParisCourtof Appeals(CAParis,21Oct1983,Isover-Saint-Gobain vDowChemicalF.rance).Thenotion,therefore,thatagroupofcompanies comprisesdistinct legal entities thecontractualarrangementsofwhich can remaindistinct fromthe other entities in the group isto acertainextenteroded underFrenchlawby thegroupof companiesdoctrine.InDowChenical, thetribunalfoundthatit wasthecommonintentionof thepartiesthatnon-signatoriesshouldbeboundbythearbitrationagreementsaswellasthedistributionagreementsinwhichtheywerecontained.However,itshouldbenotedthattoinferacommonintentionthatanon-signatorybeboundbyanarbitrationagreement,itwasinsufficienttoestablishthatthenon-signatorywasinvolvedintheoverallcommercialtransactionifit wasnotalsoinvolved in theconclusion, performanceor terminationof the contract containing thearbitrationagreement.In ICCCaseNo2138of1974,thetribunalrefusedtoextendanarbitrationclausesignedby onecompany toanother companyof thesame group becauseitwasnot establishedthatthenon-signatorypartywouldhaveacceptedthearbitrationclauseifithadsignedthecontractdirectly.The non-signatoryhad negotiatedthe overallcommercialtransactionand signedthemainprovisionsbut hadnotsignedthecontractcontainingthearbitrationagreement.Byanalogywiththegroupofcompaniesdoctrine,Frenchlawalsopermitsincertaincircumstancesthe application of anarbitrationagreementsigned bya companyto the(non-signatory)individualwithcontrolofthatcompany.TheParisCourtof Appeals(CAParisJan111990,Orri vSociete des LubrifianlsElf Aquitaine)andSupremeCourthavepermittedtheapplicationofanarbitrationTheIN-HOUSEPERSPECTIVEVolume3 Issue3agreementto a non-signatoryindividualwhowas foundto be thealter egoof the signatorycompany,onthebasisthat onthefacts,thesigningofthecontractbythecompanyandnottheindividualconstituteda'subterfuge,amountingto fraud,aimed at concealingtheidentityof the actualcontractor'.EnglandThegroupofcompaniesdoctrineunderFrenchlawhasnocounterpartinEnglishlaw(obiter Peterson Farms [nc vC&M FarmingLtd [2004]EWHC121(Comm),LangleyJatparagraph62).InPeterson Farms, thecourtconfirmedthatunderEnglishlaw,itisthesubstantiveratherthantheprocedurallawof anagreementwhichshould beappliedtoidentifythepartiesto anagreement.InPeterson Farms, thesubstantivelawoftheagreementwasArkansaslaw.FollowinganICCarbitrationaward,PetersonFarms(therespondentinthearbitration)soughtadeclarationfromtheEnglishcourtthatcertainfindingsintheawardweremadewithout jurisdiction,onthebasisthatsomeoftheclaimantsinthearbitrationwerenotsignatoriesto the arbitrationagreement. Thetribunaldecidedthat it had jurisdiction overallthe partiesby applicationof,among otherthings,thegroupofcompaniesdoctrine,followingtheDowChemical case.However,thecourtheldthatthetribunalwaswrongnot to haveappliedthe substantivelaw of thedispute, Arkansaslaw,to identifytheparties.The court applied Arkansas law and held thatthe group of companiesdoctrine did not formpart of that law, andstated thatthis wasalsothepositionunder Englishlaw.However,evenifEnglishlawisthesubstantivelaw,'otherconsiderations'canbetakenintoaccountbythetribunalindecidingthe dispute,if theparties agreeor ifitissodeterminedbytheTribunal(section46(1) (b),ArbitrationAct1996(1996Act)).Therefore,under section46 (1)(b)the groupof companiesdoctrinecouldconceivablybeappliedbyatribunalevenwhereEnglishlawisthesubstantivelawof thedispute(forexample,ifallparties,signatoryandnon-signatory,agreetotheapplicationofthedoctrine).Itisarequirementof theConventiononthe Recognitionand Enforcementof ForeignArbitral Awards1958(New York Convention)that theconsentto arbitrationbein writing.Therefore,theparties'consenttotheapplicabilityofthearbitrationagreementtothenon-signatoriesmustbeexplicit.If itwereexplicit,thensection5(3)of the1996Act('Wherepartiesagreeotherwisethaninwritingbyreferencetotermswhichareinwriting,theymakeanagreementin writing')wouldarguablybesatisfied.Aimpliedorinferredintentionisunlikelytotriggersection5 (3)and, intheabsenceof awrittenagreementtoarbitration,thearbitrationwouldstand outsidethe 1996 Act. In this case,anyawardinfavourof oragainstthenon-signatorieswouldnotbeenforceablebytheEnglish court undersection 66 of the1996 Act(which relates to the enforcement of awards).Likewise,a foreignawardinvokingthe groupof companies doctrine maynot be enforceableunder section100of the 1996 Act(relating toNew YorkConvention awards).Additionally,anon-signatorytoanarbitrationagreementcanbecomea partytoan arbitration under it by way of the Contracts(Rights of Third Parties)Act 1999(1999Act).The1999Actabolishedthelong-standingdoctrineofprivityofcontract(thatonlyapartytoacontractcanenforceitsterms).Athird party canenforce a term of the contractifthecontractexpresslyprovidesthatit candoso(section1 (a),1999 Act),or ifthe termprovidesabenefittoit(sectionl(b),1.999Act).Section8ofthe1999Actexpresslyenvisagestheapplicabilityof sectionI toarbitrationagreements.However,itisnowcommonfor commercialcontracts to excludetheapplicabilityof the1999 Act.SwitzerlandTheextensionofthebindingnatureofarbitrationtonon-signatoriesinSwitzerlanddependsontheroleplayedbythenon-signatory in the performanceof the agreementcontainingthe arbitrationclause.Whileanarbitrationagreementwouldtraditionallynotbeextendedtonon-signatoriesunderSwissprocedurallaw,adecision of the SwissFederalTribunal(YSALvZSarlA7F129 III 727-4P.115/2003)(XSAL)on16October2003forthefirsttimetookamoreliberalapproachtonon-signatories.Inthiscase,threeLebanesecompanies(X,YandZ)enteredintoaconstructioncontractcontaininganarbitrationclause.Whenadisputearose,Zcommencedproceedingsagainst X, Y andMrA(who was not apartytotheagreement),onthebasisthatMrAactivelyparticipatedinthenegotiationsandperformanceofthecontract.TheFederalTribunal,applyingtheprincipleof goodTheIN-HOUSEPERSPECTIVEVolume3 Issue3IETRLRILfaith, allowedan extensionof the arbitrationagreementto Mr A, on the basis of the writtenevidenceshowing Mr A's active involvement inthe management of X and Y, and in the actualperformanceof thecontract withZ.TheFederalTribunalalsoheldthatthefactthatMrAownedcompaniesXandY,heldtheconstructionpermitfortheworksunderthecontractbetweenX,Y andZandrepresentedtheconstructionprojectdealtwithby thecontractpersonallyinthemediawerenotsufficientgroundsforextendingthe arbitrationagreementto Mr A.It washisactiveinvolvementinthemanagementandimplementationoftheconstructionprojectwhichbecamethebasisfortheextension,becausebyhisactions,MrAshowedhiswillingnesstobeboundbythearbitrationagreement withinthe contract.Thedecisionwasastepforwardintheinterpretationof theSwissstatutegoverninginternationalarbitration,the FederalActonPrivateInternationalLaw1987(PIL).Thearbitrationagreementmustbe'evidencedbytext'(thatis,havesome formof writtenexpression)(Article178(1)PIL).TheFederalTribunal,whileacceptingthattherewasnosuchwrittenagreementwithMrA,consideredthatthepurposeofthelegalrequirementswereto forminasimilarwaytoitspracticeof acceptingarbitrationclausesincorporatedbyreference.Inthecircumstances,theFederalTribunalfoundthattheserequirementsshouldbekepttoaminimum(thatis,theexistenceofthedocumentsevidencingMrA'sinvolvementintheperformanceofthecontractwassufficient).Anarbitrationagreementisvalidifitconformstothelawchosenbytheparties,thelawgoverningthesubjectmatterof thedispute,or to Swisslaw(Article178(2),PIL).TheFederalTribunalsupportedthe arbitraltribunal'sapplicationof Lebaneselawasthelawgoverningthecontract,relyingontheconceptoflexmercatoria (principlesderivedfromtheestablishedcustomsof merchantsand tradersrather thanthe laws of a particularstate)andtheFrencharbitralpracticeofinvolvementin theconclusion, performanceor termination of the contract containing thearbitrationagreement.RussiaRussian lawprovidesthat an arbitraltribunalonlyhas jurisdictionovernon-signatoriestoanarbitrationagreementif allthepartiesexplicitlyagreeonthis,includingthenon-signatoryitself(Article19,InternationalCommercial Arbitration Act 1993). In practice,thisprovisioneffectivelyrestrictsjoinderofnon-signatories,asinmostcasesnon-signatoriesobjecttobeingaddedaspartiesto arbitration.GermanyTherearelimitedinstanceswherenon-signatoriestoanarbitrationagreementcanbecompelledtoarbitrateinGermany.Forexample, a third-party beneficiary who wishesto enforcea contractual right arisingfrom anagreement that contains an arbitrationclausemustrespectthisdisputeresolutionchoicemadebythemainpartiestothecontract.Aprincipleisboundbythearbitrationagreementconcludedbyitsagentonitsbehalf, evenincasesof apparentauthority.However,itishighlyunlikelythatGermancourts wouldfollowthegroupof companiesdoctrine.State-ownedentities andthestateWhenastate-ownedcompany,whichisaseparatelegalentitytothestate itself,entersintoanarbitrationagreement,thequestionoftenarisesastowhetherthearbitrationagreementcanbeenforcedagainsttherelevantstate.Similarly,wouldsuchastate-ownedentitybeboundbythearbitrationagreemententeredintoby thestate?Extensionofanarbitrationagreementfromastate-ownedentity to the stateThekeycaseonthisissueisSPP (MiddleEast) LtdvArab Republicof Egypt(CaseNo3493(1983))(knownasthePyramids),anarbitrationunderICCRulesinParis.SPP,acompanyincorporatedinHongKong,signedHeadsof AgreementwithEGOTH,anEgyptianstate-ownedcompany,andtheEgyptian Government, for the constructionoftwo tourist centres in Egypt. SPP and EGOTHthen enteredinto a contract which containedan ICC arbitration clausewith its seat in Paris.The contract was signed, amongothers, by theMinisterofTourismofEgypt,hissignatureappearingunderneaththe words'approved,agreedand ratified'.TheIN-HOUSEPERSPECTIVEVolume3 Issue3Whentheconstructionprojectwascancelled,SPPcommencedthearbitrationagainst bothEGOTHandthestateof Egypt.Thestatecontestedthejurisdictionofthearbitraltribunalonthebasisthatithadnotagreedtobeboundbythearbitrationagreement. However, the arbitral tribunalheldthat thesigningof theHeadsof Agreementandof theactualcontractbyagovernmentofficialwas clearevidenceof the intention bythe Egyptian Government to be bound by thearbitrationagreement.The Egyptian Governmentappealedto theParisCourtof AppealsunderArticle1502of theFrench NewCodeof CivilProcedure,claiming lack of an arbitration agreement. TheCourtallowedtheappeal,holdingthatthewords'approved, agreedand ratified'did notimplytheEgyptianGovernment'sintentiontobeboundbythearbitrationagreement,asunder EgyptianlawtheMinister,by virtueof his office, wassupposed to grant approvalstothecontractsenteredintobystate-ownedentities. SPP appealedtothe French CourdeCassation, whichsupported the interpretationof theCourt of Appeals.This judgment wasfollowed bythearbitraltribunal inanother ICCarbitrationagainst astate(CaseNo8035(1995)),reiteratingthefactthatasignaturebyastateofficialof acontract on behalf of astate-ownedcompanydoesnotautomaticallyconstitutethestate'sconsenttobeboundbythearbitrationagreement containedin the contract. In bothcasesthewordingbeforethesignaturewasinterpretedasmereapprovalof thetermsofthecontractbythecompany'ssupervisoryboard.Animportantfactorwhichmayleadatribunaltodecidethatanarbitrationclauseisbindingonanon-signatorystateistheexistenceof common obligations and interestsbetweenthepartiesandthenon-signatory.Another ICC case, with its seat in Switzerland,wasWestland HelicoptersLtd v Arab OrganizationforIndustrialization (AOI)(CaseNo3879(1984))betweenanEnglishcompany,Westland,andanentitycreatedbyfourstates, AOL. Westlandjoinedthe fourstates asrespondents,eventhoughtheydidnot signthe agreement under whichthe dispute arose.In itspartialawardtheTribunalheldthat iftheobligationsarisingoutof theagreementarealsoobligationsofthestates,thenthestates are bound by the arbitrationclause. Theawardwassuccessfullychallengedbyoneofthestates atthe SwissFederalTribunal whichconcludedthat, no matter how obviousit wasthatthestatesintendedtobeboundbytheagreement,theycouldnotbeforcedtobeboundif theyhadnot signed.However,thefinal award was subsequently rendered againstboth AOLandthe threeremainingstates.TheSwissFederalTribunalsupportedthetribunal'sreasoning,holdingthatanarbitrationagreementcouldbeextendedtothenon-partystatesiftheeconomicinterdependencebetweenthestatesandthecompanyisevident,andiftheactionsofthestatesledtheclaimanttobelievethat thestatesintendedto beboundbythecontract, including the arbitration agreementcontainedinit.Similarly,inarecentICCCaseSvenskaPetroleum Exploration ABvGovernmentofRepublic of Lithuania (1)ABGeona/ta(2)(2001),thedisputerelatedtothejointventureagreemententeredintobySvenskaand Geonafta, which contained terms dealingexpresslywithrightsandobligationsof theLithuanian Government. The agreement wassigned by government officials and containeda statement abovetheirsignaturesspecifyingthat the government approved the agreementand'acknowledgesitselftobelegallyandcontractuallyboundasiftheGovernmentwereasignatorytotheAgreement'.Thetribunalinitsinterimawardheldthatthegovernmentagreedtobeboundbytheagreement.Theissue of thetribunal's jurisdiction wassubsequentlychallengedinthecontextofenforcement proceedings brought by SvenskabeforetheEnglishcourts.TheCourtofAppealon13November2006heldthat theexistenceofthestatementprovidedstrongevidencethat theparties did intendthat thegovernment should be bound by the terms oftheagreement(SvenskaPetroleum ExplorationABvGovernment of Republicof Lithuania andanother [2006]EWCA Civ1529).These decisions show that it is not sufficientforthe stateto formallyownor part-owntheentity whichisasignatorytothearbitrationagreement.Theintentionofthepartiesandthenon-signatorystateorstatestobeboundbythe arbitrationagreementmust beestablished.TheIN-HOUSEPERSPECTIVEVolume3 Issue3Extensionof anarbitrationagreementfroma state to astate-owned entitySimilarly,foranarbitrationagreementtobeextendedfromastatetoastate-ownedentity,therealintentionsofthepartieswhenenteringthecontractmustbeestablished.InICCCaseNo4727(1987),aSwisscorporationenteredinto anagreementwithanAfricanstatewhichwassignedbyasenior manager of a state-ownedcompanyonbehalfof thestate.Whenthedisputearose,thecorporationattemptedtoincludethestate-ownedcompanyasaco-respondentonthebasisof its signature.However, theclaimwasrejectedbythetribunalonthebasisthatthesignaturewasclearlymade'onbehalf ofthestate',andthecompanythereforeneverintendedtobeboundbythearbitrationagreement. The award was upheld by the ParisCourt of Appeals.Thecircumstancesunderwhichanarbitrationagreementcanbind aparty whichwas not a partyto it differ from jurisdictiontojurisdiction.The EuropeanapproachismorelimitedinitsscopethanthefiveprincipleswhichcharacterisetheUS approach.Carefulconsiderationshouldbegiventothisissueboth by parties to an arbitrationagreement (asto whethernon-signatoriescouldpotentiallyclaimthe benefit of the arbitrationagreement)andbynon-signatories(astowhethertheirconduct is suchthat they couldbedeemed tobe boundby anarbitrationagreement).*-TheIN-HOUSEPERSPECTIVEVolume3 Issue3F kLinformabLlsmess