Arbitration – Disputes between partners of LLP

The applicant Kartik Radia is the former partner of respondent no.1 BDO India LLP and expelled from the said LLP.    Respondent no.2 is the Managing Partner of the LLP.   According to the respondents, BDO is not a party to the said LLP Agreement.

Clause 23 of the LLP Agreement provides for arbitration in respect of the disputes between the parties.  BDO had expelled the applicant and therefore, it is a dispute between him and BDO.  Therefore, the disputes between Radia and BDO are not arbitrable.

HELD that the arbitration agreement shows that t includes interpretation of any rights, duties or liabilities of any partner of BDO.  This would necessarily entail BDO being a necessary party in a dispute.

An LLP is not a third party to an LLP Agreement in the manner that the concept of “third parties” is conventionally understood.  Running of the LLP is the very subject matter of the LLP Agreement.

The conduct of the affairs of the LLP is what the partners agree upon in an LLP agreement.   An LLP is a body corporate.  To incorporate LLP, partners need to execute an incorporation document.   It is a charter document akin to the Memorandum of Association / Articles of Association of a Company.   The existence of an LLP Agreement is non-optional and a requirement of law. 

There is no merit at all in the argument that despite the LLP being the very subject of the LLP Agreement, the LLP itself is extraneous to the LLP Agreement.

Judgment dated 4.3.2025 of the High Court of Bombay in Commercial Arbitration Application No.31 of 2022 (OS) of Kartik Radia  Vs.   M/s BDO India LLP and another