Supreme Court Holds That An Arbitration Clause Using The Term “Can Be Settled By Arbitration” Does Not Constitute A Valid Arbitration Agreement

The Supreme Court through its judgement dated 17.04.2026 in the matter of Nagreeka Indcon Products Private Limited v Cargocare Logistics (India) Private Limited¹ held that an arbitration clause using the term “can be settled by arbitration” does not constitute a valid arbitration agreement.

The court held that words used in the agreement should disclose a determination and obligation to go for arbitration and not only provide for the possibility of going to arbitration. When the words provide only a possibility, the same does not constitute a valid arbitration agreement. The word ‘can’ as ordinarily understood refers to “capability or factual possibility”. The use of word ‘can be settled by arbitration’ indicates merely the future possibility of referring disputes to arbitration and cannot be said to be binding arbitration agreement.

Footnote

1. 2026 INSC 384.