GMR ENERGY LTD. V. DOOSAN POWER SYSTEMS INDIA (2017)

Quick Summary

The Delhi High Court treated the dispute as an international arbitration under Part II of the Arbitration and Conciliation Act, 1996 because the seat was foreign (SIAC). The Court accepted that, on the pleadings, GMR Energy could be drawn into the proceedings and that the tribunal could examine alter ego / veil piercing questions. It noted that Indian parties may choose a foreign seat, and it looked to leading cases to support joinder of non-signatories and a pro-enforcement stance.

Issues

• Does the case fall under Part I (domestic) or Part II (foreign-seated) of the 1996 Act?
• Should GMR Energy be made a party to the arbitration?
• Do Doosan India’s arbitration notices make a prima facie case to proceed against GMR Energy with GCEL and GIL?
• Can the tribunal look past the company form and pierce the corporate veil?

Rules

• SIAC Rules 2016 (Rule 7): Allow joinder/intervention of additional parties in suitable cases, creating a flexible and efficient process.
• Alter Ego Doctrine: If a company is merely a conduit or instrumentality of controllers, the law may treat them as one.
• Foreign Seat Principle: A foreign seat points to Part II for recognition and enforcement.

Arguments

Judgment

The Court held the proceedings are governed by Part II because the seat is foreign (SIAC). It found that, on the pleadings, GMR Energy was not wrongly impleaded and that the arbitral tribunal could consider joinder and alter ego issues. The Court relied on:

• Atlas Exports: Indian parties can choose a foreign seat; not opposed to public policy.
• Chloro Controls: Bases to bind non-signatories—implied consent, third-party beneficiary, guarantor, assignment/transfer of control rights, apparent authority, veil piercing, agency.
• Fuerst Day Lawson: The 1996 Act is more favourable to international arbitration than the prior law.

Ratio

With a foreign seat, the Arbitration Act’s Part II applies. SIAC Rule 7 enables joinder in proper cases. Where facts show alter ego, tribunals may pierce the veil and bind group entities.

Why It Matters

• Confirms that Indian parties may choose a foreign seat and stay within Part II.
• Shows when non-signatories can be joined to arbitration.
• Clarifies the role of alter ego in group company disputes.

Key Takeaways

1. Seat decides: Foreign seat → Part II regime.
2. Joinder tool: SIAC Rule 7 supports adding necessary parties.
3. Alter ego gateway: If a company is a mere vehicle, veil may be pierced.
4. Precedent-led: Atlas Exports, Chloro Controls, Fuerst Day Lawson guide the court’s stance.

Mnemonic + 3-Step Hook

Mnemonic: S-J-A — Seat, Joinder, Alter-ego.

1. Seat: Foreign seat = Part II track.
2. Joinder: SIAC Rule 7 can pull in linked parties.
3. Alter-ego: If facts fit, veil may lift.

IRAC Outline

Issue: Part I or Part II? Should GMR Energy be joined? Can the tribunal pierce the veil?

Rule: Foreign seat → Part II; SIAC Rule 7 joinder; alter-ego where entity is an instrumentality.

Application: Contracts/MoUs and group control supported joinder; pleadings allowed tribunal to test alter-ego claims.

Conclusion: Part II applies; GMR Energy can be proceeded against; tribunal may assess veil piercing.

Glossary

Part I / Part II

Part I governs domestic arbitration; Part II governs foreign awards/recognition.

SIAC Rule 7

Rule permitting joinder/intervention of third parties in SIAC arbitrations.

Alter Ego

When a company is just a tool of controllers, law may treat them as one.

Piercing the Veil

Disregarding separate corporate personality to reach true controllers.

FAQs

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