Supreme Court on incorporation of arbitration agreements into subcontracts

The importance of "words" isn't simply reflected in the crooning voice of Barry Gibb. In NBCC (India) Limited v Zillion Infraprojects Private Limited¹, the Supreme Court has emphasised the importance of choosing the correct language in wooing an arbitration agreement from another contract. The Court underscored the difference between 'incorporation of' and mere 'reference to' clauses of one contract in the context of another contract.

Background

Damodar Valley Corporation ("DVC") awarded a contract to NBCC (India) Limited ("NBCC") for certain works. The same contained an arbitration agreement.

NBCC awarded the subcontract to Zillion Infraprojects Pvt. Ltd. ("ZIPL") vide a Letter of Intent ("LOI"). The LOI contained a clause that referred disputes between ZIPL and NBCC to civil courts in Delhi. However, the LOI also provided that all terms and conditions contained in the tender issued by Damodar Valley Corporation ("DVC") to NBCC shall apply except