Overview
In a recent case before the Supreme Court, NBCC (India) Limited V/s Zillion Infraprojects Pvt. Ltd [2024 SCC Online Sc 323], the Court discussed when an arbitration clause can be considered to be ‘incorporated’ in an agreement as opposed to being a mere ‘reference’ to arbitration.
The case involves a dispute over an arbitration clause between two Indian companies – Appellant NBCC (India) Ltd., a public sector undertaking in construction, and Respondent Zillion Infraprojects Pvt. Ltd., a private infrastructure company ruled an important decision.
The key issue is whether an arbitration clause from an earlier contract between different parties gets incorporated into a later contract between NBCC and Zillion by mere reference.
The Supreme Court applied the legal test under Section 7(5) of the Indian Arbitration & Conciliation Act, 1996 and held that a general reference to another contract is not enough to incorporate an arbitration clause into the later contract. There has to be a specific reference showing intention to incorporate the arbitration clause.