Specific And Express Reference Needed To Incorporate Arbitration Clause From Prior Contract: Supreme Court Of India

In NBCC (India) Limited v. Zillion Infraprojects Pvt. Ltd., the Supreme Court of India ruled that simply mentioning another contract in an agreement would not automatically lead to incorporation of the arbitration clause in the subsequent agreement. To ensure that an arbitration clause from another agreement is applied, parties must explicitly state in the subsequent contract that the arbitration clause from the prior contract stands incorporated. In this article, we navigate through the facts of the matter and examine the decision rendered by the Supreme Court.

Brief Background

NBCC (India) Limited ("NBCC") and Zillion Infraprojects Pvt. Ltd. ("Zillion") entered into an agreement ("NBCC Contract") for the certain construction works around the Damodar river. The NBCC Contract included a provision stating that all terms and conditions from the tender issued by Damodar Valley Corporation ("DVC") to NBCC ("DVC Contract") would also apply to the NBCC