RM Investment & Trading Co. Pvt Ltd v. Boeing Co.
India Supreme Court
XXII Y.B. Comm. Arb. 710 (1997)
- Written by Mary Katherine Cunningham, JD
Facts
In 1986, RM Investment & Trading Co. Pvt Ltd (RMI) (plaintiff) entered a Consultant Services Agreement to provide consulting services to Boeing (defendant). After executing the Consultant Services Agreement, RMI and Boeing agreed to extend the agreement until 1987 to allow Boeing time to sell airplanes to Air India. When Boeing and Air India executed the purchase agreement for the two airplanes, RMI demanded a commission from Boeing. Boeing refused to pay the commission, so RMI sued Boeing in the Indian High Court. The Consultant Services Agreement contained an arbitration clause, and Boeing sought a stay based on that arbitration clause. Boeing argued that Section 3 of the Indian Foreign Awards Act permitted the stay because the Consultant Services Agreement was a commercial agreement as defined by the act. The Indian High Court dismissed Boeing’s application for a stay, finding that under the Indian Foreign Awards Act, a suit cannot be stayed unless the court finds the parties to the arbitration agreement are in a commercial relationship. The Indian High Court found that the Consultant Services Agreement was not a commercial agreement under Section 3 of the Indian Foreign Awards Act of 1961. Boeing appealed the dismissal of the stay, and the supreme court reversed the decision. RMI then appealed the granting of the stay to the Indian Supreme Court. RMI argued that under the Indian Foreign Awards Act a commercial contract necessarily involves the sale and purchase of goods. RMI argued that as an agreement to provide consulting services, the high court misconstrued the Indian Foreign Awards Act by finding that the Consultant Services Agreement was a commercial agreement as defined by Section 3 of the act.
Rule of Law
Issue
Holding and Reasoning (Agrawal, J.)
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