SC Reiterates: Consensus Ad Idem Sufficient for Valid Arbitration Agreement, Signature Not Mandatory.

Sep 13, 2025

The Hon’ble Supreme Court has made it clear that the absence of a signature on an arbitration agreement does not bar from bringing the issues to arbitration as long as the parties have consented to arbitrate. The Supreme Court overturned the Delhi High Court’s decision to forego arbitration in the case of Glencore International AG v. M/s. Shree Ganesh Metals & Anr. 2025 INSC 1036 observing that an arbitration agreement can be valid and binding even if not formally signed, provided the parties have demonstrated their consent and acted upon the agreement’s terms.

The Bench, consisting of Justices Sanjay Kumar and Satish Chandra Sharma, noted that Respondent No. 1 had emailed their consent to the terms of the contract, including the arbitration clause. The Court decided that once such consent is demonstrated, the arbitration clause cannot be revoked by the mere absence of a signature.

Analysis and Decision of the Court:

The Court emphasized that although Section 7(3) of the Arbitration and Conciliation Act, 1996, requires that an arbitration agreement be in writing, signature is not a prerequisite. According to Section 7(4), there are several situations in which the existence of an arbitration agreement is uncontested, such as correspondence, emails, or filings. Citing Govind Rubber Limited v. Louis Dreyfus Commodities Asia Pvt. Ltd. (2015), the Court reiterated that commercial documents containing arbitration clauses must be interpreted to give effect to the agreement rather than to undermine it.
The Bench also noted that in contemporary commerce, such as e-contracts, online transactions, and standard form agreements, recordings of communications even when they lack signatures can be used to demonstrate consensus ad idem.

Takeaway:

The Supreme Court reaffirmed its pro-arbitration stance by holding that a signature is not a mandatory requirement for a valid arbitration agreement. The Court mentioned that if it can be prima facie shown that the parties to agreement are at consensus ad idem, then the mere absence of a signature by one party cannot absolve such party from liability under the agreement. In the context of modern business practices such as e- contracts, e-commerce transactions, and standard form contracts etc., once the identity of the parties is established and a record of agreement exists, the arbitration clause will function as a valid arbitration agreement. Thus, according to the Arbitration and Conciliation Act signature is not a prerequisite under Section 7(4)(b), Section 7(4)(c), and Section 7(5).

Disclaimer: This blog is intended solely for informational purposes and should not be considered legal advice. Readers are encouraged to reach out to us for legal advice if they have any queries or require further clarification.