Binding a Non-Signatory to an Arbitration Agreement under Chinese and Swiss Laws (I)

Summary

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• Laws and precedents in Switzerland and China support several theories to bind non-signatories to an arbitration agreement.
• Third parties may be bound by an arbitration agreement through an assignment of claim, assumption of debt, or transfer of a contractual relationship.
• An arbitration agreement can be deemed to extend to a non-signatory where it intervenes in either the conclusion and/or performance of a contract containing an arbitration clause in such a way as to display an intention.

China and Switzerland are two civil law jurisdictions that share many features but there are some differences as well. It would be helpful to have a mutual understanding of each other's regime, especially with the growing trade volumes between China and Switzerland (and the EU), and in particular if disputes increase in this context, with arbitration being the preferred dispute resolution mechanism. For a Chinese party, Swiss law and Switzerland would be favorable if it has no choice but to agree on a neutral governing law and seat when contracting with a foreign counterparty not least because they are civil law jurisdictions.

In terms of international arbitration practice, there has been a rise of challenges to arbitration from a third party non-signatory to an agreement. A frequent scenario involving a non-signatory is where a signatory attempts to arbitrate against a non-signatory or vice-versa (although the former occurs more frequently).