Governing Law of Arbitration Agreement: The Court applied the three-step test from Sulamérica Cia Nacional De Seguros S.A. v. Enesa Engenharia S.A. to determine the governing law of the arbitration agreement. It held that in the absence of an express choice, the Lex Contractus (Indian law) governed the arbitration agreement unless there were strong indications to the contrary (Para 31).

Jurisdiction of Indian Courts: The Court ruled that Clause 16.5 of the agreement, which designated Indian law and Gujarat courts as having jurisdiction, was not overridden by Clause 18, which provided for arbitration in Bogota. Indian courts retained supervisory jurisdiction over the arbitration (Para 29-30).

Reconciliation of Conflicting Clauses: The Court emphasized that clauses in a contract should be read harmoniously, and a clause should not be rejected unless it is manifestly inconsistent with the rest of the agreement (Para 26).

Appointment of Arbitrator: The Court appointed a sole arbitrator under Section 11(6) of the A&C Act, with the arbitration to be conducted in India, as agreed by both parties during the hearing (Para 34-35).

The Supreme Court held that Indian law governed the arbitration agreement (Lex Arbitri) and that Indian courts had supervisory jurisdiction over the arbitration proceedings. The Court appointed a sole arbitrator, Mr. Justice S.P. Garg, and allowed the arbitration to be held in India, with the venue to be decided mutually by the parties and the arbitrator. The arbitration would be governed by the rules of the Delhi International Arbitration Centre, and the fee schedule for international arbitrations would apply.

Major Acts:

• Arbitration and Conciliation Act, 1996 (A&C Act) – Section 11(6) – Appointment of Arbitrator.

• Indian Contract Act, 1872 – Governing Law of Contract.

• International Arbitration Rules – Rules of Arbitration and Conciliation Centre of Bogota, Colombia.

Subjects:

• Arbitration Agreement – Governing Law – Jurisdiction – Lex Contractus – Lex Arbitri – Lex Fori – Seat of Arbitration – Venue of Arbitration – Supervisory Jurisdiction – International Commercial Arbitration – Conflict of Laws – Appointment of Arbitrator.

Facts:

1. Nature of the Litigation: Dispute between Disortho S.A.S. (Petitioner, Colombia) and Meril Life Sciences Pvt. Ltd. (Respondent, India) over the interpretation of arbitration clauses in an International Exclusive Distributor Agreement.

2. Remedy Sought: Disortho sought the appointment of an arbitral tribunal under Section 11(6) of the A&C Act, while Meril contested the jurisdiction of Indian courts.

3. Reason for Filing: Disputes arose over the distribution of medical products in Colombia, leading to arbitration under the agreement.

4. Previous Decisions: The parties disagreed on whether Indian courts had jurisdiction to appoint arbitrators, given conflicting clauses in the agreement.

Issues:

1. Whether Indian courts have jurisdiction to appoint arbitrators under Section 11(6) of the A&C Act when the arbitration agreement designates a foreign seat (Bogota, Colombia)?

2. Whether the governing law of the arbitration agreement (Lex Arbitri) is Indian law or Colombian law?

3. How to reconcile conflicting clauses in the agreement regarding jurisdiction and arbitration?

Submissions/Arguments:

• Disortho: Argued that Indian courts had jurisdiction under Clause 16.5 of the agreement, which stipulated that the agreement would be governed by Indian law and subject to the jurisdiction of courts in Gujarat, India.

• Meril: Contended that Clause 18 of the agreement, which provided for arbitration in Bogota under Colombian law, ousted Indian courts' jurisdiction.