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January 2024

Allied Laws

By Dr. K. Shivaram, Senior Advocate
Rahul K. Hakani & Shashi Bekal, Advocates
Reading Time 6 mins

41 Cox and Kings Ltd vs. SAP India Pvt Ltd

[2023] 157 taxmann.com 142 (SC)

Date of Order: 6th December, 2023

Arbitration — The validity of the ‘group companies’ doctrine — non-signatory parties can be bound by an arbitration agreement [Arbitration and Conciliation Act, 1996, 1 S. 2, S. 7].

FACTS

Five judges of the Hon’ble Supreme Court were called upon to determine the validity of the ‘Group of Companies’ doctrine in the jurisprudence of Indian arbitration. The challenge was to figure out whether there can be reconciliation between the group of companies’ doctrine and well-settled legal principles of corporate law and contract law.

HELD

The definition of “parties” under Section 2(1)(h) read with Section 7 of the Arbitration and Conciliation Act, 1996 (ACA) includes both the signatory as well as non-signatory parties. The conduct of the non-signatory parties could be an indicator of their consent to be bound by the arbitration agreement. The requirement of a written arbitration agreement under Section 7 of the ACA does not exclude the possibility of bindi

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