An arbitration clause that mandates referral to arbitration constitutes a binding arbitration agreement, regardless of discretionary language used; parties are required to adhere to the arbitration mechanism as outlined in the agreement.

JUDGMENT

[VIA VIDEO CONFERENCING]

Sanjeev Narula, J. (Oral)--The present petition under Section 11 (6) of the Arbitration and Conciliation Act, 1996 [hereinafter, "the Act"] seeks appointment of a Sole Arbitrator for adjudication of the disputes that have arisen between the parties.

2. Briefly put, the parties entered into a Distributorship Agreement dated 1st May, 2018, wherein the Respondent agreed to purchase various products relating to medical services. Subsequently, a fresh Distributorship Agreement was executed on 15th November, 2019, which was effective retrospectively from 1st April, 2019. Later, two addendums were also executed, effective from 1st May, 2019 and 19th August, 2019 respectively. It is the case of the Petitioner that, in terms of the aforesaid agreements between the parties, several invoices raised by the Petitioner against supplies made, are outstanding. Petitioner also contends that besides the outstanding overdue amount of the invoices, the Respondent is also liable to pay interest thereon. The Petitioner invoked arbitration agreement vide letter dated 22nd July, 2020, in accordance with Clause/Article 14 of the Distributorship Agreement dated 15th November, 2019, and suggested the names of the Arbitrators, however, the Respondent disagreed with the said proposal. In this background, the Petitioner has sought appointment of a Sole Arbitrator.

3. The Court has heard the learned counsels for the parties. The Arbitration Agreement between the parties, contained in Clause 14 of the Distributorship Agreement dated 15th November, 2019, reads as under:

"14.1 This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of Republic of India, without reference to conflict of laws principles and shall be subject to the jurisdiction of courts in Delhi. This Agreement shall not be governed by the United Nations Convention on Contracts for the International Sale of Goods.

(a) In the event of any dispute or difference arising between the Parties in connection with this Agreement, representatives shall within thirty (30) days of a written request from either Party to the other, meet in good faith effort to resolve the dispute without recourse to legal proceedings. Failure to comply with this clause shall be deemed to be a breach of this Agreement.

(b) if the dispute or difference is not resolved as a result of such a meeting, either Party may at such meeting or within thirty (30) days from its conclusion propose to the other in writing that such a dispute or difference shall be referred to and finally resolved by arbitration in accordance with the provisions of Indian Arbitration and Conciliation Act, 1996 and the rules framed thereunder (the 'Arbitration Act') for the time being in force which rules shall be deemed to be incorporated by reference into this clause. The arbitration shall be conducted in English in New Delhi, India.

(c) Notwithstanding anything to the contrary, either Party may apply to any court of competent jurisdiction for interim injunctive relief with respect to irreparable harm which cannot be avoided and/or compensated by such arbitration proceedings, without breach of the provisions of this Article 14, and without any abridgment of the powers of the arbitrators."

(Emphasis supplied)

4. The learned counsel for the Respondent does not dispute the existence of the Distributorship Agreement; however, he submits that the arbitration clause reproduced above, does not constitute an Arbitration Agreement. He submits that the afore-noted clause uses the expression "propose to the other in writin