Can Arbitration Agreements Be Formed Over Email? Delhi HC Reflects

The Delhi High Court recently observed that an arbitration agreement was duly contained in the exchange of emails and WhatsApp messages between the parties before it, noting that Section 7(4)(b) of the Arbitration and Conciliation Act, 1996, does away with the requirement of a conventional contract.[1]

While the Court acknowledged that it lacked territorial jurisdiction in the matter, its observations, made solely for the purpose of deciding the petition, raise important questions about the validity and treatment of arbitration agreements which may arise from email exchanges.

Background

The dispute dates back to 2022, when Belvedere Resources DMCC made an offer to sell a specific quantity of coal following a request from S.M. Niryat Pvt. Ltd. (which later amalgamated with OCL Iron and Steel Ltd.). The offer was accepted over WhatsApp. Thereafter, a globally accepted Standard Coal Trading Agreement containing an arbitration clause was circulated via email. Several WhatsApp and email exchanges followed, but Belvedere did not receive the signed contract or the advance payment. Eventually, SMN cancelled the deal over email, citing shipment delay.

Belvedere resold the same contractual cargo to a third party at a lower market price and later invoked arbitration, seeking damages for wrongful termination. Before the arbitral tribunal was constituted, Belvedere filed a Section 9 petition before the Delhi High Court, seeking interim relief to secure the disputed amount. Earlier this year, a Single Judge disposed of the application, directing Belvedere to seek relief before the tribunal. On appeal, the Division Bench remanded the matter. This time around, while determining that the Delhi High Court lacked territorial jurisdiction, the Single Judge Bench proceeded to discuss the merits of the claims, considering that the matter was argued on merits.

Exchange of Emails and the “In Writing” Requirement for Arbitration Agreements

As per the Act, an arbitration agreement must be in writing. Under Section 7(4)(b), an arbitration agreement is considered to be in writing if it is contained in an exchange of letters, telex, telegrams or other means of telecommunication including communication through electronic means which provide a record of the agreement. Here, the words “including communication through electronic means” were introduced by an amendment in 2015.

The Court pointed out that in view of the above provision, it was not necessary for a concluded contract to be in existence for a valid arbitration agreement to exist between the parties. It opined that an arbitration agreement was duly contained in the exchange of email and WhatsApp communications between the parties in the present case. That said, it concluded that a case for attachment was not made out.

[1] Belvedere Resources DMCC v. OCL Iron and Steel Ltd & Ors. [O.M.P.(I) (COMM.) 397/2024].