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Cox and Kings v SAP India

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Cox and Kings v SAP India

This case will determine whether non-signatories to an arbitration agreement can be included as party to arbitration proceedings in India under the 'Group of Companies' Doctrine.

Petitioners Arguments
SAP India is a wholly owned subsidiary of SAP SE and the transactions would not have been possible without the assistance of SAP SE. Therefore, all the transactions formed part of one single, interlinked transaction between Cox and Kings and SAP India and SAP SE. The agreements and email correspondence between the parties show that all the parties were in ad idem for the implementation and the execution of the agreements, which included the arbitration clause. Considering the holding in the three Judge Bench decision of Chloro Controls India v. Severn Trent Water Purification [(2013) 1 SCC 641] , arbitration can be invoked even against the non-signatories, if the circumstances demonstrate that it was the mutual intention of the parties.
Responders Arguments
SAP SE is neither a signatory, nor has it ever agreed (expressly or impliedly) to be bound by the agreements between Cox and Kings and SAP India. The “Group of Companies” doctrine is not applicable in the present case. SAP SE is not only a non-signatory but also never participated in the negotiation process during the drafting of the contract. Moreover, there is no consensus of the parties to be bound by the contract.
Start Date
2022-05-06
End Date
2023-12-16
Card Stage Date
2023-12-16
Review Petition No
Arbitration Petition 38/2020
Case Status
Archive
Bench Status
Constituted
Subject Matter
Arbitration
Comment
NA
Disposal Time
1 year, 7 months,11 days

5 Judge Bench

Judgment delivered

Consider As Stage Of Pendency
false

Date of institution of case

Date of reference to 5 Judge Bench

Judgement pronounced

Beginning from 2010, Cox and Kings Ltd. and SAP India Pvt. Ltd. entered into a series of agreements. One of the agreements contained an arbitration clause, requiring the parties to resolve future disputes through arbitration. However, the project faced certain difficulties, leading Cox and Kings to seek assistance from SAP SE. SAP SE took over the project, but Cox and Kings terminated the contract in 2016 and demanded a refund. In response, SAP India initiated arbitration proceedings, claiming that the contract had been wrongfully terminated. In the course of the proceedings, Cox and Kings sent a notice to both SAP and SAP SE even though the latter was not a signatory to any of the agreements. Cox and Kings argued that SAP SE took full responsibility of the project and gave their implied consent to be bound by the agreement. Further, SAP India was a subsidiary of SAP SE and was fully owned by them. This principle of including non-signatories as a party to an arbitration proceeding is known as the ‘Group of Companies’ doctrine. On 06-05-2022 , a three-judge bench of the Supreme Court referred the matter to a five-judge bench, expressing concerns about the applicability of the Doctrine to the Arbitration and Conciliation Act, 1996 .

Whether, and under what circumstances, can non-signatories be included as parties to an arbitration proceeding?

Sections 8 and 45 of the Arbitration and Conciliation Act, 1996

The three-judge bench doubted the correctness of the decision in the Chloro Controls case, and the cases following it. It opined that the law down in these cases seem to have been based on economics and convenience, more than law and that it did not respect the established principle of ‘distinct legal identities’ of companies and ‘party autonomy’. Therefore, it referred the matter to a larger bench for clarification on the ‘Group of Companies’ doctrine and its relationship with the Arbitration Act.

Sukanya Holdings v. Jayesh H. Pandya [(2003) 5 SCC 531]

Chloro Controls India v. Severn Trent Water Purification [(2013) 1 SCC 641]

Ameet Lalchand Shah v. Rishabh Enterprises [(2018) 15 SCC 678]

Cheran Properties v. Kasturi & Sons [(2018) 16 SCC 413]

Impleading Parties in Arbitration: Unresolved Dilemmas

Impleading Parties in Arbitration: Unresolved Dilemmas
Source Of Info
SCC Times
Date Of Fr
2025-02-17

The Unanswered Question of Oral Referencing of Arbitration Agreements: The Limit of Group of Companies Doctrine

The Unanswered Question of Oral Referencing of Arbitration Agreements: The Limit of Group of Companies Doctrine
Source Of Info
IRCCL
Date Of Fr
0224-03-30

Non-signatories Can Be Bound by an Arbitration Agreement: The Indian Supreme Court Affirms the “Group of Companies Doctrine” in the Cox and Kings Judgment

Non-signatories Can Be Bound by an Arbitration Agreement: The Indian Supreme Court Affirms the “Group of Companies Doctrine” in the Cox and Kings Judgment
Source Of Info
Chambers and Partners
Date Of Fr
2024-01-15