Supreme Court of India: Conundrum of “Seat” & “Venue” Solved


In Bharat Aluminium Co. (BALCO) v. Kaiser Aluminium Technical Service, Inc. (2012) 9 SCC 552 (“BALCO”), the Five Judge Constitutional Bench of the Supreme Court of India, inter alia held that arbitrations are anchored to the seat/place/situs of arbitration. The seat of arbitration is thus intended to be its centre of gravity. This, however, does not mean that all proceedings of the arbitration have to take place at the seat of the arbitration. The arbitrators at times hold meetings at more convenient locations. Thus, the law of the seat or place where the arbitration is held, is normally the law to govern the arbitration. The territorial link between the place of arbitration and the law governing that arbitration is well established in the international instruments, namely, the New York Convention, 1958 and the UNCITRAL Model Law, 1985 (“Model Law”). The Court also affirmed that the terms “seat” and “place” are often used interchangeably.

The Supreme Court then analysed the definition of ‘Court’ as provided under Section 2(1)(e) of the Arbitration & Conciliation Act, 1996 (‘Act’) read with Section 20 which deals with the ‘Place of arbitration’ and is akin to Article 20 of the Model Law. In conclusion, the Court inter alia held that where the place of arbitration is in India, the parties are free to agree to any ‘place’ or ‘seat’ within India. In the absence of the parties’ agreement thereto, Section 20(2) of the Act authorizes the tribunal to determine the place/seat of such arbitration whereas Section 20(3) enables the tribunal to meet at any place for conducting hearing witnesses, experts or the parties. Thus, the term ‘place’ mentioned in Section 20(3) of Act is nothing but the ‘venue’ of arbitration whereas the term ‘place’ as mentioned in Section 20(1)&(2) of the Act connotes the ‘seat’ of arbitration.

Exclusive Jurisdiction Theory – Roger Shashoua Principle

In BALCO, the Constitutional Bench, relying on English authority of Roger Shashoua v. Mukesh Sharma, [2009] EWHC 957 (Comm), also observed that the choice of another country as the seat of arbitration inevitably imports an acceptance that the law of that country relating to the conduct and supervision of arbitrations will apply to the proceedings.

Concurrent Jurisdiction Theory – Para 96 of BALCO

Nevertheless, the Five Judge Bench provided an example in Para 96 of BALCO which inter alia provided that if the arbitration is held at A, where neither of the parties are from A, (A having been chosen as a neutral place as between a party from B and the other from C) and the tribunal sitting in A passes an interim order under Section 17 of the Act, the appeal against such an interim order under Section 37 must lie to the Courts at A being courts having supervisory jurisdiction over the arbitration proceedings and the tribunal. This would be irrespective of the fact that the obligations to be performed under the contract were to be performed at B or C, and only arbitration is to take place at A. Till this point, the example was in conformity with internationally recognised principles of territoriality. In latter part of the judgement, the Court held that  in such circumstances, both the Courts would have jurisdiction i.e. the Court within whose jurisdiction the subject matter of the suit is situated and the courts within the jurisdiction of which the dispute resolution i.e. arbitration is located (A). As apparent, the example discussed in Para 96 of BALCO is contradictory to Roger Shashoua Principle provided in the latter part of BALCO itself.

Mystery created by Hardy

A Three Judge Bench of the Supreme Court, in Union of India v. Hardy Exploration and Production (India) Inc. 2018 SCC Online SC 1640 (“Hardy”) had somewhat diluted the position of law in respect of “seat”, “place” and “venue”. In Hardy, the precise question that had been referred to the Three Judge Bench was whether the ratio of Sumitomo Heavy Industries Ltd. v. ONGC Ltd. (1998) 1 SCC 305, a judgement delivered under the Arbitration Act, 1940, would have any impact on the “juridical seat” doctrine in arbitration law, as developed in England and by Indian Courts. (It is noteworthy that in that case, the Supreme Court was dealing with a contract which stated that the contract shall be subject to laws in India. The proceedings were to be held at London, UK in accordance with the provision of ICC. It was however held, in substance, by the Supreme Court that, where the contract is governed by Indian law and the seat of the arbitration is elsewhere, wherein arbitrability of the dispute is established, procedural law of the country of seat of arbitration governs the conduct of the arbitration proceedings till the award is delivered.)

The Three Judge Bench, while answering the above question of law, inter alia held that the arbitration clause has to be read in a holistic manner so as to determine the jurisdiction of the Court. That apart, if there is mention of venue and something else is appended thereto, depending on the nature of the prescription, the Court can come to a conclusion that there is implied exclusion of Part I of the Act which governs the domestic arbitrations in India.

In Hardy, the arbitration clause in question provided venue of arbitration as Kuala Lumpur which the Court went on to hold that there was no determination of any “juridical seat” by the agreement and would therefore have to be determined by the Arbitral Tribunal. As there was no such determination by the Arbitral Tribunal, the Three Judge Bench concluded that the ‘place’ cannot be used as ‘seat’. To elaborate, a ‘venue’ can become seat if something else is added to it as a concomitant (so Venue = Seat + ‘Concomitant’). But a place unlike seat, atleast as is seen in the contract of that case, can become a seat if one of the condition precedents is satisfied and it does not ipso facto assume the status of seat.

What skipped the notice of the Three Judge Bench in Hardy was the principle of Exclusive Jurisdiction enunciated in Roger Shashoua and cited with approval by Five Judge Bench in BALCO.

In BGS SGS Soma JV v. NHPC Ltd. 2019 OnLine SC 1585 the Supreme Court of India had constructively struck down this Venue = Seat + ‘Concomitant’ theory promulgated by the Three Judge Bench by reviving the position of law as settled by the Five Judge Bench in BALCO. Detailed case analysis given below:-

Factual Matrix

A dispute arose out of a construction contract between the Petitioner, Contractor and the Respondent, Employer. The arbitration clause in underlying contract inter alia provided that the arbitration proceedings ‘shall be held at New Delhi/Faridabad India’ without expressly mentioning either of these places as the seat of arbitration. The Contractor invoked the arbitration and a tribunal was constituted which rendered an award at New Delhi. By the said award, the tribunal allowed the claims of the Contractor. Resultantly, the aggrieved Employer filed an application to set aside the award under Section 34 of the Act. However, interestingly this application was filed in the Courts of Faridabad (the alternate place mentioned in the arbitration clause) instead of New Delhi.

In response to this application, the Contractor filed an application under Order VII Rule 10 of the Civil Procedure Code, 1908 of India (‘CPC’) seeking a return of Employer’s application under Section 34 of the Act for presentation before the appropriate Court at New Delhi challenging the jurisdiction of Faridabad Court to entertain such application as New Delhi being the seat of arbitration and therefore conferring exclusive jurisdiction to the court of New Delhi to entertain any such application.

During that period, due to advancement in Law, a special commercial court was constituted in Gurugram (a place near Faridabad which holds the territorial jurisdiction of the commercial disputes held in Faridabad) due to promulgation of Commercial Courts Act, 2015 by the Parliament. Consequently, the Employer’s application under Section 34 was transferred to Gurugram Commercial Court which allowed this application and set aside the award.

Aggrieved by the decision of Gurugram Commercial Court, the Contractor filed an appeal before the Punjab & Haryana High Court under the only appeal provision provided under the Act (i.e. Section 37) read with the general provision of appeal (Section 13(1)) provided under the Commercial Courts Act, 2015 (the dispute being a commercial dispute of a specified value under the Commercial Courts Act, 2015). The Contractor’s appeal was dismissed by the High Court and it was inter alia held that Delhi being a convenient ‘venue’ where arbitral proceedings were held and not the seat of arbitration proceedings, Faridabad would have jurisdiction on the basis of cause of action having arisen in part in Faridabad. This judgement of the High Court was appealed before the Supreme Court in the present proceedings.

Parties Contentions

In support of its appeal, the Contractor contended as under:-

  • That Section 37 of the Act enumerates an exhaustive list of orders which are appealable. Whereas the order of the High Court allowing an application of the Contractor under Order VII Rule 11 of CPC i.e. application seeking return of application of the Employer to set aside the award, is not specifically provided under the exhaustive list of appealable order under Section 37 of the Act and therefore it is not appealable under Section 37 of the Act.
  • That award being rendered at New Delhi, it is clear that the seat of arbitration was New Delhi and not Faridabad.
  • Even if both New Delhi and Faridabad had jurisdiction, New Delhi being the choice of the parties, the principles contained in Hakam Singh v. M/s. Gammon (India) Ltd., (1971) 1 SCC 286, would govern the jurisdiction of courts which inter alia provided that where it has been decided by the parties that where two courts have territorial jurisdiction to try the dispute between the parties and the parties have agreed that dispute should be tried by only one of them, the court mentioned in the agreement shall have jurisdiction.
  • That the Three Judge Bench decision in Hardy queers the pitch, in that it is directly contrary to the Five Judge Bench decision in BALCO.
  • That the theory of Concurrent Jurisdiction provided in the example cited in Para 96 of BALCO is against the theory of Exclusive Jurisdiction of courts at seat of arbitration.

Per contra, the Employer buttressed the judgement of the High Court and contended as under:-

  • That the arbitration clause did not expressly stated that either New Delhi or Faridabad was to be the seat of arbitral tribunal. Therefore, the arbitral tribunal only referred to a convenient venue, and the fact that the sittings were held at New Delhi, therefore would not make New Delhi the seat of arbitration under Section 20(1) of the Act.
  • That since the agreement was signed in Faridabad, and notices by the Contractor to the Employer were served at its Faridabad office, part of cause of action clearly arose in Faridabad, as a result of which the courts in Faridabad would be clothed with jurisdiction to decide the Section 34 application.
  • That in BALCO, even assuming that New Delhi was the seat of arbitration, both New Delhi and Faridabad would have concurrent jurisdiction, New Delhi being a neutral forum in which no part of cause of action arose, and Faridabad being a chosen forum where a part of the cause of action has arisen.
  • As per Section 42 of the Act, where with respect to an arbitration agreement any application is made under said Part-I (i.e. Part governing the domestic arbitration) in a Court, then said ‘Court alone’ would have jurisdiction over the Arbitral proceedings and all subsequent applications arising out of such agreement will have to be made in ‘that Court’ and no ‘other Court’ would have jurisdiction to entertain such petition/s or application/s filed subsequently. Thus, by virtue of Section 42 of the Act, since the Court at Faridabad was first approached by filing an application under Section 34 of the Act, that Court alone would have jurisdiction.


Appeals filed by the Employer do not fall within Section 37 of the Act and thus not maintainable

  • Section 37 alone can be looked at for the purpose of filing appeals against orders setting aside, or refusing to set aside awards under Section 34. Thus, the refusal to set aside an arbitral award must be under Section 34 i.e. after the grounds set out in Section 34 have been applied to the arbitral award in question and after the Court has turned down such grounds. In the present case, there was no adjudication under Section 34 of the Act, all that was done was that the special commercial court Gurugram allowed an application under Order VII Rule 10 of CPC. Therefore, such Section 34 application would have to returned to the competent court in New Delhi.
  • An appeal is a creature of statute and must either be found within the four corners of the statute, or not be there at all.
  • There is a distinction between judgements which either set aside or refuse to set aside, an arbitral award after the court applies its mind to Section 34 of the Act as against preliminary orders such as orders providing a condonation of delay, which do not in any way impact the arbitral award that has been assailed.

The arbitration clause does not refer to ‘venue’ of Arbitration as Delhi rather it refers to ‘seat’

  • Sections 20 and 31(4) of the Act are replications of Articles 20 and 31(2) of the Model Law, in which the pride of the place is given to the juridical seat of arbitral proceedings.


  • A co-joint reading of many paragraphs from BALCO shows that where parties have selected the seat of arbitration in their agreement, such selection would then amount to an exclusive jurisdiction clause, as the parties are now indicated that the Courts at the “seat” would alone have jurisdiction to entertain challenges against the arbitral award which have been made at the seat.

Re: Para 96 of BALCO

  • The judgements of Courts are not to be construed as statutes, neither are they to be read as Euclid’s theorems. All observations made must be read in the context in which they appear.
  • A Judgement must be read as a whole, so that conflicting parts may be harmonized to reveal the true ratio of the judgement. However, if this is not possible and it is found that the internal conflicts within the judgement cannot be resolved, then the first endeavour that must be made is to see whether a ratio decidendi can be culled out without the conflicting portion. If not then as held by Lord Denning in Harper v. National Coal Board (1974) 2 All ER 441, the biding nature of the precedent on the point on which there is a conflict in a judgement, comes under a cloud.
  • Take the consequence of opposite conclusion, in light of the facts of the given example, as follows. A is specifically designated to be the seat of the arbitration in the arbitration clause. Part of the cause of action however, arises in several places, including where the contract was partially to be performed, let us say, in D. If concurrent jurisdiction were to be the order of the day, despite seat having been located and specifically chosen by the parties, party autonomy would suffer, which BALCO specifically states cannot be the case. Thus if an application to set aside an award is made in D, which then becomes the Court for the purposes of Section 42 of the Act, where even Section 34 applications have to be made, the result would be contrary to the stated intention of the parties, as even though the parties have contemplated that a neutral place be chosen as the seat (A) so that the courts of that place alone would have jurisdiction, yet, any one of the five other courts in which a part of cause of action arises would be clothed with jurisdiction. This obviously cannot be the case. If, therefore, the conflicting portion of the judgement in BALCO in para 96 is kept aside for a moment, the very fact that the parties have chosen a place to be the seat would necessarily carry with it the decision of both parties that the courts at the seat would exclusively have jurisdiction over the entire arbitral process.

‘Seat’ v. ‘Venue’

  • Wherever there is an express designation of a ‘venue’, and no designation of any alternative place as the ‘seat’, combined with a supranational body of rules governing the arbitration and no other significant contrary indicia, the inexorable conclusion is that the stated venue is actually the juridical seat of the arbitral proceeding.
  • Whenever there is the designation of a place of arbitration in an arbitration clause as being the ‘venue’ of the arbitration proceedings, the expression ‘arbitration proceedings’ would make it clear that the ‘venue’ is really the ‘seat’ of arbitral proceedings, as the aforesaid expression does not include just one or more individual or particular hearing, but the arbitration proceedings as a whole, including making of an award at that place.
  • This language has to be contrasted with language such as ‘tribunals are to meet or have witnesses, experts or the parties’ where only hearings are to take place in the ‘venue’ which may lead to the conclusion, other things being equal, that the venue so stated is not ‘seat’ of arbitral proceeding but only a convenient place of meeting.
  • Further, the fact that the arbitral proceedings ‘shall be held’ at a particular venue would also indicate that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby, that that place is the seat of the arbitral proceedings.
  • This, coupled with there being no other significant contrary indicia that the stated venue is merely a ‘venue’ and not the ‘seat’ of the arbitral proceedings, would then conclusively show that such a clause designates a ‘seat’ of arbitral proceedings.
  • In international context, if a supranational body of rules is to govern the arbitration, this would further be an indicia that the “venue”, so stated, would be the seat of arbitral proceedings. In a national context, this would be replaced by the Act as applying to the ‘stated venue’, which then becomes the ‘seat’ for the purposes of arbitration.
  • In the instant case, the arbitration clause states that ‘Arbitration Proceedings shall be held at New Delhi/Faridabad, India..’, thereby signifying that all the hearings, including the making of the award, are to take place at one of the stated places. Negatively speaking, the clause does not state that the venue is so that some, or all, of the hearings take place at the venue, neither does it use language such as “the tribunal may meet” or “may hear witnesses, experts or parties”. The expression ‘shall be held’ also indicates that the so-called ‘venue’ is really the ‘seat’ of the arbitral proceedings.
  • The fact that the proceedings were finally held at New Delhi, and the awards were signed in New Delhi and not at Faridabad, would lead to the conclusion that both parties have chosen New Delhi as the ‘seat’ of arbitration under Section 20(1) of the Act. This being the case, both the parties, have therefore, chosen that the Courts in New Delhi alone will have exclusive jurisdiction over the arbitral proceedings. Therefore, the fact that a part of cause of action may have arisen in Faridabad would not be relevant once the ‘seat’ has been chosen, which would amount to an exclusive jurisdiction clause so far as Courts of the ‘seat’ are concerned.

Disclaimer: The views expressed on this post are mine and do not reflect the views of the organisation(s) I am engaged with

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