Yes, in some circumstances. This firm had a claim initiated by a party to a charter party agreement (“CPA”) dismissed and compelled arbitration on that claim because the CPA contained an arbitration clause. Significantly, our client was not a signatory to that CPA. But, because the charterer based its claim on an agreement containing an arbitration clause, our client was able to have the lawsuit dismissed and compel arbitration.
The Central Intellectual Property and International Trade Court (IP&IT Court) decided that the issue before the court was whether a party to a written agreement that contains an arbitration clause can elect to proceed with court proceedings by naming a non-party as a defendant in a lawsuit. The court decided even if there is no signed written agreement to arbitrate with the defendant, the plaintiff is obliged to arbitrate that claim if the claim arises out of a contract that contains an arbitration clause.
The CPA was entered into between a Thai charterer and a French shipowner for the carriage of goods from Thailand to Indonesia. The charterer had placed a deposit as contractually required, but the shipowner failed to provide a vessel ready for loading. A dispute arose, and the CPA provided that any dispute arising out of the CPA shall be resolved by arbitration.
Instead of suing the shipowner, the charterer sued our client for reimbursement of the deposit alleging that our client was by inference an agent as defined under section 824 of Thailand Civil and Commercial Code, who had made the CPA on behalf of the shipowner. The shipowner resided in a foreign country, and, the charterer argued, the shipowner should, therefore, be personally liable under the CPA. The plaintiff also argued that our client was an agent of the shipowner and should be held liable. In Thailand, an agent who makes a contract on behalf of a principal who is and has his domicile in a foreign country, is personally liable on the contract although the name of the principal has been disclosed, unless the terms of the contract are inconsistent with his liability.
We moved to compel arbitration on the basis that the subject matter of the claim was rooted in the legal relationship between the charterer and the shipowner under the CPA. Before considering the issue of compensation by our client, the court ought to consider whether any legal relationship existed between the shipowner and our client and determine if our client was indeed an agent of the shipowner. Regardless of whether or not our client was an agent of the shipowner, the claim should be proceeded by way of arbitration as the issues the charterer sought to litigate clearly arose from and related directly to the CPA.
In May 2020, the IP&IT Court decided that the charterer’s claim arose from the CPA. Therefore, the court rendered an order to compel arbitration and dismissed the charterer’s claim.
It is unprecedented for a Thai court to make this sort of ruling.
Various legal bases apply in an arbitration setting to bind a non-signatory to the terms of an arbitration agreement. For instance, principal-agent relationships where an agent binds the principal; apparent authority; alter ego relationships; joint venture relations; succession; and estoppel. Significantly, these legal concepts do not rely on the intention of the parties but rather on the force of the applicable law.
Applying Section 11 of the Thai Arbitration Act B.E. 2545 (“Arbitration Act”) which requires an arbitration agreement to be in writing and signed by the parties, the Thai court has traditionally ruled that arbitration agreement was binding only on the parties to the agreement, Strictly speaking, third-parties or non-signatories are bound by arbitration agreement only in cases of assignment of claim or liability under Section 13 of the Arbitration Act. No provision of the Arbitration Act expressly allows the Thai court to extend the application of an arbitration agreement to parties outside an agreement containing an arbitration clause.