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TMI Blog2010 (1) TMI 1306X X X X Extracts X X X X X X X X Extracts X X X X ..... hipments with the ship owners and arrange for the shipment of Minerals across the world. The Respondent is a Company registered in India using Aluminium Ore as one of the major inputs for their operations. 3. On 15.10.2007, the petitioner submitted a commercial offer through e-mail for the supply of Bauxite to the respondent. After several exchanges of e-mails and after agreeing on the material terms of the contract, the respondent conveyed their acceptance of the offer through e-mail on 16.10.2007 confirming the supply of 5 shipments of Bauxite to be supplied from Australia to Vizag/Kakinada. On the basis of the acceptance by the respondent, the petitioner concluded the deal with the Bauxite supplier in Australia on the same day and entered into a binding Charter Party Agreement with the ship owner in Oslo on 17.10.2007. A meeting was held between the representatives of the respondent and the petitioner at Lanjigarh, Orissa on 26.10.2007 and the minutes of this meeting were signed by them. The acceptance of the offer is acknowledged by the respondent in these minutes. A formal contract containing a detailed arbitration clause was also sent by the respondent to the petitioner on 08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of various essential features of the transaction. Further the draft contract received from the petitioner was yet to be accepted/confirmed by the respondent. The commercial offer provided two options of shipment lot, namely, 2 shipments and 5 shipments. The only understanding that had been arrived at between the parties as a result of the correspondence subsequent to the receipt of the commercial offer from the petitioner was that the transaction would be in respect of 5 shipments. All other terms and conditions pivotal and essential to the transaction were under negotiation as is evident from the correspondence between the parties. The product specifications, price, inclusions in the contract price, delivery point, insurance, commencement and conclusion dates of the contract, transfer of title, quality check and demurrage are all factors that are at large and remain undecided. In such a scenario, where the parties were not in one mind with respect to any aspect of the transaction, the contention of the petitioner that there existed a binding contract between the parties as also a binding arbitration agreement is wholly erroneous and misleading. Apart from the commercial offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the charter was entered into a contract by the parties on 17.10.2007 i.e. the next day. He finally submitted that from the materials it was established beyond doubt that the intention of parties in case of any dispute between them arising out of the contract which was concluded on 16.10.2007 at 3.06 p.m. shall be settled through arbitration. On the other hand, Mr. C.A. Sundaram, learned senior counsel for the respondent contended that there was no concluded contract between the parties and that the agreement between the petitioner and the respondent was only in respect of the number of shipments (two or five) and nothing more. According to him, there is no arbitration agreement and that Clause 6 is vague and ambiguous. He further contended that even in the legal notice dated 01.09.2008 issued by the petitioner's counsel, there is no specific reference to Clause 6 of the commercial offer but mentioned only Clause 29 of the purchase order exchanged between the parties on 08.11.2007 but the present petition before this Court mentions both of them. He also pointed out that the Charter Party Agreement (CPA) entered into between the petitioner and the ship owner is only a draft. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve silica at our Weipa lab for us to place a bonus/penalty on and that any rejection criteria on silica is unreasonable. It is for this reason that we are only prepared to revise our offer on total silica with a Base Grade of 4.5%. We are prepared to increase this bonus/penalty to US$1.50 per % total silica either side the Base Grade. This we believe is a fair compensation to Vedanta and is our final offer. Unfortunately we cannot make this an open ended offer as we need to fill our shipping slots set aside for these cargoes in November and December. We have already lost the October opportunity. Freight and spot prices for bauxite have all moved up since we started this negotiation and we are making offers for 2008 cargoes at $4 higher than your offer. Therefore, we have to put a validity on this until close of business Friday, 12 October after which this offer will be subject to re-confirmation. Unquote We have prepared a revised schedule of specs which is attached. This is not yet confirmed with RTA but once you agree to go by this then we can take up with them. Rejection points are also to be agreed by them. Further the freights have gone up substantially since we last made the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Swaminathan G Cc: Chinmayee Panda; Hukum Chand Dahiya N. Chellappa; Rajesh Mohata; Shanika; SR Subramanyam; Subject: Re: LM Grade Bauxite specs ₹ 1 (2). Doc Dear Mr. Swaminathan, Please send your rates at your proposed quality parameters on FOB basis and on CIF basis, separately. We would also be interested to have separate rates for 2 shipments and for the complete offer of 2 Lac MT. Thanks Swayam Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh Distt: Kalahandi Pin: 766 027 Orissa E) Shanika Annexure P-2 From: Swaminathan G [[email protected]] Sent: Monday, October 15, 2007 4:46 PM To: Rajesh Mohata; Swayam Mishra Cc: S R Subramanyam; Shanika Importance: High Attachments: Offer for Mono Bxt.Pdf Dear Rajeshji, Please find attached our offer for the two options as desired by you. Please note the validity of the offer until 1200 IST tomorrow. Freights are going up continuously and have jumped since we last gave you the offer. A quick decision will be helpful otherwise we may lose this freight offer too. Awaiting an early response. Best regards G. Swaminathan General Manager Trimex International P.O. Box 17056 Dubai-U.A.E. Tel:971-4-8835544 Ext. 209 Fax:-971-4- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in that event will be limited to product related compensation after discussions and suitable joint analysis wherever applicable. In case of joint analysis being agreed upon for confirming the product quality/penalty determination, the above should be arranged by the buyer within 30 days of product delivery to the customer. 2. We shall have no liability under this contract or by reason of any representation, warranty or duty for any direct, indirect, special or consequential loss or damage, costs or expenses arising out of the composition, supply, packaging, handling or use of products. 3. Unless stated otherwise, products are sold strictly to the offered sale condition and payments are due on the dates as applicable. 4. Prices are valid upto 1200 hrs IST 16.10.2007 unless withdrawn by notice from us during that period. 5. Interest may be charged on overdue amount wherever applicable as per our terms mentioned in commercial/payment invoice. 6. This contract is governed by Indian Law Arbitration in Mumbai courts. For Trimex International FZE Name: G. Swaminathan (computerized offer-Signature not required) TRIMEX INTERNATIONAL FZE P.O. BOX 17056, Jabel Ali, Dubai, UAI Tel:971-4-883 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njigarh Distt: Kalahandi Pin: 766 027 Orissa I) Shanika From: Swaminathan G [[email protected]] Sent: Tuesday, October 16, 2007 11:48 AM To: [email protected]; Swayam Mishra Cc: S R Subramanyam; Shanika Subject: Offer for bauxite Importance: High Urgent Dear Swayam, The time has just expired. We still have a little more than 1 hour before our offer from Owners expires. Hence we can extend this by another 1 hour which is 1300 hrs IST today. Please let us know your decision either way as we would like to keep all parties informed in time about the developments. Regards Swami J) Shanika From: Swaminathan G [[email protected]] Sent: Tuesday, October 16, 2007 11:54 AM To: Swayam Mishra Cc: [email protected]; [email protected] SR Subramanyam; Shanika Subject: Offer for imported bauxite Swayam, Where will you discharge and store in Kakinada port? Is it permissible to take it to Berth and if so what is the draft you can guarantee? If it is anchorage, it is heavily congested and also you cannot achieve the discharge rate of even 4000t per day. Freight will shoot up and it will be unworkable. Regards Swami K) Shanika From: Swayam Mishra [swayam.mishra@v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Subramanyam; tpk. [email protected]; n. [email protected] Subject: Re: Offer for imported bauxite Dear Swayam, Thanks for the confirmation just in time to go to Owners Regards Swami P) Shanika From: Swaminathan G [[email protected]] Sent: Tuesday, October 16, 2007 3:57 PM To: [email protected]; [email protected] Cc: Shanika Subject: 200K Bauxite for Vedanta Dear Shaun Deal is through for 5 Shipments. Shall give you shipping schedule agreed with owners and details by tomorrow. Special word of appreciation to the RTA team led by Mark for the support and patience in putting this thru. It's like carrying coal to Newcastle!!! Thanks Regards Swami Q) Shanika From: Swaminathan G [[email protected]] Sent: Wednesday, October 17, 2007 11:12 AM To: [email protected] Cc: [email protected] [email protected]; Shanika; SR Subramanyam; [email protected] Subject: Re: Inactive Role of Agent. Dear Swayam Small check n revert and advise them suitably. Meantime please send draft agreement. Regards Swami --------Original Message------- From: Swayam [email protected] To: Swaminathan G Cc: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges levied by railways against the 1st Rake moved from Okha, Trimex has been advised to take up the issue with the Railways officials at Okha. Imported Bauxite from Australia 1. For the shipments under the proposed new contract of 2 Lacs MT. Trimex requested to clearly mention the following clauses: i) As per Trimex offer No. TID/F/223/2007 dated 15th October 2007 and accepted by VAL, the price is on CIF-FO basis. As per Trimex under such a situation the berthing responsibility should be with VAL. ii) A copy of base Charter Party Agreement and fixture terms shall be provided by Trimex, which should be deemed incorporated in the Purchase agreement. iii) The Discharge rate agreed should be clearly mentioned in the Purchase agreement. 2. VAL will confirm on the feasibility of discharging the cargo at Kakinada port and accordingly TRIMEX will discuss with the Vessel Owners. 3. For the demurrage incurred in the shipment of MV Nena C vide Order No. VAL/OPRN/526 dated 10.09.07, Trimex claims that the same is on VAL's account as the agreement was on CIF- Visakhapatnam basis. VAL will give its opinion on the same. 4. Trimex has asked to finalise on the new contract and the demurrage by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia. Please rush the agreement for signature. Best Regards Swami V) Shanika From: Shanika [[email protected]] Sent: Wednesday, November 07, 2007, 11:20 AM To: Swayam Mishra Cc: [email protected] [email protected]; S R Subramanyam; `Swaminathan G' Subject: Agreement for 5 x 45, 000 mt LM Bauxite Importance: High Urgent Attn: Mr. Swayam Mishra We have just received feed back from Owners. On 11.5 meters Draft they have indicated an increase of US$3.5 pmt which will make the price US$97.00 pmt CIF Free Out kakinada if you were to have an option additionally for Kakinada. The following terms would be applicable: - Discharge port to be declared before vessels arrival at load port. - Discharge basis Kakinada One Safe Berth All other discharge port terms etc., will be the same. You may introduce this into the Contract as an additional clause and prepare draft urgently and sent it to us. Regards Shanika Peiris Assistant Manager-Commercial Shanika W) From: Swayam Mishra [[email protected]] Sent: Thursday, November 08, 2007 12:28 PM To: [email protected] Cc: [email protected]; [email protected]; Sarika Singh; S.R. Subramanyam; `S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction. This order is being issued in duplicate. You are requested to send the duplicate copy duly signed as a token of acceptance of the terms and conditions. Thanking you Yours faithfully For Vedanta Alumina Limited Rajesh Mohata GM-Commercial AA) Re: Draft Contract SHANIKA From: Swaminathan G [[email protected]] Sent: Thursday, November 08, 2007 6:29 PM To: [email protected] Cc: SR Subramanyam; Shanika; [email protected]; [email protected] Subject: Re: Draft Contract In final stage Shall send very soon Regards AB) Annexure P-10 SHANIKA From: Swaminathan G [[email protected]] Sent: Thursday, November 08, 2007 7:30 PM To: Swayam Mishra Cc: [email protected]; [email protected]; SR Subramanyam; Shanika; [email protected]; [email protected]; Venkateshwar Rao Subject: Trimex-Imported_5 shipments 1.doc Importance : High Attachments: Trimex-Imported_5 shipments 1.doc Dear Swayam, Please find the draft contract with clarification on various points as discussed in meetings and on phone today. Please confirm the same in order. Best regards Swami. AC) Annexure P-12 From: Rajesh Mohata [mail to: Rajesh.Mohata@vedan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly pointed out by Mr. K.K.Venugopal, no comments were made in respect of `arbitration clause'. It is further seen that at 6.04 p.m. the petitioner sent a reply to the comments made by the respondent. Again on 16.10.2007, at 11.28 a.m. though respondents suggested certain additional information on the offer note, here again no suggestion was made with regard to arbitration clause. At 11.48 a.m. the petitioner sent an e-mail extending validity of the offer by another one hour. At 01.38 p.m., the respondent made certain suggestions on the demurrage asking the petitioner to either reduce the freight rate or the demurrage rate. On the same day at 02.01 p.m., the petitioner sent a reply on the demurrage stating that the rates cannot be reduced any further. At 02.41 p.m., the respondent informed the petitioner that they would like to have a termination clause after two shipments. At 03.06 p.m., the petitioner sent a mail stating that no owner will accept this condition. Respondent may accept two or five quickly . At 03.06 p.m. the respondent accepted the offer for five shipments. In response to the same at 03.49 p.m., the petitioner thanked the respondent for acceptance and conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orced. 9. In the light of the details which have been extracted in the earlier paragraphs, I am unable to accept the stand of the respondent. It is clear that if the intention of the parties was to arbitrate any dispute which arose in relation to the offer of 15.10.2007 and the acceptance of 16.10.2007, the dispute is to be settled through arbitration. Once the contract is concluded orally or in writing, the mere fact that a formal contract has to be prepared and initialed by the parties would not affect either the acceptance of the contract so entered into or implementation thereof, even if the formal contract has never been initialed. 10. The acceptance conveyed by the respondent, which has already been extracted supra, satisfies the requirements of Section 4 of the Indian Contract Act 1872. Section 4 reads as under: Communication when complete- The communication of an acceptance is complete...as against the acceptor, when it comes to the knowledge of the proposer. As rightly pointed out by the learned senior counsel for the petitioner, when Mr. Swaminathan of Trimex opened the email of Mr. Swayam Mishra of Vedanta at 3:06 PM on 16.10.2007, it came to his knowledge that an irrevo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled `heads of agreement'. The above principle has been consistently followed by the English Courts in the cases of Mamidoil-Jetoil Greek Petroleum Co. S.A. v. Okta Crude Oil Refinery AD (2001) 2 LLR 76 at p. 89; Wilson Smithett Cape (Sugar) Ltd. v. Bangladesh Sugar and Food Industries Corporation, (1986) 1 LLR 378 at p. 386. In addition, Indian law has not evolved a contrary position. The celebrated judgment of Lord Du Parcq in Shankarlal Narayandas Mundade v. The New Mofussil Co. Ltd. and Ors. MANU/PR/0006/1946 : AIR 1946 PC 97 makes it clear that unless an inference can be drawn from the facts that the parties intended to be bound only when a formal agreement had been executed, the validity of the agreement would not be affected by its lack of formality. In the present case, where the Commercial Offer carries no clause making the conclusion of the contract incumbent upon the Purchase Order, it is clear that the basic and essential terms have been accepted by the respondent, without any option but to treat the same as a concluded contract. 12. Though Mr. C.A. Sundaram, learned senior counsel heavily relied on the judgment of this Court in Dresser Rand S.A. v. Bindal Agro Che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Party, various international shipping practices etc. which are to be pleaded in detail before the Arbitral Tribunal once it is constituted and not before this Court since this means extensive quoting of shipping laws and decided cases which cannot be done in the present arbitration petition. The above submissions cannot be under estimated. 14. Both in the counter affidavit as well as at the time of arguments Mr. C.A. Sundaram, learned senior counsel for the respondent has pointed out various differences between the version of the respondent and the petitioner. However, a close scrutiny of the same shows that there were only minor differences that would not affect the intention of the parties. It is essential that the intention of the parties be considered in order to conclude whether parties were ad idem as far as adopting arbitration as a method of dispute resolution was concerned. In those circumstances, the stand of the respondent that in the absence of signed contract, the arbitration clause cannot be relied upon is liable to be rejected. 15. Smita Conductors Ltd. v. Euro Alloys Ltd. (2001) 7 SCC 728 was a case where a contract containing an arbitration clause was between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties' autonomy of the will (1' autonomie de la volonte') i.e. their wishes. (For a general discussion on this doctrine see Law and Practice of International Commercial Arbitration, Alan Redfern and Martin Hunter, Street Maxwell, London, 1986 at pp.4 and 53.) 60. Technicalities like stamps, seals and even signatures are red tape that have to be removed before the parties can get what they really want--an efficient, effective and potentially cheap resolution of their dispute. The autonomie de la volonte' doctrine is enshrined in the policy objectives of the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration, 1985, on which our Arbitration Act is based. (See Preamble to the Act.) the courts must implement legislative intention. It would be improper and undesirable for the courts to add a number of extra formalities not envisaged by the legislation. The courts' directions should be to achieve the legislative intention. 61. One of the objectives of the UNCITRAL Model Law reads as under: the liberalization of international commercial arbitration by limiting the role of national courts, and by giving e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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