Capacity of parties to enter into arbitration agreements
Produced in partnership with Irina Tymczyszyn of Norton Rose Fulbright
Capacity of parties to enter into arbitration agreements

The following Arbitration guidance note Produced in partnership with Irina Tymczyszyn of Norton Rose Fulbright provides comprehensive and up to date legal information covering:

  • Capacity of parties to enter into arbitration agreements
  • Consequences of incapacity
  • The applicable law
  • Capacity and insolvency
  • Capacity issues when entering into an arbitration agreement

This Practice Note considers the capacity of parties to enter into an arbitration agreement and to participate in arbitration proceedings.

It is important to remember that an arbitration clause may survive even if the main agreement in which it is found is invalid—see Practice Notes: Arbitration agreements—the doctrine of separability (England and Wales) and Separability of arbitration agreements in international arbitration. From a capacity perspective, this means that a party may not have capacity to enter into the main agreement but may still retain capacity to enter into an agreement to arbitrate.

Consequences of incapacity

Both parties entering into an agreement should have a legal capacity to do so, absent which the agreement will be void. An agreement to arbitrate is not in any way different in this respect from any other contract—see Practice Note: Forming enforceable contracts—capacity.

Should an arbitral agreement be found void by reason of incapacity of either of the parties, either:

  1. the tribunal will decline jurisdiction to hear the case, if the incapacity was established before the commencement of an arbitration, or

  2. the national courts will refuse to enforce the award if the incapacity was established after the award was rendered

Article 5 of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) expressly provides that recognition and enforcement of an