J. Sagar Associates (JSA) represented Anheuser Busch InBev India Limited (“ABI”) before the Karnataka High Court. ABI had invoked arbitration under a brewing agreement against the counterparty as well as its affiliate company and its promoter and directors (“Non-Signatories”). The Non-Signatories had given guarantees ensuring performance of the brewing agreement.
The counter-party and the Non-Signatories had failed to nominate an arbitrator leading to a petition being filed on behalf of ABI for appointment of arbitrator before the Karnataka High Court. Before court, the reference to arbitration was resisted on the ground that the Non-Signatories could not be bound by the arbitration clause under the brewing agreement. The Court extensively dealt with the law on reference of non-signatories to arbitration. The Court found that (i) the brewing agreement and the guarantees comprised a multi-layered composite transaction; and (ii) the guarantors had given their implied consent to be bound by the arbitration clause under the brewing agreement. Accordingly, the Court referred not just the counterparty and its affiliate company but also the promoters and directors to arbitration.
JSA team comprised Lead Partner – Amar Gupta, Partner – Divyam Agarwal, Senior Associate – Ashish Joshi