Arbitral Seat Cannot Be Shifted Merely Due To Convenience Venue: Allahabad High Court

The Allahabad High Court on 27 May held that the jurisdictional seat of arbitration cannot be altered merely because arbitral proceedings were conducted at another venue for convenience, once the seat has been contractually designated.

Justice Piyush Agrawal allowed the petition by Bb Coachtech India Private Limited and set aside the order of the Commercial Court, Kanpur, remanding the matter for fresh consideration. He observed:

“the hearing of the arbitration may have been taken place at Prayagraj, a different venue & seat from Kanpur but at the best, it can be said to be convenient place for the parties. In other words, the Commercial Court ought to have appreciated that Kanpur Nagar was consciously designated as the seat of arbitration. Once such a designation was made, the legal consequence that inexorably follows is that courts at Kanpur alone would have jurisdiction over the arbitral proceeding. The mere fact that arbitral tribunal for reasons of convenience, conducted proceeding at Prayagraj, it does not and cannot, alter the jurisdictional seat of arbitration of Kanpur Nagar.”

The dispute arose after an arbitrator was appointed between the parties, claims were filed, and issues were framed.

The arbitral proceedings initially proceeded within the prescribed 12-month period. However, upon expiry of the timeline, the tribunal granted two extensions of six months each. Before the expiry of the extended period, the petitioner moved an application under Section 29(5) of the Arbitration and Conciliation Act, 1996 seeking further extension of time.

The Commercial Court, Kanpur rejected the application on the ground that since proceedings were being conducted at Prayagraj, the courts there would have jurisdiction.

Challenging the order, the petitioner contended that Clause 17.1 and 17.2 of the purchase order expressly designated Kanpur Nagar as the seat of arbitration, and that Prayagraj was only a convenient venue chosen with the consent of the parties.

The High Court accepted the contention and held that conducting proceedings at a different venue does not alter the juridical seat of arbitration, which alone determines jurisdiction.

Accordingly, the High Court allowed the petition and remanded the matter to the Commercial Court, Kanpur for fresh adjudication.