Arbitrability Rationale in Shareholders Dispute

By T.K.A.Padmanabhan, Advocate, New Delhi.

1. Ambit

The ever non-quenchable thirst for foreign investment on our part and the ever non-diminishing power hunger on the part of foreign investors culminating in different form of Joint Venture Agreement (JVA), Share Purchase Agreement (SPA) and Share Holders Agreement (SHA) result in inserting an omnibus arbitration clause to settle disputes that arise from these agreements. In most of the cases the terms and conditions of these agreements are incorporated in the articles of association of the company also. Some times the arbitration clause is also incorporated in the articles by way of a separate arbitration clause.

Quite often the arbitration clause is pressed in aid as a defense strategy against an action of oppression and mismanagement brought against the company and indulging shareholders before the Company Law Board. In a string of decisions the CLB had formulated a legal principle to determine what are arbitrable disputes that