Karnataka HC Sends TableSpace-GemsCap Fee Dispute To Arbitration, Says Settlement Talks Aren’t A Mandatory Precondition

The parties entered into a Service Agreement dated 11 November 2022, under which the petitioner agreed to provide premises and related services for a monthly fee.

Clause 5 required the parties to discuss and settle disputes amicably before referring unresolved disputes to arbitration.

Following a payment dispute, the petitioner issued a notice under Section 21 of the Arbitration and Conciliation Act, 1996, and then sought appointment of a sole arbitrator under Section 11(5).

The respondent objected that the petition was premature because the petitioner had not complied with the clause’s amicable-settlement requirement.

The petitioner relied on email correspondence and argued that the requirement was directory, not mandatory.

Section 11(5) of the Arbitration and Conciliation Act, 1996 empowers the High Court to appoint an arbitrator where the parties have agreed to a sole arbitrator but the appointment process has not resulted in an appointment.

Section 11(6-A), as discussed in Mphasis Limited v. Strategic Outsourcing Services Private Limited, confines the Court’s examination at the appointment stage to the existence of an arbitration agreement; objections may be raised before the arbitrator under Section 16.

Mphasis treated a pre-arbitration amicable-settlement requirement as directory rather than mandatory, while Sobha Limited v. Nava Vishwa Shashi Vijaya Krishna Properties Pvt. Ltd. had treated such a requirement as mandatory by following SBP & Co. v. Patel Engineering Ltd.

The Court considered Duro Felguera S.A. v. Gangavaram Port Limited as explaining the limited scope of review under Section 11(6-A) after the statutory amendment.

The Court found that the email correspondence showed discussions about service-charge payments and settlement offers, demonstrating that the parties had attempted, but failed, to resolve the dispute amicably.

It further preferred the approach in Mphasis, reasoning that the amended Section 11(6-A), as explained in Duro Felguera, limited the appointment-stage inquiry and that the amicable-settlement requirement did not prevent referral to arbitration.

Since the Service Agreement contained an arbitration clause and the petitioner had invoked it by notice under Section 21, the Court held that appointment was warranted.

The parties’ claims and contentions were left open, and they were directed to appear before the Centre’s Director on 30 November 2026.