The Need to Re-Think the Group of Companies Doctrine in International Commercial Arbitration

The Need to Re-Think the Group of Companies Doctrine in International Commercial Arbitration

*

Volume 15 Issue 1 ()

Based largely on party autonomy and consent, over the past two decades, arbitration has emerged as the top pick for corporations to resolve their disputes. Unlike other forms of adjudication, an arbitral tribunal derives its power from the consent the parties themselves provide. Hence, the question of impleading non-signatories in arbitral proceedings has continued to be a matter of great controversy with tribunals generating several ‘creative’ solutions to implead non-signatories. One such solution created is the Group of Companies doctrine, a theory that allows the impleading of parent companies supposedly on the basis of implicit consent. However, the response to this doctrine has been lukewarm, with some jurisdictions choosing to adopt it while others vehemently opposing it, resulting in challenges with cross-border enforcement of arbitral awards. This paper aims to critically analyse this doctrine and attempts to show that it is irreconcilable with a fundamental principle of arbitration, namely consent. It begins by showing the inconsistent application of this doctrine across jurisdictions and then aims to dispute the claim that the doctrine is merely an extension of the principle of consent. Finally, the paper suggests an alternative route that could replace the Group of Companies Doctrine and act as a means to extend the arbitral tribunal’s jurisdiction without necessarily diluting the essence and need for consent by instead focusing on the rights and liabilities of the non-signatory with respect to the dispute before the tribunal.

Cite as: Tejas Chhura, The Need to Re-Think the Group of Companies Doctrine in International Commercial Arbitration, 15 NUJS L. Rev. 27 (2022)