Arbitration clauses are not always challenged directly. Often, the challenge is more subtle: a claimant brings court proceedings against both the contractual counterparty and an additional defendant who never signed the arbitration agreement, i.e., a non-signatory or third party. The question then becomes whether that party structure is enough to keep the dispute in court.
In most cases, it is not.
That said, the position is not identical in every jurisdiction. Courts in some jurisdictions are prepared to let non-signatories rely on, or even be bound by, arbitration agreements in some cases. Others will preserve arbitration between the signatories but remain cautious about drawing true outsiders into the arbitral process.
U.S. courts are generally reluctant to let claimants avoid arbitration by adding non-signatory defendants. Although arbitration is based on consent, U.S. courts recognise several doctrines under which a non-signatory may enforce, or be bound by, an arbitration agreement. These include equitable estoppel, agency, alter ego, veil-piercing, assignment and related contract-law principles.
In Flota Petrolera Ecuatoriana EP v. Sudhaus et al. (E.D. Pa. May 27, 2026), the defendants asked the court to compel FLOPEC to arbitrate and to stay the court proceedings. FLOPEC resisted, arguing that only one defendant had signed the relevant contracts containing the arbitration agreements, while other defendants were “complete strangers” to them (p. 10) (see also our note on the case here). The United States District Court for the Eastern District of Pennsylvania rejected that argument. Applying New York estoppel principles, it held that a signatory may be prevented from avoiding arbitration with non-signatories where the issues are intertwined with the signed agreement. FLOPEC’s own pleadings alleged that the defendants acted together in the same tanker-pool arrangements and participated in the same scheme. The court therefore allowed the non-signatory defendants to compel arbitration and stayed the court proceedings.
In Bufkin Enterprises, L.L.C. v. Indian Harbor Insurance Company, No. 23-30171 (5th Cir. 2024), the claimant sued domestic insurers, later added foreign insurers, and then dismissed the foreign insurers. The domestic insurers sought to compel arbitration under an arbitration clause in the insurance policy. The Fifth Circuit reversed the district court’s refusal to compel arbitration, holding that equitable estoppel applied because Bufkin’s own pleadings alleged substantially interdependent and concerted misconduct by both the domestic and foreign insurers. Bufkin had treated the insurers collectively and had not meaningfully separated their alleged conduct.
In Dodds v. Pulte Home Corp., 909 A.2d 348 (Pa. Super. Ct. 2006), homebuyers tried to avoid arbitration by suing the builder’s alleged parent company, Pulte Home Corporation, which was not a signatory to the purchase agreements containing the arbitration clauses. The Pennsylvania Superior Court rejected that approach. It held that adding the non-signatory parent company did not defeat arbitration. The parent company’s interests were aligned with those of the signatory subsidiary, and the court reasoned that an arbitration agreement “would be of little value if a party could obviate the effect of the agreement merely by finding a way to join another party” (para. 12).
Together, these cases show that U.S. courts focus on the substance of the dispute rather than the claimant’s chosen party structure. Where the claims against signatories and non-signatories are intertwined, closely connected to the contract, or pleaded as part of the same alleged misconduct, adding a non-signatory defendant will generally not prevent arbitration.
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