Arbitration Clauses In Shareholder Agreement

Ambika Kunwar Sisodiya, Christ University (Deemed To Be University), Bangalore, Karnataka

ABSTRACT

In the past two decades, arbitration has gained prominence as a swift and cost-effective means of resolving disputes, making it the preferred choice for many. The arbitration landscape in India witnessed significant changes with the enactment of the Arbitration and Conciliation Act 1996 (referred to as the Arbitration Act) and its subsequent amendment in 2015. Nevertheless, a notable area of ambiguity within the Act pertains to the concept of "arbitrability." Indian courts have grappled with distinguishing between disputes that are suitable for arbitration and those that are not. While the Arbitration Act does not explicitly classify disputes into arbitrable and non- arbitrable categories, courts have, at times, claimed jurisdiction over certain disputes, reserving them for resolution within their own precincts.

The essence of arbitration is rooted in the contractual relationship between parties, where they can either choose litigation in courts or opt for arbitration, a decision based on their own accord. Following the 2015 Amendment Act, Section 83 of the Arbitration Act places an obligatory duty on courts to refer all disputes to arbitration when an arbitration clause exists in the underlying contract between the involved parties. Section 8 of the Arbitration Act pertains to disputes that are arbitrable and can be appropriately adjudicated by a competent arbitrator. The ongoing struggle to determine the arbitrability of disputes has led to a multitude of conflicting judicial decisions and varying viewpoints. In this article, we delve into the ongoing discourse surrounding whether disputes arising from a shareholders' agreement (SHA) can be considered arbitrable and fall within the purview of the Arbitration Act.

Keywords: Arbitration, Arbitrability, Dispute, Shareholders' Agreement