The Hon’ble Supreme Court’s judgment in _BGM and M-RPL-JMCT (JV) vs Eastern Coalfields Limited_ underscores the importance of drafting clear and specific arbitration agreements under Section 7 of the Arbitration and Conciliation Act, 1996.
Key Considerations:
– Mandatory Language : Use unequivocal language (e.g., “shall be referred to arbitration”) to establish a binding arbitration agreement.
– Scope Definition : Clearly define the scope of disputes subject to arbitration to avoid ambiguity.
– Avoid Permissive Language : Phrases like “may be” can undermine the enforceability of arbitration agreements.
By incorporating these principles into arbitration clauses, parties can ensure effective dispute resolution mechanisms.
