The Supreme Court on Thursday came down heavily on law firms for drafting confusing arbitration and jurisdiction clauses in commercial contracts [Himadri Speciality Chemicals v. Jindal Coke Limited].A Bench of Chief Justice of India (CJI) Surya Kant and Justices Joymalya Bagchi and Vipul Pancholi described such drafting practices as “professional misconduct” and blamed law firms for “generating litigation” through avoidable ambiguity.The Bench made particularly strong remarks about the intent behind such drafting."These are all deliberately, mischievously designed kind of clauses. All these law firms and the offices have started doing it. Why can't you have simplified one-line clauses?...But deliberately, the youngsters sitting in so-and-so law firm...To my mind, this is professional misconduct," CJI Kant said..The Bench made the remarks while hearing a matter pertaining to seat and venue of arbitration arising out of a commercial dispute between the two companies..The dispute originates from a coal tar supply agreement dated December 18, 2024 between Himadri Speciality Chemicals and Jindal Coke.Jindal Coke approached the Delhi High Court under Section 11 of the Arbitration and Conciliation Act seeking appointment of an arbitrator after disputes arose over the performance and enforceability of the agreement.Himadri opposed the petition, arguing that the Delhi High Court lacked jurisdiction because the agreement contained a clause stating that courts at Jajpur, Odisha would have exclusive jurisdiction. However, the contract’s arbitration clause simultaneously provided that the venue of arbitration would be New Delhi.This clash between the jurisdiction clause and the arbitration clause became the central legal issue.In a judgment dated January 13, 2026, the Delhi High Court held that the petition was maintainable and appointed an arbitrator. The Court ruled that when an arbitration clause specifies a venue of arbitration, it is treated as the juridical seat, unless the agreement indicates otherwise. Once the seat is identified, courts of that place have supervisory jurisdiction over arbitration proceedings.Accordingly, the High Court held that Delhi courts had jurisdiction and appointed Senior Advocate V Mohana as the sole arbitrator. The arbitration was directed to proceed under the Delhi International Arbitration Centre (DIAC).Himadri challenged this decision before the Supreme Court..During the hearing, the Bench expressed strong disapproval of the manner in which jurisdiction and arbitration clauses are drafted in modern commercial contracts. Chief Justice Surya Kant said:“First of all, you create this confusion when you people enter into an agreement.”The CJI indicated that the Court had already made adverse comments in the past and would not hesitate to do so again.“Thanks to the confusion created by so-called law offices nowadays, I have already adversely commented...I am going to write some harsh language again.”CJI Kant suggested that the drafting of such clauses reflects a broader culture of complexity in commercial contracts that ends up burdening courts."...which was the law firm engaged to draft this agreement? Who are the persons responsible? Who didn't understand? Who has granted them law degree? And how have they formed a law firm when they do not know the difference between venue, the seat and the law governing the arbitration? What right do they have to sit over there and draft these things? And indulge in deciding the fate of the litigation of this country?".The Court linked this to the broader problem of rising litigation“This kind of luxury clause is generating litigation in this country. We are fighting hard to prevent and control litigation.”Hinting at how such clauses frequently crop up in cases relating to big business entities, Court said "Only because the two parties are business entities, big business houses. They can afford. They don't have time to read anything," the Court said..On the merits of the case, the Court noted in its order,"Though he has made some arguable points, which might warrant this Court’s consideration in appropriate proceedings, we are not inclined to interfere in the instant matter for the reason that an eminent Senior Advocate has already been appointed as the learned Arbitrator and the parties are willing to arbitrate before her.".[Read Order].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.
