A short arbitration clause remains binding where commercial context establishes clear intent to arbitrate.

The Applicants issued a purchase order dated 19 June 2024 for the supply of a hydraulic press/machine pursuant to the Respondents’ quotation dated 18 June 2024. The purchase order contained Clause 9: “Arbitration ~ Subject to Mumbai Jurisdiction.”

Disputes subsequently arose concerning the Respondents’ performance and alleged breaches. The Respondents instituted Commercial Suit No. 11 of 2026 before the Civil Judge (Junior Division), Gurugram.

The Applicants invoked Clause 9 by notice dated 11 February 2026 and proposed the appointment of a sole arbitrator; the Respondents disputed the existence of a valid arbitration agreement by their reply dated 23 February 2026.

The Applicants accordingly filed the present application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“the Act”) seeking appointment of an arbitrator.

The Respondents contended that Clause 9 was merely an abbreviated and ambiguous reference to arbitration and Mumbai jurisdiction, did not expressly mandate arbitration, and lacked a procedure for constituting the arbitral tribunal.

They also relied on the Applicants’ participation in the Gurugram proceedings and their stated reliance on Section 8 of the Act.

Whether Clause 9 of the purchase order—“Arbitration ~ Subject to Mumbai Jurisdiction”—constituted a valid and binding arbitration agreement under Section 7 of the Act?

Whether the absence of express words such as “shall be referred” or “will be referred”, a detailed appointment procedure, and an express stipulation that the award would be final and binding invalidated the arbitration agreement?

Whether the reference to “Mumbai Jurisdiction” was inconsistent with, or destroyed, the arbitration agreement?

Whether the Court should appoint a sole arbitrator under Section 11(6) of the Act?

Section 7 of the Arbitration and Conciliation Act, 1996 does not prescribe any particular form of words for creating an arbitration agreement; the agreement must, however, disclose a clear intention to submit disputes to arbitration.

Section 11(6) empowers the Court to appoint an arbitrator where the agreed appointment mechanism has failed.

Applying K.K. Modi v. K.N. Modi, (1998) 3 SCC 573, and Babanrao Rajaram Pund v. Samarth Builders & Developers, (2022) 9 SCC 691, the Court held that the arbitration agreement must contemplate adjudication of the parties’ substantive rights by a tribunal whose decision is binding, but every attribute need not be expressly stated in the clause.

Jagdish Chander v. Ramesh Chander, (2007) 5 SCC 719, requires a present agreement to arbitrate and distinguishes it from a mere agreement to agree to arbitration in the future.

BGM and M-RPL-JMCT (JV) v. Eastern Coalfields Ltd., 2025 INSC 874, was distinguished because the clause there used permissive language—“may be sought”—which demonstrated that arbitration depended on future consent.

Relying also on Enercon (India) Ltd. v. Enercon GmbH, (2014) 5 SCC 1, the Court adopted a pragmatic and commercially sensible approach rather than a technical or pedantic construction of an arbitration clause.

The Court read the words “Arbitration” and “Subject to Mumbai Jurisdiction” together as one numbered commercial term in a concluded purchase order, rather than treating “Arbitration” as an irrelevant heading.

Unlike clauses containing expressions such as “may be referred to arbitration if mutually agreed”, Clause 9 did not make arbitration conditional upon any future consent.

The use of the word “Arbitration” in the commercial terms therefore demonstrated the parties’ intention to resolve disputes through arbitration, while “Mumbai Jurisdiction” supplied the territorial connection or supervisory jurisdiction.

The Court held that the absence of express words such as “shall” or “will”, a tribunal-appointment mechanism, and a statement that the award would be final and binding did not negate the parties’ intention to arbitrate.

Those matters could be addressed through the Act, and the absence of appointment machinery concerned the procedure for implementing arbitration, not the existence of consent to arbitrate.

The Applicants’ later invocation of arbitration did not create the agreement, nor did the Respondents’ denial of it destroy an agreement already contained in the purchase order.

The Court also declined to decide the territorial maintainability of the Gurugram suit, leaving that question to the court seized of those proceedings.

The clause was sufficiently clear when read in its commercial context, and the reference to Mumbai jurisdiction did not invalidate the agreement.

The application under Section 11(6) was therefore allowed, and Mr. Shadab Jan, Advocate, was appointed as the sole arbitrator to adjudicate disputes arising out of or connected with the purchase order.

The parties were directed to share the arbitral costs and fees equally in the first instance, subject to the final award on costs; all merits-related issues were left open before the arbitral tribunal.