CHOICE OF PLACE OF ARBITRATION

Compiled by- Asst. Prof. Anjali Bhatt

Contract law
• It is a well-settled position of law in India (ABC Laminart (P) Ltd. v. A.P. Agencies, 
(1989) 2 SCC 163) that parties by contract cannot oust the jurisdiction of courts
absolutely, as such clauses are contrary to public policy and are void.
• However, referring disputes to an Arbitral Tribunal for adjudication instead of
courts is not barred. Such reference is permitted as it does not entirely oust the
jurisdiction of courts.
• NTPC v. Singer Co., (1992) 3 SCC 551- freedom of parties to choose- law that is
applicable to the contract, the law applicable to the arbitration agreement (lex
arbitri), and the procedural law governing the arbitration (curial law).

• Naviera Amazonica Peruana SA v. Compania International de Seguros del Peru

(1988) 
• The aforesaid laws are discussed hereinafter.
• Applicable law — Contract
• The term “applicable law” or “proper law of the contract” is the law that governs
the discharge of the contract itself. In case of disputes arising, the Arbitral
Tribunal applies the applicable law to determine the substantive dispute.
Applicable law or the proper law of the contract are terms which refer to a legal
system in which a contract may be executed.
• Applicable law — Arbitration agreement
• The law applicable to the arbitration clause can be classified in two categories,
namely, the juridical seat (lex arbitri), and the curial law.
• Juridical seat or lex arbitri
• The lex arbitri would determine the courts which can exercise supervisory
jurisdiction over the arbitration proceedings.
• “Lex arbitri” may be best explained by referring to the judgment in XL Insurance
Ltd. v. Owens Corning (2000).
• The English Court held that the choice of law (proper law) being different from
the lex arbitri would not invalidate the arbitration clause.
• Since the parties have chosen to seek refuge under the English Law for
arbitration, the provisions of the English Arbitration Act would be applicable and
English Law shall solely govern the matters falling within the scope of the
arbitration agreement/clause, including formal validity of arbitration agreement
and the jurisdiction of the arbitrators.
• Curial law
• The procedural law applicable to the conduct of arbitration is known as the curial
law.
• A conflict between two jurisdictions would necessarily arise only in international
commercial arbitrations. The term “international commercial arbitration” is defined under
Section 2(1)(f) of the 1996 Act and is self explanatory.
• The provisions relevant for understanding conspectus of seat and venue under the 1996
Act are Sections 2(2) and 20. Section 2(2) in an ominously cryptic manner reads as follows:
Section 2(2)- This Part shall apply where place of arbitration is in India.
• On a bare perusal of the said section, it seems that the 1996 Act was applicable only to
arbitrations which were taking place in India.
Section 20. Place of arbitration.—(1) The parties are free to agree on the place of
arbitration.
• (2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be
determined by the Arbitral Tribunal having regard to the circumstances of the case,
including the convenience of the parties.
• (3) Notwithstanding sub-section (1) or sub-section (2), the Arbitral Tribunal may, unless
otherwise agreed by the parties, meet at any place it considers appropriate for
consultation among its members, for hearing witnesses, experts or the parties, or for
inspection of documents, goods or other property. 
Bhatia International v. Bulk Trading SA (2002)4 SCC
105
• Briefly stating facts, the parties had entered into a contract wherein the arbitration clause
provided that the arbitration was to be as per rules of International Chamber of Commerce
(ICC). Disputes having arisen between the parties, the respondent initiated the arbitration
proceedings at ICC.
• In addition to such initiation, the respondent also filed an application under Section 9 of the
1996 Act seeking an injunction against the appellants restraining them from alienating in any
manner their business assets and properties.
• The District and High Court both held that the courts in India have jurisdiction to adjudicate the
application despite the “place of arbitration” being outside India. 
• These orders were challenged before the Supreme Court.
• The simple contention raised by the appellant before the Supreme Court based on a plain
reading of Section 2(2) was that, unless the international commercial arbitration is taking place
in India, Part I will not apply.
• According to the interpretation cast by the Supreme Court, an international commercial
arbitration where an Indian party is involved, being proceeded with in any part of the world,
would confer jurisdiction on Indian courts to exercise powers under Part 1 of the 1996 Act.
Bharat Aluminium Company v. Kaiser Aluminium
Technical Services Inc. (2012)9 SCC 552
• The Supreme Court interpreted the word “place” to mean “seat” or “venue”
depending on the section in which the word was used. The Court while dealing
with Sections 2(2) and 20, extensively laid out the concept of seat and venue.
• Court observed that the section has to be interpreted to mean that only when
the seat/place of arbitration is in India, will Part I apply, restoring the distinction
between seat and venue.
• Further consolidating the doctrine of seat and venue under the 1996 Act, the
court clarified that the term “place” used in Sections 20(1) and (2) would connote
“seat” and the term “place” used in Section 20(3) would connote “venue”. 
Enercon (India) Ltd. v. Enercon GmbH (2014)5 SCC 1
• Enercon Case clarified the position of law in case the parties have failed to or
improperly mentioned the law applicable to the arbitration agreement.
• The court, placing reliance on the judgment in Naviera Amazonica
(1988) adopted the “closest and most intimate connection test”.
Report 246 — Law Commission of
India
• The Report discussed in great detail the need to amend Sections 2(2) and 20. The
changes suggested replacing the word “place” with the words “seat” and
“venue”, in accordance with the explanation provided by BALCO.
• The amendment further proposed addition of a proviso to Section 2(2) permitting
parties to choose to remain under the supervisory jurisdiction of Indian courts.
• The Report further suggested replacing the word “place” in Section 20(1) with the
words “seat” and “venue”, replacing the word place with “seat” in Section 20(2)
and with “venue” in Section 20(3).
2015 Amendment
•  The Amendment Act has, however, incorporated the proviso to Section 2(2) suggested by
the amendment. 
•  The legal quandary between a “seat” and “venue” of arbitration was resolved by
India’s Supreme Court (“SC”) in its judgment in Bharat Aluminium
Company v. Kaiser Aluminium Technical Services (“BALCO”).
• This distinction has unfortunately, however, been garbled by a recent SC decision
in Brahmani River Pellets v. Kamachi Industries (CIVIL APPEAL NO. 5850
2019) (“Brahmani”).  In Brahmani, the SC has taken the view that the venue of the
arbitration can be assumed to be the seat, until explicitly stated otherwise.
• The SC’s judgment in Brahmani
• The sales contract had the following arbitration clause:
• “Clause 18. (…) the venue of Arbitration shall be Bhubaneswar.”
• After the dispute arose, the respondent filed a petition before the Madras High Court seeking the appointment of
an arbitrator. The claimant contested this petition on the premise that the parties in Clause 18 of the Contract
have agreed that the seat of arbitration would be Bhubaneswar and therefore, only the Orissa High Court situated
there would have exclusive jurisdiction to appoint the arbitrator.
• The Madras High Court considered the challenge and held that in the absence of any clause excluding the
jurisdiction of other courts, it would continue to exercise supervisory jurisdiction along with the Orissa High Court.
• Aggrieved by this, an appeal was made before the SC. The appellant contended that when parties to an agreement
mention a venue, it results in the selection of a seat for the arbitration proceedings.  In its arguments before the
SC, the appellant relied on Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited &Ors.
 (“Indus”), wherein the SC had determined that once a seat had been fixed it had exclusive jurisdiction, to the
exclusion of other courts where the cause of action arose. In view of this, the appellant submitted that the Madras
High Court erred by exercising jurisdiction as the same was under the domain of the Orissa High Court only. On the
other hand, the respondent argued that merely mentioning the venue does not give it the status of the juridical
seat having exclusive jurisdiction. In the absence of the selection of a seat, the courts at the place of cause of
action should have jurisdiction. Since the cause of action arose at both the places i.e., Bhubaneswar and Chennai,
courts in both places were competent to deal with the matter.
• The SC held that, “considering the agreement of the parties having Bhubaneswar as the venue of arbitration, the
intention of the parties is to exclude all other courts.”
• Recently, in the case of L&T Finance Ltd. v. Manoj Pathak & Ors. (Com. Arb.
Petition No. 1315 of 2019.) , the Delhi High Court identified the tests applicable to
identify a seat of arbitration:
• “29. There emerges the following trifecta of propositions in regard to a domestic
arbitration:
• a. A stated venue is the seat of the arbitration unless there are clear indicators
that the place named is a mere venue, a meeting place of convenience, and not
the seat;
• b. Where there is an unqualified nomination of a seat (i.e. without specifying the
place as a mere venue), it is courts where that seat is situated that would have
exclusive jurisdiction; and
• c. It is only where no venue/seat is named (or where it is clear that the named
place is merely a place of convenience for meetings) that any other consideration
of jurisdiction may arise, such as cause of action.”
THE END
INDUS MOBILE DISTRIBUTION PVT. LTD. V
DATAWIND INNOVATIONS PVT. LTD. & ORS
(DECIDED ON APRIL 19, 2017)
• Recently, a Division Bench of the Supreme Court in Indus Mobile Distribution Pvt.
Ltd. v Datawind Innovations Pvt. Ltd. & Ors (Civil Appeal Nos. 5370-5371 of 2017,
decided on April 19, 2017) has answered in the affirmative the question
“whether, when the seat of arbitration is Mumbai, an exclusive jurisdiction clause
stating that the courts at Mumbai alone would have jurisdiction in respect of
disputes arising under the agreement would oust all other courts”.
Factual Background
• Datawind Innovations Pvt. Ltd. (“Datawind”), having its registered office in
Amritsar, Punjab, is engaged in the manufacturing, marketing and distribution of
mobile phones, tablets and their accessories. Datawind was engaged in the
supply of goods from New Delhi to Indus Mobile Distribution Pvt. Ltd. (“Indus”)
based in Chennai and subsequently, upon Indus’ desire to act as a retail chain
partner for Datawind, the parties entered into an agreement in 2014 towards this
end (“Agreement”). Clauses 18 and 19 of the Agreement contained the dispute
resolution and jurisdiction clauses.
• “Dispute Resolution Mechanism:
Arbitration: In case of any dispute or differences arising between parties out of or in relation to the
construction, meaning, scope, operation or effect of this Agreement or breach of this Agreement, parties
shall make efforts in good faith to amicably resolve such dispute.
If such dispute or difference cannot be amicably resolved by the parties (Dispute) within thirty days of its
occurrence, or such longer time as mutually agreed, either party may refer the dispute to the designated
senior officers of the parties.
If the Dispute cannot be amicably resolved by such officers within thirty (30) days from 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 & 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.
The arbitration award shall be final and the judgment thereupon may be entered in any court having
jurisdiction over the parties hereto or application may be made to such court for a judicial acceptance of the
award and an order of enforcement, as the case may be. The Arbitrator shall have the power to order
specific performance of the Agreement. Each Party shall bear its own costs of the Arbitration.
It is hereby agreed between the Parties that they will continue to perform their respective obligations under
this Agreement during the pendency of the Dispute.”
Delhi High Court Decision
• Clause 19. All disputes & 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.” (Emphasis supplied).
• A dispute arose between the parties and a notice was served by Datawind on
Indus in September, 2015, wherein it was stated that Indus was in default of
payment of outstanding dues amounting to Rs. 5 crores with interest thereon.
Datawind also invoked arbitration under Clause 18 of the Agreement and
appointed a sole arbitrator. Indus, vide its reply, objected to the appointment of
the sole arbitrator and further, denied the contents of Datawind’s notice.
• Subsequently, Datawind filed two petitions before the Delhi High Court – one
under Section 9 of the Arbitration and Conciliation Act, 1996, as amended (the
“Arbitration Act”) praying for certain interim reliefs in the matter and another
under Section 11 of the Arbitration Act for the appointment of an arbitrator.
• The Delhi High Court disposed of the two petitions by a common judgment
(which was challenged by Indus before the Supreme Court) holding, inter alia,
that since no part of the cause of action arose in Mumbai, the courts of only
three territories viz., Delhi and Chennai (being the places of origin and supply of
goods, respectively), and Amritsar (where the registered office of Datawind is
situated) could have jurisdiction in the matter. Therefore, the Delhi High Court
concluded that the exclusive jurisdiction clause (viz. Clause 19 of the Agreement)
would not apply on facts, as the courts in Mumbai would have no jurisdiction at
all and the Delhi High Court, being the first court that was approached, would
have jurisdiction. Accordingly, the Delhi High Court passed interim orders as well
as appointed a sole arbitrator.
Decision of the Supreme Court
• The Supreme Court, in its judgment (“Judgment”), has dealt with the concept of
“seat” of arbitration in considerable detail and for the purpose, it has referred to its
earlier judgments dealing with the principles of “juridical seat” and “place” of
arbitration, notably
a) Bharat Aluminium Co. v Kaiser Aluminium Technical Services Ltd. (2012) 9 SCC 552 ,
b) Enercon (India) Ltd. v Enercon Gmbh (2014) 5 SCC 1,
c) Reliance Industries Ltd. v Union of India (2014) 7 SCC 603,
d) Union of India v Reliance Industries Limited and Others (2015) 10 SCC 213 and
e) Eitzen Bulk A/S v Ashapura Minechem Limited and Another (2016) 11 SCC 508.
• The Judgment also discussed the relevant provisions of the Arbitration Act, including
Section 20 which, inter alia, provides autonomy to the parties to an arbitration
agreement to agree on the place of arbitration.
• The following important principles emerge from the Judgment pursuant to discussion
of the above mentioned judgments and the relevant provisions of the Arbitration Act:
• It is an internationally accepted principle that arbitrations are anchored to the
seat/place/ situs of arbitration and therefore, the ‘seat’ of arbitration is intended
to be its centre of gravity. However, choosing a ‘seat’ of arbitration does not
mean that all proceedings of the arbitration are to be held at the seat of
arbitration. The arbitrators are at liberty to hold meetings at a place which is of
convenience to all concerned. (ENERCON CASE)
• Once the seat of arbitration has been fixed, it would be in the nature of an exclusive
jurisdiction clause as to the courts which exercise supervisory powers over the
arbitration.
• ‘Juridical seat’ is nothing but the ‘legal place’ of arbitration. Once the parties have
decided a particular place as the juridical seat or legal place of arbitration (a city in
India or a foreign country), then the courts of that place alone would have jurisdiction
over the arbitration. Therefore, in cases where the seat of arbitration is located outside
India, by necessary implication Part I of the Arbitration Act is excluded as the
supervisory jurisdiction of courts over the arbitration goes along with the “seat”.
(RELIANCE )
• The mere choosing of the juridical seat of arbitration attracts the law applicable to
such location. In other words, it would not be necessary to specify which law would
apply to the arbitration proceedings, since the law of the particular country would
apply ipso jure. Accordingly, parties may well choose a particular place of arbitration
precisely because its lex arbitri is one which they find attractive. Nevertheless, once a
place of arbitration has been chosen, it brings with it its own law. If that law contains
provisions that are mandatory so far as arbitration is concerned, those provisions must
be obeyed. (EITZEN)
Interpretation by the Supreme Court as
under:
• “Under the Law of Arbitration, unlike the Code of Civil Procedure, 1908 which applies
to suits filed in courts, a reference to “seat” is a concept by which a neutral venue can
be chosen by the parties to an arbitration clause. The neutral venue may not in the
classical sense have jurisdiction – that is, no part of the cause of action may have
arisen at the neutral venue and neither would any of the provisions of Section 16 to
21 of the CPC be attracted. In arbitration law however, as has been held above, the
moment “seat” is determined, the fact that the seat is at Mumbai would vest
Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral
proceedings arising out of the agreement between the parties.”
• Thus, the Supreme Court arrived at the conclusion that the courts of the place where
the seat of arbitration is located would have exclusive jurisdiction for the purpose of
regulating arbitration proceedings between the parties. Accordingly, it was held that
under the Agreement, the courts at Mumbai alone have jurisdiction to the exclusion
of all other courts in the country, as the juridical seat of arbitration is at Mumbai.
Comments on the Judgment:
• Although in the instant case, there was a jurisdiction clause conferring jurisdiction on the courts
of Mumbai, the judgment goes a step further to reiterate the principle that once “seat” is
determined, the courts of that place will have exclusive jurisdiction for purposes of regulating
arbitral proceedings arising out of the agreement between the parties.
• It must be noted that the judgment deals with situations where parties have to approach courts
prior to commencement of or during the pendency of arbitration proceedings. The enforcement
of arbitral awards will have to be in the jurisdiciton where the award-debtor is situated and will
have to be in accordance with applicable laws for enforcement of arbitral awards.
• The Judgment is a welcome step towards making India an arbitration-friendly jurisdiction and
another example where courts are interpreting provisions in a way that upholds party autonomy
and prevents parties from reneging on agreements relating to conduct of arbitral proceedings.
• By holding that the courts located at the seat of arbitration will have exclusive jurisdiction to
deal with matters relating to the conduct of arbitral proceedings (including filing of petitions for
appointment of arbitrators and seeking interim reliefs as is the case in the present Judgment)
will help in preventing parties from approaching courts as per their convenience as well as avoid
multiplicity of proceedings being initiated by parties in different courts across the country
PARTIES HAVE NOT AGREED FOR SEAT LAW AND
THE TRIBUNAL FAILED TO DETERMINE IT
• The Supreme Court of India in Union of India v. Hardy Exploration and Production
(India) Inc. (2018) held that Indian courts will have jurisdiction to set aside the
arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 in
case the parties have not agreed for seat law and the Tribunal failed to determine
it.
• The Court was faced with the question that when the arbitration agreement
specify the venue of arbitration but does not specify the seat, then on what basis
and by which principle, the parties have to decide the seat law.
• The disputed arbitration clause, in this case, provided Indian law as the governing
law and arbitration to be conducted as per the Uncitral (United Nations
Commission on International Trade Law) Model Law specifying the venue to be
Kuala Lumpur.
• The Court determined India to be the seat law while deciding that it has
jurisdiction for setting aside the arbitral award.
Court’s Authority to Select Arbitral Seat in Absence of
Parties’ Agreement
• Agreement on the choice of the law of the seat is essential as it clarifies that which court will
have supervisory jurisdiction over the arbitration proceedings.
• Principally, parties are required to reach an agreement with regard to the choice of the seat
law. In absence of such agreement, the Arbitral Tribunal has the power to decide the place of
arbitration as per Section 20(2) of the Arbitration and Conciliation Act, 1996. 
• Moreover, the Uncitral Model Law of 1985, on which the arbitration law of India is based
upon, also state that the Tribunal will determine the place of arbitration in case the parties fail
to do so.
• The Arbitration and Conciliation Act, 1996 does not grant the local courts the power to select
the arbitral seat. No such express power is granted under the Model Law. The arbitration
statutes across the globe either allow the Arbitral Tribunal or the arbitral institution to decide
the law of the seat in case there is no agreement between the parties regarding choice of the
seat law.
• However, in few legislations like Swedish Arbitration Act and Japanese Arbitration Law, the
local courts can select the arbitral seats in circumstances where the parties have neither
agreed upon a seat nor a means for selecting a seat.
• In India, Part I of the Arbitration and Conciliation Act, 1996 only applies when the
seat of arbitration is India as stated in Section 2(2) of the Act. The Court while
deciding the application made under the provisions of Part I has to determine
whether the place of arbitration is in India or not. Therefore, in deciding such
application the courts decide the seat law in case the parties’ agreement is silent
on it.
Court’s Approach in Determination of
Law of the Seat
• The dispute regarding the choice of the seat law arises as the parties have been using the
term “place”, “venue” and “seat” interchangeably in their contracts. The Indian courts in
various cases have interpreted the agreement of the parties in order to determine the law
of the seat. In Enercon (India) Ltd. v. Enercon GmbH, (2014) 5 SCC 1 the question before
the Court was whether the phrase “venue shall be London” as used in the arbitration
agreement imply that London was the seat law. The Supreme Court in this case, while
recognising the test of the closest and most intimate connection held by expressly making
Indian law as the governing law of the arbitration agreement and the underlying contract,
the parties have designated India to be the seat of arbitration.
• The Court in Harmony Innovation Shipping Ltd. v. Gupta Coal India Ltd. (2015) 9 SCC 172
 applied the test of presumed intention and held that London will be the seat law. The
Court came to such conclusion by stating that parties intended to make London as the
seat law and for this there is ample indication through various phrases used in the
arbitration clause like “arbitration in London to apply”, arbitrators are to be the members
of the “London Arbitration Association” and the contract “to be governed and construed
according to the English law”.
• The Supreme Court’s judgment in Roger Shashoua v. Mukesh Sharma
(2017) 14 SCC 722 (Roger Shashoua) sheds further light on the court’s approach
to interpreting arbitration agreements, particularly regarding the parties’ implied
choice of seat. The Court found that the designation of London as the “venue” of
the arbitration in the absence of any express designation of a seat would suggest
that the parties agreed that London would be the seat of the arbitration (in the
absence of anything to the contrary).
• The Supreme Court in Eitzen Bulk A/S v. Ashapura Minechem Ltd.   (2016) 11 SCC
508 held that since the arbitration clause stipulates that the dispute shall be
settled in London and English law would apply to the arbitration, the intention of
the parties is manifestly clear to exclude the applicability of Part I of the 1996 Act
and thus, the conduct of the arbitration, as well as any objections relating thereto
including the award, shall be governed by English law.
• In other jurisdictions, courts have applied various approaches in order to
determine the seat law in case of parties’ failure to do so. In one case, a court
held that such an agreement could be inferred from the parties’ contractual
relationship. In another case, the court identified what it considered to be the
effective place of arbitration i.e. the place where all relevant actions in the
arbitration have taken place; another court held that, the place of the last oral
hearing should be deemed the place of arbitration.