In an article in the Financial Express, my colleague Debashish Sankhari and I have looked at whether disputes of oppression and mismanagement in relation to the
affairs of a company can be adjudicated through arbitration. This is
an important practical question for many a financial investor (and even a
long-term strategic investor) who has agreed to arbitration clauses in
the investment/ shareholder agreements, and which may also have been
incorporated in the articles of association of the company.
affairs of a company can be adjudicated through arbitration. This is
an important practical question for many a financial investor (and even a
long-term strategic investor) who has agreed to arbitration clauses in
the investment/ shareholder agreements, and which may also have been
incorporated in the articles of association of the company.
After examining various CLB orders and the Supreme Court judgement in Booz Allen & Hamilton, we come to the conclusion that the test to determine as to whether the matter/ claim of oppression
and mismanagement is to be relegated to arbitration is to examine as to
whether the allegations of oppression/mismanagement can by adjudicated
without reference to the terms of the arbitration agreement. In other words, the nature of the allegations should be such that
if established, it could definitely be declared as an act of
oppression/ mismanagement. In such cases, the matter cannot be referred
to arbitration.
— Satyajit Gupta