Arbitration Newsletter | September 2025

Welcome to the September 2025 edition of our quarterly Arbitration newsletter, where we delve into significant judgements that touch upon the interpretation of the relevant provisions of the Arbitration and Conciliation Act, 1996 Act (the "Arbitration Act") and its interplay with other statutes.

I. Glencore International AG v. M/s. Shree Ganesh Metals and Another, 2025 INSC 1036, Supreme Court of India

Highlighting the pro-arbitration approach of Indian courts, the Supreme Court has ruled that even in foreign-seated arbitrations, an arbitration agreement can be binding where the underlying contract has not been formally signed.

In its judgment dated 25 August 2025 in Glencore International AG v. M/s. Shree Ganesh Metals and Another (Civil Appeal No. 11067 of 2025), a two-judge bench applied the principles of Section 7 of the Arbitration Act, which define what constitutes an arbitration agreement in writing for Part I arbitrations, to international arbitrations governed by Part II.

The dispute arose between Glencore International AG, a Swiss commodity trading company, and Shree Ganesh Metals, an Indian proprietorship. The parties had earlier executed four contracts with London-seated LCIA arbitration clauses. In 2016, they negotiated a fifth contract for supply of 6,000 MT of zinc. The terms were exchanged by email, Glencore issued a revised contract incorporating one change suggested by Shree Ganesh Metals, signed it, and sent it to Shree Ganesh for countersignature. The draft included an arbitration clause (Clause 32.2) providing for dispute resolution in London.

Although the document was never signed by Shree Ganesh, it accepted delivery of 2,000 MT of zinc and relied on the contract to secure Standby Letters of Credit from HDFC Bank, even furnishing a correction to the contract date. Glencore raised eight invoices referencing the contract number. When disputes arose over payments, Shree Ganesh filed a civil suit before the Delhi High Court, while Glencore sought reference to arbitration under Section 45 of the Arbitration Act.

The Single Judge and the Division Bench of the High Court dismissed Glencore's application. On appeal, the Supreme Court overturned both rulings, holding that the lower courts had "lost sight of certain crucial factual aspects." It found that Shree Ganesh's conduct, including partial performance and use of Letters of Credit explicitly tied to the contract, demonstrated clear acceptance of its terms, including the arbitration clause.

The Court examined Sections 7(3) and 7(4) of the Arbitration Act. Section 7(3) requires that an arbitration agreement be in writing, while Section 7(4) sets out the ways this requirement can be met, such as through signed documents, exchanges of communication, or pleadings. The Court clarified that Section 7(4) does not mandate signatures in all cases, and the only prerequisite under Section 7(3) is that the agreement must be in writing. This principle, the Court held, applies equally to arbitration agreements governed by Sections 44 and 45 of Part II.

Section 44, which applies to foreign awards, refers to "an agreement in writing" but does not provide illustrations comparable to Section 7(4). The Court extended the interpretation of Section 7 to fill this gap, ensuring consistency between domestic and international arbitration regimes.

Although this principle had already been recognised in domestic arbitrations, particularly in Caravel Shipping Services Private Limited v. Premier Sea Foods Exim Private Limited ((2019) 11 SCC 461), the present ruling provides welcome clarification that the same approach applies to foreign-seated arbitrations under Sections 44 and 45.

The decision reaffirms that Indian courts will prioritise the substance of parties' conduct over the formality of signatures when enforcing arbitration agreements, extending this approach to international arbitration. What matters is that the intention is objectively provable, whether through correspondence, invoices, or the incorporation of institutional frameworks by reference.

II. Kamal Gupta vs M/s. L.R. Builders Private Limited, 2025 INSC 975, Supreme Court of India

A two-judge bench of the Supreme Court recently reaffirmed the principle of confidentiality in arbitration, holding that only the parties to the arbitration agreement may participate. Permitting a non-signatory to observe the proceedings, the Court ruled, would breach Section 42A of the Arbitration Act, which requires arbitration to remain confidential except where disclosure of an award is necessary for its implementation and enforcement.

The Court also clarified two further points. First, once an application under Section 11(6) of the Arbitration Act for appointment of an arbitrator has been decided, the court becomes functus officio and cannot entertain further applications in the same matter, including those by non-signatories seeking intervention. Second, while a non-signatory is not bound by an award, it may still resist enforcement under Section 36 if the award is sought to be executed against it.

The dispute arose from an oral family settlement in 2015 between Pawan Gupta ("PG") and Kamal Gupta ("KG"), which was later recorded in a Memorandum of Understanding/Family Settlement Deed ("MoU") in 2019. The MoU was not signed by Rahul Gupta ("RG"), son of KG. PG and another party-initiated proceedings under Section 11(6) of the Arbitration Act seeking appointment of a sole arbitrator, while RG applied to intervene despite being a non-signatory. PG and another also filed a Section 9 petition for interim measures, in which RG again sought intervention.

On 22 March 2024, the Single Judge of the Delhi High Court appointed a sole arbitrator, directed that the Section 9 petition be treated as an application under Section 17 to be decided by the tribunal, and dismissed RG's intervention applications.

In August 2024, RG filed a fresh application in the already disposed Section 11(6) proceedings, seeking permission to attend hearings and access pleadings, orders, and the eventual award. On 12 November 2024, the Delhi High Court allowed RG to remain present in all future arbitration proceedings and recorded that certain properties referred to in his submissions would remain outside the scope of arbitration.

PG and KG challenged this order before the Supreme Court, arguing that the High Court had become functus officio after disposing of the Section 11(6) application, that permitting a non-signatory to participate breached Section 42A, and that the Court had wrongly reconsidered the matter issuing additional directions.

The Supreme Court upheld these objections. It held that arbitration can only take place between parties to an arbitration agreement, and under Section 35 an award is not binding on non-signatories. A non-party therefore has no right to be present in proceedings between signatories. Permitting such participation, the Court observed, would be "charting a course unknown to law" and would undermine confidentiality under Section 42A. At the same time, it clarified that a non-signatory may still resist enforcement under Section 36 if an award is sought to be executed against them.

The Court further held that once a sole arbitrator had been appointed on 22 March 2024 under Section 11(6), the High Court lacked jurisdiction to entertain RG's later application. Any attempt to reopen disposed proceedings, it concluded, amounted to an abuse of process.

This decision reinforces two critical aspects of arbitration law in India. First, it underscores the confidentiality of arbitral proceedings under Section 42A of the Arbitration Act by making clear that only signatories to the arbitration agreement are entitled to participate. Second, it highlights the principle of finality in Section 11 proceedings, holding that once an arbitrator is appointed, the court becomes functus officio and cannot entertain fresh applications in the same matter. At the same time, the Court clarified that non-signatories are not left remediless: their opportunity arises at the enforcement stage under Section 36, if an award is sought to be executed against them. Importantly, this clarification operates alongside doctrines such as the Group of Companies principle recognised in Cox and Kings Ltd. v. SAP India Pvt. Ltd. (2022) 8 SCC 1, which allow non-signatories to be bound in certain circumstances. The present ruling does not dilute that principle but makes clear that outside such recognised doctrines, non-signatories have no right to participate in arbitral proceedings.

III. M/S Sonali Power Equipments Pvt. Ltd. vs. Chairman, Maharashtra State Electricity Board, Mumbai & Ors., 2025 INSC 864, Supreme Court of India

In deciding the applicability of the Limitation Act, 1963 to the MSMED Act, 2006, a two-judge bench of the Supreme Court held that while the Limitation Act will apply to arbitration proceedings under the MSMED Act, it cannot extend to conciliation proceedings. The Supreme Court, thus, drew an important distinction between the nature of arbitration and conciliation proceedings under the Arbitration Act, upholding the right of MSME suppliers to pursue time-barred claims through conciliation proceedings under the Arbitration Act.

In this case, the Appellant, Sonali Power Equipments Pvt. Ltd. supplied transformers to the Respondent, Maharashtra State Electricity Board (MSEB). Disputes relating to delay in payments arose between the parties which were taken to the Industry Facilitation Council in 2005-06, proceedings which later came to be governed by the MSMED Act. Through its award dated 28 January 2010, the Council granted relief to the Appellant. The award came to be challenged by the Respondent before the Commercial Court on the ground that the claims were barred by limitation. The challenge was allowed by the Commercial Court, and it set aside the award, against which the Appellant filed an appeal before the High Court under Section 37 of the Arbitration Act. The High Court referred the question of the applicability of Limitation Act to the MSMED Act to a larger bench. A full bench of the High Court, in its order dated 20.10.2023, upheld the applicability of the Limitation Act to both arbitration and conciliation proceedings under the MSMED Act. Aggrieved, the Appellant preferred an appeal before the Supreme Court.

Analysing the scheme and interplay of the MSMED Act, Limitation Act and Arbitration Act, the Supreme Court partly allowed the appeal, upholding the decision of the High Court to the extent of the applicability of the Limitation Act to arbitration proceedings under the MSMED Act. With respect to conciliation proceedings under the MSMED Act, the Court noted that Section 18(2) of the MSMED Act provides that conciliation must be conducted according to Sections 65 to 81 of the Arbitration Act. The Court noted that there is no provision that extends the applicability of the Limitation Act to the conciliation proceedings under the MSMED Act.

Through this decision, the Supreme Court decided that a time-barred claim can be referred to conciliation as the expiry of limitation period does not extinguish the right to recover the amount through the conciliatory process.

IV. SEPCO Electric Power Construction Corporation v. GMR Kamalanga Energy Ltd., 2025 INSC 1171, Supreme Court of India

A two-judge bench of the Supreme Court of India has upheld the High Court's decision to set aside an approx. 995 Crores award, observing that the arbitral tribunal had transgressed the parameters of the parties' agreement. In doing so, the Supreme Court held, the arbitral tribunal had exceeded its mandate under Section 28(3) of the Arbitration Act which casts an explicit duty on a tribunal to resolve disputes in accordance with the terms of the contract.

In 2015, following disputes arising out of EPC (Engineering, Procurement and Construction) Agreements between the parties, the Appellant, SEPCO, invoked arbitration in 2015. Through its award, the arbitral tribunal determined the Respondent's net liability towards the Appellant as INR 995 Crores. Assailing the award before the Single Judge of the Orissa High Court, the Respondent contended that the Tribunal had modified the parties' agreement, as despite an explicit "no oral modification" clause in the EPC Agreement, the Tribunal had applied principles of waiver and estoppel to adjudicate in favour of SEPCO. The Respondent, therefore, sought to set aside the award on the ground that the Tribunal had acted discriminately and unfairly, having adjudicated the dispute dehors the pleadings of the parties as it had inserted its own arguments on estoppel and waiver even when SEPCO had never pleaded the same.

The Single Judge rejected the Respondent's claims and upheld the arbitral award. However, hearing the appeal under Section 37 of the Arbitration Act, the Division Bench of the Orissa High Court overturned the Single Judge's findings, noting that the Single Judge had committed a patent error as the Tribunal's findings shocked the conscience of the court by exceeding its jurisdiction and changing the terms of the contract which was violative of fundamental policy of Indian law. In a similar vein, the Division Bench also held that unequal treatment of the parties by the Tribunal amounts to violation of natural justice under Section 18 of the Arbitration Act.

While SEPCO preferred an appeal against the decision of the Division Bench, the Supreme Court affirmed the setting aside of the award. While the Court noted that the scope of judicial interference under Section 37 of the Arbitration Act is narrow and limited, it observed that such interference is warranted where the Section 34 Court has failed to appreciate "the gross violations of the basic principles of adjudication of a dispute". The Court further noted that the Division Bench had rightly refused to turn a blind eye to such a glaring example of unequal treatment which clearly fails the test of perversity and is incompatible with the basic notions of justice. The Supreme Court, thus, set aside the whole award as it held that it was not possible to sever the invalid portions of the award from the valid ones.

Through this decision, the Supreme Court has clarified that despite the limited scope of interference, a court, exercising its jurisdiction under Section 37 of the Arbitration Act, is obligated to interfere with an award which falls foul of the fundamental policy of Indian law as well as the public policy of India. The Court has underscored that an arbitral tribunal must operate strictly within the scope of its authority and cannot alter the foundational contract that defines its very existence.

V. Rescom Mineral Trading FZE v. Rashtriya Ispat Nigam Limited & Anr., 2025:DHC:7467, High Court of Delhi

The Delhi High Court has observed that mere financial distress is not sufficient, on its own, to secure unadjudicated claims under Section 9 of the Arbitration Act. For grant of interim relief under Section 9, the Court held, principles governing attachment under Order XVIII, Rule 5 of the Code of Civil Procedure, 1908 are equally applicable.

The parties entered into an Agreement dated 29.08.2023 where the Petitioner supplied Coking Coal to the Respondent No. 1, Rashtriya Ispat Nigam Limited. Disputes arose between the parties with the Petitioner alleging failure on part of Respondent No. 1 to make the payment. Respondent No. 1 disputed the quality of the coal, stating that it was thus entitled to a rebate or diminution of in price of the shipment of coal under the Agreement. Citing Respondent No. 1's precarious financial condition, the Petitioner moved the Delhi High Court under Section 9 to secure its claim.

In its analysis, the High Court traversed various judicial precedents to analyse the position of law on the grant of relief under Section 9. The Court relied on its judgement in Vivek Jain v. PrepLadder Pvt. Ltd., 2023 SCC OnLine Del 6370, to resolve the conflict between the contradictory findings between co-ordinate benches of the Supreme Court in Essar House Private Limited v. Arcelor Mittal Nippon Steel India, 2022 SCC Online SC 1219 and Sanghi Industries v. Ravin Cables, 2022 SCC OnLine SC 1329.The Court reaffirmed that though the principles of CPC do not strictly apply in grant of interim relief under Section 9, courts cannot completely disregard its underlying principles. Considering that the Petitioner had not even alleged that the Respondent No. 1 was acting in a manner to frustrate the enforcement of a potential award, the Court observed that the principles embodied in Order XVIII, Rule 5 of CPC were not met. The Court also relied on its judgement in Natrip Implementation Society vs. IVCRL Ltd., 2016 SCC OnLine Del 5023 to conclude that unadjudicated claims cannot be secured through interim relief merely on the ground of financial distress. The Court further concluded that the Petitioner had not successfully met the three-pronged test for grant of interim relief i.e., the existence of a prima facie case, demonstrating that the balance of convenience lay in the Petitioner's favour and proving that it would suffer irreparable harm if interim relief were not granted.

Through this decision, the Delhi High Court has settled the dust on the test to be adopted by courts in its exercise of jurisdiction under Section 9 of the Arbitration Act. It offers valuable guidance in resolving any ambiguities in the contours of grant of interim relief under Section 9.

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