Unsigned Commercial Contract Is Enforceable; Arbitration Clause Held Binding and Matter Referred to Arbitration

A bench of Justices Sanjay Kumar and Satish Chandra Sharma heard an appeal by Glencore International AG challenging the Delhi High Court’s refusal to refer a commercial dispute to arbitration under Section 45 of the Arbitration and Conciliation Act, 1996. The narrow question before the Supreme Court was whether there existed a binding arbitration agreement between the appellant and respondent No.1 in relation to supplies under Contract No. 061-16-12115-S dated 11.03.2016.

The Court allowed the appeal, set aside the orders of the Delhi High Court (single judge and Division Bench) and directed that the referral application (I.A. No.4550 of 2017 in CS (Comm) No.154 of 2017) be restored and the disputes be referred to arbitration in accordance with law. The Court held that an arbitration agreement could be inferred from the exchange of emails and the subsequent conduct of the parties, including supply of goods and the issuance of Standby Letters of Credit by respondent No.1. The Court emphasized that the mere absence of respondent No.1’s signature on the printed contract did not defeat the contractual obligations or the arbitration clause where parties acted upon the contract. The Court, in its reasoning, observed: “We are of the considered opinion that the Division Bench and the learned 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 Court also reiterated the statutory test under Section 45 that a judicial authority should refer parties to arbitration unless it "prima facie finds that the said agreement is null and void, inoperative or incapable of being performed."

Background The dispute arose from prior commercial dealings between Glencore (a Swiss trader) and M/s. Shree Ganesh Metals (an Indian proprietor) in 2011–2012 which contained London-seated arbitration clauses. The parties then negotiated a fresh contract in March 2016 for supply of 6,000 metric tons of zinc metal. The appellant issued Contract No. 061-16-12115-S dated 11.03.2016, signed by it, and incorporated the parties’ email terms (including a modification to price calculation to a five-day LME average). Respondent No.1 did not sign the printed contract but furnished two Standby Letters of Credit (22.04.2016 and 17.11.2016), lifted 2,000 metric tons and had eight invoices quoting the contract number. When payment issues arose, respondent No.1 filed CS (Comm) No.154 of 2017 seeking declarations and injunctions against the appellant’s invocation of the Letters of Credit.

The appellant sought a Section 45 referral to arbitration based on clause 32.2 of the 2016 contract. The Delhi High Court (single judge) dismissed the referral application on 02.11.2017, finding no concluded contract as respondent No.1 had not signed the printed document; a Division Bench affirmed that view on 14.11.2019. The Supreme Court reviewed the factual matrix and relevant authorities (including the Court’s precedents recognizing that an arbitration agreement need be in writing but not necessarily signed, and that it could be inferred from correspondence and conduct). The Court noted the settled principle that a referral court should require only prima facie evidence of an arbitration agreement and should not conduct a mini-trial on its existence. The Court observed that the documentary and conduct-based evidence — the emails, invoices, deliveries and the Standby Letters of Credit — demonstrated acceptance of Contract No. 061-16-12115-S and its arbitration clause. Consequently, the Court allowed the appeal, set aside the impugned orders, restored I.A. No.4550/2017 and directed the referral court to refer the parties to arbitration. Pending applications, if any, were disposed of.

Case Details: Case No.: CIVIL APPEAL NO. 11067 OF 2025 (Special Leave Petition (C) No. 27985 of 2019) Case Title: Glencore International AG v. M/s. Shree Ganesh Metals & Anr. Appearances: For the Petitioner(s): Mr. Gourab Banerji, Senior Counsel For the Respondent(s): Mr. Vinay Garg, Senior Counsel