Subjective Scope of the Arbitration Agreement in the Event of Debt Assumption and Other Forms of Security

Facts

On 9 November 2002, X. Ltd (a Cypriot company) and Y. (a Qatari company) concluded a construction contract for the construction of an industrial complex in Qatar, containing an arbitration clause. On 20 December 2002, Z. S.p.A. (an Italian company) issued a payment guarantee in favor of X. In 2003, a dispute arose between the parties and in October, X. called on the guarantee, but Z. refused to intervene. On 18 October 2005, X. submitted a request for arbitration to the ICC against Y. and Z. The Arbitral Tribunal decided that it lacked jurisdiction over Z. X. then appealed this decision to the Federal Tribunal.

Considerations

The Federal Tribunal freely examines the legal issues that determine the competence or incompetence of the arbitral tribunal, without becoming an appellate court. It recalls the applicable principles in this matter:

The arbitration agreement binds, in principle, only the contracting parties. However, in certain cases such as debt assumption, it may extend to third parties who are not designated therein. Debt assumption, whether exclusive or cumulative, results in the transfer of the arbitration clause to the assuming party. This is justified by the fact that the arbitration clause, as an accessory to the debt, follows it.

On the other hand, for other forms of security (suretyship, guarantee, etc.), the situation is different because the guarantor does not become the passive subject of the guaranteed debt. Consequently, the arbitration agreement of the main contract cannot be considered as an accessory…