The Powers of Arbitral Tribunal to Implead Non-Signatories in India: Judicial Trend

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THE AUTHOR:
Rahul Jain, Co-Founder at Channel 1 Law Partners

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Introduction: Understanding the Concept and Need

Arbitration fundamentally rests upon the consent of the parties. Traditionally, in India, this consent has been strictly interpreted, restricting arbitral proceedings solely to those who are parties to the arbitration agreement. However, with the ever-increasing complex commercial arrangements, especially within corporate group structures, entities closely involved in the transaction, yet formally not part of the arbitration agreement, may be required to be impleaded to effectively adjudicate the ‘lis’. This scenario has led to the judicial development of doctrines such as ‘Group of Companies’ and ‘Single Economic Transaction’ to address the challenge of impleading non-signatories. This article navigates through the evolution of the concept of impleading non-signatories by examining the nuanced jurisprudence and legislative developments, particularly the Arbitration Amendment Bill, 2024.

Early Judicial Stance: Pre-2013 Approach

Initially, Indian courts showed hesitation in allowing non-signatories to be impleaded by arbitral tribunals. The hesitation was based on the then understanding of the provisions of the Arbitration and Conciliation Act, 1996 (“the Act“), which were interpreted by Indian Courts to emphasise party autonomy and explicit consent. The judicial consensus was that arbitral tribunals had no independent power to join non-signatories, unlike Courts under Order 1 Rule 10 of the Code of Civil Procedure, 1908 and that no implicit power can be inferred from Sections 16, 17 or 19 of the Act, providing inherent or residuary powers to the Arbitral Tribunals under the Act, to implead non-signatories (see Sukanya v. Pandya and another, 14 April 2003).

The Chloro Controls Judgment: Judicial Evolution (2013)

The Supreme Court’s landmark decision in Chloro Controls India Pvt. Ltd. v. Severn Trent Water Purification Inc. (28 September 2013) marked a significant shift. Adopting the “Group of Companies” doctrine, the Court acknowledged that non-signatories could be bound to arbitration agreements within composite transactions if implied consent and mutual intention were demonstrable. However, the Court clarified that this power of joinder remained exclusively judicial, stopping short of recognising similar powers for arbitral tribunals.

Subsequent rulings expanded the scope introduced by Chloro Controls, while holding that only the Courts can implead non-signatories to an arbitration. Delhi High Court in Arupri Logistics Pvt. Ltd Vs. Vilas Gupta & Ors (2023, Reported as (2024) 308 DLT 327), reiterated that Arbitral Tribunals have no inherent powers under the Act to implead non-signatories, and the doctrine of alter-ego or group of companies cannot be exercised by Arbitral Tribunals, in the absence of a statutory framework.

The Definitive Turning Point: Cox & Kings I (2023)

The constitutional bench of the Supreme Court issued its decision in  Cox & Kings Ltd. v. SAP India Pvt. Ltd. (6 December 2023) to establish a pivotal transformation in legal interpretation. While endorsing the Group of Companies doctrine, the Supreme Court interpreted the doctrine of Kompetenz-Kompetenz under Section 16 of the Act to also include the power to decide whether an arbitration agreement exists with a third party. While this decision marked a paradigmatic shift, the observation of the Court that “the referral Court should leave open the issue whether a non-signatory is bound by the arbitration agreement for the Arbitral Tribunal to decide” resulted in further litigation, with one school of thought, arguing that the Arbitral Tribunal can implead a non-signatory, only if such an issue is specifically left open by the referral Court (under Section 8 or 11 of the Act) for the Arbitral Tribunal to decide.

ASF Buildtech v. SPA (2025): Strengthening Tribunal Powers

The much-needed clarity came in the form of the Supreme Court’s judgment in ASF Buildtech Vs Shapporji Pallonji & Company Pvt. Ltd, 2025 SCC Online SC 1016 (“ASF Buildtech”). The Supreme Court cemented arbitral tribunals’ authority by unequivocally clarifying that tribunals possess independent jurisdiction to determine and join necessary parties, including non-signatories. This ruling resolved residual ambiguities, underscoring the expansive interpretation of tribunal autonomy under Section 16 of the Act, even absent initial judicial intervention. The Supreme Court relied upon the decision in Cox & Kings I and held that since the terms “party” and “arbitration agreement” used in Section 2(1)(h) and Section 7 of the Act, respectively, are not confined to “courts” or “tribunal”, an arbitral tribunal has the power to implead a non-signatory, if that person is found to be bound by the arbitration agreement.

International Comparative Perspective

The Supreme Court’s decision in ASF Buildtech is a step in the right direction and is in line with internationally accepted practices. The power of the arbitral tribunal to implead non-signatories is not a novel concept. Jurisdictions such as the USA and Singapore explicitly empower arbitral tribunals to implead non-signatories. Institutional rules, including those of ICC (International Chamber of Commerce) and SIAC (Singapore International Arbitration Centre), reflect similar provisions, emphasising procedural flexibility and party autonomy. India’s judicially driven approach increasingly aligns with this international arbitration landscape, although statutory recognition remains absent.

Arbitration Amendment Bill, 2024: A Missed Opportunity?

Surprisingly, despite significant judicial evolution, the Arbitration Amendment Bill, 2024, omits explicit provisions granting tribunals statutory authority to implead non-signatories. This omission has drawn considerable judicial criticism, notably from the Supreme Court, which urged legislative rectification in May 2025. An amendment can be made either to Section 16 or through the insertion of specific provisions aligned with international arbitration norms, giving statutory recognition to the tribunal’s power to implead non-signatories.

Conclusion: Navigating the Future

The Indian judiciary’s proactive approach has significantly transformed the arbitral landscape concerning the impleadment of non-signatories, progressively shifting from strict statutory interpretation towards tribunal autonomy. However, the absence of statutory recognition in the Arbitration Amendment Bill, 2024, underscores a critical legislative gap. As India moves forward, it is imperative that a comprehensive overhaul of the Indian Arbitration Law is carried out to consolidate judicial advancements, adopt best practices, foster procedural certainty, and enhance arbitration’s effectiveness as a dispute resolution mechanism.

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ABOUT THE AUTHOR

Rahul Jain, MCIArb, is an Advocate-on-Record at the Supreme Court of India and the Co-Founder at Channel 1 Law Partners.

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*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.