1956 (1) TMI 34

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.... 2. The suit which the plaintiff filed in this case is a suit claiming damages for breach of contract for non-delivery of the goods. The allegation is that the defendant agreed to sell and the plaintiff agreed to buy certain cargo loads of iron ore. The Arbitration clause that I have set out appears in this contracts. 3. Apparently if there is a valid Arbitration agreement in that clause quoted above, the disputes alleged in the plaint are unquestionably disputes which come within the ambit of that Arbitration clause. But the whole point is whether this is a valid Arbitration agreement at all. Before discussing the construction of this clause, it is necessary to refer to the fact that there are five different Chambers of Commerce in Ma....

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....ental point in this case which vitiates, in my judgment, the validity of this alleged Arbitration agreement. 4. I know of no reported decision where any Arbitration clause used the word "can" as in this case. The Arbitration Clause in this case can at best mean that the dispute "can" be settled by Arbitration. But that does not mean that the dispute shall be settled by Arbitration. It only means this that after the dispute has occurred, the parties may go to Arbitration as an alternative method of settling the dispute instead of going to the Courts. But that means that after the dispute has arisen, the parties will have to come to a further agreement that they shall go to Arbitration. In other words, the clause at best means that it i....

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....t to be a present agreement to submit present or future differences. The Agreement must be a present agreement and a concluded agreement according to the test of an ordinary contract. If it fails in that test, then there is no submission and no Arbitration agreement at all. If in law it is not an agreement at all, it is no answer to say that this clause appears as one of the terms and conditions of the contract in Clause 11 as "other conditions". An invalid contract does not become valid by describing it as a "condition". Here the Arbitration clause which is Clause 11 is; "In the event of any dispute arising out of this contract the same can be settled by Arbitration held by a Chamber of Commerce at Madras". On a proper construc....

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....long to any of the contracting parties to go to Arbitration and the fact that it belongs to any one of them does not invalidate the contract for arbitration. This doctrine of option was called in aid to rescue the word "can" in this Arbitration clause. In my judgment these cases and the doctrine of option cannot save the present arbitration clause. The first insuperable difficulty is that all the contracts of Arbitration in these two cases just mentioned use the word "shall". That means arbitration there, was a clear and unequivocal obligation and there was a binding concluded contract between the parties to go to arbitration. Therefore, the contract was a present contract to submit future differences and clearly, therefore, came within ....