Unilateral Option Clauses: The Way Forward

India is on its way to being recognised as one of the arbitration-friendly nations of the world. An unresolved question of law, acting as a hurdle to this is the enforceability of option clauses. Since arbitration agreements are the foundation of the rights of the parties to an agreement, it is to be considered whether unilateral option clauses are valid because the parties have agreed to the same. This paper analyses the consequences of only one party to a contract having the right to approach a broader choice of forum to hear its grievances. Although unilateral option clauses are commonly used in commercial transactions, they pose various issues. This paper examines the different facets of the validity and operation of such clauses in arbitration. For this, the paper relies on the developments in Indian as well as international arbitration laws-specifically, the recent judgement of the Singapore Court of Appeals is examined. The issues with respect to enforceability of such clauses make it necessary to weigh the benefits of having them, as against their complex operability.