Arbitration works particularly well where the contractual structure matches the dispute: a two-party dispute governed by a single arbitration agreement. That is often not the case in supply chains, construction structures, shareholder constellations, framework arrangements, or post-M&A recourse chains. Arbitration is built on consent. If all relevant parties have not agreed to be in the same arbitral framework, the dispute may split across several proceedings. That can mean duplicate fact work, inconsistent outcomes, confidentiality barriers between proceedings, and weaker settlement dynamics. 

German litigation has structural tools here that arbitration does not fully replicate. Arbitration does not naturally provide the full effect of Streitverkündung (third party notice) in the same way. The 2026 ICC Rules offer joinder (Article 8 ICC) and consolidation (Article 11 ICC), but no mechanism comparable to third-party notice. Under the 2026 ICC Rules, joinder after confirmation or appointment of an arbitrator is now possible where the additional party accepts the constitution of the tribunal and the tribunal decides to accept the request, taking into account jurisdiction, timing, conflicts of interest and the effect on procedure (Article 8(6) ICC). The DIS has gone further: since 15 March 2024, it offers the DIS Supplementary Rules for Third-Party Notices, which are specifically designed to create a contractual third-party notice mechanism and avoid what the DIS itself describes as the “recourse trap.” That is a meaningful development, but it remains a contractual workaround rather than a universal cure. It depends on compatible drafting across the legal relationships involved. 

The current German arbitration reform also addresses tribunal constitution in multi-party constellations through proposed section 1035(4) ZPO-E, although this does not remove the need for careful alignment of dispute-resolution clauses across the transaction.

So the key point is therefore not that arbitration is poor in multi-party disputes. It is that the clause cannot be drafted one contract at a time. The entire dispute architecture must be designed across the whole transaction. Otherwise, arbitration may remain elegant only until the first recourse claim appears.

Key takeaway 

Where a transaction is likely to generate chain claims or multi-party recourse, dispute-resolution clauses should be harmonised across the full contract structure from the outset.

German Disputes Bites series

We hope you are enjoying our series of blogs on Litigation vs Arbitration. This series will cover different aspects of the choice between a litigation or arbitration forum. Previous posts in the series:

• German Disputes Bites – Arbitration vs Litigation: confidentiality doesn’t make a dispute invisible

• German Disputes Bites – Arbitration vs Litigation: deciding who decides?

• German Disputes Bites – Arbitration vs Litigation: tribunal choice is key strategic phase

• German Disputes Bites – Arbitration vs Litigation: procedural flexibility advantage if managed

• German Disputes Bites – Arbitration vs Litigation: choosing the right forum for enforcement