Arbitration Clause in Terms & Conditions (T&C) on a website is binding on the parties when Digital Agreement Engraved with Hyperlink of T&C: Delhi HC [Read Order]
The court held that an arbitration clause contained in the terms and conditions available on the website of a company would get incorporated into the agreement between the parties if the agreement makes an express reference and provides a hyperlink to T&Cs
Delhi High Court – terms and conditions – digital agreement – Websites – hyperlink -TAXSCAN
Delhi High Court – terms and conditions – digital agreement – Websites – hyperlink -TAXSCAN
The Delhi High Court held that an arbitration clause contained in the terms and conditions available on the website of a company would get incorporated into the agreement between the parties if the agreement makes an express reference and provides a hyperlink to T&Cs. It was held that such incorporation of an arbitration clause would satisfy the requirement of Section 7(5) of the Arbitration & Conciliation Act, 1996 (A&C Act) which provides that reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement.
M/s. Oravel Stays Pvt. Ltd. (OSPL) challenged the order passed by the Commercial Court rejecting the application filed under Section 8 of the A&C Act . The parties entered into a Marketing and Operational Consulting Agreement (MOCA) on 27.07.2018. Clause 15 of MOCA incorporated terms and conditions available on the appellant's website. Clause 14 of the website provided for reference to arbitration.
A dispute arose between the parties regarding the non-payment of assured monthly benchmark revenue by the appellant. Resultantly, the respondent filed a Suit before the Commercial Court. The appellant filed an application under Section 8 of the A&C Act seeking reference of the dispute to arbitration.
The Commercial Court held that Clause 14 of the T&C got incorporated in MOCA and there was a valid arbitration agreement, however, it held that the scope of the arbitration clause was limited to 'Construction, Interpretation and Application' of the agreement and the lies in the suit pertained to non-compliance of the terms of the agreement. Both parties filed appeal against this order. The High Court decided both the appeals together.
It was found that the parties had digitally entered into the MOCA, which expressly referred to the Terms and Conditions published on appellant's website. It noted that Clause 15 of the MOCA explicitly stated that by agreeing to the MOCA, the respondent also accepted the terms and conditions published on the website, which would constitute the entire agreement between the parties.
The division bench of Justices Vibhu Bakhru and Ravinder Dudeja held that an arbitration clause contained in the terms and conditions available on the website of a company would get incorporated in the agreement between the parties if the agreement makes an express reference and provide a hyperlink to T&Cs.
To Read the full text of the Order CLICK HERE
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