EXTENDING THE SCOPE OF ARBITRATION AGREEMENTS AND THE NEW YORK CONVENTION

22 February 2024

Our Managing Partner Dr.Richard Schmidt LL.M made a presentation on the personal and subject-matter scope extension of arbitration agreements under the New York Arbitration Convention at the Arbitration Breakfast co-organised by the Hungarian Arbitration Association and Lakatos, Köves and Partners Law Firm.

Arbitration Breakfast in Budapest

The Hungarian Arbitration Association and Lakatos, Köves and Partners Law Firm (LKT Partners) decided to co-organise an arbitration breakfast in Budapest on 15 February 2024 in the offices of LKT Partners.

The topic of the event was the 1958 New York Arbitration Convention on the recognition and enforcement of foreign arbitral awards, which is the most important international source of law in the field of internation commercial arbitration.

Prof. Dr. Ádám Boóc (Károli University) made a presentation on the historical context of the adoption of the Convention, and he summarized the most important principles and provisions of this international legal source.

Based on a recent judgment of the Hungarian Supreme Court, issued in a New York Convention award enforcement case, dr.Sára Darnót and dr.Balázs Fazekas (both LKT Partners) presented a case study, revealing various interesting issues and problems of enforcing arbitral awards in Hungary.

Arbitration Agreements - Personal and subject matter scope extension

In his presentation, dr.Richard Schmidt focused on two contemporary issues of international commercial arbitration: the extension of the subject-matter scope and personal scope of the arbitration agreement under the New York Arbitration Convention.

First of all, Richard drew attention to the importance of the law applicable to the arbitration agreement, which will govern the issue of the formation and validity of the arbitration clause, as well as its construction. Richard stressed that Article V (1) a) of the Convention governs this question, which is applicable both in the pre-award and post-award stages of the arbitral process.

When it comes to personal scope extension, Richard highlighted that this issue depends on the law applicable to the arbitration clause, and the court applying that law.

To illustrate this, Richard made a comparison between the approach of English and French courts, by examining the Dallah Real Estate vs Pakistan and the Kabab Ji vs Kout Food Group cases, where the courts at the two sides of the Channel have reached diametrically opposing solutions in relation with the extension of personal scope of the the arbitration clause to non-signatories.

In relation with subject-matter scope extension, the presentation focused on two issues.

First, Richard examined the scenario, when the dispute of the parties concerns extra-contractual claims (e.g. delicts, quasi-delicts etc.), and addressed the question in which cases can these claims arbitrated.

Richard continued with the situations when the parties concluded more contracts and not all of them contains arbitration clauses, by addressing the issue, whether claims arising from related contracts can be arbitrated.

The first arbitration breakfast was a quite successful event, thanks to the Hungarian Arbitration Association and for Lakatos Köves and Partners for organizing this event.