Joinder in arbitration is the act of involving a third party as a party in already ongoing proceedings. This mechanism contributes to saving on time and costs related to a dispute among more than two parties, and is usually connected to multi-party and/or multi-contract arbitration.
Due to the fact that the jurisdiction of arbitral tribunals is based on party autonomy, the threshold for joining third parties into an arbitration is usually high. Each arbitral institution provides for different requirements in their arbitration rules, such as agreement of all parties (including the third party) or the third party also being bound by an arbitration agreement.
Notwithstanding, a third party may also be bound (or benefit from) an arbitration agreement, inter alia, where there was assignment, transfer or subrogation of rights; where corporate veils can be lifted; and where a third party played a significant role during contract negotiation or formation.
Consolidation, on the other hand, is a procedural tool allowing for merging two or more arbitrations into one single procedure. Much as the device of joinder, consolidation aims at saving on time and costs and is usually connected to multi-party and/or multi-contract arbitration.
Consolidation is usually allowed
- whenever the parties agree to it;
- whenever all claims are made under the same arbitration agreement; or,
- where more than one arbitration agreement is in place, whenever the arbitrations are between the same parties, the disputes arise in connection with the same legal relationship, and the arbitration agreements are compatible.
It must also be considered how far the proceedings to be consolidated have already developed, in order to avoid diminishing the freedom of choosing arbitrators or the right to be heard of a party.
In addition to allow for more cost-efficient arbitral proceedings, joinder and consolidation also contribute for lowering the risk of inconsistent and/or conflicting decisions.
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