Note4Students
From UPSC perspective, the following things are important :
Prelims level: Group of Companies Doctrine
Mains level: NA
Central Idea
- The Supreme Court has issued a landmark ruling, expanding the scope of arbitration agreements to include non-signatories under specific conditions.
- This ruling centers on the “group of companies” doctrine within the framework of arbitration agreements.
‘Group of Companies’ Doctrine
Details | |
Essence | Non-signatory entities in a corporate group can be bound by an arbitration agreement if part of the same group as a signatory. |
Basis on Mutual Intent | Relies on the mutual intention to bind both signatories and non-signatory group members. |
Arbitration as a Tool | Offers an alternative to court litigation, with enforceable decisions by neutral arbitrators. |
Root in International Jurisprudence | Based more on international arbitration practices than domestic law. |
Indian Legal Precedent | Established by Chloro Controls India Pvt. Ltd. v. Severn Trent Water Purification Inc. case (2013). |
Criteria for Application | Set by the Indian Supreme Court, includes mutual intent, relationship between entities, common subject matter, transaction nature, and contract performance. |
Objective | Aims to prevent dispute fragmentation in complex, multi-party transactions. |
Recent Supreme Court Ruling | Clarified conditions under which non-signatories can be bound by arbitration agreements, focusing on legal relationships and demonstrated intentions. |
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