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Introduction

"Electronic Contracts or Online Contracts" is not defined in either the Indian Contract Act, 1872 (‘Contract Act’) or the Information Technology Act, 2000 (‘IT Act’). Nonetheless, "validity of contracts formed through electronic means" is covered under the Information Technology Act, 2000 under Section 10A. Accordingly, if, during the formation of a contract, proposals, acceptances, revocations, and proposals, as applicable, are communicated in electronic form or through an electronic record, the contract will not be deemed unenforceable solely on the fact that such electronic means were employed for it. Consequently, any contract in which the consent or terms and conditions are communicated in any electronic format is a component of an electronic contract.

This piece aims to examine the legal framework and major judicial precedents that recognize the validity of online and electronic contracts under Indian law. It then focuses on the enforceability of arbitration agreements formed through WhatsApp and email, in light of the recent Delhi High Court ruling in Belvedere Resources DMCC v. OCL Iron & Steel Ltd. Drawing from these developments, the piece concludes that informal digital communications, when meeting statutory requirements, can indeed create binding and enforceable arbitration agreements in India

Judicial Approach to Online Contracts

The simplest way to enter into agreements is through electronic mail. It is comparable to the conventional type of contract regulated by the Contract Act, in which an offer is made and accepted via electronic communication. Both sides have enough time and space to negotiate or set terms and conditions under this type of agreement. Two or more parties, as defined by the IT Act, must be the originator and the addressee of an email contract. Electronic record transmission in the form of offer, and the email addresses of the sender and recipient are used to initiate and accept the offer. The emails were divided into different packets and routed through different ISPs. Once it reaches the recipient's or addressee's email box, they might not be able to access the information until they have opened it. Thus, even though the internet offers instantaneous services, email-based contract formation is classified as non-instantaneous communication. In the Trimex International FZE Ltd. Dubai v. Vedanta Aluminium Ltd. case (‘Trimex’), the Supreme Court acknowledged that emails exchanged between parties on their respective responsibilities constituted a contract.

There are many similarities between traditional and electronic contract formats.

However, a number of significant legal concerns have been brought up by the characteristics and functioning of electronic communication methods. On a global scale, UNCITRAL's attempt through Model Law on Electronic Commerce, 1996 (‘MLEC’) was largely effective in resolving the problems. In accordance with the necessity, India has adopted the crucial MLEC principle. The primary issue raised by electronic communication or e-contracts was their dependability, legality, or the integrity of a contract created via these channels.

By stating that information cannot be denied legal effect, validity, or enforceability only because it is in the form of a data message, MLEC takes the initiative in Article 5 to address the legality issue of electronic information. Additionally, Article 11 grants the following legal validity to a contract created by data messages.

In the case of Ambalal Sarabhai Enterprise Limited v. KS Infraspace LLP Limited, the Supreme Court observed that WhatsApp messages, which are virtual verbal communications, are issues of evidence with regard to their meaning and its substance (are) to be established during trial by evidence-in-chief and cross-examination. It is also pertinent to note that the mode of communication was not seen as a barrier to contract formation. Rather, the court emphasized that all relevant communications should be read together and in context to determine if a contract was actually concluded. To determine whether a contract was signed or not, the emails and WhatsApp communications must be read and comprehended all at once. Mere usage of the words "final draft" in the email, the court held, is not enough to determine whether an offer is accepted or rejected. Therefore, as long as fundamental requirements of the Contract Act and the IT Act are met, courts in India have recognized and permitted the execution of agreements online.

Digital Communications as Arbitration Agreements: Evolving Legal Recognition The initiation of arbitration proceedings is contingent on the existence of a valid arbitration agreement. The Arbitration and Conciliation Act, 1996 (‘A&C Act’) stipulates in Section 7(4) that the agreement must be in writing and signed by both parties. Electronic contracts are made in writing, but the parties do not physically sign them. Shrink-wrap contracts, Click-wrap contracts, Browse-wrap contracts, and individually negotiated contracts via electronic mode are the most often used e-contracts. These contracts frequently become the subject of discussion whenever a disagreement arises between the parties and also contain an arbitration clause.

The Arbitration and Conciliation (Amendment) Act, 2015 added the phrase "including communication through electronic means" to Section 7(4)(b) in order to resolve this problem. This change implied that an agreement including an arbitral clause would still be enforceable even if it was signed electronically. However, the Supreme Court has to take a far closer look at matters like the enforceability of arbitral clauses in electronic standard form contracts and the performance of contracts through email exchanges that mention arbitration. If a contract meets the requirements of Section 10 of the Indian Contract Act of 1872, it is considered legitimate. According to Section 7(4) of the A&C Act , a letter exchange would be considered a legally binding arbitration agreement. However, when emails are sent, the need for physical signatures is not fulfilled, and as a result, these agreements are contested for lacking the required signature. Section 3A of the IT Act [MA4] recognises electronic signatures. Additionally, Section 85B of the Indian Evidence Act, 1872 [MA5] establishes a presumption in favour of electronic signatures In addition, an electronic contract cannot be declared unenforceable just because it was executed electronically, according to Section 10A of the IT Act.

The Apex Court provided a purposive interpretation of Section 7 of the Arbitration Act in Shakti Bhog Foods Limited v. Kola Shipping Limited, (‘Shakti Bhog’), holding that even in cases where the parties did not sign the agreement, an inference must be made from the exchange of emails, letters, or faxes. An electronic arbitration agreement can be deemed legitimate and enforceable if it satisfies the requirements of the Arbitration Act, according to the ratios established in the Trimex and Shakti Bhog cases.

It is appropriate to state that the Indian legal system recognises the legitimacy and enforceability of electronic arbitration agreements in light of the Trimex and Shakti Bhog rulings. The Arbitration and Conciliation Act's provisions have been given a purposeful interpretation by the Apex Court, which has made sure that judicial intervention is kept to a minimum. Enforceability of an electronic arbitration agreement is made simple when it is signed by email exchange and satisfies the standards of the Indian Contract Act and the Arbitration and Conciliation Act. It is imperative that electronic arbitration agreements be enforceable. Recent rulings are progressive and consistent with the goals of the 1996 Arbitration and Conciliation Act, which include the prompt and economical resolution of cases.

The recent Delhi High Court ruling in Belvedere Resources DMCC v. OCL Iron and Steel Ltd. & Ors. reaffirms that unofficial digital communications can create legally binding arbitration clauses. The central point in the lawsuit was whether a series of email and WhatsApp discussions constituted a legally enforceable arbitration agreement.

The Court relied on the landmark Supreme Court decision in Cox & Kings Ltd. v. SAP India Pvt. Ltd., 2024, which concluded that if mutual assent may be inferred from the parties' written and spoken interactions, then a traditional signature is not necessary. In this instance, the parties shared draft contracts, vessel details, payment arrangements, and confirmations on WhatsApp in addition to discussing commercial issues. In an obvious show of agreement, the response pledged to return the signed contract and asked for regular information on the vessel's estimated time of arrival.

Therefore, even though there was no actual formal agreement, the Court determined that the arbitration clause was legitimate and enforceable.

Conclusion

The Delhi High Court’s ruling is noteworthy in several ways:

·      According to arbitration law, WhatsApp is now "Writing": acknowledges the validity of informal, digital communication in B2B arbitration agreements.

·      Conduct takes precedence above contractual formalism prioritizes content over form.

·      The documented desire of the parties to be bound was not superseded by the lack of signatures or executed documents.

·      Law, not only company presence, is the foundation of jurisdiction: The court discouraged forum shopping by enforcing stringent jurisdiction rules.

·      A compelling argument alone is insufficient for Interim Relief: Proof of asset dissipation or intent to thwart enforcement is required for security orders.

In the digital age, the Delhi High Court's decision in Belvedere Resources DMCC v. OCL Iron & Steel Ltd. is a significant precedent for arbitration. It restates the validity of arbitration agreements included in WhatsApp conversations or email threads as long as there is unambiguous proof of agreement. The insistence on written, signed documents has been replaced by a pragmatic, technology-friendly approach that recognizes the realities of modern business communication.

     Navya Mishra

4th year student at Bennett University