Court holds that clause requiring "if mutually agreed upon by the parties" does not constitute a binding arbitration agreement under Arbitration and Conciliation Act, 1996; unilateral invocation of arbitration rejected.
In a significant ruling delivered on October 7, 2026, the Karnataka High Court dismissed the petition filed by Riemen Solution Private Limited seeking the appointment of a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The dispute arose out of a Call Centre Services Agreement dated December 9, 2021, between Riemen Solution Pvt. Ltd. (Petitioner) and Swiggy Limited (Respondent).
The petitioner invoked the arbitration clause in the agreement after an unsuccessful attempt at mutual dispute resolution. However, the respondent contested the invocation, arguing that the arbitration clause was contingent upon further mutual consent, and therefore did not constitute a binding arbitration agreement.
At the heart of the dispute was Clause 14(viii) of the Agreement, which stated that in the event of disputes unresolved within 30 days of notice, the matter "shall, if mutually agreed upon by the parties, be submitted for arbitration" before a sole arbitrator mutually appointed by the parties. The petitioner contended that the clause contained all essential attributes of a valid arbitration agreement, including express references to arbitration, a sole arbitrator, final and binding awards, and procedural details such as the seat of arbitration (Bengaluru), language (English), and governing law (Indian law).
The respondent, supported by authoritative Supreme Court precedents, argued that the qualifying phrase "if mutually agreed upon by the parties" qualified the very submission of the dispute to arbitration and rendered the clause conditional, thereby lacking the present and binding intention required under Section 7 of the Arbitration and Conciliation Act to constitute an arbitration agreement.
The Court undertook a detailed examination of Section 7 of the Act, which defines an arbitration agreement as an agreement by the parties to submit disputes to arbitration. It emphasized that the fundamental requirement is consensus ad idem-a present and binding agreement to arbitrate disputes. Mere use of words like "arbitration" or "arbitrator" is insufficient if the clause contemplates arbitration only as a future possibility dependent on further consent.
Relying heavily on the Supreme Court's judgment in Jagdish Chander v. Ramesh Chander (2007), the Court reiterated that an arbitration clause must demonstrate an unconditional obligation to arbitrate and not merely a hope or possibility of arbitration. The phrase "if mutually agreed upon by the parties" was highlighted as a clear indication that the clause contemplated a further agreement before arbitration could be initiated, thus disqualifying it as a presently enforceable arbitration agreement.
The Court further distinguished the present clause from cases where parties agree presently to arbitrate but leave procedural details (such as appointment of arbitrators) to be decided later. Here, the very submission of disputes to arbitration was conditional on a future mutual agreement.
The petitioner's reliance on the Supreme Court decision in Nagreeka Indcon Products Pvt. Ltd. v. Cargocare Logistics (India) Pvt. Ltd. (2026) was found misplaced, as that case involved clauses showing clear intention to arbitrate, unlike the conditional clause in the present Agreement.
The Court underscored that Section 11 jurisdiction is limited to a prima facie examination of the existence of an arbitration agreement, and cannot be exercised absent such an agreement. It refused to rewrite the parties' bargain to compel arbitration where the contract expressly requires further mutual consent.
In conclusion, the Karnataka High Court held that the arbitration clause in the Call Centre Services Agreement did not constitute a presently binding arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996, due to the express conditionality on mutual agreement. Consequently, the petition under Section 11(6) seeking appointment of an arbitrator was dismissed.
This ruling reinforces the principle of party autonomy in arbitration agreements and clarifies that courts will not compel arbitration where parties have not unequivocally agreed to it. The decision serves as a caution to contract drafters to clearly and unconditionally stipulate arbitration obligations to avoid protracted disputes over jurisdiction.
Bottom Line:
Arbitration and Conciliation Act, 1996 Section 7 Clause providing that dispute shall be referred to arbitration only "if mutually agreed upon by the parties" does not constitute a binding arbitration agreement - Such clause contemplates future consensus and not a present obligation to arbitrate - Petition under Section 11(6) for appointment of arbitrator not maintainable.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Section 7, Section 11(6)
Riemen Solution Private Limited v. Swiggy Limited, (Karnataka) : Law Finder Doc Id # 2994773
