The question whether an agreement contains an arbitration clause still spawns long litigation, though contracts are supposed to be drafted by sharp-minded lawyers. In the latest such case, the Supreme Court ruled that despite the use of words like ‘mediators/arbitrators’ and ‘binding decision’, there was no clear indication that the parties had agreed to refer disputes to arbitration.
The case, Shyam Sunder vs Narotham Rao, arose from disputes over sale and purchase of shares of a cement company among the directors. The court stated that the words mediators/arbitrators were used in a “loose” sense. The two persons named to conduct the affairs were, in fact, escrow agents who had no adjudicatory functions. The idea emerging from the contract is only that the two persons do all the things necessary during the implementation of the transactions between the parties to see that the transactions get successfully completed. There was no clear arbitration clause.