IS THE ‘GROUP OF COMPANIES’ DOCTRINE A GATEWAY TO ASSERTING JURISDICTION OVER NON-SIGNATORIES IN ARBITRATION?
Due to the often complex nature of parties’ contractual relations and corporate structures, it is not uncommon for arbitration disputes to involve those that are not explicitly a party to an arbitration agreement. More than ever before, tribunals may need to face the question of whether they can extend an arbitration agreement to non-signatories.
Subsequently, at the annulment or enforcement stage of the arbitral award, national courts are then tasked with balancing the principles of party consent and privity of contract, against what justice and fairness may require. Naturally, between jurisdictions that remain popular seats for arbitration, there is no uniform approach to deciding whether or when an arbitration agreement can be extended.
It may therefore be helpful for companies, including those that may be contemplating arbitral proceedings, to have a sense of how the courts in France, England, Singapore and Hong Kong (which are pro-arbitration jurisdictions) have grappled with this question.
‘Group of companies’ doctrine
One theoretical basis for establishing jurisdiction over non-signatories is the ‘group of companies’ doctrine. This enables the extension of an arbitration agreement in a contract that one company is a party to, to other companies within the same corporate group. In general, the fact that the two entities are within the same corporate group cannot, without more, be sufficient to justify the extension. The party requesting the extension would also need to show there was an intention that the group (or the non-signatories in question) be involved in the conclusion of the contract and its performance.
Oct-Dec 2022 issue
Quinn Emanuel Urquhart & Sullivan LLP