Tag: General Corporate

A robust arbitration clause is necessary to ensure an enforceable framework for dispute resolution in any contract. The recent decision of the Hon’ble Supreme Court of India in NBCC (India) Limited v. Zillion Infra Projects Pvt. Ltd. has clarified the critical difference between ‘reference to an arbitration clause’ and ‘incorporation of an arbitration clause’. The Supreme Court held that a mere reference to an arbitration clause does not bind the parties to arbitrate in case of a dispute. To bind the parties to arbitration, the reference should be such that the arbitration clause is incorporated in the agreement. Thus, it is crucial to understand how to correctly incorporate an arbitration clause by reference.
In this note, we analyze the aforesaid Supreme Court’s decision and set forth principles that emerge as best practices for incorporating an arbitration clause by reference.

The group of companies (“GoC”) doctrine allows group entities who did not sign an arbitration agreement to be reached through the GoC doctrine and consequently be amenable to the arbitral process and award. In the recent decision of the Constitution Bench of the Supreme Court of India in Cox and Kings v. SAP India (P) Ltd, the GoC doctrine has been affirmatively declared as part of Indian arbitration jurisprudence.
In its practical application, the doctrine could present conflicts with the separate legal personality afforded to companies under Indian law. As such, the GoC doctrine has potentially far-reaching consequences for entities within a group of companies, and its applicability should be examined while structuring contractual arrangements involving group entities, to avoid unexpected outcomes later in the arrangement.