Arbitration Clause Cannot Alone Determine Seat When Multiple Places Are Specified: Supreme Court

The Supreme Court has held that when an arbitration clause specifies two places, namely Delhi and Goa, the juridical seat of arbitration must be determined by reading the agreement as a whole, including the governing law and jurisdiction clause.

The Court rejected the argument that the arbitration clause alone should determine the seat because it is independent of the main contract.

A division bench of Justices Manoj Misra and Vijay Bishnoi set aside the Delhi High Court's November 11, 2025 order appointing an arbitrator in a dispute between Arcis Clean Energy Pvt Ltd and Parshva Innovation.

"The submission on behalf of the appellant that the arbitration agreement is independent of the main contract and, therefore, the arbitration clause would alone determine the juridical seat, and not the Governing Law clause, cannot be countenanced for the simple reason that the arbitration clause itself mentions two places, namely, Delhi and Goa.", the Court observed.

The dispute arose from a franchise agreement dated August 3, 2023. Clause 32.4 stated that the precise location of arbitration would be within Delhi, while Clause 32.5 provided that the arbitration proceedings would be held in Goa. Clause 38 of the agreement conferred exclusive jurisdiction on courts in Goa. Parshva proposed a sole arbitrator on March 25, 2025 but Arcis rejected the proposal on April 19, 2025. Parshva subsequently approached the Delhi High Court, which appointed an arbitrator and left the venue of hearings to be decided in consultation with the parties.

Before the Supreme Court, Arcis argued that Goa was the juridical seat and Delhi was merely the venue. Parshva contended that the arbitration agreement was independent of the main contract and that the governing law clause could not determine the seat. It argued that Clause 32.4 specifically mentioned Delhi and should prevail over the provision referring to Goa.

The Supreme Court observed that parties can choose the place of arbitration by agreement and confer exclusive jurisdiction on courts at a particular place to regulate arbitral proceedings. However, where an agreement mentions more than one place for arbitration, the specified venue does not automatically become the juridical seat.

Relying on the principles laid down in BGS SGS SOMA JV v. NHPC Ltd. and Arif Azim Company Ltd. v. Micromax Informatics FZE, the Court held that the intention of the parties must be determined by examining the agreement in its entirety.

The bench noted that Clause 32.4 referred to Delhi, whereas Clause 32.5 stated that arbitration proceedings would be held in Goa.

Reading these provisions harmoniously with Clause 38 which conferred exclusive jurisdiction on courts in Goa, the Court concluded that Goa was the juridical seat and Delhi was only the venue.

"In such a situation, the Governing Law clause i.e., Clause 38 of the Agreement would be helpful in determining the juridical seat. Since Clause 38 of the Agreement confers exclusive jurisdiction to the courts at Goa and Clause 32.5 provides that arbitration proceedings will be held in Goa, it is clear that the parties have agreed that Goa shall be the juridical seat, Delhi is just a venue."

Accordingly, the Court allowed the appeal and set aside the Delhi High Court's order. It left the parties at liberty to pursue appropriate proceedings before the jurisdictional High Court.

For Appellant: Salvador Santosh Rebello- 2891, AOR, Advocates Raghav Sharma, Sneha Bhargava, Ankit Rana, Devesh Khandelwal

For Respondent: Mudit Gupta- 3309, AOR, Advocates Varun Singh, Alankriti, Somesa Gupta, Kajal Gupta, Arun Sidhant, Deepeika Kalia, Sudeep Chandra