According to the general principle of privity of contract, only parties to an arbitration agreement are bound by its terms and conditions. However, the Group of Companies doctrine proposes that even non-signatories to an arbitration agreement may be bound if there seems to be a “mutual intent” of parties to bind such non-signatories.
The doctrine was propounded by the International Chamber of Commerce in the case of Dow Chemical France, the Dow Chemical Company v. Isover Saint Gobain. The ICC observed that Dow Chemicals operated as a “single economic unit”. Interestingly, in the case of Cox & Kings, the concept of category of single economic unit has been questioned.
The questions referred by the Court to a larger bench are:
A. Whether the Group of Companies Doctrine should be read into Section 8 of the Act or whether it can exist in Indian jurisprudence independent of any statutory provision?
B. Whether the Group of Companies Doctrine should continue to be invoked on the basis of the principle of ‘single economic reality’?
C. Whether the Group of Companies Doctrine should be construed as a means of interpreting the implied consent or intent to arbitrate between the parties?
D. Whether the principles of alter ego and/or piercing the corporate veil can alone justify pressing the Group of Companies Doctrine into operation even in the absence of implied consent?
Source: Barandbench
