Arbitration and Conciliation Act, 1996 – s.34 – “seat” and “venue” for holding arbitration proceedings under the Arbitration agreement – Arbitrator held meeting at Kuala Lumpur and signed the arbitral award in favour of the respondents – Appellant challenged the legal propriety and correctness of the award u/s.34 – High Court held that in the terms of the arbitration agreement, the Indian Courts had no jurisdiction to entertain the application, as Art.33 of the agreement mentioned Kuala Lumpur as a venue for arbitration – Aggrieved, appellant filed appeal – Two judge Bench of Supreme Court referred the matter to the larger Bench to decide the question regarding “seat” and “venue” for holding arbitration proceedings under the Arbitration agreement/ International Commercial Arbitration agreement – Held: The arbitration clause has to be appositely read to understand its intention so as to arrive at a conclusion on whether it determines the seat or not – Further, it has to be read in a holistic manner so as to determine the jurisdiction of the Court – That apart, if there is mention of venue and something else is appended thereto, depending on the nature of the prescription, the Court can come to conclusion that there is implied exclusion of Part-I of the Act – The sittings at various places are relatable to venue – However, it cannot be equated with the seat of arbitration or place of arbitration – Insofar place of arbitration between the parties in present case is concerned, place of arbitration had not been agreed upon between the parties – In case of failure of agreement between the parties, the Arbitral Tribunal was required to determine the same u/Art.20 of the UNCITRAL Model Law – It was also incumbent on the Arbitral Tribunal that the determination was clearly stated in the ‘form and contents of award’ as postulated in Art.31 of the UNCITRAL Model Law – In instant case, there was no determination or in other words, there was no adjudication and expression of an opinion – Thus, the word ‘place’ cannot be used as ‘seat’, though normally ‘place’ and ‘seat’ are used interchangeably – A place unlike seat, as 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 – As conditions precedent were not satisfied, Kaula Lumpur was not the seat or place of arbitration – Therefore, Courts in India had jurisdiction to entertain application u/s.34 of the Act – UNCITRAL Model Law – Arts.20 and 31.
Allowing the appeal, the Court
HELD: 1. In view of the various Supreme Court judgments, there is no confusion with regard to what the seat of arbitration and venue of arbitration mean. There is no shadow of doubt that the arbitration clause has to be read in a holistic manner so as to determine the jurisdiction of the Court. That apart, if there is mention of venue and something else is appended thereto, depending on the nature of the prescription, the Court can come to a conclusion that there is implied exclusion of Part I of the Act. [Para 23] [399-E-F]
2. In the present case, the place of arbitration was to be agreed upon between the parties. It had not been agreed upon ; and in case of failure of agreement, the Arbitral Tribunal is required to determine the same taking into consideration the convenience of the parties. It is also incumbent on the Arbitral Tribunal that the determination shall be clearly stated in the ‘form and contents of award’ that is postulated in Article 31. There has been no determination. [Para 31] [403-A-B]
3. The word ‘determination’ has to be contextually determined. When a ‘place’ is agreed upon, it gets the status of seat which means the juridical seat. The terms ‘place’ and ‘seat’ are used interchangeably. When only the term ‘place’ is stated or mentioned and no other condition is postulated, it is equivalent to ‘seat’ and that finalises the facet of jurisdiction. But if a condition precedent is attached to the term ‘place’, the said condition has to be satisfied so that the place can become equivalent to seat. In the instant case, as there are two distinct and disjunct riders, either of them have to be satisfied to become a place. As is evident, there is no agreement. As far as determination is concerned, there has been no determination. [Para 34][403-D-F]
4. 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. Thus, the Courts in India have jurisdiction and, therefore, the order passed by the Delhi High Court is set aside. [Para 34] [404-B-E]
Union of India v. Hardy Exploration and Production (India) INC (2018) 7 SCC 374 ; Govt. Of India v. Petrocon India Ltd. (2016) SCC Online MYFC 35 ; Sumitomo Heavy Industries Ltd. v. ONGC Ltd. and Others (1998) 1 SCC 305 ; Bhatia International v. Bulk Trading S.A. and Another (2002) 4 SCC 105 ; Venture Global Engineering v. Satyam Computer Services Ltd. & Another (2008) 4 SCC 190 ; Videocon Industries Limited v. Union of India and Another (2011) 6 SCC 161 ; Dozco India Private Ltd. v. Doosan Infracore Co. Limited (2011) 6 SCC 179 : [2010] 12 SCR 259 ; Bharat Aluminium Company v. Kaiser Aluminium Technical Services INC (2012) 9 SCC 552 : [2012] 12 SCR
327 ; Enercon (India) Ltd. & Others v. Enercon GMBH & Another (2014) 5 SCC 1: [2014] 2 SCR 855 ; Reliance Industries Limited and Another v. Union of India (2014) 7 SCC 603 : [2014] 6 SCR 456 ; Harmony Innovation Shipping Ltd. v. Gupta Coal India Limited and Another (2015) 9 SCC 172 : [2015] 2 SCR 697 ; Union of India v. Reliance Industries Limited and Others (2015) 10 SCC 213 : [2015] 10 SCR 85 ; Eitzen Bulk A/s & Others v. Ashapura Minechem Limited and Another (2016) 11 SCC 508 : [2016] 2 SCR 634 ; Imax Corporation v. E-City Entertainment (India) Pvt. Lid. (2017) 5 SCC 331 : [2017] 4 SCR 833 ; Roger
Shashoua and Others v. Mukesh Sharma and Others (2017) 14 SCC 722 : [2017] 7 SCR 442 ; Indtel Technical Services Private Ltd. v. W.S. Atkins Rail Limited (2008) 10 SCC 308 : [2008] 12 SCR 673 ; Ashok Leyland Limited v. State of T.N. and Another (2004) 3 SCC 1 : [2004] 1 SCR 306 – referred to. Lesotho Highlands Development Authority v. Impregilo SpA (2005) 3 WLR 129; Naviera Amazonica Peuana S.A. v. Compania International de Seguros del Peru (1998) 1 Lloyd’s Law Reports 116 (CA) ; Union of India v. McDonnell Douglas Corporation (1993) 2 Lloyd’s Law Reports 48 ; Hiscox v. Outhwaite (1992)
1 AC 562 ; C v. D (2007) EWCA Civ 1282 (CA) ; C v. D (2008) 1 Lloyd’s Law Reports 239 ; Braes of Doune Wind Farm (Scotland) Limited v. Alfred McAlpine Business Services Limited (2008) EWHC 426 (TCC) ; Shashoua and Ors. v. Sharma (2009) EWHC 957
(Comm.) ; Sulamerica Cia Nacional De Seguros S.A. and Ors. v. Enesa Engenharia SA & Ors. (2012) EWCA Civ 638 ; (1) Enercon GMBH (2) Wobben Properties GMBH v. Enercon (India) Ltd. (2012) EWHC 3711 (Comm.) – referred to.
Black’s Law Dictionary, 6th Edition – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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