Supreme Court Clarifies Arbitration Clause Cannot Be 'Optional'

The Supreme Court set aside the Madhya Pradesh High Court’s judgment, holding that if parties cannot agree on an arbitrator, the court can appoint the arbitral tribunal under Section 11(6) of the Arbitration and Conciliation Act, 1996. 

The dispute arose from the interpretation of an arbitration clause in a 2016 Partnership Deed.

The Court emphasized that arbitration clauses must be interpreted pragmatically, ensuring continuity even for legal representatives of deceased partners.

The Court also clarified that the "optional" language in the clause should not be read in isolation but in context, allowing the invocation of arbitration by an aggrieved party.

The Court directed the Madhya Pradesh Arbitration Centre to appoint an arbitrator to resolve the dispute.