Supreme Court Upholds Rule of Law in Contracts and Restores Arbitral Award
Introduction The Supreme Court of India, in an important judgment delivered on 23 March 2026, reaffirmed that contracts involving the…
Tag: Arbitration Law
Supreme Court Clarifies that Enablement Clauses are not Arbitration Agreements under Section 7, Redefining Threshold of Referral to Arbitration
In BGM and M-RPL-JMCT (JV) Vs. Eastern Coalfields Ltd., the Supreme Court said that enablement clauses, those containing words like “may” are not binding arbitration agreements within the meaning of Section 7 of the Arbitration and Conciliation Act, 1996. Rejected the appointment of arbitrator by the Calcutta High Court, and said that only unambiguous mandatory words generate enforceable arbitration agreements. This ruling improves contract drafting norms and restricts court’s referral powers to prima facie inquiry under Section 11.