Does a mere reference to a document make its arbitration clause part of the contract?
Coram: Dr Dhananjaya Y Chandrachud, CJI; Pamidighantam Sri Narasimha, J.; J B Pardiwala, J.
No. Where there is a reference to a document in a contract, and the reference shows that the document was not intended to be incorporated in entirety, the reference will not make the arbitration clause in that document a part of the contract, unless there is a special reference to the arbitration clause so as to make it applicable.
Arbitration and Conciliation Act 1996 — s.7(5) — s.11 — Incorporation by reference — Arbitration agreement — International commercial arbitration — Arbitration and Conciliation Act 1996 — s.7(5) — Incorporation, not mere reference — Held: Where one agreement provides that its terms shall constitute an integral part of another and shall apply mutatis mutandis, it does not merely refer to that other agreement but incorporates its terms, carrying the arbitration clause with them. (¶15, 16) Arbitration and Conciliation Act 1996 — s.7(5) — Reference short of incorporation — Held further: Where the reference shows that the document was not intended to be incorporated in entirety, the reference will not make the arbitration clause part of the contract unless there is a special reference to that clause. (¶18) Arbitration and Conciliation Act 1996 — s.11 — Pendency of a suit and Section 8 — Held further: A party is not to be relegated to a Section 8 application merely because the opposite party has instituted a suit; on clear contractual terms a reference to arbitration is necessitated. Arbitrator appointed. (¶20, 21)
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