Misc, SC Judgement Dated 18/07/2025 – Arbitration clause “May Be Sought” is not binding

 Case of BGM and MRPL-JMCT (JV) vs Eastern Coalfields limited, SC Judgement Dated 18th July 2025. The Court referred to its earlier judgments which established that for an arbitration agreement to exist, there must be a clear intention and an obligation to refer disputes to arbitration, not merely a possibility or a tentative arrangement requiring further consent. The presence of words like “may” in phrases 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 same to arbitration” indicates that a further agreement or consensus is required before arbitration can be initiated. The Supreme Court concluded that phrasing, “redressal of the dispute may be sought through ARBITRATION…”, falls into this category, indicating only a desire or hope for arbitration rather than a firm obligation. Consequently, the Supreme Court upheld the High Court’s decision, ruling that no binding arbitration agreement existed between the parties. 

(Link: SC Judgement Dated 18/07/2025)

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