Escrow-held arbitration clauses remain enforceable, permitting property-preservation injunctions while reciprocal performance disputes proceed to arbitration.
An arbitration clause in an MOU held in escrow remains enforceable where the dispute concerns fulfilment of reciprocal escrow conditions and arbitral adjudication is not expressly or necessarily excluded. The clause is treated as separable from the underlying MOU, and written communications accepting its existence support its invocation. Pending arbitration, substantial payments under the MOU, undisputed execution, and requests to adjust payments may establish a prima facie case for preserving disputed land. Injunctive relief may restrain disposal, alienation, sale, or third-party rights, while disputes over escrow performance and payment character require arbitral evidence. Appointment of a Receiver is unnecessary where an injunction adequately protects the property.
Issues: (i) Whether an arbitration agreement contained in an MOU held in escrow was valid and enforceable; (ii) Whether interim protection of the disputed land was warranted pending arbitration.
Issue (i): Whether an arbitration agreement contained in an MOU held in escrow was valid and enforceable.
Analysis: Escrow ordinarily postpones the enforceability of the instrument until fulfilment of the stipulated condition. However, where fulfilment of escrow conditions itself involves disputed reciprocal obligations, exclusion of an adjudicatory forum cannot be readily inferred. Section 7 recognises a written arbitration agreement, while Section 16 treats an arbitration clause as independent of the underlying contract and preserves it notwithstanding a challenge to that contract. The parties' communications also accepted the existence of the arbitration clause and challenged only its invocation.
Conclusion: The arbitration agreement was valid and enforceable notwithstanding that the MOU remained in escrow, in favour of the Petitioner.
Issue (ii): Whether interim protection of the disputed land was warranted pending arbitration.
Analysis: The Petitioner established a prima facie case through substantial payments made pursuant to the MOU, the undisputed execution of the MOU, and the heirs' subsequent request for payment to be adjusted against amounts payable under it. Questions concerning the escrow conditions and the character of payments required evidentiary determination in arbitration. The balance of convenience and risk of irreparable injury justified preservation of the property, though appointment of a Receiver was unnecessary.
Conclusion: An injunction restraining disposal, alienation, sale, or creation of third-party rights in the land was warranted pending arbitration; appointment of a Receiver was refused, partly in favour of the Petitioner.
Final Conclusion: The property is preserved pending arbitral determination, while disputes concerning performance of escrow conditions and the parties' substantive contractual rights remain for arbitration.
Ratio Decidendi: An arbitration clause is separable from the underlying contract and remains capable of enforcement where the dispute concerns fulfilment of conditions for release of the contract from escrow, unless arbitral adjudication is expressly or necessarily excluded.