IMPORTANT POINT
Arbitration agreement needs to be in writing though it need not be signed.

JUDGMENT

SANJAY KUMAR, J

1. Leave granted.

2. Is there a binding arbitration agreement between the appellant and respondent No.1?

3. This question was answered in the negative by a learned Judge of the Delhi High Court on 02.11.2017. In appeal, on 14.11.2019, a Division Bench of that Court affirmed that view. Hence, this appeal.

4. Glencore International AG, the appellant, is a Swiss company engaged in the business of mining and commodity trading. Shree Ganesh Metals, respondent No.1, is an Indian proprietorship concern located at Kala Amb, Himachal Pradesh, and is a producer of zinc alloys. Respondent No. 1 had earlier purchased zinc metal from the appellant under contracts dated 20.04.2011, 01.07.2011, 23.11.2011 and 11.01.2012. All the four contracts contained arbitration clauses which stated that any dispute in connection with that contract would be referred to arbitration to be resolved under the Rules of the London Court of International Arbitration and the seat of the arbitration would be London.

5. The parties then proposed to enter into a fifth contract, whereby respondent No.1 was to buy 6,000 metric tons of zinc metal from the appellant from March, 2016 to February, 2017. The terms and modalities of this contract were sought to be worked out between the parties. In that context, the appellant addressed email dated 10.03.2016 to respondent No.1. Therein, it stated that the provisional price would be the London Metal Exchange (LME) average of 10 market days prior. It stipulated that a Standby Letter of Credit was to be opened in form and substance fully acceptable to the appellant for the entire contractual period. It further stipulated that all other terms and conditions, as per the last contract between the parties, would remain intact. Respondent No.1 replied, vide email dated 11.03.2016, wherein it stated as follows:

“We confirm the same terms as said just one thing that provisional price of both, either LC or Invoice, will be average of last 5 (five) LME days”.

6. The appellant, in turn, addressed email dated 11.03.2016 to respondent No.1 thanking it for the business confirmation and promising to revert with the contract and proforma. The appellant then forwarded Contract No. 061-16-12115-S dated 11.03.2016, duly signed by it, to respondent No.1 for its signatures. This contract incorporated the terms and modalities agreed upon through the earlier email correspondence. The quantity of the zinc metal to be purchased was mentioned at clause No.2 as 6,000 (six thousand) metric tons plus/minus 2% (two percent) in the seller’s option. Clause 11.2, titled ‘Provisional Payment’, stated thus:

“…….The provisional value of the Material per metric ton shall be Official LME Cash Settlement Price, as published in the London Metal Bulletin, averaged over 5 (five) consecutive LME market days prior to the Commercial Invoice date, plus a contractual premium per metric ton.”

This clause demonstrates that the modification suggested by respondent No.1 in its email dated 11.03.2016 was duly accepted and acted upon by the appellant.

7. Clause 12.1, titled ‘Standby Letter of Credit’, stipulated that, within 5 (five) working days after the conclusion of respective business, respondent No.1 would open a Standby Letter of Credit in form and substance fully acceptable to the appellant, valid until 31st March, 2017, for the amount of US$50,000. Significantly, this contract also contained an arbitration agreement in clause 32.2. This clause is of relevance and is ext