Shapoorji Pallonji v. Rattan India
High court interpretation limiting the scope of binding non-signatories in joint venture disputes with explicit opt-outs.
What Happened
A joint venture agreement contained an express clause excluding affiliates from the arbitration agreement. The claimant nonetheless sought to join a parent entity that had guaranteed performance.
Legal Issue
Whether the group of companies doctrine can override an express contractual exclusion of affiliates from the arbitration agreement.
Court Held
The court held that the doctrine rests on inferred consent, and an express exclusion forecloses the inference. Where the parties have addressed the question in terms, the court will not supply a contrary intention from conduct.
Key takeaways
- An express affiliate exclusion defeats the group of companies doctrine.
- Inferred consent cannot displace stated consent.
- A separate guarantee does not by itself import the arbitration agreement.
- Drafting practice can control joinder risk directly.
Why It Matters
The decision is the practical answer to Cox & Kings for transactional lawyers: an explicit exclusion clause remains effective.