January 19, 2012 Articles

When Non-Signatories Compel Arbitration, Relationships Matter

By Gilda R. Turitz

Who gets to come to the arbitration party? Generally, only parties to the arbitration agreement can compel other signatories to arbitrate, based on the well-established premise that such agreement, by which a party gives up its right of access to the courts, is a matter of consent, not coercion. Several cases in 2011 addressed whether non-signatories can force an adversary to arbitrate where that adversary is a party to an arbitration agreement with a third person who may or may not be directly involved in the dispute. The relationship among these parties is a key factor in determining the outcome of a non-signatory's motion to compel arbitration. Principal among the factors considered in the recent cases here are corporate party relationships, the existence or lack of a claimed agency relationship, and whether another business relationship or allegations of acting in concert supported compelling arbitration. Courts have also relied on estoppel principles to allow a non-signatory to compel arbitration. The estoppel inquiry looks at the relationships of the pleaded claims and the parties and the intertwining of issues to be resolved in the contracting parties' claims and the claims involving the non-signatory.

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