A Brief Comparative Study

---

THE AUTHOR:
Sraddha Kedia, Independent Dispute Resolution Lawyer in India
Anushree Malaviya, Independent Dispute Resolution Lawyer in India

---

Introduction

Courts are often faced with the question of whether the phrase “may arbitrate” in a dispute resolution clause can be interpreted as a “shall” obligation. Typically, ‘pro-arbitration’ jurisdictions strive to give effect to the true intention of the parties (despite flawed or vaguely worded clauses), which is almost always to resort to arbitration mandatorily. However, “may” arbitrate clauses have been the subject of significant debate since the plain language neither precludes nor conclusively enables the parties from arbitration. It’s a soft nudge, and courts are left to decide which direction they should lean towards: is arbitration mandatory, permissive or an offer to arbitrate? This dilemma, and the catena of cases following it, thus brings to focus the importance of unambiguous and clear drafting of arbitration clauses.

Indian jurisprudence has evinced judicial approval that usage of “may” in an arbitration clause indicates the non-mandatory nature of resorting to arbitration. In this regard, the most recent verdict of the Supreme Court of India in BGM and M-RPL-JMCT (JV) v. Eastern Coalfields Limited, 2025 INSC 874 (“Eastern Coalfields”) continues to impact the drafting of arbitration clauses. Relying on past jurisprudence, the Court interpreted the word “may” in the arbitration clause to create a non-binding obligation to arbitrate. The court’s intention is clear – such usage would qualify merely as an enabling clause, giving the parties an option to subsequently agree to resort to arbitration. When compared to the jurisprudence developed in other leading arbitration jurisdictions, including the UK, USA, Hong Kong and Singapore, the “may” qualifier is generally interpreted as “shall” arbitrate. Here, we briefly analyse the position adopted by the Eastern Coalfields court and compare it to the parallel jurisprudence from selected global jurisdictions. After comparing the competing interpretations, we conclude with key practical and academic takeaways on the implication of a “may” arbitrate clause.

Where May is Nay

In Eastern Coalfields, the dispute settlement clause required the parties to first resolve disputes at a company level. If that failed, the clause stated that redressal “may be sought” through arbitration. The Respondent objected to the proceedings commenced by the Appellant under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“Act”) for the appointment of an arbitrator on the ground of the absence of a valid arbitration agreement between the parties. The Court found that it has jurisdiction to make a prima facie determination on the existence and validity of the arbitration agreement – a power it shares with the arbitral tribunal. This position was already well supported by Indian case law, including the seminal Supreme Court judgment in Vidya Drolia v. Durga Trading.

Second, the Appellant argued that the dispute settlement clause was framed as an “optional clause”. Accordingly, the presence of “may” in the clause was in effect an offer to arbitrate, which, when exercised by either party, would become binding. Importantly, there is a very fine line between the word “may” in a clause and optional clauses. This was a deftly framed argument, since Indian case law supports the validity of arbitration clauses where a clear option between arbitration and litigation is provided. For instance, where a clause states “such dispute or difference hereunder will be referred to the adjudicator or the courts as the case may be” (as in the case of M/S. Indtel Technical Services Pvt.Ltd vs W.S. Atkins Plc, 25 August 2008 or similarly M/S Zhejiang Bonly Elevator Guide Rail … vs M/S Jade Elevator Components, 2018 INSC 821) the Supreme Court and High Courts have ruled that the parties have agreed to have their disputes resolved by arbitration. In M/s Zhejiang, the Court was convinced that the parties had an option to go to court or opt for arbitration and that the petitioner in the case, by invoking arbitration, had made it binding on the other party.

While not explicit in its decision, the Eastern Coalfields Courtappears to have drawn a distinction between the aforementioned optional clause with “may arbitrate” phrased clauses, including iterations such as “may be referred” or “if the parties so decide” or “any disputes between parties, if they so agree, shall be referred to arbitration” (see in Ramesh Chander and others v. Jagdish Chander). The Court has found that the latter categoryeffectively strips the mandatory nature of arbitration, and for the arbitral clause to come to life, it would require the parties to exercise the option to resort to arbitration jointly, thus requiring fresh agreement between them (see also, Trbex Impex (P) Ltd. v. Ashok Fine Spun, 10 May 2024). Curiously, the clause in question in Eastern Coalfields resembles these non-mandatory clauses in that it also offers an option to arbitrate and, by implication and as stated elsewhere, to alternatively choose to litigate. However, the Eastern Coalfields Court and the ones before appear to adopt a more formalistic, technical approach to interpretation, without engaging too heavily with the underlying “intention” of the parties.

Where May is Shall

In stark contrast to the Indian approach, Hong Kong, Singapore, the UK, the USA and certain other jurisdictions tend to adopt not only a permissive, but mandatory interpretation to such clauses. Thus, “may” arbitrate is typically understood as meaning “shall” arbitrate, creating a binding obligation on parties to resolve disputes through arbitration. Generally, this is also interpreted as an “option” or “offer” to arbitrate, which, once elected by any party, is binding on the other party and results in an arbitration agreement.

Both the UK’s Privy Council and a US Court of Appeals have conclusively stated that even where litigation has been first elected and initiated by one party, the other party would still be entitled to a stay of proceedings, even prior to the formal initiation of arbitration proceedings (see, ‘When a “may” is (almost) a “must” in an arbitration agreement’, 22 February 2016). This is because the application of stay, with the intention of initiating arbitration, is seen to be a valid election of the choice to arbitrate. Similarly, in Hong Kong, if the other terms of the arbitration agreement (such as applicable rules, institutions, procedure) are clearly set out, but the clause states that disputes “may” be submitted for arbitration, then a party can seek a stay of any litigation proceedings that are initiated.

In Singapore, too, a party may obtain anti-suit injunctions on the basis of a “may” prefaced arbitration clause. The Singapore High Court observed that the New York Convention (1958) mandates signatories to uphold arbitration agreements. When a party institutes litigation before domestic courts, an agreement with the “may” framed option to arbitrate once elected would amount to a valid arbitration agreement. On that basis, the party can seek either a stay of existing proceedings or an anti-suit injunction.

One rationale for this reasoning was articulated in a US district court judgment, which found that “may” could only be read as a mandatory obligation since it “would [otherwise] render the clause meaningless” as parties already possess the right to subsequently agree to submit a dispute to arbitration. This rationale could perhaps also be applied to the Indian context. The Eastern Coalfields judgment holds that the “may” phraseology indicates that it is “just an enabling clause”. But what truly does it “enable” when parties are already entitled under the law to subsequently enter into an arbitration agreement to resolve disputes?

In fact, this broad language often gives way to an even more pro-arbitration interpretation than that accorded to optional clauses, where parties explicitly have the choice between arbitration and litigation. An interesting example of this can be seen in Georgia, where “may”  (or “is able” to initiate arbitration) clauses are also interpreted as “shall”, but explicit optional clauses with a choice between arbitration or litigation are deemed invalid for want of an “exclusive” intention to arbitrate (see “May” Means “Shall” in Georgia – Supreme Court of Georgia Upholds a Permissive ICC Arbitration Clause, 28 February 2019). This is again in complete divergence to the Indian position, where, while “may” arbitrate is read as creating no binding obligation to arbitrate, but optional clauses prefaced with a “shall” obligation do indeed create an offer to arbitrate which may validly be invoked by the aggrieved party.

Takeaways

An outcome of this stream of cases definitely suggests a pro-arbitration interpretation of “may” in most jurisdictions, except India. However, either interpretation should alarm the drafters about the potentially harmful effect of lax word use in dispute settlement clauses. In pro-arbitration jurisdictions, such clauses are likely to lead to protracted and expensive proceedings, if (and likely, when) a stay of litigation is sought. On the other hand, where one of the parties is from India, or if the seat and governing law is India, drafters should be careful to include the mandatory “shall” language if the intention indeed is to arbitrate. Otherwise, trying to initiate arbitration in a “may” phrased clause would likely be futile and dismissed by Indian courts. The eventual consequence here, too, would be unnecessary delays and costs. Therefore, in practice, a “may” clause would almost always be to the disadvantage of all parties, who face delays, costs, and uncertainty – though perhaps a victory for their lawyers.

---

ABOUT THE AUTHOR

Sraddha Kedia is a dispute resolution lawyer, qualified to practice in India and New York, and is currently an independent practitioner in India. She has a keen interest in Public International Law and International Arbitration. She has previously worked with a Tier-1 law firm in India and had a short stint as a trainee at an international law firm in New York, in the field of international arbitration.

Anushree Malaviya is an independent dispute resolution lawyer, qualified to practice in India. She has completed her Masters in International Dispute Settlement (“MIDS”) from Geneva (2024) and her B.A./LL.B. from NUJS, Kolkata (2018). She is a former Law Clerk-cum-Research Assistant to Hon’ble Mr. Justice (Retd.) U. U. Lalit at the Supreme Court of India. Her practice focuses on litigation and arbitration, with notable experience in construction, contract, real estate, labour, and white-collar crime disputes.

---

*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.