Seat vs Venue | Arbitration

Two significant judgments of the Supreme Court govern the law in this field of arbitration viz.-

i. Bhatia International vs Bulk Trading ¹(2002) 4 SCC 105  [“Bhatia”]

A three judge bench of the Supreme Court held that the provisions of part 1 of the Arbitration and Conciliation Act [“the Act”] shall also apply to all arbitrations held out of India unless the parties by agreement, express or implied, exclude all or any of its provisions.

ii. Bharat Aluminum Co. vs Kaiser Aluminum Technical Service, Inc.²(2012) 9 SCC 552  [“BALCO”]

A decade later, a constitution bench of the Supreme Court reversed the findings given in Bhatia and strictly limited the application of part 1 of the Act to arbitrations which take place within the territory of India. However, keeping in view of the fact that the law laid down in Bhatia has been followed by all the High Courts and the Supreme Court as well in various judgments, thus, the Supreme Court deemed it appropriate in holding that the above ratio would apply prospectively to all the arbitration agreements executed after the date of the aforementioned judgment.

The Act does not define seat or venue. Section 20 of the Act merely defines place of arbitration which is often used synonymously with the terms “seat” or “venue” which often leads to controversy. The term “seat” is of vital importance as it connotes situs of arbitration. Whereas, the term “venue” though often confused with the term “seat” is more of a place chosen as convenient location by the parties to carry out the arbitration proceedings, but it ought not to be confused with seat. For example, the parties may choose Delhi as the seat of arbitration but are at liberty to conduct the arbitration proceedings in Mumbai or any place other than the Seat/Delhi. However, in case of dispute, it is only the courts in Delhi which shall have the supervisory jurisdiction over such arbitration proceedings as the Seat chosen by the parties is Delhi which is akin to an exclusive jurisdiction clause in the Agreement.

The Constitution bench in BALCO unequivocally clarified that the word “place” mentioned in Section 20(1) and 20(2) of the Act refers to the juridical seat of arbitration, whereas the word “place” as appearing in Clause 20(3) is equivalent to Venue. Apart from limiting the scope and application of part I of the Act to arbitrations taking place within India, the Constitution bench in BALCO laid down various guiding principles and the foundation upon which the controversy qua the Seat and venue is to be adjudicated. The same are hereby given below in brief-

1. The law of the Seat or place where the arbitration is held shall be the law to govern the Arbitration.
2. Part 1 of the Act applies when the seat of Arbitration is in India irrespective of the kind of arbitration.
3. The distinction between Seat and Venue is crucial when the arbitration agreement designates a foreign court as Seat/place of arbitration and also selects Arbitration and Conciliation Act 1996, as the law to govern the arbitration proceedings. In such an event, the part 1 of the Act would be inapplicable as the Seat is outside India even if the agreement purports to provide the applicability of the Arbitration and Conciliation Act 1996 to govern the proceedings.
4. The Court must undertake detailed examination in order to discern from the agreement and surrounding circumstances, the intention of the parties as to whether a particular place mentioned in the agreement refers to Seat or Venue.
5. Choice of another country as the seat of arbitration, inevitably imports an acceptance that law of that country relating to the conduct and supervision of arbitration will apply to such proceedings.

Upon the bedrock of the aforementioned principles laid down in BALCO, herein below is a case study of various arbitration clauses under consideration in matters adjudicated by the foreign courts and the Supreme Court, which resulted in landmark judgments and further development in understanding the controversy between Seat and Venue.

1. Roger Shashoua & Ors v Mukesh Sharma³[2009] EWHC 957 (Comm) 

Arbitration Clause

“The Venue of the Arbitration shall be London, United Kingdom. The Arbitration proceedings would be conducted in English in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, Paris. The governing law of the Agreement would be the law of India.”

The aforementioned arbitration clause does not conspicuously confer the seat of arbitration as that of London, U.K., it only refers to Venue. It is exactly in the aforementioned fact situation that the Supreme Court, in BALCO held that the Courts must undertake a detailed examination as to whether the place mentioned in the agreement refers to Seat or Venue. In the aforementioned judgment, rendered by Justice Cook, the Court arrived at the conclusion that although the word venue is not synonymous with Seat in an arbitration clause, however, the venue designated as London is accompanied with the curial law of International Chamber of Commerce, Paris which is a supranational body of Rules. Therefore, in the aforesaid fact situation the Court held that the word Venue in the arbitration clause would have to be read as the seat of arbitration and only courts in U.K. shall have the supervisory jurisdiction over such arbitration proceedings as seat is akin to an exclusive jurisdiction clause. The aforementioned judgment became to be known and quoted in various judgments of the Indian Courts as the Shashoua principle [“Shashoua principle”] and was relied upon by the Supreme Court in BALCO for arriving at the conclusion.

2. Enercon (India) Pvt. Ltd. & Ors. Vs Enercon GMBH & Anr.⁴(2014) 5 SCC 1

 Arbitration Clause

“18.3. A proceedings in such arbitration shall be conducted in English. The Venue of the arbitration proceedings shall be in 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 provisions of the Indian Arbitration and Conciliation Act, 1996 shall apply.”

Notably, London has been designated Venue of Arbitration proceedings between the parties and the provisions of the Arbitration and Conciliation Act, 1996 have been made applicable to such proceedings. Faced with the aforementioned unworkability of the arbitration clause, the Supreme Court observed that in such fact situation, a commonsense approach must be adopted to give effect to the intention of the parties. The fact that London has been designated as Venue coupled with the fact that Indian Arbitration Act has been made applicable to the said proceedings, the Supreme Court concluded that the Seat of such arbitration proceedings shall be India and only Indian courts shall have supervisory jurisdiction over such proceedings. Distinguishing the aforementioned ratio with the law laid down in in Shashoua, the Supreme Court held that unlike in Shashoua where the Venue was accompanied with supranational body of rules i.e. ICC, Pairs, in the present fact situation the Venue is accompanied with the Indian Arbitration Act, therefore parties intended that the seat of Arbitration would be in India and London would be the venue for convenience of the parties.

3. Union of India vs Reliance Industries Ltd. & Ors.⁵(2015) 10 SCC 213

Arbitration Clause

“33.9. Arbitration proceedings shall be conducted in accordance with the arbitration rules of United Nations Commission on International Trade Law (UNCITRAL) of 1985….

33.12. The Venue of Conciliation or arbitration proceedings pursuant to this Article, unless the parties otherwise agree, shall be London, England and shall be conducted in English language.”

Two distinct features which appear in the aforesaid clause is that the Venue has been designated in London and law applicable to the arbitration proceedings is that of UNCITRAL. The aforesaid agreement dated prior to ratio laid down in BALCO therefore, the ratio laid down in Bhatia would have to be applied which held that part 1 of the Act would be applicable to the arbitration proceedings unless expressly or impliedly excluded by the parties. In aforementioned clause the parties have impliedly excluded with application of Indian Arbitration Act by choosing UNCITRAL arbitration rules to conduct the proceedings, therefore, part 1 of the Act shall not be applicable following the ratio laid down in Bhatia and coupled with the fact that Venue has been designated as London, the Supreme Court concluded that the word “Venue” would have to be construed as “Seat” of arbitration as the parties intended Courts in London to have supervisory jurisdiction over the proceedings.

4. Eitezen Bulk vs Ashapura Minechem⁶(2017) 14 SCC 722 

Arbitration Clause

“Any dispute arising under this C.O.A. is to be settled and referred to Arbitration in London. One Arbitrator to be employed by the Charters and one by the Owners and in case they shall not agree then shall appoint an Umpire whose decision shall be final and binding, the Arbitrators and Umpire to be Commercial Shipping Men. English law to apply. Notwithstanding anything to the contrary agreed in the C.O.A., all disputes where the amount involved is less then USD 50,000/- (fifty thousand) the Arbitration shall be conducted in accordance with the Small Claims Procedure of the L.M.A.A.”

The aforementioned is an agreement executed prior to BALCO, therefore the Supreme Court was to decide whether the provisions of Part 1 of the Act have been expressly or impliedly excluded by the parties. The Supreme Court held that the Seat of the Arbitration is London coupled with the fact that the parties have chosen only English law to apply to such proceedings which is an expressive intention of the parties to exclude part 1 of the Act. Therefore, an award rendered by the English court is not amenable to a challenge u/s 34 of the Act, falling in part 1 of the Act. The Supreme Court further clarified that mere choosing of the juridical seat of Arbitration attracts the law applicable to such location and it is not necessary to specify which law would apply to the arbitration proceedings, since the law of the particular country would apply ipso jure.

5. Roger Shashoua & Ors. Vs Mukesh Sharma⁷(2017) 14 SCC 722

Arbitration Clause

“14.1. …The Arbitration proceedings shall be in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, Paris.

14.4. The Venue of the Arbitration shall be London, United Kingdom.

17.6. This Agreement shall be governed by and construed in accordance with the laws of India.”

Notably, the aforementioned clause is similar to the one under consideration before the English Court in Shashoua viz. Venue- London and governed by a supranational body of rules viz ICC, Paris. Therefore, the Supreme Court applied the Shashoua principle and held that the parties have intended the seat to be of London and only courts in U.K. shall have supervisory jurisdiction over such arbitration proceedings as seat is akin to an exclusive jurisdiction clause.

6. Indus Mobile Distribution Pvt. Ltd. vs Datawind Innovations Pvt. Ltd.⁸(2017) 14 SCC 722

Arbitration Clause

“18..If the dispute cannot be amicably resolved by such officers within 30 days form the date of referral or within such longer time as mutually agreed, such dispute shall be finally settled by arbitration conducted under the provisions of the Arbitration and Conciliation Act, 1996 by reference to a sole Arbitrator which shall be mutually agreed by the parties Such arbitration shall be conducted at Mumbai, in English language.

All disputes and differences of any kind whatever arising out of or in connection with this Agreement shall be subject to the exclusive jurisdiction of courts of Mumbai only.”

Notably, the seat of arbitration is in India with exclusive jurisdiction of Courts at Mumbai. The Respondent in the above matter filed an application u/s 9 of the Act for interim reliefs before the Delhi High Court. The Delhi High Court allowed the said application stating that since no part of cause of action arose in Mumbai, therefore Delhi would have jurisdiction. The said judgment was challenged before the Supreme Court which reversed the findings given by the Delhi High Court in the impugned judgment. The Supreme Court reiterated the principle that once the seat of arbitration has been fixed (in above matter, Mumbai), it would be in the nature of exclusive jurisdiction clause and only courts at the place of seat shall have the supervisory control and jurisdiction to adjudicate dispute arising out of such proceedings. It is immaterial where the cause of action has arisen. The Court further held that the provisions of Section 16 to 20 of the Civil Procedure Code, 1908 would not be attracted. Therefore, the  Supreme Court set aside the judgement rendered by the Delhi High Court, observing that only courts at Mumbai shall have jurisdiction.

7. Mankastu Impex Pvt. Ltd. vs Airvisual Ltd.⁹(2020) 5 SCC 399

Arbitration Clause

“17.1. This MoU is governed by the laws of India, without regard to its conflicts of law provisions and courts at New Delhi shall have the jurisdiction.

17.2. Any dispute,  controversy, difference or claim arising out of or relating to this MoU, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered in Hong Kong.

The Place of arbitration shall be Hong Kong.”

The three-judge bench of the Supreme Court observed that the agreement between the parties choosing “Hong Kong” as the place of arbitration by itself will not lead to the conclusion that parties have chosen Hong Kong as the seat of arbitration. The words “the place of arbitration shall be Hong Kong” have to be read along with clause 17.2. The Court held that the agreement between the parties that the dispute “shall be referred to and finally resolved by arbitration administered in Hong Kong” clearly suggests that the parties have agreed that arbitration be seated at Hong Kong and that the laws of Hong Kong shall govern the arbitration proceedings as well as the power of judicial review over the arbitration award. Clause 17.1 of the agreement stating that New Delhi shall have jurisdiction does not alone confer jurisdiction upon courts in New Delhi. Clause 17.1 is to be read in conjunction with clause 17.3.

The Conundrum of two jurisdictions 

The Constitution Bench in BALCO (supra) at paragraph 96 inter alia observed that the legislature has conferred jurisdiction upon two courts i.e. the court where the cause of action has arisen and the court where the seat of the arbitration is situated. This observation of the Supreme Court is inconsistent with the subsequent paragraphs of the judgment and a well recognised principle of law in the field of arbitration that once the seat of the arbitration has been fixed, it would be in the nature of an exclusive jurisdiction clause ousting the jurisdiction of other Courts. The Supreme Court in the matter of Indus Mobile Distribution Pvt. Ltd. (supra), after going through the conspectus of the judgments discussed above, categorically held that the moment the seat is designated, it is akin to an exclusive jurisdiction clause and a plea that the cause of action did not arise within the jurisdiction of the “Seat” court cannot be countenanced.  Despite settling the law in the aforesaid terms, various High Courts draw sustenance from the observations made by the Constitution Bench in BALCO (supra). For example in Antrix Corporation Ltd. vs Devas Multimedia Pvt. Ltd.¹⁰2018 SCC Online Del 9338 a division bench of the Delhi High Court held that courts would have concurrent jurisdiction notwithstanding the designation of the seat of arbitration by agreement between the parties. Recently, the Punjab and Haryana High Court in the matter of M/s I care Consultancy vs L & T Finance Ltd & Ors.¹¹ARB- 57 of 2023 held that the Punjab and Haryana High Court would have jurisdiction to appoint the arbitrator as the cause of action has arisen within its jurisdiction notwithstanding the fact that the arbitration clause categorically conferred jurisdiction upon courts situated at Mumbai.

A three judge bench of the Supreme Court in BGS SGS SOMA JV vs NHPC Ltd. finally put a quietus to the aforesaid conundrum by echoing the principle that “seat” is akin to an exclusive jurisdiction clause and the observation of the Constitution Bench in BALCO (supra) does not ‘unmistakably’ hold that two courts have concurring jurisdiction. The arbitration clause and the facts and circumstances of the said case are discussed herein below-

8. BSG SGS SOMA JV vs NHPC Ltd.¹²2019 (17) SCALE 369  

Arbitration Clause

“(i)…A dispute with an Indian Contractor shall be finally settled in accordance with the Indian Arbitration and Conciliation Act, 1996 or any statutory amendment thereof.

(ii) Arbitration proceedings shall be held at New Delhi/Faridabad, India and the language of the arbitration proceedings and that of all documents and communications between the parties shall be English”

In the aforementioned matter, the arbitration proceedings were held at New Delhi and the award was also passed at New Delhi. However, a valiant attempt was made by the Respondents to persuade the Court that since the cause of action has arisen in Faridabad, therefore, the Courts at Haryana shall have jurisdiction. Reliance was placed upon para 96 of BALCO to state that two courts would have concurrent jurisdiction viz. one where the seat is located and one where the cause of action has arisen. The Supreme Court, however, repelled the aforesaid contentions of the Respondents and categorically stated that BALCO does not “unmistakably” hold that two courts would have concurrent jurisdiction as follows-

Therefore, the court overruled Antrix (supra) by clarifying the observations in BALCO (supra). The Court reiterated that choosing of seat amounts to choosing of the exclusive jurisdiction of the courts at which the seat is located. On the issue of seat of Arbitration, the Supreme Court reached the conclusion that since the arbitration proceedings were held in New Delhi, awards were signed in New Delhi and not in Faridabad, would lead to the conclusion that both parties have chosen New Delhi as the Seat of arbitration. Resultantly, only courts at New Delhi would have supervisory jurisdiction over such proceedings. Before arriving at conclusion, the Supreme Court laid down various guiding principles for adjudicating the controversy between Seat and Venue-

1. Whenever 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 proceedings.
2. Whenever there is the designation of a place of arbitration in an arbitration clause as being the “Venue” of the arbitration proceedings, the expression “arbitration proceedings” would make it clear that “venue” is really the “seat” of arbitration proceedings.
3. If a clause stipulates that arbitration proceedings “shall be held” at particular venue would also indicate that the said “venue” is the seat of the arbitral proceedings.
4. The aforementioned rules are to be applied 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.
5. In an international context, if a supranational body of rules is to govern the arbitration, this would further be an indicia that the “venue”, so stated, would be the seat of the arbitral proceedings.
6. In a national context, this would be replaced by Arbitration Act, 1996 as applying to the stated “venue” which then becomes the “seat” for the purposes of arbitration.

When the Arbitration Agreement is silent upon Seat and Venue then Seat has to be determined according to Section 16 to 20 of CPC by the Court at the stage of referral to Arbitration under Section 11

In Faith Constructions vs N.W.G.E.L. Church¹³Arb. P. 1318 of 2024, the Delhi High Court was dealing with a Section 11 Petition for appointment of Arbitrator for adjudicating disputes between the parties arising out of an Agreement which was silent upon the Seat and Venue of the Arbitration proceedings. The Court held that when the Arbitration Agreement is silent upon Seat, Venue or Place of Arbitration, then the Seat of the Arbitration would be determined by the Court by seeking recourse to Section 16 to 20 of the CPC. The Court emphasized that in such a case, two factors would be of relevance, viz-

1. Where the Respondent actually or voluntarily resides or carries on their business, and
2. Where the cause of action, wholly or in part, arises.

The Court also stated some of the principles which would be relevant for determining the territorial jurisdiction of a Court, viz-

1. The making and singing of a contract constitutes cause of action;
2. The facts which are necessary to decide the lis between the parties must have wholly or at least in part, arisen within the territorial jurisdiction of the court.
3. Each fact pleaded in the Petition would not ipso fact be considered relevant while determining cause of action. The facts must have some nexus with the issues involved in the matter.
4. An insignificant or trivial part of cause of action would not be sufficient to confer territorial jurisdiction, even if incidentally forming a part of cause of action.

In the aforesaid matter the following factors weighed with the Court-

1. The subject Agreement was executed and notarized in Odisha.
2. The construction work under the said Agreement also took place in Odisha.
3. Respondent’s principal place of business was in Odisha.

Therefore, the Court held that the material part of cause of action had arisen outside the territorial jurisdiction of Delhi therefore, the court held that the Delhi High Court does not have jurisdiction, leading to dismissal of the Section 11 Petition. In Kings Chariot vs Tarun Wadhwa¹⁴2024 DHC 4407; RK Braria Through RK Bararia Sole Proprietor vs JBM Global School¹⁵2024 SCC OnLine Del 3033 and IIFL Home Finance Ltd. vs Punkaj Bhagchand Chhallani & Ors.¹⁶Arb. P. 827 of 2024 the same ratio has been reiterated by the Delhi High Court, viz. If the Arbitration Agreement is silent upon Seat and Venue, then jurisdiction would have to be determined by the Court by seeking recourse to Section 16 to 20 of CPC.

When the Agreement is silent upon Seat and Venue but Agreement contains exclusive jurisdiction clause then the exclusive jurisdiction clause would be deemed to be the Seat of Arbitration

In M/s Activitas Management Advisor Pvt. Ltd. vs Mind Plus Healthcare Pvt. Ltd.¹⁷SLP (C) No. 27714 of 2024, the Arbitration clause provided that parties submit to the exclusive jurisdiction of Courts located in Mumbai. However, pursuant to a dispute between the parties, the Respondent approached the Punjab and Haryana High Court under Section 11 for appointment of Arbitrator, which was allowed by the High Court. The Petitioner challenged the aforesaid appointment before Supreme Court in SLP. The Supreme Court held that the exclusive jurisdiction mentioned in the Agreement must be understood to mean in the context of Arbitration and therefore the Seat of Arbitration must be taken to be Mumbai. This judgment was recently followed by the Delhi High Court in the matter of SNS Engineering Pvt. Ltd. vs M/s Hariom Projects Pvt. Ltd.¹⁸Arb. P. 2130 of 2024 wherein the Court reiterated that even in absence of word “Seat” in the arbitration clause/agreement, the court that is granted the exclusive jurisdiction, will be deemed to be the Seat of Arbitration.

In Swastik Gases Pvt. Ltd vs IOCL¹⁹(2013) 9 SCC 32 the clause in the Agreement stipulated that the Agreement shall be subject to the jurisdiction of the Courts at Calcutta. The Appellant argued that since part of cause of action has arisen in Jaipur and the Agreement does not expressly bar the jurisdiction of any other Court, therefore, the Rajasthan High Court would have jurisdiction to appoint the Arbitrator under Section 11. In this scenario the Supreme Court clarified that merely because the words like “alone”, “exclusive” and “only” have not been used in the jurisdiction clause, that would not stultify or invalidate the jurisdiction clause. The Court held that when parties have conferred jurisdiction upon Court at particular place then an inference must be drawn that parties have excluded jurisdiction of all other Courts.

Where cause of action arose, is immaterial for determining the Seat of Arbitration

In Delhi Tourism and Trasnportation Development Corporation vs M/s Satinder Mahajan²⁰OMP (Comm) 337 of 2021 decided on 01.05.2024, the Delhi High Court clarified that Seat of Arbitration is to be determined on the basis of connection with the arbitral proceedings, and not with the cause of action for the underlying disputes. In the aforesaid case the Arbitral the Agreement did not provide Seat, Venue or an exclusive jurisdiction clause. The Petitioner argued that since the agreement was executed in Delhi and cause of action arose in Delhi therefore, Delhi High Court would have jurisdiction to entertain the Section 34 Petition. However, the Court clarified that the aforesaid factors are immaterial for determining the Seat of Arbitration. The Court observed that since the Arbitral proceedings were conducted in Pathankot, in absence of any contrary indicia in the nature of exclusive jurisdiction clause or otherwise, then Seat would be Pathankot where the Arbitration was conducted.  This argument was also considered by the three-judge bench of the Supreme Court in BGS Soma JV vs NHPC²¹2019 (17) SCALE 369 wherein the Arbitration clause stipulated that the Arbitration proceedings shall be held at New Delhi/Faridabad.  The Respondents relied upon the Constitution Bench judgment in BALCO to argue that two courts can have concurrent jurisdiction pertaining to an Arbitration viz. one where the cause of action arose and the other where the Seat is located. However, the Supreme Court rejected the argument and clarified that choosing of Seat is akin to an exclusive jurisdiction clause. Once the Agreement fixes the Seat of Arbitration then the place where cause of action arose and Section 2(1)(e) of the Act, lose their relevance²²Cars 24 Services Pvt. Ltd. vs Cyber Approach Workspace LLP 2020 SCC OnLine 1720.

When Agreement provides Seat of Arbitration at Place X but the Exclusive jurisdiction clause confers jurisdiction on Courts situated at Y then courts situated at X would have supervisory jurisdiction over the Arbitration

The Constitution Bench in BALCO (supra) held in no uncertain terms that Seat is akin to an exclusive jurisdiction clause and when once Seat is determined then the Courts having territorial jurisdiction over Seat of Arbitration shall have supervisory jurisdiction over the Arbitration proceedings. This position of law has been affirmed by the three-judge bench in BGS SOMA (supra). In such a situation, even if there is an exclusive jurisdiction clause present in the Agreement conferring jurisdiction upon Courts other than the Seat of Arbitration, such a clause would be of no consequence.  In Yassh Deep Builder LLP vs Sushil Kumar Singh²³(2024) 2 HCC (Del) 99, the Delhi High Court was concerned with an Arbitration clause which provided Venue of the proceedings as Delhi and also contained an exclusive jurisdiction clause which conferred jurisdiction upon Court at Gurugram, Haryana. The Court held that since Venue has been expressly mentioned, in the absence of Seat, the Venue Delhi shall be considered as the Seat of Arbitration and the Exclusive jurisdiction clause conferring jurisdiction upon Court at Gurugram would only be applicable if the parties do not choose to decide their disputes through Arbitration. This position of law was reiterated by Delhi High Court in Precitech Enclosures Systems Pvt. Ltd. vs Rudrapur Precision Industries and Anr.²⁴2025 SCC OnLine 1609 wherein the Court held that if the Agreement contains one clause designating arbitral seat/arbitral venue, and another conferring exclusive jurisdiction on courts located elsewhere over the agreement then disputes that arise out of it, legal or judicial proceedings relating to arbitration would lie only before the court having territorial jurisdiction over the arbitral seat/arbitral venue. This position of law has been recently reiterated by the Delhi High Court in the matter of PVR Inox Ltd. vs Shipra Hotels Ltd²⁵Arb. P. 478 of 2025.

When Agreement provides Seat of Arbitration at Place X but the Exclusive jurisdiction clause, also relating to arbitration, confers jurisdiction on Courts situated at Y then courts situated at Y would have supervisory jurisdiction over the Arbitration

The application of law is more nuanced in a case where the Seat of Arbitration and the Exclusive jurisdiction clause, both relate to Arbitration proceedings, providing different places of jurisdiction. In Cars 24 Services Pvt. Ltd. vs Cyber Approach Workspace LLP²⁶2020 SCC OnLine 1720, the Delhi High Court was dealing with an Arbitration clause which on one hand provided that the parties may approach Courts at Haryana for the purpose of appointment of Arbitrator and on the other hand provided that the Seat of Arbitration shall be Delhi. Posed with such a situation, the Court held that in such a case it would not be prudent to grant pride of place to the Seat of Arbitration over the exclusive jurisdiction clause. Therefore, the Court held that once the Agreement between the parties specifically confers Section 11 jurisdiction, for appointment of arbitrator, on courts at Haryana, then Courts at Delhi would not have jurisdiction to entertain the Section 11 Petition for appointment of Arbitrator. This position of law was reiterated by the Delhi High Court in Precitech Enclosures (supra) which contained a similar jurisdiction clause and more recently in the matter of Surjit Singh and Bros. vs AFCON Infrastructure Ltd²⁷Arb. P. 51 of 2025.

Therefore, when faced with an Arbitration clause which provides Seat as well as an exclusive jurisdiction clause, both clauses conferring jurisdiction on separate courts, then it is imperative to first discern whether the exclusive jurisdiction clause is general in nature, if yes then the general rule will apply and the Seat mentioned in the Agreement will override the exclusive jurisdiction clause. However, if the exclusive jurisdiction clause is also related to arbitration, say it provides that for appointment of arbitrator, parties shall approach courts at Delhi, then notwithstanding the Seat provided in the Agreements designates Mumbai as Seat of Arbitration, the Petition for appointment of Arbitrator would only lie before Courts at Delhi. This position of law was recently upheld by the Delhi High Court in the matter of M/s Viva  Infraventure Pvt. Ltd. vs New Okhla Industrial Development Authority²⁸OMP (MISC.) Comm 606 of 2024, wherein the Court held that where an agreement contains an exclusive jurisdiction clause covering the arbitration clause, the court identified in the exclusive jurisdiction clause will be deemed to have supervisory jurisdiction over the seat of arbitration. In the aforesaid matter, the Agreement provided that the venue shall be fixed by the Arbitrator, however, any application for the enforcement of the arbitration clause shall be filed before competent court at Gautam Budh Nagar.

The aforesaid judgments, however do no clarify which Courts the parties must approach for seeking reliefs under the other Sections of the Act, viz. Section 29A for extension of time or Section 34 for challenging the Arbitral Award. The aforesaid judgments provided an exclusive jurisdiction clause, very specific in nature, viz. that for appointment of Arbitrator the parties shall approach courts situated at X and also provided that the Seat of Arbitration proceedings shall be at Y. Therefore, the Delhi High Court held that parties must approach Courts at X since the exclusive jurisdiction clause is specific in nature. However, as per Section 42 of the Act, if the parties filed Section 11 before Courts at X, then all the subsequent Applications under the Act would also have to be filed at Court X only. This would be in conflict with the clause specifically providing Seat at Y and the principle that fixation of Seat is akin to an exclusive jurisdiction clause. The Delhi High Court in Cars 24 (supra) was alive to the aforesaid anomalous situation that would arise, however, refused to address the issue since the Court in the said case was only determining which Court should have Section 11 jurisdiction in the presence of a clause of the aforesaid nature.

Arbitrator cannot change the Seat/Venue mentioned in the Agreement by way of a Procedural Order or without the consent of the Parties

In Viva Infraventure (supra) the Arbitration clause stipulated that Any suit or application for enforcement of this arbitration clause shall be filed in the competent court at Gautam Budh Nagar. However, the Arbitral Tribunal by way of a Procedural Order fixed the Seat of Arbitration at Delhi. The Delhi High Court inter alia observed that a Procedural Order fixing the Seat of Arbitration does not override the terms of the Agreement between the parties, stipulating a particular Seat/Venue or an exclusive jurisdiction clause.  

In NMDC Steel Limited vs Danieli and C.Officine Meccaniche SPA²⁹W.P. No. 30363 of 2025 the Arbitration clause stipulated that the place and venue of the Arbitration shall be at Hyderabad. However, for the purpose of conducting hearing, the parties suggested shifting of the Venue at Delhi. Subsequently, the Claimant submitted a separate request for changing the venue to London from New Delhi which was allowed by the Tribunal by way of procedural order after recording that the costs of venues in Delhi are significantly higher than the one quoted by the London Hotel. The Division Bench of the Telangana High Court observed that no consent was obtained by the parties for changing the venue to London. The Court further observed that the convenience of the parties is the overreaching mandate for fixing the place/venue of the arbitration. Therefore, the Court held that the forced shift of Venue from New Delhi to London would not only amount to perversity but also lack of inherent jurisdiction being contrary to the Arbitration Agreement, the ICC Rules of Arbitration as well as the Arbitration Act.

Seat and Venue in the context of Arbitrations under the MSME Act

Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 [“the MSMED Act”] ordains reference of disputes with respect to any amount due under Section 17 of the Act to MSME Facilitation Council for the purpose of conciliation. If the conciliation proceedings are unsuccessful, then as per Section 18(3) the dispute ought to be adjudicated by way of Arbitration as per the provisions of the Arbitration Act as if the Arbitration was in pursuance of an arbitration agreement referred to in sub-section (1) of Section 7 of the Act. Section 18(4) of the MSMED Act further clarifies that MSME Council where the Supplier is located, shall have jurisdiction to adjudicate the matter. Therefore, it is immaterial where the cause of action arose, the MSME council where the Supplier is located shall have the jurisdiction to adjudicate the dispute. However, if the Agreement between the parties provides Seat or Venue or an exclusive jurisdiction clause, conferring jurisdiction on a court other than the place where the Supplier is located, would the provisions of the MSME Act, override the Seat/Venue/exclusive jurisdiction clause mentioned in the Agreement between the parties?

A Division Bench of the Delhi High Court in the matter of Indian Oil Corporation Ltd. vs FEPL Engineering Pvt. Ltd.³⁰2019 SCC OnLine Del 10265 was concerned with an issue as to which Court would have jurisdiction to challenge the Arbitral Award rendered by the Maharashtra MSME Council. The Supplier in this case was located in Thane, Maharashtra. However, the Agreement between the parties provided Seat and Venue at New Delhi. The Respondent argued that since the supplier was located in Maharashtra, and cause of action had arisen in Maharashtra, therefore, Courts at Maharashtra would have the jurisdiction to entertain the Section 34 Petition. However, the Delhi High Court held that the overriding effect of the MSME Act cannot be construed to mean that the terms of the Agreement between the parties have also been nullified. The Court clarified that the jurisdiction of the MSME council which is decided on the basis of the location of the supplier, would only determine the Venue and not the Seat of Arbitration. The Seat of Arbitration would continue to be governed in terms of the Arbitration Agreement between the parties.

But how is the jurisdiction of Section 34 court to be determined in a case where the Agreement between the parties does not envisage Seat, venue or exclusive jurisdiction clause? In Delhi Tourism and Transportation Development Corporation vs M/s Satinder Mahajan³¹OMP (Comm) 337 of 2021 the Delhi High Court was dealing with a Section 34 Petition against an Arbitral Award rendered by the MSME Council at Pathankot, Punajb. The Agreement between the parties did not envisage Seat or an exclusive jurisdiction clause, it only mentioned that the venue would be as determined by the Arbitrator. The Petitioner argued that since the Agreement has been executed in Delhi and cause of action has arisen in Delhi therefore, Delhi High Court has the jurisdiction to entertain the Petitioner. The Court, however clarified that the Seat of Arbitration are to be determined on the basis of connection with the arbitral proceedings and not where the cause of action arose. In the aforesaid case the Court observed that since the Arbitral proceedings were conducted at Pathankot and there is no contrary indication in the form of jurisdiction clause or otherwise, then the Seat of Arbitration would be at the place where the Arbitration was conducted i.e. Pathankot.

Conclusion

As evident from the aforementioned judgments, there is no straight jacket formula or a hard and fast rule to decide seat and venue of an arbitration proceedings. While there are guiding principles laid down by the Supreme Court in the aforementioned judgments, however, the same ought to be applied keeping in view the party autonomy and ultimate intention of the parties to the arbitration proceedings. The Seat and Venue of an arbitration proceedings cannot be derived by reading an arbitration clause in isolation. The intention of the parties as to the seat and venue ought to be construed by harmoniously reading down the arbitration clauses in a holistic manner in order to give effect to intention of the parties.