ENGLAND & WALES Law and Practice Contributed by: James Stacey, Peter Wickham, Samantha Holland and William Humphries, Slaughter and May
13.5 Binding of Third Parties Under English law, a non-signatory third party may be bound by an arbitration agreement in limited cir - cumstances. Circumstances in which this may occur include the following. • Where an agent has executed an arbitration agree - ment on behalf of its principal. • Where contractual rights or causes of action are assigned or transferred to a third party. Where those rights or causes of action were originally subject to an arbitration agreement, the third party may also be bound by it ( West Tankers Inc v Ras Riunione Adriatica Di Sicurta SpA [2005] EWHC 454 (Comm)). • The Contracts (Rights of Third Parties) Act 1999 (C(RTP)A 1999) provides that, in certain circum - stances, a third party may enforce rights arising under a contract. If those rights are subject to an arbitration agreement, the third party may be bound by that arbitration agreement ( Nisshin Ship- ping v Cleaves & Co [2003] EWHC 2602 (Comm)). It is relatively common for contracts to exclude the application of C(RTP)A 1999. • An insurer may be subrogated to contractual rights that are themselves subject to an obligation to arbitrate. • Where, in limited circumstances, the corporate veil is pierced to extend an arbitration agreement to a group company because the corporate entity is simply a “façade to conceal the true facts” ( VTB Capital plc v Nutritek International Corp and others [2013] UKSC 5).
An arbitral award will not bind third parties, includ - ing parent companies of parties to an arbitration. For example, the English courts have held that a prior award that rescinded a joint venture agreement had no binding effect on a subsequent proprietary claim made against third parties who were not parties to the arbitration ( Vale SA v Steinmetz [2021] EWCA Civ 1087). See also 5.2 Circumstances for Court Intervention .
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