This Supreme Court judgment reaffirms that a valid arbitration agreement can be constituted through conduct and correspondence, without a signed contract. The Supreme Court held that if parties have demonstrably acted upon the terms of an unsigned agreement, they are bound by its arbitration clause, and a referral court need only conduct a prima facie review of the agreement’s existence.
Facts Of The Case:
The dispute arose from a proposed contract for the sale of 6,000 metric tons of zinc metal between Glencore International AG (Appellant) and Shree Ganesh Metals (Respondent No.1). The terms were negotiated via email, and Glencore sent a formal contract (No. 061-16-12115-S) incorporating an arbitration clause, which it signed. The Respondent, however, never signed this document. Despite the lack of a signature, the parties performed part of the contract: Glencore supplied 2,000 metric tons of zinc, and the Respondent accepted the goods and procured Standby Letters of Credit from its bank (Respondent No.2), all of which explicitly referenced the unsigned contract. When disputes later emerged, the Respondent filed a civil suit in the Delhi High Court. Glencore applied under Section 45 of the Arbitration and Conciliation Act, 1996, seeking to refer the parties to arbitration based on the clause in the unsigned contract. Both the Single Judge and Division Bench of the High Court rejected this application, holding that no concluded contract existed as it was not signed by the Respondent, leading to the present appeal before the Supreme Court.
Procedural History:
The procedural journey began when Shree Ganesh Metals filed a civil suit (CS (Comm) No. 154 of 2017) before the Delhi High Court, seeking relief against the invocation of Standby Letters of Credit. In response, Glencore International AG filed an application (I.A. No. 4550 of 2017) under Section 45 of the Arbitration and Conciliation Act, 1996, requesting that the dispute be referred to arbitration. A Single Judge of the Delhi High Court rejected this application on 02.11.2017, holding that no binding arbitration agreement existed. Glencore’s subsequent appeal (FAO (OS) (COMM) No. 195 of 2017) was dismissed by a Division Bench of the same court on 14.11.2019, which affirmed the Single Judge’s view. The matter was then brought before the Supreme Court through a special leave petition, which culminated in the present civil appeal.
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Court Observation:
The Supreme Court observed that the High Court erred by ignoring crucial facts demonstrating that the unsigned contract was duly accepted and acted upon by the respondent. The Court held that a binding arbitration agreement, as defined under Section 7 of the Arbitration and Conciliation Act, 1996, can be inferred from the parties’ conduct and correspondence, and a formal signature is not mandatory. It emphasized that the respondent’s actions—accepting deliveries, furnishing Letters of Credit explicitly referencing the contract, and communicating about its performance—clearly established a record of the agreement and the parties’ ad idem (meeting of the minds). Consequently, the respondent could not evade the arbitration clause merely by not signing the document, and the referral court’s role was only to conduct a prima facie review of the agreement’s existence, not a mini-trial.
Final Decision & Judgement:
The Supreme Court allowed the appeal, setting aside the judgments of both the Delhi High Court’s Single Judge and Division Bench. The Court held that a binding arbitration agreement existed under Clause 32.2 of Contract No. 061-16-12115-S, as the parties’ conduct and correspondence unequivocally demonstrated their acceptance of its terms. Consequently, it directed the referral court to allow Glencore’s application (I.A. No.4550 of 2017) and refer the disputes between the parties to arbitration in accordance with the contract. All pending applications, if any, were disposed of as a result.
Case Details:
Case Title: Glencore International AG vs. M/s. Shree Ganesh Metals and another Citation: 2025 INSC 1036 Civil Appeal No.: Civil Appeal No. 11067 of 2025 Date of Judgement: August 25, 2025 Judges/Justice Name: Justice Sanjay Kumar and Justice Satish Chandra Sharma
Download The Judgement Here