Subsequent Consulting Agreements Prescribing Arbitration Do Not Bind Parties When MoU Forming Basis Of Claim Doesn't Contain Arbitration Clause: P&H High Court
Punjab and Haryana High Court recently held that where the claim of a party to an agreement is based upon a Memorandum of Understanding which does not contain an arbitration clause, the Court is not required to refer the matter merely because the subsequent Consulting Agreements executed by the parties contemplate arbitration. The bench comprising Justice Augustine George Masih and Justice Sandeep Moudgil in this case noted that there is no clause for arbitration under the MoU and the clause, if any, is in the Consulting Agreements which would not be applicable here since plaintiff's claim is based exclusively on the MoU. The court was dealing with an appeal wherein the order of Commercial Court rejecting the first defendant's application under Order VII Rule 11 of the CPC read with Section 8 of the Arbitration & Conciliation Act, 1996 for rejection of the plaint in terms of Clause 16 in the Consulting Agreement, was challenged. The clause, if any, is in the Consulting Agreements which would not be applicable since the claim of respondent No.1 – plaintiff is based exclusively on the Memorandum of Understanding.
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