In Brief
A hospital company and a software vendor disputed the implementation of a hospital management system. The hospital invoked Clause 8.28 of their contract—styled "Arbitration"—seeking appointment of an arbitrator. The clause, however, prescribed only negotiation between executives and mediation between the Chairmen of both companies, with the right to approach courts if unresolved within 15 days. The Supreme Court affirmed the High Court's rejection of the arbitration application, holding that mere use of the word 'arbitration' does not create a valid arbitration agreement. For a valid agreement, the parties must express clear intent to be bound by the tribunal's decision. Clause 8.28 lacked finality, neutrality, and binding effect—essential hallmarks of arbitration. It was merely an internal settlement mechanism. The case clarifies that substance prevails over form; corporate contracts must clearly demonstrate intent to arbitrate to invoke that process.
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