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[Anshuman Jhala is a law student at Gujarat National Law University]



Arbitration is a private matter between the parties to the agreement and is a process which finds its functioning based on consent. A valid arbitration agreement necessitates consensus ad idem, as stipulated in Section 7 of the Arbitration & Conciliation Act, 1996 (“the Act"). This means that both parties must agree with the terms of the agreement and have a mutual intention of resolving disputes via arbitration. The notion that the rights and responsibilities outlined in an arbitration agreement are exclusive to the involved parties is founded on the civil law and common law principles of privity of contract. Although uncommon, legal principles are occasionally applied to establish the consent of non-signatories to arbitration terms.

The Group of companies doctrine (“GOCD”) is one such legal concept that has found its application in such rare instances. The principle behind GOCD gained international recognition in the International Criminal Court (“ICC”) Award in  Dow Chemical v. Isover Saint Gobain , wherein Dow Chemical and its French subsidiary (Dow Chemical France). The arbitration proceedings were initiated in accordance with a contractual provision that did not involve Dow Chemical France or Dow Chemical USA as direct parties. The arbitration clause was included in a contract between the respondent and Dow Chemical affiliates. Predictably, Saint Gobain expressed apprehensions regarding the jurisdiction of the Arbitral Tribunal, contending that Dow Chemical USA and Dow Chemical France were not the original signatories to the arbitration agreement at issue. Jurisdiction of the tribunal was challenged but was rejected.

The tribunal cited that Dow Chemical USA exercised absolute authority over its subsidiaries through direct contract signing or, as was the case with Dow Chemical France, active participation in contract negotiation, execution, and conclusion. The active engagement exhibited by the parties signified their shared intention to be legally obligated by the pertinent agreements. Notwithstanding the distinct legal identities of its constituents, the argument posits that a corporate group functions as a cohesive economic entity. A tribunal should recognise this single economic entity when rendering jurisdictional decisions.


Indian Position on GOCD so Far

GOCD was first crystallized in India via the Supreme Court verdict in Chloro controls v. Severn Trent Water Purification Inc , here the Hon’ble Apex Court reasoned on the basis of Section 45 of the Act which allows for foreign seated arbitrations to which the New York convention applies.  The transaction in the case at hand involved multiple foreign as well as Indian parties. In deciding the scope of application of the doctrine the court held that certain factors need to be examined: (i) the “directness” of the relationship of the non-signatory to the signatory; (ii) the commonality of the subject at hand; (iii) The transaction must have a "composite nature in which fulfilling the primary agreement may be impractical without the support, execution, and fulfilment of the additional or ancillary agreement" and (iv) whether referring to disputes under the agreement would be in interests of justice.

The next instance where the GOCD was applied by the Apex Court was in Mahanagar Telephone Nigam Ltd. v. Canara Bank, wherein the Court followed its decision in Chloro controls  and reiterated the four criteria stated above but further added one more criterion which may be taken into consideration when invoking the GOCD that being the “tight group structure  along with the presence strong financial and economic connections which would form a single economic entity.

In April 2022, the Supreme Court was presented with a challenge to an interim arbitral award in the case of ONGC Ltd. v. Discovery Enterprises (P) Ltd  wherein the court first traced and outlined the development of GOCD in India and then held that a non-signatory company can be held accountable to an arbitration agreement via the GOCD subject to two conditions: (i) existence of GOCD and (ii) the parties to the agreement have made any statement or have shown via their conduct the intent to include a non-signatory party to the agreement.


The Cox and Kings Case

On the December 6th 2023, a five-judge bench led by the CJI Dr. DY Chandrachud held that, companies outside the ambit of the arbitration agreement can be made parties to it via the GOCD. This constitutional bench ruling was along the lines of the Indian jurisprudence developed until now and it has been met with positive reception from the legal as well as the business fraternity.


In 2010 Cox and Kings (“C&K”) and SAP India entered into a software licensing agreement.  As C&K was developing its own e-commerce platform in October 2015, SAP India suggested the implementation of a new software application. Following that, the two organisations entered into three agreements to make use of SAP's 'Hybris Solution' software. SAP India reported that C&K's existing software was 90% compatible with the new software. The General terms and conditions clause  between the parties included an arbitration clause which also stated that the arbitration would take place in Mumbai and the procedure would be as per the Act.

In November 2016, C&K terminated the contract and demanded refund from SAP on account of the “Hybrid” Technology not working in response, SAP India issued notice to begin arbitration proceedings citing that the contract had been wrongfully terminated. The Arbitration was adjourned by the NCLT in 2019 due to C&K facing insolvency. Despite this C&K issued notice to begin arbitration afresh.

In 2022, a 3-judge bench lead by the then CJI N.V Ramana referred the matter to a constitutional bench.



The Supreme Court in its judgment stated that when non-signatory parties are involved, the courts must ascertain whether the individuals or organisations involved intended or consented to be bound by the arbitration agreement or the underlying contract that contains the arbitration agreement by their conduct, rights, or actions. The Supreme Court also provided much-needed clarity to the precarious situation that arises when a party actively participates in the negotiation and performance of the contract but refuses to be bound by the arbitration agreement contained in the principal contract but signs a composite contract that is closely interlinked to the agreement between the primary parties. Considering the surrounding circumstances, the Supreme Court determined that such a party could be held obligated to abide by the arbitration agreement.


Furthermore, the Court unequivocally determined that the Doctrine does not contradict the notion of "party consent" by determining that it shares similarities with other consent-based doctrines in that it is typically utilized to determine the parties' shared intent to obligate a non-signatory to an arbitration agreement.  It is particularly noteworthy that the agreement or the signature of a party signifies the deepest manifestation of consent to submit to the jurisdiction of an arbitral tribunal.

Concurrently, the court recognized that the absence of a clearly defined legal relationship between signatory and non-signatory parties does not preclude the possibility of binding non signatory parties under an arbitration agreement. As a result, the court rendered a decision stating that signatures are not always required on the document containing the terms of a written contract.

The Supreme Court opined that courts should ascertain whether non-signatory parties intended or consented to be bound by the arbitration agreement or the underlying contract by analysing the actions, rights, or conduct of the parties in question. The court clarified circumstances in which a party actively participates in performance and negotiation while signing a composite contract that is inextricably linked to the agreement of the primary parties. However, the party refuses to be bound by the arbitration clause in the principal contract. Considering an examination of the contextual factors, the Supreme Court determined that such a party could be considered obligated to abide by the arbitration agreement.

In response to the inquiry put forth in the case at hand concerning the doctrine's legal foundation, the Constitution Bench reaffirmed its autonomous status as a legal principle. This status is derived from a judicious construal of Section 2(1)(h) and Section 7 of the Act.


The Supreme Court via a constitutional bench has  affirmed the application of GOCD in arbitration agreements to make non signatory parties part of the arbitration proceedings. The Cox and Kings Judgement ensures that there exists proper balance between “party consent” and the contemporary corporate demands. This landmark decision has provided essential clarity that is anticipated to reconcile discrepancies among various Supreme Court decisions. It is expected to optimise the management of litigations and applications that result from the implementation of the doctrine, which frequently give rise to challenges of jurisdiction.

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