Arbitration law in India, an author commented once, is not for the faint hearted. Unfortunately, time and again the above statement keeps coming true. The Indian arbitration regime had hardly recovered from the shadow of “implied exclusion” debate, here it is, dealing with a new saga, a new avenue for judicial intervention and jurisdictional battles, the seat-venue-place debate. This time the international business community is not so effected, but one thing definitely seems to be seems to be under doubt, that is — the prospects of India becoming preferred seat of arbitration and choice of arbitration as a preferred method for dispute resolution.
The story, incidentally started with the same judgment, Bharat Aluminiun Company v. Kaiser Aluminium Technical Services Inc., (hereinafter BALCO), which was entrusted with the task of improving India’s image as a pro-arbitration jurisdiction. Convinced that party autonomy is a bedrock of international arbitration, the Constitution Bench, found it proper to extend its scope in domestic arbitration too. The consequence was, the famous para 96 of the judgment, an effort, albeit cautious, to introduce concept of seat in ‘Indian arbitration’, BALCO offered us, what looked like a customised concept of seat. According to BALCO, the parties could confer jurisdiction on an unconnected/neutral forum to supervise arbitration proceedings. However, what remained unclear was the exclusive or non-exclusive status of this choice. This new entrant, imported from international arbitration, remained dormant in India, till a Division Bench of the Supreme Court decided to take it out of the shadows of caution and declared in 2017 in Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. (hereinafter Indus Mobile) that contracting parties could choose an unconnected forum as the seat and that would vest exclusive jurisdiction with the seat courts to decide any dispute.
However, the life for this new entrant was still not smooth. It got caught in the flurry of divided opinions by different High Courts and even different Benches from the same High Courts. Some accepted the idea that for purposes of arbitration parties can confer exclusive jurisdiction on a neutral forum. However, there were some who were willing to accept that parties could choose a neutral forum, but not could not read BALCO and Indus Mobile as judgments which ordained that the parties’ choice could override authority of natural forums and have exclusive jurisdiction, especially when legislature had ordained otherwise. Jurisdiction battles to interpret arbitration agreements to determine, first, what does choice of parties indicate— choice of a jurisdiction (seat) or merely a physical location seat or venue have chosen a seat and second, whether that choice is to be treated as an exclusive jurisdiction clause became common. Once again the Supreme Court rose to the occasion recently, in 2019, in BGS SGS Soma JV v. NHPC Ltd. (hereinafter BGS Soma). It raised hopes for getting clarity and some respite in these battles. Some hopes were met— the three-Judges Bench clarified that the concept of seat as it is prevalent in international arbitration has been imported in Indian arbitration with both of its contours, neutrality and exclusivity. It also offered some guidance on how to interpret arbitration agreements when it comes to determining choice. But unfortunately, what it covered is only a tip of the iceberg. Seat-venue debate is a longstanding topic of discussion even in international arbitration given the fact that arbitration agreements come packed with creative examples of drafting skills of lawyers/drafters of contracts. Though we have imported the debate in India the Supreme Court judgments offer precedential guidance for few specific situations, leaving a lot of questions unanswered.
One such situation arose very recently before the Bombay High Court and the Supreme Court in quick succession in Omprakash v. Vijay Dwarkada Varma (hereinafter Omprakash) and Quippo Construction Equipment Ltd. v. Janardan Nirman Pvt. Ltd. (hereinafter Quippo Construction) respectively. Though involving very different fact situations in both the cases the Courts were faced with a similar question— what should be the criteria for determining the seat where either it is difficult to determine choice due to contradiction in wordings of arbitration agreements or the parties have failed to identify the seat and the task has to be completed by the tribunal as prescribed under Section 20(2) of the 1996 Act. In such a situation can the place where arbitration proceedings have been held and the award declared and signed be considered as seat of arbitration or something more is needed? The Supreme Court judgment in Union of India v. Hardy Exploration and Production India (Inc.) Ltd. was faced with the issue. The Court in the above case was of the view that there is a need for clear determination by the tribunal on the place where proceedings were held. However, the above stance of the Supreme Court has come under challenge with the declaration in BGS Soma that Hardy Exploration is wrongly decided. Does it mean that Indian Law now says that in ‘Indian arbitration’ the place where proceedings are held, and award signed and declared will be considered seat of arbitration?
This piece looks into the above question. It undertakes close analysis of the two recent judgments to find out whether this rather new dimension of seat venue conundrum got adequately addressed or not?
1.1. Quippo Construction Equipment Ltd.
The case arose out when civil court rejected a petition filed under Section 34 of the 1996 Act for setting aside an award for want of jurisdiction. The case involved a contract between an infrastructure development company, Janardan Nirman Private Ltd. (hereinafter “Janardan”) respondents in the case and a company, Quippo Construction Equipment Ltd.(hereinafter “Quippo”) dealing in the business of supplying equipment on rent for infrastructure activities. The parties entered into four agreements, dated 1.8.2010, 2.10.2010, 19.3.2011., 14.4.2011, for supply of equipment at the site of Janardan. What became relevant for the case were the contracts dated 1.8.2010 and 14.4.2011 which had governing law, jurisdiction and arbitration clauses with a different choice of venue and judicial forum. According to the agreement dated 1.8.2010, contract was to be governed by laws of India, courts at New Delhi were to have exclusive jurisdiction, and the venue “for holding arbitration proceedings” was Delhi. The arbitration was to be conducted as per the rule of Construction Industry Arbitration Association (CIAC) and the arbitrator was to be appointed by the owner of equipment from the panel of arbitrators of CIAC.
On the other hand the agreement dated 14.4.2011 conferred jurisdiction on courts of Kolkata. Apart from that the arbitration clause mentioned that the “disputes were to be resolved by arbitration in Kolkata”. In this agreement arbitration was to be conducted by the CIAC rules and an arbitrator was to be appointed by the owner of the equipment out of a panel of CIAC.
Disputes arose between the parties with respect to payments. Failure in payments from Janardan, led Quippo to invoke the arbitration clause by a communication dated 2.3.2012. It appointed an arbitrator as per the agreement, who was to conduct arbitration proceedings at New Delhi. A copy of communication was also marked to CIAC. In its reply dated 15.3.2012 Janardan denied existence of arbitration agreements between the parties and did not participate in the arbitration proceedings. Janardan attempted, albeit unsuccessfully, to restrain arbitration by filing a civil suit in Sealdeh, West Bengal. The Civil Judge dismissed the suit and referred the matter for arbitration. Janardan did not succeed in the appeal nor could it obtain a stay order against the arbitral tribunal during pendency of the appeal. In absence of a stay order the tribunal proceeded with the arbitration and by an ex parte order dated 24.03.2015, the arbitrator accepted the claim preferred by Quippo. The award was a common award covering claims in all the four agreements.
Aggrieved by the award Janardan filed an application under Section 34 of the Act before the Civil Judge, Alipore, West Bengal. It reiterated non-existence of arbitration agreement and also argued that arbitration could not be conducted in Delhi since as per the agreement dated 14.4.2011 the venue of arbitration was Kolkata. The Civil Court rejected the petition for lack of jurisdiction. The court took note of the fact that the arbitrator was appointed at New Delhi and the award was also passed in Delhi. Providing reasons for rejecting the petition on grounds of jurisdiction the trial Judge further stated that “the jurisdiction of Section 34 is where the arbitration award was passed or in the place where the seat of arbitration was agreed by the parties.” Referring to the Supreme Court judgment in Indus Mobile, it stated that according to this case “jurisdiction is exclusively in the place where arbitration is done.” The matter reached the Supreme Court as the Calcutta High Court accepted an appeal against the decision of the civil court and referred the matter back to the Alipore Court for deciding the Section 34 petition.
As the above description suggests, the question before the Supreme Court was to decide whether in the given case Delhi could be considered seat of arbitration since arbitration was conducted at Delhi and the award was declared and signed at Delhi despite the fact that one of the agreements, especially the last agreement between the parties had choice of Kolkata for arbitration proceedings. Answering the question in affirmative, the Supreme upheld the decision of the Civil Judge holding that only courts in Delhi have jurisdiction since in the given case seat of arbitration can be considered to be Delhi. Rejecting the contention of Janardan the Court stated,
Considering the facts that the respondent failed to participate in the proceedings before the Arbitrator and did not raise any submission that the arbitrator did not have jurisdiction or that he was exceeding the scope of his authority, the respondent must be deemed to have waived all such objections.
The Court did take note of the fact that one of the agreements had choice of Kolkata as place of arbitration. However, it dismissed this choice first by invoking Section 4 of the 1996 Act and an earlier Supreme Court judgment in Narayan Prasad Lohia v. Nikunj Kumar Lohia to support its argument that not raising objection in connection with any aspect of arbitration proceedings amount to waiver. Since Janardan did not raise objection against conduct of arbitration proceedings in Delhi he is presumed to have waived its choice. The Court also decided to ignore choice of Kolkata with a very interesting observation wherein it expressed doubt about relevance of concept of seat of arbitration in Indian arbitration. It stated:
“The specification of “place of arbitration” may have special significance in an International Commercial Arbitration, where the “place of arbitration” may determine which curial law would apply. However, in the present case, the applicable substantive as well as curial law would be the same.”
1.2. Omprakash v. Vijay Dwarkada Varma
The jurisdiction of the High Court was invoked in this case through a writ petition to challenge the order of the Civil Court, Malkapur, Maharashtra, wherein the Court had rejected a petition under Section 34 of the 1996 Act for want of jurisdiction. The dispute between the parties was related to a partnership deed signed on 01/04/1997, and arbitration was invoked since clause 13 of the said deed provided for resolution of disputes between the parties by way of arbitration. The arbitrator was appointed by the High Court under Section 11(6) of the 1996 Act. It was undisputed that the entire arbitration proceedings took place at Nagpur and that award was pronounced and signed by the learned arbitrator at Nagpur on 27/06/2018. Aggrieved by the said award, the award debtor filed an application under Section 34 of the Act before the Court below at Malkapur relying upon Section 2(1)(e) of the 1996 Act. The civil court rejected the Section 34 application on the grounds that only the courts at Nagpur could have jurisdiction since the seat of arbitration was Nagpur.
The order of the civil Court was challenged by the award debtor-petitioner in the writ Petition before the Bombay High Court on the following grounds: that Nagpur was merely a venue and could not be considered seat of arbitration; that the arbitration clause did not have any choice for place for conducting arbitration; that the High Court while appointing the arbitrator did not prescribe any place for arbitration; that arbitral tribunal did not make any determination on the seat of arbitration; that the facts of conduct, pronouncement and signing of arbitration agreement were not sufficient to consider a place as seat of arbitration in absence of specific determination by the arbitral tribunal. On the other hand, the respondent’s contention was that none of above arguments could be sustained after the Supreme Court judgment in BGS Soma.
Not being able to agree with the contentions of the petitioner the High Court dismissed the writ petition which challenged the order of the civil court. The High Court relied on the Supreme Court judgments in BALCO and BGS Soma to reach the conclusion that only the courts at Nagpur had exclusive jurisdiction to entertain Section 34 petition. It rejected the contention of the petitioner that by virtue of BALCO and Section 2(1)(e) of the 1996 Act, the court at Malkapur had jurisdiction even if Nagpur could be considered the seat of arbitration. The High Court was of the view that the way arbitration law has developed in India, Section 2(1)(e) “has lost its plain meaning” and had to be read with Section 20 of the 1996 Act. Invoking BALCO the Court stated:
It was held in BALCO judgment that it was a facet of public policy that only one Court should have jurisdiction to set aside an arbitral award. It was specifically held that to accept that two Courts would have concurrent jurisdiction in such matters i.e. the Court where the cause of action was located and the Court where the arbitration took place would lead to risk of conflicting decisions.
In accepting Nagpur as the seat of arbitration, the Court drew parallel from BGS Soma where the Supreme Court had held Delhi as a seat of arbitration since arbitration proceedings were held there despite the fact that the arbitration clause had choice in favour of two places, Delhi and Faridabad. The Court also rejected the petitioner’s emphasis on lack of determination of seat by the arbitral tribunal as required under Section 20(2) of the Act and as prescribed by Hardy Exploration. Reflecting on Section 20(2) of the 1996 Act, the Court opined that the situation for determination by the tribunal can arise “only if there was failure of agreement between the parties on the place of arbitration or that there was a dispute or controversy between the parties on the said question.” The Court was of the view that merely absence of an agreement on place does not put tribunal under an obligation to first determine the seat of arbitration. It further held that there was nothing in the Act to suggest that “in absence of any such determination the place where the arbitration proceedings actually took place and the award was rendered could not be said to be the place of arbitration under section 20 of the aforesaid Act.”
Interpreting Section 20 of the Act the Court held that while clause (1) gives autonomy to the parties to choose a place/seat of arbitration, this choice could also be inferred from the conduct of parties, and this conduct in the given case, the Court suggested, was submission to entire arbitration proceedings before the arbitrator at Nagpur without raising any objection.
- Deepening Crisis or New Challenges
Both the above judgments, though addressing rather different fact situations, seem to address a single point — can the place where arbitration proceedings are held can be considered seat of arbitration in absence of any choice or clear choice by the parties in the arbitration clause. Unfortunately, both the judgments lend themselves to an affirmative answer, and this answer is a cause of concern given the fact that the 1996 Act incorporates a clear distinction between seat and venue and it is also well- accepted principle that place of arbitration cannot become a seat merely by the fortuitous circumstances of proceedings being held there.  What is also problematic is the reasoning adopted by the Courts, the Supreme Court as well as the High Court, especially in deciphering the law laid down by the Supreme Court in BALCO and BGS Soma. This section undertakes a closer analysis of both the judgements to point out the concerns raised by them.
If we first look at the judgement of the Supreme Court, it appears that in reaching its conclusion the Supreme Court, although the judgment does not have any discussion whatsoever on the issue, seems to have worked first of all on the understanding that after BGS Soma choice of venue can be considered choice of seat in Indian arbitration. Since in the given circumstances one of the agreements between the parties had mentioned Delhi as choice of venue it could be considered a choice of seat. Other reasons which seem to have influenced court’s decision are: that arbitration proceedings were held in Delhi, that the award was signed and declared in Delhi and most importantly, that the award debtor raised no objections to following two things: first, that the arbitrator delivered an award covering all four agreements to arbitration proceedings and second, that arbitration proceedings were conducted in Delhi.
In case of the Bombay High Court, the factor which seemed to have influenced the decision of the Court is that both the parties submitted to arbitration in Nagpur willingly. The Bombay High Court however, did not invoke Section 4 of the 1996 Act to consider it as waiver of a chance to raise an objection. It took the fact of unquestioned participation as a sign of implied consent – consent by conduct- which could fulfil the requirement under Section 20(1) for having Nagpur as a seat of arbitration.
Considering the way the discourse relating to concept of seat has developed in last few years, especially in light of the Supreme Court judgment in BGS Soma, perhaps the stances taken by the Supreme Court and also the Bombay High Court are the most probable ones. However, both these judgments raise some serious concerns relating to legal reasoning and use of precedents.
If case of Quippo Construction, while the Supreme Court agreed with the trial court that Delhi was a seat of arbitration, it remains unclear how this conclusion was reached. Moreover, it is confusing how the issue relating to the seat or venue of arbitration could be seen as an issue relating to scope and authority of arbitrator? For the trial court the understanding was that the place where the award was passed could be considered as the seat of arbitration. It accepted, howsoever erroneously, that Supreme Court has laid down in Indus Mobile that seat of arbitration is where “arbitration is done”. However, the Supreme Court did not get into the question whether the reasoning adopted by the trial court was legally sound or not. One could perhaps argue that BGS Soma is an authority for the above proposition deployed by the trial court. However, while this could be true for the Court in Quippo Construction, but till the date of order by the trial court, there wasn’t any judgment of the Supreme Court which had laid down that the place where arbitration proceedings are held can be considered as seat of arbitration. On the contrary, while importing concept of seat BALCO was very clear and conscious about seat- venue distinction. In Indus Mobile the issue was whether choice of place in arbitration clause can be taken as choice of seat for arbitration, something which can be seen as a decision to confer exclusive jurisdiction on the chosen court. The Supreme Court decided in favour of Delhi as seat of arbitration only on the ground of failure of parties to raise an objection against the proceedings being held at Delhi. It leaves one wondering if that could be a new criteria for determining seat.
In case of the Bombay High Court judgment too, the most problematic and disturbing part is the way the Court has drawn on and referred to the previous judgements like BGS Soma, BALCO and even Hardy Exploration. The Court has used BGS Soma to state that the place where arbitration is held can be considered seat of arbitration even if there is no choice of place in the arbitration clause. It is true that the three-Judges Bench in BGS Soma have stated that “judgment in Hardy Exploration and Production (India) Inc. being contrary to the five-Judges Bench in BALCO, cannot be considered to be good law.” On the one hand, the High Court’s reliance on this aspect of BGS Soma is problematic in itself given the fact that the statement of the Supreme Court relating to Hardy Exploration is first of all questionable on grounds of judicial propriety given the fact that both are judgments of coordinate Benches. On the other hand, even if one draws on BGS Soma, it remains doubtful whether the opinion of the Supreme Court therein about Hardy Exploration is also applicable to the issue of requirement of determination of seat by the tribunal in absence of choice by the parties. It remains doubtful whether it can be said that BGS Soma has an effect of making redundant Section 20(2) of the 1996 Act, which requires the tribunal to determine the seat of arbitration failing parties’ agreement in that regard. Can we read BGS Soma to have declared that there is no requirement of determination of seat by the tribunal in the absence of choice and mere submission of parties to the proceedings at a particular place is sufficient to reach the conclusion about seat?
If we look further, the High Court’s way of drawing on BALCO seems even more problematic. The main point of contention associated with BALCO has been in para 96 and its attempt to combine seat of arbitration with Section 2(1)(e) and concurrent jurisdiction therein. Drawing on BALCO to mention that it had laid down that only one court can have jurisdiction to set aside an award, in a way, undercuts the whole purpose and rationale of BGS Soma! Moreover, the opinion of the Constitution Bench with respect to jurisdiction for setting aside awards was in a completely different context of foreign awards and interpretation of Section 48(1)( e) of the 1996 Act and Article V(1)(e) of the New York Convention. Incidentally nowhere in the judgment it has been “specifically held that that to accept that two Courts would have concurrent jurisdiction in such matters i.e. the Court where the cause of action was located and the Court where the arbitration took place would lead to risk of conflicting decisions.”
- Conclusion: Need for Clarity
Seat-venue debate, like implied exclusion debate few years ago, has become one of the most hotly debated topic from the world of arbitration. The amount of literature, especially the case law that this topic has generated in a short span of time is amazing. However, the most unfortunate part is that every new case seems to be creating more ambiguities and confusions.
With the two judgments discussed here, a most important question is how should one read these judgments, especially the judgment of the Supreme Court. Should they be read as judgments which establish and reinforce the proposition that the place where arbitration proceedings are held can be considered seat of arbitration if both the parties participate in the proceedings without raising any objection in relation to the place where proceedings are being held? Does the challenge relating to seat or venue of arbitration fall within the scope of challenge to the competence and authority of the arbitrator, which if not made in due time can lead to presumption of waiver by invoking Section 4 of the 1996 Act? Is there no requirement of clear determination of seat by the arbitral tribunal in the absence of choice of place in the agreement? Are parties under an obligation to raise a challenge if arbitration proceedings are held at a place to ensure that the said place is not considered as a seat later on?
Furthermore, can fact of holding proceedings at a place have effect of changing parties’ choice of seat in the arbitration agreement, if no objection is raised? For example, if the arbitration clause has Delhi as choice of seat but the arbitration proceedings are conducted in Mumbai with participation of both parties, can it be concluded that parties have conceded to change of seat as Mumbai. Alternatively, what needs to be done in situations where the word venue is used in the arbitration clause? After BGS Soma, one has to presume that choice of venue is choice of seat in absence of any contrary indicia. After having chosen a venue in the agreement, if the arbitration proceedings are conducted at a different place and no objections are raised by either of the parties can it be presumed that they have agreed to change of seat?
The judgments unfortunately do not lend themselves to clear answers to above questions. One can perhaps say that on the basis of established legal principles, answer to most of the above raised questions would be in negative. Seat venue distinction is inherent to the concept of seat in arbitration and has been incorporated in the UNCITRAL Model Law as well as Section 20 of the 1996 Act. The Supreme Court has held on numerous occasions that a place cannot become seat of arbitration merely by the fortuitous circumstances of proceedings being held there. The current judgments, therefore, cannot and should not be seen as introducing any change in position. In the absence of any choice of seat by the parties and lack of determination by the tribunal perhaps Sections 2(1)(e) and 42 can have full play, something which seems to have been envisaged by the Supreme Court in BGS Soma too. But we will have to wait, the answers, if at all, will come from numerous jurisdiction battles that will be fought in different courts across the country.
*Associate Professor, Faculty of Law, Executive Director, Center for Research and Training in Arbitration Law (CARTAL) at National Law University, Jodhpur. Email: email@example.com. The views expressed by the author are purely personal.
 Implied exclusion, as is well known, is a concept which got introduced in Indian arbitration regime through the Supreme Court judgment in Bhatia International v. Bulk Trading, (2002) 4 SCC 105. The main import of this judgment was that Part I of the 1996 Act will apply also to foreign seated arbitration unless excluded expressly or impliedly by the contracting parties. Since this judgment shook the territoriality principle which was at the root of UNCITRAL Model Law and the 1996 Act, it created lot of uncertainty and debate in Indian arbitration regime, especially in relation to foreign seated arbitrations. Also see Rohan Tigadi, ‘Indian Arbitration: The Ghost of Implied Exclusion and Other Related Issues’, in Michael Pryles and Philip Chan (eds), Asian International Arbitration Journal, [© Singapore International Arbitration Centre (in cooperation with Kluwer Law International]; Kluwer Law International 2016, Vol. 12 Issue 2) pp. 181–193; S.K. Dholakia, Bhatia International v. Bulk Trading S.A. – A Critical Review, (2003) 5 SCC-J 22
 This article uses Indian arbitration as a state of the art term to include both the domestic arbitration and India seated international commercial arbitration.
 Some examples are: Dipendra Kumar v. Strategic Outsourcing Services Pvt. Ltd., 2017 SCC Online Del 10361 ; Ramandeep Singh Taneja v Crown Realtech Pvt. Ltd., 2017 SCC Online Del 11966; Rites Ltd. v Govt. ( NCT of Delhi), 2018 SCC Online Del 8227; Devyani International Ltd. v. Siddhi Vinayak Builders and Developers Ltd., 2017 SCC Online Del 11156
 A pioneer judgement to represent this school of thought was Calcutta High Court judgment in Hinduja Leyland Finance v. Debdas Routh, 2017 SCC OnLine Cal 16379; following course was Delhi High Court judgment in Antrix Corporation Ltd. v. Devas Multimedia Pvt. Ltd., 2018 SCC Online Del 9338
 See Emkay Global Financial Services Ltd. v. Girdhar Sondhi, (2018) 9 SCC 49 . In this case the arbitration was conducted at Delhi, and the applicable bye-laws had exclusive jurisdiction clause in favour of Mumbai courts. In this case, the Court was of the view that Delhi, where arbitration proceedings were held was merely a venue, since there was an exclusive jurisdiction clause which conferred jurisdiction on the Courts at Mumbai. Also relevant herein is the judgment of Delhi High Court in Dwarika Construction Ltd. v Superintending Engineer, 2019 SCC Online Del 8445 (decided on May 10, 2019). In this case an agreement was executed between the parties at Karnal, Haryana for construction of Road Over Bridge (ROB). The agreement provided that the place of execution of the work shall be Karnal and the Courts at Karnal shall have jurisdiction in the matter. Disputes arose between the parties which resulted in initiation of arbitration proceedings. Majority of the arbitration proceedings took place in Delhi and some in Chandigarh as per the convenience of the parties. The arbitral award was also delivered in Delhi. The Delhi High Court held that there was no procedure agreed to between the parties stating that Delhi would be the jurisdictional place/seat of arbitration and there are many indicators in the agreement that parties never intended Delhi to be the ‘seat/place’ of arbitration. Further, Delhi and Chandigarh were merely ‘venue’ of arbitration. Choosing jurisdictional ‘seat/place’ of arbitration requires a deliberate act and a party cannot be taken by surprise and be told that ‘venue’ fixed for arbitration has morphed into the ‘seat/place’ of arbitration.