Winding-up petitions held to be non-arbitrable

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Delhi High Court recently restated that an arbitration clause
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Delhi High Court recently restated that an arbitration clause could not oust the jurisdiction of a company court to adjudicate a winding-up petition as disputes relating to insolvencies are non-arbitrable.

In HSH Nordbank v Goodwill Hospital and Research Centre Limited, following a default in the repayment of an amount extended under a financial facility, the lender, Nordbank, filed a petition before the high court under sections 433(e) and 433(f) read with sections 434 and 439 (1)(b) of the Companies Act, 1956, seeking to wind up the debtor, Goodwill Hospital. The latter objected on the ground that the agreement between the parties had an arbitration clause and that clause 12 of the agreement provided that the agreement was to be governed by the laws of Sweden.

The agreement further provided that any disputes between the parties were to be adjudicated in accordance with the rules of the Arbitration Institute of the Stockholm Chamber of Commerce. Hence, the debtor applied to the high court to refer them to arbitration.

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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.

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