When can a non-party be a party to an arbitration agreement? The meaning of “under or through” in Section 82(2) of the English Arbitration Act 1996
In a recent decision, Naibu Global  EWHC 2719, the English High Court has examined the parameters of s.82(2) Arbitration Act 1996; a provision which deems, when the English courts apply Part I of that Act, parties to an arbitration agreement to include “any person claiming under or through a party to the agreement”
When applying Part I of the Arbitration Act 1996 (“AA”), English courts are required by s.82(2) AA to treat references to a party to an arbitration agreement as including “any person claiming under or through a party to the agreement”.
Although somewhat obscurely located, this can be an important provision in cases where it is alleged that a non-party should nevertheless be bound by/able to avail themselves of an arbitration clause. This is because, before the English courts, it will mean that the provisions of Part I AA apply to that entity as if they were a party to the arbitration agreement.
So, for example, provided a valid arbitration agreement otherwise exists, such an entity bringing a claim in the English courts could see its claim stayed under s.9 AA. There are other statutory provisions which have a similar effect in more specific contexts (for example in the Contract (Rights of Third Parties) Act 1999), but s.82(2) AA provides something of a more general provision. What, however, does it mean?
Facts and findings in Naibu Global
The case concerned a claim by Naibu Jersey (“Jersey”) against a law firm arising out of the law firm’s advice in relation to an IPO. There was, however, no written contract between them and the retainer was instead between the law firm and one of Jersey’s subsidiaries (“HK”). That retainer contained an arbitration agreement. Jersey brought its claims alternatively on the basis of (1) an implied retainer, and (2) a tortious duty of care, both of which it argued had been established through the law firm’s conduct towards it.
In response to Jersey’s claims, the law firm applied for a stay under s.9 AA of the AA 1996. It argued that even though Jersey itself was not a party to the retainer containing the arbitration clause, it was bound by it because it was claiming “under or through” HK within the meaning of s.82(2) AA. The law firm’s assertion being that Jersey was seeking “in substance” to take benefit from the HK retainer.
Could this, therefore, satisfy the “under or through” test? In that respect, the judge, Bacon J, noted that s.82(2) AA clearly applied in cases of, for example, a formal assignment (Schiffahrts-gesellschaft Detlev von Appen v Voest Alpine Intertrading (The Jay Bola)  2 Lloyds Rep 279), or a statutory transfer under the Third Parties (Rights Against Insurers) Act 1930 (The Padre Island (No. 1)  2 Lloyd's Rep 408). The more difficult question posed by this case was when, short of such examples, is s.82(2) AA engaged.
In that respect, the judge noted that in Through Transport Mutual Insurance v New India Assurance  EWHC 455 (Comm), Moore-Bick J had applied the provision in a case involving goods lost in transit and a resultant claim by the shipper’s insurers (New India) against the carrier’s insurers which arose from the rights of the carrier under the insurance contract. The result in that case was, in the judge’s view, explicable on the basis “that New India's claim was entirely based on (and would not have arisen but for) that contract.”
By contrast, in this case, Jersey, in the judge’s view, was not claiming “under or through” HK, in any sense. Rather it was advancing claims on the basis of separate duties owed directly to it: an implied contract between it and the law firm or, alternatively, a breach of duty owed by the law firm to Jersey. Although it was the case that these might be similar to the ones owed by the law firm to HK under the retainer, this was not sufficient. Accordingly, the law firm’s application for a stay was dismissed.
Click here for the judgment.