Can non-signatories be forced to arbitrate under Indian law?

Yes, in exceptional cases. If facts show intent to bind group entities, courts may refer non-signatories under Section 45 using the Group of Companies doctrine.

What did the Supreme Court decide in Chloro Controls?

It allowed reference of non-signatories to the same arbitration and treated the composite transaction under Section 45 with a broader approach than Section 8.

How is Section 45 different from Section 8?

Section 45 (foreign awards) gives wider leeway to send parties to arbitration; Section 8 (domestic) is narrower and Sukanya Holdings limits splitting of causes.

What test brings a non-signatory within the clause?

Intention. The claimant must show, in fact and in law, it claims under or through a signatory, and that the agreements form one composite transaction.

What was the seat and law of the arbitration?

Seat: London. Governing law of the arbitration agreement: English law, as per the shareholders agreement.

Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc. (2013) 1 SCC 641

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Quick Summary

Core idea: The Supreme Court used the Group of Companies approach to say: in special situations, a non-signatory can be sent to arbitration if the facts show a single, composite deal and an intention to bind related entities.

Section 45 (foreign awards) gives a wider door than Section 8. Here, with a London seat and English law in the shareholders agreement, the Court referred the dispute to the same foreign-seated arbitration.

Non-signatories possible
Composite transaction
Section 45 > Section 8 (scope)

Issues

Can a non-signatory/third party be compelled to arbitrate in exceptional cases?
What is the ambit and scope of Section 45 of the Arbitration and Conciliation Act, 1996?

Rules

Group of Companies doctrine: If the shared intention was to bind affiliates within a group, a signatory’s arbitration agreement may extend to a non-signatory.
Section 45 (Part II) permits reference to arbitration for foreign awards with broader discretion than Section 8.
Burden of proof: The party seeking reference must show it claims under or through a signatory and that the contracts form a composite transaction.

Facts — Timeline

View Timeline

JV Framework: Parties entered a joint venture with multiple linked agreements covering different functions.

Arbitration Clause: The shareholders agreement had arbitration with London seat and English law.

Suit & Section 8/45: Respondent sued. Appellant sought Section 8; it was treated as a Section 45 request (foreign element).

Single Judge: Relied on Sukanya Holdings; refused reference, citing different parties and bar on splitting causes.

Division Bench: Reversed. Said Sukanya did not apply on these facts; Section 45 application should succeed.

Arguments

Appellant

Agreements were inter-linked; treat as a composite transaction.
Section 45 allows wider reference; rigid Sukanya reading would defeat pro-arbitration policy.
Intent was to bind group entities to one forum.

Respondent

Different parties and reliefs; no consent from non-signatories.
Sukanya Holdings bars splitting and enjoining non-signatories.
Mere group relationship cannot compel arbitration.

Judgment

Reference allowed: The Court permitted non-signatories to be referred along with signatories in exceptional settings.
Section 45 lens: Sukanya was about Section 8. Under Section 45, the Court has a broader mandate.
Seat & law: Arbitration to proceed in London under English law per the clause.
Proof: Heavy onus on the party to show it claims under/through a signatory and that the deal is genuinely composite.

Ratio Decidendi

Where agreements form one composite transaction and the facts show a shared intention to bind group entities, non-signatories may be referred to the same arbitration under Section 45.

Why It Matters

Aligns India with a modern, pro-arbitration approach for complex group deals.
Prevents parallel proceedings across forums for the same dispute.
Clarifies the Section 8 vs Section 45 difference.

Key Takeaways

Non-signatories can be referred in exceptional cases.
Composite transaction + intent are crucial.
Section 45 offers a wider gate than Section 8.
Burden lies on the party seeking reference to prove “under or through”.

Mnemonic + 3-Step Hook

Mnemonic — “GROUP-45 FIT”

GROUP — Group of Companies idea applies.
45 — Use Section 45 lens (wider scope).
FIT — Agreements fit together as one composite deal + intent to bind.

3-Step Hook: Composite Deal → Common Intention → One Arbitration.

IRAC Outline

Issue	Rule	Application	Conclusion
Can non-signatories be compelled to arbitrate?	Group doctrine + Section 45 discretion.	Linked JV agreements; intent to bind affiliates.	Yes, in exceptional, fact-driven cases.
Does Sukanya bar reference here?	Sukanya applies to Section 8 (narrower).	Here, foreign element → Section 45 applies.	No bar; Section 45 permits reference.

Glossary

Section 45: Power to refer parties to foreign-seated arbitration (Part II).
Group of Companies: Doctrine that may extend arbitration to affiliates if intention and facts support it.
Composite Transaction: Multiple linked contracts forming one commercial scheme.
Sukanya Holdings: Supreme Court case limiting Section 8; not decisive for Section 45 scenarios.