Final signed Booking Note prevails over prior negotiations; Court holds arbitration clause absent, restrains London arbitration under LMAA
In a significant judgment delivered on September 18, 2026, the Delhi High Court (Division Bench) in the matter of Sarr Freights Corporation and Anr. v. Argo Coral Maritime Ltd. has clarified the primacy of the final signed contract over prior negotiations in determining the existence of an arbitration agreement. The Court set aside an earlier order that had rejected an interim anti-arbitration injunction and restrained the respondent from continuing arbitration proceedings before the London Maritime Arbitrators Association (LMAA).
The dispute arose out of the transit of military cargo from New Delhi to Sudan for the United Nations Peace Keeping Force. The plaintiffs, Sarr Freights Corporation, and the respondent, Argo Coral Maritime Ltd., had negotiated terms through exchanged emails and a Fixture Recap dated April 4, 2023, which contained an arbitration clause specifying English law and London arbitration. However, the parties subsequently executed a Booking Note also dated April 4, 2023, signed on April 5, 2023, which expressly excluded the arbitration clause present in the Fixture Recap by referencing only Clauses 20 to 41 of the additional rider attached to the Booking Note, omitting Clause 43 where the arbitration clause was located.
Following the United Nations' advisory on April 18, 2023, declaring cargo movement through Sudan ports unsafe, the plaintiffs canceled the Booking Note citing force majeure. The respondent initiated arbitration under Clause 43, which the plaintiffs contested, arguing that the Booking Note, being the final agreement, did not incorporate any arbitration clause.
The LMAA tribunal initially proceeded with arbitration, but complexities arose regarding the parties to the arbitration due to differences in corporate entities named. The plaintiffs then approached the Delhi High Court seeking an anti-arbitration injunction, contending that no valid arbitration agreement existed between the parties.
The Single Judge had earlier rejected the injunction application, relying on the principle that arbitration agreements can be inferred from correspondence and prior agreements, interpreting the reference to Clauses "20-41" in the Booking Note as a typographical error meant to include Clause 43, the arbitration clause.
On appeal, the Division Bench took a different view. It held that under Indian law, once parties reduce their agreement to a clear and unambiguous written contract signed by them, the terms of such a contract prevail over any prior negotiations or correspondence. The Court emphasized the provisions of Sections 91 and 92 of the Indian Evidence Act, 1872, which exclude extrinsic evidence to contradict or vary the terms of a written contract, unless the language is ambiguous or defective.
The Court noted that the Booking Note expressly stated that it would prevail over any previous arrangements, except for deadfreight or bill of lading terms (which were not relevant here). The deliberate omission of Clauses 42 and 43, including the arbitration clause, from the Booking Note's special terms was a conscious decision by the parties. The Court found no ambiguity or mistake in the Booking Note's language to justify rectification or reading in the arbitration clause.
Citing precedents such as Union of India v. Kishorilal Gupta & Bros. and Young Achievers v. IMS Learning Resources (P) Ltd., the Court held that an arbitration clause in a superseded agreement does not survive unless expressly retained. The prior Fixture Recap containing the arbitration clause was superseded by the Booking Note, which did not include such a clause.
Given the absence of a valid arbitration agreement, the Court ruled that the foundation for the arbitration proceedings before LMAA did not exist. It granted the anti-arbitration injunction restraining the respondent from continuing or pursuing the arbitration titled "Argo Coral Maritime Ltd. v. SARR Freights Ltd/SARR Freights Corporation."
The Court also affirmed its jurisdiction, noting that the Booking Note was signed in Delhi by the plaintiffs based there, and a substantial part of the cause of action arose within Delhi's territorial jurisdiction.
This judgment underscores the importance of the final written contract in commercial disputes and clarifies that arbitration clauses must be clearly incorporated in the final executed agreement to be enforceable under Indian law. It also delineates the distinction between Indian codified law on contract interpretation and English common law principles on rectification.
Bottom Line:
Arbitration Agreement - Terms of a written contract supersede prior arrangements - No arbitration agreement exists between the parties when the Booking Note specifically excludes arbitration clause and overrides previous arrangements.
Statutory provision(s):
Sections 91, 92, 93, 94, 95 of the Indian Evidence Act, 1872
Sarr Freights Corporation v. Argo Coral Maritime Ltd., (Delhi)(DB) : Law Finder Doc Id # 2982085
