Non-Signatory being Direct Beneficiary and Involved in Contract Can be Compelled to Arbitrate

Our undertakings for long-term impact are an organic extension of our purpose.

They are to employ our deep knowledge of the law beyond the business, the transaction, the deal. To use the opportunities and skills we possess, to reflect on the culture we’re creating. Individually and collectively, these are our efforts to help shape the thinking of our future generations, and arm them with strategies for true, sustainable growth.

Jun 30, 2021

Non-Signatory being Direct Beneficiary and Involved in Contract Can be Compelled to Arbitrate

The Delhi High Court in Shapoorji Pallonji and Co. Private Limited v. Rattan India Power Ltd^[1], held that a non-signatory to the arbitration agreement may be held to be the alter ego of a signatory and, accordingly, may be bound by the arbitration agreement in the following circumstances: (i) such non-signatory exercised control over a signatory through shareholding in the signatory; (ii) officials of such non-signatory acted on behalf of and exercise substantial and dominant direct control over the signatory party; (iii) the signatory and non-signatory shared common resources; (iv) such non-signatory was directly involved in the contract; and (v) such non-signatory knowingly accepted the benefits of the agreement.

[1] Shapoorji Pallonji and Co. Pvt. Ltd. v. Rattan India Power Ltd, Arb. P. 716/2019 and I.A. No. 7836/2020.

DISCLAIMER

These are the views and opinions of the author(s) and do not necessarily reflect the views of the Firm. This article is intended for general information only and does not constitute legal or other advice and you acknowledge that there is no relationship (implied, legal or fiduciary) between you and the author/AZB. AZB does not claim that the article's content or information is accurate, correct or complete, and disclaims all liability for any loss or damage caused through error or omission.