Delhi High Court Reverses Decision on Arbitration Clause Incorporation in SARR Freights Case

A Division Bench of the Delhi High Court recently reversed a Single Judge's decision in SARR Freights Corpn. v. Argo Coral Maritime Ltd., holding that an arbitration clause in an earlier document was not incorporated into the parties' subsequent signed agreement. The court restrained a London-seated arbitration concerning a military cargo transportation contract from India to Sudan.

The dispute hinged on drafting inconsistency: a booking note incorporated rider Clauses 20–41, but the attached riders extended to Clause 43, with the arbitration provision appearing only in Clause 43. The London Maritime Arbitrators Association (LMAA) Tribunal treated the reference to Clause 41 as a typographical error and rectified it to Clause 43, while a Single Judge found prima facie agreement to arbitrate.

The Division Bench's reversal highlights contrasting judicial approaches to arbitral consent and the incorporation of terms from earlier negotiating documents into final signed agreements, raising questions about party autonomy and the scope of arbitration clauses.