ROLE OF ARBITRATION IN SHAREHOLDER DISPUTES

AUTHOR – DIKSHA RAO, STUDENT ATCHRIST (DEEMED TO BE UNIVERSITY), PUNE, LAVASA, CAMPUS

BEST CITATION – DIKSHA RAO, ROLE OF ARBITRATION IN SHAREHOLDER DISPUTES, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 4 (2) OF 2024, PG. 315-321, APIS – 3920 – 0001 & ISSN – 2583-2344.

ABSTRACT

The concept of arbitrability in India, particularly concerning shareholder disputes, has garnered significant attention and debate since the enactment of the Arbitration and Conciliation Act 1996. Understanding arbitrability’s definition is crucial as it delineates the scope of disputes amenable to arbitration versus those falling within the exclusive jurisdiction of state courts. While Indian courts have established criteria for determining arbitrability, the issue remains complex and varies across jurisdictions. This article examines the divergent perspectives on arbitrability, particularly focusing on shareholder disputes, which have become increasingly common amidst India’s economic growth. The enforcement and interpretation of shareholder agreements (SHA) vis-à-vis a company’s articles of association (AOA) have led to contrasting judicial interpretations, further complicating the landscape. Recent Supreme Court rulings, notably in Booz Allen & Hamilton Inc v SBI Home Finance Inc and Vidya Drolia v. Durga Trading Corporation, have attempted to provide clarity on arbitrability criteria, emphasizing distinctions between rights in personam and rights in rem. However, challenges persist, especially regarding the enforceability of arbitration provisions solely within SHAs. Additionally, shareholder disputes intersect with statutory remedies under the Companies Act 2013, particularly in cases of oppression and mismanagement, which are exclusively adjudicated by specialized tribunals. Despite judicial efforts to address arbitrability, the intricate nature of shareholder disputes necessitates a nuanced, fact-based approach, balancing the parties’ contractual autonomy with statutory safeguards. Thus, while arbitration offers a potential avenue for dispute resolution, the unique circumstances of each case demand careful consideration to ensure equitable outcomes.

Keywords – Arbitrability, Arbitration and Conciliation Act 1996, Shareholder Disputes, Legal Framework, Arbitration Agreement, Supreme Court of India, Companies Act 2013, Oppression and Mismanagement.