A French View on the Application of the Arbitration Agreement to Non-Signatories

A French View on the Application of the Arbitration Agreement to Non-Signatories

When parties enter into an arbitration agreement, they have made a conscious decision to resolve disputes outside of the courts. However, what happens when a non-signatory wants to join the arbitration proceedings? This is a complex issue that has been the subject of intense debate in the world of arbitration law.

In France, the application of the arbitration agreement to non-signatories is governed by Article 1500-1 of the French Civil Procedure Code. According to this article, a third party may be bound by an arbitration agreement if it has expressly consented to it or if the dispute is directly linked to the main contract containing the arbitration agreement.

Express consent is the most common way for a non-signatory to be bound by an arbitration agreement. This can be achieved through the inclusion of standard arbitration clauses in related contracts or through the specific wording of the arbitration clause in the main contract. In these cases, it is clear that the non-signatory has expressly consented to the arbitration agreement and can be subject to its terms.

However, the situation becomes more complicated when the non-signatory has not expressly consented to the arbitration agreement. In these cases, the French courts have applied the concept of “group of companies” or “economic unity” to determine whether a non-signatory can be bound by the arbitration agreement. This concept is based on the theory that companies within the same group or economic unity should be treated as one entity, and therefore, any disputes between them should be resolved in the same way.

The French courts have also recognized the “extension theory” which allows for the application of the arbitration agreement to non-signatories if the dispute is directly linked to the main contract containing the arbitration agreement. The courts have used this theory to extend the application of the arbitration agreement to subcontractors, agents, and other third parties involved in the performance of the main contract.

Overall, the French approach to the application of the arbitration agreement to non-signatories is pragmatic and flexible. It recognizes the need to balance the autonomy of the parties with the desire to ensure a fair and efficient dispute resolution process. The concepts of “group of companies” and “economic unity” have been useful tools in this regard and have allowed for a nuanced analysis of each case.

In conclusion, the French approach to the application of the arbitration agreement to non-signatories is one of the most sophisticated and well-developed in the world. Its flexible and pragmatic approach has allowed for a fair and efficient resolution of disputes, while respecting the autonomy of the parties involved.

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