Navigating joinder issues in US litigation: guidance for foreign counsel handling multi-party US disputes

Justin Lee
Wuersch & Gering, New York
justin.lee@wg-law.com

Your client, a European subcontractor, supplies equipment for a United States infrastructure project. The governing contract with a US-based general contractor is subject to New York law and includes an arbitration clause. Meanwhile, a separate arbitration is initiated by the project owner. The general contractor – now a respondent – seeks to join your client into that proceeding and also threatens parallel court litigation, invoking the US Federal Rules of Civil Procedure (FRCP) as the basis for joinder in a related court action.

Your client turns to you to assess the legal viability of such joinder efforts – and to understand the broader risk of being pulled into multiparty US litigation. The following considerations are critical.

Joinder under the US Federal Rules of Civil Procedure

Joinder in US federal litigation is governed principally by Rules 14 and 19 of the FRCP:

• Rule 14 (Third-Party Practice): Permits a defendant to implead a third party ‘who is or may be liable to it for all or part of the claim’. This rule enables contribution or indemnity claims but does not allow a defendant to bring in unrelated parties merely to shift blame or multiply proceedings.

• Rule 19 (Required Joinder of Parties): Mandates joinder of a party whose absence would (1) prevent complete relief among existing parties or (2) impair that absent party’s ability to protect its interests. However, the rule does not authorise a defendant to unilaterally bring in unrelated third parties or restructure litigation to their tactical advantage.

Courts have emphasised the narrow application of Rule 19. As the US District Court for the Eastern District of Louisiana observed:

‘Rule 19 does not provide or support the introduction of a third-party defendant into a lawsuit... It does not empower the court to order joinder of a third-party defendant, because that is what Rule 14 is for.’ US ex rel. Branch Consultants, LLC v Allstate Ins Co, 265 FRD 266, 270–71 (ED La 2010)

Foreign parties should be aware that US courts generally disfavour strategic joinder attempts aimed at coercing or complicating the position of foreign entities, particularly when such parties are peripheral to the dispute or not subject to personal jurisdiction.

Comparison to international arbitration practice

Although this article is litigation-focused, arbitration practice provides useful context for foreign litigation counsel. For example:

• International Chamber of Commerce (ICC) Rules: Article 7 provides that a party wishing to join an additional party must submit a request to the Secretariat. Joinder requires the agreement of all parties involved, including the additional party, and compliance with specific criteria established by the arbitration agreement and the ICC Rules.

• London Court of International Arbitration (LCIA) Rules: Article 22.1(x) allows parties to request the joinder of additional parties, subject to the tribunal’s consent and provided that the third party agrees or is bound by the arbitration agreement.

• Singapore International Arbitration Centre (SIAC) Rules: Rule 18 provides that parties or third parties may apply for joinder, where (1) all parties, including the additional party, have consented to such joinder or (2) the additional party is prima facie bound by the arbitration agreement.

These restrictive joinder approaches in arbitration underscore that, even in US-based dispute resolution forums, there are significant legal limits to forcing third-party participation – whether in court or arbitration. Litigation counsel representing foreign entities must rigorously assert these boundaries in court filings, particularly when the opposing party blurs procedural distinctions or makes overreaching claims of necessity.

Strategic considerations for foreign litigation counsel

For foreign counsel whose clients are facing potential exposure in US litigation due to joinder threats, the following steps are recommended:

1. Assess personal jurisdiction: Before any substantive response, determine whether US courts even have jurisdiction over your client. This threshold issue is often overlooked in joinder motions.
2. Scrutinise the legal basis for joinder: Is opposing counsel invoking Rule 14 or Rule 19? Courts are attentive to misuse of these provisions. Raise objections early.
3. Limit exposure with precise contract drafting: Encourage clients to include forum selection clauses and clear indemnity provisions in cross-border contracts, which can serve as a defence against improper joinder in later litigation.
4. Preserve the record: If joinder is contested, ensure objections are formally raised and preserved to support later appeals or jurisdictional challenges.
5. Monitor parallel proceedings: If a related arbitration or foreign court proceeding exists, be alert to possible preclusion or inconsistent findings, especially under doctrines like res judicata or collateral estoppel.

Conclusion

Joinder in US litigation presents real risks for foreign parties. While US courts allow joinder in limited circumstances, they also recognise the burden it may impose on foreign litigants, particularly when jurisdiction or due process protections are at issue. Cross-border litigation counsel should be vigilant in identifying and resisting improper joinder efforts, and should advise their clients proactively when structuring international transactions to reduce litigation exposure.