Mere Non-Signing Won't Invalidate Arbitration Agreement If Parties Otherwise Consented To Arbitration : Supreme Court

The Supreme Court observed that merely because an arbitration agreement was not signed, there is no bar to refer the dispute to arbitration, if the parties have otherwise consented to arbitration.

The bench comprising Justices Sanjay Kumar and Satish Chandra Sharma set aside the Delhi High Court's decision which declined reference to arbitration merely because Respondent No.1 didn't sign the arbitration agreement. Since the Respondent No.1 consented to the contractual terms via email, the Court held that the High Court's refusal to refer to an arbitration on the ground of non-signing of the arbitration agreement cannot be sustained.

“Noting the fact that the requirement of the arbitration agreement being in writing has been continued in Section 7(3) of the Act of 1996, it was observed that Section 7(4) only added that an arbitration agreement could be found in the circumstances mentioned in the three sub-clauses that make up Section 7(4) but that did not mean that, in all cases, an arbitration agreement needs to be signed. It was held that the only pre-requisite is that it should be in writing, as pointed out in Section 7(3). This legal principle would hold good equally for an arbitration agreement covered by Sections 44 and 45 of the Act of 1996.”, the Court said.

The judgment authored by Justice Sanjay Kumar relied on the case of Govind Rubber Limited vs. Louis Dreyfus Commodities Asia Private Limited (2015) to state 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.”

“On reading the provisions it can safely be concluded that an arbitration agreement even though in writing need not be signed by the parties if the record of agreement is provided by exchange of letters, telex, telegrams or other means of telecommunication. Section 7(4)(c) provides that there can be an arbitration agreement in the exchange of statements of claims and defence in which the existence of the agreement is alleged by one party and not denied by the other. If it can be prima facie shown that the parties are at ad idem, then the mere fact of one party not signing the agreement cannot absolve him from the liability under the agreement. In the present day of e-commerce, in cases of internet purchases, tele purchases, ticket booking on internet and in standard forms of contract, terms and conditions are agreed upon. In such agreements, if the identity of the parties is established, and there is a record of agreement it becomes an arbitration agreement if there is an arbitration clause showing ad idem between the parties. Therefore, signature is not a formal requirement under Section 7(4) (b) or 7(4)(c) or under Section 7(5) of the Act.”, the court said in Govind Rubber Limited.

Accordingly, the Court allowed the appeal, and the case was restored to the file of the High Court to be referred to an arbitration by the High Court in accordance with law.

Cause Title: Glencore International AG Versus M/s. Shree Ganesh Metals and another

Citation : 2025 LiveLaw (SC) 839

Click here to read/download the judgment

Appearance:

For Petitioner(s) : Mr. Gourab Banerji, Sr. Adv. Mr. Sumeet Lall, AOR Mr. Sidhant Kapoor, Adv. Ms. Palak Rawat, Adv. Mr. Rakesh Talukdar, Adv.

For Respondent(s) : Mr. Vinay Garg, Sr. Adv. Mr. Piyush Sharma, AOR Mr. Karunesh Tandon, Adv. Mr. Anuj Kumar Sharma, Adv. Mr. Aditya Dikshit, Adv. Mr. Sonal Jain, AOR Mr. Rishab Raj Jain, Adv. Ms. Kajal Sharma, Adv. Ms. Amiti Gupta, Adv. Mr. Udayan Jain, Adv.