The Calcutta HC has held that a clause in an agreement that merely provides the option to go for arbitration is not a valid arbitration agreement as the clause makes arbitration a mere possibility, which may unravel at any time.

Clause 7 of the agreement provided that in case of any dispute or pendency of litigation or arbitration between the parties, the performance of the agreement should not be stopped. Merely calling the clause an ‘arbitration clause’ would not make it a binding arbitration agreement. An arbitration agreement makes it mandatory for the parties to refer the dispute to arbitration.

The Court finally dismissed the petitions for the reason that there was no arbitration agreement between the parties.