“WhatsApp and email exchanges can form a valid arbitration agreement even without signatures,” rules Delhi HC, but denies interim relief citing lack of jurisdiction and no proof of intent to obstruct an arbitral award.
Thank you for reading this post, don't forget to subscribe!
NEW DELHI: The Delhi High Court held that a valid arbitration agreement existed based on email and WhatsApp exchanges, even without a signed contract, as permitted under Section 7(4)(b) of the Arbitration Act.
However, the Court found it lacked territorial jurisdiction and denied interim relief under Section 9, stating that unliquidated damages are not a debt unless adjudicated, and no evidence was provided to show the respondent intended to obstruct a future arbitral award.
Background and Facts of the Case
The petitioner, Belvedere Holdings Ltd., is a UAE-based company engaged in trading and supplying coal. The respondents include OCL Iron and Steel Ltd. (Respondent No. 1), a manufacturer of direct reduced iron and steel, along with its wholly owned subsidiaries—Oriental Iron Casting Ltd. (Respondent No. 2) and Aron Auto Ltd. (Respondent No. 3).
On 30 September 2022, a representative of S.M. Niryat Pvt. Ltd. (SMN) contacted Belvedere’s representative via WhatsApp, requesting a coal supply proposal for November. Belvedere responded with price and quantity details. On 1 October 2022, a formal offer was shared to supply 75,000 to 150,000 MT of coal on CFR terms to Indian ports, which SMN accepted via WhatsApp, thereby forming a preliminary agreement.
To formalize the transaction, Belvedere circulated the Standard Coal Trading Agreement (ScoTA) on 13 October 2022, detailing key terms such as quality, quantity, pricing, delivery ports, risk and title transfer, and dispute resolution via SIAC arbitration in Singapore.
SMN continued communications via WhatsApp and email, requested vessel nomination (as per ScoTA Clause 5), and proposed minor edits to the Transaction Summary (TS). Belvedere nominated the vessel MV GLYFADA, and SMN confirmed the nomination on 27 October 2022.
By 31 October 2022, SMN accepted the amended TS and requested the final contract, thereby affirming the agreement. Belvedere shared the final signed version on 2 November 2022, also reminding SMN about overdue advance payment.
Despite several reminders between 3–14 November 2022, SMN neither signed the contract nor made the payment. On 15 November, SMN abruptly requested a change in delivery schedule and later issued a cancellation notice. Meanwhile, the vessel had already arrived within the agreed laycan period and tendered its Notice of Readiness on 10 November 2022.
Belvedere initiated arbitration proceedings with SIAC on 14 June 2024, claiming damages for wrongful termination and contractual breach. In response, OCL (respondent) submitted a letter to SIAC on 11 July 2024, stating that SMN had ceased to exist after being amalgamated with OCL, as per a 30 January 2024 NCLT order—a fact that Belvedere learned only during arbitration.
Argument by the Parties
Petitioner:
The petitioner argued that a binding contract (ScoTA) was concluded through negotiations and party conduct, even without formal signatures, citing English law. SMN’s cancellation on 15 November 2022 amounted to wrongful repudiation after the petitioner had performed its part. Losses were real and measurable due to resale at a lower price.
SMN concealed its ongoing amalgamation with RI, which later denied liability. However, under Section 232 of the Companies Act, RI, as the transferee, is responsible for SMN’s obligations. The petitioner also highlighted false statements by RI denying its Delhi office, despite contrary public records.
A Section 9 plea for interim relief was filed in November 2024, but RI delayed court compliance and asset disclosure. The High Court initially disposed of the petition, but the Division Bench remitted it for fresh consideration. Given RI’s financial instability and risk of asset dissipation, the petitioner sought urgent protection of its claim.
Respondent:
The respondents, through Senior Advocate Mr. Krishnaraj Thaker, contended that no binding arbitration agreement existed as the ScoTA contract was never concluded.
They challenged the jurisdiction of the Delhi High Court, asserting that neither party currently maintains an office in Delhi, and mere historical references to a Delhi address are irrelevant under Section 2(1)(e)(ii) of the Arbitration Act.
They further argued that the petitioner’s December 2022 letter was merely a pre-arbitration notice, not a valid invocation of arbitration.
The respondents maintained that no part of the cause of action arose in Delhi, and the presence of assets like shares in the city does not confer jurisdiction since those assets are unrelated to the dispute. The damages claimed were said to be unliquidated and not a present debt, making them ineligible for security under Section 9.
They emphasized there was no evidence of asset dissipation to justify interim protection, and the petitioner failed to submit concrete proof of loss from the resale transaction.
Additionally, the petition was delayed, filed well after the November 2022 breach, and the petitioner had not availed the alternate remedy of interim relief available under Rule 30 of the SIAC Rules. Consequently, the application is barred under Section 9(3) of the Arbitration Act.
Finding and Observation of the Court
The Court upheld the existence of a valid arbitration agreement between the parties based on email and WhatsApp exchanges, despite the absence of a signed contract. Citing Section 7(4)(b) of the Arbitration Act and Cox & Kings Ltd. v. SAP India Pvt. Ltd. (2024), the Court ruled in favor of the petitioner on this point.
“Section 7(4)(b) allows an arbitration agreement to be valid even without a signed contract, as long as it is reflected in a documented exchange, like emails or messages, that shows mutual consent. Courts can infer agreement from such communications, as held in Shakti Bhog, Trimex, and Great Offshore cases.”
However, the Court found that it lacked territorial jurisdiction since all material parts of the transaction were linked to RI’s Kolkata office. The mere presence of a branch office in Delhi or RI’s shareholding in a Delhi-based company did not establish jurisdiction. Hence, this issue was decided against the petitioner.
On the claim of USD 2.77 million, the Court ruled that
“Unliquidated damages do not constitute a debt until adjudicated.”
Relying on Union of India v. Raman Iron Foundry (1974), it emphasized that
“Breach of contract gives rise to a right to sue, not an enforceable monetary claim.”
Further, interim relief under Section 9 of the Arbitration Act, akin to pre-trial asset attachment, was denied due to the absence of proof that RI intended to obstruct any future award.
In conclusion, the petition was dismissed on grounds of lack of jurisdiction and failure to meet the legal threshold for interim protection. The Court clarified that its observations were limited to this interim application and would not affect the arbitration proceedings.
Click Here to Read Previous Reports on WhatsApp
FOLLOW US ON YOUTUBE FOR MORE LEGAL UPDATES
