Arbitration – Can a non-signatory initiate arbitration?

There are many instances, whereby, parties who are non-signatory to the arbitration agreement are also subjected to Arbitration. In most of the cases, any of the party to arbitration agreement initiates the Arbitration process. But can a non-signatory to the arbitration agreement commence the Arbitration process?  

This question was answered in affirmative by the Hon’ble Bombay High Court in Tata Capital Financial Services Limited Vs Net 4 India Limited & others. In this case, 1^st Respondent owned some debt to one ‘X’. The agreement between 1^st Respondent and ‘X’ contained arbitration agreement. Subsequently, dent was assigned to the Petitioner, who sought for interim relief under Section 9 against the 1^st Respondent. The 1^st Respondent resisted the claim of the Petition pleading no privity of contract between him and the Petitioner, therefore, Petitioner cannot initiate arbitration. Rejecting the contention of the 1^st Respondent, the Hon’ble High Court held “In my view since the petitioner had stepped into the shoes of said M/s.Connect Residuary Private Limited and the said agreement between the said M/s. Connect Residuary Private Limited and the respondent no.1 stood assigned in favour of the petitioner, all the rights and obligations of the said M/s. Connect Residuary Private Limited including right to invoke arbitration agreement stood assigned in favour of the petitioner. In my view this court thus has jurisdiction to entertain and dispose of this petition.”