No binding arbitration agreement can subsist between the parties, if the contract has not been concluded

Delhi High Court: While deciding a case where no acceptance was communicated as regards sale contracts and the other party sought to enforce the award rendered by invoking the arbitration clause in the contract, the Single Bench of Vibhu Bakhru, J. declined to enforce the award in view of no communication of acceptance of the contract to the other party.

The present case dealt with two companies at a preliminary stage of negotiation for sale of palm oil, whereby the seller, who presumed the existence of a binding contract between the two, sought to enforce the award given by an Arbitral Tribunal which held the contracts to be existing, it being a usual practice to conclude unsigned contracts.

This Court, however, while analyzing the facts and circumstances of the case in light of its previous judgments and addressing the question as to whether an arbitration agreement existed between the parties, held that Section 44(a) of the Arbitration and Conciliation Act, 1996 clearly mandates the agreement to be in writing, and since the contracts had not been signed there could have been no communication or meeting of minds, thereby concluding no enforceable contract between the parties and the subsequent entailing causes of action by invocation of the arbitration clause or otherwise.[Virgoz Oils & Fats Pvt. Ltd.v. National Agricultural Co-Operative Marketing Federation of India, 2016 SCC OnLine Del 6203, decided on 05.12.2016]

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