Incorporation by reference upheld for arbitration clauses; foreign arbitration and award not void on public policy grounds.

An arbitration clause incorporated by clear reference into a contract binds the parties where the adopted terms are consistent with the express bargain and intelligible. On that basis, the objection that no written arbitration agreement existed failed. A further challenge that the foreign arbitration agreement and award were contrary to public policy also failed, because a clause requiring disputes to be referred to arbitration does not amount to an absolute bar on legal proceedings and is not invalid merely because arbitration is to be conducted abroad. The parties' knowing participation in the arbitration and failure to object at the proper stage further supported enforceability.

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Issues: Whether the arbitration clause contained in the standard GAFTA contract was validly incorporated by reference into the parties' contract and whether the foreign arbitration agreement and award were unenforceable as being opposed to public policy under the Contract Act.

Analysis: The dispute turned on construction of the contract and the effect of incorporation by reference. The contract expressly adopted the terms and conditions of GAFTA Standard Contract No. 15, including its arbitration clause. Where parties consciously incorporate another document into their agreement, the incorporated terms bind them unless they are inconsistent with the express terms of the contract or are otherwise insensible or unintelligible. The objection that there was no written arbitration agreement therefore failed. The further challenge based on public policy also failed because the agreement merely required disputes to be referred to arbitration and did not absolutely bar recourse to legal proceedings. Such an agreement falls within the exception to the statutory prohibition against absolute restraints on enforcement of contractual rights. The fact that the arbitrators were located abroad did not, by itself, render the arbitration clause unlawful, especially when the parties knowingly participated in the arbitration and did not raise the objection at the appropriate stages.

Conclusion: The arbitration clause was validly incorporated and enforceable, and the award was not opposed to public policy; the objections were rejected against the appellant.

Final Conclusion: The High Court's decision making the foreign award rule of court was upheld, and the appellant's challenge to enforcement failed.

Ratio Decidendi: An arbitration clause incorporated by reference into a contract is binding where the incorporation is clear and the incorporated terms are consistent with the express bargain, and a clause referring disputes to arbitration is not void merely because the arbitration is to be conducted abroad or because it channels disputes away from ordinary court proceedings.

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