Case Note & Summary
The petitioner, Disortho S.A.S., a Colombian company, and the respondent, Meril Life Science Private Limited, an Indian company, entered into an International Exclusive Distributor Agreement dated 16th May 2016 for distribution of medical products in Colombia. Disputes arose, and Disortho filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitral panel. The agreement contained two relevant clauses: Clause 16.5 stated that the agreement shall be governed by Indian law and subject to the jurisdiction of courts in Gujarat, India; Clause 18 provided for conciliation and arbitration in Bogota, Colombia, under the rules of the Chamber of Commerce of Bogota, with the seat of arbitration in Bogota. Meril opposed the petition on jurisdictional grounds, arguing that the arbitration clause designated Colombia as the seat, thus Indian courts had no supervisory jurisdiction. The Supreme Court examined the interaction between the governing law clause and the arbitration clause. It distinguished between the law governing the contract (lex contractus), the law governing the arbitration agreement (lex arbitri), and the procedural law (lex fori). The Court held that the arbitration clause clearly indicated the parties' intention to have the arbitration seated in Colombia, with Colombian law as the lex arbitri. Therefore, Indian courts lacked jurisdiction to appoint an arbitrator under Section 11(6) of the Act. The Court dismissed the petition, leaving it open for the petitioner to seek appointment of an arbitrator in Colombia.
Headnote
A) International Commercial Arbitration - Jurisdiction to Appoint Arbitrator - Section 11(6) Arbitration and Conciliation Act, 1996 - Conflict between governing law clause and arbitration clause - The dispute involved a distributor agreement with Indian governing law but arbitration seated in Bogota, Colombia. The Supreme Court held that the law governing the arbitration agreement (lex arbitri) determines supervisory jurisdiction, and since the seat was Colombia, Indian courts lacked jurisdiction to appoint an arbitrator. (Paras 1-20) B) Arbitration Agreement - Interpretation of Conflicting Clauses - Lex Arbitri vs. Lex Contractus - The Court distinguished between the law governing the contract (Indian law) and the law governing the arbitration (Colombian law). It held that the arbitration clause's reference to Colombian arbitration center and seat indicated the parties' choice of Colombian law as lex arbitri, overriding the general governing law clause. (Paras 3-10) C) Precedent - M/s. Arif Azim Co. Ltd. v. M/s. Micromax Informatics Fze - The Court relied on this precedent to hold that the seat of arbitration determines the curial law and supervisory jurisdiction, and Indian courts cannot exercise jurisdiction over a foreign-seated arbitration. (Paras 4, 20)
Issue of Consideration
Whether Indian courts have jurisdiction to appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, when the arbitration agreement provides for arbitration in Bogota, Colombia, and the governing law of the contract is Indian law.
Final Decision
The Supreme Court dismissed the petition, holding that Indian courts lack jurisdiction to appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The arbitration is seated in Bogota, Colombia, and the lex arbitri is Colombian law. The petitioner may seek appointment of an arbitrator in Colombia.
Law Points
- Law governing arbitration agreement
- Lex arbitri
- Supervisory jurisdiction
- Seat of arbitration
- Conflict of arbitration clauses
- Section 11(6) Arbitration and Conciliation Act
- 1996
