engleski

Suretyship Contract and Arbitration Agreement

With arbitration agreement parties agree to submit to arbitration all or certain disputes that have arisen or that may arise between them in respect of their legal relationship. Such agreement binds the parties involved. However, legal theory, arbitral and judicial practice recognize that in some situations arbitration agreement also binds a third party that did not consent to such an agreement. This contribution elaborates on the issue of whether surety is bound by the arbitration agreement concluded between the creditor and the principal debtor in regard to the main contract. With suretyship contract surety undertakes to perform principal debtor’s obligation from the main contract to the principal debtor’s creditor. It will be demonstrated that such an arbitration agreement does not bind the surety, as a third party non-signatory, because of the accessory and independent nature of the suretyship contract in relation to the main contract. This also means that necessary references to the principal debtor’s obligation and the principal contract, contained in the suretyship contract, normally do not suffice for the extension of the arbitration agreement to the surety. There is no doubt that surety can conclude a separate arbitration agreement with the creditor or consent to arbitration by referencing an arbitration agreement in the main contract. However, such a reference is insufficient if the parties’ intent to arbitrate disputes arising from the suretyship contract cannot be additionally demonstrated.

arbitration ; arbitration agreement ; suretyship contract ; surety ; non-signatory third party ; principle of co-extensiveness of suretyship ; independency principle of suretyship

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