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‘A reference to the document in the contract should be such that shows the intention to incorporate the arbitration clause contained in the document into the contract’
Supreme Court said that when there is a reference in the second contract to the terms and conditions of the first contract, the arbitration clause would not ipso facto be applicable to the second contract unless there is a specific mention/reference thereto.
Supreme Court concluded that the instant matter was not one of ‘incorporation’ but a case of ‘reference’ and clarified that a general reference would not have the effect of incorporating arbitration clause.
The Calcutta High Court emphasised on the doctrine of “kompetenz-kompetenz”, granting the Arbitral Tribunal the authority to rule on its own jurisdiction, including the existence and validity of the arbitration agreement.
The Bombay High Court explained that if it was to consider the instant application under Section 11 of A&C Act, it would have to work on the deficiency of stamp duty and penalty, if any.
Calcutta High Court held that all the reliefs sought by the petitioner is to protect the subject matter of the arbitration and to preserve the rights of the parties under the Share Purchase Agreement (SPA).
In the instant matter, the primary issue was the incorporation of arbitration clauses from the Master Facility Agreement and Settlement Agreement and the maintainability of a composite reference.
“It is palpably clear that the language of the purported arbitration clause must evidence an unambiguous, explicit and unequivocal intention to refer the disputes to arbitration, leaving no room for doubt that parties chose arbitration as their only mode of resolution of disputes.”
Where parties decide to put an end to the original contract as if it never existed and substituted a new contract with it, then in such a situation the original contract is extinguished by the substituted one and the arbitration clause of the original one perishes with it.
Any document in writing exchanged between the parties which provide a record of the agreement and in respect of which there is no denial by the other side, would squarely fall within the ambit of Section 7 of the Arbitration and Conciliation Act, 1996 and would amount to an arbitration clause.
The parties may choose to enter two different contracts covering the same transaction at different points of time, however, the purchase orders do not in any manner supersede the contract between the parties.
The Court, while exercising powers under Section 11 of the Act, can refuse to refer the parties to arbitration only where “it is manifestly and ex facie certain that the arbitration agreement is nonexistent, invalid or the disputes are non-arbitrable, though the nature and facet of non-arbitrability would, to some extent, determine the level and nature of judicial scrutiny.”
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