Group Of Companies Doctrine: When Non-signatories Are Bound By Arbitration Agreements

The principle that allows third parties to be bound by an arbitration agreement, known as the Group of Companies Doctrine (hereinafter referred to as 'Doctrine'), was initially articulated by the International Chamber of Commerce (ICC) Tribunal in the Dow Chemicals v. Isover Saint Gobain case. The ICC Tribunal highlighted those elements such as the 'conclusion, performance, and termination of a contract,' and 'common intent of the parties,' are critical in determining the relevance and extent of an arbitration agreement to third parties.

In the context of complex and multi-party transactions, the matter of whether non-signatories can be subject to an arbitration agreement has become increasingly contentious. It is crucial to delineate clear criteria for when and how non-signatories can be bound by arbitration agreements to avoid unfair outcomes. On December 6, 2023, a constitution bench of five judges in the Supreme Court of India, in Cox and Kings Ltd. v. SAP