Supreme Court: Venue of Arbitration will be seat of Arbitration in absence of contrary intention of parties

 It will thus be seen that wherever there is an express designation of a

“venue”, and no designation of any alternative place as the “seat”,

combined with a supranational body of rules governing the arbitration,

and no other significant contrary indicia, the inexorable conclusion is

that the stated venue is actually the juridical seat of the arbitral proceeding.{Para 63}

On a conspectus of the aforesaid judgments, it may be concluded that

whenever there is the designation of a place of arbitration in an arbitration

clause as being the “venue” of the arbitration proceedings, the

expression “arbitration proceedings” would make it clear that the

“venue” is really the “seat” of the arbitral proceedings, as the aforesaid

expression does not include just one or more individual or particular

hearing, but the arbitration proceedings as a whole, including the

making of an award at that place. This language has to be contrasted

with language such as “tribunals are to meet or have witnesses, experts

or the parties” where only hearings are to take place in the

“venue”, which may lead to the conclusion, other things being equal,

that the venue so stated is not the “seat” of arbitral proceedings, but

only a convenient place of meeting. Further, the fact that the arbitral  proceedings “shall be held” at a particular venue would also indicate

that the parties intended to anchor arbitral proceedings to a particular

place, signifying thereby, that that place is the seat of the arbitral proceedings.

This, coupled with there being no other significant contrary

indicia that the stated venue is merely a “venue” and not the “seat” of

the arbitral proceedings, would then conclusively show that such a

clause designates a “seat” of the arbitral proceedings. In an International

context, if a supranational body of rules is to govern the arbitration,

this would further be an indicia that “the venue”, so stated, would

be the seat of the arbitral proceedings. In a national context, this

would be replaced by the Arbitration Act, 1996 as applying to the

“stated venue”, which then becomes the “seat” for the purposes of arbitration.{Para 84}

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9307 OF 2019

BGS SGS SOMA JV  Vs  NHPC LTD.

Dated:December 10, 2019

R.F. NARIMAN, J.

1. Leave granted.

2. Three appeals before us raise questions as to maintainability of appeals

under Section 37 of the Arbitration and Conciliation Act, 1996

(hereinafter referred to as “the Arbitration Act, 1996”), and, given the

arbitration clause in these proceedings, whether the “seat” of the arbitration

proceedings is New Delhi or Faridabad, consequent upon

which a petition under Section 34 of the Arbitration Act, 1996 may be

filed dependent on where the seat of arbitration is located.

3. At the outset, the facts in SLP (Civil) No.25618 of 2018 are set out as

follows. On 16.01.2004, the Petitioner was awarded a contract for

construction of Diversion Tunnels, Coffer Dams, Concrete Gravity

Dams, Plunge Pools and Cutoff Walls of Subansri Lower Hydroelectric

Project on river Subansri, with an installed capacity of 2000 MW,

stated to be the largest Hydropower project yet in India. The project

site is located in the lower Subansri districts in the States of Assam

and Arunachal Pradesh. Clause 67.3 of the agreement between the

parties provides for dispute resolution through arbitration. Clause 67.3

reads as follows:

“Any dispute in respect of which the Employer

and the Contractor have failed to reach at an amicable

settlement pursuant to Sub-Clause 67.1,

shall be finally settled by arbitration as set forth

below. The Arbitral Tribunal shall have full power

to open up, review and revise any decision, opinion,

instruction, determination, certificate or valuation

of the Engineer.

(i) A dispute with an Indian Contractor shall

be finally settled in accordance with the In-

2

dian Arbitration and Conciliation Act, 1996,

or any statutory amendment thereof. The

arbitral tribunal shall consist of 3 arbitrators,

one each to be appointed by the Employer

and the Contractor. The third Arbitrator

shall be chosen by the two Arbitrators

so appointed by the Parties and shall act

as Presiding arbitrator. In case of failure of

the two arbitrators, appointed by the parties

to reach upon a consensus within a

period of 30 days from the appointment of

the arbitrator appointed subsequently, the

Presiding arbitrator shall be appointed by

the President of the Institution of Engineers

(India). For the purposes of this Sub-

Clause, the term “Indian Contractor”

means a contractor who is registered in India

and is a juridic person created under

Indian law as well as a joint venture between

such a contractor and a Foreign

Contractor.

(ii) In the case of a dispute with a Foreign

Contractor, the dispute shall be finally settled

in accordance with the provisions of

the Indian Arbitration and Conciliation Act,

1996 and read with UNCITRAL Arbitration

Rules. The arbitral tribunal shall consist of

three Arbitrators, one each to be appointed

by the Employer and the Contractor. The

third Arbitrator shall be chosen by the two

Arbitrators so appointed by the Parties and

shall act as Presiding arbitrator. In case of

failure of the two arbitrators appointed by

the parties to reach a consensus within a

period of 30 days from their appointment

on the Presiding Arbitrator to be appointed

subsequently, the Presiding arbitrator shall

be appointed by the President of the Institution

of Engineers (India). For the pur-

3

poses of this Clause 67, the term “Foreign

Contractor” means a contractor who is not

registered in India and is not a juridic person

created under Indian Law. In case of

any contradiction between Indian Arbitration

and Conciliation Act, 1996 and UNCITRAL

Arbitration Rules, the provisions in

the Indian Arbitration and Conciliation Act,

1996 shall prevail.

(iii) Arbitration may be commenced prior to or

after completion of the Works, provided

that the obligations of the Employers, the

Engineer, and the Contractor shall not be

altered by reason of the arbitration being

conducted during the progress of the

Works.

xxx xxx xxx

(v) If one of the parties fail to appoint its arbitrator

in pursuance of sub-clause (i) and (ii)

above, within 30 days after receipt of the

notice of the appointment of its arbitrator

by the other party, then the President of the

Institution of Engineers (India), both in

cases of foreign contractors as well as Indian

Contractors, shall appoint the arbitrator.

A certified copy of the order of the

President of Institution of Engineers (India),

making such an appointment shall be furnished

to each of the parties.

(vi) Arbitration Proceedings shall be held at

New Delhi/Faridabad, India and the language

of the arbitration proceedings and

that of all documents and communications

between the parties shall be English.

4

(vii) The decision of the majority of arbitrators

shall be final and binding upon both parties.

The cost and expenses of Arbitration

shall be borne in such a manner as determined

by the arbitral tribunal. However, the

expenses incurred by each party in connection

with the preparation, presentation

etc. of its proceedings as also the fees and

expenses paid to the arbitrator appointed

by such party on its behalf shall be borne

by each party itself.”

4. On 16.05.2011, a Notice of Arbitration was issued by the Petitioner to

the Respondent, in regard to payment of compensation for losses suffered

due to abnormal delays and additional costs as a result of hindrances

caused by the Respondent. A three-member Arbitral Tribunal

was constituted as per clause 67.3 of the agreement under the Arbitration

Act, 1996. Pursuant thereto, the Petitioner filed its Statement of

Claim seeking recovery of an amount of INR 986.60 crores plus CHF

1060619. Between August 2011 and August 2016, seventy-one sittings

of the Arbitral Tribunal took place at New Delhi. The Tribunal

then delivered its unanimous award at New Delhi on 26.08.2016, by

which the claims of the Petitioner aggregating to INR

424,81,54,096.29 were allowed, together with simple interest at 14%

per annum till the date of actual payment. On 04.10.2016, in view of

certain computational and typographical errors in the arbitral award,

5

the figure of 424,81,54,096.29 was rectified to INR 424,70,52,126.66.

On 03.01.2017, being aggrieved by the arbitral award and the rectification

thereto, the Respondent filed an application under Section 34

of the Arbitration Act, 1996 seeking to set aside these awards before

the Court of the District and Sessions Judge, Faridabad, Haryana. On

28.04.2017, the Petitioner filed an application under Section 151 read

with Order VII Rule 10 of the Code of Civil Procedure, 1908 (hereinafter

referred to as the “CPC”) and Section 2(1)(e)(i) of the Arbitration

Act, 1996, seeking a return of the petition filed under Section 34

for presentation before the appropriate Court at New Delhi and/or the

District Judge at Dhemaji, Assam. In November, 2017, after the constitution

of a Special Commercial Court at Gurugram, the Section 34

petition filed at Faridabad was transferred to the said Gurugram Commercial

Court and numbered as Arbitration Case No.74 (CIS No.

ARB/118/2017).

5. On 21.12.2017, the Special Commercial Court, Gurugram allowed the

application of the Petitioner, and returned the Section 34 petition for

presentation to the proper court having jurisdiction in New Delhi. On

15.02.2018, the Respondent filed an appeal under Section 37 of the

Arbitration Act, 1996 read with Section 13(1) of the Commercial

6

Courts Act, 2015 before the High Court of Punjab and Haryana at

Chandigarh. On 12.09.2018, the impugned judgment was delivered

by the Punjab and Haryana High Court, in which it was held that the

appeal filed under Section 37 of the Arbitration Act, 1996 was maintainable,

and that Delhi being only a convenient venue where arbitral

proceedings were held and not the seat of the arbitration proceedings,

Faridabad would have jurisdiction on the basis of the cause of

action having arisen in part in Faridabad. As a result, the appeal was

allowed and the judgment of the Special Commercial Court, Gurugram

was set aside.

6. Dr. Abhishek Manu Singhvi, learned Senior Advocate appearing on

behalf of the Petitioner in SLP (C) No.25618 of 2018, has assailed the

impugned High Court judgment on both counts. According to him, on

a combined reading of Section 13 of the Commercial Courts Act, 2015

and Section 37 of the Arbitration Act, 1996, it becomes clear that Section

13 of the Commercial Courts Act, 2015 only provides the forum

for challenge, whereas Section 37 of the Arbitration Act, 1996 - which

is expressly referred to in the proviso to Section 13(1) of the Commercial

Courts Act, 2015 - circumscribes the right of appeal. He contended

that this when read with Section 5 of the Arbitration Act, 1996,

makes it clear that only certain judgments and orders are appealable,

and no appeal lies under any provision outside Section 37 of the Arbitration

Act, 1996. He contended that the High Court was manifestly

wrong when it said that the present appeal was appealable under

Section 37(1)(c) of the Arbitration Act, 1996 as being an appeal

against an order refusing to set aside an arbitral award under Section

34 of the Arbitration Act, 1996. According to Dr. Singhvi, an order

which allows an application under Section 151 read with Order VII

Rule 10 of the CPC can by no stretch of the imagination amount to an

order refusing to set aside an arbitral award under Section 34 of the

Arbitration Act, 1996. For this proposition, he strongly relied upon on

our judgment in Kandla Export Corporation & Anr. v. M/s OCI Corporation

& Anr. (2018) 14 SCC 715. On the second point, he read

out the impugned judgment in detail, and stated that the ultimate conclusion

that New Delhi was only a “venue” and not the “seat” of the arbitration

was incorrect, as the parties have chosen to have sittings at

New Delhi, as a result of which it is clear that the Arbitral Tribunal considered

that the award made at New Delhi would be made at “the

seat” of the arbitral proceedings between the parties. He further

added that it was clear that even if both New Delhi and Faridabad had

jurisdiction, New Delhi being the choice of the parties, the principle

contained in Hakam Singh v. M/s. Gammon (India) Ltd., (1971) 1

SCC 286, would govern. He referred in copious detail to many judgments

of this Court, including the Five Judge Bench in Bharat Aluminium

Co. (BALCO) v. Kaiser Aluminium Technical Service, Inc.,

(2012) 9 SCC 552, Indus Mobile Distribution Private Limited v.

Datawind Innovations Private Limited & Ors., (2017) 7 SCC 678,

and various other judgments to buttress his submissions. According

to him, the recent judgment delivered in Union of India v. Hardy Exploration

and Production (India) Inc. 2018 SCC Online SC 1640

queers the pitch, in that it is directly contrary to the Five Judge bench

decision in BALCO (supra). It is only as a result of the confusion

caused by judgments such as Hardy Exploration and Production

(India) Inc. (supra) that the impugned judgment has arrived at the

wrong conclusion that New Delhi is not the “seat”, but only the

“venue” of the present arbitral proceedings. He, therefore, in the

course of his submissions argued that this confusion should be removed,

and exhorted us to declare that Hardy Exploration and Production

(India) Inc. (supra) was not correctly decided, being contrary

to the larger bench in BALCO (supra).

7. Dr. Singhvi in the course of his submissions also referred pointedly to

paragraph 96 of BALCO (supra), and argued that not only was the

example given in the said paragraph contrary to the theory of concurrent

jurisdiction propounded therein, but was also contrary to subsequent

paragraphs in the said judgment, in which it was clearly held

that a clause in an agreement stating the “seat” of arbitration is akin to

an exclusive jurisdiction clause, which would put paid to any theory of

concurrent jurisdiction. As a matter of fact, two subsequent decisions

have understood the ratio of BALCO (supra) to be that once the

“seat” is indicated in an arbitration agreement, it is akin to an exclusive

jurisdiction clause, which would oust the jurisdiction of courts

other than courts at the seat. For this purpose he expressly referred

to and relied upon Reliance Industries Ltd. v. Union of India (2014)

7 SCC 603 and Indus Mobile Distribution Pvt. Ltd. (supra).

8. Shri Arunabh Chowdhury, appearing in SLP (Civil) No. 25848 of 2018,

argued that unlike the first SLP argued by Dr. Singhvi, in his case, the

Notice for Arbitration was sent to the Assam site-office of the Respondent,

and not routed through the Assam office to be sent to the Head

Office at Faridabad, thereby making the observations based on Section

21 of the Arbitration Act,1996 in the impugned judgment inappli-

10

cable on the facts of his case. He supported Dr. Singhvi’s argument

that the appeal filed under Section 37 of the Arbitration Act, 1996

would not be maintainable, and cited several judgments, which will be

dealt with a little later.

9. Shri Ankit Chaturvedi, appearing in SLP (Civil) No. 28062 of 2018,

stressed one important difference in the facts of his case, which is,

that the arbitral award made in his case expressly referred to Section

31(4) of the Arbitration Act, 1996, and stated that the place of arbitration,

as determined in accordance with Section 20 of the Arbitration

Act, 1996, was New Delhi. Therefore, this being the “seat” as determined

by the Arbitral Tribunal in this case, a challenge under Section

34 of the Arbitration Act, 1996 could only be made in the courts at

New Delhi.

10. Smt. Maninder Acharya, learned Additional Solicitor General, supported

the judgment under appeal. She first argued that the reasoning

of the impugned judgment, that an order passed under Section 151

read with Order VII Rule 10 of the CPC would amount to a refusal to

set aside an arbitral award, is correct, and relied heavily upon a Division

Bench judgment of the Delhi High Court in Antrix Corporation

Ltd. v. Devas Multimedia Pvt. Ltd. 2018 SCC Online Del 9338 for

this purpose. On the second point, she argued that the arbitration

clause did not expressly state that either New Delhi or Faridabad was

to be the seat of the Arbitral Tribunal. Therefore, the arbitration clause

only referred to a convenient venue, and the fact that the sittings were

held at New Delhi, therefore, would not make New Delhi the seat of

the arbitration under Section 20(1) of the Arbitration Act, 1996. According

to her, since the agreements in the present case were signed

in Faridabad, and since notices were sent by the Petitioners to the

Respondent’s Faridabad office, part of the cause of action clearly

arose in Faridabad, as a result of which the courts in Faridabad would

be clothed with jurisdiction to decide a Section 34 application. She

stressed the fact that in BALCO (supra), even assuming that New

Delhi was the seat of arbitration, both New Delhi and Faridabad would

have concurrent jurisdiction - New Delhi being a neutral forum in

which no part of the cause of action arose, and Faridabad being a

chosen forum where a part of the cause of action has arisen. When

read with Section 42 of the Arbitration Act, 1996, since the Court at

Faridabad was first approached by filing an application under Section

34 of the Arbitration Act,1996, that Court alone would have jurisdiction,

as a result of which the impugned judgment ought to be affirmed.

Maintainability of the appeals under Section 37 of the Arbitration

Act, 1996

11. Section 37(1) of the Arbitration Act, 1996 reads as follows:

“37. Appealable Orders.-

(1)An appeal shall lie from the following orders (and

from no others) to the Court authorised by law to

hear appeals from original decrees of the Court

passing the order, namely:-

(a)refusing to refer the parties to arbitration under

section 8;

(b)granting or refusing to grant any measure under

section 9;

(c)setting aside or refusing to set aside an arbitral

award under section 34.”

12. Section 13 of the Commercial Courts Act, 2015 reads as follows:

“13. Appeals from decrees of Commercial Courts

and Commercial Divisions.-

(1)Any person aggrieved by the judgment or order of

a Commercial Court below the level of a District

Judge may appeal to the Commercial Appellate

Court within a period of sixty days from the date of

judgment or order.

(1A)Any person aggrieved by the judgment or order of

a Commercial Court at the level of District Judge

exercising original civil jurisdiction or, as the case

may be, Commercial Division Bench of a High

Court may appeal to the Commercial Appellate Division

of that High Court within a period of sixty

days from the date of the judgment of order:

13

Provided that an appeal shall lie from such orders

passed by the Commercial Division or a Commercial

Court that are specifically enumerated in Order

XLIII of the Code of Civil Procedure, 1908 (5 of

1908) as amended by this Act and Section 37 of

the Arbitration and Conciliation Act, 1996 (26 of

1996).

(2)Notwithstanding anything contained in any other

law for the time being in force or Letters Patent of

a High Court, no appeal shall lie from any other order

or decree of a Commercial Division or Commercial

Court otherwise than in accordance with

the provisions of the Act.”

13. The interplay between Section 37 of the Arbitration Act, 1996 and

Section 13 of the Commercial Courts Act, 2015, has been laid down

in some detail in the judgment in Kandla Export Corporation

(supra). The precise question that arose in Kandla Export Corporation

(supra) was as to whether an appeal, which was not maintainable

under Section 50 of the Arbitration Act,1996, is nonetheless

maintainable under Section 13(1) of the Commercial Courts Act,

2015. In this context, after setting out various provisions of the Commercial

Courts Act, 2015 and the Arbitration Act, 1996, this Court

held:

“13. Section 13(1) of the Commercial Courts Act, with

which we are immediately concerned in these appeals,

is in two parts. The main provision is, as has

been correctly submitted by Shri Giri, a provision

which provides for appeals from judgments, orders

and decrees of the Commercial Division of the High

Court. To this main provision, an exception is carved

out by the proviso…”

14. The proviso goes on to state that an appeal shall

lie from such orders passed by the Commercial Division

of the High Court that are specifically enumerated

under Order 43 of the Code of Civil Procedure

Code, 1908, and Section 37 of the Arbitration Act. It

will at once be noticed that orders that are not specifically

enumerated under Order 43 CPC would, therefore,

not be appealable, and appeals that are mentioned

in Section 37 of the Arbitration Act alone are

appeals that can be made to the Commercial Appellate

Division of a High Court.

15. Thus, an order which refers parties to arbitration

under Section 8, not being appealable under Section

37(1)(a), would not be appealable under Section

13(1) of the Commercial Courts Act. Similarly, an appeal

rejecting a plea referred to in sub-sections (2)

and (3) of Section 16 of the Arbitration Act would

equally not be appealable under Section 37(2)(a)

and, therefore, under Section 13(1) of the Commercial

Courts Act.

xxx xxx xxx

20. Given the judgment of this Court in Fuerst Day

Lawson [Fuerst Day Lawson Ltd. v. Jindal Exports

Ltd., (2011) 8 SCC 333 : (2011) 4 SCC (Civ) 178] ,

which Parliament is presumed to know when it enacted

the Arbitration Amendment Act, 2015, and given

the fact that no change was made in Section 50 of the

Arbitration Act when the Commercial Courts Act was

brought into force, it is clear that Section 50 is a provision

contained in a self-contained code on matters

pertaining to arbitration, and which is exhaustive in

nature. It carries the negative import mentioned in

para 89 of Fuerst Day Lawson [Fuerst Day Lawson

Ltd. v. Jindal Exports Ltd., (2011) 8 SCC 333 : (2011)

4 SCC (Civ) 178] that appeals which are not mentioned

therein, are not permissible. This being the

case, it is clear that Section 13(1) of the Commercial

Courts Act, being a general provision vis-à-vis arbitration

relating to appeals arising out of commercial disputes,

would obviously not apply to cases covered by

Section 50 of the Arbitration Act.

21. However, the question still arises as to why Section

37 of the Arbitration Act was expressly included in

the proviso to Section 13(1) of the Commercial Courts

Act, which is equally a special provision of appeal

contained in a self-contained code, which in any case

would be outside Section 13(1) of the Commercial

Courts Act. One answer is that this was done ex

abundanti cautela. Another answer may be that as

Section 37 itself was amended by the Arbitration

Amendment Act, 2015, which came into force on the

same day as the Commercial Courts Act, Parliament

thought, in its wisdom, that it was necessary to emphasise

that the amended Section 37 would have

precedence over the general provision contained in

Section 13(1) of the Commercial Courts Act. Incidentally,

the amendment of 2015 introduced one more

category into the category of appealable orders in the

Arbitration Act, namely, a category where an order is

made under Section 8 refusing to refer parties to arbitration.

Parliament may have found it necessary to

emphasise the fact that an order referring parties to

arbitration under Section 8 is not appealable under

Section 37(1)(a) and would, therefore, not be appealable

under Section 13(1) of the Commercial Courts

Act. Whatever may be the ultimate reason for including

Section 37 of the Arbitration Act in the proviso to

Section 13(1), the ratio decidendi of the judgment

in Fuerst Day Lawson [Fuerst Day Lawson Ltd. v. Jindal

Exports Ltd., (2011) 8 SCC 333 : (2011) 4 SCC

(Civ) 178] would apply, and this being so, appeals

filed under Section 50 of the Arbitration Act would

have to follow the drill of Section 50 alone.

22. This, in fact, follows from the language of Section

50 itself. In all arbitration cases of enforcement of foreign

awards, it is Section 50 alone that provides an

appeal. Having provided for an appeal, the forum of

appeal is left “to the Court authorised by law to hear

appeals from such orders”. Section 50 properly read

would, therefore, mean that if an appeal lies under

the said provision, then alone would Section 13(1) of

the Commercial Courts Act be attracted as laying

down the forum which will hear and decide such an

appeal.

xxx xxx xxx

27. The matter can be looked at from a slightly different

angle. Given the objects of both the statutes, it is

clear that arbitration itself is meant to be a speedy

resolution of disputes between parties. Equally, enforcement

of foreign awards should take place as

soon as possible if India is to remain as an equal

partner, commercially speaking, in the international

community. In point of fact, the raison d'être for the

enactment of the Commercial Courts Act is that commercial

disputes involving high amounts of money

should be speedily decided. Given the objects of both

the enactments, if we were to provide an additional

appeal, when Section 50 does away with an appeal

so as to speedily enforce foreign awards, we would

be turning the Arbitration Act and the Commercial

Courts Act on their heads. Admittedly, if the amount

contained in a foreign award to be enforced in India

were less than Rs 1 crore, and a Single Judge of a

High Court were to enforce such award, no appeal

would lie, in keeping with the object of speedy enforcement

of foreign awards. However, if, in the same

fact circumstance, a foreign award were to be for Rs

1 crore or more, if the appellants are correct, enforce-

ment of such award would be further delayed by providing

an appeal under Section 13(1) of the Commercial

Courts Act. Any such interpretation would lead to

absurdity, and would be directly contrary to the object

sought to be achieved by the Commercial Courts Act

viz. speedy resolution of disputes of a commercial nature

involving a sum of Rs 1 crore and over. For this

reason also, we feel that Section 13(1) of the Commercial

Courts Act must be construed in accordance

with the object sought to be achieved by the Act. Any

construction of Section 13 of the Commercial Courts

Act, which would lead to further delay, instead of an

expeditious enforcement of a foreign award must,

therefore, be eschewed. Even on applying the doctrine

of harmonious construction of both statutes, it is

clear that they are best harmonised by giving effect to

the special statute i.e. the Arbitration Act, vis-à-vis the

more general statute, namely, the Commercial Courts

Act, being left to operate in spheres other than arbitration.”

14. Given the fact that there is no independent right of appeal under Section

13(1) of the Commercial Courts Act, 2015, which merely provides

the forum of filing appeals, it is the parameters of Section 37 of the Arbitration

Act,1996 alone which have to be looked at in order to determine

whether the present appeals were maintainable. Section 37(1)

makes it clear that appeals shall only lie from the orders set out in

sub-clauses (a), (b) and (c) and from no others. The pigeonhole that

the High Court in the impugned judgement has chosen to say that the

appeals in the present cases were maintainable is sub-clause (c). According

to the High Court, even where a Section 34 application is ordered to be returned to the appropriate Court, such order would

amount to an order “refusing to set aside an arbitral award under Section

34”.

15. Interestingly, under the proviso to Section 13(1A) of the Commercial

Courts Act, 2015, Order XLIII of the CPC is also mentioned. Order

XLIII Rule(1)(a) reads as follows:

“1. Appeal from orders.- An appeal shall lie from the

following orders under the provisions of Section 104,

namely-

(a)an order under Rule 10 of Order VII returning a

plaint to be presented to the proper Court except

where the procedure specified in rule 10A of Order

VII has been followed;”

16. This provision is conspicuous by its absence in Section 37 of the Arbitration

Act, 1996, which alone can be looked at for the purpose of filing

appeals against orders setting aside, or refusing to set aside

awards under Section 34. Also, what is missed by the impugned judgment

is the words “under Section 34”. Thus, the refusal to set aside

an arbitral award must be under Section 34, i.e., after the grounds set

out in Section 34 have been applied to the arbitral award in question,

and after the Court has turned down such grounds. Admittedly, on

the facts of these cases, there was no adjudication under Section 34

of the Arbitration Act, 1996 - all that was done was that the Special

Commercial Court at Gurugram allowed an application filed under

Section 151 read with Order VII Rule 10 CPC, determining that the

Special Commercial Court at Gurugram had no jurisdiction to proceed

further with the Section 34 application, and therefore, such application

would have to be returned to the competent court situate at

New Delhi.

17. Shri Anurabh Chowdhury referred to a number of judgments in which

a well-settled proposition was elucidated, i.e. that an appeal is a creature

of statute, and must either be found within the four corners of the

statute, or not be there be at all. In support thereof, he referred to Municipal

Corporation of Delhi & Ors. v. International Security & Intelligence

Agency Ltd. (2004) 3 SCC 250 (at paragraphs 14 and

15), and Arcot Textile Mills Ltd. v. Regional Provident Fund Commissioner

and Ors. (2013) 16 SCC 1 (at paragraph 20). He also referred

to a recent Delhi High Court judgment reported as South Delhi

Municipal Corporation v. Tech Mahindra EFA (OS) (Comm.) 3 of

2019, in which the Delhi High Court held that an order of a Single

Judge, which directed the deposit of 50% of the awarded amount,

would not be appealable under Section 37 of the Arbitration Act, 1996  read with the Commercial Courts Act, 2015. In the course of discussion

the Delhi High Court said:

“12. In view of the above discussions, we conclude

that the present appeal is not maintainable. The appellant’s

remedy clearly lies elsewhere. An attempt

was made to urge that no litigant can be deprived of

remedy if there is a grievance: ubi jus ibi remedium;

however, that argument is wholly without substance

because an appeal, it has been repeatedly emphasised,

is a specific creation of statute and cannot be

claimed as a matter of right. This was explained

pithily in Ganga Bai v. Vijay Kumar, (1974) 2 SCC

393, in the following terms:

“There is a basic distinction between the right of suit

and the right of appeal. There is an inherent right in

every person to bring suit of a civil nature and unless

the suit is barred by statute one may, at one’s peril,

bring a suit of one’s choice. It is no answer to a suit

howsoever frivolous the claim, that the law confers no

right to sue. A suit for its maintainability requires no

authority of law and it is enough that no statute bars

the suit. But the position in regard to appeals is quite

the opposite. The right of appeal inheres in no one

and therefore an appeal for its maintainability must

have the clear authority of law. That explains why the

right of appeal is described as a creature of statute.

13. In view of the above discussion, it is held that the

present appeal is plainly not maintainable by virtue of

provisions of the Commercial Courts Act, 2015; the

appeal is therefore dismissed. No costs.”

18. Shri Chowdhury also referred to another Delhi High Court judgment

reported as Hamanprit Singh Sidhu v. Arcadia Shares & Stock

Brokers Pvt. Ltd 2016 234 DLT 30 (DB), in which a learned Single

Judge of the Delhi High Court allowed an application for condonation

of delay in filing a Section 34 petition. The Division Bench, in holding

that an appeal against such an order would not be maintainable under

Section 37 of the Arbitration Act, 1996, read with the Commercial

Courts Act, 2015 held:

“10. Coming to Section 37(1), it is evident that an appeal

can lie from Coming to Section 37(1), it is evident

that an appeal can lie from only the orders specified

in clauses (a), (b) or (c). In other words, an appeal

under Section 37 would only be maintainable

against (a) an order refusing to refer the parties to arbitration

under Section 8 of the A&C Act; (b) an order

granting or refusing to grant any measure under Section

9 of the A&C Act; or (c) an order setting aside or

refusing to set aside an arbitral award under Section

34 of the A&C Act. The impugned order is clearly not

relatable to Sections 8 or 9 of the A&C Act. It was

sought to be contended by the learned counsel for

the appellant that the present appeal would fall within

Section 37(1) (c) which relates to an order "setting

aside" or "refusing to set aside" an arbitral award under

Section 34. We are unable to accept this proposition.

By virtue of the impugned order, the arbitral

award dated 10.09.2013 has not been set aside. Nor

has the court, at this stage, refused to set aside the

said arbitral award under Section 34 of the A&C Act.

In fact, the appellant in whose favour the award has

been made, would only be aggrieved if the award

were to have been set aside in whole or in part. That

has not happened. What the learned single Judge

has done is to have condoned the delay in re-filing of

the petition under Section 34. This has not, in any

way, impacted the award.”

19. The reasoning in this judgment commends itself to us, as a distinction

is made between judgments which either set aside, or refuse to set

aside, an arbitral award after the court applies its mind to Section 34

of the Arbitration Act, 1996, as against preliminary orders of condonation

of delay, which do not in any way impact the arbitral award that

has been assailed.

20. However, Smt. Acharya relied heavily upon the Division Bench judgment

of the Delhi High Court in Antrix Corporation Ltd. (supra). On

the facts of that case, on 28.02.2017, a learned Single Judge of the

Delhi High Court ruled that Antrix’s petition under Section 9 of the Arbitration

Act, 1996 before the Bangalore Court was not maintainable,

and that Devas’ petition under Section 9 was maintainable, the bar

under Section 42 of the Arbitration Act, 1996 being inapplicable. The

order also held that consequently, Antrix’s petition under Section 34 of

the Arbitration Act, 1996 before the Bangalore City Civil Court would

not be maintainable, inasmuch as Devas’ petition filed in Delhi under

Section 9 was filed earlier. The learned Single Judge then listed the

matter for hearing on merits and directed Antrix to file an affidavit of

an authorised officer, enclosing therewith its audited Balance Sheets,

and Profit and Loss Accounts for the past three years. Antrix then appealed against this order, to which a preliminary objection was taken,

stating that this appeal would not be maintainable under Section 37 of

the Arbitration Act, 1996. After setting out Section 13 of the Commercial

Courts Act, 2015 and Sections 37 and 42 of the Arbitration Act,

1996, the Division Bench noticed Hamanprit Singh Sidhu (supra) in

paragraph 39, without at all adverting to paragraph 10 of the judgment

(which is set out hereinabove). Thereafter, the Court held as follows:

“42. While undeniably, the Learned Single Judge in

the impugned order has not decided the Section 9 petition

finally and had listed the matter for hearing on

merits, Antrix states that the impugned order is indistinguishable

from an order under Section 9. Devas

however, argued that the sequence of events has not

been completed. Antrix should face an adverse order

under Section 9 before it can approach this court in

appeal. On this issue, significant reliance has been

placed on the decision of the Madras High Court

in Samson Maritime (supra). In that case, the Court

held:

“Learned counsel appearing for the respondent made

an attempt to contend that the application seeking for

furnishing of details of assets cannot be construed as

an interim measure or interim relief contemplated under

section 9 of the said Act. I am not convinced to

accept the said contention for the reason that those

details are sought for by the applicant only to seek for

consequential or follow up relief in the event of the respondent's

failure to furnish securities. Therefore, as

the relief sought for in this application is having a direct

bearing on the relief sought for in the other applications

seeking for furnishing securities, it cannot be

said that this relief seeking for details of the assets is

24

outside the scope of Section 9. Therefore, I find that

the application filed seeking for details of the assets

is also maintainable.”

43. The Court in Samson Maritime (supra) reasoned

that an application seeking for furnishing of details of

assets would also amount to an interim measure under

Section 9, because the reason that those details

are sought are only to seek consequential or follow

up relief in the event of the respondent's failure to furnish

securities. Therefore, an order mandating a party

to disclose his assets or file his accounts would also

be an interim measure within the meaning of Section

9. In this case, through Paragraph 57 of the impugned

order, the Learned Single Judge had directed

Antrix to file an affidavit of an authorised officer, enclosing

therewith its audited balance sheets and profit

and loss accounts for the past three years. Keeping in

mind the view of the Court in Samson Maritime

(supra), which this Court is in agreement with,

this would also in effect be a Section 9 order as those

details are sought for the purpose of adjudicating

whether consequential relief could be given to Devas

of securing the amount due from the arbitral award

against Antrix. Moreover, this Court cannot take a

doctrinaire and unbending approach in this matter,

when it is clear that Antrix has suffered all but one remaining

blow through the impugned order, and therefore,

the Court should not wait till it suffers the final

blow (that of the final Section 9 order) before it can

assume jurisdiction over the appeal. The court's direction

to Antrix furnish an affidavit along with the particulars

sought, is to aid its order with respect to a

possible distraint, attachment or further such consequential

order towards interim relief. Such an order

would not be made unless the court directs this as a

prelude, or important step towards the inevitable interim

order, which would be just consequential.

Therefore, the Court finds that Antrix's appeal against

the impugned order is maintainable.

25

44. This court also finds merit in Antrix's argument

that as regards the single judge's observations that

the Bangalore court cannot proceed with the matter,

the impugned order is really final. It precludes in effect,

Antrix from proceeding with its Section 34 petition

before that court (in turn based on the pending

Section 9 petition before that court). If Antrix were to

accept the ruling, the effect would be to denude the

Bangalore court of jurisdiction. It was contended-and

correctly, in this court's opinion that whereas a court

acts within jurisdiction in deciding whether it has or

does not have jurisdiction over a cause of a matter,

the declaration by it about the lack of jurisdiction of

another court, based on the appreciation of the matter

before the latter court is undeniably an adverse order.

Allowing that to stand would prejudice Antrix for all

times.”

21. It can be seen that the reasoning in this judgment would have no application

to the facts of the present case. The Division Bench held that

directing Antrix to file an affidavit, enclosing therewith its audited Balance

Sheets and Profit and Loss Account for the last three years, is itself

an interim order passed under Section 9 of the Arbitration Act,

1996. The further reasoning of the Court that the direction to Antrix to

furnish an affidavit is to aid a future interim order, which would be just

consequential, does not commend itself to us. A step towards an interim

order would not amount to granting, or refusing to grant, any

measure under Section 9 of the Arbitration Act, 1996. The case is also

distinguishable for the reason that, as regards the Bangalore Court,

which cannot proceed further with the matter, the impugned order

therein is really final and would, therefore, also be appealable under

Section 37. For all these reasons, this judgment is wholly distinguishable

and would not apply to the facts of the present case. We may

also advert to the fact that our judgment in Kandla (supra) was delivered

on 07.02.2018, and was missed by the Division Bench in Antrix

Corporation Ltd. (supra), as the Division Bench had reserved judgment

on 06.12.2017, even though it ultimately pronounced the judgment

on 30.05.2018. The judgment in South Delhi Municipal Corporation

(supra) was decided after reference was made to Kandla

(supra), resulting in a deposit order being held to be not appealable

under Section 37 of the Arbitration Act, 1996.

22. It is clear, therefore, that the appeals filed in the present case do not

fall within Section 37 of the Arbitration Act,1996 and are not maintainable.

23. We now examine the second part of the challenge made by the Petitioners

to the impugned judgment, which relates to the determination

of the “seat” of the arbitral proceedings between the parties. The impugned

judgment of the Punjab and Haryana High Court referred to

BALCO (supra) and Indus Mobile Distribution Pvt. Ltd. (supra),

27

and other judgments of this Court, in order to arrive at the conclusion

that the arbitration clause in the present case does not refer to the

“seat” of arbitration, but only refers to the “venue” of arbitration. Consequently,

the impugned judgment holds that since a part of the

cause of action had arisen in Faridabad, and the Faridabad Commercial

Court was approached first, the Faridabad Court alone would

have jurisdiction over the arbitral proceedings, and the courts at New

Delhi would have no such jurisdiction. The correctness of these

propositions has been vehemently assailed before us, and it is therefore

important to lay down the law on what constitutes the “juridical

seat” of arbitral proceedings, and whether, once the seat is delineated

by the arbitration agreement, courts at the place of the seat would

alone thereafter have exclusive jurisdiction over the arbitral proceedings.

The juridical seat of the arbitral proceedings

28

24. The Arbitration Act, 1940 did not refer to the “juridical seat” of the arbitral

proceedings at all. Under the scheme of the Arbitration Act, 1940,

Section 14 stated as follows:

“14. Award to be signed and filed.-

(1)When the arbitrators or umpire have made their

award, they shall sign it and shall give notice in

writing to the parties of the making and signing

thereof and of the amount of fees and charges

payable in respect of the arbitration and award.

(2)The arbitrators or umpire shall, at the request of

any party to the arbitration agreement or any person

claiming under such party or if so directed by

the Court and upon payment of the fees and

charges due in respect of the arbitration and

award and of the costs and charges of filing the

award, cause the award or a signed copy of it, together

with any depositions and documents which

may have been taken and proved before them, to

be filed in Court, and the Court shall thereupon

give notice to the parties of the filing of the award.

(3) Where the arbitrators or umpire state a special

case under clause (b) of Section 13, the Court, after

giving notice to the parties and hearing them,

shall pronounce its opinion thereon and such

opinion shall be added to, and shall form part of,

the award.

25. When the award was signed and filed in Court, a judgment in terms of

the award had then to be made as follows:

“17. Judgment in terms of award.- Where the Court

sees no cause to remit the award or any of the matters

referred to arbitration for reconsideration or to set

aside the award, the Court shall, after the time for

29

making an application to set aside the award has expired,

or such application having been made, after refusing

it, proceed to pronounce judgement according

to the award, and upon the judgment so pronounced

a decree shall follow, and no appeal shall lie from

such a decree except on the ground that it is in excess

of, or not otherwise in accordance with, the

award.”

26. It was in this setting that “Court” was defined by Section 2(c) of the Arbitration

Act, 1940 as follows:

“2. Definitions.- In this Act, unless there is anything

repugnant in the subject or the context,

xxx xxx xxx

(c)“Court” means a Civil Court having jurisdiction to

decide the questions forming the subject-matter of

the reference if the same had been the subjectmatter

of a suit, but does not, except for the purpose

of arbitration proceedings under Section 21,

include a Small Cause Court;”

27. Section 31, which dealt with the Court in which an award may be filed

then stated as follows:

“31. Jurisdiction.

(1)Subject to the provisions of this Act, an award may

be filed in any Court having jurisdiction in the matter

to which the reference relates.

(2)Notwithstanding anything contained in any other

law for the time being in force and save as otherwise

provided in this Act, all questions regarding

the validity, effect or existence of an award or an

arbitration agreement between the parties to the

30

agreement- or persons claiming under them shall

be decided by the Court in which the award under

the agreement has been, or may be, filed, and by

no other Court.

(3)All applications regarding the conduct of arbitration

proceedings or otherwise arising out of such proceedings

shall be made to the Court where the

award has been, or may be, filed, and to no other

Court.

(4)Notwithstanding anything contained elsewhere in

this Act or in any other law for the time being in

force, where in any reference any application under

this Act has been made in a Court competent

to entertain it, that Court alone shall have jurisdiction

over the arbitration proceedings-, and all subsequent

applications arising, out of that reference,

and the arbitration proceedings shall be made in

that Court and in no other Court.”

28. It will be noticed that in this statutory setting, the “place” in which the

award is made is not referred to at all. Given this fact, the “Court” was

defined as any Civil Court having jurisdiction to decide questions

forming the subject matter of the reference to arbitration if the same

had been the subject matter of a suit.

29. The UNCITRAL Model Law on International Commercial Arbitration

(as adopted by the United Nations Commission on International Trade

Law on 21 June 1985) (hereinafter referred to as the “UNCITRAL

Model Law”) was then adopted by this country. The UNCITRAL Model

31

Law introduced the concept of “place” or “seat” of the arbitral proceedings

as follows:

“Article 1. Scope of application

xxx xxx xxx

(2)The provisions of this Law, except articles 8, 9, 35

and 36, apply only if the place of arbitration is in

the territory of this State.

xxx xxx xxx

Article 2. Definitions and rules of interpretation

xxx xxx xxx

(c)“court” means a body or organ of the judicial system

of a State;

xxx xxx xxx

Article 6. Court or other authority for certain functions

of arbitration assistance and supervision

The functions referred to in articles 11(3), 11(4),

13(3), 14, 16(3) and 34(2) shall be performed by ...

[Each State enacting this model law specifies the

court, courts or, where referred to therein, other authority

competent to perform these functions.]

xxx xxx xxx

Article 20. Place of arbitration

(1) The parties are free to agree on the place of arbitration.

Failing such agreement, the place of arbitration

shall be determined by the arbitral tribunal having

32

regard to the circumstances of the case, including the

convenience of the parties.

(2) Notwithstanding the provisions of paragraph (1) of

this article, the arbitral tribunal may, unless otherwise

agreed by the parties, meet at any place it considers

appropriate for consultation among its members, for

hearing witnesses, experts or the parties, or for inspection

of goods, other property or documents.

xxx xxx xxx

Article 31. Form and contents of award

xxx xxx xxx

(3) The award shall state its date and the place of arbitration

as determined in accordance with article

20(1). The award shall be deemed to have been

made at that place.”

30. The Arbitration Act, 1996 repealed the Arbitration Act, 1940. As is

stated in its preamble, the Arbitration Act, 1996 adopted provisions of

the UNCITRAL Model Law, as they had made a significant contribution

to the establishment of a unified legal framework for the fair and

efficient settlement of disputes arising in international commercial relations.

31. The Arbitration Act, 1996 refers to “the place” of arbitration and defines

‘Court’, and indicates which Courts have jurisdiction in relation to

arbitral proceedings in several sections in Part I. Section 2(1)(e) and

Section 2(2) of the Arbitration Act, 1996 are as follows:

33

“2.Definitions.-

(1) In this Part, unless the context otherwise requires,-

xxx xxx xxx

(e)“Court” means-

(i) in case of an arbitration other than international

commercial arbitration, the principal

Civil Court of original jurisdiction in a district,

and includes the High Court in exercise of its

ordinary original civil jurisdiction, having jurisdiction

to decide the questions forming the

subject-matter of the arbitration if the same

had been the subject-matter of a suit, but

does not include any Civil Court of a grade

inferior to such principal Civil Court, or any

Court of Small Causes;

(ii) in the case of international commercial arbitration,

the High Court in exercise of its ordinary

original civil jurisdiction, having jurisdiction

to decide the questions forming the subject-

matter of a suit if the same had been the

subject-matter of a suit, and in other cases, a

High Court having jurisdiction to hear appeals

from decrees of courts subordinate to

that High Court;

xxx xxx xxx

(2) This part shall apply where the place of arbitration

is in India.

Provided that subject to an agreement to the

contrary, the provisions of sections 9, 27 and

clause (a) of sub-section (1) and sub-section (3)

of Section 37 shall also apply to international

commercial arbitration, even if the place of arbitration

is outside India, and an arbitral award

34

made or to be made in such place is enforceable

and recognised under the provisions of Part II of

this Act.

32. Sections 20, 31(4) and 42 of the Arbitration Act, 1996 read as follows:

“20. Place of Arbitration.-

(1)The parties are free to agree on the place of arbitration.

(2)Failing any agreement referred to in sub-section (1),

the place of arbitration shall be determined by the arbitral

tribunal having regard to the circumstances of

the case, including the convenience of the parties.

(3)Notwithstanding sub-section (1) or sub-section (2),

the arbitral tribunal may, unless otherwise agreed by

the parties, meet at any place it considers appropriate

for consultation among its members, for hearing witnesses,

experts or the parties, or for inspection of

documents, goods or other property.”

“31. Form and contents of arbitral award.-

xxx xxx xxx

(4)The arbitral award shall state its date and the place of

arbitration as determined in accordance with section

20 and the award shall be deemed to have been

made at that place.”

“42. Jurisdiction.- Notwithstanding anything contained

elsewhere in this Part or any other law for the time being

in force, where with respect to an arbitration agreement

any application under this Part has been made in

any Court, that Court alone shall have jurisdiction over

the arbitral proceedings and all subsequent applications

arising out of that agreement and the arbitral proceedings

shall be made in that Court and no other Court.”

35

33. It will thus be seen that the new provisions contained in Sections 20

and 31(4) of the Arbitration Act, 1996 are a replication of Articles 20

and 31(3) of the UNCITRAL Model Law, in which pride of place is

given to the juridical seat of the arbitral proceedings. However, the

definition of “court” in Section 2(1)(e) of the Arbitration Act, 1996 continues

the definition contained in the Arbitration Act, 1940, but replaces

any and every civil court by only the principal civil court of original

jurisdiction in a district, and includes the High Court in exercise of

its ordinary civil jurisdiction. Section 42 of the Arbitration Act, 1996

also substantially follows the drill of Section 31(4) of the Arbitration

Act, 1940.

34. It can thus be seen that given the new concept of “juridical seat” of

the arbitral proceedings, and the importance given by the Arbitration

Act, 1996 to this “seat”, the arbitral award is now not only to state its

date, but also the place of arbitration as determined in accordance

with Section 20. However, the definition of “Court” contained in Section

2(1)(c) of the Arbitration Act, 1940, continued as such in the Arbitration

Act, 1996, though narrowed to mean only principal civil court

and the High Court in exercise of their original ordinary civil jurisdiction.

Thus, the concept of juridical seat of the arbitral proceedings and

36

its relationship to the jurisdiction of courts which are then to look into

matters relating to the arbitral proceedings - including challenges to

arbitral awards - was unclear, and had to be developed in accordance

with international practice on a case by case basis by this Court.

35. Some of the early decisions of this Court did not properly distinguish

between “seat” and “venue” of an arbitral proceeding. The Five Judge

Bench in BALCO (supra) dealt with this problem as follows:

“75. We are also unable to accept the submission of

the learned counsel for the appellants that the Arbitration

Act, 1996 does not make seat of the arbitration

as the centre of gravity of the arbitration. On the contrary,

it is accepted by most of the experts that in

most of the national laws, arbitrations are anchored to

the seat/place/situs of arbitration. Redfern in Para

3.54 concludes that “the seat of the arbitration is thus

intended to be its centre of gravity.” [Blackaby, Partasides,

Redfern and Hunter (Eds.), Redfern and

Hunter on International Arbitration (5th Edn., Oxford

University Press, Oxford/New York 2009).] This, however,

does not mean that all the proceedings of the

arbitration have to take place at the seat of the arbitration.

The arbitrators at times hold meetings at more

convenient locations. This is necessary as arbitrators

often come from different countries. It may, therefore,

on occasions be convenient to hold some of the

meetings in a location which may be convenient to all.

Such a situation was examined by the Court of Appeal

in England in Naviera Amazonica Peruana

S.A. v. Compania International de Seguros del

Peru [(1988) 1 Lloyd's Rep 116 (CA)] wherein at p.

121 it is observed as follows:

37

“The preceding discussion has been on the basis that

there is only one ‘place’ of arbitration. This will be the

place chosen by or on behalf of the parties; and it will

be designated in the arbitration agreement or the

terms of reference or the minutes of proceedings or in

some other way as the place or ‘seat’ of the

arbitration. This does not mean, however, that the

Arbitral Tribunal must hold all its meetings or hearings

at the place of arbitration. International commercial

arbitration often involves people of many different

nationalities, from many different countries. In these

circumstances, it is by no means unusual for an

Arbitral Tribunal to hold meetings—or even hearings

—in a place other than the designated place of

arbitration, either for its own convenience or for the

convenience of the parties or their witnesses…. It

may be more convenient for an Arbitral Tribunal

sitting in one country to conduct a hearing in another

country — for instance, for the purpose of taking

evidence…. In such circumstances each move of the

Arbitral Tribunal does not of itself mean that the seat

of arbitration changes. The seat of arbitration remains

the place initially agreed by or on behalf of the

parties.”

76. It must be pointed out that the law of the seat or

place where the arbitration is held, is normally the law

to govern that arbitration. The territorial link between

the place of arbitration and the law governing that

arbitration is well established in the international

instruments, namely, the New York Convention of

1958 and the UNCITRAL Model Law of 1985. It is true

that the terms “seat” and “place” are often used

interchangeably. In Redfern and Hunter on

International Arbitration [ Blackaby, Partasides,

Redfern and Hunter (Eds.), Redfern and Hunter on

International Arbitration (5th Edn., Oxford University

Press, Oxford/New York 2009).] (Para 3.51), the seat

theory is defined thus: “The concept that an

arbitration is governed by the law of the place in

38

which it is held, which is the ‘seat’ (or ‘forum’ or locus

arbitri) of the arbitration, is well established in both

the theory and practice of international arbitration. In

fact, the Geneva Protocol, 1923 states:

“2. The arbitral procedure, including the constitution

of the Arbitral Tribunal, shall be governed by the will

of the parties and by the law of the country in whose

territory the arbitration takes place.”

The New York Convention maintains the reference to

“the law of the country where the arbitration took

place” [Article V(1)(d)] and, synonymously to “the law

of the country where the award is made” [Articles V(1)

(a) and (e)]. The aforesaid observations clearly show

that the New York Convention continues the clear

territorial link between the place of arbitration and the

law governing that arbitration. The author further

points out that this territorial link is again maintained

in the Model Law which provides in Article 1(2) that:

“1. (2) the provision of this Law, except Articles 8, 9,

35 and 36, apply only if the place of arbitration is in

the territory of the State.”

Just as the Arbitration Act, 1996 maintains the

territorial link between the place of arbitration and its

law of arbitration, the law in Switzerland and England

also maintain a clear link between the seat of

arbitration and the lex arbitri. The Swiss Law states:

“176(I). (1) The provision of this chapter shall apply to

any arbitration if the seat of the Arbitral Tribunal is in

Switzerland and if, at the time when the arbitration

agreement was concluded, at least one of the parties

had neither its domicile nor its habitual residence in

Switzerland.” [See the Swiss Private International

Law Act, 1987, Ch. 12, Article 176 (I)(1).]

39

These observations were subsequently followed

in Union of India v. McDonnell Douglas

Corpn. [(1993) 2 Lloyd's Rep 48]

xxx xxx xxx

95. Learned Counsel for the Appellants have submitted

that Section 2(1)(e), Section 20 and Section 28

read with Section 45 and Section 48(1)(e) make it

clear that Part I is not limited only to arbitrations

which take place in India. These provisions indicate

that Arbitration Act, 1996 is subject matter centric and

not exclusively seat centric. Therefore, "seat" is not

the "centre of gravity" so far as the Arbitration Act,

1996 is concerned. We are of the considered opinion

that the aforesaid provisions have to be interpreted by

keeping the principle of territoriality at the forefront.

We have earlier observed that Section 2(2) does not

make Part I applicable to arbitrations seated or held

outside India. In view of the expression used in Section

2(2), the maxim expressum facit cessare tacitum,

would not permit by interpretation to hold that Part I

would also apply to arbitrations held outside the territory

of India. The expression "this Part shall apply

where the place of arbitration is in India" necessarily

excludes application of Part I to arbitration seated or

held outside India. It appears to us that neither of the

provisions relied upon by the Learned Counsel for the

Appellants would make any section of Part I applicable

to arbitration seated outside India. It will be apposite

now to consider each of the aforesaid provisions

in turn.

96. Section 2(1)(e) of the Arbitration Act, 1996 reads

as under:

“2. Definitions

(1) In this Part, unless the context otherwise requires

40

(e) "Court" means the principal Civil Court of original

jurisdiction in a district, and includes the High Court in

exercise of its ordinary original civil jurisdiction, having

jurisdiction to decide the questions forming the

subject matter of the arbitration if the same had been

the subject matter of a suit, but does not include any

civil court of a grade inferior to such principal Civil

Court, or any Court of Small Causes.”

We are of the opinion, the term "subject matter of the

arbitration" cannot be confused with "subject matter

of the suit". The term "subject matter" in Section 2(1)

(e) is confined to Part I. It has a reference and connection

with the process of dispute resolution. Its purpose

is to identify the courts having supervisory control

over the arbitration proceedings. Hence, it refers

to a court which would essentially be a court of the

seat of the arbitration process. In our opinion, the provision

in Section 2(1)(e) has to be construed keeping

in view the provisions in Section 20 which give recognition

to party autonomy. Accepting the narrow construction

as projected by the Learned Counsel for the

Appellants would, in fact, render Section 20 nugatory.

In our view, the legislature has intentionally given jurisdiction

to two courts i.e. the court which would have

jurisdiction where the cause of action is located and

the courts where the arbitration takes place. This was

necessary as on many occasions the agreement may

provide for a seat of arbitration at a place which

would be neutral to both the parties. Therefore, the

courts where the arbitration takes place would be required

to exercise supervisory control over the arbitral

process. For example, if the arbitration is held in

Delhi, where neither of the parties are from Delhi,

(Delhi having been chosen as a neutral place as between

a party from Mumbai and the other from

Kolkata) and the tribunal sitting in Delhi passes an interim

order Under Section 17 of the Arbitration Act,

1996, the appeal against such an interim order under

Section 37 must lie to the Courts of Delhi being the

41

Courts having supervisory jurisdiction over the arbitration

proceedings and the tribunal. This would be irrespective

of the fact that the obligations to be performed

under the contract were to be performed either

at Mumbai or at Kolkata, and only arbitration is to

take place in Delhi. In such circumstances, both the

Courts would have jurisdiction, i.e., the Court within

whose jurisdiction the subject matter of the suit is situated

and the courts within the jurisdiction of which

the dispute resolution, i.e., arbitration is located.

xxx xxx xxx

98. We now come to Section 20, which is as under:

20. Place of arbitration

(1) The parties are free to agree on the place of arbitration.

(2) Failing any agreement referred to in Sub-section

(1), the place of arbitration shall be determined by the

arbitral tribunal having regard to the circumstances of

the case, including the convenience of the parties.

(3) Notwithstanding Sub-section (1) or Sub-section

(2), the arbitral tribunal may, unless otherwise agreed

by the parties, meet at any place it considers appropriate

for consultation among its members, for hearing

witnesses, experts or the parties, or for inspection

of documents, good or other property."

A plain reading of Section 20 leaves no room for

doubt that where the place of arbitration is in India,

the parties are free to agree to any "place" or "seat"

within India, be it Delhi, Mumbai etc. In the absence

of the parties' agreement thereto, Section 20(2) authorizes

the tribunal to determine the place/seat of

such arbitration. Section 20(3) enables the tribunal to

meet at any place for conducting hearings at a place

of convenience in matters such as consultations

42

among its members for hearing witnesses, experts or

the parties.

99. The fixation of the most convenient "venue" is

taken care of by Section 20(3). Section 20, has to be

read in the context of Section 2(2), which places a

threshold limitation on the applicability of Part I,

where the place of arbitration is in India. Therefore,

Section 20 would also not support the submission of

the extra-territorial applicability of Part I, as canvassed

by the Learned Counsel for the Appellants, so

far as purely domestic arbitration is concerned.”

(emphasis supplied)

36. The Court then went on to refer to several English judgments and

specifically italicised several parts of the judgment in Roger

Shashoua & Ors. v. Mukesh Sharma [2009] EWHC 957 (Comm) as

follows:

“110. Examining the fact situation in the case, the

Court observed as follows:

The basis for the court's grant of an anti-suit injunction

of the kind sought depended upon the seat of the

arbitration. An agreement as to the seat of an arbitration

brought in the law of that country as the curial

law and was analogous to an exclusive jurisdiction

clause. Not only was there agreement to the curial

law of the seat, but also to the Courts of the seat having

supervisory jurisdiction over the arbitration, so

that, by agreeing to the seat, the parties agreed that

any challenge to an interim or final award was to be

made only in the courts of the place designated as

the seat of the arbitration.

Although, 'venue' was not synonymous with 'seat', in

an arbitration clause which provided for arbitration to

be conducted in accordance with the Rules of the ICC

in Paris (a supranational body of rules), a provision

43

that 'the venue of arbitration shall be London, United

Kingdom' did amount to the designation of a juridical

seat...”

In Paragraph 54, it is further observed as follows:

There was a little debate about the possibility of the

issues relating to the alleged submission by the

claimants to the jurisdiction of the High Court of Delhi

being heard by that court, because it was best fitted

to determine such issues under Indian Law. Whilst I

found this idea attractive initially, we are persuaded

that it would be wrong in principle to allow this and

that it would create undue practical problems in any

event. On the basis of what I have already decided,

England is the seat of the arbitration and since this

carries with it something akin to an exclusive jurisdiction

clause, as a matter of principle the foreign court

should not decide matters which are for this Court to

decide in the context of an anti-suit injunction.

In making the aforesaid observations, the Court relied

on judgments of the Court of Appeal in C v. D (2007)

EWCA Civ 1282 (CA).”

(emphasis in original)

37. Finally, the conclusion drawn in paragraph 116 was as follows:

“116. The legal position that emerges from a conspectus

of all the decisions, seems to be, that the

choice of another country as the seat of arbitration inevitably

imports an acceptance that the law of that

country relating to the conduct and supervision of arbitrations

will apply to the proceedings

38. Also, in paragraph 123, the Court held as follows:

“123. Thus, it is clear that the regulation of conduct of

arbitration and challenge to an award would have to

be done by the courts of the country in which the

arbitration is being conducted. Such a court is then

the supervisory court possessed of the power to

44

annul the award. This is in keeping with the scheme

of the international instruments, such as the Geneva

Convention and the New York Convention as well as

the UNCITRAL Model Law. It also recognises the

territorial principle which gives effect to the sovereign

right of a country to regulate, through its national

courts, an adjudicatory duty being performed in its

own country. By way of a comparative example, we

may reiterate the observations made by the Court of

Appeal, England in C v. D [2008 Bus LR 843 : 2007

EWCA Civ 1282 (CA)] wherein it is observed that:

“It follows from this that a choice of seat for the

arbitration must be a choice of forum for remedies

seeking to attack the award.”

In the aforesaid case, the Court of Appeal had

approved the observations made in A v. B [(2007) 1

All ER (Comm) 591 : (2007) 1 Lloyd's Rep 237]

wherein it is observed that:

“… an agreement as to the seat of an arbitration is

analogous to an exclusive jurisdiction clause. Any

claim for a remedy … as to the validity of an existing

interim or final award is agreed to be made only in

the courts of the place designated as the seat of

arbitration.”

39. The Court then concluded in paragraph 194 as follows:

194. In view of the above discussion, we are of the

considered opinion that the Arbitration Act, 1996 has

accepted the territoriality principle which has been

adopted in the UNCITRAL Model Law. Section 2(2)

makes a declaration that Part I of the Arbitration Act,

1996 shall apply to all arbitrations which take place

within India. We are of the considered opinion that

Part I of the Arbitration Act, 1996 would have no application

to international commercial arbitration held outside

India. Therefore, such awards would only be

45

subject to the jurisdiction of the Indian courts when

the same are sought to be enforced in India in accordance

with the provisions contained in Part II of the

Arbitration Act, 1996. In our opinion, the provisions

contained in the Arbitration Act, 1996 make it crystal

clear that there can be no overlapping or intermingling

of the provisions contained in Part I with the provisions

contained in Part II of the Arbitration Act,

1996.

40. A reading of paragraphs 75, 76, 96, 110, 116, 123 and 194 of BALCO

(supra) would show that where parties have selected the seat of arbitration

in their agreement, such selection would then amount to an exclusive

jurisdiction clause, as the parties have now indicated that the

Courts at the “seat” would alone have jurisdiction to entertain challenges

against the arbitral award which have been made at the seat.

The example given in paragraph 96 buttresses this proposition, and is

supported by the previous and subsequent paragraphs pointed out

hereinabove. The BALCO judgment (supra), when read as a whole,

applies the concept of “seat” as laid down by the English judgments

(and which is in Section 20 of the Arbitration Act, 1996), by harmoniously

construing Section 20 with Section 2(1)(e), so as to broaden

the definition of “court”, and bring within its ken courts of the “seat” of

the arbitration1.

1 Section 3 of the English Arbitration Act, 1996 defines “seat” as follows:

46

41. However, this proposition is contradicted when paragraph 96 speaks

of the concurrent jurisdiction of Courts within whose jurisdiction the

cause of action arises wholly or in part, and Courts within the jurisdiction

of which the dispute resolution i.e. arbitration, is located.

42. Paragraph 96 is in several parts. First and foremost, Section 2(1)(e),

which is the definition of “Court” under the Arbitration Act, 1996 was

referred to, and was construed keeping in view the provisions in Section

20 of the Arbitration Act, 1996, which give recognition to party autonomy

in choosing the seat of the arbitration proceedings. Secondly,

the Court went on to state in two places in the said paragraph that jurisdiction

is given to two sets of Courts, namely, those Courts which

would have jurisdiction where the cause of action is located; and

those Courts where the arbitration takes place. However, when it

“In this Part “the seat of the arbitration” means the juridical

seat of the arbitration designated—

(a)by the parties to the arbitration agreement, or

(b)by any arbitral or other institution or person vested by the

parties with powers in that regard, or

(c)by the arbitral tribunal if so authorised by the parties,

or determined, in the absence of any such designation, having

regard to the parties’ agreement and all the relevant circumstances.”

It will be noticed that this Section closely approximates with Section 20 of

the Indian Arbitration Act, 1996. The meaning of “Court” is laid down in Section

105 of the English Arbitration Act, 1996 whereby the Lord Chancellor may, by

order, make provision allocating and specifying proceedings under the Act which

may go to the High Court or to county courts.

47

came to providing a neutral place as the “seat” of arbitration proceedings,

the example given by the Five Judge Bench made it clear that

appeals under Section 37 of the Arbitration Act, 1996 against interim

orders passed under Section 17 of the Arbitration Act, 1996 would lie

only to the Courts of the seat - which is Delhi in that example - which

are the Courts having supervisory control, or jurisdiction, over the arbitration

proceedings. The example then goes on to state that this

would be irrespective of the fact that the obligations to be performed

under the contract, that is the cause of action, may arise in part either

at Mumbai or Kolkata. The fact that the arbitration is to take place in

Delhi is of importance. However, the next sentence in the said paragraph

reiterates the concurrent jurisdiction of both Courts.

43. This Court has held that judgments of Courts are not to be construed

as statutes, neither are they to be read as Euclid’s theorems. All observations

made must be read in the context in which they appear.

This was felicitously put in Amar Nath Om Prakash v. State of Punjab

(1985) 1 SCC 345, where this Court stated:

“10. There is one other significant sentence in Sreenivasa

General Traders v. State of A.P [(1983) 4 SCC

353 : AIR 1983 SC 1246] with which we must express

our agreement, It was said: (SCC p. 377, para 27)

48

“With utmost respect, these observations of the

learned Judge are not to be read as Euclid's theorems,

nor as provisions of a statute. These observations

must be read in the context in which they appear.”

We consider it proper to say, as we have already said

in other cases, that judgments of courts are not to be

construed as statutes. To interpret words, phrases

and provisions of a statute, it may become necessary

for Judges to embark into lengthy discussions but the

discussion is meant to explain and not to define.

Judges interpret statutes, they do not interpret judgments.

They interpret words of statutes; their words

are not to be interpreted as statutes.

In London Graving Dock Co. Ltd. v. Horton [1951 AC

737, 761 : (1951)-2 All ER 1, 14 (HL)] Lord MacDermott

observed:

“The matter cannot, of course, be settled merely by

treating the ipsissima verba of Willes, J., as though

they were part of an Act of Parliament and applying

the rules of interpretation appropriate thereto. This is

not to detract from the great weight to be given to the

language actually used by that most distinguished

Judge....

In Home Office v. Dorset Yacht Co. Ltd. [(1970) 2 All

ER 294 : (1970) 2 WLR 1140 : 1970 AC 1004 (HL)]

Lord Reid said:

“Lord Atkin's speech [Donoghue v. Stevension, 1932

All ER Rep 1, 11 : 1932 AC 562, 580 : 101 LJPC

119 : 147 LT 281 (HL)] ... is not to be treated as if it

was a statutory definition. It will require qualification in

new circumstances.”

Megarry, J. in (1971) 1 WLR 1062 observed:

“One must not, of course, construe even a reserved

judgment of even Russell, L.J. as if it were an Act of

Parliament.”

And, in Herrington v. British Railways Board [(1972) 2

WLR 537: (1972) 1 All Er 749 : 1972 AC 877 (HL)]

Lord Morris said: “There is always peril in treating the

words of a speech or a judgment as though they were

49

words in a legislative enactment, and it is to be remembered

that judicial utterances are made in the

setting of the facts of a particular case.”

(emphasis supplied)

44. More recently, this Court in Union of India v. Amrit Lal Manchanda

(2004) 3 SCC 75 held as follows:

“15. Cases involving challenges to orders of detention

before and after execution of the order stand on different

footings. Courts should not place reliance on

decisions without discussing as to how the factual situation

fits in with the fact situation of the decision on

which reliance is placed. Observations of courts are

neither to be read as Euclid's theorems nor as provisions

of the statute and that too taken out of their

context. These observations must be read in the context

in which they appear to have been stated. Judgments

of courts are not to be construed as statutes.

To interpret words, phrases and provisions of a

statute, it may become necessary for judges to embark

into lengthy discussions but the discussion is

meant to explain and not to define. Judges interpret

statutes, they do not interpret judgments. They interpret

words of statutes; their words are not to be interpreted

as statutes.”

(emphasis supplied)

45. In any case, a judgment must be read as a whole, so that conflicting

parts may be harmonised to reveal the true ratio of the judgment.

However, if this is not possible, and it is found that the internal conflicts

within the judgment cannot be resolved, then the first endeavour

that must be made is to see whether a ratio decidendi can be culled

out without the conflicting portion. If not, then, as held by Lord Den-

50

ning in Harper and Ors. v. National Coal Board (1974) 2 All ER 441,

the binding nature of the precedent on the point on which there is a

conflict in a judgment, comes under a cloud.2

46. If paragraphs 75, 76, 96, 110, 116, 123 and 194 of BALCO (supra)

are to be read together, what becomes clear is that Section 2(1)(e)

2 In Harper (supra), the decision in Central Asbestos Co. Ltd. vs. Dodd (1972) 2

All ER 1135, a House of Lords judgment, had to be applied. It was found that two

learned Law Lords decided the question of law in favour of Dodd, whereas two

learned Law Lords decided the question of law against Dodd, stating that his

claim was barred. As Lord Denning stated, the fifth Law Lord, Lord Pearson, was

the odd man out, in that he agreed with the two learned Law Lords that the law

did not support Dodd’s case, but agreed with the minority judges that Dodd’s

claim was not barred. This being the case, Lord Denning spoke of the

precedential value of Dodd’s case as follows:

“How then do we stand on the law? We have listened to a most helpful

discussion by Mr. McCullough on the doctrine of precedent. One thing is clear.

We can only accept a line of reasoning which supports the actual decision of the

House of Lords. By no possibility can we accept any reasoning which would

show the decision itself to be wrong. The second proposition is that if we can

discover the reasoning on which the majority based their decision, then we

should accept that as binding upon us. The third proposition is that, if we can

discover the reasoning on which the minority base their decision, we should

reject it. It must be wrong because it led them to the wrong result. The fourth

proposition is that, if we cannot discover the reasoning on which the majority

based their decision, we are not bound by it. We are free to adopt any reasoning

which appears to us to be correct, so long as it supports the actual decision of

the House.

In support of those propositions, I would refer to the speech of Lord

Dunedin in Great Western Railway Co. v. Owners of S.S. Mostyn [1928] A.C. 57,

73–74, and of Lord MacDermott in Walsh v. Curry [1955] N.I. 112, 124–125, and

of Viscount Simonds in Midland Silicones Ltd. v. Scruttons Ltd. [1962] A.C. 446,

468–469. Applying the propositions to Smith v. Central Asbestos Co. Ltd.

[Dodd's case] [1973] A.C. 518, the position stands thus: (1) the actual decision of

the House in favour of Dodd must be accepted as correct, We cannot accept any

line of reasoning which would show it to be wrong. We cannot therefore accept

51

has to be construed keeping in view Section 20 of the Arbitration Act,

1996, which gives recognition to party autonomy - the Arbitration Act,

1996 having accepted the territoriality principle in Section 2(2), following

the UNCITRAL Model Law. The narrow construction of Section

2(1)(e) was expressly rejected by the Five Judge bench in BALCO

(supra). This being so, what has then to be seen is what is the effect

Section 20 would have on Section 2(1)(e) of the Arbitration Act, 1996.

47. It was not until this Court’s judgment in Indus Mobile Distribution

Private Limited (supra) that the provisions of Section 20 were properly

analysed in the light of the 246th Report of the Law Commission

of India titled, ‘Amendments to the Arbitration and Conciliation Act,

1996’ (August, 2014) (hereinafter referred to as the “Law Commission

Report, 2014”), under which Section 20(1) and (2) would refer to the

the reasoning of a minority of two — Lord Simon of Glaisdale and Lord Salmon

— on the law. It must be wrong because it led them to the wrong result. (2) We

ought to accept the reasoning of the three in the majority if we can discover it.

But it is not discoverable. The three were divided. Lord Reid and Lord Morris of

Borth-y-Gest took one view of the law. Lord Pearson took another. We cannot

say that Lord Reid and Lard Morris of Borth-y-Gest were correct: because we

know that their reasoning on the law was in conflict with the reasoning of the

other three. We cannot say that Lord Pearson was correct: because we know

that the reasoning which he accepted on the law led the other two (Lord Simon

of Glaisdale and Lord Salmon) to a wrong conclusion. So we cannot say that any

of the three in the majority was correct. (3) The result is that there is no

discernible ratio among the majority of the House of Lords. In these

circumstances I think we are at liberty to adopt the reasoning which appears to

us to be correct.”

52

“seat” of the arbitration, and Section 20(3) would refer only to the

“venue” of the arbitration. Given the fact that when parties, either by

agreement or, in default of there being an agreement, where the arbitral

tribunal determines a particular place as the seat of the arbitration

under Section 31(4) of the Arbitration Act, 1996, it becomes clear that

the parties having chosen the seat, or the arbitral tribunal having determined

the seat, have also chosen the Courts at the seat for the

purpose of interim orders and challenges to the award.

48. This Court in Indus Mobile Distribution Private Limited (supra), after

referring to Sections 2(1)(e) and 20 of the Arbitration Act, 1996,

and various judgments distinguishing between the “seat” of an arbitral

proceeding and “venue” of such proceeding, referred to the Law Commission

Report, 2014 and the recommendations made therein as follows:

“17. In amendments to be made to the Act, the Law

Commission recommended the following:

“Amendment of Section 20

In Section 20, delete the word "Place" and add the

words "Seat and Venue" before the words "of arbitration".

(i) In Sub-section (1), after the words "agree on the"

delete the word "place" and add words "seat and

venue"

53

(ii) In Sub-section (3), after the words "meet at any"

delete the word "place" and add word "venue".

[NOTE: The departure from the existing phrase

"place" of arbitration is proposed to make the

wording of the Act consistent with the international

usage of the concept of a "seat" of arbitration, to

denote the legal home of the arbitration. The

amendment further legislatively distinguishes between

the "[legal] seat" from a "[mere] venue" of

arbitration.]

Amendment of Section 31

17. In Section 31

(i) In Sub-section (4), after the words "its date and

the" delete the word "place" and add the word

"seat".”

18. The amended Act, does not, however, contain the

aforesaid amendments, presumably because the

BALCO judgment in no uncertain terms has referred

to "place" as "juridical seat" for the purpose of Section

2(2) of the Act. It further made it clear that Section

20(1) and 20 (2) where the word "place" is used,

refers to "juridical seat", whereas in Section 20 (3),

the word "place" is equivalent to "venue". This being

the settled law, it was found unnecessary to expressly

incorporate what the Constitution Bench of the

Supreme Court has already done by way of construction

of the Act.

19. A conspectus of all the aforesaid provisions

shows that the moment the seat is designated, it is

akin to an exclusive jurisdiction clause. On the facts

of the present case, it is clear that the seat of arbitration

is Mumbai and Clause 19 further makes it clear

that jurisdiction exclusively vests in the Mumbai

courts. Under the Law of Arbitration, unlike the Code

of Civil Procedure which applies to suits filed in

54

courts, a reference to "seat" is a concept by which a

neutral venue can be chosen by the parties to an arbitration

clause. The neutral venue may not in the

classical sense have jurisdiction - that is, no part of

the cause of action may have arisen at the neutral

venue and neither would any of the provisions of Section

16 to 21 of the Code of Civil Procedure be attracted.

In arbitration law however, as has been held

above, the moment "seat" is determined, the fact that

the seat is at Mumbai would vest Mumbai courts with

exclusive jurisdiction for purposes of regulating arbitral

proceedings arising out of the agreement between

the parties.

20. It is well settled that where more than one court

has jurisdiction, it is open for parties to exclude all

other courts. For an exhaustive analysis of the case

law, see Swastik Gases Private Limited v. Indian Oil

Corporation Limited (2013) 9 SCC 32. This was followed

in a recent judgment in B.E. Simoese Von

Staraburg Niedenthal and Anr. v. Chhattisgarh Investment

Limited: (2015) 12 SCC 225. Having regard to

the above, it is clear that Mumbai courts alone have

jurisdiction to the exclusion of all other courts in the

country, as the juridical seat of arbitration is at Mumbai.

This being the case, the impugned judgment is

set aside. The injunction confirmed by the impugned

judgment will continue for a period of four weeks from

the date of pronouncement of this judgment, so that

the Respondents may take necessary steps Under

Section 9 in the Mumbai Court. Appeals are disposed

of accordingly.”

This judgment has recently been followed in Brahmani River Pellets

Ltd. v. Kamachi Industries Ltd. 2019 SCC Online SC 929 at paragraph

15.

55

49. In fact, the Law Commission Report, 2014 also recommended an

amendment in the definition of “Court” under Section 2(1)(e) of the Arbitration

Act, 1996, so that in the case of international commercial arbitrations

held in India, the High Court alone should be the “Court” for

the purposes of the Arbitration Act, 1996, even where such a High

Court does not exercise ordinary original jurisdiction. The recommendation

made by the Law Commission, which was followed, leading to

an amendment of the Arbitration Act, 1996, is as follows:

“26. It is recommended that in case of international

commercial arbitrations, where there is a significant

foreign element to the transaction and at least one of

the parties is foreign, the relevant “Court” which is

competent to entertain proceedings arising out of the

arbitration agreement, should be the High Court, even

where such a High Court does not exercise ordinary

civil jurisdiction. It is expected that this would ensure

that international commercial arbitrations, involving

foreign parties, will be heard expeditiously and by

commercial oriented judges at the High Court level…”

Amendment of Section 2

1. In Section 2 of the Arbitration and Conciliation Act,

1996 (hereinafter referred to as the principal Act),-

xxx xxx xxx

(ii) In sub-section (1), clause (e), after the words

“Court means-” add sub-section (i) beginning with

the words “in the case of an arbitration other than

international commercial arbitration,” before the

words “the principal Civil Court of original jurisdiction”

In sub-section (1), clause (e) replace sub-clause

(ii) by following:

“(ii) in the case of an international commercial arbitration,

the High Court exercising jurisdiction over

the principal Civil Court of original jurisdiction in a

district, and includes the High Court in exercise of

its ordinary original civil jurisdiction, having jurisdiction

to decide the questions forming the subjectmatter

of the arbitration if the same had been the

subject-matter of a suit, but does not include any

Court of a grade inferior to such High Court, or in

cases involving grant of interim measures in respect

of arbitrations outside India, the High Court

exercising jurisdiction over the court having jurisdiction

to grant such measures as per the laws of

India, and includes the High Court in exercise of its

ordinary original civil jurisdiction.”

[NOTE: This is to solve the problem of conflict of

jurisdiction that would arise in cases where interim

measures are sought in India in cases of arbitrations

seated outside India. This also ensures that

in International Commercial Arbitrations, jurisdiction

is exercised by the High Court, even if such

High Court does not exercise ordinary original civil

jurisdiction.]”

50. The aforesaid amendment carried out in the definition of “Court” is

also a step showing the right direction, namely, that in international

commercial arbitrations held in India, the High Court alone is to exercise

jurisdiction over such proceedings, even where no part of the

cause of action may have arisen within the jurisdiction of such High

Court, such High Court not having ordinary original jurisdiction. In

57

such cases, the “place” where the award is delivered alone is looked

at, and the High Court given jurisdiction to supervise the arbitration

proceedings, on the footing of its jurisdiction to hear appeals from decrees

of courts subordinate to it, which is only on the basis of territorial

jurisdiction which in turn relates to the “place” where the award is

made. In the light of this important change in the law, Section 2(1)(e)

(i) of the Arbitration Act, 1996 must also be construed in the manner

indicated by this judgment.

51. Take the consequence of the opposite conclusion, in the light of the

facts of a given example, as follows. New Delhi is specifically designated

to be the seat of the arbitration in the arbitration clause between

the parties. Part of the cause of action, however, arises in several

places, including where the contract is partially to be performed,

let us say, in a remote part of Uttarakhand. If concurrent jurisdiction

were to be the order of the day, despite the seat having been located

and specifically chosen by the parties, party autonomy would suffer,

which BALCO (supra) specifically states cannot be the case. Thus, if

an application is made to a District Court in a remote corner of the Uttarakhand

hills, which then becomes the Court for the purposes of

Section 42 of the Arbitration Act, 1996 where even Section 34 applica-

58

tions have then to be made, the result would be contrary to the stated

intention of the parties - as even though the parties have contemplated

that a neutral place be chosen as the seat so that the Courts of

that place alone would have jurisdiction, yet, any one of five other

Courts in which a part of the cause of action arises, including Courts

in remote corners of the country, would also be clothed with jurisdiction.

This obviously cannot be the case. If, therefore, the conflicting

portion of the judgment of BALCO (supra) in paragraph 96 is kept

aside for a moment, the very fact that parties have chosen a place to

be the seat would necessarily carry with it the decision of both parties

that the Courts at the seat would exclusively have jurisdiction over the

entire arbitral process.

52. In fact, subsequent Division Benches of this Court have understood

the law to be that once the seat of arbitration is chosen, it amounts to

an exclusive jurisdiction clause, insofar as the Courts at that seat are

concerned. In Enercon (India) Ltd. and Ors. v. Enercon GmbH and

Anr. (2014) 5 SCC 1, this Court approved the dictum in Roger

Shashoua (supra) as follows:

“126. Examining the fact situation in the case, the

Court in Shashoua case [Shashoua v. Sharma,

(2009) 2 Lloyd's Law Rep 376] observed as

follows:

59

“The basis for the court's grant of an anti-suit

injunction of the kind sought depended upon

the seat of the arbitration. An agreement as to the

seat of an arbitration brought in the law of that

country as the curial law and was analogous to an

exclusive jurisdiction clause. Not only was there

agreement to the curial law of the seat, but also to

the courts of the seat having supervisory

jurisdiction over the arbitration, so that, by

agreeing to the seat, the parties agreed that any

challenge to an interim or final award was to be

made only in the courts of the place designated as

the seat of the arbitration.

Although, ‘venue’ was not synonymous with ‘seat’,

in an arbitration clause which provided for

arbitration to be conducted in accordance with the

Rules of the ICC in Paris (a supranational body of

rules), a provision that ‘the venue of arbitration

shall be London, United Kingdom’ did amount to

the designation of a juridical seat….”

In para 54, it is further observed as follows:

“There was a little debate about the possibility of

the issues relating to the alleged submission by

the claimants to the jurisdiction of the High Court

of Delhi being heard by that Court, because it was

best fitted to determine such issues under the

Indian law. Whilst I found this idea attractive

initially, we are persuaded that it would be wrong

in principle to allow this and that it would create

undue practical problems in any event. On the

basis of what I have already decided, England is

the seat of the arbitration and since this carries

with it something akin to an exclusive jurisdiction

clause, as a matter of principle the foreign court

should not decide matters which are for this Court

to decide in the context of an anti-suit injunction.”

53. The Court then concluded:

“138. Once the seat of arbitration has been fixed in

India, it would be in the nature of exclusive jurisdic-

60

tion to exercise the supervisory powers over the arbitration...”

54. In Reliance Industries Ltd. (supra), this Court held:

“45. In our opinion, it is too late in the day to contend

that the seat of arbitration is not analogous to an exclusive

jurisdiction clause. This view of ours will find

support from numerous judgments of this Court. Once

the parties had consciously agreed that the juridical

seat of the arbitration would be London and that the

arbitration agreement will be governed by the laws of

England, it was no longer open to them to contend

that the provisions of Part I of the Arbitration Act

would also be applicable to the arbitration agreement.

This Court in Videocon Industries Ltd. [(2011) 6 SCC

161 : (2011) 3 SCC (Civ) 257] has clearly held as follows:

(SCC p. 178, para 33)

“33. In the present case also, the parties had agreed

that notwithstanding Article 33.1, the arbitration

agreement contained in Article 34 shall be governed

by laws of England. This necessarily implies that the

parties had agreed to exclude the provisions of Part I

of the Act. As a corollary to the above conclusion, we

hold that the Delhi High Court did not have the jurisdiction

to entertain the petition filed by the respondents

under Section 9 of the Act and the mere fact

that the appellant had earlier filed similar petitions

was not sufficient to clothe that High Court with the jurisdiction

to entertain the petition filed by the respondents.”

xxx xxx xxx

55. The effect of choice of seat of arbitration was

considered by the Court of Appeal in C v. D [2008

Bus LR 843 : (2008) 1 Lloyd's Law 239 : 2007 EWCA

Civ 1282] . This judgment has been specifically

approved by this Court in Balco [BALCO v. Kaiser

Aluminium Technical Services Inc., (2012) 9 SCC 552

: (2012) 4 SCC (Civ) 810] and reiterated

61

in Enercon [Enercon (India) Ltd. v. Enercon GmbH,

(2014) 5 SCC 1 : (2014) 3 SCC (Civ) 59 : (2014) 1

ALR 257] . In C v. D [2008 Bus LR 843 : (2008) 1

Lloyd's Law 239 : 2007 EWCA Civ 1282] , the Court

of Appeal has observed: (Bus LR p. 851, para 16)

“Primary conclusion

16. I shall deal with Mr Hirst's arguments in due

course but, in my judgment, they fail to grapple with

the central point at issue which is whether or not, by

choosing London as the seat of the arbitration, the

parties must be taken to have agreed that

proceedings on the award should be only those

permitted by English law. In my view they must be

taken to have so agreed for the reasons given by the

Judge. The whole purpose of the balance achieved

by the Bermuda form (English arbitration but applying

New York law to issues arising under the policy) is

that judicial remedies in respect of the award should

be those permitted by English law and only those so

permitted. Mr Hirst could not say (and did not say)

that English judicial remedies for lack of jurisdiction

on procedural irregularities under Sections 67 and 68

of the 1996 Act were not permitted; he was reduced

to saying that New York judicial remedies

were also permitted. That, however, would be a

recipe for litigation and (what is worse) confusion

which cannot have been intended by the parties. No

doubt New York law has its own judicial remedies for

want of jurisdiction and serious irregularity but it could

scarcely be supposed that a party aggrieved by one

part of an award could proceed in one jurisdiction and

a party aggrieved by another part of an award could

proceed in another jurisdiction. Similarly, in the case

of a single complaint about an award, it could not be

supposed that the aggrieved party could complain in

one jurisdiction and the satisfied party be entitled to

ask the other jurisdiction to declare its satisfaction

with the award. There would be a serious risk of

parties rushing to get the first judgment or of

62

conflicting decisions which the parties cannot have

contemplated.”

56. The aforesaid observations in C v. D [2008 Bus

LR 843 : (2008) 1 Lloyd's Law 239 : 2007 EWCA Civ

1282] were subsequently followed by the High Court

of Justice, Queen's Bench Division, Commercial

Court (England) in Sulamerica Cia Nacional de

Seguros SA v. Enesa Engelharia SA —

Enesa [(2013) 1 WLR 102 : 2012 EWCA Civ 638 :

2012 WL 14764] . In laying down the same

proposition, the High Court noticed that the issue in

that case depended upon the weight to be given to

the provision in Condition 12 of the insurance policy

that “the seat of the arbitration shall be London,

England”. It was observed that this necessarily

carried with it the English Court's supervisory

jurisdiction over the arbitration process. It was

observed that:

“this follows from the express terms of the Arbitration

Act, 1996 and, in particular, the provisions of Section

2 which provide that Part I of the Arbitration Act, 1996

applies where the seat of the arbitration is in England

and Wales or Northern Ireland. This immediately

establishes a strong connection between the

arbitration agreement itself and the law of England. It

is for this reason that recent authorities have laid

stress upon the locations of the seat of the arbitration

as an important factor in determining the proper law

of the arbitration agreement.””

55. In Indus Mobile Distribution Private Limited and Ors. (supra), after

clearing the air on the meaning of Section 20 of the Arbitration Act,

1996, the Court in paragraph 19 (which has already been set out

hereinabove) made it clear that the moment a seat is designated by

agreement between the parties, it is akin to an exclusive jurisdiction

clause, which would then vest the Courts at the “seat” with exclusive

jurisdiction for purposes of regulating arbitral proceedings arising out

of the agreement between the parties.

56. Despite the aforesaid judgments of this Court, discordant notes have

been struck by some of the High Courts. In Antrix Corporation Ltd.

(supra), a Division Bench of the Delhi High Court, after setting out

paragraph 96 of BALCO (supra), then followed the reasoning of

judgements of the Bombay High Court, in stating that the ratio decidendi

of the 5 Judge Bench in BALCO (supra) is that Courts would

have concurrent jurisdiction, notwithstanding the designation of the

seat of arbitration by agreement between the parties. The Delhi High

Court stated:

“52. Having held that the statement in paragraph 96

of BALCO (supra) would apply to the present case as

well, this court has to examine its legal consequence

in light of the law declared in BALCO (supra). It is

important to note that in the said paragraph (extracted

above), the Supreme Court has noted that Section

2(1)(e) of the Arbitration Act confers jurisdiction to two

courts over the arbitral process - the courts having

subject matter jurisdiction and the courts of the seat.

This is evident both from the substantive holding of

the paragraph as well as the example given by the

Court. The Court notes that “the legislature has

intentionally given jurisdiction to two courts i.e. the

court which would have jurisdiction where the cause

of action is located and the courts where the

arbitration takes place.” This is further reinforced by

64

the example that the Court gave later in the same

paragraph. In the example where the parties are from

Mumbai and Kolkata and the obligations under the

contract are to be performed at either Mumbai or

Kolkata, and the parties have designated Delhi as the

seat of the arbitration, in such a situation, both courts

would have jurisdiction, i.e. within whose jurisdiction

the subject matter of the suit is situated (either

Mumbai or Kolkata) and the court within the

jurisdiction of which the dispute resolution, i.e.,

arbitration is located (which is Delhi). Moreover, the

fact that the court interpreted the term “subject matter

of the suit” in the paragraph, also gives credence to

the interpretation that the court recognized that

Section 2(1)(e) gives jurisdiction to both the cause of

action courts, and the court at the seat of the

arbitration. If the Court were of the opinion that only

the courts at the seat would have jurisdiction under

Section 2(1)(e) and no other court, then it would be

wholly unnecessary for the court to interpret the

term “subject matter of the suit”, since that court

would anyway not have jurisdiction. In sum therefore,

paragraph 96 of BALCO (supra) gives jurisdiction to

both courts at the seat and the courts within whose

jurisdiction the cause of action arises, if the dispute

were the subject matter of a suit. This is what the

Bombay High Court in Konkola Copper Mines (supra)

also interpreted BALCO (supra) as holding:

“The Supreme Court held that the provisions of

Section 2(1)(e) are purely jurisdictional in nature and

can have no relevance to the question whether any

part of the cause of action has taken place outside

India. The observations which have been extracted

above, clearly establish that the Court where the

arbitration takes place would be required to exercise

supervisory control over the arbitral process. The

Supreme Court has held that Parliament has given

jurisdiction to two courts - the Court which would

have jurisdiction where the cause of action is located

65

and the Court where the arbitration takes place. This

is evident from the example which is contained in the

above quoted extract from the decision.”

57. Having so stated, the Division Bench then went on to give a restricted

meaning to Indus Mobile Distribution Private Ltd. (supra) in paragraph

56 as follows:

“56. In Datawind (supra), as the facts and the question

framed by the Court in the second paragraph of

its decision suggest, the Court was faced with a situation

where the parties had designated both the

seat and specified an exclusive forum selection

clause. Therefore, its findings have to be interpreted

in that light. In fact, were this Court to find otherwise,

and interpret Datawind (supra) as holding that the

designation of seat alone would amount to an exclusive

forum selection clause in domestic arbitrations,

then this would run contrary to the five-Judge decision

in BALCO (supra), which as noticed above, gave

jurisdiction under Section 2(1)(e) to two courts - one

of which was the court of the seat, thereby clearly implying

that the designation of a seat would not

amount to an exclusive forum selection clause…”

58. The Court then went on to state:

“58. The court is of the opinion that in this case, only

if the parties had designated the seat as New

Delhi and also provided an exclusive forum selection

clause in favour of the courts at New Delhi, could it be

said that this court would have exclusive jurisdiction

over all applications filed under the Arbitration Act. Indeed,

it is open to parties to an arbitration to designate

a particular forum as the exclusive forum to

which all applications under the Act would lie. This

would merely be an exercise of the right of the parties

to choose one among multiple competent forums as

the exclusive forum. This is a clearly permissible ex-

66

ercise of the right of party autonomy as held by the

Supreme Court in Swastik Gases v. Indian Oil Corporation

Ltd., (2013) 9 SCC 32. Conversely, merely

choosing a seat, cannot amount to exercising such a

right of exclusive forum selection.

59. This court is of opinion that, holding otherwise

would in effect render Section 42 of the Arbitration Act

ineffective and useless. Section 42 of the Act presupposes

that there is more than one competent forum to

hear applications under the Arbitration Act, and hence

to ensure efficacy of dispute resolution, this provision

enacts that the court, which is first seized of any such

application under the Act, would be the only court

possessing jurisdiction to hear all subsequent applications.

If seat were equivalent to an exclusive forum

selection clause in Part-I arbitrations, then every time

parties would designate a seat, that would in effect

mean that Section 42 would have no application.

Thus, only those few situations where parties do not

actually designate any seat (and thus no exclusive

competence is conferred on one forum) would Section

42 have any role. In fact, often, when parties do

not agree upon a seat in the arbitration agreement,

for convenience, the arbitral tribunal designates a

particular seat of the arbitration, or the agreement

vests the discretion in the tribunal to decide the seat

(and not just the “venue”). In all those circumstances

then as well, the decision of the tribunal to agree

upon a “seat” would amount to an exclusive jurisdiction

clause and Section 42 would have no application.

This would dilute Section 42 and would accordingly,

be contrary to Parliamentary intent. Undoubtedly, in

the present case, the parties have only chosen the

seat as New Delhi and have not specified an exclusive

forum selection clause. Therefore, it cannot be

said that the courts in Delhi have exclusive competence

to entertain applications under the Arbitration

Act in the present dispute. The jurisdiction of the

courts where the cause of action arises, which in this

67

case, is the Bangalore City Civil Court, cannot be said

to have been excluded therefore. Accordingly, question

(ii) is also answered in favour of Antrix...”

59. The view of the Delhi High Court in Antrix Corporation Ltd. (supra),

which followed judgments of the Bombay High Court, does not commend

itself to us. First and foremost, it is incorrect to state that the example

given by the Court in paragraph 96 of BALCO (supra) reinforces

the concurrent jurisdiction aspect of the said paragraph. As

has been pointed out by us, the conclusion that the Delhi as well as

the Mumbai or Kolkata Courts would have jurisdiction in the example

given in the said paragraph is wholly incorrect, given the sentence,

“This would be irrespective of the fact that the obligations to be performed

under the contract were to be performed either at Mumbai or

at Kolkata, and only arbitration is to take place in Delhi”. The sentence

which follows this is out of sync with this sentence, and the

other paragraphs of the judgment. Thus, BALCO (supra) does not

“unmistakably” hold that two Courts have concurrent jurisdiction, i.e.,

the seat Court and the Court within whose jurisdiction the cause of

action arises. What is missed by these High Court judgments is the

subsequent paragraphs in BALCO (supra), which clearly and unmistakably

state that the choosing of a “seat” amounts to the choosing of

68

the exclusive jurisdiction of the Courts at which the “seat” is located.

What is also missed are the judgments of this Court in Enercon (India)

Ltd. (supra) and Reliance Industries (supra).

60. Equally, the ratio of the judgment in Indus Mobile Distribution Private

Ltd. (supra), is contained in paragraphs 19 and 20. Two separate

and distinct reasons are given in Indus Mobile Distribution Private

Ltd. (supra) for arriving at the conclusion that the Courts at

Mumbai alone would have jurisdiction. The first reason, which is independent

of the second, is that as the seat of the arbitration was designated

as Mumbai, it would carry with it the fact that Courts at Mumbai

alone would have jurisdiction over the arbitration process. The second

reason given was that in any case, following the Hakam Singh

(supra) principle, where more than one Court can be said to have jurisdiction,

the agreement itself designated the Mumbai Courts as having

exclusive jurisdiction. It is thus wholly incorrect to state that Indus

Mobile Distribution Private Ltd. (supra) has a limited ratio decidendi

contained in paragraph 20 alone, and that paragraph 19, if read

by itself, would run contrary to the 5 Judge Bench decision in BALCO

(supra).

69

61. Equally incorrect is the finding in Antrix Corporation Ltd. (supra)

that Section 42 of the Arbitration Act, 1996 would be rendered ineffective

and useless. Section 42 is meant to avoid conflicts in jurisdiction

of Courts by placing the supervisory jurisdiction over all arbitral proceedings

in connection with the arbitration in one Court exclusively.

This is why the section begins with a non-obstante clause, and then

goes on to state “…where with respect to an arbitration agreement

any application under this Part has been made in a Court…” It is obvious

that the application made under this part to a Court must be a

Court which has jurisdiction to decide such application. The subsequent

holdings of this Court, that where a seat is designated in an

agreement, the Courts of the seat alone have jurisdiction, would require

that all applications under Part I be made only in the Court

where the seat is located, and that Court alone then has jurisdiction

over the arbitral proceedings and all subsequent applications arising

out of the arbitral agreement. So read, Section 42 is not rendered ineffective

or useless. Also, where it is found on the facts of a particular

case that either no “seat” is designated by agreement, or the socalled

“seat” is only a convenient “venue”, then there may be several

Courts where a part of the cause of action arises that may have juris-

70

diction. Again, an application under Section 9 of the Arbitration Act,

1996 may be preferred before a court in which part of the cause of action

arises in a case where parties have not agreed on the “seat” of

arbitration, and before such “seat” may have been determined, on the

facts of a particular case, by the Arbitral Tribunal under Section 20(2)

of the Arbitration Act, 1996. In both these situations, the earliest application

having been made to a Court in which a part of the cause of

action arises would then be the exclusive Court under Section 42,

which would have control over the arbitral proceedings. For all these

reasons, the law stated by the Bombay and Delhi High Courts in this

regard is incorrect and is overruled.

Tests for determination of “seat”

62. The judgments of the English Courts have examined the concept of

the “juridical seat” of the arbitral proceedings, and have laid down

several important tests in order to determine whether the “seat” of the

arbitral proceedings has, in fact, been indicated in the agreement between

the parties. The judgment of Cooke, J., in Roger Shashoua

(supra), states:

“34. “London Arbitration is a well known phenomenon

which is often chosen by foreign nationals with a different

law, such as the law of New York, governing

71

the substantive rights of the parties. This is because

of the legislative framework and supervisory powers

of the courts here which many parties are keen to

adopt. When therefore there is an express designation

of the arbitration venue as London and no designation

of any alternative place as the seat, combined

with a supranational body of rules governing the arbitration

and no other significant contrary indicia, the inexorable

conclusion is, to my mind, that London is the

juridical seat and English law the curial law. In my

judgment it is clear that either London has been designated

by the parties to the arbitration agreement as

the seat of the arbitration, or, having regard to the

parties’ agreement and all the relevant circumstances,

it is the seat to be determined in accordance

with the final fall back provision of section 3 of the arbitration

act.”

63. It will thus be seen that wherever there is an express designation of a

“venue”, and no designation of any alternative place as the “seat”,

combined with a supranational body of rules governing the arbitration,

and no other significant contrary indicia, the inexorable conclusion is

that the stated venue is actually the juridical seat of the arbitral proceeding.

64. In Enercon GmbH v. Enercon (India) Ltd. [2012] EWHC 689, the

arbitration clause between the parties read as follows:

“18.3 All proceedings in such arbitration shall be conducted

in English. The venue of the arbitration proceedings

shall be London. The arbitrators may (but

shall not be obliged to) award costs and reasonable

expenses (including reasonable fees of counsel) to

the Party(ies) that substantially prevail on merit. The

72

provisions of the Indian Arbitration and Conciliation

Act, 1996 shall apply.”

65. The Court began its discussion on the “seat” of the arbitration by

referring to Roger Shashoua (supra), and then referring to ‘The Conflict

of Laws’, Dicey, Morris & Collins, 14th Ed. as follows:

“Moreover, as Cooke J. noted, this conclusion is consistent

with the views expressed in The Conflict of

Laws, Dicey, Morris & Collins, 14th Edition at ¶16–

035 where the authors state that the seat “is in most

cases sufficiently indicated by the country chosen as

the place of the arbitration. For such a choice of place

not to be given effect as a choice of seat, there will

need to be clear evidence that the parties … agreed

to choose another seat for the arbitration and that

such a choice will be effective to endow the courts of

that country with jurisdiction to supervise and support

the arbitration” .

Apart from the last sentence in clause 18.3 (ie “The

provisions of the Indian Arbitration and Conciliation

Act 1996 shall apply”), it seems to me that the conclusion

that London is the “seat” of any arbitration thereunder

is beyond any possible doubt. Thus the main

issue is whether this last sentence is to be regarded

as “significant contrary indicia” (using the language of

Cooke J.) so as to place the “seat” of the arbitration in

India. A similar issue was considered by Saville J in

Union v of India v McDonnell [1993] 2 Lloyd's Rep 48

which, of course, pre-dates the English 1996 Act .

The arbitration agreement in that case provided as

follows: “In the event of a dispute arising out of or in

connection with this agreement…the same shall be

referred to an Arbitration Tribunal…The arbitration

shall be conducted in accordance with the procedure

provided in the Indian Arbitration Act of 1940 or any

enactment or modification thereof. The arbitration

73

shall be conducted in the English language…The

seat of the arbitration proceedings shall be London,

United Kingdom.” Saville J expressed the view that

the arguments on both sides were “finely balanced”

but in effect concluded that the reference to the Indian

Arbitration Act 1940 did not have the effect of

changing the “seat” of the arbitration designated by

the parties. Rather, the phrase referring to the 1940

Act was to be reconciled with the rest of the clause by

reading it as referring to the internal conduct of the arbitration

as opposed to the external supervision of the

arbitration by the Courts.”

(emphasis supplied)

66. The Court then held that although the word “venue” is not synonymous

with “seat”, on the facts of that case, London - though described

as the “venue” - was really the “seat” of the arbitration. This was for

the reason that London was a neutral place in which neither party

worked for gain, and in which no part of the cause of action arose. It

was thus understood to be a neutral place in which the proceedings

could be “anchored”. Secondly, the Court stressed on the expression

“arbitration proceedings” in clause 18.3, which the Court held to be an

expression which included not just one or more individual hearings,

but the arbitral proceedings as a whole, culminating in the making of

an award. The Court held:

“Second, the language in clause 18.3 refers to the

“arbitration proceedings”. That is an expression which

includes not just one or more individual or particular

hearings but the arbitration proceedings as a whole

74

including the making of an award. In other words the

parties were anchoring the whole arbitration process

in London right up to and including the making of an

award. The place designated for the making of an

award is a designation of seat. Moreover the language

in clause 18.3 does not refer to the venue of all

hearings “taking place” in London. Clause 18.3 instead

provides that the venue of the arbitration proceedings

“shall be” London. This again suggests the

parties intended to anchor the arbitration proceedings

to and in London rather than simply physically locating

the arbitration hearings in London. Indeed in a

case where evidence might need to be taken or perhaps

more likely inspected in India it would make no

commercial sense to construe the provision as mandating

all hearings to take place in a physical place as

opposed to anchoring the arbitral process to and in a

designated place. All agreements including an arbitration

agreement should be construed to accord with

business common sense. In my view, there is no

business common sense to construe the arbitration

agreement (as contended for by EIL) in a manner

which would simply deprive the arbitrators of an important

discretion that they possess to hear evidence

in a convenient geographical location.

Third, Mr Joseph QC submitted that the last sentence

of clause 18.3 can be reconciled with the choice of

London as the seat. First, he submitted that it can be

read as referring simply to Part II of the Indian 1996

Act ie the enforcement provisions. Mr Edey QC's response

was that if that is all the last sentence meant,

then it would be superfluous. However, I do not consider

that any such superfluity carries much, if any,

weight. Alternatively, Mr Joseph QC submitted that it

can be read as referring only to those provisions of

the Indian 1996 Act which were not inconsistent with

the English 1996 Act.”

(emphasis supplied)

75

67. The Court then held that the reference to the Indian Arbitration Act,

1996 would not make London the “venue” and India the “seat” of the

arbitral process for several reasons, including the fact that in earlier

agreements between the same parties, the seat of arbitral proceedings

was India, which was changed by this agreement to London - the

explanation for this change being to render an award enforceable in

India under the provisions of the Convention on the Recognition and

Enforcement of Foreign Arbitral Awards (New York, 1958).

68. In Shagang South-Asia (Hong Kong) Trading Co. Ltd. v. Daewoo

Logistics [2015] EWHC 194, the Queen’s Bench Division (Commercial

Courts) dealt with a ‘Fixture Note’ in which the Respondent

agreed to charter a vessel to Shangang, China. The Fixture Note provided:

“Clause 23. ARBITRATION TO BE HELD IN

HONGKONG. ENGLISH LAW TO BE APPLIED.”

69. After referring to Roger Shashoua (supra) and Enercon GmbH

(supra), the Court held:

“In my judgment the approach adopted in Shashoua v

Sharma and in other cases is appropriate in this case

also. An agreement that the arbitration is ‘to be held

in Hong Kong’ would ordinarily carry with it an implied

choice of Hong Kong as the seat of the arbitration

and of the application of Hong Kong law as the

curial law. Clear words or ‘significant contrary indicia’

76

are necessary to establish that some other seat or curial

law has been agreed.”

70. In Process and Indusrial Developments Ltd. v. Nigeria [2019]

EWHC 2241 the Court was concerned with a dispute that arose out of

a gas supply and processing agreement. The arbitration clause in that

case read as follows:

“The Parties agree that if any difference or dispute

arises between them concerning the interpretation or

performance of this Agreement and if they fail to settle

such difference or dispute amicably, then a Party

may serve on the other a notice of arbitration under

the rules of the Nigerian Arbitration and Conciliation

Act (Cap A18 LFN 2004) which, except as otherwise

provided herein, shall apply to any dispute between

such Parties under this Agreement. Within thirty (30)

days of the notice of arbitration being issued by the

initiating Party, the Parties shall each appoint an arbitrator

and the arbitrators thus appointed by the Parties

shall within fifteen (15) days from the date the

last arbitrator was appointed, appoint a third arbitrator

to complete the tribunal. …

The arbitration award shall be final and binding upon

the Parties. The award shall be delivered within two

months after the appointment of the third arbitrator or

within such extended period as may be agreed by the

Parties. The costs of the arbitration shall be borne

equally by the Parties. Each Party shall, however,

bear its own lawyers' fees. The venue of the arbitration

shall be London, England or otherwise as agreed

by the Parties. The arbitration proceedings and

record shall be in the English language.”

77

71. The Court then held that the gas supply agreement provided for the

seat of the arbitration to be in London, inter alia, for the following reasons:

“ It is significant that clause 20 refers to the venue "of

the arbitration" as being London. The arbitra tion

would continue up to and including the final

award. Clause 20 does not refer to London as being

the venue for some or all of the hearings. It does not

use the language used in s. 16(2) ACA of where the

tribunal may "meet" or may "hear witnesses, experts

or the parties". I consider that the provision repre sented

an anchoring of the entire arbitration to London

rather than providing that the hearings should

take place there.

Clause 20 provides that the venue of the arbitration

"shall be" London "or otherwise as agreed between

the parties". If the reference to venue was simply

to where the hearings should take place, this

would be an inconvenient provision and one which

the parties are unlikely to have intended. It would

mean that hearings had to take place in London, however

inconvenient that might be for a particular hearing,

unless the parties agreed otherwise. The question

of where hearings should be conveniently held is,

however, one which the arbitrators ordinarily have the

power to decide, as indeed is envisaged in s. 16(2)

ACA. That is likely to be a much more convenient arrangement.

Clearly if the parties were in agreement

as to where a particular hearing were to take place,

that would be likely to be very influential on the arbitral

tribunal. But if for whatever reason they were not

in agreement, and it is not unknown for parties to arbitration

to become at loggerheads about very many

matters, then it is convenient for the arbitrators to be

able to decide. If that arrangement was to be displaced

it would, in my judgment, have to be spelled

78

out clearly. Accordingly, the reference to the "venue"

as being London or otherwise as agreed between the

parties, is better read as providing that the seat of

the arbitration is to be England, unless the parties

agree to change it. This would still allow the arbitrators

to decide where particular hearings should take

place, while providing for an anchor to England for

supervisory purposes, unless changed.”

(emphasis supplied)

72. Coming to the judgments of our Courts, this Court in Dozco India (P)

Ltd. v. Doosan Infracore Co. Ltd. (2011) 16 SCC 179, was concerned

with the following arbitration clause contained in the agreement

between the parties:

“Article 22. Governing Laws — 22.1: This agreement

shall be governed by and construed in accordance

with the laws of The Republic of Korea.

Article 23. Arbitration — 23.1: All disputes arising in

connection with this agreement shall be finally settled

by arbitration in Seoul, Korea (or such other place as

the parties may agree in writing), pursuant to the

rules of agreement then in force of the International

Chamber of Commerce.”

73. The Court then held:

“18. In my opinion, there is essential difference between

the clauses referred to in Citation Infowares

Ltd. v. Equinox Corpn. [(2009) 7 SCC 220] as also

in Indtel Technical Services (P) Ltd. v. W.S. Atkins Rail

Ltd. [(2008) 10 SCC 308] on one hand and Article 23.1

in the present case, on the other. Shri Gurukrishna

Kumar rightly pointed out that the advantage of the

bracketed portion cannot be taken, particularly, in view

79

of the decision in Naviera Amazonica Peruana

S.A. v. Compania International de Seguros del

Peru [(1988) 1 Lloyd's Rep 116 (CA)] wherein it was

held:

“All contracts which provide for arbitration and contain a

foreign element may involve three potentially relevant

systems of law: (1) the law governing the substantive

contract; (2) the law governing the agreement to

arbitrate and the performance of that agreement; (3) the

law governing the conduct of the arbitration. In the

majority of the cases all three will be the same, but (1)

will often be different from (2) and (3) and occasionally,

but rarely, (2) may also differ from (3).”

That is exactly the case here. The language of Article

23.1 clearly suggests that all the three laws are the laws

of The Republic of Korea with the seat of arbitration in

Seoul, Korea and the arbitration to be conducted in

accordance with the Rules of the International Chamber

of Commerce.

19. In respect of the bracketed portion in Article 23.1,

however, it is to be seen that it was observed in Naviera

case [(1988) 1 Lloyd's Rep 116 (CA)] :

“… It seems clear that the submissions advanced below

confused the legal ‘seat’, etc. of an arbitration with the

geographically convenient place or places for holding

hearings. This distinction is nowadays a common

feature of international arbitrations and is helpfully

explained in Redfern and Hunter [Ed.: Redfern and

Hunter on International Arbitration.] in the following

passage under the heading ‘The Place of Arbitration’:

‘The preceding discussion has been on the basis that

there is only one “place” of arbitration. This will be the

place chosen by or on behalf of the parties; and it will be

designated in the arbitration agreement or the terms of

reference or the minutes of proceedings or in some

80

other way as the place or “seat” of the arbitration. This

does not mean, however, that the Arbitral Tribunal must

hold all its meetings or hearings at the place of

arbitration. International commercial arbitration often

involves people of many different nationalities, from

many different countries. In these circumstances, it is by

no means unusual for an Arbitral Tribunal to hold

meetings — or even hearings — in a place other than

the designated place of arbitration, either for its own

convenience or for the convenience of the parties or

their witnesses….

It may be more convenient for an Arbitral Tribunal sitting

in one country to conduct a hearing in another country

— for instance, for the purpose of taking evidence…. In

such circumstances, each move of the Arbitral Tribunal

does not of itself mean that the seat of the arbitration

changes. The seat of the arbitration remains the place

initially agreed by or on behalf of the parties.’

These aspects need to be borne in mind when one

comes to the Judge's construction of this policy.”

It would be clear from this that the bracketed portion in

the article was not for deciding upon the seat of the

arbitration, but for the convenience of the parties in case

they find to hold the arbitration proceedings somewhere

else than Seoul, Korea. The part which has been quoted

above from Naviera Amazonica Peruana

S.A. v. Compania International de Seguros del

Peru [(1988) 1 Lloyd's Rep 116 (CA)] supports this

inference.

20. In that view, my inferences are that:

(i) The clear language of Articles 22 and 23 of the

distributorship agreement between the parties in this

case spells out a clear agreement between the parties

excluding Part I of the Act.

(ii) The law laid down in Bhatia International v. Bulk

Trading S.A. [(2002) 4 SCC 105] and Indtel Technical

Services (P) Ltd. v. W.S. Atkins Rail Ltd. [(2008) 10 SCC

308] , as also in Citation Infowares Ltd. v. Equinox

81

Corpn. [(2009) 7 SCC 220] is not applicable to the

present case.

(iii) Since the interpretation of Article 23.1 suggests that

the law governing the arbitration will be Korean Law and

the seat of arbitration will be Seoul in Korea, there will

be no question of applicability of Section 11(6) of the Act

and the appointment of arbitrator in terms of that

provision.”

74. In Videocon Industries Ltd. v. Union of India (2011) 6 SCC 161,

this Court was concerned with an arbitration agreement between the

parties as follows:

“34.12. Venue and law of arbitration agreement.—The

venue of sole expert, conciliation or arbitration

proceedings pursuant to this article, unless the parties

otherwise agree, shall be Kuala Lumpur, Malaysia, and

shall be conducted in the English language. Insofar as

practicable, the parties shall continue to implement the

terms of this contract notwithstanding the initiation of

arbitral proceedings and any pending claim or dispute.

Notwithstanding the provisions of Article 33.1, the

arbitration agreement contained in this Article 34 shall

be governed by the laws of England.”

75. Referring to Sections 3 and 53 of the English Arbitration Act, 1996,

the Court held:

“20. We shall first consider the question whether Kuala

Lumpur was the designated seat or juridical seat of

arbitration and the same had been shifted to London. In

terms of Article 34.12 of the PSC entered into by 5

parties, the seat of arbitration was Kuala Lumpur,

Malaysia. However, due to outbreak of epidemic SARS,

the Arbitral Tribunal decided to hold its sittings first at

Amsterdam and then at London and the parties did not

82

object to this. In the proceedings held on 14-10-2003

and 15-10-2003 at London, the Arbitral Tribunal

recorded the consent of the parties for shifting the

juridical seat of arbitration to London. Whether this

amounted to shifting of the physical or juridical seat of

arbitration from Kuala Lumpur to London? The decision

of this would depend on a holistic consideration of the

relevant clauses of the PSC.

21. Though, it may appear repetitive, we deem it

necessary to mention that as per the terms of

agreement, the seat of arbitration was Kuala Lumpur. If

the parties wanted to amend Article 34.12, they could

have done so only by a written instrument which was

required to be signed by all of them. Admittedly, neither

was there any agreement between the parties to the

PSC to shift the juridical seat of arbitration from Kuala

Lumpur to London nor was any written instrument

signed by them for amending Article 34.12. Therefore,

the mere fact that the parties to the particular arbitration

had agreed for shifting of the seat of arbitration to

London cannot be interpreted as anything except

physical change of the venue of arbitration from Kuala

Lumpur to London.”

76. In Enercon (India) Ltd. (supra), this Court was concerned with an

arbitration clause which stated that the venue shall be in London. The

Court held, on the facts of that case, that since the substantive law of

the contract, the curial law of the proceedings, and the law governing

the arbitration agreement were all India, the seat would be India -

London only being the venue for holding meetings. The Court then

held, following the Naviera Amazonica Peruana S.A. v. Compania

83

Internacional De Seguros Del Peru (1988) 1 Lloyd’s Rep 116 (CA)

case, that the lex fori of the arbitral proceedings, namely, the place in

which arbitration is to be held, must be considered to be the seat of

the arbitral proceedings, other things being equal, as follows:

“100. On the facts of the case, it was observed

in Naviera Amazonica case [Naviera Amazonica

Peruana S.A. v. Compania Internacional De Seguros

Del Peru, (1988) 1 Lloyd's Rep 116 (CA)] that since

there was no contest on Law 1 and Law 2, the entire

issue turned on Law 3, “the law governing the conduct

of the arbitration”. This is usually referred to as

the curial or procedural law, or the lex fori. Thereafter,

the Court approvingly quoted the following observation

from Dicey & Morris on the Conflict of Laws (11th Edn.):

“English law does not recognise the concept of a

delocalised arbitration or of arbitral procedures floating

in the transnational firmament, unconnected with any

municipal system of law.” It is further held that

“accordingly every arbitration must have a ‘seat’ or

‘locus arbitri’ or ‘forum’ which subjects its procedural

rules to the municipal law which is there in force”. The

Court thereafter culls out the following principle:

“Where the parties have failed to choose the law

governing the arbitration proceedings, those

proceedings must be considered, at any rate prima

facie, as being governed by the law of the country in

which the arbitration is held, on the ground that it is the

country most closely connected with the proceedings.”

The aforesaid classic statement of the conflict of law

rules as quoted in Dicey & Morris on the Conflict of

Laws (11th Edn.), Vol. 1, was approved by the House of

Lords in James Miller & Partners Ltd. v. Whitworth

Street Estates (Manchester) Ltd. [1970 AC 583 : (1970)

2 WLR 728 : (1970) 1 All ER 796 : (1970) 1 Lloyd's Rep

269 (HL)] and Mustill, J. in Black Clawson International

Ltd. v. Papierwerke Waldhof-Aschaffenburg A.G. [(1981)

2 Lloyd's Rep 446 at p. 453] , a little later characterised

the same proposition as “the law of the place where the

reference is conducted, the lex fori”. The position of law

in India is the same.

77. The Court then examined Braes of Doune Wind Farm (Scotland) v.

Alfred McAlpine Business Services Ltd. [2008] EWHC 436 (TCC)

in some detail, and concluded in paragraph 118 as follows:

“118. In Braes of Doune [Braes of Doune Wind Farm

(Scotland) Ltd. v. Alfred McAlpine Business Services

Ltd., [2008] Bus LR D 137 (QBD) : 2008 EWHC 426

(TCC)] , detailed examination was undertaken by the

Court to discern the intention of the parties as to

whether the place mentioned refers to venue or

the seat of the arbitration. The factual situation in the

present case is not as difficult or complex as the parties

herein have only designated London as a venue.

Therefore, if one has to apply the reasoning and logic of

Akenhead, J., the conclusion would be irresistible that

the parties have designated India as the seat. This is

even more so as the parties have not agreed that the

courts in London will have exclusive jurisdiction to

resolve any dispute arising out of or in connection with

the contract, which was specifically provided in Clause

1.4.1 of the EPC contract examined by Akenhead, J.

in Braes of Doune [Braes of Doune Wind Farm

(Scotland) Ltd. v. Alfred McAlpine Business Services

Ltd., [2008] Bus LR D 137 (QBD) : 2008 EWHC 426

(TCC)] . In the present case, except for London being

chosen as a convenient place/venue for holding the

meetings of the arbitration, there is no other factor

connecting the arbitration proceedings to London.”

85

78. The Court then made a reference to C v. D [2007] EWCA Civ. 182,

where the Court, following C v. D (supra), held:

“122. Longmore, J. of the Court of Appeal observed:

(C v. D case [[2008] Bus LR 843 : 2007 EWCA Civ

1282] , Bus LR p. 851, paras 16-17)

“16. I shall deal with Mr Hirst's arguments in due course

but, in my judgment, they fail to grapple with the central

point at issue which is whether or not, by choosing

London as the seat of the arbitration, the parties must

be taken to have agreed that proceedings on the award

should be only those permitted by English law. In my

view they must be taken to have so agreed for the

reasons given by the Judge. The whole purpose of the

balance achieved by the Bermuda Form (English

arbitration but applying New York law to issues arising

under the policy) is that judicial remedies in respect of

the award should be those permitted by English law and

only those so permitted. Mr Hirst could not say (and did

not say) that English judicial remedies for lack of

jurisdiction on procedural irregularities under Sections

67 and 68 of the Indian Arbitration Act, 1996 were not

permitted; he was reduced to saying that New York

judicial remedies were also [Ed.: The word “also” has

been emphasised in original.] permitted. That, however,

would be a recipe for litigation and (what is worse)

confusion which cannot have been intended by the

parties. No doubt New York law has its own judicial

remedies for want of jurisdiction and serious irregularity

but it could scarcely be supposed that a party aggrieved

by one part of an award could proceed in one

jurisdiction and a party aggrieved by another part of an

award could proceed in another jurisdiction. Similarly, in

the case of a single complaint about an award, it could

not be supposed that the aggrieved party could

complain in one jurisdiction and the satisfied party be

entitled to ask the other jurisdiction to declare its

86

satisfaction with the award. There would be a serious

risk of parties rushing to get the first judgment or of

conflicting decisions which the parties cannot have

contemplated.

17. It follows from this that a choice of seat for the

arbitration must be a choice of forum for remedies

seeking to attack the award.”

On the facts of the case, the Court held that the seat of

the arbitration was in England and accordingly

entertained the challenge to the award.”

79. Reference was made to Roger Shashoua (supra) in paragraphs 124

to 128, and then to various other judgments, including BALCO

(supra), as follows:

“134. It is accepted by most of the experts in the law

relating to international arbitration that in almost all the

national laws, arbitrations are anchored to

the seat/place/situs of arbitration. Redfern and Hunter

on International Arbitration (5th Edn., Oxford University

Press, Oxford/New York 2009), in Para 3.54 concludes

that “the seat of the arbitration is thus intended to be its

centre of gravity”. In BALCO [Bharat Aluminium

Co. v. Kaiser Aluminium Technical Services Inc., (2012)

9 SCC 552 : (2012) 4 SCC (Civ) 810] , it is further

noticed that this does not mean that all proceedings of

the arbitration are to be held at the seat of arbitration.

The arbitrators are at liberty to hold meetings at a place

which is of convenience to all concerned. This may

become necessary as arbitrators often come from

different countries. Therefore, it may be convenient to

hold all or some of the meetings of the arbitration in a

location other than where the seat of arbitration is

located. In BALCO, the relevant passage from Redfern

and Hunter has been quoted which is as under: (SCC p.

598, para 75)

87

“75. … ‘The preceding discussion has been on the basis

that there is only one “place” of arbitration. This will be

the place chosen by or on behalf of the parties; and it

will be designated in the arbitration agreement or the

terms of reference or the minutes of proceedings or in

some other way as the place or “seat” of the arbitration.

This does not mean, however, that the Arbitral

Tribunal must hold all its meetings or hearings at the

place of arbitration. International commercial arbitration

often involves people of many different nationalities,

from many different countries. In these circumstances, it

is by no means unusual for an Arbitral Tribunal to hold

meetings—or even hearings—in a place other than the

designated place of arbitration, either for its own

convenience or for the convenience of the parties or

their witnesses…. It may be more convenient for an

Arbitral Tribunal sitting in one country to conduct a

hearing in another country — for instance, for the

purpose of taking evidence…. In such circumstances

each move of the Arbitral Tribunal does not of itself

mean that the seat of arbitration changes. The seat of

arbitration remains the place initially agreed by or on

behalf of the parties.’ (Naviera case [Naviera

Amazonica Peruana S.A. v. Compania Internacional De

Seguros Del Peru, (1988) 1 Lloyd's Rep 116 (CA)] ,

Lloyd's Rep p. 121)”

These observations have also been noticed in Union of

India v. McDonnell Douglas Corpn. [(1993) 2 Lloyd's

Rep 48]”

80. The Court finally concluded:

“135. In the present case, even though the venue of

arbitration proceedings has been fixed in London, it

cannot be presumed that the parties have intended

the seat to be also in London. In an international

commercial arbitration, venue can often be different

from the seat of arbitration. In such circumstances, the

88

hearing of the arbitration will be conducted at

the venue fixed by the parties, but this would not bring

about a change in the seat of the arbitration. This is

precisely the ratio in Braes of Doune [Braes of Doune

Wind Farm (Scotland) Ltd. v. Alfred McAlpine Business

Services Ltd., [2008] Bus LR D 137 (QBD) : 2008

EWHC 426 (TCC)] . Therefore, in the present case, the

seat would remain in India.”

81. In Harmony Innovation Shipping Ltd. v. Gupta Coal India Ltd. and

Anr. (2015) 9 SCC 172, the Court dealt with an arbitration clause between

the parties which read as follows:

“5. If any dispute or difference should arise under this

charter, general average/arbitration in London to apply,

one to be appointed by each of the parties hereto, the

third by the two so chosen, and their decision or that of

any two of them, shall be final and binding, and this

agreement may, for enforcing the same, be made a rule

of court. Said three parties to be commercial men who

are the members of the London Arbitrators Association.

This contract is to be governed and construed according

to the English law. For disputes where total amount

claimed by either party does not exceed US $50,000 the

arbitration should be conducted in accordance with

small claims procedure of the London Maritime

Arbitration Association.”

82. After referring, in extenso, to a large number of English decisions and

the decisions of this Court, the Court concluded:

“48. In the present case, the agreement stipulates that

the contract is to be governed and construed according

to the English law. This occurs in the arbitration clause.

Mr Viswanathan, learned Senior Counsel, would submit

that this part has to be interpreted as a part of “curial

89

law” and not as a “proper law” or “substantive law”. It is

his submission that it cannot be equated with the seat of

arbitration. As we perceive, it forms as a part of the

arbitration clause. There is ample indication through

various phrases like “arbitration in London to apply”,

arbitrators are to be the members of the “London

Arbitration Association” and the contract “to be

governed and construed according to the English law”.

It is worth noting that there is no other stipulation

relating to the applicability of any law to the agreement.

There is no other clause anywhere in the contract. That

apart, it is also postulated that if the dispute is for an

amount less than US $50,000 then, the arbitration

should be conducted in accordance with small claims

procedure of the London Maritime Arbitration

Association. When the aforesaid stipulations are read

and appreciated in the contextual perspective, “the

presumed intention” of the parties is clear as crystal that

the juridical seat of arbitration would be London.”

83. Most recently, in Brahmani River Pellets (supra), this Court in a domestic

arbitration considered clause 18 - which was the arbitration

agreement between the parties - and which stated that arbitration

shall be under Indian Arbitration and Conciliation Act, 1996, and the

venue of arbitration shall be Bhubaneswar. After citing several judgments

of this Court and then referring to Indus Mobile Distribution

(supra), the Court held:

“18. Where the contract specifies the jurisdiction of

the court at a particular place, only such court will

have the jurisdiction to deal with the matter and parties

intended to exclude all other courts. In the

present case, the parties have agreed that the

“venue” of arbitration shall be at Bhubaneswar. Con-

sidering the agreement of the parties having

Bhubaneswar as the venue of arbitration, the intention

of the parties is to exclude all other courts. As

held in Swastik, non-use of words like “exclusive jurisdiction”,

“only”, “exclusive”, “alone” is not decisive and

does not make any material difference.

19. When the parties have agreed to the have the

“venue” of arbitration at Bhubaneshwar, the Madras

High Court erred in assuming the jurisdiction under

Section 11(6) of the Act. Since only the Orissa High

Court will have the jurisdiction to entertain the petition

filed under Section 11(6) of the Act, the impugned order

is liable to be set aside.”

84. On a conspectus of the aforesaid judgments, it may be concluded that

whenever there is the designation of a place of arbitration in an arbitration

clause as being the “venue” of the arbitration proceedings, the

expression “arbitration proceedings” would make it clear that the

“venue” is really the “seat” of the arbitral proceedings, as the aforesaid

expression does not include just one or more individual or particular

hearing, but the arbitration proceedings as a whole, including the

making of an award at that place. This language has to be contrasted

with language such as “tribunals are to meet or have witnesses, experts

or the parties” where only hearings are to take place in the

“venue”, which may lead to the conclusion, other things being equal,

that the venue so stated is not the “seat” of arbitral proceedings, but

only a convenient place of meeting. Further, the fact that the arbitral  proceedings “shall be held” at a particular venue would also indicate

that the parties intended to anchor arbitral proceedings to a particular

place, signifying thereby, that that place is the seat of the arbitral proceedings.

This, coupled with there being no other significant contrary

indicia that the stated venue is merely a “venue” and not the “seat” of

the arbitral proceedings, would then conclusively show that such a

clause designates a “seat” of the arbitral proceedings. In an International

context, if a supranational body of rules is to govern the arbitration,

this would further be an indicia that “the venue”, so stated, would

be the seat of the arbitral proceedings. In a national context, this

would be replaced by the Arbitration Act, 1996 as applying to the

“stated venue”, which then becomes the “seat” for the purposes of arbitration.

Correctness of the judgment in Hardy Exploration and Production

(India) Ltd.

85. Roger Shashoua (supra) was expressly referred to in paragraphs

108 and 109 of BALCO (supra), and followed in paragraph 110 as ex-tracted above. BALCO (supra) then summed up the legal position as

follows:

“116. The legal position that emerges from a conspectus

of all the decisions, seems to be, that the

choice of another country as the seat of arbitration inevitably

imports an acceptance that the law of that

country relating to the conduct and supervision of arbitrations

will apply to the proceedings.

117. It would, therefore, follow that if the arbitration

agreement is found or held to provide for a seat /

place of arbitration outside India, then the provision

that the Arbitration Act, 1996 would govern the arbitration

proceedings, would not make Part I of the Arbitration

Act, 1996 applicable or enable Indian Courts to

exercise supervisory jurisdiction over the arbitration

or the award. It would only mean that the parties have

contractually imported from the Arbitration Act, 1996,

those provisions which are concerned with the internal

conduct of their arbitration and which are not inconsistent

with the mandatory provisions of the English

Procedural Law/Curial Law. This necessarily follows

from the fact that Part I applies only to arbitrations

having their seat / place in India.”

86. In Roger Shashoua & Ors. v. Mukesh Sharma & Ors., (2017) 14

SCC 722, a Division Bench of this Court, after referring to a number

of judgments, referred to the English Shashoua judgment3 as follows:

“46. As stated earlier, in Shashoua Cooke, J., in the

course of analysis, held that "London arbitration" is a

well known phenomenon which is often chosen by

foreign nationals with a different law, such as the law

of New York, governing the substantive rights of the

parties and it is because of the legislative framework

and supervisory powers of the courts here which

3 [2009] EWHC 957 (Comm).

many parties are keen to adopt. The learned Judge

has further held that when there is an express designation

of the arbitration venue as London and no designation

of any alternative place as the seat, combined

with a supranational body of Rules governing

the arbitration and no other significant contrary indicia,

the inexorable conclusion is that London is the juridical

seat and English law the curial law.”

87. The Division bench then turned down an argument that BALCO

(supra) had not expressly approved the Shashoua principle, as follows:

“54. We had earlier extracted extensively from the

said judgment, as we find, the Court after adverting to

various aspects, has categorically held that the High

Court had not followed Shashoua principle. The various

decisions referred to in Enercon (India) Ltd.

(supra), the analysis made and the propositions deduced

leads to an indubitable conclusion that

Shashoua principle has been accepted by Enercon

(India) Ltd. (supra). It is also to be noted that in

BALCO, the Constitution Bench has not merely reproduced

few paragraphs from Shashoua but has also

referred to other decisions on which Shashoua has

placed reliance upon. As we notice, there is analysis

of earlier judgments, though it does not specifically

state that "propositions laid down in Shashoua are

accepted". On a clear reading, the ratio of the decision

in BALCO, in the ultimate eventuate, reflects that

the Shashoua principle has been accepted and the

two-Judge Bench in Enercon (India) Ltd. (supra), after

succinctly analyzing it, has stated that the said principles

have been accepted by the Constitution Bench.

Therefore, we are unable to accept the submission of

Mr. Chidambaram that the finding recorded in Enercon

(India) Ltd. (supra) that Shashoua principle has

been accepted in BALCO should be declared as per

incuriam.”

94

88. The Court then set out the arbitration clause and the governing law on

the facts of the case as follows:

“69. Though we have opined that Shashoua principle

has been accepted in BALCO and Enercon (India)

Ltd. (supra), yet we think it apt to refer to the clauses

in the agreement and scrutinize whether there is any

scope to hold that the courts in India could have entertained

the petition. Clause 14 of the shareholders

agreement (SHA) refers to arbitration. The said

Clause reads thus:

14. ARBITRATION

14.1 ...Each party shall nominate one arbitrator and in

the event of any difference between the two arbitrators,

a third arbitrator/umpire shall be appointed. The

arbitration proceedings shall be in accordance with

the Rules of Conciliation and Arbitration of the International

Chamber of Commerce Paris.

14.2 Proceedings in such arbitrations shall be conducted

in the English language.

14.3 The arbitration award shall be substantiated in

writing and shall be final and binding on the parties.

14.4 The venue of the arbitration shall be London,

United Kingdom."

70. Clause 17.6 deals with governing law, which

reads as follows:

17.6 GOVERNING LAW

This Agreement shall be governed by and construed

in accordance with the laws of India.”

89. The court then went on to state:

95

“72. It is worthy to note that the arbitration agreement

is not silent as to what law and procedure is to be followed.

On the contrary, Clause 14.1 lays down that

the arbitration proceedings shall be in accordance

with the Rules of Conciliation and Arbitration of the

ICC. In Enercon (India) Ltd. (supra), the two-Judge

Bench referring to Shashoua case accepted the view

of Cooke, J. that the phrase "venue of arbitration shall

be in London, UK" was accompanied by the provision

in the arbitration Clause or arbitration to be conducted

in accordance with the Rules of ICC in Paris. The

two-Judge Bench accepted the Rules of ICC, Paris

which is supernational body of Rules as has been

noted by Cooke, J. and that is how it has accepted

that the parties have not simply provided for the location

of hearings to be in London. To elaborate, the

distinction between the venue and the seat remains.

But when a Court finds there is prescription for venue

and something else, it has to be adjudged on the

facts of each case to determine the juridical seat. As

in the instant case, the agreement in question has

been interpreted and it has been held that London is

not mentioned as the mere location but the courts in

London will have the jurisdiction, another interpretative

perception as projected by the learned senior

Counsel is unacceptable.

xxx xxx xxx

76. In view of the aforesaid analysis, we allow the appeals

and set aside the judgment of the High Court of

Delhi that has held that courts in India have jurisdiction,

and has also determined that Gautam Budh Nagar

has no jurisdiction and the petition Under Section

34 has to be filed before the Delhi High Court. Once

the courts in India have no jurisdiction, the aforesaid

conclusions are to be nullified and we so do. In the

facts and circumstances of the case, there shall be no

order as to costs.”

90. The stage is now set for consideration of the recent judgment of a

Three Judge Bench of this Court in Hardy Exploration and Produc-

96

tion (India) Inc. (supra). The precise question that had been referred

to the Three Judge Bench in Hardy Exploration and Production (India)

Inc. (supra) was as to whether the ratio of Sumitomo Heavy Industries

Ltd. v. ONGC Ltd. & Ors. (1998) 1 SCC 305 - a judgment

delivered under the Arbitration Act, 1940 - would have any impact on

the “juridical seat” doctrine in arbitration law, as developed in England

and by our courts. The Three Judge Bench answered the reference

as follows:

“27. In view of the aforesaid development of law,

there is no confusion with regard to what the seat of

arbitration and venue of arbitration mean. There is no

shadow of doubt that the arbitration Clause has to be

read in a holistic manner so as to determine the jurisdiction

of the Court. That apart, if there is mention of

venue and something else is appended thereto, depending

on the nature of the prescription, the Court

can come to a conclusion that there is implied exclusion

of Part I of the Act. The principle laid down in

Sumitomo Heavy Industries Ltd. (supra) has been referred

to in Reliance Industries Limited (II) and distinguished.

In any case, it has no applicability to a controversy

under the Act. The said controversy has to

be governed by the BALCO principle or by the agreement

or by the principle of implied exclusion as has

been held in Bhatia International.

28. Thus, we answer the reference accordingly.”

91. Having answered the reference, the Court then went on to consider

the arbitration clause in the facts of that case, which was set out in

paragraph 30 as follows:

97

“30. Article 33 deals with "Sole expert, conciliation

and arbitrator". Article 33.9 and 33.12 read thus:

33.9 Arbitration proceedings shall be conducted in

accordance with the UNICITRAL Model Law on

International Commercial Arbitration of 1985 except

that in the event of any conflict between the Rules

and the provisions of this Article 33, the provisions of

this Article 33 shall govern.

xxx xxx xxx

33.12 The venue of conciliation or arbitration

proceedings pursuant to this Article unless the parties

otherwise agree, shall be Kuala Lumpur and shall be

conducted in English language. Insofar as practicable

the parties shall continue to implement the terms of

this contract notwithstanding the initiation of

arbitration proceedings and any pending claim or

dispute.”

92. The Court then went on to see for itself Articles 20 and 31 of the

UNCITRAL Model Law and then went on to state that under the

UNCITRAL Model Law, either the juridical seat of the arbitral

proceedings is indicated in the agreement between the parties, or if it

is not, must be determined by the Arbitral Tribunal. Holding that the

arbitration clause, on the facts of that case, referred to the “venue” as

Kuala Lumpur, the Court went on to hold that there was no

determination of any “juridical seat” by agreement, and would

therefore have to be determined by the Arbitral Tribunal. As there was

no such determination by the Arbitral Tribunal, the Court then

concluded:

98

“40. The said test clearly means that the expression

of determination signifies an expressive opinion. In

the instant case, there has been no adjudication and

expression of an opinion. Thus, the word 'place'

cannot be used as seat. To elaborate, a venue can

become a seat if something else is added to it as a

concomitant. But a place unlike seat, at least as is

seen in the contract, can become a seat if one of the

conditions precedent is satisfied. It does not ipso

facto assume the status of seat. Thus understood,

Kuala Lumpur is not the seat or place of arbitration

and the interchangeable use will not apply in stricto

sensu.

41. In view of the aforesaid analysis, the irresistible

conclusion is that the Courts in India have jurisdiction

and, therefore, the order passed by the Delhi High

Court is set aside. Resultantly, the appeal stands

allowed and the High Court is requested to deal with

the application preferred Under Section 34 of the Act

as expeditiously as possible. There shall be no order

as to costs.”

93. The Three Judge Bench in Hardy Exploration and Production (India)

Inc (supra) failed to apply the Shashoua principle to the arbitration

clause in question. Had the Shashoua principle been applied, the

answer would have been that Kuala Lumpur, which was stated to be

the “venue” of arbitration proceedings, being governed by the UNCITRAL

Model Law, would be governed by a supranational set of rules,

and there being no other contrary indicator, it would be clear that

Kuala Lumpur would therefore be the juridical “seat” of the arbitration.

99

94. As we have seen hereinabove, the judgement of Cooke, J. in Roger

Shashoua and Ors. v. Mukesh Sharma4, was expressly approved by

the 5-Judge Bench in BALCO (supra), as was stated by the Supreme

Court of India in Roger Shashoua and Ors. v. Mukesh Sharma and

Ors.5 By failing to apply the Shashoua principle to the arbitration

clause in question, the Three Judge Bench in Hardy Exploration and

Production (India) Inc (supra) has not followed the law as to determination

of a “juridical seat”, laid down by a Five Judge Bench of this

Court in BALCO (supra). The result in Hardy Exploration and Production

(India) Inc (supra) is that a foreign award that would be delivered

in Kuala Lumpur, would now be liable to be challenged in the

Courts at Kuala Lumpur, and also be challenged in the courts in India,

under Section 34 of Part I of the Arbitration Act, 1996. This is exactly

the situation that this Court encountered when it decided the case of

Venture Global Engineering v. Satyam Computer Services Ltd. &

Anr., (2008) 4 SCC 190. The Five Judge Bench in BALCO (supra)

expressly overruled Venture Global Engineering (supra) as follows:

“143…With these observations, the matter was remanded

back to the trial court to dispose of the suit

on merits. The submissions made by K.K. Venugopal,

as noticed in para 42, epitomise the kind of chaos

4 [2009] EWHC 957 (Comm)

5 (2017) 14 SCC 722

100

which would be created by two court systems, in two

different countries, exercising concurrent jurisdiction

over the same dispute. There would be a clear risk of

conflicting decisions. This would add to the problems

relating to enforcement of such decisions. Such a situation

would undermine the policy underlying the

New York Convention or the UNCITRAL Model Law.

Therefore, we are of the opinion that appropriate

manner to interpret the aforesaid provision is that “alternative

two” will become available only if “alternative

one” is not available.

xxx xxx xxx

“154. At this stage, we may notice that in spite of the

aforesaid international understanding of the second

limb of Article V(1)(e), this Court has proceeded on a

number of occasions to annul an award on the basis

that parties had chosen Indian law to govern the substance

of their dispute. The aforesaid view has been

expressed in Bhatia International [(2002) 4 SCC 105]

and Venture Global Engg. [(2008) 4 SCC 190] In our

opinion, accepting such an interpretation would be to

ignore the spirit underlying the New York Convention

which embodies a consensus evolved to encourage

consensual resolution of complicated, intricate and in

many cases very sensitive international commercial

disputes. Therefore, the interpretation which hinders

such a process ought not to be accepted. This also

seems to be the view of the national courts in different

jurisdictions across the world. For the reasons

stated above, we are also unable to agree with the

conclusions recorded by this Court in Venture Global

Engg. [(2008) 4 SCC 190] that the foreign award

could be annulled on the exclusive grounds that the

Indian law governed the substance of the dispute.

Such an opinion is not borne out by the huge body of

judicial precedents in different jurisdictions of the

world.”

95. The Five Judge Bench then went on to state:

101

“195. With utmost respect, we are unable to agree

with the conclusions recorded in the judgments of this

Court in Bhatia International (supra) and Venture

Global Engineering (supra). In our opinion, the provision

contained in Section 2(2) of the Arbitration Act,

1996 is not in conflict with any of the provisions either

in Part I or in Part II of the Arbitration Act, 1996. In a

foreign seated international commercial arbitration, no

application for interim relief would be maintainable

under Section 9 or any other provision, as applicability

of Part I of the Arbitration Act, 1996 is limited to all

arbitrations which take place in India. Similarly, no

suit for interim injunction simplicitor would be maintainable

in India, on the basis of an international commercial

arbitration with a seat outside India.”

96. The decision in Hardy Exploration and Production (India) Inc.

(supra) is therefore contrary to the Five Judge Bench in BALCO

(supra), in that it failed to apply the Shashoua principle to the arbitration

clause in question. The Hardy Exploration and Production (India)

Inc. (supra) decision would lead to the result that a foreign award

would not only be subject to challenge in the country in which it was

made, but also subject to challenge under Section 34 of Part I of the

Arbitration Act, 1996, which would lead to the chaos spoken of in

paragraph 143 of BALCO (supra), with the concomitant risk of conflicting

decisions, as held in Venture Global Engineering (supra)

[overruled in BALCO (supra)], which would add to problems relating

to enforcement, and undermine the policy underlying the New York

102

Convention and the UNCITRAL Model Law. We, therefore, declare

that the judgment in Hardy Exploration and Production (India) Inc.

(supra), being contrary to the Five Judge Bench in BALCO (supra),

cannot be considered to be good law.

97. Coming to the impugned judgment in the present appeals, it is clear

that the reasoning followed stems from the subject-matter test that

flows from the definition of ‘court’ in Section 2(1)(e)(i) of the Act.

According to the impugned judgment, since the agreement was

executed at Faridabad, part of the cause of action would arise at

Faridabad, clothing Faridabad courts with jurisdiction for the purposes

of filing a Section 34 petition. The second part of the reasoning is that

Faridabad is the place where the request for reference to arbitration

was received, as a result of which part of the cause of action arose in

Faridabad, which ousts the jurisdiction of Courts of New Delhi, in

which no part of the cause of action arose.

98. We have extracted the arbitration agreement in the present case (as

contained in Clause 67.3 of the agreement between the parties) in

paragraph 3 of this judgment. As per the arbitration agreement, in

case a dispute was to arise with a foreign contractor, clause 67.3(ii)

would apply. Under this sub-clause, a dispute which would amount to

103

an ‘international commercial arbitration’ within the meaning of Section

2(1)(f) of the Arbitration Act, 1996, would have to be finally settled in

accordance with the Arbitration Act, 1996 read with the UNCITRAL Arbitration

Rules, and in case of any conflict, the Arbitration Act, 1996 is

to prevail (as an award made under Part I is considered a domestic

award under Section 2(7) of the Arbitration Act, 1996 notwithstanding

the fact that it is an award made in an international commercial arbitration).

Applying the Shashoua principle delineated above, it is clear

that if the dispute was with a foreign contractor under Clause 67.3 of

the agreement, the fact that arbitration proceedings shall be held at

New Delhi/Faridabad, India in sub-clause (vi) of Clause 67.3, would

amount to the designation of either of these places as the “seat” of arbitration,

as a supranational body of law is to be applied, namely, the

UNCITRAL Arbitration Rules, in conjunction with the Arbitration Act,

1996. As such arbitration would be an international commercial arbitration

which would be decided in India, the Arbitration Act, 1996 is to

apply as well. There being no other contra indication in such a situation,

either New Delhi or Faridabad, India is the designated “seat” under

the agreement, and it is thereafter for the parties to choose as to

in which of the two places the arbitration is finally to be held.

104

99. Given the fact that if there were a dispute between NHPC Ltd. and a

foreign contractor, clause 67.3(vi) would have to be read as a clause

designating the “seat” of arbitration, the same must follow even when

sub-clause (vi) is to be read with sub-clause (i) of Clause 67.3, where

the dispute between NHPC Ltd. would be with an Indian Contractor.

The arbitration clause in the present case states that “Arbitration Proceedings

shall be held at New Delhi/Faridabad, India…”, thereby signifying

that all the hearings, including the making of the award, are to

take place at one of the stated places. Negatively speaking, the

clause does not state that the venue is so that some, or all, of the

hearings take place at the venue; neither does it use language such

as “the Tribunal may meet”, or “may hear witnesses, experts or parties”.

The expression “shall be held” also indicates that the so-called

“venue” is really the “seat” of the arbitral proceedings. The dispute is

to be settled in accordance with the Arbitration Act, 1996 which, therefore,

applies a national body of rules to the arbitration that is to be

held either at New Delhi or Faridabad, given the fact that the present

arbitration would be Indian and not international. It is clear, therefore,

that even in such a scenario, New Delhi/Faridabad, India has been

designated as the “seat” of the arbitration proceedings.

100.However, the fact that in all the three appeals before us the proceedings

were finally held at New Delhi, and the awards were signed in

New Delhi, and not at Faridabad, would lead to the conclusion that

both parties have chosen New Delhi as the “seat” of arbitration under

Section 20(1) of the Arbitration Act, 1996. This being the case, both

parties have, therefore, chosen that the Courts at New Delhi alone

would have exclusive jurisdiction over the arbitral proceedings. Therefore,

the fact that a part of the cause of action may have arisen at

Faridabad would not be relevant once the “seat” has been chosen,

which would then amount to an exclusive jurisdiction clause so far as

Courts of the “seat” are concerned.

101.Consequently, the impugned judgment is set aside, and the Section

34 petition is ordered to be presented in the Courts in New Delhi, as

was held by the learned Single Judge of the Special Commercial

Court at Gurugram.

102.The appeals are allowed in the aforesaid terms.

……………………………J.

(R.F. Nariman)

……………………………J.

(Aniruddha Bose)

……………………………J.

New Delhi; (V. Ramasubramanian)

December 10, 2019

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