The Claimant, Trimex International FZE Limited is a company, whose core business was trading minerals all over the world. The Respondent, Vedanta Aluminum Limited, was an Indian Company, which received an invitation in form of an email from the Claimant, to supply a mineral named ‘brauxite’.
After reciprocal emails, both parties agreed on terms including dispute resolution with 5 shipments containing ‘brauxite’ which was confirmed to be delivered, even though a draft contract was not yet formalized nor signed. Trimex shipped the first consignment to India which Vedanta received but then requested claimant to stop supplying further goods and to hold the shipment for the reason of checking the utility value of the received goods first. Trimex informed Vedanta that it would not be possible at that point of time, and asked Vedanta to sign the contract which had an arbitration clause. However, Vedanta stayed silent and did not respond to Trimex, which led Trimex to cancel the agreement and the shipment.
Simultaneously, Trimex had already entered into agreements with a commercial ship owner in order to deliver the consignment to India, and when the agreement got cancelled, the ship owner made a claim asking for compensation and commercial settlement from them. Trimex asked Vedanta to the pay the latter, but Vedanta refused, stating that a contract was never signed, refusing to hold liability. Trimex reached into a settlement with the ship owner and had to pay 600 thousand USD in two installments. The claimant then decided to raise a claim against Vedanta.
The main issue was whether there was a valid contract formed including the arbitration clause through emails that imposed obligations on both parties, or a contract in its formal way is a must.
The main contention raised by Trimex was that a contract was formed and binding by reciprocal emails and therefore, they could refer the dispute to arbitration.
While Vedanta stated that there was no contract concluded and that no agreement was reached in respect to core features of the transaction therefore, disputing the aforesaid.
The decision of the Court:
The court confirmed that the contract was very much into existence. The contract between both the parties concluded when they both agreed on the shipments through email. The mere fact that a formal contract was not signed does not affect the acceptance nor the implementation thereof. Since, the contract subsisted, the arbitration clause would also continue to hold merit.
Moreover, the court held that the price, quantity, delivery and discharge ports are from the essential and core elements of these kind of shipment contracts, and the parties in the case at hand had agreed on them through emails. Not having a formal contract would not solely deprive the aggrieved party to refer the dispute from being resolved in the manner agreed as per the reciprocal emails.