Whether A Non-Signatory Can Be Bound By An Arbitration Agreement

Arbitration as a mechanism of dispute resolution is premised on the principle of the party autonomy, which can be enforced only against the signatories to an agreement. However, challenges arise when there is a non-signatory, who, though is not a party to the arbitration agreement, but shares a commercial relationship and/or is involved in the transaction in any capacity with the signatories. In such cases, it becomes difficult for the Courts and Tribunal to determine whether a party despite being a non-signatory to an arbitration agreement, can still be impleaded as a party in an arbitration.

LEGAL FRAMEWORK

The Arbitration and Conciliation Act, 1996 ("the Act") does not contain any specific provision that permits or governs the impleadment of a non-signatory to an arbitration proceeding. Nevertheless, certain provisions of the Act are relevant for understanding such questions which have arisen in this respect: