The term “non-party to the arbitration agreement” refers to a person or entity that is not a party to a contract containing an arbitration agreement, but may be implicated in the dispute that led to arbitration.
Arbitration is a common dispute resolution method, particularly in commercial and employment contracts. It is a form of alternative dispute resolution (ADR) that is typically less formal, faster, and less expensive than going to court. However, arbitration agreements only bind the parties that sign them, and non-parties may assert claims or defenses that are related to the dispute.
There are several circumstances in which a non-party may be involved in an arbitration dispute. For example, a non-party may be:
– A third-party beneficiary: A third-party beneficiary is a person or entity that benefits from a contract between other parties, even if they do not sign the contract. For example, if Company A hires Company B to perform a service for Company C, Company C may be a third-party beneficiary of the contract between Company A and Company B. If a dispute arises between Company A and Company B, Company C may be implicated in the dispute, even though it did not sign the contract containing the arbitration agreement.
– A successor-in-interest: A successor-in-interest is a person or entity that acquires the rights or obligations of another person or entity. For example, if Company A sells its assets to Company B, Company B may be a successor-in-interest to Company A. If a dispute arises between Company A and a third party, Company B may be implicated in the dispute as a successor-in-interest.
– A joint tortfeasor: A joint tortfeasor is a person or entity that commits a tort (a civil wrong) with another person or entity. For example, if Company A and Company B both contribute to an injury suffered by a third party, they may be joint tortfeasors. If the third party initiates an arbitration proceeding against Company A, Company B may be implicated in the dispute as a joint tortfeasor.
When a non-party is implicated in an arbitration dispute, there are several ways in which they may be brought into the arbitration proceedings. For example, the parties to the arbitration may agree to include the non-party in the arbitration, either through a joint request or by asking the arbitrator to join the non-party. Alternatively, the non-party may seek to intervene in the arbitration proceedings, either by filing a motion to intervene or a separate arbitration claim.
It is important for parties to consider the potential involvement of non-parties in arbitration disputes when drafting arbitration agreements. Including provisions that outline the circumstances in which non-parties may be implicated in the dispute and how they may be brought into the arbitration proceedings can help parties avoid confusion and delays. Additionally, parties may want to consider including provisions that require non-parties to the arbitration agreement to waive their right to sue in court or to seek arbitration in a separate proceeding.
In conclusion, non-parties to an arbitration agreement may be implicated in an arbitration dispute in several ways, including as third-party beneficiaries, successors-in-interest, or joint tortfeasors. Parties should consider the potential involvement of non-parties when drafting arbitration agreements and include provisions that address how non-parties may be brought into the arbitration proceedings.
