Venue Of Arbitration Is Seat In Absence Of Contrary Indication: J&K&L High Court
The Jammu & Kashmir and Ladkah High Court has recently reiterated that where an arbitration clause designates a particular place as the “venue” of arbitration and there is no contrary indication, such place must be treated as the “seat” of arbitration, thereby conferring exclusive jurisdiction on courts at that location.
"It is, thus settled that whenever there is mention of place of arbitration in an arbitration clause as being the venue of arbitration proceedings, it would really mean the seat of arbitral proceedings. This is so because the expression “arbitration/ arbitral proceedings” does not refer to individual hearing but conveys that entire arbitration process including making of the award shall be conducted at the place referred to as venue‟, the court observed.
A bench of Justice Sanjeev Kumar dismissed a petition seeking appointment of an arbitrator, holding that since Mumbai was designated as the venue of arbitration and the clause restricted jurisdiction to Mumbai courts, the J&K High Court lacked territorial jurisdiction.
The court observed that it is well settled that when an arbitration clause mentions a place as the venue of arbitration proceedings, it ordinarily signifies the seat of arbitration, unless there are significant contrary indicia to show otherwise.
Relying on the Supreme Court's decision in BGS SGS SOMA JV, the Court reiterated the three-condition test to determine whether a designated “venue” constitutes the seat of arbitration:
The arbitration clause designates a specific place for arbitration proceedings;
The clause fixes that place without scope for change; and
There are no significant contrary indicia suggesting that the place is merely a venue and not the seat.
Applying this test, the Court found that The arbitration clause designated only Mumbai as the venue; All arbitral proceedings culminating in the award were to be conducted at Mumbai and the clause expressly provided that jurisdiction would be restricted to Mumbai courts.
There was no contrary indication in the agreement suggesting that Mumbai was merely a venue.
In view of these findings, the Court upheld the preliminary objection raised by the respondents regarding maintainability. It held that since Mumbai was the seat of arbitration, only courts at Mumbai would have jurisdiction to entertain an application under Section 11.
The Court also noted that in an earlier similar matter involving an identical arbitration clause, the application had not been entertained for want of jurisdiction.
Accordingly, the petition was dismissed with liberty to the petitioner to approach the competent court. The Court observed that the time spent in prosecuting the proceedings before it may be considered by the competent court while addressing limitation, if so urged.
For Petitioner: Advocate Pranav Sharma
For Respondents: Advocates Mohinder Singh Advocate with Moti Sharma