Referred to Larger Bench XIII ANSWERED: Venue v. Seat, Arbitration

My Lord, ‘Venue’ v. ‘Seat’?

The Arbitration Clause has to be appositely read to understand its intention so as to arrive at a conclusion on whether it determines the ‘seat’ or not. There is no shadow of doubt that the Arbitration Clause has to be read in a holistic manner so as to determine the jurisdiction of the Court.

In IMAX Corporation, (2017) 5 SCC 331 the 3 Judge Bench had ruled: “An express choice has been made by the parties regarding the conduct of Arbitration i.e. that a dispute shall be finally settled by Arbitration according to The ICC Rules of Arbitration. The parties have not chosen the place of Arbitration. They have simply chosen the rules that will govern the Arbitration, presumably aware of the provision in the rules that the place of Arbitration will be decided by ICC vide Article 14(1) of The ICC Rules. ICC having chosen London, leaves no doubt that the place of Arbitration will attract the law of UK in all matters concerning Arbitration. The parties having agreed to have the seat decided by ICC and ICC having chosen London after consulting the parties and the parties having abided by the decision, it must be held that upon the decision of ICC to hold the Arbitration in London, the parties agreed that the seat shall be in London for all practical purposes.”

In the present case, the ‘place’ of Arbitration was to be agreed upon between the parties. It had not been agreed upon; and in case of failure of agreement, the Arbitral Tribunal was required to determine the same taking into consideration the convenience of the parties.

Sittings at various places are relatable to a ‘venue’. It cannot be equated with the ‘seat’ of Arbitration or ‘place’ of Arbitration which has a different connotation as has been held in Reliance Industries Ltd. (I) & (II), Harmony Innovation Shipping Limited, (2015) 9 SCC 172 and in Roger Shashoua, (2017) 14 SCC 722. The word ‘determination’ has to be contextually determined. When a ‘place’ is agreed upon, it gets the status of ‘seat’ which means the juridical seat. We have already noted that the terms ‘place’ and ‘seat’ are used interchangeably. When only the term ‘place’ is stated or mentioned and no other condition is postulated, it is equivalent to a ‘seat’ and that finalizes the facet of jurisdiction. But if a condition precedent is attached to the term ‘place’, the said condition has to be satisfied so that the ‘place’ can become equivalent to ‘seat’. In the instant case, there is no agreement. As far as determination is concerned, there has been no determination. The expression of determination signifies an expressive opinion. In the instant case, there has been no adjudication and expression of an opinion. Thus, the word ‘place’ cannot be used as ‘seat’. To elaborate, a ‘venue’ can become a ‘seat’ if something else is added to it as a concomitant. But a ‘place’, at least as is seen in the contract, can become a ‘seat’ if one of the conditions precedent is satisfied. It does not ipso facto assume the status of ‘seat’.

– Hon’ble Chief Justice of India, Hon’ble Justice Dipak Misra, Union of India v. Hardy Exploration and Production (India) INC, [Civil Appeal No. 4628 of 2018].