The Portuguese Arbitration Act (Lei de Arbitragem
Voluntária), similar to many others, does not address the
issue of multiparty disputes. Moreover, the act is clearly designed
to accommodate disputes between only two parties ? a
claimant and a defendant.
This gives rise to serious problems. In some cases, multi-party
arbitration is indispensable to settle disputes, such as in
situations in which an arbitral award must necessarily be binding
on more than two parties (e.g., separation of property owned by
three tenants in common). In other cases, although multi-party
arbitration is not necessary, it may be highly advisable to: save
time and money; avoid conflicting decisions on the same issues of
law and fact; allow a defendant to pass on the liability to third
parties (e.g., suppliers, sub-contractors); or to provide
flexibility when the claimant is unsure which defendant the claim
should be directed to (e.g., when it is unclear which of two
parties is responsible for certain conduct).
However appropriate in some cases, multi-party arbitrations
often have two downsides. Firstly, the proceedings tend to become
lengthier and more complex (particularly when they result from
joint claims), and secondly it is more difficult to agree on
appointing arbitrators. The latter becomes even more significant
when there is more than one arbitrator, as the claimants or the
defendants each have the right to appoint someone. This is
particularly relevant in Portuguese arbitrations since, unless
otherwise agreed, the arbitral tribunal is composed of three
persons with one appointed by the claimant, another by the
defendant, and the third arbitrator, who acts as chairman of the
tribunal, appointed by the other two.
Thus, although multiparty arbitrations may be particularly
advisable in some cases, they can often be detrimental to at least
one of the parties.
Portuguese law does not forbid multi-party arbitrations.
Therefore, if all parties agree either expressly or implicitly, we
understand that the arbitral tribunal may not dismiss the parties
to the arbitration on the grounds of illegal joining of parties or
claims, regardless of a lack of relevant connection between the
claims. As to defendants appointing an arbitrator (the claimants
must always agree on who will hear the proceedings), article 12 of
the Portuguese Arbitration Act applies: if the parties fail to
reach an agreement within 30 days, any party may request that the
president of the Portuguese...