Arbitral Tribunal’s Power to Implead Non-Signatories of Arbitration Agreement: Judicial Trends and Statutory Perspectives
The jurisprudential conundrum surrounding an arbitral tribunal’s power to implead non-signatories is examined in this article. Although the fundamental tenet of arbitration is circumscribed by consent of parties to the agreement, the contemporary commercial structures necessitate the joinder of non-signatories to ensure effective dispute resolution.
The article discusses the current statutory gaps in the Arbitration and Conciliation Act, 1996[1],(hereinafter referred to as “the Act’’) and correlates with the progressive judicial imprimatur, such as the “Group of companies” doctrine, which was first recognized by Supreme Court in Chloro Controls India Private Limited v. Severn Trent Water Purification Inc.[2] and established in the Cox & Kings v. SAP[3] case. The doctrinal evolution from a strict consensual approach to a more comprehensive Kompetenz-Kompetenz for the tribunal, which operates in a statutory lacuna, thereby resulting in jurisdictional disputes and possible challenges to arbitral awards. De lege ferenda, the article calls for immediate legislative action to codify the arbitral tribunal’s power to implead non-signatories, thereby balancing and competing imperatives for efficiency of the arbitral award with the principle of party autonomy.
The principle of consent embedded in the doctrine “Pacta Sunt Servanda”, meaning ‘agreements must be kept,’ is the core principium of arbitration. An Arbitral Tribunal derives its authority from the consent of the parties to the arbitration agreement and, as defined by the Arbitration and Conciliation Act, 1996[4], parties mean a party to an arbitration agreement. In this sense, only signatory parties give consent to the tribunal to be adjudged by the Act. Traditionally, arbitral proceedings involve only parties who are signatories to the arbitration agreement. However, Commercial constraints are evolving with complex corporate structures and multi-party involvement, engaging entities that may not have signed the arbitration agreement but are inseparably linked to the dispute. This scenario raised the question of the power of the arbitral tribunal to implead non-signatories in the arbitration agreement in the absence of an explicit statutory provision mentioned in the Act.
This article explores and offers an exhaustive synthesis of the arbitral tribunal’s power to implead non-signatories in arbitration proceedings, anchored by statutory framework, doctrinal developments and judicial precedents, especially from Indian jurisprudence, while placing the discussion in an international context.
CONCEPT OF NON-SIGNATORIES AND NECESSITY OF IMPLEADMENT
Non-signatories are individuals or entities who are not signatories to the arbitration agreement but may have been directly or indirectly linked to the dispute arising out of the agreement. Even in arbitration proceedings, a non-signatory generally has no legal right to participate in arbitration proceedings between signatories, which does not make the arbitral award binding on them as per section 35[5] of the Act.
The necessity of impleading non-signatories arises from the complex corporate group structures where related entities participate in a single transaction. The effectiveness of resolving disputes requires the inclusion of all the parties essentially or intricately linked to the adjudication. Impleading non-signatories also prevents multiplicity of proceedings and inconsistent decisions. These essential aspects necessitate the impleadment of non-signatories.
STATUTORY FRAMEWORK ON IMPLEADMENT OF NON-SIGNATORIES
- The Arbitration and Conciliation Act, 1996
The Act governing arbitration does not have explicit provisions empowering arbitral tribunals to join or implead non-signatories. Certain sections relevant to party joinder, such as Section 16[6] on jurisdiction, Section 9[7] on interim relief, and Section 34[8] on application for setting aside arbitral award, do not explicitly address impleadment of non-signatories. Conventionally, the courts held the power to implead non-signatories before the constitution of arbitral tribunals.
Despite the need for legislative recognition to provide clarity and procedural certainty, the Arbitration Amendment Bill, 2024[9], did not incorporate explicit provisions on the arbitral tribunal’s power to implead non-signatories.
- International Arbitration Rules
The ICC Rules (2021), Article 7(5)[10], allow a party to request to join an additional party before the constitution of the tribunal. After the Constitution, any joinder requires the request of a party and the additional party’s consent. The SIAC Rules (2016), Rule 7[11] has a detailed joinder provision allowing a party to apply for joinder before the tribunal is constituted, and the tribunal, after constitution, has the power to allow joinder upon the application of a party, provided the additional party consents to it in writing.
The LCIA Rules (2020), under Article 22.1[12], grant the tribunal the power to allow joinder of other parties, provided that such person and the applicant party have consented to that in writing.
PRINCIPLES AND CONDITIONS GOVERNING IMPLEADMENT OF NON-SIGNATORIES
The conditions and principles governing impleadment of non-signatories are complex and evolving in nature. These arise from exceptional circumstances, exceptions to the party autonomy and explicit consent, these are:-
- Intention to be bound by agreement
The non-signatories should have a causal connection to the transaction or negotiation. The intention should also be bound with an arbitration agreement, either directly or tacitly, and must be clearly established.
- The group of Companies doctrine
This doctrine talks about contractual relations between the related entities forming a cohesive group linked by shared interests and commercial objectives. It is the most robust legal basis for impleadment of non-signatories as this doctrine is justified to prevent the bypassing of arbitration agreements.
III. Procedural fairness to the non-signatories
The non-signatories must be given the opportunity to oppose impleadment, as it is necessary for ensuring procedural fairness. Arbitrators should provide reasoned speaking orders on decisions to implead and also remedies for unjust impleadment available under section 34 of the Act.
JUDICIAL PRONOUNCEMENT OVERVIEW ON IMPLEADMENT OF NON-SIGNATORIES
- Restrictive approach in early trends (Pre-2015)
The court in the case of Sukanya v. Pandya and another[13] did not recognise the implicit power of arbitral tribunals to implead non-signatories. The hon’ble court rejected the argument regarding the tribunal’s power to join non-signatories.
- Pragmatic Shift in Jurisprudence through ‘Group of Companies’ doctrine (Post-2015)
In 2013, the court in the judgment of Chloro Controls India Pvt. Ltd. V. Severn Trent Water Purification Inc.[14] held that the ‘group of companies’ doctrine can be enforced. The doctrine allows non-signatories to be impleaded when they are part of a group of companies participating in a transaction.
Later in 2023, the Hon’ble Supreme Court in the case of Cox & Kings v. SAP India[15]affirmed the “group of companies” doctrine, which is now firmly part of Indian arbitration jurisprudence. It was also held that the arbitral tribunal’s decision to implead non-signatories is subject to challenge under section 34 after the award.
III. Post Cox & Kings II Judgement
The Supreme Court in the case of ASF Buildtech Pvt. Ltd. V. Shapoorji Pallonji & Co.[16]affirmed the tribunal’s power to implead non-signatories as a tool of comprehensive dispute resolution. The review of judicial interference should be prima facie limited to the referral stage, and the final impleadment should be decided by the tribunal.
The judgment of Adavya Projects Pvt. Ltd. v. Vishal Structurals Pvt. Ltd.[17] held that the subsequent impleadment does not require fresh court approval. An arbitral tribunal can implead parties even if they were not part of the referral court or arbitration notice proceedings initially.
CHALLENGES AND UNSETTLED ISSUES
- Lack of statutory clarity
The absence of explicit provisions in the Act governing arbitration creates uncertainty among adjudicating authorities and parties. The debate arises on whether the tribunals have the power to implead, whether it should be explicitly codified or remain judicially evolved.
- Party autonomy and Arbitration efficiency
By including non-signatories in the arbitration proceedings, the risk of expanding the arbitration scope beyond the consent of the parties is increased. For the efficiency of arbitration, there is a need to prevent misuse or harassment by arbitration impleadment.
III. Jurisdictional conflicts
The statutory recognition is missing in the Arbitration Amendment Bill, 2025[18], which creates an unambiguous situation in jurisdictional aspects to decide impleadment of non-signatories in arbitration proceedings. Determining the status of courts/tribunals that have the primary jurisdiction to decide the issue of impleading of non-signatories remains unsettled.
CONCLUSION
The judicial innovation from a consent-based model to a pragmatic and holistic approach of the arbitral tribunal to implead non-signatories represents a critical evolution in arbitration law. Indian jurisprudence has firmly embedded the “Group of Companies” and affirmed the authority of the tribunal to ensure that a single proceeding binds all parties integral to a transaction. This pragmatism is evidenced in cases like Cox & Kings v. SAP[19] and ASF Buildtech Pvt. Ltd. V. Shapoorji Pallonji & Co.[20], which address the commercial necessity of preventing multiplicity of proceedings and ensuring uniformity in outcomes.
However, this pragmatic shift operates within a significant statutory lacuna. The consistent failure to incorporate explicit provision creates uncertainty and invites jurisdictional challenges. While the arbitral tribunals are now authorized to implead non-signatories, the lack of explicit statutory power risks arbitrary decisions and expands the scope for challenges of arbitral award. Therefore, the future prospects necessitate the legislative intervention and an explicit statutory framework that authorises the arbitral tribunals to implead non-signatories would ensure the efficiency of arbitration without compromising the foundational elements of fairness and consent.
Author:– Suman Kumar, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or IP & Legal Filing.
[1] Arbitration and Conciliation Act, 1996 (India).
[2] Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., (2013) 1 SCC 641 (India).
[3] Cox and Kings Ltd. v. SAP India Pvt. Ltd., 2023 INSC 1051 (India).
[4] Arbitration and Conciliation Act.
[5] Arbitration and Conciliation Act, 1996, § 35 (India).
[6] Arbitration and Conciliation Act, 1996, § 16 (India).
[7] Arbitration and Conciliation Act, 1996, § 9 (India).
[8] Arbitration and Conciliation Act, 1996, § 34 (India).
[9] Arbitration and Conciliation (Amendment) Bill, 2024, Bill No. 15 of 2024, § 5 (Mar. 15, 2024) (India).
[10] ICC Arbitration Rules, 2021, art. 7(5).
[11] SIAC Arbitration Rules, 2016, Rule 7.
[12] LCIA Arbitration Rules, 2020, art. 22.1.
[13] Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya, (2003) 5 SCC 531 (India).
[14] Chloro Controls, 1 SCC at 645.
[15] Cox & Kings, 8 SCC at 1.
[16] ASF Buildtech Pvt. Ltd. v. Shapoorji Pallonji & Co., 2025 INSC 616 (India).
[17] Adavya Projects Pvt. Ltd. v. Vishal Structurals Pvt. Ltd., 2025 SCC OnLine SC 806 (India).
[18] Arbitration and Conciliation (Amendment) Bill, 2025, Bill No. 10 of 2025 (Feb. 15, 2025) (India).
[19] Cox & Kings.
[20] ASF Buildtech.
