#Section 7 Arbitration Act

The Bombay High Court held that the clause 'Arbitration Subject to Mumbai Jurisdiction' in a purchase order constitutes a valid arbitration agreement under Section 7, even though it lacks mandatory referential language or procedural machinery. The court appointed a sole arbitrator under Section 11(6), affirming that minimalist clauses can satisfy the statutory threshold for arbitration agreements in commercial contracts.

The Bombay High Court nullified an arbitral award because a new agreement containing an arbitration clause did not automatically govern disputes under a prior, still-active toll collection contract where jurisdiction was expressly reserved for civil courts. This reinforces that arbitration requires clear, specific consent per dispute context-not blanket assumption through contract substitution. Contractors and infrastructure agencies must now draft replacement agreements with explicit jurisdictional carve-outs.

The Supreme Court holds that arbitration clauses using the word 'can' express possibility, not obligation, and therefore fail to satisfy the mandatory language required under Section 7 of the Arbitration and Conciliation Act, 1996. This clarifies that party autonomy demands unequivocal intent - businesses must draft arbitration clauses with 'shall' or 'must' to ensure enforceability, affecting thousands of commercial contracts with ambiguous dispute resolution language.