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Appointment and Challenge Non Signatories

Pravin Electricals Pvt Ltd v. Galaxy Infra and Engineering Pvt Ltd., 2021 SCC Online SC 190.

ISSUE:

Whether the party has filed a complaint with the proper High Court?

Whether an arbitration agreement exists for the arbitrator to resolve? - Whether the party, who has applied for reference and is a party to such agreement, be entitled to a more thorough assessment?

RULE:

The scope of judicial intervention in the determination of the validity of an arbitration agreement is limited.

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Non Signatories

MTNL v. Canara Bank (2020) 12 SCC 767

ISSUE:

Whether there exists a valid arbitration agreement between the three parties, i.e., MTNL, Canara Bank, and CanFina?

RULE:

Groups of Companies Doctrine: The doctrine has been invoked by courts and tribunals for joining a non-signatory member of the group if the facts of the case determine that it was the mutual intention of all parties for binding the signatories as well as the non-signatories affiliates in the group.

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Non Signatories

GMR Energy Ltd. v. Doosan Power Systems India, 2017 SCC OnLine Del 11625.

ISSUE:

Whether the issue is such that it will be covered by domestic arbitration under Part I of the Arbitration and Conciliation Act 1996 or an international arbitration under Part II of the Act?

Whether GMR Energy should be made a party to arbitration proceedings?

Whether on the Basis of Pleas in the notice of arbitration issued by Doosan India, a case is made out to subject GMR Energy to arbitration along with GCEL and GIL?

Whether the Arbitral Tribunal has jurisdiction to pierce the corporate veil?

RULE:

The SIAC Rules, which are one of the top five arbitration institutions in the world lay down a flexible and efficient mechanism of conducting arbitration proceedings. Rule 7 of the 2016 SIAC Rules allows for third parties to seek intervention in arbitration proceedings as well.

The Principle of Alter-Ego, a legal doctrine where a corporation or entity is so heavily dominated that its own identity is ignored, to the extent that it is a mere instrumentality or conduit of its dominators, the two must be treated as one and the same.

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Non Signatories

Chloro Controls (I) P. Ltd v. Severn Trent Water Purification, (2013) 1 SCC 641

ISSUE:

Whether a non-signatory or third party can be subjected to arbitration without their consent in exceptional circumstances?

What is the ambit and scope of section 45 of the Arbitration and Conciliation Act 1996?

RULE:

The “Group of Companies” doctrine, was observed in this case for the first time in Indian legal history, and it stated that an arbitration agreement entered into by a company, being one within a group of companies, can bind its non- signatory affiliates or sister or parent concerns, if the circumstances demonstrate, that the mutual intention of all the parties was to bind both- the signatories and the non-signatory affiliates, while being in accordance with the Arbitration and Conciliation Act.

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