2014 (12) TMI 1362 - SC - Indian Laws

Enforcement and execution of Foreign Award - Sections 47 and 48 of the Arbitration and Conciliation Act 1996 - HELD THAT - There may not be any dispute with regard to the settled proposition of law that an agreement even if not signed by the parties can be spelt out from correspondence exchanged between the parties. However it is the duty of the court to construe correspondence with a view to arrive at the conclusion whether there was any meeting of mind between the parties which could create a binding contract between them. It is necessary for the court to find out from the correspondence as to whether the parties were ad idem to the terms of contract. It is equally well settled that while construing an arbitration agreement or arbitration clause the courts have to adopt a pragmatic and not a technical approach. 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. In the instant case admittedly the respondent issued a sales contract for supply of goods incorporating in the said sales contract various terms including hundred per cent payment against letter of credit and also providing the governing terms as Singapore Commodity Exchange . Though the appellant issued purchase order dated 21-8-2008 on terms and conditions set out therein but the appellant requested the respondent to change the payment terms mentioned in the sales contract. The request for amendment was accepted by the respondent. It is true that the question in the present case is a question of competence of the arbitrator which in a sense is a question of jurisdiction but it is not like the jurisdiction of a court because the jurisdiction of arbitrators is derived from consent of the parties - It is clear that for construing an arbitration agreement the intention of the parties must be looked into. The materials on record which have been discussed hereinabove make it very clear that the appellant was prima facie acting pursuant to the sale contract issued by the respondent. So it is not very material whether it was signed by the second respondent or not. There are no valid ground to oppose the enforcement of the foreign award. The High Court in the impugned order has rightly held that the foreign award is enforceable under Part II and is binding for all purposes on the parties - appeal dismissed.

Summary

Issues Involved:
1. Jurisdiction of the Singapore Commodity Exchange to arbitrate the dispute.
2. Validity of the arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996.
3. Enforceability of the foreign arbitral award.

Detailed Analysis:

1. Jurisdiction of the Singapore Commodity Exchange to Arbitrate the Dispute:
The appellant contended that the Singapore Commodity Exchange did not have jurisdiction to arbitrate the dispute as the sales contract containing the arbitration clause was not signed by them. The appellant argued that the purchase order, which was accepted by the respondent, contained terms including the exclusive jurisdiction of the Bombay High Court. However, the court found that the appellant had requested changes to the payment terms in the sales contract, which the respondent accepted. This indicated a meeting of minds and the appellant's acknowledgment of the sales contract terms, including the arbitration clause. Moreover, the appellant made a counterclaim before the Arbitral Tribunal, thereby submitting to its jurisdiction.

2. Validity of the Arbitration Agreement under Section 7 of the Arbitration and Conciliation Act, 1996:
The court examined Section 7 of the Arbitration and Conciliation Act, 1996, which defines an arbitration agreement and its requirements. It was held that an arbitration agreement need not be signed by all parties if it is in writing and can be inferred from an exchange of letters, telex, telegrams, or other means of telecommunication that provide a record of the agreement. The court concluded that the correspondence between the parties, including emails and the appellant's actions, demonstrated that there was a binding arbitration agreement. The court emphasized that the intention of the parties and their conduct should be considered to determine the existence of an arbitration agreement.

3. Enforceability of the Foreign Arbitral Award:
The appellant did not challenge the arbitral award dated 18-12-2009 in any court of law. Instead, they filed a suit for damages against the respondent in the High Court. The High Court, after hearing both parties, allowed the enforcement of the foreign award, observing that the appellant had not provided any proof to refuse its enforcement. The court held that the foreign award was enforceable under Part II of the Arbitration and Conciliation Act, 1996, and binding on the parties under Section 46. The Supreme Court affirmed this decision, stating that there were no valid grounds to oppose the enforcement of the foreign award.

Conclusion:
The Supreme Court dismissed the appeal, upholding the High Court's decision that the foreign arbitral award was enforceable and binding on the parties. The court emphasized the importance of the parties' intention and conduct in determining the existence of an arbitration agreement and reiterated that an arbitration agreement need not be signed if it can be inferred from the parties' correspondence and actions.