The Supreme Court of India has clarified the legal standard for determining the validity of arbitration agreements under Part II of the Arbitration and Conciliation Act, 1996. In its decision dated August 25, 2025, in Glencore International AG v. Shree Ganesh Metals & Anr., the Court addressed whether an unsigned contract containing an arbitration clause can still be considered valid and binding.
The case involved a dispute over a contract for the supply of zinc between Glencore International AG and Shree Ganesh Metals. The parties had previously entered into four contracts with London-seated arbitration clauses under the Rules of the London Court of International Arbitration (LCIA). In 2016, they negotiated a fifth contract (“2016 Contract”) that was signed by Glencore but not by Shree Ganesh Metals.
Despite not signing, Shree Ganesh Metals participated in actions related to performance under the contract, including issuing Standby Letters of Credit (SBLCs), accepting delivery of material, receiving invoices, and filing a suit concerning invocation of SBLCs tied to this contract.
Lower courts held that there was no binding arbitration agreement due to lack of signature. The Supreme Court reviewed these decisions after Glencore appealed.
The judgment stated: “The Respondents’ conduct in the facts unequivocally demonstrated that it accepted and acted upon the 2016 Contract. So far as the conduct was concerned the Hon’ble Court sift through the factual matrix and highlighted that the correspondence issued by the Respondent specially referring to 2016 Contract, the issuance of SBLCs by the Respondent’s bank towards discharge of its obligations under 2016 Contract, picking up of part material supplied by Appellant by the Respondent, receipt of invoices under the 2016 Contract and ultimately filing a suit pertaining to invocation of SBLC pertaining to 2016 Contract demonstrates unequivocal acceptance by the Respondent who cannot regal out [sic]the terms by its failure to sign the contract.”
On legal standards for referral to arbitration under Section 45 when proceedings are seated outside India, it observed: “only prima facie existence of an arbitration agreement needs to be adduced before the referral court. The referral court is not an appropriate forum to conduct a mind trial by allowing parties to adduce evidence in regard to existence or validity… as same ought to be left to arbitral tribunal.” It relied on previous Supreme Court rulings such as Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd., reinforcing that courts should defer detailed factual inquiries about validity or existence unless there is clear evidence against it.
Addressing whether signatures are necessary for enforceability: “Requirement of signature… pale into insignificances when it can be prima facie shown… that parties are ad idem and materials on record make it clear that Respondent was acting upon [the]Contract issued…” Citing Caravel Shipping Services Private Limited vs Premier Sea Foods Exim Private Limited and Jugal Kishore Rameshwardas vs Goolbai Hormusji, it reiterated an arbitration agreement must be in writing but need not always bear signatures if mutual assent is otherwise evident.
As a result, judgments from lower courts were set aside; “the Hon’ble Court found [the]arbitration agreement contained in [the]2016 Contract to be valid and binding and accordingly restored [the]Section 45 application filed by Appellant for reference…to arbitration…”
“The Decision by Hon’ble Supreme Court reaffirms India’s stand when it comes to international commercial arbitration i.e., a pro-arbitration approach, upholding parties intention and following duty…to relegate parties to contractually agreed mechanism under Part II…on a prima facie view without inviting rigmors [sic]of disputed questions involving leading extensive evidence,” according to those involved with representing Glencore.
Sumeet Lall (Partner), Sidhant Kapoor (Legal Director), and Palak Rawat (Associate) from CSL Chambers represented Glencore International AG in this matter. CSL Chambers is associated with Clyde & Co LLP.