chapter  15
23 Pages

Arbitration and third parties

ByClare Ambrose, Karen Maxwell, Michael Collett QC

Arbitration arises out of an agreement which is usually contained in a contract between two parties. The arbitrator’s authority derives solely from that agreement. The essentially consensual basis of arbitrators’ powers means that they have no inherent powers to make orders binding third parties. Multi-party disputes are extremely common in the context of maritime arbitration – there may be several contracts between different parties relating to a particular transaction. Arbitrators also have no inherent powers to make orders for consolidated arbitrations or concurrent hearings as their authority is derived solely from the arbitration agreement. As regards documents, the general rule is that an arbitrator can only order parties to an arbitration to make disclosure of documents. Costs incurred in one dispute may be recovered in another arbitration if they can be claimed as damages for breach of contract. The speculative commercial funding of arbitration claims by third parties, such as professional investors, has become increasingly significant.