May Or Shall: A Curious Case Of Usage In Arbitration Clauses

In a recent judgment, the Supreme Court ("SC") in BGM and M-RPL-JMCT (JV) v. Eastern Coalfields Limited¹ reiterated that not every inclusion of an arbitration clause in a contract would amount to a valid arbitration agreement, especially when the language of the contract states that arbitration may be invoked rather than mandating it. This decision highlights the significance of precise drafting of arbitration clauses in a contract, and if due consideration is not given then the preferred choice of dispute resolution can by itself become a cause of protracted litigation.

Factual background

The case arose from a contract for transportation and handling of goods entered between BGM and M-RPL-JMCT (JV) ("Appellant") and Eastern Coalfields Limited ("Respondent"). Through the course of performance of the contract, disputes arose between the parties. The Appellant relied on Clause 13 of the General Terms of Contract ("GCC"), which formed part of the contract, to