I. Introduction
One of the cardinal principles of arbitration is the autonomy of parties and the requirement of their consent, premised upon the doctrine of consensus ad idem. The "Group of Companies" doctrine ("GCD") mandates binding a 'group company', which is an affiliate within a network of entities under the control and management of the parent company, to the arbitration process, if an intention to include that company can be determined. By virtue of the GCD, the conduct, performance and contractual undertakings of one entity within such a corporate group may be factored in to ascertain whether there is an intention on the part of that entity, or a common intention of the group, to bind itself to the arbitration.
The GCD has emerged as a pragmatic tool in international arbitration, allowing non-signatory affiliates to be bound by arbitration agreements where there is evidence of mutual intention and composite performance. From its origins in French jurisprudence to its cautious application in jurisdictions like the UK and Singapore, the GCD reflects a tension between party autonomy and commercial interdependence. While Courts in India and Malaysia have embraced a more flexible, fact-driven approach, others have remained anchored in traditional notions of privity. Recently, the Supreme Court in ASF Buildtech1, relying on Cox and Kings2, reaffirmed the joinder of non-signatories in arbitration proceedings by applying GCD and the doctrine of alter ego. Importantly, the Court also criticised the Arbitration Bill, 2024, for lacking a mechanism to provide for the joinder of non-signatories. This evolving doctrine underscores the need to look beyond formal signatures and recognise the substance of commercial dealings, where group entities act as one, they may also arbitrate as one.
II. Theories Binding Non-Signatories to Arbitration
The following are the various theories under which non-signatories may be bound by an arbitration agreement:
- Doctrine of Alter Ego – This doctrine comes into play when the distinction between the signatory and non-signatory is more illusion than reality. If it is established that the non-signatory acts merely as a façade or extension of the signatory, sharing control, decision-making, and financial interest, Courts may lift the corporate veil and treat both entities as one.[3]
- Doctrine of Agency – Where a legal relationship of agency exists, an arbitration agreement entered into by an agent may bind the principal, even if the principal is not a signatory. Similarly, in cases involving assignment, novation, or succession, non-signatories claiming through or under a signatory may be held bound by the arbitration clause.
- Doctrine of Estoppel – Under this doctrine, non-signatories who directly benefit from the underlying contract may be estopped from denying its arbitration provisions. In other words, a party which claims a certain benefit in terms of the contract is estopped from refusing to be bound by the arbitration agreement contained in that contract. This principle also applies when the non-signatory's claims are so closely intertwined with the contract and its subject matter that allowing them to proceed in Court while others are referred to arbitration would be unjust.
- Doctrine of Group of Companies – The GCD
enables the extension of arbitration clauses to non-signatories
within a corporate group. Recognised by the Supreme Court of India
in landmark cases such as Chloro Controls India (P) Ltd. v.
Severn Trent Water Purification Inc.4
("Chloro Controls") and reaffirmed in
Oil and Natural Gas Corporation Ltd. v. Discovery Enterprises
Pvt. Ltd. & Ors.5, the GCD focuses on
the mutual intent of the parties and the composite nature of the
transaction. The application of this Doctrine is based on factors
such as:
- Mutual intention of the parties;
- Direct relationship of the non-signatory to the entity that is signatory to the agreement;
- Commonality of subject matter under the various agreements;
- Integrated transaction between both parties; and
- All agreements forming part of the transaction must be connected to, or ancillary to, the agreement with an arbitration clause.
III. The Global Landscape: Divergent Jurisdictional Approaches
The Doctrine, though widely discussed in international arbitration, finds varying degrees of acceptance across jurisdictions, shaped by the underlying principles of party autonomy and the commercial realities of corporate structures.
A. France
The origin of the GCD can be traced to France, where it was first articulated in the landmark Dow Chemical v. Isover Saint Gobain6("Dow Chemical") case. In this matter, the arbitral tribunal, constituted under the aegis of the International Chamber of Commerce, allowed the joinder of non-signatory affiliates based on their active participation in the negotiation, performance and termination of the contract, which made it evident that the affiliates' roles were equally significant to those of the signatory entity. In this case, the Court recognised that the consent is inferred not only from formal signature, but also from substantive participation and shared intention. Such intention was inferred from the non-signatories' integral role in the transaction, evidenced by joint decision-making authority, common branding and representation, and their initial non-objection to the arbitral proceedings, rather than the contract alone.
B. United Kingdom
In contrast, the United Kingdom has consistently maintained a strict and literal interpretation of arbitration clauses, deeply rooted in the doctrines of contractual privity. While Section 82(2) of the UK Arbitration Act, 1996 provides that a party to an arbitration agreement includes any person "claiming under or through", the courts have adopted a narrow interpretation of this provision. Notably, in Peterson Farms Inc. v. C&M Farming Ltd.7, the England and Wales High Court declined to extend the arbitration clause to group entities that were not express signatories, despite their involvement in the wider commercial arrangement. The Court emphasised the primacy of express or implied consent, thereby prioritising contractual certainty and resisted any departure from the consensual foundation of arbitration.
C. Singapore
Similar to the UK, the Singaporean courts have taken a restrictive approach. In Manuchar Steel Hong Kong Limited v. Star Pacific Line Pte. Ltd.[8] and Tjong Very Sumito & Ors. v. Antig Investments9, the Singapore High Court refused to extend arbitration agreements to non-signatories. The Court stressed that merely being part of a corporate group does not justify lifting the corporate veil or disregarding the distinct legal identity of the parties.
D. Malaysia
Malaysia has exhibited a fact-sensitive flexibility, recognising the GCD in certain commercial contexts. In PT Wijaya Karya (Persero) TBK & Anr. v. Zecon Berhad & Anr.10, the Malaysian Court of Appeal upheld the joinder of non-signatory parent companies to arbitration, emphasising their substantive involvement and the composite nature of the transaction. The dispute arose from two project management service agreements (PMSA-1 and PMSA-2) executed by parent and subsidiary companies of Indonesian and Malaysian origin. Notwithstanding the existence of separate agreements and legal personalities, the Court treated the contracts as forming a single composite transaction and noted that the parent companies had actively participated in both the contractual negotiations and the arbitral proceedings. On this basis, the Court held that joinder of non-signatories was justified, thereby reinforcing the principle that substantive participation in the contractual and arbitral process may override the absence of a formal signature.
IV. Evolution of Indian Jurisprudence: From Chloro Controls to ASF Buildtech
In Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc.[11], the Supreme Court of India, first laid the foundation for GCD in Indian arbitration law, while interpreting the phrase "any person claiming through or under" in Section 45 of the erstwhile Arbitration Act, 1940 (now replaced by the Arbitration and Conciliation Act, 1996). The case involved a web of agreements between Chloro Controls and entities within the Severn Trent Group, some containing arbitration clauses, others not. Despite the lack of uniform signatures across all contracts, the Court identified a composite transaction grounded in aligned commercial purpose and active participation of all parties, including non-signatories, in the negotiation and execution of the agreements. Accordingly, the Court held that where agreements are so closely intertwined that performance of one is impossible without the others, and the parties act with a common intention, non-signatories may be bound by the arbitration clause.
This reasoning was sharpened in Cox & Kings Ltd. v. SAP India Pvt. Ltd.12, where the Court decisively clarified that the GCD stands independent of statutory construction and rests instead on mutual consent as inferred from conduct. In this case, although the arbitration clause was confined to one agreement (the GTC), the overarching transaction involved multiple contracts executed with coordinated performance between SAP India and its foreign parent company, SAP SE GMBH (Germany). Rejecting theories like alter ego or lifting of corporate veil, the Court focused on substantive engagement, shared objectives, and intertwined performance as evidence of intention to arbitrate. The Court distinguished the findings of Chloro Controls by decoupling the GCD from the phrase "claiming through or under" and stressed that at the pre-referral stage under Sections 8 or 11, Courts must only undertake a prima facie inquiry, leaving jurisdictional issues to the arbitral tribunal under the doctrine of kompetenz-kompetenz.
This evolution culminated in ASF Buildtech Pvt. Ltd. v. Shapoorji Pallonji & Co. Pvt. Ltd.[13], where the Supreme Court of India upheld counterclaims against non-signatory affiliates of the ASF Group. The Court observed that the affiliates formed a unified economic entity through shared management, financial integration, and operational coordination, which was sufficient to infer a mutual intent to arbitrate. It clarified that the provisions of the Arbitration and Conciliation Act, 1996 (particularly Sections 2(h) and 7) do not preclude the joinder of non-signatories, provided such intent and composite performance are clearly demonstrated. Indicators of such involvement may include participation in negotiations, execution of comfort arrangements, performance of obligations, and operational or financial contributions to the contract. The Court further held that procedural lapses, such as the absence of a formal arbitration notice to non-signatories, would not defeat the process where constructive knowledge or active participation in the underlying transaction is established.
V. Conclusion
The GCD has transitioned in India from a cautious exception to a judicially entrenched principle. With the ASF Buildtech judgment, the Supreme Court has now clarified that economic reality and commercial intent can override the formal absence of signature in the arbitration agreement, provided that the factual matrix supports the inference of mutual intention to arbitrate. As India continues to project itself as an arbitration-friendly jurisdiction, its recognition of commercial realities, particularly in complex corporate structures, signals a mature and pragmatic arbitration regime. The Indian approach contrasts with the formalist tendencies of jurisdictions like the UK and Singapore, positioning India at the forefront of progressive arbitration jurisprudence. In conclusion, the GCD's application must remain grounded in factual nuance and judicial restraint, but its potential to resolve multi-party, multi-contract disputes efficiently is now well established in India.
Footnotes
1 ASF Buildtech Pvt. Ltd. v. Shapoorji Pallonji & Co. Pvt. Ltd., 2025 SCC OnLine SC 1016.
2 Cox & Kings Ltd. v. SAP India (P) Ltd., 2023 SCC OnLine SC 1634.
3 Chloro Controls India (P) Ltd v. Severn Trent Water Purification Inc, (2013) 1 SCC 641.
4 Id.
5 Oil and Natural Gas Corporation Ltd. v. Discovery Enterprises Pvt. Ltd. & Ors, (2022) 8 SCC 42.
6Dow Chemical v. Isover Saint Goblain, Interim Award, ICC Case No. 4131, 23 September 2023.
7 Peterson Farms Inc. v. C & M Farming Limited, [2004] EWHC 121 (Comm).
8Manuchar Steel Hong Kong Limited v. Star Pacific Line Pte. Ltd., [2014] SGHC 181.
9 Tjong Very Sumito & Ors. v. Antig Investments, [2009] SGCA 41.
10 PT Wijaya Karya (Persero) TBK & Anr. v. Zecon Berhad & Anr., Civil Appeal No: Q-02(C)(A)-1971-10/2021.
11 Supra note 3.
12 Supra note 2.
13 Supra note 1.
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