There Cannot Be Any Ifs & Buts, Parties Must Give A Resounding “Yes” To Arbitration: Calcutta HC
The Calcutta High Court stated that there should be no room for ambiguity or hesitation in an arbitration agreement, highlighting that parties must unmistakably express their consent to arbitration.
The petitioner had filed a petition seeking the appointment of an arbitrator under Section 11 of The Arbitration and Conciliation Act, 1996. The dispute arose from the e-tender notice issued by the respondent, Eastern Coalfields Limited (ECL), for a project. The petitioner relied on Clause 13 of the General Terms and Conditions of the e-tender notice as the arbitration clause.
A bench of Justice Moushumi Bhattacharya held, “In essence, there cannot be any ifs and buts or an undecided mumble; the parties must give a resounding “Yes” to arbitration. For a movement analogy; the arbitration agreement is not about a hesitant 1 step ahead – 2 steps backward / back-tracking but a confident 1–way stride forward to arbitration.”
Advocates Debajyoti Basu, Diptomoy Talukdar, Dibyendu Ghosh, C. Chatterjee appeared for the Petitioners and Advocates Debnath Ghosh, Sayed Nurul Arefin, Sayed M. Arefin, Rashmi Binayak appeared for the Respondents.
The respondent contested the maintainability of the application, arguing that there is no arbitration agreement between the parties.
The issue before the Court was whether the use of the term "may" in the arbitration clause constituted a valid arbitration agreement under Section 7 of the 1996 Act.
The Court referred to the principles laid out in Jagdish Chander vs. Ramesh Chander (2007) 5 SCC 719, emphasizing the importance of clear intent to arbitrate. It underscored that the use of words like "may" may introduce ambiguity and lack of clarity in expressing the parties' intention to arbitrate. The Court added, “Jagdish Chander masterfuly encapsulates the parameters of what constitutes an arbitration agreement and more important, the parties intention to arbitrate. The will to arbitrate must clearly be articulated in the arbitration clause. There is no room for any doubt or second-guessing. Parties must be clear in their minds that they wish to subject themselves to arbitration as the chosen mechanism of dispute resolution and ensure that the intention is expressed in writing in the form of the arbitration agreement.”
The Court concluded that the word "may" in Clause 13 gives an option to the parties to either refer the dispute to arbitration or refrain from doing so. This lack of unequivocal commitment and the conditional nature of the clause create uncertainty regarding the parties' intentions.
The Court also noted previous cases, such as Food Corporation of India v. National Collateral Management Services Limited and Mahanadi Coalfields Ltd. v. IVRCL AMR Joint Venture, where the presence of similar terms like "may" led to the conclusion that there was no clear intention to enter into an arbitration agreement.
The Court dismissed the petitioner's application on the grounds of maintainability, stating that Clause 13 does not constitute or contain a valid arbitration agreement. The Court emphasized the need for clarity in dispute resolution clauses and urged parties to be cautious about vague or uncertain terms in such agreements.
Finally, the Court acknowledged that Clause 32 of the Instructions to Bidders provides an alternative remedy for aggrieved parties to approach the jurisdictional court, ensuring that the petitioner is not left without a legal recourse.
Cause Title: BGM and M-RPL-JMCT (JV) v. Eastern Coalfields Limited
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