Whether Non-Signatories To An Agreement Can Be Made Parties To An Arbitration Proceeding
- IJLLR Journal
- Jun 4
- 2 min read
Kavish Jain, KES College of Law
Arbitration as a mechanism of dispute resolution is fundamentally premised on the principle of party autonomy, which dictates that only those who have consented to arbitration can be bound by it. This consent is ordinarily manifested through a written arbitration agreement executed between the parties. Consequently, the traditional view has been that arbitration can be enforced only against the signatories to such an agreement. However, with the increasing complexity of modern commercial transactions—often involving multiple entities, layered contractual frameworks, and intricate corporate group structures—this rigid approach has undergone significant evolution. Challenges arise in situations where a non-signatory, though not formally a party to the arbitration agreement, shares a close commercial relationship with the signatories or plays an active role in the underlying transaction. In such cases, it becomes difficult for courts and arbitral tribunals to determine whether such a non-signatory can nonetheless be impleaded as a party to arbitration proceedings. This issue has emerged as one of the most debated questions in contemporary arbitration law in India.
The Arbitration and Conciliation Act, 1996 (“the Act”) does not contain any express provision governing or permitting the impleadment of non-signatories to arbitration proceedings. Nevertheless, certain provisions provide a framework within which such questions have been judicially examined. Section 2(1)(h) defines the term “party” as a party to an arbitration agreement, suggesting a restrictive interpretation limited to signatories. Section 7 defines an arbitration agreement as an agreement between the parties to submit disputes to arbitration, requiring such agreement to be in writing. Section 8 empowers a judicial authority to refer parties to arbitration where there exists a valid arbitration agreement, and post the 2015 amendment, extends this power to “any person claiming through or under” a party. Section 11 deals with the appointment of arbitrators and involves a prima facie judicial determination of the existence of an arbitration agreement. Section 16 incorporates the principle of kompetenz- kompetenz, empowering the arbitral tribunal to rule on its own jurisdiction, including objections relating to the existence or validity of the arbitration agreement. Although none of these provisions explicitly address nonsignatories, they have collectively provided the foundation for judicial innovation in this area.
