Title: Group of Companies Doctrine: Caveats to Consider before its Application
Author(s): Disha Surpuriya (View Profile)
Journal: Indian Review of International Arbitration
Source: www.iriarb.com
Abstract:
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.
