REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9307 OF 2019 (ARISING OUT OF SLP (CIVIL) NO.25618 OF 2018)

BGS SGS SOMA JV …Petitioner  

Versus

NHPC LTD. …Respondent

WITH CIVIL APPEAL NO. 9308 OF 2019

(ARISING OUT OF SLP (CIVIL) NO. 25848 OF 2018) WITH

CIVIL APPEAL NO. 9309 OF 2019 (ARISING OUT OF SLP (CIVIL) NO. 28062 OF 2018)

J U D G M E N T

R.F. NARIMAN, J.

1. Leave granted.

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

peals under Section 37 of the Arbitration and Conciliation Act, 1996

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

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

tration  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 Hydroelec-

tric 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 am- icable 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, opin- ion, instruction, determination, certificate or valu- ation of the Engineer.

(i) A dispute  with  an Indian Contractor  shall be finally settled in accordance with the In-

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dian Arbitration and Conciliation Act, 1996, or  any statutory amendment  thereof.  The arbitral  tribunal  shall  consist  of  3  arbitra- tors, one each to be appointed by the Em- ployer and the Contractor. The third Arbitra- tor 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 par- ties  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 In- dia and is a juridic person created under Indian law as well  as a  joint  venture be- tween  such  a  contractor  and  a  Foreign Contractor.

(ii) In  the  case  of  a  dispute  with  a  Foreign Contractor, the dispute shall be finally set- tled  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 Insti- tution  of  Engineers  (India).  For  the  pur-

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poses of this Clause 67, the term “Foreign Contractor” means a contractor who is not registered in India and is not a juridic per- son created under Indian Law. In case of any  contradiction  between  Indian  Arbitra- tion and Conciliation Act, 1996 and UNCI- TRAL 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 arbi- trator 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 In- dian Contractors, shall appoint the arbitra- tor.  A certified  copy  of  the  order  of  the President of Institution of Engineers (India), making such an appointment shall be fur- nished to each of the parties.

(vi) Arbitration  Proceedings  shall  be  held  at New  Delhi/Faridabad,  India  and  the  lan- guage of  the  arbitration  proceedings  and that of all documents and communications between the parties shall be English.

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(vii) The decision of the majority of arbitrators shall  be final  and binding upon both par- ties. The cost and expenses of Arbitration shall be borne in such a manner as deter- mined by the arbitral tribunal. However, the expenses  incurred  by  each  party  in  con- nection 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 suf-

fered due to abnormal delays and additional costs as a result of hin-

drances caused by the Respondent. A three-member Arbitral Tribunal

was constituted as per clause 67.3 of the agreement under the Arbi-

tration 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 sit-

tings 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,

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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 rectifi -

cation 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 (here-

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

tion 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 con-

stitution of a Special Commercial Court at Gurugram, the Section 34

petition filed at Faridabad was transferred to the said Gurugram Com-

mercial  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

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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 main-

tainable, and that Delhi being only a convenient venue where arbitral

proceedings were held and not the seat of the arbitration proceed-

ings, 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,  Guru-

gram 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 Sec-

tion 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 Commer-

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

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

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

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

tration 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 Cor-

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

out the impugned judgment in detail, and stated that the ultimate con-

clusion that New Delhi was only a “venue” and not the “seat” of the ar-

bitration 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 con-

sidered 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

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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 judg-

ments of this Court, including the Five Judge Bench in  Bharat Alu-

minium 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 Ex-

ploration 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 re-

moved, and exhorted us to declare that Hardy Exploration and Pro-

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

to the larger bench in BALCO (supra).  

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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 concur-

rent jurisdiction propounded therein, but was also contrary to subse-

quent 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 exclu-

sive 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 Respon-

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

Office at Faridabad, thereby making the observations based on Sec-

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

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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 arbitra-

tion, as determined in accordance with Section 20 of the Arbitration

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

mined 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,  sup-

ported 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 Divi-

sion Bench judgment of the Delhi High Court in Antrix Corporation

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

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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. Ac-

cording 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 jurisdic-

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

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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 Di- vision of that High Court within a period of sixty days from the date of the judgment of order:

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Provided that an appeal shall lie from such orders passed by the Commercial Division or a Commer- cial 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 or- der or decree of a Commercial Division or Com- mercial  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 Corpora-

tion (supra) was as to whether an appeal, which was not maintain-

able  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 Com-

mercial  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  ap- peals, is in two parts. The main provision is, as has been  correctly  submitted  by  Shri  Giri,  a  provision

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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 Divi- sion of the High Court that are specifically enumer- ated 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 specifi- cally enumerated under Order 43 CPC would, there- fore, not be appealable, and appeals that are men- tioned in Section 37 of the Arbitration Act alone are appeals that can be made to the Commercial Appel- late 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 ap- peal 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 Commer- cial 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  en- acted 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 provi- sion contained in  a  self-contained code on matters pertaining to arbitration,  and which is  exhaustive in nature.  It  carries  the  negative  import  mentioned  in

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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 men- tioned  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 arbitra- tion relating to appeals arising out of commercial dis- putes, would obviously not apply to cases covered by Section 50 of the Arbitration Act.

21. However, the question still arises as to why Sec- tion 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 em- phasise  that  the  amended  Section  37  would  have precedence over the general  provision contained in Section 13(1) of the Commercial Courts Act. Inciden- tally,  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 arbi- tration.  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 appeal- able under Section 13(1) of the Commercial Courts Act. Whatever may be the ultimate reason for includ- ing 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. Jin- dal Exports Ltd., (2011) 8 SCC 333 : (2011) 4 SCC (Civ)  178]  would  apply,  and this  being so,  appeals

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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 for- eign 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 differ- ent 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,  en- forcement  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 com- mercial  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 en- forcement 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-

17

ment of such award would be further delayed by pro- viding an appeal under Section 13(1) of the Commer- cial 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 na- ture involving a sum of Rs 1 crore and over. For this reason also, we feel that Section 13(1) of the Com- mercial 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 doc- trine 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 arbi- tration.”

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

tion 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 Ar-

bitration Act,1996 alone which have to be looked at in order to deter-

mine 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). Ac-

cording to the High Court, even where a Section 34 application is or-

18

dered  to  be  returned  to  the  appropriate  Court,  such  order  would

amount to an order “refusing to set aside an arbitral award under Sec-

tion 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 Arbi-

tration Act, 1996, which alone can be looked at for the purpose of fil-

ing  appeals  against  orders  setting  aside,  or  refusing  to  set  aside

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

ment 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

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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 pro-

ceed further with the Section 34 application, and therefore, such ap-

plication 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 crea-

ture 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 Mu-

nicipal Corporation of Delhi & Ors. v. International Security & In-

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

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

missioner and Ors. (2013) 16 SCC 1 (at paragraph 20). He also re-

ferred 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

20

read with the Commercial Courts Act, 2015. In the course of discus-

sion the Delhi High Court said:

“12.  In view of the above discussions, we conclude that the present appeal is not maintainable. The ap- pellant’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 empha- sised, 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

21

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 ap- peal can lie from Coming to Section 37(1), it is evi- dent that an appeal can lie from only the orders speci- fied in clauses (a), (b) or (c). In other words, an ap- peal  under  Section  37  would  only  be  maintainable against (a) an order refusing to refer the parties to ar- bitration under Section 8 of the A&C Act; (b) an order granting or refusing to grant any measure under Sec- tion 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 un- der Section 34. We are unable to accept this proposi- tion.  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.”

22

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 condona-

tion 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 judg-

ment 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 Ar-

bitration 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 ap-

23

pealed 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 Commer-

cial 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 pe- tition finally and had listed the matter for hearing on merits, Antrix states that the impugned order is indis- tinguishable 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 un- der 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 re- spondent's failure to furnish securities. Therefore, as the relief sought for in this application is having a di- rect bearing on the relief sought for in the other appli- cations 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 un- der 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 fur- nish 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  im- pugned order, the Learned Single Judge had directed Antrix to file an affidavit of an authorised officer, en- closing 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  Mar- itime (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 re- maining blow through the impugned order, and there- fore, 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 di- rection to Antrix furnish an affidavit along with the par- ticulars sought,  is to aid its order with respect to a possible distraint,  attachment or further such conse- quential 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 in- terim  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 ef- fect, Antrix from proceeding with its Section 34 peti- tion 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 ap-

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

directing Antrix to file an affidavit, enclosing therewith its audited Bal-

ance Sheets and Profit and Loss Account for the last three years, is it-

self 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 in-

terim 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,

26

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 distinguish-

able 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 deliv-

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

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

ment on 06.12.2017, even though it ultimately pronounced the judg-

ment on 30.05.2018. The judgment in South Delhi Municipal Corpo-

ration  (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 maintain-

able.

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

tioners to the impugned judgment, which relates to the determination

of the “seat” of the arbitral proceedings between the parties. The im-

pugned 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. Con-

sequently,  the  impugned  judgment  holds  that  since  a  part  of  the

cause of action had arisen in Faridabad, and the Faridabad Commer-

cial  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 there-

fore 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 proceed-

ings.

The juridical seat of the arbitral proceedings

28

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

tral 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 per- son 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, to- gether 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, af- ter 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 mat- ters 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 ex- pired, or such application having been made, after re- fusing 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 ex- cess  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 Ar-

bitration 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 subject- matter of a suit, but does not, except for the pur- pose 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 mat- ter to which the reference relates.

(2)Notwithstanding  anything  contained  in  any  other law for the time being in force and save as other- wise 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 pro- ceedings 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 un- der this Act has been made in a Court competent to entertain it, that Court alone shall have jurisdic- tion over the arbitration proceedings-, and all sub- sequent 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  pro-

ceedings 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 sys- tem of a State;

xxx xxx xxx

Article 6. Court or other authority for certain func- tions 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 au- thority competent to perform these functions.]

xxx xxx xxx

Article 20. Place of arbitration

(1) The parties are free to agree on the place of arbi- tration. Failing such agreement, the place of arbitra- tion 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  in- spection 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 ar- bitration 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 contribu-

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

efficient settlement of disputes arising in international commercial re-

lations.

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

fines ‘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  re- quires,-

xxx xxx xxx

(e)“Court” means- (i) in case of an arbitration other than interna-

tional  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 ju- risdiction 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 arbi- tration, the High Court in exercise of its ordi- nary original civil jurisdiction, having jurisdic- tion to decide the questions forming the sub- ject-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  ap- peals from decrees of courts subordinate to that High Court;

xxx xxx xxx

(2) This part shall apply where the place of arbitra- tion 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 arbi- tration  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 arbitra-

tion.

(2)Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the ar- bitral 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 wit- nesses,  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 be- ing in force, where with respect to an arbitration agree- ment 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 proceed- ings 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 con-

tinues the  definition  contained  in  the Arbitration Act,  1940,  but  re-

places any and every civil court by only the principal civil court of orig-

inal 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 Sec-

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

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

and the High Court in exercise of their original ordinary civil jurisdic-

tion. 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 Arbitra- tion Act, 1996 does not make seat of the arbitration as the centre of gravity of the arbitration. On the con- trary,  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, Parta- sides,  Redfern  and  Hunter  (Eds.), Redfern  and Hunter on International Arbitration (5th Edn.,  Oxford University Press, Oxford/New York 2009).] This, how- ever, does not mean that all the proceedings of the arbitration have to take place at the seat of the arbi- tration. 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 Ap- peal  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 submit- ted 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 Sec- tion 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 terri- tory  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 applica- ble to arbitration seated outside India. It will be appo- site 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, hav- ing 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 con- nection with the process of dispute resolution. Its pur- pose is to identify the courts having supervisory con- trol 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 pro- vision in Section 2(1)(e) has to be construed keeping in view the provisions in Section 20 which give recog- nition to party autonomy. Accepting the narrow con- struction as projected by the Learned Counsel for the Appellants would, in fact, render Section 20 nugatory. In our view, the legislature has intentionally given ju- risdiction 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 re- quired 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 be- tween  a  party  from  Mumbai  and  the  other  from Kolkata) and the tribunal sitting in Delhi passes an in- terim 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 arbi- tration proceedings and the tribunal. This would be ir- respective of the fact that the obligations to be per- formed under the contract were to be performed ei- ther 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 sit- uated 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 arbi- tration.

(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 appro- priate for consultation among its members, for hear- ing 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) au- thorizes 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  can- vassed 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 injunc- tion of the kind sought depended upon the seat of the arbitration. An agreement as to the seat of an arbitra- tion 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 hav- ing  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 jurisdic- tion 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  con- spectus of  all  the decisions,  seems to  be,  that  the choice of another country as the seat of arbitration in- evitably  imports an acceptance that  the law of  that country relating to the conduct and supervision of ar- bitrations 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 appli- cation to international commercial arbitration held out- side  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 accor- dance 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  intermin- gling of the provisions contained in Part I with the pro- visions  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 arbi-

tration in their agreement, such selection would then amount to an ex-

clusive jurisdiction clause, as the parties have now indicated that the

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

lenges 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 harmo-

niously 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 jurisdic-

tion 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 Sec-

tion 20 of the Arbitration Act, 1996, which give recognition to party au-

tonomy in choosing the seat of the arbitration proceedings. Secondly,

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

risdiction 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 proceed-

ings, 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 ar-

bitration 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 para-

graph 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 ob-

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

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

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

“10. There is one other significant sentence in Sreeni- vasa 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 theo- rems, nor as provisions of a statute. These observa- tions must be read in the context in which they ap- pear.” 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 judg- ments. 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 MacDer- mott 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 re- membered 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 dif- ferent footings. Courts should not place reliance on decisions without discussing as to how the factual sit- uation 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 provi- sions of  the statute and that  too taken out  of  their context. These observations must be read in the con- text in which they appear to have been stated. Judg- ments 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 em- bark  into  lengthy  discussions  but  the  discussion  is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They inter- pret words of statutes; their words are not to be inter- preted 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 con-

flicts 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), follow-

ing 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 prop-

erly 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 arbi-

tral 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 de-

termined 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), af-

ter 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 Com-

mission Report, 2014 and the recommendations made therein as fol-

lows:

“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 arbitra- tion".

(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 be- tween 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 construc- tion 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 arbitra- tion 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 ar- bitration  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 Sec- tion 16 to 21 of the Code of Civil  Procedure be at- tracted. 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 arbi- tral  proceedings  arising  out  of  the  agreement  be- tween 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 fol- lowed  in  a  recent  judgment  in  B.E.  Simoese  Von Staraburg Niedenthal and Anr. v. Chhattisgarh Invest- ment 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 Mum- bai. 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 para-

graph 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 Ar-

bitration Act, 1996, so that in the case of international commercial ar-

bitrations 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 recommen-

dation 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

56

words “the principal Civil Court of original jurisdic- tion”

In sub-section (1),  clause (e) replace sub-clause (ii) by following: “(ii) in the case of an international commercial arbi- tration, 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 juris- diction 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 Court of a grade inferior to such High Court, or in cases involving grant  of  interim measures in  re- spect of arbitrations outside India, the High Court exercising jurisdiction over the court having juris- diction 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 arbitra- tions seated outside India. This also ensures that in  International  Commercial  Arbitrations,  jurisdic- tion 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 exer-

cise 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 de-

crees of courts subordinate to it, which is only on the basis of territo-

rial 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 desig-

nated to be the seat of the arbitration in the arbitration clause be-

tween the parties. Part of the cause of action, however, arises in sev-

eral 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 Ut-

tarakhand 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 contem-

plated 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 jurisdic-

tion. 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 arbi- tration...”

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 ex- clusive 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 fol- lows: (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 juris- diction to entertain the petition filed by the respon- dents 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 ju- risdiction to entertain the petition filed by the respon- dents.” 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

63

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 deci-

dendi  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 para-

graph 56 as follows:

“56. In Datawind (supra), as the facts and the ques- tion framed by the Court in the second paragraph of its decision suggest, the Court was faced with a situa- tion  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 exclu- sive forum selection clause in domestic arbitrations, then this would run contrary to the five-Judge deci- sion 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 im- plying  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. In- deed, it is open to parties to an arbitration to desig- nate  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 Corpo- ration  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 presup- poses 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 appli- cations. 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 Sec- tion 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 jurisdic- tion 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 exclu- sive forum selection clause. Therefore, it  cannot be said that the courts in Delhi have exclusive compe- tence 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, ques- tion (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 com-

mend itself to us. First and foremost, it is incorrect to state that the ex-

ample given by the Court in paragraph 96 of  BALCO  (supra) rein-

forces 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 per-

formed under the contract were to be performed either at Mumbai or

at Kolkata, and only arbitration is to take place in Delhi”.  The sen-

tence 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 unmis-

takably 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 (In-

dia) Ltd. (supra) and Reliance Industries (supra).  

60. Equally, the ratio of the judgment in  Indus Mobile Distribution Pri-

vate Ltd.  (supra), is contained in paragraphs 19 and 20. Two sepa-

rate and distinct reasons are given in Indus Mobile Distribution Pri-

vate  Ltd.  (supra)  for  arriving  at  the  conclusion  that  the  Courts  at

Mumbai alone would have jurisdiction. The first reason, which is inde-

pendent of the second, is that as the seat of the arbitration was desig-

nated 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 ju-

risdiction, the agreement itself designated the Mumbai Courts as hav-

ing exclusive jurisdiction. It is thus wholly incorrect to state that Indus

Mobile  Distribution  Private  Ltd.  (supra)  has  a  limited  ratio  deci-

dendi 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 ineffec-

tive and useless. Section 42 is meant to avoid conflicts in jurisdiction

of Courts by placing the supervisory jurisdiction over all arbitral pro-

ceedings 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 obvi-

ous that the application made under this part to a Court must be a

Court which has jurisdiction to decide such application. The subse-

quent holdings of this Court, that where a seat is designated in an

agreement, the Courts of the seat alone have jurisdiction, would re-

quire  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 in-

effective or useless. Also, where it is found on the facts of a particular

case that  either  no “seat”  is  designated by agreement,  or  the so-

called “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 ac-

tion 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 appli-

cation 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 be-

tween 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 dif- ferent 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 designa- tion of the arbitration venue as London and no desig- nation of any alternative place as the seat, combined with a supranational body of rules governing the arbi- tration and no other significant contrary indicia, the in- exorable 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 des- ignated by the parties to the arbitration agreement as the seat  of  the arbitration,  or,  having regard to the parties’  agreement  and  all  the  relevant  circum- stances, it is the seat to be determined in accordance with the final fall back provision of section 3 of the ar- bitration 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 pro-

ceeding.

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 con- ducted  in  English.  The  venue of  the arbitration pro- ceedings  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

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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 Con-

flict of Laws’, Dicey, Morris & Collins, 14th Ed. as follows:

“Moreover, as Cooke J. noted, this conclusion is con- sistent  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 conclu- sion that London is the “seat” of any arbitration there- under 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

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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 In- dian 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 ar- bitration 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 synony-

mous 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

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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  lan- guage in clause 18.3 does not refer to the venue of all hearings  “taking  place”  in  London.  Clause  18.3  in- stead provides that the venue of the arbitration pro- ceedings “shall be” London. This again suggests the parties intended to anchor the arbitration proceedings to and in London rather than simply physically locat- ing the arbitration hearings in  London.  Indeed in  a case where evidence might need to be taken or per- haps more likely inspected in India it would make no commercial sense to construe the provision as man- dating 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 arbitra- tion 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 im- portant 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 re- sponse was that if that is all the last sentence meant, then it would be superfluous. However, I do not con- sider 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)

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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 proceed-

ings 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 (Commer-

cial  Courts)  dealt  with  a  ‘Fixture  Note’  in  which  the  Respondent

agreed to charter a vessel to Shangang, China. The Fixture Note pro-

vided:

“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 arbitra- tion and of the application of Hong Kong law as the curial law. Clear words or ‘significant contrary indicia’

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are necessary to establish that some other seat or cu- rial 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 set- tle 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 arbi- trator and the arbitrators thus appointed by the Par- ties shall  within fifteen (15) days from the date the last arbitrator was appointed,  appoint  a  third arbitra- tor 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 arbitra- tion shall be London, England or otherwise as agreed by  the  Parties.  The arbitration proceedings  and record shall be in the English language.”

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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 rea-

sons:

“  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 Lon- don  rather  than  providing  that  the  hearings  should take place there.

Clause  20  provides  that  the venue of  the arbitra- tion "shall  be"  London "or  otherwise as  agreed be- tween the parties". If the reference to venue was sim- ply  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, how- ever inconvenient that might be for a particular hear- ing,  unless the parties agreed otherwise.  The ques- tion 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 ar- rangement. 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 arbi- tral tribunal. But if for whatever reason they were not in agreement, and it is not unknown for parties to ar- bitration 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 dis- placed it would, in my judgment, have to be spelled

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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 arbitra- tors 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 con-

cerned with the following arbitration clause contained in the agree-

ment 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

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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

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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

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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

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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

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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)

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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.”

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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

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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)

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“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

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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 be-

tween 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 do-

mestic 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 judg-

ments 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 par- ties  intended  to  exclude  all  other  courts.  In  the present  case,  the  parties  have  agreed  that  the “venue” of arbitration shall be at Bhubaneswar. Con-

90

sidering  the  agreement  of  the  parties  having Bhubaneswar as the venue of arbitration, the inten- tion of the parties is to exclude all  other courts. As held in Swastik, non-use of words like “exclusive juris- diction”, “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 or- der 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 arbi-

tration 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 afore-

said expression does not include just one or more individual or partic-

ular 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, ex-

perts  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

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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 pro-

ceedings. 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 Interna-

tional context, if a supranational body of rules is to govern the arbitra-

tion, 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 ar-

bitration.

Correctness of the judgment in Hardy Exploration and Produc-

tion (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-

92

tracted above. BALCO (supra) then summed up the legal position as

follows:

“116. The  legal  position  that  emerges  from a  con- spectus of  all  the decisions,  seems to  be,  that  the choice of another country as the seat of arbitration in- evitably  imports an acceptance that  the law of  that country relating to the conduct and supervision of ar- bitrations 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 arbi- tration proceedings, would not make Part I of the Arbi- tration 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 inter- nal conduct of their arbitration and which are not in- consistent with the mandatory provisions of the Eng- lish Procedural Law/Curial Law. This necessarily fol- lows from the fact that Part I applies only to arbitra- tions 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).

93

many parties are keen to adopt. The learned Judge has further held that when there is an express desig- nation of the arbitration venue as London and no des- ignation of  any alternative  place as the seat,  com- bined with a supranational body of Rules governing the arbitration and no other significant contrary indi- cia, the inexorable conclusion is that London is the ju- ridical 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 fol-

lows:

“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 vari- ous  decisions  referred  to  in  Enercon  (India)  Ltd. (supra), the analysis made and the propositions de- duced  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 repro- duced 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 deci- sion 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 princi- ples have been accepted by the Constitution Bench. Therefore, we are unable to accept the submission of Mr. Chidambaram that the finding recorded in Ener- con (India) Ltd. (supra) that Shashoua principle has been accepted in BALCO should be declared as per incuriam.”

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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 en- tertained 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 arbitra- tors, a third arbitrator/umpire shall be appointed. The arbitration proceedings shall  be in  accordance with the Rules of Conciliation and Arbitration of the Inter- national Chamber of Commerce Paris.

14.2 Proceedings in  such arbitrations shall  be con- ducted 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:

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“72. It is worthy to note that the arbitration agreement is not silent as to what law and procedure is to be fol- lowed. 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 loca- tion 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 interpreta- tive  perception  as  projected  by  the  learned  senior Counsel is unacceptable. xxx xxx xxx 76. In view of the aforesaid analysis, we allow the ap- peals and set aside the judgment of the High Court of Delhi that has held that courts in India have jurisdic- tion, and has also determined that Gautam Budh Na- gar 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 (In-

dia) Inc. (supra) was as to whether the ratio of Sumitomo Heavy In-

dustries 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 juris- diction of the Court. That apart, if there is mention of venue and something else is appended thereto, de- pending on the nature of the prescription, the Court can come to a conclusion that there is implied exclu- sion of Part I  of the Act.  The principle laid down in Sumitomo Heavy Industries Ltd. (supra) has been re- ferred to in Reliance Industries Limited (II) and distin- guished. In any case, it has no applicability to a con- troversy under the Act. The said controversy has to be governed by the BALCO principle or by the agree- ment 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:

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“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 (In-

dia) Inc (supra) failed to apply the Shashoua principle to the arbitra-

tion 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 UNCI-

TRAL 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 deter-

mination of a “juridical seat”, laid down by a Five Judge Bench of this

Court in BALCO (supra). The result in Hardy Exploration and Pro-

duction (India) Inc (supra) is that a foreign award that would be de-

livered 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  re- manded 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 sit- uation  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 “al- ternative 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 sub- stance 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 differ- ent  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:

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“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 provi- sion 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 applicabil- ity 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 main- tainable in India, on the basis of an international com- mercial 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 arbitra-

tion clause in question. The Hardy Exploration and Production (In-

dia) 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 con-

flicting  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

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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 Ar-

bitration 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 arbi-

tration). 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 ar-

bitration, 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 arbi-

tration which would be decided in India, the Arbitration Act, 1996 is to

apply as well. There being no other contra indication in such a situa-

tion, either New Delhi or Faridabad, India is the designated “seat” un-

der 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.

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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 Pro-

ceedings shall be held at New Delhi/Faridabad, India…”, thereby sig-

nifying 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 par-

ties”. 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, there-

fore, 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.  

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100.However, the fact that in all the three appeals before us the proceed-

ings 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. There-

fore, 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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