Lifeforce Cryobank Sciences Inc vs. Cryoviva Biotech Pvt. Ltd. & Ors.
Background
Lifeforce Cryobank Sciences Inc, a US company, claimed to have bought all assets, including intellectual property rights, of another US company (Cryobank USA) at a public auction in Florida. It said this made it the successor to Cryobank USA's rights under a license agreement and a share-subscription agreement with Cryoviva Biotech (formerly Cryobanks India) and related Indian parties, both of which contained arbitration clauses. When a dispute arose over use of the intellectual property, Lifeforce tried to invoke arbitration, but Cryoviva and the other respondents refused, arguing the license was non-assignable and they had never accepted Lifeforce as a substitute party.
Decision Breakdown
The Supreme Court held that at the stage of appointing an arbitrator under Section 11 of the Arbitration Act, courts only need to confirm that a valid arbitration agreement exists, not resolve deeper disputes about who is entitled to invoke it. Since both underlying agreements admittedly contained valid arbitration clauses, and the real dispute (whether Lifeforce validly stepped into Cryobank USA's shoes) was a matter for the arbitrator to decide on evidence, the Court declined to go into that issue itself. It referred the entire dispute to the Delhi International Arbitration Centre for appointment of a sole arbitrator, without expressing any opinion on the merits.
Lesson Learnt
When approaching a court merely to get an arbitrator appointed, the court's role is limited to checking that an arbitration clause exists: genuine disputes about assignment of rights, identity of parties, or the merits of the claim are left for the arbitrator to decide, not the court.