Wrong Party, Right Answer: The Irish High Court Refuses A Stay To Arbitration Under Article 8 And The Inherent Jurisdiction

The position of a non-signatory to an arbitration agreement is a topic of enduring interest in arbitration circles. The issue can arise in a number of ways, depending on the non-signatory's objectives. If the non-signatory would prefer to arbitrate rather than litigate its dispute, it might bring an application to stay court proceedings to arbitration. Alternatively, the non-signatory may want to escape the consequences of an award already made against it, and defend an application to enforce that award.

In England, the issue of the non-signatory has received reasonably comprehensive treatment in the Court of Appeal (City of London v Sancheti)1 and the Supreme Court (Dallah v Government of Pakistan).2 Now, the Irish High Court has had occasion to deal with a paradigm case.

The case arose out of the project to construct the new acute hospital in Enniskillen, Northern Ireland. In 2008, an Irish construction company (P Elliott) entered into a joint venture agreement with a Spanish construction company (FCC Construcción SA). In the joint venture agreement, the joint venturers established the framework for their collaboration in preparing a tender for and building the hospital. The agreement contained an arbitration clause, providing that any disputes between the joint venturers arising out of the joint venture agreement or the anticipated building contract should go to ICC arbitration in Geneva. Before the tender was awarded, however, the joint venturers decided to create a tax-efficient structure under which the building contract would be entered into by a newly-incorporated company (FCC Elliott) and the joint venturers would be involved indirectly through a suite of other contracts and partnerships. As part of this structure, in 2009 P Elliott and FCC Elliott entered into a consultancy agreement. This agreement contained an exclusive jurisdiction clause in favour of the Irish courts.

In P Elliot & Company Limited v FCC Elliott Construction Limited,3 the claimant brought summary proceedings against the defendant in the Irish courts for payment of invoices rendered under the 2009 consultancy agreement. The defendant applied for a stay to arbitration on two grounds.

First, the defendant said the Court should grant a stay under Article 8 of the Model Law (enacted into Irish law by the Arbitration Act 2010). It pointed to the arbitration clause in the joint venture agreement between PECL and the defendant's ultimate parent FCC Construcción SA...