The Bombay High Court has held that an arbitral tribunal cannot excuse disclosure of a contract central to an alleged breach of exclusivity or non-compete obligations solely on the basis of an asserted contractual confidentiality obligation, particularly where a court has already directed disclosure and where standard protective mechanisms such as redaction, confidentiality rings, and restricted access remain available. A private confidentiality clause in a commercial contract cannot override a legal obligation to disclose before a court or tribunal in order to adjudicate the dispute properly.
The Court further laid down that, in construing a negotiated exclusivity clause in a joint venture agreement, the word “offered” must be given its contractual meaning and cannot be judicially rewritten to mean “accepted and paid for” or “purchased”. Where the record shows that the relevant technology was offered to the joint venture and its deployment continued to be pursued, the tribunal cannot infer rejection merely from postponement of purchase. In such a joint venture context, the clause is to be viewed not as a simple restraint on trade but as a positive covenant to conduct the business through the exclusive joint venture vehicle in the defined territory.
A Single Judge Bench of Justice Somasekhar Sundaresan observed that the arbitral tribunal had adopted an untenable approach in excusing production of the Bhutan contract merely because the investor invoked a confidentiality clause said to exist in that very contract. The Bench observed that commercial confidentiality clauses ordinarily yield to legal, regulatory, or court-directed disclosure obligations, subject to mechanisms such as consultation, redaction, confidentiality rings, and controlled access.
The Bench found that the arbitral tribunal had not even called for the confidentiality clause itself, nor the full correspondence with Bhutan, and had relied only on two disjointed letters without the intermediate communication or any proper examination of whether limited or protected disclosure could be made. In the Court’s view, permitting a party to avoid scrutiny of an alleged non-compete breach by invoking an unseen confidentiality clause in the allegedly offending contract would render such obligations effectively immune from adjudication.
On interpretation of “offered”, the Bench disagreed with the arbitral tribunal’s view that the word should be understood as meaning technology actually made available, accepted, and paid for. The Bench held that such a reading rewrote the contract. At the prima facie stage, where commercially sophisticated parties had chosen the word “offered”, it was not permissible to substitute it with “purchased” or “deployed”. The material on record did not support any rejection of the technology by the joint venture; rather, it showed continuing pursuit of deployment in India.
The Bench further observed that Clause 18.3 was not merely a restraint on trade, but a commitment to conduct trade in an exclusive collaborative relationship through the joint venture. Accordingly, the tribunal’s conflation of “offered” with “accepted and paid for” was found implausible and contrary to the contractual text.
The Bench also clarified that it did not disturb the tribunal’s refusal to stay performance of the Bhutan contract itself, noting that injuncting the contract could cause grave and irreparable harm. However, the Bench emphasized that even if the Bhutan contract was not to be halted, the subject matter of the arbitration agreement, namely the exclusivity of the joint venture as the chosen vehicle for doing business in the Territory, still required preservation. For that purpose, disclosure of the Bhutan contract and related material was necessary at least to assess the scale of injury and possible protective measures, including damages-related preservation of the petitioner’s claim.
Briefly, the petition under Section 37 of the Arbitration and Conciliation Act, 1996 challenged an arbitral tribunal’s order dated 1 April 2026 rejecting the petitioner’s application for interlocutory relief. The petitioner, Oil Field Instrumentation India Pvt Ltd., was the Indian promoter of a joint venture company, Xcalibur McPhar International Private Limited, while Respondent No. 1, Xcalibur Multiphysics Group S.L., was the foreign investor holding 51% in the joint venture under a shareholders’ agreement dated 17 October 2022. The agreement contemplated that the joint venture would be the exclusive vehicle for carrying on the business of airborne geophysical surveys in the defined “Territory”, which expressly included Bhutan, with Iraq being the only non-exclusive market. The dispute arose because the investor, through its Australian affiliate, obtained and performed a contract for aerial geophysical survey work in Bhutan outside the joint venture structure.
The non-compete controversy centred on Clause 18.3 of the shareholders’ agreement, which restrained the shareholders from directly or indirectly engaging in any competing business in the Territory, while Clause 18.3.5 limited the restriction to technologies offered by the investor to the joint venture and excluded certain unique airborne survey technologies and drone-based surveys, subject to Clause 18.3.6. The petitioner had earlier moved the Court under Section 9, where an ad interim order dated 9 May 2025 restrained the investor from negotiating and signing new contracts in the Territory except through the joint venture, while permitting the Bhutan activity to continue subject to disclosure of the Bhutan contract and supporting documents. The matter was later converted into Section 17 proceedings before the arbitral tribunal, which denied interim relief and excused non-disclosure of the Bhutan contract on the basis of an asserted confidentiality obligation and refusal by the Government of Bhutan to permit disclosure.
The second core issue concerned whether the technology used in Bhutan, identified as iCORUS-X, had been “offered” to the joint venture within the meaning of Clause 18.3.5. The record showed that the technology had been offered to the joint venture in 2023; the CEO of the joint venture had discussed its deployment with the Geological Survey of India; the joint venture had continued pursuing possible deployment in India; and board minutes reflected that the technology could be purchased as and when required. The investor nevertheless argued that the technology had not been accepted or purchased by the joint venture and could therefore, be used elsewhere, whereas the petitioner contended that the offer had not been rejected and the exclusivity obligation continued to apply.
