IMPORTANT POINT
Appointment of Arbitrator – Arbitral Tribunal is preferred first authority to look into questions of arbitrability and jurisdiction, and courts at referral stage should not venture into contested questions involving complex facts.

JUDGMENT :

J. B. PARDIWALA, J.:

1. Cox & Kings Ltd. (hereinafter referred to as the “petitioner”) has filed the present petition in terms of Section 11(6) read with Section 11(12)(a) of the Arbitration & Conciliation Act, 1996 (for short “the Act, 1996”), seeking appointment of an arbitrator for the adjudication of disputes and claims in terms of clause 15.7 of the Services General Terms and Conditions Agreement dated 30.10.2015 entered into between the Petitioner and SAP India Pvt. Ltd. (hereinafter referred to as the “respondent no. 1”)

A. FACTUAL MATRIX

2. The petitioner is a company registered under the Companies Act, 1956 and is engaged in the business of providing tourism packages and hospitality services to its customers.

3. Respondent no. 1 is also a company registered under the Companies Act, 1956 and is engaged in the business of providing business software solution services. It is a wholly-owned subsidiary of SAP SE GMBH (Germany) (hereinafter referred to as the “respondent no. 2”), a company incorporated under the laws of Germany.

4. The petitioner and respondent no. 1 entered into a SAP Software End User License Agreement & SAP Enterprise Support Schedule (for short “License Agreement”) on 14.12.2010 under which the petitioner was made a licensee of certain Enterprise Resource Planning (“ERP”) software developed and owned by the respondents. The License Agreement is a mandatory pre-requisite for all customers of the respondents who intend to enter into any software agreement with the respondents.

5. It is the case of the petitioner that while it was developing its own software for e-commerce operations in 2015, it was approached by respondent no. 1 who recommended their ‘Hybris Solution’ (hereinafter referred to as the “SAP Hybris Software”) for use by the petitioner. It is the case of the petitioner that respondent no. 1 had, at the relevant point in time, represented that the SAP Hybris Software would be suitable and 90% compatible to the requirements of the petitioner. It was further represented that the customisation of the balance 10% would take about 10 months from the date of execution of an agreement and that the customisation of the SAP Hybris Software would take lesser time than the time the petitioner may take in developing its own technological solution.

6. The transaction for the purchase, customisation and use of the SAP Hybris Software was divided into three separate agreements entered into between the petitioner and respondent no. 1:

i. First, Software License and Support Agreement Software Order Form no. 3 (for short “Order Form no. 3”) dated 30.10.2015 for the purchase of SAP Hybris Software License by the petitioner.

ii. Second, the Services General Terms and Conditions Agreement (for short “GTC agreement”) dated 30.10.2015 containing the terms and conditions governing the implementation of the SAP Hybris Software.

iii. Third, SAP Global Service and Support Agreement, Order Form no.1 dated 16.11.2015 (for short “Order Form no. 1”) which was executed pursuant to the signing of the GTC agreement and contained the terms of payment between the parties for the services being rendered.

7. It is the case of the petitioner that as it had already entered into the License Agreement with respondent no. 1 in 2010, it was not required to do so again for the purpose of purchasing the SAP Hybris Software. The GTC agreement, Order Form no. 3 and Order Form no. 1 were all executed pursuant to the License Agreement. The said three agreements are ancillary to the License Agreement and have a similar underlying commercial purpose.

8. It is pertinent to note that in terms of Clause 15.7 of the GTC agreement, in the event of any dispute, the parties agreed to resolve their disputes through arbitration. Clause 15.7 of GTC agreement reads as under:

“15.7 Dispute Resolution: In the event of any dispute or difference arising out of the subject matter of this Agreement, the Parties shall undertake to resolve such disputes amicably