Supreme Court declines to apply group of companies doctrine in arbitration

Supreme court declines to apply group of companies doctrine in arbitration

The Supreme Court, in the recent judgment of Reckitt Benckiser (India) Ltd v Reynders Label Printing India Ltd, refused to invoke the group of companies doctrine (which bind non-signatory affiliates) to implead a foreign company in an application for appointment of an arbitrator over a dispute arising out an agreement with its Indian affiliate.

In the case, an application under section 11 of the Arbitration and Conciliation Act, 1996, was filed by Reckitt India for the appointment of an arbitrator according to an agreement between Reckitt India and Reynders India. Reckitt India also impleaded a Belgian affiliate of Reynders India (Reynders Belgium) despite it being a non-signatory to the agreement. Both Reynders India and Reynders Belgium were constituents of the same group of companies known as Reynders Label Printing Group. Reckitt filed the application on the premise that Reynders Belgium was an entity incorporated in a country other than India and therefore this was international commercial arbitration.

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