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Facts for Prelims (FFP)
Source: TH
Context: The Supreme Court of India has ruled that an arbitration agreement can be binding on non-signatory firms under the ‘group of companies’ doctrine.
- This doctrine holds that an arbitration agreement can apply to a company that, while not a signatory, is a member of a group of companies that is party to the agreement.
- The ruling maintains the corporate separateness of group companies while establishing the common intention of parties to bind a non-signatory party to the arbitration agreement.
The court clarified that the definition of “parties” under the Arbitration Act includes both signatory and non-signatory parties, and the requirement for a written arbitration agreement does not exclude the possibility of binding non-signatory parties.
The judgment stemmed from a plea filed by Cox and Kings Ltd in a dispute related to an arbitration agreement.
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