The Supreme Court on Monday (October 12) held that where an arbitration clause mentions two places for arbitration without clearly designating one as the juridical seat, the governing law clause conferring exclusive jurisdiction on courts at a particular place becomes relevant in determining the parties' intention to identify the seat of an arbitration.

“that mere expression “place of arbitration” cannot be the basis to determine the intention of the parties that they have intended that place as the “seat” of arbitration. The intention of the parties as to the “seat” should be determined from other clauses in the agreement, including the conduct of the parties.”, a bench of Justice Manoj Misra and Justice Vijay Bishnoi quoted from Mankastu Impex (P) Ltd. v. Airvisual Ltd. to hold that the seat of the arbitration would be determined upon a holistic reading of various clauses of the Agreement, especially the governing law of the arbitration.

The appeal was filed against the Delhi High Court's decision to allow the Respondent's plea for an appointment of an arbitrator, where the arbitration clause mentions two venues, i.e., Delhi and Goa; however, the governing law clause conferred exclusive jurisdiction with the Courts in Goa.

The Appellant contended that a mere mention of the two venues in an arbitration clause would not grant an exclusive jurisdiction to the Delhi High Court, when the law governing the arbitration conferred exclusive jurisdiction on the Courts in Goa.

Finding force in the Appellant's contention, the judgment authored by Justice Misra said that the intention of the parties to ascertain the seat of an arbitration could be evinced from a holistic reading of various clauses of the Agreement.

“...venue for arbitral proceeding would not automatically be the seat of arbitration. In such a situation, the Governing Law clause i.e., Clause 38 of the Agreement would be helpful in determining the juridical seat. Since Clause 38 of the Agreement confers exclusive jurisdiction to the courts at Goa and Clause 32.5 provides that arbitration proceedings will be held in Goa, it is clear that the parties have agreed that Goa shall be the juridical seat, Delhi is just a venue.”, The Court observed, relying on BGS SGS SOMA JV v. NHPC LTD. (2020), later affirmed in Arif Azim Company Limited v. Micromax Informatics FZE, 2024 LiveLaw (SC) 871.

“Upon reading the Agreement in its entirety, we find that the juridical seat of arbitration was at Goa, therefore, we are of the view that the Delhi High Court lacked jurisdiction to entertain the application under sub-section (6) of Section 11 of the 1996 Act.”, the Court held.

As a result, the appeal was allowed.

Appearance:

For Petitioner(s) :Mr. Salvador Santosh Rebello, AOR Mr. Raghav Sharma, Adv. Ms. Moulishree Pathak, Adv. Mr. Nishant Kumar, Adv. Mr. Devesh Khandelwal, Adv.

For Respondent(s) :Mr. Varun Singh, Adv. Mr. Sidhant Dhingra, Adv. Ms. Alankriti Dwivedi, Adv. Ms. Somesa Gupta, Adv. Ms. Arushi Vig, Adv. Mr. Mudit Gupta, AOR