Glencore International AG v. M/S Shree Ganesh Metals
Background
Glencore International AG, a Swiss commodity trading company, and Shree Ganesh Metals, an Indian zinc-alloy producer, had a history of contracts for zinc metal purchases, each containing a London-seated arbitration clause. In 2016 the parties negotiated a fresh contract for 6,000 metric tons of zinc, exchanged confirming emails, and Glencore sent a signed written contract, but Shree Ganesh never signed it, even though it went on to accept deliveries, raise/honour invoices, and furnish Letters of Credit referencing that very contract. When a dispute arose over Letters of Credit and non-supply of the remaining quantity, Shree Ganesh sued in the Delhi High Court, and Glencore sought reference to arbitration under Section 45 of the Arbitration and Conciliation Act, 1996, both the Single Judge and the Division Bench refused, holding no concluded, binding contract (and hence no arbitration agreement) existed since the contract was unsigned.
Decision Breakdown
The Supreme Court reversed both lower court rulings, holding that an arbitration agreement need not be signed if the record of agreement is otherwise established: through an exchange of emails, invoices, and conduct demonstrating both parties acted upon the contract. Since Shree Ganesh accepted 2,000 metric tons under the contract, referenced its specific contract number in correspondence and Letters of Credit, and never disputed those terms until litigation arose, its conduct amounted to acceptance including the arbitration clause. The Court relied on precedents holding that signature is not a mandatory requirement under Section 7 of the Act where conduct and correspondence show the parties were "ad idem." It set aside the High Court orders and directed that the dispute be referred to arbitration in London as agreed.
Lesson Learnt
In commercial contracts, actions speak louder than signatures. If a party accepts goods, raises invoices, and issues payment instruments under a written but unsigned contract, it cannot later disown the arbitration clause in that same contract by pointing to the missing signature.