In a decision which has been welcomed by many practitioners, the Swiss Federal Supreme Court has allowed a plea by the respondent to an ICC arbitration for the joinder of three additional parties, non-signatory to the relevant arbitration clause. In so doing, it annulled an interlocutory award of the tribunal and a decision of the ICC Court denying that plea.
Although no reference was made to it, this decision would appear to be consistent with a decision by the same Court in 2008 in which it determined that an arbitration clause will not be extended to a non-signatory absent explicit expression (within the relevant contract or by other communication or conduct) that the party intended to be bound to arbitrate.
In this instance, two contracts were concluded on the same day containing identical arbitration clauses: the first, to which there were five parties, was for the sale of a company; while the second, to which there were only two parties, was an employment contract employing the purchaser in the first contract as managing director of the company there purchased.
One year later, the company commenced ICC proceedings against the managing director for breach of the employment contract, a claim to which the managing director argued that all parties to the sales contract should be joined on the basis that the two contracts were indissolubly linked, and that one could not be interpreted in the absence of the other. Despite the rejection by the ICC Court and the tribunal of this argument, the Swiss Supreme Court agreed with it, finding that the three non-signatory parties had had an "intense involvement" in the conclusion of the employment contract, in which they had in addition expressly reserved certain rights, and had therefore intended to be bound by the arbitration agreement contained in it.
Although this decision may arguably have an impact on what has been criticised by some as the overly-cautious approach of the ICC Court in relation to the question of joinder, it does not appear to represent an extension of the circumstances in which the Swiss Courts will extend an arbitration agreement to non-signatories. Those circumstances remain limited, and parties drafting arbitration clauses in multi-contract/multi-party scenarios should remain conscious of the need for careful drafting to reflect the likely problems which may arise once a dispute occurs.
(Swiss Federal Supreme Court, 4A_376/2008)