How To Correctly Incorporate An Arbitration Clause By Reference: NBCC v. Zillion Infra

A robust arbitration clause is necessary to ensure an enforceable framework for dispute resolution in any contract. The recent decision of the Hon'ble Supreme Court of India (the "Supreme Court") in NBCC (India) Limited v. Zillion Infra Projects Pvt. Ltd.¹ ("NBCC v. Zillion Infra") has clarified the critical difference between 'reference to an arbitration clause' and 'incorporation of an arbitration clause'.

The Supreme Court has held that a mere reference to an arbitration clause does not bind the parties to arbitrate in case of a dispute. To bind the parties to arbitration, the reference should be such that the arbitration clause is incorporated in the agreement. Thus, it is crucial to understand how to correctly incorporate an arbitration clause by reference.