M/S. Inox Wind Ltd. v. M/S. Thermocables Ltd.
Background
Inox Wind, a wind turbine manufacturer, bought cables from Thermocables under purchase orders that referred to attached "Standard Terms and Conditions" containing an arbitration clause. After the supplied cables developed cracked outer sheaths, Inox Wind sought to invoke arbitration, but Thermocables did not respond, leading Inox Wind to approach the Allahabad High Court to appoint an arbitrator. The High Court refused, holding that merely referring to the standard terms in the purchase order was not enough to incorporate the arbitration clause, relying on an earlier Supreme Court ruling in M.R. Engineers v. Som Datt Builders.
Decision Breakdown
The Supreme Court revisited its earlier M.R. Engineers ruling in light of later English case law (particularly the "single contract" versus "two contract" distinction), and held that where a single contract merely attaches its own standard terms and conditions (as opposed to incorporating an entirely separate contract between different parties), a general reference to those standard terms is enough to pull in an arbitration clause contained in them: a specific, separate mention of the arbitration clause is not required. Finding that Thermocables had accepted the purchase order's terms (barring the delivery period) and was aware the standard terms were attached, the Court held the arbitration clause was validly incorporated, allowed the appeal, set aside the High Court's refusal, and itself appointed a named arbitrator (Justice Sushil Harkauli) to resolve the dispute.
Lesson Learnt
In ordinary commercial purchase orders, simply attaching your own standard terms and conditions (which include an arbitration clause) and referring to them generally in the main order is legally sufficient to bind both sides to arbitration: a business does not need to separately call out the arbitration clause by name for it to apply.