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ARTICLE · 23 JANUARY 2026

Clause Stating Redressal Of The Dispute May Be Sought Through Arbitration Is Not A Valid Arbitration Agreement

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In a significant ruling, the Hon'ble Supreme Court in BGM And M-RPL-JMCT (JV) v. Eastern Coalfields Limited, 2025 INSC 874, clarified that a clause stating redressal of the dispute may be sought through arbitration is not a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996.

IndiaLitigation, Mediation & Arbitration
Rajat Jain
Rajat Jain
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In a significant ruling, the Hon'ble Supreme Court in BGM And M-RPL-JMCT (JV) v. Eastern Coalfields Limited, 2025 INSC 874, clarified that a clause stating redressal of the dispute may be sought through arbitration is not a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996.

The Hon'ble Court while deciding the present case relied upon its earlier decisions in Mahanadi Coalfields Ltd. vs. IVRCL AMR Joint Venture, (2022) 20 SCC 636 and Jagdish Chander vs. Ramesh Chander and Others, (2007) 5 SCC 719, and held as under:

"That mere use of the word "arbitration" or "arbitrator" in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration In Jagdish Chander (supra), use of words such as "parties can, if they so desire, refer their disputes to arbitration", or "in the event of any dispute, the parties may also agree to refer the

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