Arbitration, an alternative dispute resolution mechanism wherein parties consensually decide to submit a dispute between them, to an arbitral tribunal to the exclusion of domestic courts[1].   Arbitration provides a neutral, efficient, and expert process for dispute resolution at a single forum whose decision is final and binding on the parties.  The principle of party autonomy underpins the arbitration process as it allows the parties to dispense with technical formalities and agree upon substantive and procedural laws and rules applicable to the merits of a dispute[2].  With its inherent flexibility and efficiency, arbitration has become a preferred method for resolving commercial disputes worldwide.  However, arbitration is not always confined to the signatories of the arbitration agreement.  In certain circumstances, parties may seek to involve non-signatories in arbitration proceedings, presenting complex legal challenges.

The Group of Companies doctrine (‘Doctrine’) is one such situation where a non-signatory can be bound to an arbitration agreement initially made by a specific entity within a corporate group.  The application of this Doctrine has significantly evolved in Indian law, especially in recent years.  This article aims to explore the development of the Doctrine in Indian arbitration law, focusing on its implications, recent judicial interpretations, and the landmark judgment passed by a five-judge constitution bench  of the Supreme Court of India (‘Supreme Court’) in the matter of Cox and Kings Limited v. SAP India Private Limited, Arbitration Petition (Civil) No 38 of 2020 (‘Cox and Kings Judgment’), which deals with the extent of application of the Doctrine under the Indian law.

Doctrine and its Development in Indian Jurisprudence

The evolution of the Doctrine in Indian jurisprudence can be traced into two stages i.e., before and after the decision of the Supreme Court in the matter of Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc.[3]  (Chloro Controls).   

Prior to Chloro Controls case, Indian courts adhered to a strict interpretation of Section 7 of the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’) in relation to the arbitration agreement and considered that parties to an agreement are limited to its signatories alone.  However, after Chloro Controls judgment a new understanding emerged.  It recognized that under exceptional circumstances, non-signatories are also bound by an arbitration agreement.

There was a definitive shift in the original position brought about by the Chloro Controls judgement.  Arising out of a multi-party multi-contractual dispute, a petition for reference to arbitration under Section 45 of the Arbitration Act was filed in a suit, despite asymmetry in the parties to the contracts and the parties to the arbitration agreement.  Interpreting the words and phrases ‘any person’, ‘claiming through or under’, and ‘shall’ in Section 45 of the Arbitration Act, the Supreme Court enlarged the scope of reference for the first time, to bind non-signatories.

In Chloro Controls, the Supreme Court held that a non-signatory can be bound by an arbitration agreement if certain conditions are met, including a direct relationship between the signatory and non-signatory, commonality of subject matter, composite nature of transactions, and the ends of justice being served by referring the parties to arbitration.  The Supreme Court established the principle that a person or entity not originally a signatory to an arbitration agreement could be brought into the proceedings by demonstrating a connection of ‘claiming through or under’ a signatory party.

Subsequent cases further elaborated on the principles laid down in Chloro Controls, broadening the scope of the Doctrine and providing clarity on its applicability.  Cases such as Ameet Lalchand Shah v. Rishabh Enterprises[4] and Mahanagar Telephone Nigam Limited v. Canara Bank[5] reaffirmed the principles laid down in Chloro Controls while expanding the scope of the Doctrine to cover tight corporate group structures with strong organizational and financial links including (i) the mutual intent of the parties; (ii) the relationship of a non-signatory to a party which is a signatory to the agreement; (iii) the commonality of the subject-matter; (iv) the composite nature of the transactions; and (v) the performance of the contract.

However, questions regarding the applicability and scope of the Doctrine persisted, leading to further judicial scrutiny.   Cox and Kings Judgment represented a crucial juncture in this regard, as the Supreme Court delved into the complexities of the Doctrine and its impact on multi-party arbitration cases.

Brief Facts

The Cox and Kings Judgment dealt with complex factual scenario involving a software licensing agreement between Cox and Kings Limited (‘Cox & King’) and SAP India Private Limited (‘SAP’).  The dispute arose when contractual obligations remained unfulfilled, leading to arbitration proceedings initiated by Cox & King against SAP and its parent company.  Notably, the parent company of SAP was not a party to any of the agreement executed between Cox & King and SAP.  Following a lack of response from SAP or its parent company, Cox and King filed an application under Section 11(6) of the Arbitration Act before the Supreme Court of India for the appointment of arbitrators.

A three-judge bench of the Supreme Court, while considering the above application, aimed to reassess the validity of the Doctrine under Indian arbitration law and, if applicable, delineate its parameters.  This matter was consequently referred to the constitutional bench comprising CJI DY Chandrachud, Justices Hrishikesh Roy, PS Narasimha, JB Pardiwala, and Manoj Misra, which rendered its judgment on December 6, 2023.

Analysis of the Supreme Court Judgement

The primary issues before the constitution bench were: (i) whether the Arbitration Act allows joinder of a non-signatory as a party to an arbitration agreement; and (ii) whether Section 7 of the Arbitration Act allows for determination of an intention to arbitrate on the basis of the conduct of the parties.

Additionally, the constitution bench also deliberated on various connected matters, including whether the Doctrine should be inferred into Section 8[6] of the Arbitration Act or exist independently of any statutory provision; whether the Doctrine should be invoked based on the principle of ‘single economic reality’; whether the doctrine should be interpreted as a method of discerning implied consent or intent to arbitrate among the parties; and whether the principles of alter ego and/or piercing the corporate veil can independently justify the application of the doctrine even without implied consent.

The Supreme Court held that the Arbitration Act does not prohibit the joinder of a non-signatory as a party to an arbitration agreement, provided there is a defined legal relationship between the non-signatory and the parties to the arbitration agreement, and the non-signatory has consented to be bound by the arbitration agreement, either expressly or impliedly.  Further, it clarified that Section 7 of the Arbitration Act does not preclude the determination of an intention to arbitrate based on the parties’ conduct, so long as such conduct is documented in writing or by reference to a document containing an arbitration clause.

The Supreme Court established the Doctrine as a valid and applicable principle in Indian arbitration law. It can be invoked to bind a non-signatory entity within a corporate group to an arbitration agreement, subject to certain conditions: (i) a direct relationship with the party that is a signatory to the arbitration agreement; (ii) a direct commonality of the subject matter and the agreement between the parties constituting a composite transaction; (iii) the transaction being of a composite nature where performance of the primary agreement may not be feasible without the execution and performance of supplementary or ancillary agreements, collectively bearing on the dispute; and (iv) inclusion of such parties would serve the interests of justice.

The Supreme Court further clarified that a person ‘claiming through or under’ (as mentioned in Section 8 or Section 45 of the Arbitration Act) and a party/signatory to the arbitration agreement cannot be equated under the Doctrine, as it would be inconsistent with the Arbitration Act’s framework.  A person claiming through a party or a signatory, acts in a derivative capacity and such a person cannot be considered a party to the arbitration agreement.  Therefore, the Supreme Court deemed the application of the Doctrine in Chloro Control erroneous to such extent.

Furthermore, the judgment clarified the distinction and connection between the Doctrine and other principles like alter ego, piercing the corporate veil, and the single economic unit, which also bind non-signatories to arbitration agreements.  The Supreme Court held that the Doctrine stands independently and is not contingent upon these principles as the principle of alter ego disregards the corporate separateness and the intentions of the parties in view of the overriding considerations of equity and good faith.  In contrast, the Doctrine facilitates the identification of the intention of the parties to determine the true parties to the arbitration agreement without disturbing the legal personality of the entity in question.

Justice Narsimha, in a concurring judgment, regarded the inclusion of a non-signatory as a party to an arbitration agreement as a matter of contractual interpretation, best left to the arbitral tribunal to decide initially, unless the court finds prima facie evidence of no consent or intention to arbitrate on the part of the non-signatory.


In conclusion, the Cox and Kings Judgment represents a significant development in India’s arbitration jurisprudence, aligning national practices with international standards observed in various jurisdictions. Upholding the validity of the Doctrine, the judgment indicates that interconnected transactions within a corporate group may imply consent to be bound by an arbitration agreement.  It also highlights the importance of structuring transactions/ agreement within corporate groups to avoid unintended consequences, especially when the intent is solely to bind the signatory company.

While affirming the Doctrine’s validity, the Supreme Court acknowledged challenges such as its case-specific application and the necessity to safeguard the interests of non-signatories.

Written By Nidhi Arora (Partner) and Binny Chopra (Senior Associate)

[1]              Gary Born, International Arbitration Law and Practice (3rd ed, 2021) 2.

[2]             Bharat Aluminium Company v Kaiser Aluminium Technical Services, (2016) 4 SCC 126

[3]             (2013) 1 SCC 641

[4]             (2018) 15 SCC 678 [2018 INSC 450].

[5]             (2020) 12 SCC 767

[6]             Power to refer parties to arbitration where there is an arbitration agreement.

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