Assignments, assignees and the burden of an arbitration clause
It is trite that one can only assign ‘benefits’ but not ‘burdens’. However, it is accepted that the ‘burden’ of arbitration agreements can ‘bind’ assignees of choses in action which fall within their ambit. This seems to be so, even where the assignee must have taken the assignment while ignorant of the arbitration agreement. In The Jay Bola, by drawing an analogy with the equitable rule that equities arising between debtor/obligor and the assignor also bind the assignee, Hobhouse LJ explained that not doing so would be unconscionable. That explanation has been criticised in some respects. Although those criticisms may be overblown, the reasoning in The Jay Bola can be analysed more deeply to identify how the ‘burden’ of an arbitration clause will also ‘burden’ an assignee. By better understanding the trust and agency mechanisms by which assignments do their work, the basis for the ‘unconscionability’ of allowing an assignee to avoid the burden of an associated arbitration agreement becomes easier to understand.
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