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Doctrine of Group of Companies: An Analysis across Jurisdictions

Article by Jagatjeet Singh and Jagrati Maru


In a landmark ruling[1], the Hon’ble Apex Court has ruled on the finality of the long-standing debate of Group of Companies Doctrine (hereinafter referred to as ‘GOC Doctrine’) being a challenge to the foundational principles of arbitration law being party autonomy, privity of contract, consensus ad idem and separate legal personality. The doctrine postulates that an arbitration agreement which is entered into by a company within a group of companies may bind non-signatory affiliates if the “circumstances are such as to demonstrate the mutual intention of the parties to bind both signatories and non-signatories”. This article attempts to dissect the GOC Doctrine from the perspective of foreign jurisdictions and discuss the implications of the judgment upon Indian Arbitration Jurisprudence.


Observations of the Hon’ble Supreme Court in Cox and Kings Ltd. v. SAP India Pvt. Ltd.

The Supreme Court while upholding the GOC Doctrine has concluded, the following:

  1. Definition of “parties” in Section 2(1)(h) of the read with the Section 7 Arbitration & Conciliation Act, 1996 (hereinafter referred to as ‘A&C Act’) includes both signatories and non-signatories.
  2. Consent to be bound by an arbitration shall be inferred from the conduct of the non-signatory.
  3. Section 7 of A&C Act requirement of written arbitration agreement does not exclude the possibility of a non-signatory party.
  4. Under the A&C Act, “party” and “persons claiming through or under” a party are distinct and different terms.
  5. Basis of the application of the GOC Doctrine is for maintaining the corporate separateness of group of companies while determining common intention of parties to bind a non-signatory party.
  6. Piercing of Corporate veil or the Doctrine of Alter Ego cannot be the foundation for the application of the GOC Doctrine.
  7. GOC Doctrine is a principle of law which stems from the conjoint reading of Section 2(1)(h) and Section 7 of the A&C Act.
  8. Single Economic Unit cannot be sole basis for invoking the GOC Doctrine.
  9. Persons “claiming through or under” can only assert their right in a derivative capacity.
  10. GOC Doctrine shall be retained ‘considering its utility in determining the intention of the parties in context of complex transactions involving multiple parties.
  11. At referral stage (under Section 11 or Section 8 of the A&C Act), the referral Court shall leave it to the Arbitral Tribunal whether non-signatory is bound by the arbitration agreement.

 Overview of the Doctrine in other Jurisdictions


The Doctrine finds its origin from France wherein an ICC tribunal as early as in 1982 passed an interim award in an arbitration titled Dow Chemical v. Isover Saint Gobain[2], holding the Dow Chemical (France) and Dow Chemical Company, non-signatories to the contracts, to be a party to the arbitration. The Tribunal observed that Dow Chemical (France) played vital role in the negotiation, performance and termination of the contract and Dow Chemical Company was the holding company who owned the trademarks under which the products were sold in France and also had absolute control over its subsidiary, the signatory to the contracts. In French law an arbitration agreement can be extended on the non-signatory parties, if it can be stablished that all the parties had a common intention to be bound by the agreement. Such common intention is subjective and is inferred on the objective conduct of the said party during the ‘negotiation, performance and termination of the contract containing the arbitration agreement.[3]


The Swiss law considers the consent of the parties, either implied or express by their conduct to determine whether a non-signatory is bound by an arbitration agreement. In Swiss law, the mere fact that a non-signatory is a part of the same group of companies is not enough justification for binding the said non-signatory to the arbitration agreement[4]. The Swiss law, similar to the French, mandates a subjective willingness of a non-signatory derived through certain behaviour or conduct which is expressed through an objective element such as involvement in negotiation and performance of the contract for a non-signatory to be bound to the arbitration agreement.[5]


Under the English law, even non-signatory parties may be bound by an arbitration agreement but only if they are claiming under or through the original party to the agreement. Therefore, the doctrine of privity is adhered to strictly and an arbitration agreement is extended to non-signatory parties on the basis of traditional contractual principles and doctrines such as agency, novation, assignment, operation of law, and merger and succession. English Courts have discarded the applicability of the Doctrine of Group of Companies. For instance, in Peterson Farms INC case[6] the Respondent claimed damages suffered by its group entities against the Petitioner and some of these group entities were non-signatories to the arbitration agreement. While the tribunal opined that by virtue of the GOC Doctrine the Respondent was entitled to claim damages suffered by its group entities against the Petitioner, on appeal the Commercial Court held that English Law excludes the application of GOC Doctrine and arbitration agreement, therefore, cannot be extended to non-signatory parties.


The US Federal Arbitration Act does not provide for joinder of non-signatory parties to arbitration agreements. The US Courts have used non-consensual doctrines to extend arbitration agreements to non-signatory parties. For example, where parent company completely exercised control over subsidiary, the Courts have pierced corporate veil and held the alter ego liable in exceptional circumstances.  The US Supreme Court in GE Energy case[7]  held that the New York Convention is silent on the aspect of whether non-signatories can enforce an arbitration agreement and therefore the Convention does not conflict with the application of domestic law equitable estoppel doctrines to third parties.


The Brazilian Arbitration Act, 1996 does not envisage any express provision governing joinder of third parties however, the rule finds its recognition in several institutional arbitration rules.

A look at the jurisprudence on the GOC doctrine, it can be observed that the Courts in Brazil have relied on the GOC Doctrine in limited circumstances. The Doctrine finds its recognition in Court of Appeals decisions wherein the Doctrine has been used to find the very consent to arbitrate when non-signatories from the same group of companies of one of the parties were involved in the negotiation or performance of underlying contract.  The Superior Court of Justice in one case pierced corporate veil under Article 50 of the Brazilian Civil Code invoking an exceptional circumstance to find implicit consent when the signatory and non-signatory parties belonging to the same Group of Companies had abused their rights by committing fraud and acting malafide[8].


The Japanese Arbitration Act does not contain provisions to enable an Arbitral Tribunal to assume or assert its jurisdiction over individuals or companies who are not a party to the arbitration. The Japanese Law, in stark contrast to the French, Indian and the Swiss, dictates that no parent company or subsidiary company of a signatory shall be bound by the arbitration agreement under the doctrine of group of companies even though the same may have played a vital role in the negotiation, performance and termination of the contract. However, a District Court in Nagoya, Japan in 1995 had held that ‘an arbitration clause in a contract entered into by a company would extend to the individuals closely associated with the said company.’[9]


The Singapore High Court has taken a concurrent view with the English Courts in rejecting the Group of Companies Doctrine on reasoning that the doctrine is “anathema to the logic of consensual basis of an agreement to arbitrate; and second, ordering of companies within a broader group did not mean one could dispense with separate legal entity[10].” Following the English decision in Peterson Farms (supra), it was observed that enforceable obligations cannot be imposed on “strangers” to an arbitration agreement.


The Hon’ble Supreme Court while listing its reasoning for upholding the GOC Doctrine has referred to and explored numerous jurisdictions and foreign case laws with respect to the GOC Doctrine. The Court has recognised implied consent for binding non-signatories to an arbitration agreement.

To conclude, this decision has crystalized the applicability of GOC Doctrine in the Indian Arbitration Law landscape and paved way for a comprehensive standard in determining the intention of parties, particularly in a multi-party commercial setup.

[1] Cox and Kings Ltd. v. SAP India Pvt. Ltd. and Anr. 2023 SCC OnLine SC 1634.
[2] Dow Chemical v. Isover Saint Goblain, Interim Award, ICC Case No. 4131, 23 September 2023.
[3] ICC award in Case No. 11405 of 2001.
[4] Saudi Butec Ltd et Al Fouzan Trading v. Saudi Arabian Saipem Ltd, unpublished ICC Interim Award of 25 October 1994, confirmed by DFT on 29 January 1996, ASA Bulletin (1996) Vol 3 p 496.
[5]Cox and Kings Ltd. (Supra).
[6] Peterson Farms INC v. C & M Farming Limited [2004] EWHC 121 (Comm).
[7] 140 S.Ct. 1637 (2020).
[8] Commerical Arbitration : Brazil, Global Arbitration Review < > last accessed 22.12.2023.
[9] International Arbitration Laws and Regulations Japan 2023, (Iwata Good 2023) < International Arbitration Laws and Regulations Report 2023 Japan (> last accessed on 26.12.2023.
[10] Manuchar Steel Hong Kong Limited v. Star Pacific Line Pte Ltd. [2014] SGHC 181.