JSA Prism (Dispute Resolution) – February 2023

Use of the word 'may' in an arbitration clause does not amount to parties agreeing to mandatory arbitration clause under which the courts would exercise jurisdiction under the Arbitration Act.

A single bench of the Bombay High Court ("Bombay HC") in its recent judgment GTL Infrastructure Ltd. v. Vodafone Idea Ltd. (VIL)¹ inter alia held that an arbitration agreement which postulates a fresh consensus between the parties before referring the disputes to arbitration is not a mandatory/valid arbitration agreement. While deciding applications under Section 11(6) of the Arbitration and Conciliation Act, 1996 ("Arbitration Act") for appointment of an arbitrator, the Bombay HC held that in arbitration agreements where the word 'may' has been used, there is no mandatory agreement to initiate arbitral proceedings.