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Resolve Multi-Party Disputes and Multi-Contract Arbitration with THAC
Arbitration is an effective, efficient method of Alternative Dispute Resolution (ADR) that many businesses choose over costly, time-consuming litigation in court. Rather than submit to a national court system’s rigid rules and regulations, arbitration allows parties to maintain control over proceedings to a certain extent in terms of process, such as scheduling, procedural rules, and arbitrator selection. Typically, parties will agree to these points in an arbitration clause or arbitration agreement whereby they first agree to settle any disputes with the arbitration.
While the arbitration clause or agreement sets out how the arbitration will occur, generally, arbitration is an ADR method in which an appointed neutral third-party arbitrator (or panel of arbitrators) listens to evidence and testimony to determine an arbitral award that is usually legally binding.
However, their situations whereby arbitrations may become complicated, such as when more than two parties are at odds or when a dispute involves more than one contract. These are known as multi-party or multi-contract arbitrations. This article will discuss these nuanced variations in arbitration and ways to address them.
What is multi-party arbitration?
A multi-party arbitration occurs when more than two parties are involved in a contract subject to an arbitration clause or agreement. The main problem when there are more than two parties is how to ensure that every party receives equal treatment during the arbitration. In some cases, certain parties share enough common interests to be “claimants” or “respondents” together. However, this may not always be the case. Furthermore, multi-party arbitration may also apply when parties are involved in claims or conflicts who are not part of the contract or arbitration agreement.
What is multi-contract arbitration?
Multi-contract arbitration describes, as the name implies, a situation where a dispute involves multiple contracts that are somehow interconnected. For example, this could result from a series of transactions, each governed by a different contract yet related in an overall transaction, such as a supply chain, or from multiple contracts as a subset of an overarching contract, such as multiple loans under a single facility agreement. The issue here is when each contract has a different arbitration clause or agreement. Without addressing this problem, all the parties involved may find themselves facing multiple arbitrations and even litigation proceedings with inconsistent results, not to mention the possibility of exponential costs in time and money needed as the fees accrue.
What is the difference between multi-party and multi-contract arbitrations?
As discussed above, multi-party arbitrations involve more than two parties, while multi-contract ones must deal with multiple agreements. Having multiple parties presents equal treatment issues during arbitration, possibly including parties who were not part of the arbitration clause or agreement at hand. Furthermore, multi-contract arbitrations may also have to contend with multi-party issues.
How to handle multi-party / multi-contract arbitrations?
Before signing a contract with an arbitration clause or entering into an arbitration agreement, multi-party or multi-contract issues could be worked into the framework if those involved anticipate more than two parties or more than one contract. For example, experts in arbitration services could include language for a fair appointment and arbitration process to ensure equal treatment in multi-party situations. For multi-contract scenarios, advisors could ensure the exact mechanisms and language for streamlined or consistent arbitration proceedings between the different contracts.
However, this is not always possible. Nevertheless, most arbitral institutions and established rules provide for joinder and consolidation mechanisms to handle multi-party and multi-contract arbitrations.
Joinder
For multi-party arbitrations where there are third parties with interest in but not currently privy to an arbitration proceeding, joinders allow that party to participate by joining the arbitration, usually after the fact. Depending on the arbitration rules agreed upon, there may be criteria that must be met before this can occur. All involved parties must agree to the new party being included in the proceedings and the new party agreeing to be bound by the arbitration agreement or clause.
Consolidation
For multi-contract arbitrations with many contracts with disparate arbitration agreements or clauses (or none) in place, a consolidation can merge or consolidate the dispute resolution under a single proceeding. As with joinders, all the involved parties must agree to the consolidation and the new, merged arbitration, including such frameworks and whether to continue with a current arbitrator or panel or appoint a new arbitrator or panel.
Resolve disputes with THAC
The Thailand Arbitration Center (THAC) is a leading Dispute resolution center renowned for its expert advice and world-class ADR services. Advanced technology and comprehensive business and administrative services mean that THAC can handle a full range of ADR solutions, including in-person and remote hearings and online dispute resolution (ODR). Conveniently located in Bangkok’s central business district with access from the Skytrain at Phrom Phong BTS station as well as major highways and avenues, THAC can support local and cross-border proceedings with parties traveling from other Thai cities or abroad through Bangkok’s international airports.
We also offer access to a comprehensive selection of ADR experts skilled in arbitration and mediation, many of whom are subject matter experts for more informed arbitrators and mediators. For more information on how THAC can help you with multi-party or multi-contract arbitration agreements or clauses or with mediating or arbitrating your business or personal disputes, please contact THAC at [email protected] or +66 (0)2018 1615
