Distinction Between 'Seat' & 'Venue' Of Arbitration : Supreme Court Summarises Principles

The Supreme Court has reiterated that merely conducting arbitral proceedings at a place different from the designated seat of arbitration does not confer jurisdiction on the courts of that location. A bench of Justices PS Narasimha and Alok Aradhe set aside the Jammu & Kashmir and Ladakh High Court's decision, which had refused to entertain the Appellant's Section 34 plea for challenging the award, merely because the arbitration proceedings were conducted in New Delhi, while ignoring the fact that the parties had mutually agreed to designate Srinagar as a seat of arbitration. “The seat of arbitration is governed by the agreement of the parties and not by any stray recital in the award. Once the seat of arbitration is fixed, it remains immutable unless altered by an express agreement. In the absence of any agreement, the designation of Srinagar as seat of the arbitration continues to hold the field…Once such a designation was made, the legal consequence that inexorably follows is that courts at Srinagar alone would have supervisory jurisdiction over the arbitral proceeding. The mere fact that arbitral tribunal for reasons of convenience, conducted proceeding at New Delhi or rendered the award at that place does not and cannot, alter the juridical seat of arbitration.”, the court observed. The Court rejected the High Court's approach to justify Delhi court's jurisdiction to hear Section 34 plea, stating that “the approach adopted by the High Court, if upheld, would have the effect of rendering the concept of juridical seat otiose, and would introduce uncertainty in arbitration proceeding by allowing the place of hearing or the place where the award is signed to determine the jurisdiction. Such a consequence would be contrary to principles of party autonomy and legal certainty that underlie the Arbitration and Conciliation Act, 1996.” The case arose after a dispute between the Appellant and Respondent, in which the Respondent was granted a work order by the Appellant for the construction of road projects in Jammu & Kashmir. The parties have consented to make Srinagar a seat of arbitration; however, the arbitral award was passed in New Delhi. The Appellant approached the J&K and Ladakh High Court for setting aside the award; however, the High Court returned the plea, asking them to approach the court in New Delhi, leading to an appeal before the Supreme Court. Setting aside the impugned order, the judgment authored by Justice Aradhe observed that merely because New Delhi was the venue of the arbitration would not 'ipso facto' make the court in New Delhi to entertain a Section 34 plea when the jurisdictional seat was determined at Srinagar. “The mere fact that arbitral proceedings are conducted or the award is rendered at a particular place does not confer jurisdiction on courts of that place if it is different from the designated seat. The seat remains fixed unless expressly altered by agreement of the parties.”, the court observed. “..the impugned order returning the application filed by the appellant under Section 34 of the Act cannot be sustained. The court at Srinagar being the court of seat of arbitration, alone possesses the jurisdiction to entertain and decide the challenge to the arbitral award”, the court held. The principles governing the distinction between the seat and venue of the arbitration, and the jurisdictional consequences that follow, may be summarised as under: - "(i) The seat of arbitration constitutes the juridical home or legal place of arbitration. It determines the curial law governing the arbitral process and identifies the Court having supervisory control over the arbitration. (ii) Once the seat is designated by agreement of the parties, the courts of that place alone have exclusive jurisdiction to entertain all proceedings arising out of the arbitration, including challenges to the award. The designation of the seat operates akin to an exclusive jurisdiction clause, excluding all other courts – even those where the cause of action may have arisen. (iii) The venue is merely a geographical location chosen for convenience for holding hearings, examination of witnesses, or meetings of the arbitral tribunal. It does not confer jurisdiction and does not, by itself, alter or determine the seat. The arbitral tribunal is free to conduct proceedings at locations different from the seat without affecting the juridical seat. (iv) The mere fact that arbitral proceedings are conducted or the award is rendered at a particular place does not confer jurisdiction on courts of that place if it is different from the designated seat. The seat remains fixed unless expressly altered by agreement of the parties. (v) Where the seat is not expressly designated, courts determine it by applying: (a) the closest and most intimate connection test, identifying the place most closely connected with the arbitration (based on the Naviera Amazonica principle); and (b) in appropriate cases,...

Distinction Between 'Seat' & 'Venue' Of Arbitration : Supreme Court Summarises Principles

Yash Mittal

Tags