Arbitration Dispute: Unfolding the Belvedere-OCL Contract Conflict

In business, a deal is only as strong as the paper it’s written on - or is it?

“What happens when a multimillion-dollar international commodity deal collapses over WhatsApp conversations and unsigned documents?” This was the central question that came before the Delhi High Court in Belvedere Resources DMCC v. OCL Iron and Steel Ltd. a case that sheds light on the legal fragility of informal contracts and the complex interplay of arbitration disputes, jurisdiction, and financial security. 

The recent Delhi High Court judgment in Belvedere Resources DMCC v. OCL Iron and Steel Ltd. challenges this very notion, as it dives deep into a multi-crore dispute built almost entirely on emails and WhatsApp messages. This high-stakes conflict navigates through international trade, arbitration law, company mergers, and jurisdictional boundaries. The case serves as a powerful illustration of how informal commercial dealings, cross-border transactions, and the nuances of corporate restructuring can converge to trigger intense legal battles. 

This blog dives deep into the facts, legal issues, and implications of the case, especially in the context of arbitration disputes arising from informal cross-border contracting Whether you're a legal professional or a commercial party dealing with international contracts, this case offers key takeaways. 

The Genesis of the Belvedere-OCL Arbitration Dispute 

Belvedere Resources DMCC, a UAE-based coal trading company, was approached by SMN Niryat Pvt. Ltd. (SMN) in late September 2022 for a coal shipment offer. What began as a series of WhatsApp exchanges evolved rapidly into an agreement over coal supply. On 1 October 2022, Belvedere offered to supply between 75,000MT to 150,000MT of coal on a CFR basis to Indian ports. SMN accepted the offer the same day via WhatsApp, thereby creating a contract in principle. 

To formalize the arrangement, Belvedere emailed a ScoTA (Standard Coal Trading Agreement) draft on 13 October 2022, laying out the material terms, including: 

• Quantity (80,000MT-90,000MT), 

• FOB and CFR price (USD 131.50 and USD 155.50 respectively), 

• Laycan period (25 October to 15 November 2022), 

• Loadport and Disports (Richards Bay DBT in South Africa to Paradip and Sagar in India), 

• Payment terms (20% advance), 

• Dispute resolution (SIAC arbitration, Singapore, governed by English law). 

SMN not only continued engaging with Belvedere on vessel nomination and shipping certificates but also acknowledged the final contract through multiple emails. The final version was shared on 2 November 2022, and SMN was requested to sign and return it. Meanwhile, Belvedere nominated the vessel MV GLYFADA, which arrived within the agreed laycan window. Despite these efforts, SMN abruptly cancelled the contract via email on 15 November 2022, just before the end of the delivery period. 

Arbitration Disputes Initiated: Claims and Counterclaims 

Belvedere, alleging wrongful repudiation, initiated SIAC arbitration on 14 June 2024 and sought damages of USD 2,77 million. Simultaneously, a Section 9 application was filed before the Delhi High Court seeking interim measures: 

• Monetary security of the claim amount via bank guarantee or FDR. 

• Injunction against dissipation of respondent’s assets. 

• Status quo over company restructuring or mergers. 

• Disclosure of all movable and immovable assets. 

In an unexpected development, Belvedere discovered during arbitration that SMN had ceased to exist, having been amalgamated with OCL Iron and Steel Ltd. (R1) via an NCLT Kolkata order dated 30 January 2024. The petitioner alleged this information was deliberately concealed and raised concerns about OCL’s financial standing and transparency. 

OCL's counsel contended that no valid arbitration agreement existed because the ScoTA had not been formally signed. This contention is typical of many AD where formal signatures are absent but intent is evident through conduct. They further argued that the Delhi High Court lacked jurisdiction as the transaction, parties, and correspondence had no material connection to Delhi. 

OCL also objected to the claim for security, asserting that unliquidated damages (i.e., compensation yet to be determined by a court or tribunal) could not form the basis for such relief under Section 9 of the Arbitration Act. They cited the Supreme Court's jurisprudence in Union of India v. Raman Iron Foundry (1974), stating that until adjudication occurs, there is no "debt due". 

The Court's Determination 

Justice Jasmeet Singh structured the judgment around three pivotal questions: 

1. Whether a valid arbitration agreement existed? 

The primary question before the Court was whether the email and WhatsApp exchanges could amount to a valid arbitration agreement under Section 7(4)(b) of the Arbitration and Conciliation Act, 1996.

The Court decisively answered in the affirmative, Yes. The Court held that the arbitration clause embedded within ScoTA and exchanged via email/WhatsApp constituted a valid agreement under Section 7(4)(b) of the Arbitration and Conciliation Act. Citing Supreme courts judgement in Cox & Kings v. SAP India Pvt. Ltd., the Court emphasized that signatures are not mandatory when the parties' conduct and communication clearly indicate acceptance. In this case, repeated acknowledgments by SMN and requests for performance validated the arbitration clause. 

2. Whether the Delhi High Court had territorial jurisdiction? 

While the Court accepted the existence of a valid arbitration agreement, it dismissed the petition on the grounds of lack of territorial jurisdiction. Belvedere argued that OCL’s corporate disclosures and its shareholding in a Delhi-based entity gave the Delhi Court jurisdiction. 

However, the Court found that the actual negotiations, communications, and contract repudiation occurred through Kolkata, and not Delhi. Merely having a branch office in Delhi or holding shares in a Delhi-based company was insufficient to attract jurisdiction under Sections 15-20 of the CPC. 

This part of the judgment is crucial: businesses must pay close attention to the seat of negotiations and execution when considering where to file arbitration-related petitions. Jurisdiction is not determined by convenience or company assets alone. 

3. Whether interim protection (security/attachment) could be granted for unliquidated damages? 

Belvedere sought interim relief primarily attachment of assets and monetary security for an unliquidated claim of damages. The Court declined, reiterating settled law that such damages do not crystallize into debt until adjudicated.

The Court referenced the landmark Union of India v. Raman Iron Foundry, stating that breach of contract grants a right to sue not an actionable claim for debt.  The Court emphasized that claims for damages, even if quantified by the petitioner, do not become debts until formally adjudicated. Therefore, no relief could be granted under Order XXXVIII Rule 5 of the CPC unless the petitioner demonstrated that the respondent was actively attempting to defeat the execution of a future decree. Since Belvedere could not prove that OCL was maliciously dissipating its assets, and the contract breach occurred nearly two years before the petition, the Court held that no urgency or basis existed to grant relief. 

Critical Case Highlights 

• The Court noted the respondent’s failure to disclose amalgamation proceedings to the petitioner at the time of contract formation. 

• OCL’s financial disclosures showed encumbered assets and loans exceeding INR 1000 crores, but this alone was deemed insufficient to prove asset dissipation. 

• Belvedere's delayed filing and failure to pursue SIAC emergency interim relief under Rule 30 were also factors against granting relief. 

Legal Takeaways from the Belvedere-OCL Arbitration

Dispute 

This case delivers critical lessons for commercial entities and legal professionals involved in arbitration and cross-border trade: 

1. Digital Contracting Has Legal Consequences:

   
   

   WhatsApp and email exchanges can establish binding agreements, especially when standard forms like ScoTA are involved. 

   
   

2. Arbitration Clauses Must Be Clear and Communicated:

   
   

   Even if not signed, if they are acknowledged and acted upon, they hold legal weight. 

   
   

3. Jurisdiction Cannot Be Assumed:

   
   

   Filing Section 9 petitions requires careful evaluation of where the cause of action arose, not just where assets or offices are located. 

   
   

4. Interim Relief Thresholds Are High: 

   
   

   Section 9 petitions seeking asset protection require concrete evidence of fraudulent intent or risk of asset dissipation. 

   
   

5. Delay Weakens Urgency: 

   
   

   Waiting over 1.5 years post-breach to seek security undermines the plea for urgent interim protection. 

   
   

6. Amalgamated Entities Inherit Liabilities: 

   
   

   As per Section 232 of the Companies Act, a company post-amalgamation assumes all obligations of the merged entity. 

   
   

7. Resort to Arbitral Tribunal First: 

   
   

   When an arbitral tribunal is constituted, parties must typically seek interim relief there before moving court, as per Section 9(3). 

Conclusion 

The Delhi High Court's verdict in Belvedere v. OCL offers an instructive example of how arbitration-related interim relief operates within the framework of Indian law. While Belvedere succeeded in establishing a valid arbitration agreement, it failed to demonstrate territorial jurisdiction and the urgency required for securing interim monetary relief. 

This case underscores the importance of carefully managing contract execution, jurisdictional strategy, and timing of legal recourse, especially in AD where delay, poor documentation, or jurisdictional errors can derail legitimate claims. In the age of digital contracting and global supply chains, informal commitments can have formal consequences but only if pursued correctly. 

For claimants and businesses navigating complex commercial disputes, this case is a clear reminder: ensure contract execution, act quickly in case of breach, and assess jurisdiction precisely. 

At LegalPay, we specialize in funding meritorious arbitration claims, including those involving international parties, commodity contracts, and commercial restructuring. With LegalPay, businesses can pursue justice without financial roadblocks, backed by expert legal strategy and due diligence support. 

Understanding the legal nuances can help safeguard your commercial interests before a dispute arises. 

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Frequently Asked Questions (FAQs)

1. Can WhatsApp or email exchanges really create a binding contract in India? 

Yes, Indian courts have increasingly accepted WhatsApp messages and email exchanges as valid forms of contract communication, especially in commercial transactions. As per Section 7(4)(b) of the Arbitration and Conciliation Act, 1996, a binding arbitration agreement may be formed through electronic communications that record mutual consent.

In the Belvedere v. OCL case, the Delhi High Court held that even without a signed contract, the combination of WhatsApp messages, vessel nominations, and email confirmations indicated a clear meeting of minds. This decision aligns with global practices where digital communication is routinely accepted as evidence of contract formation.

However, while enforceable, such informal arrangements carry risks such as ambiguity in terms or lack of record-keeping which can later complicate legal enforcement. Businesses are advised to promptly follow up informal agreements with formal documentation to reduce uncertainty and protect their interests during disputes or arbitration proceedings. 

2. What is a ScoTA agreement, and how did it play a role in this case? 

ScoTA, or the Standard Coal Trading Agreement, is a globally recognized template used in international coal transactions. It lays down standard terms relating to quality specifications, delivery schedules, payment conditions, and, importantly, dispute resolution mechanisms such as arbitration clauses.

In the Belvedere v. OCL case, the ScoTA formed the backbone of the agreement even though it was not formally signed. The petitioner had shared the ScoTA via email, and the respondent had confirmed critical aspects such as vessel nomination and laycan dates, indicating acceptance.

The Court held that even in the absence of a signed contract, parties’ conduct and communications amounted to a valid contract under Indian law. This decision reinforces that in commodity trading, shared standards like ScoTA can create enforceable obligations when acknowledged and acted upon. For global traders, adopting ScoTA terms ensures predictability and minimizes legal uncertainty, especially when disputes arise in cross-border contracts. 

3. Why was the Section 9 petition dismissed despite a valid arbitration agreement? 

The Delhi High Court dismissed Belvedere’s Section 9 petition not because the arbitration agreement was invalid, but because the court lacked territorial jurisdiction and the damages were unliquidated.

Although the Court acknowledged a valid arbitration agreement under Section 7(4)(b), it found that no part of the cause of action arose in Delhi. All key events contract negotiation, execution, and breach occurred outside Delhi, primarily in Dubai, Kolkata, and Singapore. Additionally, the Court held that unliquidated damages (damages not determined or admitted) cannot be secured through interim relief unless the petitioner proves a risk of asset dissipation. Belvedere failed to demonstrate such urgency or risk, especially given the two-year delay in filing the petition.

This decision emphasizes the importance of prompt legal action and clear jurisdictional strategy when seeking interim relief under Section 9 of the Arbitration and Conciliation Act. 

4. How does company amalgamation affect contractual liability in arbitration cases? 

In India, when one company is amalgamated into another under Section 232 of the Companies Act, 2013, the successor (transferee) company inherits all assets, liabilities, and contractual obligations of the amalgamated (transferor) entity.

In the Belvedere v. OCL case, SMN Niryat Pvt. Ltd. entered into the coal agreement but was later amalgamated into OCL Iron and Steel Ltd. via an NCLT order. The petitioner argued that this change was deliberately hidden during the transaction, and that OCL, now being the legal successor, was fully liable for the contract’s performance. The Court acknowledged this legal framework but ultimately did not rule on liability due to jurisdictional and procedural reasons.

This case illustrates that companies acquiring or merging with others must perform due diligence to avoid inheriting undisclosed legal risks. Likewise, counterparties should verify corporate structures before and after contract execution to ensure enforceability in arbitration. 

5. What is the difference between Section 9 and Section 17 of the Arbitration Act? 

Section 9 of the Arbitration and Conciliation Act, 1996 allows parties to approach the court for interim relief such as asset security or injunctions before or during arbitration. Section 17 provides similar powers to the arbitral tribunal after it is constituted.

The key difference lies in the forum: Section 9 involves judicial intervention, while Section 17 empowers the tribunal directly. In Belvedere v. OCL, the petition under Section 9 was challenged on the ground that the arbitral tribunal had already been constituted, and hence, relief should have been sought under Section 17.

Section 9(3) specifically restricts court intervention once the tribunal is in place unless circumstances make it ineffective. Courts also require strict conditions (like proving asset dissipation or urgency) for granting relief under Section 9. This distinction ensures that arbitration remains a streamlined and self-contained process, with court support limited to truly exceptional cases. 

6. Why can't unliquidated damages be secured through interim relief? 

Unliquidated damages are claims where the compensation amount has not been pre-fixed or adjudicated. Under Indian law, courts consistently hold that unliquidated damages do not create a “debt due” until determined by a competent authority or tribunal.

In the Belvedere v. OCL case, the Court dismissed the Section 9 plea for security because Belvedere’s claim though specific in amount was based on a post-breach resale at a lower price and hadn’t been proven or admitted. Citing precedents like Union of India v. Raman Iron Foundry, the Court reiterated that such damages, until awarded, are speculative and cannot be enforced via interim relief mechanisms like attachment or monetary security.

This protects defendants from prejudicial orders based on unverifiable claims. Claimants must instead present concrete proof of loss and wait for a final arbitral award or court decree to convert such claims into enforceable debts. 

7. How does LegalPay help claimants in complex AD? 

LegalPay empowers businesses and individuals to pursue strong legal claims without being burdened by the high upfront cost of litigation or arbitration. In disputes like Belvedere v. OCL, where international contracts, jurisdictional hurdles, and intricate corporate structures complicate proceedings, LegalPay steps in with tailored financing solutions.

We conduct thorough due diligence to assess claim strength, manage legal strategy in coordination with top-tier counsel, and fund litigation costs including tribunal fees, expert witnesses, and enforcement actions. Our non-recourse funding model ensures that claimants repay only if they win.

LegalPay’s expertise is especially valuable in cross-border arbitration cases where interim relief may be denied and legal battles are prolonged. By reducing the financial risks of litigation, LegalPay enables access to justice and helps level the playing field for those pursuing rightful claims. We don’t just fund cases we support outcomes that matter.