BGM and M-RPL-JMCT (JV) vs Eastern Coalfields Limited 2025 INSC 874 - Arbitration Agreement - Reference

Arbitration and Conciliation Act 1996 - Section 7- Any agreement, or clause in an agreement, requiring or contemplating a further consent or consensus before a reference to arbitration, is not an arbitration agreement - Mere use of the word “arbitration” or “arbitrator” in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration- (Para 26) Referred to Mahanadi Coalfields Ltd. vs. IVRCL AMR Joint Venture (Para 26) Context: In this case, the relevant clause in the Contract between parties read as follows: In case of parties other than Govt. Agencies, the redressal of the dispute may be sought through Arbitration And Conciliation Act, 1996 As Amended By Amendment Act Of 2015 - Whether this clause would constitute an arbitration agreement between the parties? SC held: Use of the words “may be sought”, imply that there is no subsisting agreement between parties that they, or any one of them, would have to seek settlement of dispute(s) through arbitration. It is just an enabling clause whereunder, if parties agree, they could resolve their dispute(s) through arbitration. In our view, the phraseology of clause 13 is not indicative of a binding agreement that any of the parties on its own could seek redressal of inter se dispute(s) through arbitration. (Para 31) Essential ingredients of an arbitration agreement as follows: (a) there must be a present or future difference in connection with some contemplated affair; (b) the parties must intend to settle such difference by a private tribunal; (c) the parties must agree in writing to be bound by the decision of such tribunal; and (d) the parties must be ad idem. (Para 20)

Arbitration and Conciliation Act 1996 - Section 7,11 - Referral Court before appointing an arbitral tribunal will have to be prima facie satisfied that an arbitration agreement as contemplated in Section 7 exists. For this limited purpose it can scrutinize the documents relied upon by the parties in proof of its existence. Though the burden of proving the existence of arbitration agreement lies on the party seeking to rely on such agreement, only prima facie proof of its existence must be adduced before the Referral Court because the Referral Court is not the appropriate forum to conduct a mini-trial by allowing the parties to adduce the evidence in regard to its existence- However, where professed arbitration agreement is found in an undisputed document, no trial or inquiry is required as to its existence. In such a situation, the Court would have to simply peruse the same to satisfy itself whether it, prima facie, fulfills the essential ingredients of an arbitration agreement as contemplated under Section 7 of the 1996 Act. But where the professed arbitration agreement is not contained in any one document and is to be inferred from two or more documents, such as exchange of letters or communications, parties may raise various pleas and place various documents to prove or disprove its existence. In such a scenario, if from the documents placed, existence of an arbitration agreement, as defined in Section 7, is prima facie made out, Referral Court, instead of undertaking a deeper probe or inquiry, should refer the matter to the arbitral tribunal. More so, because opinion of the Referral Court as to existence of an arbitration agreement is neither binding on the arbitral tribunal nor the Court dealing with the arbitral award. (Para 16-17) - Referred to Interplay Between Arbitration Agreements under Arbitration, 1996 & Stamp Act, 1899 (2024) 6 SCC 1.

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