Seat Alone Determines Jurisdiction, Not Where Arbitration Is Conducted Or Award Is Pronounced: Supreme Court

The Supreme Court of India has set aside an order of the Jammu and Kashmir and Ladakh High Court which had declined to hear a challenge to an arbitral award on the ground that it was delivered in New Delhi, holding that jurisdiction lies with courts at the seat of arbitration and cannot shift based on where proceedings are conducted or the award is rendered.

A Bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe said, “The mere fact that arbitral proceedings are conducted or the award is rendered at a particular place does not confer jurisdiction on courts of that place if it is different from the designated seat. The seat remains fixed unless expressly altered by agreement of the parties.”

The court also clarified the limits of relying on how an arbitral award describes the place of arbitration, observing, “The seat of arbitration is governed by the agreement of the parties and not by any stray recital in the award. Once the seat of arbitration is fixed, it remains immutable unless altered by an express agreement.”

The case arose from four road infrastructure contracts awarded in Jammu and Kashmir in 2008 by J&K Economic Reconstruction Agency to Rash Builders India Private Limited. Disputes led to arbitration in 2014.

In 2016, with consent of both sides, the arbitrator fixed Srinagar as the seat of arbitration and New Delhi as the venue for hearings. The award was delivered in New Delhi in January 2024, and it recorded New Delhi as the place where it was rendered.

When the agency challenged the award before the High Court, the court returned the plea, holding that courts in New Delhi would have jurisdiction since the proceedings and the award were conducted there.

Before the Supreme Court, the agency argued that once the seat was fixed as Srinagar, only courts there could hear a challenge and that this position could not be changed without an express agreement between the parties.

The contractor relied on the award's reference to New Delhi and argued that it should be treated as the place of arbitration for all purposes.

Rejecting this, the court said the seat is the juridical seat of arbitration and determines which court has supervisory control. It then set out the distinction between seat and venue in clear terms:

• The seat of arbitration is the juridical home of arbitration. It determines the governing law and the court that has supervisory jurisdiction.
• Once the seat is fixed by agreement, courts at that place alone have exclusive jurisdiction over all proceedings, including challenges to the award.
• The venue is only a convenient location for conducting hearings or meetings. It does not confer jurisdiction.
• Conducting proceedings or delivering the award at a different place does not shift jurisdiction away from the seat. The seat remains unchanged unless it is expressly altered by agreement between the parties.
• Where the seat is not specified, it must be determined from the closest connection to the arbitration and the intention of the parties.
• The intention of the parties, as discerned from the arbitration agreement and surrounding circumstances, is the paramount factor in determining the seat

The bench added that allowing jurisdiction to depend on where hearings were held or how the award describes the place of arbitration would create uncertainty and undermine party autonomy.

It set aside the High Court's order and restored the proceedings before the Srinagar court for a decision on merits.