Arbitration Agreements – Do They Apply To Third Parties?

In a recent Circuit Court case¹, Mr and Mrs Maguire entered into a contract to buy a car. Mrs Maguire signed the standard terms and conditions of the seller (MSL) of the car, which included an arbitration clause. The contract between the plaintiffs and the manufacturer of the car (Mazda) did not contain an arbitration agreement. The plaintiffs claimed that the car was defective and commenced proceedings against MSL and Mazda.

The Circuit Court granted applications by the defendants to refer the plaintiff's proceedings against MSL to arbitration and to suspend the court proceedings against Mazda pending the outcome of the arbitration. The couple appealed both of these decisions to the High Court.