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Nature of Matter

Joinder of third parties 

Jurisdiction 

Case Summary

1. The plaintiff, CJD, is a limited liability company incorporated in Narnia. It is the respondent in the underlying arbitration (the “Arbitration”). 
2. The first defendant, CJE, is an offshore company also incorporated in Narnia, and is the claimant in the Arbitration. The second defendant, CJF, is a limited liability company incorporated in Telmar. The second defendant owns 100 % of the issued shares in the first defendant, and is not a party to the Arbitration.
3. The plaintiff entered into a joint venture agreement with the first defendant, second defendant and 3 other parties to develop a mixed use residential/commercial tower, hotel and/or service apartments  complex in Narnia (the “JVA”). 
4. In late 2014, cracks started to appear in the parties’ relationship as the first defendant alleged that the plaintiff had breached several terms of the JVA by:-

1. delaying the transfer to the joint venture company of title to land for the development of the complex in Narnia.
2. delaying and eventually failing to seek the requisite regulatory approvals in Narnia.
3. incurring liabilities and costs without the approval of the joint venture company’s Board of Directors.
4. terminating the JVA wrongfully and/or invalidity; and
5. failing to act in good faith.

5. The first defendant then commenced the Arbitration against the plaintiff under the LCIA Rules 2014 pursuant to the terms of the JVA. The plaintiff subsequently applied to the Tribunal to join the second defendant as a party to the Arbitration.
6. The Tribunal however held that it did not have jurisdiction to join the second defendant to the Arbitration as the second defendant did not consent, pursuant to Article 22 of the LCIA Rules 2014, to be joined as a party to the Arbitration.
7. The plaintiff applied to the High Court to reverse and/or set aside the Tribunal’s ruling that it lacked jurisdiction to join the second defendant in the Arbitration. 

The High Court dismissed the application. It took the view that being a signatory and party in a multiparty contract containing an arbitration agreement, was not sufficient in and of itself to constitute consent by the 2nd defendant in writing to being joined in any arbitral reference involving any of the other parties to the JVA:

1. The plain wording of Article 22.1 of the LCIA Rules 2014 does not lend itself to such an interpretation. There is no mention in the rule of the requisite consent in writing being found simply by being a party to an arbitration agreement no matter how generally worded. Such a broad interpretation of “consent” would, in the High Court’s view, be problematic as: 
   1. the joinder party would be forced to live in a state of uncertainty as to whether it would be called upon to defend itself or advance claims in the ongoing arbitration from the commencement of the arbitration till its eventual conclusion; and
   2. the joinder party could well be deprived of the opportunity to nominate or participate in the selection of its own arbitrator if it was indeed joined to the arbitration. Such an outcome would represent a significant derogation from the fundamental requirement of party autonomy in international commercial arbitration.
2. The doctrine of “double separability” distinguishes between the original arbitration contract between the parties and the separate contract that arises between the arbitrants to a dispute in a particular arbitration reference. It is because the third person (who may be a party to the original arbitration contract) is a stranger to the second contract that arises between the arbitrants in the arbitration reference that the third person’s consent to being joined is required, and indeed, essential. The present case broadly falls within this situation.
3. In any event, the High Court noted that the plaintiff would not be without recourse or be deprived of an opportunity to bring the second defendant into the arena in order to advance a claim against it. On the contrary, the plaintiff had already intimated, in its Statement of Defence and Counterclaim filed in the Arbitration, its intention to issue a separate request for arbitration against the second defendant, and have those proceedings consolidated with the Arbitration. That is a course of action entirely within the plaintiff’s rights under the arbitration agreement in the JVA.