1. International distribution agreement — Dispute over appointment of arbitral panel — Petition under Section 11(6), Arbitration and Conciliation Act, 1996. (Para 1 , 2 )
Back
Next 
2025 Supreme(SC) 486
SUPREME COURT OF INDIA
SANJIV KHANNA, CJI, SANJAY KUMAR, K.V. VISWANATHAN, JJ.
Disortho S.A.S. – Appellant
Versus
Meril Life Sciences Private Limited – Respondent
Arbitration Petition No.48 of 2023
Decided on : 18-03-2025
The arbitration agreement is governed by Indian law, with Indian courts retaining supervisory jurisdiction despite arbitration being conducted in Colombia.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11(6) - Dispute between international companies regarding jurisdiction and arbitration - The court examined the conflict between clauses of the Distributor Agreement, determining that Indian law governs the arbitration agreement, and Indian courts retain supervisory jurisdiction despite arbitration being in Bogota, Colombia. (Paras 25-36)
(B) Jurisdiction - The court emphasized the importance of harmonizing conflicting clauses in contracts and respecting the parties' intentions regarding arbitration and jurisdiction. (Paras 26-28)
(C) Arbitration Agreement - The court ruled that the law governing the arbitration agreement may differ from the law governing the substantive contract, applying a three-step test to ascertain the applicable law. (Paras 31-32)
Facts of the case:
The petitioner, a Colombian company, and the respondent, an Indian company, entered into a Distributor Agreement for medical products. Disputes arose regarding the jurisdiction for arbitration and the governing law.
Findings of Court:
The court found that Indian law governs the arbitration agreement, and the courts in Gujarat, India, have jurisdiction over the arbitration proceedings. The parties agreed to appoint a sole arbitrator and conduct arbitration in India.
Issues: The main issues included the jurisdiction of Indian courts over the arbitration agreement and the applicable law governing the arbitration.
Ratio Decidendi: The court held that the arbitration agreement is governed by Indian law, and the courts in Gujarat have supervisory jurisdiction, despite the arbitration being conducted in Bogota.
Result: The arbitration petition is allowed and disposed of accordingly.
Legal Category Hierarchy
Table of Contents
2. Whether Indian courts possess jurisdiction to appoint arbitrators despite conflicting clauses designating Indian law and jurisdiction alongside arbitration in a foreign city. (Para 2 )
3. Analysis of lex contractus, lex arbitri, and lex fori — Application of a three-step test to determine the law governing the arbitration agreement. (Para 3 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 26 , 27 , 28 , 29 , 30 , 31 , 32 )
4. Where lex contractus is expressly chosen, it is presumed to govern the arbitration agreement unless displaced by specific factors or the law of the seat. (Para 16 , 31 )
5. Petition allowed — Sole arbitrator appointed — Arbitration to be conducted in India under specified rules by mutual consent. (Para 34 , 35 , 36 )
6. What are the distinctions between lex contractus, lex arbitri, and lex fori in trans-border arbitration?
Lex contractus is the law governing substantive contractual issues; lex arbitri is the law governing the arbitration agreement and its performance; and lex fori is the law governing the procedural aspects of arbitration. (Para 3 )
7. How is the law governing an arbitration agreement determined when not explicitly stated by the parties?
Courts employ a three-step inquiry: first, searching for an express choice; second, identifying an implied choice (where lex contractus often creates a strong presumption); and third, determining the closest and most real connection. (Para 16 , 31 )
8. Does the selection of a foreign seat automatically determine the law governing the arbitration agreement?
No. The choice of a seat different from the lex contractus is not, by itself, sufficient to negate the presumption that the law governing the contract also governs the arbitration agreement. (Para 14 , 18 , 31 )
9. What is the difference between the law governing the agreement to arbitrate and the law governing the arbitration itself?
The law governing the agreement to arbitrate determines its validity, scope, and interpretation, whereas the law governing the arbitration (curial law) determines the court's supervisory jurisdiction and the conduct of the proceedings. (Para 7 , 8 )
JUDGMENT :
SANJIV KHANNA, CJI.
Disortho S.A.S, 1[Hereinafter referred to as, “Disortho”.] the petitioner before us, is a company incorporated in Bogota, Colombia. The respondent, Meril Life Science Private Limited, 2[Hereinafter referred to as, “Meril”.] is a company incorporated in Gujarat, India. Disortho and Meril executed an International Exclusive Distributor Agreement, 3[Hereinafter referred to as, “Distributor Agreement”.] dated 16th May 2016, for distribution of medical products in Colombia. Later, disputes emerged between the parties.
2. Disortho has filed this petition under Section 11(6) of the Arbitration and Conciliation Act, 19964[Hereinafter referred to as, “A&C Act”.], for appointment of an arbitral panel in terms of Clauses 16.5 and 18 of the Distributor Agreement. Meril has opposed the petition on jurisdictional grounds, contending that these clauses do not grant Indian Courts jurisdiction to appoint arbitrators. The clauses 16.5 and 18 read:
“16. Miscellaneous
16.5. This Agreement shall be governed by and construed in accordance with the laws of India and all matter pertaining to this agreement or the matters arising as a consequence of this agreement with be subject to the jurisdiction of courts in Gujarat, India.
18. Direct Settlement of Disputes
The Parties mutually agree and pact that any dispute, controversy or claim arising during this Agreement related to subscription, execution, termination, breach, as well as non- contractual relationships, related to the clauses mentioned above; They may be submitted to conciliation in accordance with the Rules of Arbitration and Conciliation of the Chamber of Commerce of Bogota DC., or instead. of this city, where the Director of the Centre so determine.
Similarly, the Parties mutually agree and pact that if the dispute or difference has not been settled in conciliation, or to the extent that has not been resolved; it will be committed to Arbitration by either party for final settlement in accordance with the Arbitration and Conciliation Center of the Chamber of Bogota DC. The Arbitral Tribunal shall consist of one (1) arbitrator in cases of minor or no value E according to the Rules of Conciliation and Arbitration Center of the Chamber of Commerce of Bogota DC. Also, in the event of greater amount, the Court of conformity shall comply with the Regulations of the Center for Conciliation and Arbitration of the Chamber of Commerce of Bogota DC., With three (3) arbitrators appointed by the Centre and by drawing lots. The arbitration will take place in Bogota DC. On the premises of Center for Conciliation and Arbitration of the Chamber of Commerce of Bogota DC., or at the place where the Director of the Centre as determined in this city. The award shall be in law and standard will be applicable Colombian law governing the mailer, Expenditure in the conciliation and arbitration proceedings shall be borne equally.”
3. What initially appeared to be a straightforward question has, in fact, become a vexed one, primarily for two salient reasons. First, there exists a divergence of opinion, both internationally and domestically, on the appropriate test to determine jurisdiction in a case of trans-border arbitration. This divergence stems from the interaction between three distinct legal systems which come into play when a dispute occurs: (i) lex-contractus, the law governing the substantive contractual issues; (ii) lex arbitri, the law governing the arbitration agreement and the performance of this agreement; and (iii) lex-fori, the law governing the procedural aspects of arbitration. These legal systems may either differ or align, depending on the parties’ choices. Furthermore, there may be internal splits within these legal systems, such as for lex arbitri. 5[Lex arbitri might be split into two components if the parties so desire – (i) law governing the agreement to arbitrate or the proper law of arbitration and (ii) the law governing the arbitration. While the former relates to v
