In Brief
Intercontinental Hotels Group (IHG) and respondent Waterline Hotels entered a Hotel Management Agreement (HMA) under which IHG was to manage a Bengaluru hotel. Waterline stopped paying required fees and purportedly terminated the HMA. IHG invoked arbitration under the agreement's dispute resolution clause. Waterline challenged the arbitration, arguing the HMA was inadequately stamped under the Indian Stamp Act. The Supreme Court held that where stamp duty has been partially paid, the Court at the pre-appointment stage should refer the matter to arbitration unless there is clear 'deadwood'. Issues of stamp duty sufficiency, classification, and validity are for later determination. The arbitration agreement is separate from the underlying contract (doctrine of separability) and survives independently. The Court appointed a sole arbitrator and allowed the petition, finding no basis to prevent arbitration from proceeding.
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