Arbitration pacts binding on all companies in a group: SC

Apex court says pact is binding even on non-signatory firms that are part of the group

In a significant verdict, the Supreme Court (SC) on Wednesday held that an arbitration agreement can be binding on non-signatory firms under the "group of companies" doctrine. According to the doctrine, a firm which is not a signatory to an arbitration agreement between two parties can be held bound if such a company is part of the same group of companies which agreed to such a clause or agreement.

A five-judge constitution bench headed by Chief Justice D.Y. Chandrachud made the ruling in its judgement on a plea filed by Cox and Kings Ltd in a dispute arising out of arbitration agreement.