Summary and Analysis of Glencore International AG vs Ms Shree Ganesh Metals and another
1. Heading of the Judgment
Glencore International AG vs. M/s. Shree Ganesh Metals and another, Civil Appeal No. 11067 of 2025 (@ SLP (C) No. 27985 of 2019), Supreme Court of India, decided on August 25, 2025.
Citation: Glencore International AG vs. M/s. Shree Ganesh Metals and another, 2025 INSC 1036.
2. Related Laws and Sections
The judgment primarily interprets and applies the following provisions of the Indian Arbitration and Conciliation Act, 1996:
Section 44: Defines a "foreign award" as an arbitral award made pursuant to a written arbitration agreement.
Section 45: Empowers a judicial authority to refer parties to arbitration if an agreement under Section 44 exists, unless it finds the agreement prima facie "null and void, inoperative or incapable of being performed."
The judgment also references Section 7 of the Act, which deals with the definition and form of an arbitration agreement, to support its reasoning.
3. Basic Judgment Details
Parties:
Appellant: Glencore International AG (a Swiss mining and commodity trading company).
Respondent No. 1: M/s. Shree Ganesh Metals (an Indian proprietorship concern).
Respondent No. 2: HDFC Bank (the bank that issued Letters of Credit for the transaction).Core Legal Question: Whether a binding arbitration agreement existed between the appellant and the first respondent concerning their 2016 contract for the sale of zinc metal, even though the formal written contract was not signed by Respondent No. 1.
Lower Court Decisions: Both the single judge and the division bench of the Delhi High Court had held that no arbitration agreement existed because the contract was unsigned.
Supreme Court's Decision: The Supreme Court allowed the appeal, set aside the High Court's orders, and held that a valid arbitration agreement did exist and the parties must be referred to arbitration.
4. Explanation of the Judgment
Background and Facts
The dispute arose from a series of contracts for the sale of zinc metal. The parties had four previous contracts, all containing arbitration clauses. They then negotiated a fifth contract for 6,000 metric tons of zinc.
The negotiation happened via email. On March 10, 2016, Glencore sent an email proposing terms, including that the "provisional price" would be based on the average of the last 10 London Metal Exchange (LME) days. The next day, Shree Ganesh Metals replied, confirming the terms but requesting one change: that the provisional price be based on the average of the last 5 LME days instead of 10.
Glencore accepted this change and sent a formal contract (No. 061-16-12115-S) dated March 11, 2016, which it signed. This contract incorporated the modified pricing term (5-day average) and contained a detailed arbitration clause (Clause 32.2). Although Shree Ganesh Metals never signed this contract, its subsequent actions were crucial:
It procured two Standby Letters of Credit from HDFC Bank, both explicitly mentioning Contract No. 061-16-12115-S.
It accepted delivery of 2,000 metric tons of zinc from Glencore.
Glencore raised eight invoices for this delivery, all referencing the same contract number.
The parties exchanged further correspondence discussing obligations and issues under this specific contract.
When a dispute arose over payments and further deliveries, Shree Ganesh Metals filed a civil suit in the Delhi High Court to prevent Glencore from encashing the Letters of Credit. Glencore applied under Section 45 of the Arbitration Act requesting the court to refer the dispute to arbitration as per Clause 32.2 of the contract. The High Court rejected this application, leading to this appeal in the Supreme Court.
The Supreme Court's Reasoning and Ruling
The Supreme Court strongly disagreed with the High Court's conclusion. Its reasoning was based on two main pillars: the conduct of the parties and established legal principles.
1. Conduct of the Parties Demonstrates Acceptance:
The Court emphasized that a contract and its arbitration clause are not invalid merely because they are not signed. The law focuses on the substance of the agreement, not the form. The Court listed Shree Ganesh Metals' actions that proved it had accepted the terms of the unsigned contract:
It requested and agreed to a specific change in the price term, which was then incorporated into the final contract.
It performed its obligations under the contract by arranging for Standby Letters of Credit that specifically named the contract.
It accepted delivery of a significant quantity of goods (2,000 MT) under that contract.
Its own lawsuit was based on the Letters of Credit issued for this specific contract, meaning it itself relied on the existence of the contract to make its claim.
The Court stated that a party cannot "blithely bank upon its own failure to sign the said contract to wriggle out of the terms and conditions mentioned therein" after having willingly acted upon it.
2. Application of Legal Principles:
The Court relied on several legal precedents to support its decision:
It cited the Constitution Bench decision in Interplay between Arbitration Agreements under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899, In Re (2024), which held that a referral court only needs to see if there is a prima facie case for the existence of an arbitration agreement. A full trial on this issue is not required and should be left to the arbitral tribunal.
It referred to Govind Rubber Limited vs. Louis Dreyfus Commodities Asia Private Limited (2015), where it was held that commercial contracts must be interpreted to give effect to the agreement. The Court noted that in that case, much like here, a party had not signed the contract but had acted upon it, and this was sufficient to bind them to the arbitration clause.
It also cited Caravel Shipping Services Private Limited vs. Premier Sea Foods Exim Private Limited (2019), which reaffirmed that an arbitration agreement must be in writing but does not need to be signed. The "record of the agreement" can be found in the exchange of communications and the subsequent conduct of the parties.
Conclusion and Final Order
The Supreme Court concluded that the High Court had made a mistake by ignoring the overwhelming evidence of Shree Ganesh Metals' conduct, which clearly showed it had accepted all terms of Contract No. 061-16-12115-S, including the arbitration clause in Clause 32.2.
The Court held that Glencore's application under Section 45 of the Arbitration Act was valid and justified. Consequently, the Supreme Court:
Allowed the appeal.
Set aside the orders of the Delhi High Court.
Restored Glencore's application (I.A. No. 4550 of 2017) and directed the High Court to refer the parties to arbitration in accordance with the law.