Arbitration agreement disputes may be left to the tribunal when correspondence shows only a prima facie commercial transaction.

Where parties have exchanged correspondence and transaction documents showing at least a prima facie commercial dealing, the existence of a concluded contract containing an arbitration agreement may not be finally determined at the section 11 appointment stage. Section 7 requires an arbitration agreement to be in writing, including through signed documents or exchanged communications recording assent, while section 16 reserves to the arbitral tribunal the power to rule on its own jurisdiction and on objections to the existence or validity of the arbitration agreement. In that setting, the disputed question was left open for the tribunal, and the matter was referred to arbitration.

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Issues: Whether, in proceedings under section 11(5) of the Arbitration and Conciliation Act, 1996, the existence of an arbitration agreement should be finally decided by the Chief Justice or his nominee when the parties exchange correspondence and transaction documents but dispute the conclusion of a binding contract, and whether such dispute should instead be left to the arbitral tribunal under section 16.

Analysis: The existence of some commercial dealing and correspondence between the parties indicated that they were not strangers and that there was at least a prima facie transaction relating to sale and supply of goods. The question whether that transaction crystallised into a concluded contract containing an arbitration clause was not one that could be conclusively determined at the section 11 stage on the materials then available. Section 7 requires an arbitration agreement to be in writing, including through signed documents or exchange of communications recording the agreement, while section 16 empowers the arbitral tribunal to rule on its own jurisdiction and on objections to the existence or validity of the arbitration agreement. In this setting, the appropriate course was to permit the arbitral tribunal to decide the disputed question rather than refuse reference at the appointment stage.

Conclusion: The dispute was to be referred to arbitration, leaving the objection as to existence or validity of the arbitration agreement open for determination by the arbitral tribunal.

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