Supreme Court Affirms Arbitrability of IPR Disputes Rooted in Contractual Agreements Date of Judgment: 9 May 2025 | New Delhi

About the Court

The Supreme Court of India, as the apex judicial body, routinely delivers landmark judgments that shape constitutional interpretation, commercial jurisprudence, and procedural frameworks. It remains the highest appellate court in the country with the final word on disputes relating to fundamental rights, civil liberties, and statutory interpretation.

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About the Case

In the case of K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr. [SLP(C) No. 13012 of 2025], the Supreme Court of India settled a pivotal question in intellectual property law — whether disputes involving Intellectual Property Rights (IPR) arising out of contract-based assignments can be resolved through arbitration. The verdict confirms that when the rights in question are in personam (between the parties) and not in rem (against the world), arbitration is a valid and enforceable mechanism of dispute resolution.

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Case Timeline

Stage	Date
Commercial Court Judgment	6 February 2024
Madras High Court Judgment	9 January 2025
Supreme Court Judgment	9 May 2025

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Legal Issues and Resolution

The case originated from a commercial suit for a permanent injunction and damages filed by the petitioners against the respondents for allegedly infringing the trademark “Sri Angannan Biriyani Hotel.” The respondents invoked an arbitration clause contained in two Assignment Deeds and filed an application under Section 8 of the Arbitration and Conciliation Act, 1996. The Commercial Court accepted this request and referred the matter to arbitration, which was upheld by the High Court and eventually by the Supreme Court.

Key Findings:

• Arbitrability Test: The Court reaffirmed that disputes which are in personam — such as those arising from assignment deeds — are arbitrable, even if they relate to registered trademarks.
• Distinction Between Rights: The Court emphasized the established distinction between rights in rem (which are not arbitrable) and rights in personam (which are). Licensing or contractual disputes over IP are categorically personam and thus amenable to arbitration.
• No Bar Due to IPR Nature: The Court dismissed the petitioners’ assertion that the mere involvement of a trademark, a statutory right, renders the matter non-arbitrable. The Court clarified that the arbitration was not concerning registration or validity under the Trade Marks Act, 1999, but rather disputes arising from assignment agreements.
• Fraud and Arbitration: The Supreme Court also rejected the argument that allegations of fraud should exclude the matter from arbitration, reiterating settled law that unless fraud affects the public at large, such issues can be handled by the arbitral tribunal.

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Impact and Precedent

This judgment significantly advances the jurisprudence concerning arbitrability in India. It clarifies that:

• IPR disputes rooted in contracts are arbitrable.
• Allegations of fraud, unless implicating public interest, are not grounds to oust arbitration.
• The doctrine of separability applies — arbitration clauses are treated independently from the main contract.

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Eligibility for Reference

This decision serves as guiding precedent for:

• Contractual IPR disputes involving assignment or licensing.
• Situations where parties have a valid arbitration clause embedded in an agreement.
• Commercial suits where the main contention is the enforcement of rights arising from agreements, not from the statutory grant of IP.

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FAQs

Q1: Is every IPR dispute now arbitrable?
A: No. Only those involving rights in personam — such as licensing, assignment, or breach of IPR contracts — are arbitrable. Disputes involving grant, validity, or registration of IP rights (rights in rem) are still non-arbitrable.

Q2: Does the mere presence of fraud allegations negate arbitration?
A: Not unless the fraud affects the public at large or permeates the contract so thoroughly as to render the arbitration clause itself void.

Q3: Can non-signatories be subjected to arbitration under such agreements?
A: Yes, if they claim rights through a signatory (e.g., via gift deed or succession), as affirmed by the Commercial Court in this case.

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Important Links

📘 Arbitration & Conciliation Act, 1996

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