SC Criticizes Ambiguous Arbitration Clauses, Calls for Judicial Vigilance

The Supreme Court has expressed serious concerns over the drafting of arbitration clauses in commercial agreements, stating that the process is being misused to complicate and prolong dispute resolution.

A bench comprising Justices Surya Kant and N. Kotiswar Singh highlighted that despite arbitration being introduced as a means for speedy and effective dispute resolution, it is evident and ironic that, in certain cases, the process has been misused to further complicate and prolong the resolution of disputes.

The Court emphasized that the drafting of arbitration clauses in commercial agreements in India leaves much to be desired. It noted that ambiguity is often embedded into such agreements, leading to misuse of the arbitration process.

The bench instructed courts to show an unwavering tendency towards rejecting shoddily drafted clauses at the very threshold, asserting that willful and wanton wastage of judicial time is highly deplorable. It is high time that arbitration clauses are worded with piercing precision and clarity, and that they are not couched in ambiguous phraseology.

This judgment underscores the judiciary’s commitment to ensuring that arbitration remains a tool for efficient dispute resolution and not a means to delay justice. Legal professionals are urged to draft arbitration clauses with utmost clarity to uphold the integrity of the arbitration process.

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