Corporate Lawyer: Non- party to the arbitration agreement, cannot be made party in the petition under Section 11, for appointment of arbitrator; SC.- 22:13
Supreme Court of India
Justice A M Khanwilkar and Justice Ajay Rastogi
The supreme court in its today's judgement had laid down that the party which is not party in the arbitration agreement, or did not have any casual connection with the process of negotiation preceding the agreement, or the execution thereof, cannot be made party to the arbitration proceedings.
In the case titled as "Reckitt Benckiser Private Limited versus Reynders Label Printing India Private Limited and another", the petition under section 11 of the arbitration and conciliation act 1996 was filed seeking appointment of a sole arbitrator, as respondent no 2 was the company incorporated under the laws of Belgium, and it was alleged to be, therefore, International Commercial Arbitration.
The Supreme Court while going through the agreement, and also to the pleadings of the parties, held that the respondent no. 2 was not a party to the arbitration agreement nor had it given assent to the arbitration agreement, and in absence thereof even if respondent no. 2 happens to be a constituent of the group of companies of which respondent no 1 is also a constituent, that will not make respondent no 2 as a party in the arbitration proceedings, therefore, the respondent no 2 cannot be subject to the proposed arbitration proceedings. In view of the above, it was held that the respondent no 2 cannot be made party, therefore, the arbitration was held to be domestic commercial arbitration. But on the particular facts of the case, and on the request of the parties, the supreme court appointed the retired Chief Justice of Jammu and Kashmir High Court, Justice Badar Durrez Ahmed as a sole arbitrator, for arbitration at New Delhi.