The Group Of Companies Doctrine: A New Pillar In Indian Arbitration Law

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Huda Allil, Research Scholar, Faculty of Law, University of Delhi

ABSTRACT

The Group of Companies Doctrine (GCD) has become a crucial idea in Indian arbitration law, fundamentally altering the conventional interpretation of corporate consent and the extent of non-signatory involvement in arbitration agreements. Grounded in the idea of party autonomy, arbitration conventionally requires explicit consent from all participating parties. The growing intricacy of commercial transactions, particularly within multinational corporate frameworks, has led Indian courts to acknowledge and implement the GCD to obligate non-signatory affiliates that demonstrate behaviour suggesting an intention to adhere to arbitration agreements.

This study rigorously analyzes the development of GCD jurisprudence in India, emphasizing significant verdicts such as Chloro Controls India Pvt. Ltd. v. Severn Trent Water Purification and MTNL v. Canara Bank.These rulings have been significant in legitimizing the theory, allowing courts to enforce arbitration agreements against non-signatories when their participation in the negotiation, execution, or performance of the contract is apparent. The GCD assists in preventing corporations from circumventing arbitral duties via strategic legal structuring; yet, its implementation has ignited discussions about judicial activism, vagueness in legal standards, and possible violations of consent-based arbitration principles.

Despite its increasing acceptance, the inconsistency in judicial application and the expansive interpretation of implied consent present obstacles, especially in cross-border disputes where predictability and uniformity are essential. This study advocates for a more systematic and principled implementation of the GCD, proposing a framework that aligns with India's pro-arbitration policy while preserving essential arbitration principles such as voluntary consent and contractual integrity. In this manner, Indian arbitration law can achieve equilibrium between commercial pragmatism and doctrinal integrity, so augmenting its legitimacy and efficacy in the global arbitration arena.

Keywords: The Group of Companies, Binding Non-signatories, Arbitration Agreement Extension, Corporate Arbitration, Implied Consent, Party Autonomy and Consent in Arbitration.