NONSIGNATORY AGENTS OF A PARTY TO AN ARBITRATION AGREEMENT ARE NOT COMPELLED TO ARBITRATE
The Fifth Circuit held that two agents and officers of Beacon Maritime, Inc. were not bound to arbitrate claims against Aban Offshore Limited because, although one officer had signed a contract containing an arbitration clause in his capacity as an officer of the company, neither had signed the agreement in his individual capacity. The court reversed a trial court decision compelling the individual officers to arbitrate. Among other authorities, the Fifth Circuit relied on the Restatement (Third) of Agency, which provides that when an agent contracts with another on behalf of a disclosed principal, the agent and the third party become parties to the contract, but the agent does not become a party to the agreement unless the agent and third party agree otherwise. The court also cited state and federal case law holding that nonparties resisting arbitration demands are not be bound by arbitration agreements. Guy Covington v. Aban Offshore Ltd., No. 10-40449 (5th Cir. Aug. 10, 2011).
This post written by Ben Seessel.
