The case concerns a dispute between several family members regarding their interests in family-owned companies, including a private bank and a French credit institution. B and his two sons, A and C, on the one hand, and B's brother, D, on the other, wished to achieve a separation of their respective interests in the various companies. The shares of the French credit institution were held through a chain of other companies, at the top of which was company V, which had its seat in the Netherlands. The parties entered into an agreement according to which those shares were ultimately to be acquired by D in exchange for his own shares in other companies (the Agreement). In order to achieve this, the shares in the French credit institution were to be transferred back through to company V, at which point they would pass over to D.

The various transactions and stages were set out in a "Step Plan" and required the cooperation of all involved. However, before all the steps could be completed, A was excluded from the private bank, of which he was until then a director. A then refused to continue cooperating with his father, brother and uncle (B, C and D) on the implementation of the Agreement and Step Plan, effectively blocking the process.

B, C, D and company V began arbitration proceedings against A, requesting that A be ordered to transfer his shares to V in accordance with the Agreement. A objected to the participation of company V in the proceedings, claiming that the latter was not a party to the Agreement and that the arbitral tribunal therefore had no jurisdiction to hear its claims.

The tribunal rejected this argument in its final award, finding that it also had jurisdiction with regard to company V. A petitioned the Supreme Court to have the award set aside.

The Supreme Court rejected the petition to set aside the award.

In interpreting the arbitration agreement, the arbitral tribunal had found that the parties had intended company V to be a third party beneficiary, entitled to claim performance in its own right and, consequently, entitled to rely on the arbitration clause in relation to such claim.

The Supreme Court first recalled its case law regarding the extension of arbitration agreements to non-signatory third parties. Such parties may be bound by the arbitration agreement, where the underlying claim was assigned to them, or in cases where they were involved in the performance of the contract in such a way that an implicit intent to be bound by the arbitration agreement can be inferred from their behaviour. As to third party beneficiaries, the Supreme Court pointed out that until now the main issue of debate has been whether such beneficiaries could be compelled to join the arbitration proceedings between the promisor and the promisee against their will.

For some authors, it is necessary for the third party beneficiary to consent to arbitration. For others, the arbitration clause contained in the contract in favour of the beneficiary may be invoked against the latter ipso jure (by operation of law), at least where the beneficiary has accepted the stipulation in its favour. A third view is that the arbitration agreement itself may be stipulated in favour of a third party.

In this case, however, the beneficiary (company V) was not being forced to take part in the proceedings against its will, but rather was participating on the claimants' side on its own initiative. The Supreme Court found that A could not object to the fact that company V was bringing its claim based on the Agreement, using a procedure which A and the other parties chose for the resolution of disputes. The beneficiary of a "perfect" contract in favour of a third party (stipulation pour autrui parfaite, echter Vertrag zugunsten Dritter) acquires an independent claim against the debtor along with all associated rights, including an agreement to arbitrate. If the third party beneficiary wishes to bring its claim by invoking the arbitration agreement, neither the promisor nor the promisee can prevent it from doing so.

The circumstances which led to the conclusion of the Agreement may not be typical for this legal institution. In particular, it was clear that the transfer of the shares to company V was only one of 14 steps allowing the parties to achieve the ultimate objective of the Agreement. Nevertheless, the parties evidently intended to grant company V an independent right to claim performance.

Finally, the Supreme Court stated that even if this were otherwise, the parties had clearly intended company V to take an active part in the implementation of the Step Plan, thereby implying their intention that company V should also be bound by the arbitration agreement.

As a last argument, A claimed that by introducing company V (which had its seat in the Netherlands) as a party to the proceedings, B, C and D had artificially turned a domestic arbitration into an international one, thereby depriving him of the legal remedies provided for by the law applicable to domestic arbitration. A argued that this constituted a breach of public policy. The Supreme Court did not decide this issue, merely finding that A was barred from bringing such an argument at that stage. This was because A had not invoked the protection of the rules on domestic arbitration during the arbitral proceedings, choosing rather to refer to the PILA in his various submissions to the tribunal.

This decision addresses the debated issue of the participation of "non-signatory" third parties in arbitral proceedings. The Supreme Court rightly pointed out that the main controversy in this regard is whether a third party can be made to take part in proceedings against its will. Although this specific question is ultimately left unresolved with regard to third party beneficiaries, the decision is interesting in that it reaffirms the principle of privity of the arbitration agreement, allowing for an extension of the agreement only where a common consent of the parties to such extension may be inferred from the circumstances of the case. It is also the first time that an authoritative finding has been made to the effect that the beneficiary of a "perfect" contract in favour of a third party (that is, a contract where the beneficiary indicates its acceptance of the claim) may rely on the arbitration clause contained in the contract between the promisor and the promisee.

A's argument that the other parties "artificially internationalised" the proceedings by including company V is also of interest. Indeed, in this case, all the other parties were domiciled in Switzerland, both at the time of the conclusion of the arbitration agreement and at the time of the initiation of the arbitration proceedings. If company V had not taken part, any challenge to the award would most likely have been submitted to the rules applicable to domestic arbitration, which provide other grounds for challenge than the PILA. The Supreme Court, however, avoided the issue by finding that A had waived the right to rely on this argument.

4A_44/2011.