Sub-contractor not covered by arbitration clause

Sub-contractor not covered by arbitration clause
Business Standard, July 20, 2009, Page 10

The Supreme Court has ruled that an arbitration clause in a contract between the principal employer and the contractor could not be extended to subcontractors. The sub-contract in this case provided that it "shall be carried out on the terms and conditions as applicable to the main contract." The main contract carried an arbitration clause. When a dispute arose between the Kerala PWD department, the main contractor and the sub-contractor, the latter invoked the arbitration clause in the contract between the PWD department and the main contractor. The arbitrator did not allow this. Therefore, the subcontractor appealed to the Supreme Court. It dismissed the appeal (M.R. Engineers & Contractors vs

Som Datt Builders), stating that Section 7(5) of the Arbitration and Conciliation Act could not be interpreted to mean that sub-contractors could also be covered by the arbitration agreement between the main parties.