Original scientific paper
https://doi.org/10.3935/zpfz.72.12.22
Extension of the Arbitration Clause to Non-Signatories Through the Piercing of the Corporate Veil
Petar Ceronja
; Faculty of Law, University of Zagreb, Zagreb, Croatia
Abstract
The paper elaborates the possibility of extending the arbitration clause to entities which are not formal parties to the arbitration agreement (Non-Signatories) through the piercing of the corporate veil. Piercing of the corporate veil is a company law concept through which separate legal existence of a company is being disregarded (pierced) in order for the creditors to be able to expand their claims against the company to assets or other rights of the company's shareholders. Basic substantive company law standards for piercing the corporate veil are explained. A stance is taken that under Croatian law, in line with comparative legal literature and views of renowned scholars, it would be allowed to expand an arbitration clause to a Non-Signatory shareholder of the company if certain conditions are met. It is pointed out that the piercing of the corporate veil in corporate law, as well as a method of extension of the arbitration clause, is an exception to the general rule and thus imposes a high standard of proof and places the burden of proof on the party invoking its application. Piercing of the corporate veil is compared to some other typical cases of extending arbitration clauses to Non-Signatories. The most common cases and reasons for piercing are illustrated. In conclusion, practitioners are advised on how to draw up arbitration clauses to avoid the need to expand its application altogether through this method, and are being cautioned against the circumstances which need to be taken into account if the extension of the arbitration clause through the piercing of the corporate veil is considered.
Keywords
arbitration; arbitration clause; piercing of the corporate veil
Hrčak ID:
280159
URI
Publication date:
1.6.2022.
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