Delhi High Court: Non-Signatory to Agreement Can't Invoke Arbitration Clause, Exceptional Cases Examined
In a recent ruling [A ES Engineers Pvt Ltd v. Ugro Capital Limited], the Delhi High Court stated that a non-signatory or third party to an agreement cannot invoke arbitration without prior consent, except in exceptional circumstances. Justice V Kameswar Rao emphasized that these exceptions must be assessed based on factors such as a direct relationship with the signatory parties, common subject matter, and the agreement's interdependence. The court made this observation while hearing a case where a petitioner sought the appointment of an arbitrator under a Master Service Agreement (MSA) between two respondents. The petitioner argued that a Facility Agreement (FA) between them and the first respondent created an interdependence that necessitated joint consideration of both agreements. However, the court ruled that since the petitioner was not a signatory to the MSA, they couldn't invoke its arbitration clause. Consequently, the petitioner's plea for a three-member arbitral tribunal was dismissed. Advocates representing both parties appeared before the court during the proceedings.
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TAGS: Delhi High Court non-signatory agreement arbitration prior consent exceptional cases Justice V Kameswar Rao touchstone direct relationship commonality composite transaction interdependent Master Service Agreement (MSA) Facility Agreement (FA) petitioner respondents arbitration clause mother agreement three-member arbitral tribunal ruling advocates.
