WhatsApp and Email Exchanges Can Constitute Valid Arbitration Agreement, Delhi HC Rules

In a significant judgment, the Delhi High Court has recently held that WhatsApp communications and email exchanges between parties can constitute a valid arbitration agreement.

"..... arbitration agreement was contained in the exchange of email and WhatsApp communications between the parties, and hence, there is an existence of a valid arbitration agreement between the parties," a bench led by Justice Jasmeet Singh said.

The High Court passed the ruling while dealing with a plea filed under Section 9 of the Arbitration and Conciliation Act, 1996, by the petitioner, Belvedere Resources DMCC, a UAE-based company.

Belvedere had sought interim relief to secure its claim of approximately Rs 23.34 crore (USD 2.77 million) from OCL Iron and Steel Ltd.

"A perusal of Section 7(4)(b) of the Act reveals that it is not necessary for a concluded contract to be in existence for a valid arbitration agreement to be existing between the parties. The arbitration agreement must form a part of documents/communication exchange between the parties," the Court added.

Background

On 30 September 2022, a representative of S.M. Niryat Pvt. Ltd. approached a representative of Belvedere via WhatsApp, requesting an offer for the sale of a coal cargo scheduled for delivery in November. In response, Belvedere shared the proposed prices and quantities through the same medium.

Subsequent negotiations and confirmations were conducted over WhatsApp and email.

Belvedere eventually made a formal offer to sell between 75,000 MT and 150,000 MT (+/-10%) of coal on a CFR basis—at the rate of USD 155.50 per metric ton for delivery at two ports or USD 150 per metric ton for one port. SMN accepted the offer via WhatsApp on the same day, thereby establishing a binding contract between the parties.

To enter into a formal agreement, Belvedere emailed a Standard Coal Trading Agreement (SCoTA) on 13 October 2022, which included an arbitration clause.

Later, SMN, again via WhatsApp, requested Belvedere to nominate the performing vessel—indicating their intent to proceed with the contract in accordance with Clause S of the SCoTA agreement.

Belvedere followed up multiple times through WhatsApp and email, requesting a signed copy of the contract and advance payment. However, the transaction was eventually cancelled by SMN.

Aggrieved by the cancellation, Belvedere invoked arbitration under SIAC Rules in June 2024 and also approached the Delhi High Court under Section 9 of the Arbitration and Conciliation Act, seeking interim relief and claiming approximately Rs 23.34 crore (USD 2.77 million).

During the course of proceedings, the respondent argued that no valid arbitration agreement existed as the SCoTA was not concluded. It was also contended that the Delhi High Court lacked territorial jurisdiction since neither party operated from Delhi. Additionally, it was argued that the damages claimed were unliquidated and could not be secured until adjudicated.

Court Findings

While considering the matter, the High Court at the outset noted that SCoTA was sent by the petitioner through email, and the respondent duly responded to the said email seeking updates.

Noting that the respondent had informed the petitioner that SCoTA would be signed and sent immediately, the HC held the arbitration agreement was contained in the exchange of email and WhatsApp communications between the parties.

On the issue of whether the court has the territorial jurisdiction to entertain the present petition under Section 9 of the Arbitration and Conciliation Act, 1996, the Court said that mere existence of a branch office in Delhi, which has no connection to the transaction in question, would not confer jurisdiction on the Delhi court.

It further noted that the petitioner has its office in Dubai, while Respondent No. 1 is based in Kolkata. Therefore, no part of the cause of action has arisen in Delhi.

Turning to the petitioner’s claim of approximately Rs 23.34 crore (USD 2.77 million) as damages for alleged breach of contract, the HC held, "Hence claim for damages is not in the nature of a debt till it is adjudicated upon by a Court or an adjudicating authority. There exists no obligation to an amount when damages are claimed for breach of contract unless the competent court adjudicates upon the claim and holds that there has been a breach of contract committed by the defendant and is thereby liable to compensate the aggrieved party for the loss, following which the quantum of such liability is assessed."

With these observations, the Court dismissed the present petition.

Case Title: BELVEDERE RESOURCES DMCC versus OCL IRON AND STEEL LTD & ORS

Read order here: