This article demonstrates that while the Indian Supreme Court is developing a consent-based ‘group of companies’ doctrine, its ‘group of contracts’ jurisprudence is losing sight of parties’ intent due to a misreading of the ‘composite transaction’ test.
Authors:
Manasi Kumar, Professor, Jindal Global Law School, O.P. Jindal Global University, Sonipat, Haryana, India.
Summary:
In 2013, the Indian Supreme Court penned an innovative judgment in Chloro Controls v. Severn Trent Water Purification, where it appeared to fashion a new basis for extending arbitration agreements to non-signatories – a ‘composite transaction’ doctrine. This article argues that the ‘composite transaction’ is in fact a two-tiered analysis.
The first part addresses whether the arbitration agreement may be extended to a non-signatory that is an affiliate company of one of the signatories, using the somewhat controversial ‘group of companies’ doctrine.
Meanwhile, the second part addresses whether the arbitration agreement that is invoked may be extended to disputes arising within a group of contracts. This article demonstrates that while the Indian Supreme Court is developing a consent-based ‘group of companies’ doctrine, its ‘group of contracts’ jurisprudence is losing sight of parties’ intent due to a misreading of the ‘composite transaction’ test. This article concludes that in order to develop a modern and versatile, consent-based analysis into extension of arbitration agreements, the Indian Supreme Court must recast the ‘composite transaction’ test as the two-tiered analysis it represents.
Published in: Journal of International Arbitration
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