Lawstreet Journal

Sole Proprietorship Will Fall Under International Commercial Arbitration if Proprietor is a Habitual Resident of a Foreign Country: SC

Lawstreet Journal 11 Mar 2021 4:21pm

Image courtesy: Lawstreet Journal Judiciary Sole Proprietorship Will Fall Under International Commercial Arbitration if Proprietor is a Habitual Resident of a Foreign Country: SC

A bench comprising Justices RF Nariman and BR Gavai of the Supreme Court has held that a sole proprietorship will fall under international commercial arbitration if the proprietor is a habitual resident of a foreign country, notwithstanding the fact that the proprietary concern is carrying out business in India.

The bench while holding this set aside an order of the Delhi High Court appointing an arbitrator in the case Amway India v. Ravindranath Rao and another and said that the HC has no jurisdiction as the dispute was an international commercial arbitration within the meaning of Section 2(1)(f) of the Arbitration and Conciliation Act, 1996.


Matter before the court:

The matter arose out of a distributorship agreement between Amway and the respondents, Ravindranath Rao Scindia and Indumati Scindia. The respondents had applied for a distributorship of Amway products as a single entity under the name “Scindia Enterprises.”

Certain disputes which arose out of the agreement, seeking to which the respondents sought arbitration and approached the Delhi High Court for the appointment of an arbitrator under Section 11(6) of the Arbitration Act. Amway opposed the maintainability of the petition by saying that the matter was an international commercial arbitration as the respondents were habitual residents of the United State of America.


Judgment by Delhi HC:

The Delhi High Court held that since the central management and control of this association or body of individuals is exercised only in India under Section2(1)(f)(iii), the dispute is not an international commercial arbitration. Court then allowed the application by placing reliance on the SC precedent… Continue Reading...

Tagged: Supreme Court of India  
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