Arbitration agreement needs to be in writing though need not be signed: SC
The Supreme Court has said, an arbitration agreement needs to be in writing though it need not be signed and this legal principle would hold good equally for an arbitration agreement covered by Sections 44 and 45 under the Arbitration and Conciliation Act, 1996.
A bench of Justices Sanjay Kumar and Satish Chandra Sharma said, a commercial document having an arbitration clause has to be interpreted in such a manner as to give effect to the agreement rather than invalidate it.
"An arbitration agreement can be inferred even from an exchange of letters, including communication through electronic means, which provide a record of the agreement,'' the bench said.
The court here examined the question whether there is a binding arbitration agreement between the appellant, Glencore International AG, a Swiss company, engaged in the business of mining and commodity trading and respondent No 1, M/s Shree Ganesh Metals, an Indian proprietorship concern located at Kala Amb, Himachal Pradesh, and is a producer of zinc alloys.
This question was answered in the negative by a single judge of the Delhi High Court in 2017. In appeal, in 2019, a division bench affirmed that view.
Having heard the counsel for the parties, the bench found that the division bench and the single judge of the Delhi High Court lost sight of certain crucial factual aspects which showed that Contract No. 061-16-12115-S was duly accepted and acted upon by respondent No.1.
Such actions on its part implied that the arbitration agreement therein also came into effect and bound the parties thereto. Some confusion seems to have arisen due to the contract of 2012, which was referred to in the course of the email correspondence, leading to an alternative plea being raised on behalf of the appellant that, even in the absence of Contract No. 061-16- 12115-S, the arbitration agreement in the contract of 2012 would be available to it for invocation, the bench noted.
"We are of the considered opinion that it was not necessary for the appellant to fall back upon the contract of 2012 in the light of the admitted facts that demonstrated, in no uncertain terms, that the parties duly accepted and acted upon Contract No. 061-16-12115-S dated 11.03.2016,'' the bench said.
The court emphasised that there was no denying the legal proposition that an arbitration agreement can be inferred even from an exchange of letters, including communication through electronic means, which provided a record of the agreement.
The bench said the mere fact that Contract No. 061-16-12115-S was not signed by respondent No.1 would not obviate from this principle when the conduct of the parties in furtherance of the said contract, clearly manifested respondent No. 1’s acceptance of the terms and conditions contained therein, which would include the arbitration agreement in clause 32.2 thereof.
The court cited Govind Rubber Limited Vs Louis Dreyfus Commodities Asia Private Limited (2015), wherein this court observed that a commercial document having an arbitration clause has to be interpreted in such a manner as to give effect to the agreement rather than invalidate it.
It held the refusal by the referral Court of the judge and the confirmation of such refusal by the division bench were unsustainable on facts and in law.
The court thus allowed the appeal, setting aside the judgment of 2019 of the division bench and the order of 2017 of the single judge of the Delhi High Court. It ordered that the disputes between the parties would be referred to arbitration by the referral court in accordance with law.
Case Title: Glencore International AG Vs M/s Shree Ganesh Metals and another
Bench: Justices Sanjay Kumar and Satish Chandra Sharma
Date: August 25, 2025