Supreme Court Calls for Reform in Arbitration Clause Drafting

The Supreme Court has voiced apprehension regarding the creation of arbitration clauses within commercial contracts. On Thursday, a bench including Justices Surya Kant and N Kotiswar Singh underscored how poorly constructed clauses complicate dispute resolutions, urging clearer drafting to prevent misuse of the arbitration process.

The concerns follow petitions contesting Delhi High Court decisions related to agreements between the Municipal Corporation of Delhi and private contractors. The apex court noted that imprecisely drafted clauses undermine arbitration's purpose of swift conflict resolution and called for legal professionals to craft clauses with greater precision.

Emphasizing the necessity for transparency and professionalism, the court suggested potential personal liability and punitive measures for those responsible for drafting deceptive clauses. This initiative aims to uphold the integrity of arbitration proceedings and preserve the sanctity of commercial agreements.

(With inputs from agencies.)