Topic
A Section 11(6) petition is limited to a prima-facie test of the arbitration agreement, with limitation defences outside the court’s jurisdiction. The court also held that non-signatory promoters can be treated as parties to the arbitration. This narrows Section 11 scope and extends arbitral reach to promoters.
The Madhya Pradesh High Court has ruled that business relationships, invoice references, or assignment of rights alone cannot bind non-signatories to arbitration clauses. Only explicit consent or demonstrable status as a veritable party to the contract can create privity of contract for arbitration purposes, setting a strict threshold for enforcing arbitration against third parties in commercial disputes.
Bombay HC clarifies that corporate affiliation alone does not bind non-signatory group companies to arbitration. Consent must be inferred from active participation in contract negotiation, performance, or dispute resolution-setting a higher threshold for piercing the corporate veil in arbitration disputes.
Delhi High Court rules that an arbitral tribunal's rejection of an impleadment application constitutes a jurisdictional ruling under Section 16 of the Arbitration and Conciliation Act, making it appealable under Section 37. The decision reinforces that non-signatories may be bound by arbitration agreements based on conduct and contractual interlinkage, expanding the scope of arbitral jurisdiction.