Trans-border Arbitration – Jurisdiction of Courts in India and Arbitration in Colombia
Section 11(6) AA Petition of Colombia Company against Indian Company – Jurisdiction in Trans-Border Arbitration
The petitioner Disortho – a Colombia company and the Respondent – an Indian Company in Gujarat – executed International Exclusive Distributor Agreement dated 16.5.2016 for distribution of medical products in Colombia.
The petitioner filed Section 11(6) petition for appointment of an arbitral tribunal in terms of Clauses 16.5 and 18 of the Distributor Agreement. This was objected on the ground that the said clauses do not clothe the Indian Courts with authority to appoint arbitral tribunal.
The important question that arises as to how to determine the law that governs the arbitration agreement.
Clause 16.5 stipulates that the agreement shall be governed by and construed in accordance with laws of India. All matters arising from the agreement shall be subject to the jurisdiction of the Courts in Gujarat (India). However, Clause 28 deals with settlement of disputes initially through conciliation and on failure to Arbitration and Conciliation Centre at the Chambers of Commerce in Bogota as per the Colombian law.
Conflict between two competing or inconsistent clauses. While it is acknowledged that the venue of arbitration is Bogota, Colombia and the procedural rules of Bogota Centre are to apply, this does not diminish the supervisory powers of the Indian Courts as explicitly outlined in Clause 16.5. Three-test developed by Sulamerica Cia case (2012 EWCA Civ 638) was applied.
The conclusions in Enka Insaat case (UK Supreme Court Judgment in 2020 UK SC 38) summarizes the tie breaker rules that the law governing the arbitration agreement may differ from the law governing the contract.
In our view, Bogota has been designated as the venue for conciliation and arbitration while the Courts in Gujarat retain exclusive jurisdiction over the disputes. This must, unless there is a divergency in lex arbitri include jurisdiction over appointments and act as a conduit for the arbitration in Bogota, Colombia.
Judgment dated 18.3.2025 of the Supreme Court of India in Arbitration Petition No.48 of 2023 of DISORTHO S.A.S Vs. MERIL LIFE SCIENCES PRIVATE LIMITED
