Form Versus Function: Re-Examining Arbitration Clauses In Commercial Contracts
Darshita Johari, B.B.A. LL.B. (Hons.), Symbiosis Law School, Pune
ABSTRACT
Between 2025-2026, the Supreme Court of India decided a trilogy of cases, starting from the infamous South Delhi Municipal Corporation v. SMS Ltd., Alchemist Hospitals Ltd. v. ICT Health Technology Services India Pvt. Ltd., to the most recent Nagreeka Indcon Products Pvt. Ltd. v. Cargocare Logistics (India) Pvt. Ltd., that collectively re-drew the boundary of an arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996. Each decision struck down a clause that used the vocabulary of arbitration without its substance. This article argues that the deeper problem is structural rather than merely rhetorical: Indian arbitration law possesses no settled taxonomy for distinguishing agreements that never came into existence from agreements that exist but were imperfectly performed. Drawing on the jurisdiction vs. admissibility distinction that has matured in England, Singapore and Hong Kong, this article proposes a two-track 'curable-defect' framework under which only defects going to consensus ad idem, neutrality or the binding character of the outcome void the agreement, while procedural and multi-tier defects are treated as admissibility questions for the tribunal. It further proposes an original institutional mechanism - a voluntary Section 7 Compliance Certification issued by arbitral institutions at the contract- drafting stage as a preventive complement to post-hoc judicial correction. The article situates these proposals within the Mediation Act, 2023 and the growing use of AI-assisted drafting and closes with concrete recommendations for legislators, institutions and transactional lawyers.
Keywords: arbitration agreement, Section 7, jurisdiction and admissibility, multi-tier clauses, Mediation Act 2023, contract drafting, Indian arbitration reform.
