Cox & Kings Ltd. filed a petition under Section 11(6), read with Section 11(12)(a) of the Arbitration & Conciliation Act, 1996, seeking the appointment of an arbitrator to adjudicate disputes and claims arising from an agreement signed between Cox & Kings Ltd. and SAP India Pvt. Ltd.
The dispute arose over the timely completion and implementation of SAP Hybris Software. SAP India assured Cox & Kings that 90% of the software was compatible with their requirements and that the remaining customization would take approximately 10 months. However, delays, project execution challenges, and a lack of response from SAP India, combined with missed deadlines, led to the initiation of arbitration proceedings.
Cox & Kings argued that several agreements existed between the parties, all of which were interlinked. They contended that SAP India’s parent company, though not a signatory to the agreement, played an active role in implementing the project and intervening in the dispute. This involvement, they claimed, made the parent company a “veritable party” to the agreement. Furthermore, Cox & Kings invoked the Group of Companies doctrine to include SAP SE (the parent company) in the arbitration and requested fresh arbitration proceedings, despite a previous arbitration being ongoing.
In response, SAP India countered that the same issue was already being adjudicated, and allowing another arbitration would lead to risk of conflicting judgments on the same subject matter and as such, the principles of res sub-judice and res judicata would be attracted to the second arbitration proceedings and consequently the present petition. They also argued that the parent company never consented to arbitration and that the arbitration clause did not extend to the parent company or any unrelated agreements.
After reviewing the materials on record, the court held that although the respondents raised numerous objections, none of these objections questioned the existence of the arbitration agreement under which the petition had been filed. The court found that the prima facie existence of an arbitration agreement was satisfied under Section 11 of the Act. The court ruled that once the arbitral tribunal was constituted, the respondents would be able to raise all legal objections, and the tribunal would consider these before proceeding with the case.
On the issue of including SAP SE (the parent company) in the arbitration, the court acknowledged the complexity of determining whether a non-signatory could be made a party to the arbitration. It deemed it appropriate for the arbitral tribunal to decide on this matter based on the facts and legal doctrines involved.
The judgment reaffirmed the limited role of the court at the referral stage, emphasizing that the arbitral tribunal is best suited to resolve complex issues such as the applicability of the arbitration agreement to non-signatories.