Originally from American Review of International Arbitration - ARIA

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I. THE ISSUE

Whenever a state agency or instrumentality enters into a contract containing an arbitration clause, the question naturally arises whether the state is also bound by the contract and the arbitration clause.1 Careful drafters address these issues at the time of contracting, but unfortunately, they are often left unanswered at that crucial time. As a result, when disputes subsequently arise, the courts and arbitrators have to address them. In some cases, the issues are not submitted to the arbitrators, but only at the enforcement stage, to the court at the enforcement forum. A similar problem arises when a contract containing an arbitration clause is assigned and when an arbitration clause is asserted by or against a guarantor. The problems created by assignment and guarantee have been addressed by the Swedish Supreme Court. Its decisions have been commented on in the Stockholm Arbitration Report.2 This Comment is limited to discussion of the question formulated in its first sentence. It was squarely addressed by the Fifth Circuit in its decisions in Bridas v. Turkmenistan and Turkmenneft.3