Case: OIL AND NATURAL GAS CORPORATION LTD. v. M/s G & T Beckfield Drilling Services Pvt. Ltd.
Court: Supreme Court of India
Date of Judgment: 2 September 2025
Coram: Hon’ble Justices P.S. Narasimha and Manoj Misra
Citation: 2025 LiveLaw (SC) 868

Summary

The Supreme Court clarified that an Arbitral Tribunal can grant pendente lite interest unless the contract expressly or by necessary implication bars it. A contractual clause prohibiting interest on delayed payments cannot, by itself, be read as a bar on pendente lite interest under Section 31(7)(a) of the Arbitration & Conciliation Act, 1996.

Background

ONGC entered into a contract with M/s G & T Beckfield Drilling Services Pvt. Ltd. A dispute arose regarding delayed payments, and the Arbitral Tribunal awarded pendente lite interest (interest accruing during the pendency of arbitration). ONGC challenged this award, relying on Clause 18.1 of the contract:

“No interest shall be payable by ONGC on any delayed payment/disputed claim.”

ONGC argued that this clause barred the Tribunal from granting pendente lite interest. The Gauhati High Court upheld the award, leading ONGC to appeal before the Supreme Court.

Key Issues

• ONGC’s Argument: The contractual clause (18.1) barred any award of interest, including pendente lite interest, making the Tribunal’s award unsustainable.
• Respondent’s Argument: The clause only prohibited contractual interest on delayed invoices and did not restrict the Tribunal’s discretion under the Arbitration Act.

Supreme Court Findings

• Scope of Clause 18.1: The clause only prohibited ONGC from paying contractual interest on delayed payments but did not extend to pendente lite interest.
• Tribunal’s Power: Under Section 31(7)(a) of the Arbitration Act, an arbitral tribunal has statutory discretion to award pendente lite interest unless explicitly or impliedly barred by the contract.
• No Explicit Bar: Since the clause did not expressly or impliedly bar pendente lite interest, the Tribunal’s award was upheld.
• The Court concluded:

“Clause 18.1 would not limit the statutory power of the arbitral tribunal to award pendente-lite interest. Consequently, we find no such error in the award of pendente lite interest as may warrant interference with the award.”

Cited Precedents

• Sayeed & Co. v. State of Orissa (2009) – where the contract expressly prohibited pendente lite interest.
• THDC First Case – interpreting contractual bars on interest.
• Section 31(7)(a) Arbitration & Conciliation Act, 1996 – statutory provision enabling arbitral tribunals to grant interest.

Important Observations

• A bar on contractual interest cannot automatically be read as a bar on pendente lite interest.
• Only express wording or necessary implication can remove the Tribunal’s discretion.
• Courts should uphold arbitral awards unless a clear error of law or jurisdiction is found.

Legal Partners’ Views

This ruling strengthens the autonomy of arbitral tribunals by reaffirming their statutory power under the Arbitration Act. It clarifies that parties must use clear contractual language if they wish to exclude pendente lite interest. Otherwise, arbitral tribunals retain wide discretion to award it in the interest of fairness.

Outcome

• ONGC’s appeal was dismissed.
• The Arbitral Tribunal’s award of pendente lite interest was upheld.

Final Thoughts

This ruling is crucial for arbitration practice in India, as it settles recurring disputes around contractual bars on interest. It reinforces that mere prohibition of interest on delayed payments is insufficient to oust arbitral discretion on pendente lite interest, thereby safeguarding claimants’ rights during prolonged arbitration proceedings.

SOURCE: LiveLaw

Case: Glencore International AG v. M/s. Shree Ganesh Metals and Another
Court: Supreme Court of India
Date of Judgment: 25 August 2025
Coram: Hon’ble Justice Sanjay Kumar & Justice Satish Chandra Sharma
Citation: 2025 INSC 1036; 2025 LiveLaw (SC) 839

Summary

The Supreme Court clarified that the absence of a physical signature on an arbitration agreement does not bar reference to arbitration, provided the parties have consented to its terms through written communication.

Background

Glencore International AG, a Swiss company, entered into a series of contracts with Shree Ganesh Metals, an Indian entity, for the supply of zinc alloys. Their earlier contracts contained arbitration clauses referring disputes to the London Court of International Arbitration. In 2016, they negotiated a fresh contract for 6,000 MT of zinc, confirmed via email. While Glencore signed the contract, Shree Ganesh Metals did not—but it accepted deliveries and arranged Standby Letters of Credit referring to the contract.

When disputes arose, Shree Ganesh Metals filed a civil suit before the Delhi High Court, which rejected Glencore’s request for arbitration under Section 45 of the Arbitration and Conciliation Act, 1996, citing the absence of Respondent No.1’s signature. The Division Bench upheld this finding.

Key Issues

• Glencore alleged breach of contractual obligations and sought arbitration under clause 32.2 of the unsigned 2016 contract.
• Shree Ganesh Metals argued that no binding arbitration agreement existed as the contract was not signed.

Supreme Court Findings

• An arbitration agreement need only be in writing, not necessarily signed.
• The parties’ conduct—acceptance of supplies, issuance of Standby Letters of Credit, and email correspondence—clearly demonstrated consent to the contractual terms, including the arbitration clause.
• The High Court erred in holding that there was no consensus ad idem.
• The Court reaffirmed the doctrine of Kompetenz-Kompetenz, holding that referral courts need only determine the existence of an arbitration agreement prima facie.

Cited Precedents

• Govind Rubber Ltd. v. Louis Dreyfus Commodities Asia (2015) 13 SCC 477 – Arbitration agreement valid without signatures if consent is shown.
• Caravel Shipping Services Pvt. Ltd. v. Premier Sea Foods Exim Pvt. Ltd. (2019) 11 SCC 461 – Arbitration agreement need not be signed if in writing.
• Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. (2005) 7 SCC 234 – Referral courts must only form a prima facie view of arbitration agreements.

Important Observations

• Arbitration agreements must be interpreted to give effect to parties’ intent, not invalidate them.
• Modern commerce often operates through electronic communications and standard forms, where signatures are secondary to proof of consensus.
• Respondent No.1’s reliance on Letters of Credit under the 2016 contract was inconsistent with its claim of no agreement.

Legal Partners’ Views

This ruling strengthens the enforceability of arbitration agreements in commercial practice, particularly in cross-border transactions where contracts may remain unsigned but are acted upon. For businesses, it underscores the importance of conduct and correspondence as binding evidence of consent.

Outcome

The Supreme Court set aside the Delhi High Court’s orders and restored the matter for reference to arbitration.

Final Thoughts

This ruling is crucial for international commercial arbitration and e-commerce contracts, ensuring that the absence of signatures does not defeat valid arbitration agreements when mutual consent is clear.

SOURCE: LiveLaw