In the matter of Quickheal Technologies vs. NCS Computech, the Bombay High Court may have re-fueled the debate on legality and validity of symmetric optional arbitration clauses in our nation.

Optional arbitration clauses are those with prefixes such as ‘May’, ‘Will’ or ‘Shall’ to the main arbitration clause. Such clause gives either of the party to arbitrate any dispute that arises between them in future. The clause is as binding as any other arbitration agreement even with the usage of such pre-fixes.

The most recent judgment on this topic was that of ‘Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. Vs. Jade Elevator Components’ wherein the Apex Court interpreted the optional arbitration clause in the agreement between the parties in the following manner: If the disputing parties are unable to settle their dispute amicably then both the parties have an option of either pursuing arbitration or litigation to get their dispute resolved.

Prior to this Zhejiang case, in the case of ‘Jagisd Chander Vs. Ramesh Chander & Ors.’ The Supreme Court affirmed that if the arbitration clause requires mutual agreement of the parties to pursue arbitration then that it is how it should be. Also in the matter of ‘Wellington Associates Vs. Kirit Mehta’ Indian Courts have held that if the words such as ‘May’ are used then, it indicates that fresh consent of the other party is required if any of the party decides to pursue arbitration to settle any dispute that arises. In such cases, the Supreme Court has not recognized such clauses as valid arbitration clauses.              

A closer look at precedents from other common law jurisdictions proves that in similar cases where prefixes such as ‘May’ are used, the Courts have confirmed over and over that such optional clauses are as valid as any other arbitration clause.

Even so the Australian Supreme Court has confirmed in ‘Pipeline Services WA Pty Ltd. Vs. ATCO Gas Australian Pty Ltd.’, that either party may be mere notice refer the dispute to arbitration. It is noted that the word ‘May’ merely showed the choice that the Parties had to resolve any dispute that arose.

It is still quite debatable whether use of ‘May’ means the consent of the other party is required to invoke the arbitration clause or does it not. Indian Judiciary must be decisive and decide which one and lay it out explicitly in a judgment because of the trend of providing options in the agreement about how to resolve disputes seems to be growing steadily globally. In my humble opinion the usage of ‘May’ should not make any arbitration clause invalid as it merely states and option. Till the time, Indian Judiciary doesn’t provide clarity; parties are advised to stick to regular arbitration clauses and avoid the usage of optional prefixes which could land them in trouble in future if any dispute arises. In case the parties insist on including an option other than arbitration as a way to resolve disputes then, they are advised to not use terms such as ‘May’, ‘Shall’ or ‘Will’ till it safe to do so.