The Supreme Court has allowed arbitration in Mumbai in a dispute between an Indian company and a South Korean company, holding that an arbitration clause in an earlier licence agreement providing for arbitration in Seoul could not, at the referral stage, override the arbitration clauses contained in subsequent agreements dealing with different subjects.

The bench of  Chief Justice Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana found that the licence agreement, joint venture agreement and memorandum of understanding prima facie operated in different fields. Consequently, disputes arising exclusively under the joint venture agreement and the memorandum of understanding could be referred to arbitration under their respective dispute resolution clauses.

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A Bench appointed former Bombay High Court Chief Justice Ramesh Deokinandan Dhanuka as the sole arbitrator. Justice Bagchi authored the order dated October 8, 2026. 

The central question was whether an earlier licence agreement providing for arbitration in South Korea would govern disputes under subsequent agreements providing for arbitration in Mumbai merely because the parties’ commercial arrangements were connected.

The Court also considered whether an objection that a subsidiary company was a non-signatory to the arbitration agreements should prevent a reference to arbitration, or whether that question should be decided by the arbitrator.

Background: Three Agreements Governed The Business Relationship

Shubham Equipment Private Limited, an Indian company based in Thane, provides drinking water tank cleaning services under the trade names “TANCLEAN” and “SHUBHAM”. Rothwell Water Company Limited, a South Korean company, holds patents relating to biological nutrient removal technology used in wastewater treatment.

On January 30, 2019, the companies entered into a Technical Collaboration Licence Agreement. Under this arrangement, Rothwell granted Shubham and/or its affiliates an exclusive, non-transferable, royalty-bearing licence for specified wastewater treatment patents.

The licence agreement contained a dispute resolution clause providing for arbitration in Seoul in accordance with the law of the Republic of Korea.

Subsequently, on October 1, 2021, the respective promoters entered into a Joint Venture Agreement and Share Holding Agreement. This led to the creation of Rothwell Water (India) Private Limited to undertake the supply, installation, operation and maintenance of sewage treatment plants and related products and equipment under the “ROTHWELL” brand.

The Court noted that the promoters signed this agreement on behalf of the respective Indian and South Korean groups, thereby signifying that the companies represented by them were bound by the agreement.

Unlike the earlier licence agreement, Article 43 of the joint venture agreement provided for arbitration in Mumbai under Indian law if the parties failed to settle their disputes amicably after 30 days of consultation.

A third arrangement followed on February 1, 2023, when Shubham and Rothwell executed a memorandum of understanding. It required Shubham to provide liaison services involving JWIL Infra Limited and the Municipal Corporation of Greater Mumbai, along with customs clearance, port handling, transportation, warehousing and other logistical services.

Clause 9 of the memorandum of understanding provided for a sole arbitrator to be appointed by mutual consent, with Mumbai as both the seat and venue of arbitration. 

The relationship deteriorated after Shubham alleged that Rothwell had incorporated a wholly owned Indian subsidiary, Rothwell Business International Private Limited, to compete with the joint venture company in breach of the joint venture agreement’s non-compete covenant.

Shubham also alleged that delays in receiving technical inputs from Rothwell resulted in the rejection of business projects. According to Shubham, those delays were used to promote the subsidiary’s business at the expense of the joint venture.

A separate financial dispute arose from the procurement of decanter systems from Rothwell worth ₹15,27,72,420 for supply to JWIL, the main contractor for the Municipal Corporation of Greater Mumbai’s Bhandup project.

Shubham claimed that government dues and related costs were payable by Rothwell under their mutual arrangement. It consequently demanded ₹4,24,35,647 towards costs, taxes, liabilities and interest allegedly incurred on Rothwell’s behalf.

On October 11, 2024, Shubham issued a notice terminating the joint venture agreement and sought ₹20 crore for business loss, apart from the ₹4.24 crore claim under the memorandum of understanding.

These were claims raised by Shubham and disputed by Rothwell. The Supreme Court’s order concerned the appointment of an arbitrator and did not determine whether these amounts were payable. 

After issuing arbitration notices on November 28, 2024, under the joint venture agreement and memorandum of understanding, Shubham approached the Supreme Court under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator.

Rothwell argued that the subsequent agreements were intrinsically connected to the 2019 licence agreement, which it described as the “mother agreement”. It maintained that the earlier agreement’s clause providing for arbitration in Korea should therefore prevail.

The respondents also alleged a breach of the licence agreement’s exclusivity clause and relied on a separate notice dated August 8, 2025, invoking arbitration in Korea.

They further objected that Rothwell Business International was an independent non-signatory entity and could not be bound by the arbitration clauses.

Shubham, however, maintained that the joint venture agreement and memorandum of understanding were independent arrangements. It relied on provisions declaring those agreements complete in respect of their respective subject matter and superseding earlier agreements on that subject.

The Supreme Court initially referred the matter to mediation. Although some progress was made, the parties could not reach an amicable settlement, prompting the Court to consider the appointment petitions on merits.

The Supreme Court reiterated that Section 11(6-A) embodies the principle of minimal judicial intervention by restricting the referral court’s inquiry to the prima facie existence of an arbitration agreement.

It relied on In re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899, reported in (2024) 6 SCC 1.

In the present case, the existence of the arbitration agreements governing disputes under the joint venture agreement and memorandum of understanding was admitted. The objection concerned whether the earlier licence agreement displaced those clauses.

Examining the contractual arrangements, the Court found that the licence agreement concerned the grant of patent licences, the joint venture agreement concerned the creation and business activities of an Indian joint venture company, and the memorandum of understanding concerned liaison and other services.

The Court therefore concluded that the three agreements prima facie operated in different fields. Disputes arising exclusively under the later agreements were amenable to their own arbitration clauses.

This conclusion was reinforced by Article 25 of the joint venture agreement and Clause 10.8 of the memorandum of understanding, which superseded prior agreements concerning their respective subject matter. 

The Supreme Court held that the argument concerning overlap between disputes under the later agreements and claims under the licence agreement fell within the arbitrator’s jurisdiction.

The arbitrator would determine the scope and ambit of disputes amenable to arbitration under the joint venture agreement and memorandum of understanding. The alleged overlap could not justify refusing a reference at the threshold.

The Court similarly left the non-signatory objection concerning Rothwell Business International to the arbitrator.

It noted that the subsidiary was wholly owned by Rothwell, a signatory, and was alleged to have been incorporated in breach of the joint venture agreement. In these circumstances, whether the subsidiary was bound by the arbitration agreement was a contentious issue requiring adjudication by the arbitrator.

The order therefore did not conclusively hold that the subsidiary was bound by the arbitration clauses merely because it was wholly owned by a signatory. 

The Supreme Court appointed Justice Ramesh Deokinandan Dhanuka as the sole arbitrator and granted him liberty to fix his remuneration and fees. It made no order as to costs.

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