Brief Overview:

Where an escrow agreement (“Escrow Agreement”) is executed in furtherance of a Share Transfer Agreement (“STA”) containing an arbitration clause, disputes under the Escrow Agreement are also arbitrable, even without a standalone arbitration clause.

Technical Details:

Whether an arbitration clause in a STA can extend to an Escrow Agreement that does not contain an arbitration clause?

The Calcutta High Court (“High Court”) answered in the affirmative, stating that:

1) Yes, in the event the contracts were interconnected, forming a single commercial transaction, then an arbitration clause under a STA can extend to an Escrow Agreement.

2) The High Court specified that the arbitration clause can only extend if the contract explicitly refers to the document containing it, demonstrates clear intent to include it, and the clause is applicable and not inconsistent; otherwise, disputes cannot be arbitrated by incorporation.

JC takeaway:

Arbitration clause in one agreement can bind related agreements forming a single commercial transaction, even if those agreements lack an arbitration clause.

For further details, please see:

Asian Tea and Exports Limited V. Priyanka Gupta and Ors. (APOT/213/2025 IA No. GA/1/2025), Calcutta High Court.

Calcutta High Court Judgment – Asian Tea & Exports v. Priyanka Gupta.pdf

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