The filing of arbitrations based on multiple arbitration agreements, contained in two (or more) separate contracts, in a single arbitration proceeding may be possible, but must be done with caution.
The development of major projects in the fields of engineering, construction, oil and gas, and mining often give rise to situations where related disputes regarding a single project concern multiple contracts with multiple arbitration agreements. Regardless of whether different arbitration agreements are relied upon in an initial request for arbitration (termed a composite request for arbitration), or consolidation is requested later in the arbitral proceedings, there are advantages of grouping different disputes related to the same project into one arbitration proceeding.
Solving all related issues in a single proceeding will typically be more efficient and economical, requiring the payment of fewer arbitrators and other costs. A single proceeding also eliminates the possibility of conflicting awards, as different arbitral tribunals may decide differently, even on the basis of similar fact patterns. Moreover, resolving disputes in a single proceeding may allow the arbitral tribunal or sole arbitrator to have a better understanding of the underlying facts, which may improve the quality of the final award that is rendered.
There are pitfalls that must be considered prior to initiating multi-contract arbitrations, however.
Filing Arbitrations Under Different Arbitration Agreements and the Approach of National Courts
Despite the advantages of resolving a dispute involving multiple contracts through a single proceeding, the approach of national courts as to the question of conso
lidation is inconsistent, especially when one party seeks to initiate a single arbitration based on two arbitration agreements, rather than attempting to consolidate two existing arbitrations.
In A v B [2017] EWHC 3416 (Comm), for instance, the High Court of England and Wales considered that a single request for arbitration in the context of disputes arising from two separate arbitration agreements in an LCIA Arbitration was invalid. The court ruled that a request for arbitration impermissibly included two claims based on two identical arbitration agreements, contained in two different contracts, although connected.
The court rooted its analysis in Article 1 of the 2014 LCIA Arbitration Rules (“LCIA Rules”) and found that the repeated use of words such as “dispute”, “arbitration”, “the arbitration agreement” in their singular forms indicated that the LCIA Rules do not envisage multiple arbitrations being commenced under a single request for arbitration. According to the High Court, it was “entirely plain” that the LCIA Rules consider that (i) a single request for arbitration may only give rise to one arbitration, which (ii) entails the payment of one registration fee, and (iii) the constitution of one arbitral tribunal. Accordingly, the Court concluded that it would be “inconceivable” to conclude that the 2014 LCIA Rules permit the filing of two different arbitration agreements in one single request for arbitration. This decision led to the LCIA to update its arbitration rules, and Article 1.2 of the 2020 LCIA Rules now explicitly allows the filing of a composite Request for Arbitration:
“1.2 A Claimant wishing to commence more than one arbitration under the LCIA Rules (whether against one or more Respondents and under one or more Arbitration Agreements) may serve a composite Request in respect of all such arbitrations, provided that the requirements of Article 1.1 are complied with to the satisfaction of the LCIA Court in respect of each arbitration.”
The outcome of the A v B decision contrasts with the approach accepted in another English court decision. In Easybiz Investments v Sinograin et al. [2011] 1 Lloyd’s Rep 688, it was held that a single request for arbitration was valid to initiate an arbitration under ten separate contracts, each one containing a different arbitration agreement. The difference between A v B and The Biz lies in the fact that the latter was an ad hoc arbitration. Therefore, no institutional rules were applicable, let alone the 2014 LCIA Rules.
The Italian Supreme Court has decided that the filing of one single request for arbitration in respect of various claims based on identical arbitration agreements was valid. Thus, an award could not be set aside on this ground.[1] The Italian Supreme Court understood that as long as (i) the parties are the same, (ii) the contracts are connected and (iii) the arbitration agreements are identical, the principle of good faith justifies consolidation in one single proceeding.
In Canada, the British Columbia Supreme Court decided in South Coast British Columbia Transportation Authority v. BMT Fleet Technology Ltd[2], however, that a single request for arbitration brought under more than one arbitration agreement was invalid. However, the Canadian court found another solution, holding that the arbitral institution administering the case (the British Columbia International Commercial Arbitration Centre) had the power to split the dispute into separate, valid proceedings.
These decisions show that the possibility of relying upon two or more arbitration agreements in the same request for arbitration will depend on the terms of the arbitration clauses, the applicable law and whether they provide for institutional or ad hoc arbitration. In case the arbitration is institutional, parties and counsels must bear in mind that filing multiple arbitration agreements in a single request for arbitration may be valid under some rules, but invalid under others.
Multiple Arbitration Agreements and the Rules of Arbitral Institutions
Article 9 of the ICC Arbitration Rules explicitly provides that claims arising out of or in connection with more than one contract may be made in a single arbitration irrespective of whether they are made under one or more than one arbitration agreement.
“Subject to the provisions of Articles 6(3)–6(7) and 23(4), claims arising out of or in connection with more than one contract may be made in a single arbitration, irrespective of whether such claims are made under one or more than one arbitration agreement under the Rules.”
Generally, the ICC Court will admit the filing of different arbitration agreements in a single proceeding if the following criteria are met:
- all contracts must have been signed by the same parties;
- all contracts must relate to the same economic transaction; and
- the dispute resolution clauses contained in the contracts must be compatible.
In the same vein, Article 14(1) of the 2017 Arbitration Rules of the Stockholm Chamber of Commerce (SCC) explicitly authorizes the filing of claims arising out or in connection with more than one contract in a single arbitration.
“Parties may make claims arising out of or in connection with more than one contract in a single arbitration.”
Likewise, the 2015 China International Economic and Trade Arbitration Commission (CIETAC) Arbitration Rules provide, in Article 14, that a claimant may initiate a single arbitration concerning disputes arising out of or in connection with multiple contracts if the following criteria are met:
- the contracts are connected and involve the same parties as well as legal relationship of the same nature;
- the disputes arise out the same transaction or the same series of transaction; and
- the arbitration agreements are identical or compatible.
Article 29 of the 2018 HKIAC Administered Arbitration Rules, in turn, authorizes the filing of simultaneous claims provided that three conditions are fulfilled:
- a common question of law or fact arises under each arbitration agreement giving rise to the arbitration;
- the rights to relief claimed are in respect of, or arise out of, the same transaction or a series of related transactions; and
- the arbitration agreements under which those claims are made are compatible.
Certain arbitration rules, such as the arbitration rules of the London Chamber of Arbitration and Mediation (LCAM) do not provide for this, however, requiring the filing of separate arbitrations. Like the 2014 LCIA Rules, they merely make reference to arbitration “agreement” in the singular, thus do not allow for composite requests for arbitration.
For such institutions, and indeed any institution where composite requests for arbitration are not explicitly allowed, it is therefore prudent to file separate requests for arbitration under each arbitration agreement and then to seek consolidation.
[1] Aliman Immobiliare del Geon, Roberto Gufler & C.S.A.S., v. Meridiana Costruzioni srl., Court of Cassation, 25 May 2007.
[2] South Coast British Columbia Transportation Authority v. BMT Fleet Technology Ltd., 2018 BCCA 468 (2018-12-11)
