Cross-Border Contracts & Doctrine of Separate Arbitration Agreements
Order dated 8.10.2026 of the Supreme Court in Arbitration Petition (Civil) No.7 of 2025 of Shubham Equipment Private Limited and another Vs. Rothwell Water Company Limited and others with Arbitration Petition (Civil) No.8 of 2025
On 01.02.2023, a Memorandum of Understanding (‘MoU’) was executed between SEPL and RWCL, inter alia, providing that SEPL would render services like liaison with JWIL and Municipal Corporation of Greater Mumbai on behalf of RWCL, customs clearance of goods at Mumbai port, logistical arrangements, port handling, transportation, warehousing, et cetera.
Clause 9 of MoU provided for arbitration.
On 11.10.2024, SEPL through Petitioner No.2 sent a notice of termination of the JVA to RWCL and RBIPL (subsidiary company of RWCL) which is alleged to have been incorporated to compete with the joint venture entity RWIPL in breach of the non-compete covenant, namely Article 24.1 of the JVA.
Quoting these infractions, SEPL issued the termination notice of the JVA and called upon RWCL to pay Rs. 20,00,00,000/- for business loss and a sum of Rs. 4,24,35,647/- under the MoU. 10. Another notice of the same date was issued by SEPL to RWCL with regard to the aforesaid claim of Rs. 4,24,35,647/- plus applicable taxes, interest, etc. under the MoU, which was disputed by RWCL and Respondent No.2. 11. In their reply, RWCL and Respondent No. 2 disputed the aforesaid termination notice vide letter dated 28.10.2024, countering the allegations of outstanding dues raised by SEPL and called upon the latter to amicably settle the dispute. RWCL further mentioned in the reply that the dispute is directly linked with the operation and management of the License Agreement dated 30.01.2019 and, therefore, the dispute resolution clause of the said License Agreement would be applicable to the dispute. 12. In the backdrop of the aforesaid disputes, SEPL issued notices of arbitration dated 28.11.2024 under Article 43 of 7 the JVA and Clause 9 of the MOU respectively. In reply to the said notices, RWCL while acknowledging the disputes, reiterated its stance that the said disputes were intrinsically connected to the License Agreement dated 30.01.2019 and that any dispute resolution via arbitration was covered under Clause 12.1 of the said agreement in accordance with the law of the Republic of Korea.
In these circumstances, Petitioners have taken out the petitions under Section 11 of the Arbitration and Conciliation Act, 1996 (“1996 Act”) for referring the disputes to arbitration and appointment of an arbitrator under Article 43 of the JVA and Clause 9 of the MoU respectively.
Admittedly, the existence of the agreements is not in dispute. What is contended is that the JVA and MoU spring from the mother agreement, namely License Agreement, and have no independent existence. As such, the dispute resolution clause, namely Clause 12.1 of the mother agreement, envisaging arbitration in Korea would override the dispute resolution clauses in the subsidiary agreements.
aving examined the terms of the License Agreement, JVA and MoU, we note that the License Agreement deals with grant of multiple licenses by RWCL to SEPL and/or its affiliates; JVA creates a joint venture company in India namely RWIPL to carry on business activities in supply, installation, operation and maintenance of latest generation sewage treatment plants and other liquid procession products and equipment under the brand name ‘ROTHWELL’; and MoU is an arrangement between SEPL and RWCL by which SEPL would render liaison and other services on behalf of RWCL with JWIL and Municipal Corporation of Greater Mumbai. Thus, the License Agreement, JVA and MoU 12 prima facie operate in different fields and the disputes arising exclusively under the JVA and MoU are amenable to the dispute resolution clauses engrafted therein and not the clause in the License Agreement. We are further fortified to come to such conclusion with reference to Article 25 of the JVA and Clause 10.8 of the MoU which inter alia provide that the said agreements are exclusive in respect of the subject matter thereof and supersede all or any prior agreements. Mr. Choudhari’s argument that the disputes pertaining to the JVA and MoU cannot be adjudicated in isolation and overlap with claims under the License Agreement in respect whereof his clients have already raised a dispute for arbitration in Korea, would fall within the jurisdiction of the arbitrator vis à-vis the scope and ambit of disputes amenable to arbitration under the JVA/MoU, and cannot constitute a ground to refuse a reference at the threshold. 22. Similarly, the other issue that RBIPL is an independent non signatory entity which is not bound by the arbitration agreement is a contentious one as RBIPL is a wholly owned subsidiary of RWCL (a signatory) and is alleged to have been incorporated by RWCL in derogation of the terms of the JVA. 13 Given this situation, such issue needs to be relegated to the arbitrator for appropriate adjudication. 23. In light of the above, we allow the present arbitration petitions and appoint Hon’ble Mr. Justice Ramesh Deokinandan Dhanuka, Former Chief Justice of Bombay High Court as the Sole Arbitrator. The Arbitrator shall have the liberty to fix his own remuneration/fees.
