The arbitration agreement is governed by Indian law, with Indian courts retaining supervisory jurisdiction despite arbitration being conducted in Colombia.

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