MSMEs follow a similar format in their invoices and supplier agreements – standard terms, boilerplate language, and at the bottom, a line that reads “Subject to Mumbai Jurisdiction.”
It looks standard. It feels safe. But here is the truth: that single sentence often decides whether you get paid in three months or three years. For many small businesses, this “routine” clause is what quietly locks them into years of litigation, burning through cash and patience. This is exactly why so many MSMEs today are exploring online dispute resolution services in India to escape this trap.
The Fine Print That Fuels Litigation
Technically, the “Subject to Mumbai Jurisdiction” clause just means that if there is a fight, it happens in a Mumbai court. That sounds fair. But in the real world, it forces even minor payment disputes into the traditional litigation grinder. You are looking at filing cases, hiring lawyers, attending hearings, and waiting through endless adjournments.
For a small business that runs on tight cash flow, these delays aren’t just annoying – they bleed financially. And this is where the lack of an efficient dispute resolution system becomes painfully clear.
The Reality of Delays
By the Numbers When you push a payment dispute into the court system, you are often pushing recovery out of reach. Look at the data from 2025: over 2.5 lakh applications involving ₹55,244.29 crore in delayed payments are sitting before MSEFCs across India. Only about 58% have been resolved. That means nearly half of that money is stuck.
In Maharashtra alone, the picture is worrying:
● MSMEs have filed 58,235 applications worth over ₹11,312 crore.
● While some are resolved, 41,834 cases are still under action or pending.
● Specifically, 1,599 cases are sitting pending, with hundreds stuck for over 90 days.
It’s not just MSME councils either. In Maharashtra’s civil courts, over 1.74 lakh cases have been pending for more than a year. Some have been dragging on for a decade. Do you really want your unpaid invoice to join that queue?
Why You Need to Rethink the Clause
The problem isn’t the city (Mumbai); the problem is the system. When your invoice mentions “Jurisdiction,” it automatically directs you to a civil court framework designed for complex disputes, not quick commercial resolutions.
Originally, this clause was about clarity. But business today moves fast. A clause that sends every disagreement to an overburdened court no longer makes sense. It ultimately consumes your time, money, and focus.
From Jurisdiction to Resolution: The Arbitration Advantage
The smarter move? Swap the “Jurisdiction” clause for an Arbitration Clause. Replacing the jurisdiction clause with an arbitration clause transforms how disputes are resolved. This changes the entire mechanism. Instead of a court, you go to Arbitration. It is time-bound, confidential, and cost-effective. You skip the procedural nightmares of litigation and get a resolution in days or months, not years.
A simple alternative clause could read:
“In the event of any dispute arising under, out of or in connection with this agreement and/or subsequent modifications/alterations/novation thereto, the parties shall refer the dispute to WeVaad (www.wevaad.com) for resolution through arbitration to be conducted under WeVaad Arbitration Rules, by a sole arbitrator to be appointed by WeVaad. The language of arbitration shall be English, and the proceedings shall be conducted online on the WeVaad web application platform. The seat of arbitration shall be Mumbai. The award passed by the Arbitrator shall be final and binding on the Parties.”
This clause keeps the process digital, fast, and legally binding – just like a court decree. It also aligned with what a modern ODR platform in India facilitates today.
For low-value disputes and older claims where no arbitration clause exists, mediation can also be effective. Platforms like WeVaad provide neutral mediators who help you settle without burning the relationship with your client.
Why This Shift Matters
Replacing “Jurisdiction” with “Arbitration” isn’t just a legal tweak. It’s a business strategy.
● Speed: You avoid the “long date” culture of courts.
● Recovery: You get your dues faster.
● Control: You control the process and costs.
In short, it brings fairness and efficiency back into business.
A Small Change, A Big Difference
Shifting from “Subject to Mumbai Jurisdiction” to an arbitration or mediation clause is not just a legal tweak, it’s a business decision. It means choosing resolution over delay and efficiency over exhaustion. The shift from “Subject to Mumbai Jurisdiction” to “Dispute to be resolved through Arbitration” is about protecting your future.
Next time you type up an invoice, pause at that last line. Don’t let a copy-paste template tie your hands. Change the clause, and choose resolution over litigation.
It’s time MSMEs move from jurisdiction-bound disputes to resolution-driven growth.
Litigation or Resolution? The Choice Is in Your Invoice.
https://samadhaan.msme.gov.in/MyMsme/MSEFC/MSEFC_ReportAllAmount.aspx