Prior Negotiations Cannot Add Arbitration Clause To Signed Contract: Delhi HIgh Court

The Delhi High Court has recently held that prior negotiations and correspondence cannot be used to add an arbitration clause to a clear and unambiguous agreement signed by the parties.

A Division Bench of Justice Vivek Chaudhary and Justice Renu Bhatnagar observed, “It is only where the language is not clear, ambiguous or defective that the surrounding circumstances or other evidence may be looked into, to explain or supply its meaning. The Court is, therefore, barred from relying upon prior negotiations, correspondence or communications to contradict, vary, add to or subtract, from clear and unambiguous terms of the written agreement. The true construction of the contract must depend upon the import of the words used therein, and the intention of the parties is to be ascertained from the language of the agreement itself.”

The court held that once contractual terms are reduced to a signed written agreement, earlier negotiations or correspondence cannot be used to contradict, vary, add to or subtract from those terms, unless the circumstances permit such evidence under the law.

The observation came while allowing an appeal by SARR Freights Corporation against an order refusing its plea to restrain arbitration initiated by Argo Coral Maritime Ltd. The bench held that the parties had not entered into a valid arbitration agreement.

The dispute arose from an arrangement to transport military cargo for a United Nations Peacekeeping Force from New Delhi to Sudan, with the sea leg running from Nhava Sheva Port in Mumbai to Port Sudan.

During negotiations on April 4, 2023, Pirama, SARR's broker/agent, and Ocean7, Argo Coral's booking agent, exchanged emails and a Fixture Recap. Clause 23 of the Fixture Recap provided for “English law and London arbitration."

The parties subsequently executed a Booking Note. Its Special Terms specifically stated that additional rider Clauses 20 to 41 would apply.

Clause 43 of the Booking Note contained the “Bimco Dispute Resolution Clause latest edition”, subject to English law and LMAA Terms and Procedures. However, the Special Terms did not refer to Clause 43.

After the United Nations issued an advisory declaring cargo movements through all ports of Sudan unsafe, SARR cancelled the Booking Note, invoking force majeure.

Argo Coral commenced arbitration. In a partial award dated October 18, 2025, the majority of the tribunal, applying English common law, held that the reference to “20-41” in the Booking Note was a typographical error and should be read as “20-43”.

The tribunal therefore treated Clause 43 as part of the parties' agreement. SARR subsequently approached the Delhi High Court seeking an anti-arbitration injunction.

The Single Judge rejected SARR's interim anti-arbitration injunction application on March 13, 2026.

Relying on Supreme Court decisions concerning arbitration agreements inferred from correspondence, the Single Judge held that “20-41” was an inadvertent error and should be read as "20-43."

The Division Bench held that those decisions did not apply because, unlike those cases, the parties here had ultimately executed a signed written agreement.

The court noted that Sections 91 and 92 of the Indian Evidence Act, 1872, require the terms of a contract reduced to writing to ordinarily be proved from the document itself. They also restrict the use of oral agreements or statements to contradict, vary, add to or subtract from those written terms.

The bench explained that surrounding circumstances can be considered where the language of a document is ambiguous or defective, or where language that is plain on its face is unmeaning when applied to existing facts. They cannot, however, be used to alter a clear contractual provision.

Applying this principle, the court found that the parties had consciously filled in the Special Terms of the Booking Note and specifically retained the reference to Clauses 20-41.

The court also noted that the arbitration provisions in the Fixture Recap and Booking Note were not identical. While the Fixture Recap referred to “English law and London arbitration”,

Clause 43 referred to the BIMCO Dispute Resolution Clause, English law and LMAA Terms and Procedures.

The bench further noted that the Booking Note expressly provided that its terms would prevail over previous arrangements.

It therefore rejected the argument that the reference to “20-41” could be corrected by relying on the earlier Fixture Recap.

“The same may be a sound argument under the English Common law but cannot stand under the Indian codified law as detailed above,” the court observed.

The bench found no ambiguity, mistake, or defective language in the signed Booking Note. It held that the reference to Clauses 20-41 had a clear meaning and that Clause 43 could not be read into the agreement.

The court consequently held that there was no arbitration agreement between the parties.

It further held that, in the absence of an arbitration agreement, “the very foundation for continuation of the arbitration proceedings does not exist."

The bench found that the case therefore fell within the exceptional circumstances warranting an anti-arbitration injunction.

The Division Bench accordingly allowed SARR's appeal, set aside the Single Judge's March 13, 2026, order, and restrained Argo Coral Maritime Ltd. from continuing, pursuing, or taking any steps in the LMAA arbitration

For Appellants: Senior Advocate Dayan Krishnan with Advocates Saurabh Seth, Shantanu Aggarwal, Sukrit Seth, Sumer Dev Seth, Neelampreet Kaur, Abhiroop Rathore, Kabir Dev and Sukhbir Singh.

For Respondent: Senior Advocate Sandeep Sethi with Advocates Arvind K. Gupta, Tripti Sharma, Krishna Gambhir, Shreya Sethi, Abhiesumat Gupta and Ashish Singh.