Title: Group of Companies Doctrine: Caveats to Consider before its Application
Author(s): Disha Surpuriya (View Profile)
Journal: Indian Review of International Arbitration
With the growing popularity of arbitration as a preferred mode of dispute resolution, especially within corporate houses and businesses, there has arisen a need to retain the relevance of this mechanism keeping in mind their complex internal structure. Indian courts have promoted arbitration by interpreting and applying new doctrines to make the process more constructive and rewarding and to ensure that this method fully settles the differences involving companies and its affiliates. One such doctrine that has gained immense attraction over the last few years has been the Group of Companies Doctrine through which non-signatories to an arbitration agreements have also been made by parties to it. The Hon’ble Supreme Court first applied this Doctrine in 2012 and has subsequently recognized it in various matters over the years. While the debate around its validity and application is questioned by several countries, Indian courts seem to have readily adopted it. In light of the same, this paper, aims to study its evolution and to identify whether its practice in any manner challenges rudimentary principles of law like that of free consent, privity of contract and separate legal personality. This paper also includes a comparative analysis of the perspective of different jurisdictions which would help in understanding the hesitation behind application of this Doctrine. It is essential to highlight some sensitive points which courts must take into account while applying this Doctrine in order to prevent any unfair and erroneous decisions. Towards the end, certain recommendations have been proposed to help in the just and reasonable application of this Doctrine in a manner which does not contradict basic principles of contract law while still upholding the spirit of dispute resolution.
Cite this as: Disha Surpuriya, Group of Companies Doctrine: Caveats to Consider before its Application, 2 IRIArb (2022).
Keywords: UNCITRAL Model Law, Non-Signatories to an Arbitration Agreement, Legal Background, Caveats
*The views expressed are of author(s) only.