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Re: leave & license agreement (Property Law)

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Author : Arati Gawde

Posted On 25 September 2013 at 11:52

Please Guide I want to prepare Leave & License (L&L) Agreement.

In L & L Agreement if Party desire to use Arbitration clause instead of Litigation Clause then can they use? Or Party must have to use Litigation Clause & not Arbitration Clause in L & L Agreement?

Expert : Ms.Nirmala P.Rao

Posted On 25 September 2013 at 13:14

Dear Client,

In the eventuality of any disputes arising between the parties to a particular agreement - such disputes can be settled by an arbitrator or courts as the parties to an agreement wish. So, you can provide for either arbitration clause or litigation clause in an agreement as the parties thereto are at liberty to set the terms such as jurisdiction of courts, arbitrators etc to govern their future disputes so long as such T& C are not illegal,immoral or opposed to public policy.

Ms.Nirmala P.Rao
Legal Expert

Expert : ajay sethi

Posted On 25 September 2013 at 13:25

the agreement should mention in the event of disputes it would be subject to jurisdiction of courts in _________ only .no need for arbitration clause

Expert : ajay sethi

Posted On 25 September 2013 at 13:29

there can be no arbitration clause in leave and license agreement .

Expert : ajay sethi

Posted On 25 September 2013 at 13:33

In a landmark judgment passed by a Full Bench of the Bombay High Court (“Court”), the Court
has laid down the law regarding operation of an arbitration clause in agreements giving a license
to use property executed in Greater Mumbai. The Court has thereby confirmed its earlier
judgments which held that arbitration clauses in Leave and License Agreements pertaining to
properties situated in Greater Mumbai are void and the jurisdiction to try all disputes in such
arrangements vests with the Small Causes Court in Mumbai as per the provisions of the
Presidency Small Causes Court Act, 1882 (“Presidency Act”).
The Court observed that Section 41 (2) of the Presidency Act is a special law which in turn has
constituted special courts for adjudication of disputes specified therein between the licensor and
licensee or a landlord and tenant. Thus the Court held that Section 5 of the Arbitration Act in a
sense was not an absolute non-obstante clause and cannot affect the laws that have been in
force and thus Section 41 of the Presidency Act falls within the ambit of Section 2 (3) of the
Arbitration Act. As a result, even if the License Agreement contains an Arbitration clause, the
exclusive jurisdiction of the Courts of Small Causes under Section 41 of the Presidency Act, is not
affected in any manner.

Expert : Ms.Nirmala P.Rao

Posted On 25 September 2013 at 14:55

Dear Client,

There is no absolute bar of excluding arbitration clause in Lease & License Agreement according to the Supreme Court in Dolphins Drillings Limited vs. ONGC unless the arbitration results in imposing undue burden on the Licensee etc. and the Supreme court held that such agreements should be carefully drafted invoking dispute resolution through arbitration clauses. Please read on:
In the present case the issue before the SC was whether an arbitration clause in a contract is a one-time recourse available to the parties to the contract or whether the parties can invoke the arbitration clause repeatedly for different disputes. The respondent raised an objection with regard to the repeated invocation of the arbitration clause on the ground that the financial burden cast by the arbitration proceedings was quite onerous. The SC while considering the said question in the facts of the case answered the question in negative and held that unless the arbitration clause or arbitration agreement expressly provides so, it cannot be held that once the arbitration clause is invoked the remedy of arbitration is no longer available in regard to other disputes that might arise in future. The SC expressed its opinion that the process of arbitration had become a time-consuming and expensive mode of resolution of disputes and suggested that the problem of financial burden cast upon the parties resorting to arbitration should be remedied at the earliest by proper drafting of arbitration clauses. The SC expressed that the arbitration clauses should be drafted in such manner that the remedy could be used only at the conclusion of the work or on termination of the agreement.

Ms.Nirmala P.Rao
Legal Expert

Expert : ajay sethi

Posted On 25 September 2013 at 16:27

in mumbai disputes relating to leave and license cannot be referred to arbitration. HC has relied upon SC judgments in support of its findings

Expert : Ms.Nirmala P.Rao

Posted On 25 September 2013 at 17:04

Dear Client,

Dolphins Drillings Judgement was rendered by the Hon'ble Supreme Court in 2010 and The Bombay High court's Judgment was earlier, i.e., in 2008.The Supreme court Judgment is binding on all other Courts of India and the Supreme Court didn't exclude arbitration clauses in Leave & License Agreements.

Ms.Nirmala P.Rao

Author : Arati Gawde

Posted On 26 September 2013 at 14:08

Thanks@ Expert.. I have recevied information what i require..

Expert : ajay sethi

Posted On 26 September 2013 at 14:47

in dolphin case the SC did not have to consider whether in leave and license agreement executed in Mumbai whether arbitration clause was valid or not . the Sc did not consider whether bar imposed under Small cause act ousting arbitration was valid or not .
whereas Bombay high court judgment was on the specific issue relating to leave and license and after consideration of various SC judgments on said issue .
hence i disagree with learned expert



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