Mere Use of Terms Like “Arbitration” or “Arbitrator” Does Not Constitute a Binding Arbitration Agreement

The Calcutta High Court held that mere use of terms like “arbitration” or “arbitrator” in a contract does not constitute a binding arbitration agreement under Section 7 of the Arbitration Act.

In a dispute involving a ₹379 crore road project with WBHDCL, the Court ruled that Clause 26.3’s use of the word “may” made arbitration optional, not mandatory, requiring fresh consent from both the parties.

Referring to Visa International v. Continental Resources (2009), Wellington Associates v. Kirit Mehta (2000), and Jagdish Chander, the Court emphasized that a clear and unequivocal agreement is essential for arbitration to be enforceable

Consequently, the application for arbitration was dismissed due to the absence of a binding agreement.