A respondent’s denial of breach does not prevent referral of disputes under a valid arbitration agreement.

The petitioner sought appointment of a sole arbitrator under Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996, in disputes arising from a Licensing Agreement dated 13 March 2023.

The petitioner alleged that the respondents’ licensed continuous-process technology for manufacturing azelaic acid and pelargonic acid failed during demonstrations, and sought a refund of know-how fees, damages and consequential reliefs.

The petitioner stated that it had followed the dispute-resolution procedure in Clause 21, but the disputes remained unresolved; the respondents denied breach in their reply to the notice invoking arbitration.

The agreement provided for arbitration at Delhi and referral to the Delhi International Arbitration Centre (DIAC).

Whether the disputes under the Licensing Agreement should be referred to arbitration and a sole arbitrator appointed under Section 11 of the Arbitration and Conciliation Act, 1996.

Whether the parties’ disputes concerning breach, arbitrability and the merits of their claims should be determined at the appointment stage or left to the arbitrator.

The Court acted under Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996, on the petitioner’s request for appointment of a sole arbitrator.

It also directed that the arbitrator furnish a declaration under Section 12 before entering upon the reference.

The Court relied on Clause 21 of the Licensing Agreement, which provided for arbitration and referral of disputes to DIAC, with Delhi as the agreed venue.

The Court found that the agreement contained an arbitration clause and that the respondents had denied liability in response to the petitioner’s notice, leaving the parties’ disputes unresolved.

Because the petitioner sought only appointment of an arbitrator and the agreement specified arbitration through DIAC, the Court referred the disputes to arbitration.

It did not decide whether either party had breached the agreement or whether the claims were arbitrable; those issues, along with other preliminary objections and the merits of any claim or counterclaim, were expressly left to the arbitrator.

It appointed Mr. Vinay Kumar Gupta, Former District & Sessions Judge, Delhi, as sole arbitrator; directed that the arbitration proceed under DIAC’s aegis and rules, with fees determined under the DIAC (Administrative Cost and Arbitrator’s Fees) Rules 2018; required a Section 12 declaration; and directed the parties to approach DIAC within two weeks.

The parties’ rights and contentions, including arbitrability, preliminary objections and the merits of claims or counterclaims, were left open.