Introduction

Arbitration has emerged as a cornerstone of dispute resolution in the modern era of

globalization, offering parties a flexible, efficient, and neutral alternative to traditional
litigation. Its popularity stems from its ability to transcend national boundaries, allowing
parties from different jurisdictions to resolve disputes in a manner that is both legally
enforceable and commercially practical. However, the very features that make arbitration so
attractive—its flexibility and international character—also give rise to complex legal and
procedural challenges. Among these challenges, the conundrum of distinguishing between
the "seat" and "venue" of arbitration stands out as a recurring source of confusion,
disputes, and litigation.

The seat and venue of arbitration are two distinct concepts that play critical roles in shaping
the conduct and outcome of arbitral proceedings. While the seat refers to the legal
jurisdiction that governs the arbitration and determines the applicable procedural law,
the venue is simply the physical location where hearings are held. Despite their differences,
these terms are often used interchangeably in arbitration agreements, leading to ambiguity
and conflicting interpretations by courts and arbitral tribunals. This confusion can have far-
reaching consequences, affecting everything from the procedural framework of the
arbitration to the enforceability of the final award.

The importance of this issue cannot be overstated. The seat of arbitration determines
the lex arbitri (the law governing the arbitration), the supervisory jurisdiction of local courts,
and the nationality of the arbitral award—factors that are crucial for the award's recognition
and enforcement under international instruments like the New York Convention. On the
other hand, the venue is a matter of practical convenience, chosen for its accessibility, cost-
effectiveness, or neutrality. When parties fail to clearly distinguish between the two, or
when they assume that the venue carries legal significance, the stage is set for disputes that
can undermine the efficiency and finality of the arbitration process.

Difference between seat and venue of arbitration

The Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) does not
directly define the terms ‘seat’ and ‘venue’.

Although the aforesaid terms have not been expressly defined in the Act, an attempt has
been made to explain the concepts in Section 20 of the Act. It highlights that parties are free
to choose the place of arbitration and the role of an arbitral tribunal in case the parties fail
to determine the place in the arbitration agreement/ clause. Section 20 of Arbitration and
Conciliation Act, 1996 is an important provision inspired by Article 20 of UNCITRAL Model
Law which gives contractual freedom to parties to decide the place for arbitration. It plays
the role of providing the ground for the arbitration process and majorly impacts the
procedure as well as the result of arbitration. If the parties fail to decide the place of
arbitration then it shall be decided by the arbitral tribunal taking into consideration the
circumstances of the case and the convenience of the parties involved. The section
highlights the importance of the place of arbitration and gives the parties the privilege to
decide on the place of arbitration. However, the Act uses the word “Place” of Arbitration,
instead of ‘seat’ and ‘venue’ which creates ambiguity on the location of the arbitration, the
law governing the arbitration proceedings, the language in which the arbitration is effected,
and the recognition and enforcement of the award.

Let’s first understand the concept of seat and venue with the help of relevant case laws
followed by a detailed explanation of the role played by ‘seat’ and ‘venue’ to understand its
importance in the procedure of arbitration.

Seat

The seat of an arbitration refers to the court which has exclusive jurisdiction over the
transaction. Seat in the context of International Commercial Arbitration is one of the most
crucial aspects that determines the course of arbitration proceedings. If in an arbitration
agreement, a certain place is selected as the seat, then the courts of that place will have
jurisdiction over that matter, if any dispute arises related to the agreement. Seat creates a
legal base for arbitration because it determines how the arbitration will be conducted, what
procedural rules will apply, and also governs the way the decision of arbitrators will be
enforced. However, the role of the seat in arbitration is to decide the legal framework of the
complete arbitration proceedings and it cannot be determined as the geographical location
of arbitration proceedings. Supreme Court in the case of Bharat Aluminium Co vs. Kaiser
Aluminium Technical Service, Inc (2012) pertaining to foreign seated International
Commercial Arbitration held that “When parties have chosen a seat of arbitration, or if the
arbitral tribunal has determined a seat, such a determination automatically confers
jurisdiction on the courts at such seat of arbitration for the purposes of interim orders and
challenges to an award”. Through this case, the Supreme Court observed that Part I of the
Act is concerned with the seat of arbitration in India.

Venue

Venue refers to the geographical location where the parties will conduct the physical
proceedings. Since arbitration is a mechanism to settle disputes outside the court, the place
to conduct the proceedings is also crucial to decide by the parties. The venue in the
arbitration should specify the city or country where both parties along with the arbitrator
will meet to conduct the proceedings. Many arbitrations have the same place for the
jurisdiction of the court as well as the physical place where the parties will meet to solve the
dispute. However, the problem arises when the seat and venue are different. The confusion
on seat and venue in India has been clarified through conflicting judgements by various high
courts which have been concluded by the Apex Court. In Imax Corporation vs. E-City
Entertainment (India) Pvt. Ltd. (2017) where one party was Indian and parties contracted to
install theatre systems in India, the Supreme Court held that “If the venue of arbitration is
not clearly mentioned then any party which is involved in arbitration can apply for
jurisdiction to decide in the Indian Court. This might increase the multiplicity of legal
proceedings.”

The use of “place” under Section 20 sparked debate if it referred to a seat or venue which
was later settled under Bharat Aluminium Co. vs. Kaiser Aluminium Technical Services Inc.
(2012) (explained in detail under Supreme Court on “seat vs. venue” of this Article) clarified
that “place” refers to the “seat” and in Section 20(3) of the Act “place” refers to the “venue”.

ISSUE

The Ambiguity Surrounding ‘Place’, ‘Venue’ and ‘Seat’ Under the Act

The Act does not define ‘seat’ but introduces the term ‘place’ in the statute. However, the
same has not been well-defined and can be interpreted to have different meanings under
various sections of the Act. This leads to ambiguity in deciding which court has the sole
jurisdiction over the arbitration proceedings.

On reading Section 20 of the Act, the initial implication points that the party autonomy
extends only to the choice of ‘venue’ of arbitration. However, the Apex Court in Bharat
Aluminium Company v. Kaiser Aluminum Technical Services Incorporation(‘BALCO’) has partly
cleared the confusion. It established the concepts of ‘seat’ and ‘venue’ under the Act. It is
imperative to read the abovementioned two sections in consonance thereby leading to the
conclusion that ‘place’ connotes ‘seat’ under Section 20(1) and (2), whereas, it would
connote ‘venue’ under section 20(3).

It is common to use seat of arbitration interchangeably with place of arbitration. It

determines which court has the jurisdiction to the exclusion of other courts in the arbitral
proceedings. The venue on the other hand merely indicates the geographical location where
the proceedings might be conducted. It may be a neutral venue decided entirely on the
convenience of the parties. The seat exists independently and separately as to the venue of
arbitration.

The conundrum of seat and venue of arbitration begins where the contract remains
ambiguous or silent on the provision of a seat. The possibility of concurrent jurisdictions
introduces the fatality of discord and disharmony into the settlement process of claims. A
new peril arises in deciding which courts’ decision would prevail over the dispute. Therefore,
the determination of the seat of arbitration is of utmost importance in any arbitral dispute.

Conflicting views by the High Court

Due to the underlying inconsistency and ambiguity in the Act, there have been several issues
raised concerning ‘seat vs venue’ which has also sparked debate between judges. Conflicting
opinions by high courts arose when the arbitration contract or clause specified a certain
place as the seat for the legal place arbitration, however, at the same time, it also granted
jurisdiction to a different court which created ambiguity about the governing law and other
aspects of the arbitration.

First view

The first view that various courts opined is that the juridical seat is the same as the place
(venue) of the arbitration. Delhi High Court in NJ Construction vs. Ayursundra Health Care (P)
Ltd (2018) and Madras High Court in Ayyappa Enterprises vs. Sugam Vanijya Holdings (2021)
held that there is no distinction between seat and venue. The above-mentioned courts
encountered similar cases and the judges stated that the exclusive jurisdiction clause is
applicable to other proceedings and irrelevant to arbitration and they further held that the
parties intended the place of arbitration to be their juridical seat. To conclude the cases, the
shashoua test was often applied to determine the location of the arbitration proceedings.
According to this test, when there is no mention of a seat in the arbitration clause, the
venue automatically becomes the jurisdiction of the arbitration. In short, this view
disregarded the exclusive jurisdiction mentioned in the agreements directing the
arbitration.

Second view

The contrary viewpoint observes that an exclusive jurisdiction clause indicates that seat and
venue are different. Gujarat High Court in Instakart Services vs Megastone Logiparks Ltd
(2023), Delhi High Court in Kush Raj Bhatia vs. DLF Power and Services Ltd (2022), Calcutta
High Court in Commercial Division Bowlopedia Restaurants India Ltd in vs. Devyani
International Ltd (2021), and Rajasthan High Court in Aseem Watts vs. Union of India
(2023) concluded with the second view. They highlighted that place is considered the venue
whereas exclusive jurisdiction is about power given to the court of a certain place which
makes both distinguished. The Courts in their respective case held that the venue is the
location chosen for the arbitration sittings which brings convenience to parties whereas the
seat is the intention of parties that gives exclusive jurisdiction.

In Meenakshi Nehra Bhat vs. Wave Megacity Centre (2022), the parties designated Delhi as
the location but also mentioned that any dispute arising shall be referred to the exclusive
jurisdiction of a different court. The High Court of Delhi held that the selection of a certain
venue would not automatically make it the seat of arbitration.

Supreme Court on “seat vs. venue”

To answer this vexed question of law time and again, the judiciary has given various
interpretations in different judgements. On 5th March 2020, the Supreme Court
in Mankastu Impex Private Limited vs. Airvisual Limited revived the conundrum of “seat vs.
venue” under the Arbitration Act, 1996 and tried to settle the issue in the line of UOI vs.
Hardy Exploration (2016).

Prior to Hardy Exploration case

After the enactment of the Act, the first landmark attempt by the judiciary to settle down
the quandary was in the case of Bhatia International vs. Bulk Trading SA (2002) (herein
referred to as (Bhatia International”). In this case, the Supreme Court while interpreting
Section 2(2) of the Act, rather than differentiating between “seat” and “venue”, held that
any international commercial arbitration that involves an Indian party irrespective of
whether it proceeded in any country would confer jurisdiction on Indian Courts to entertain
applications under Part I of the 1996 Act. This view was without any reasoning and is
considered a judicial fiasco.

However, the Apex Court in the case of Bharat Aluminium Co. vs. Kaiser Aluminium Technical
Services Inc. (2012), (herein referred to as “BALCO”) overruled the interpretation of Section
2(2) as laid down in the case of Bhatia International vs. Bulk Trading SA (2002) and held that
Part I of the Act would only apply if “seat” of arbitration is in India, and reading of Section
2(2) along with Section 20 established that the Act has no extraterritorial jurisdiction.

The Court restored the distinction between “seat” and “venue” and stated that the term
“place” used in Sections 20(1) and (2) connotes “seat” and Section 20(3) talks about
“venue”. Sections 20(1) and (2) deal with the right of the parties to select the place of
arbitration and in the absence of any such selection in the agreement, authorise the tribunal
to determine the same, whereas Section 20(3) allows the tribunal to meet at any place for
convenience in procedural matters.

Before BALCO the other prevailing approach to determine the supervisory jurisdiction of the
court for arbitration was to decide as per section 2(1)(e) of the Act, which recognizes that
the court at the place of cause of action would have jurisdiction, but BALCO adopted a seat
centric approach instead of the place of cause of action approach and extended the
supervisory jurisdiction of the arbitration exclusively onto the court, which is considered as
the seat of arbitration.

In 2014, the 246th Report of Law Commission addressed that the use of the word “place” in
the Act is a misnomer and suggested replacing the word “place” with the words “seat” and
“venue” in section 2(2) and section 20 of the Act on the line of explanation given in BALCO,
but this suggestion was never materialised.

The Supreme Court reiterated the same principle in Enercon (India) Ltd. vs. Enercon GmbH
(2014). In this case, the court noted that if the “seat” of arbitration is not clear, the “closest
and most intimate connection test” would be applied. This test necessitates taking into
consideration several factors like place of performance, contractual conditions in the
contract, governing and curial laws of arbitration, the intention of the parties, and the legal
system which has the most intimate connection with the arbitral proceedings while
determining the “seat”.

In Roger Shahshoua vs. Mukesh Sharma (2017), the Supreme Court upheld the judgement of
the English case and recognized “the significant contrary indicia” test to differentiate
between “venue” and “seat” and held that unless there is the contrary intention of party
“seat” of arbitration would be determined by “venue” and “something else” prescribed in
the agreement, which would vary with the facts of the case. However, BALCO has also
implicitly concluded that a “venue of the arbitration” is the “seat of arbitration”, in the
absence of any significant contrary intention in the agreement.

Before the judgement of Hardy, the law to determine “the juridical seat” was “the
significant contrary indicia” test, but the judgement of Hardy led the other way around to
determine the “seat of arbitration”.

UOI vs. Hardy Exploration

Facts of the case- Hardy Exploration and the government of India signed a contract and
agreed to solve the dispute through arbitration. The arbitration clause specified Kuala
Lumpur as the “venue” of arbitration, whereas the UNCITRAL Model Law of International
Commercial Arbitration of 1985 would govern arbitration proceedings.

The arbitration was conducted and the award was signed in Kuala Lumpur in favor of Hardy
Exploration, which was challenged before the Delhi High Court under section 34 of the
Arbitration and Conciliation Act, 1996. The high court held that the seat of Arbitration is
Kuala Lumpur and Indian courts don’t have any jurisdiction to hear the matter. The matter
was further challenged before the Supreme Court and heard by a three-judge bench.

Issue- Whether the “juridical seat” of the arbitration is the same as the “venue” of
arbitration if the venue is given but the seat is not specifically mentioned in the arbitration
agreement.

Held- The Court contradicted the judgement of Roger Shashoua, BALCO, and held that the
“seat” of the arbitration and “venue” of the arbitration are distinct from each other and if
the arbitration agreement only mentioned the “venue” of arbitration, the same can be
considered as the “seat” of arbitration only if arbitration agreement has explicitly mentioned
it or other factors of the arbitration agreement indicate that. The Apex Court held that the
arbitration agreement should be read holistically to deduce the ‘seat’ of arbitration.

In the present case, the Supreme Court read the Arbitration agreement holistically and
considered the Model Law as a factor in deducing the seat of arbitration. As per the Model
Law if there is no mention about the place of arbitration, then the same can be determined
by the arbitral tribunal. The Apex court noted that the award was signed and declared in
Kuala Lumpur, but the place of arbitration was not expressly determined by the arbitral
tribunal. So, the ‘seat’ of arbitration is not Kuala Lumpur and the award rendered isn’t a
“foreign award”, which entitles the Indian court to entertain the application under Section
34 of the Act.

Post Hardy Exploration

In the case of Brahmani River Pellets vs. Kamachi Industries (2019), the matter involved
domestic arbitration, but the court in case obliterated the difference between “seat” and
“venue” and held that, in the absence of specification of “seat” of arbitration in the
arbitration agreement, the “venue” of the arbitration would be same as “seat” of the
arbitration without any other concomitant factors. The court neither mentioned any reason
for its judgement nor applied nor set any test or standard which could determine that
“venue” would be considered as “seat”.

This blanket formula could have far-reaching effects on the arbitration because the venue of
the arbitration could be flexible and could take place at different locations but the same
can’t be applied to the seat of the arbitration.

Another landmark judgement in this series of judicial interpretations is BGS SGS Soma vs.
NHPC (2019). Many regarded this judgement to be the defining moment in the never-ending
debate of “seat vs. venue”, as it tried to clarify and describe the stand of the Apex Court on
the issue. In this particular judgement, the Apex Court restored the reasoning of Roger
Shashoua and the BALCO case and held that choosing the “venue” of the arbitration is akin
to choosing the “seat” of the arbitration. And, the absence of any contrary indication about
any difference in the context of “seat” and “venue” shall be a strong sign to regard both
venue and seat as indistinguishable and not require any explicit mention of the same as held
in Hardy. This judgement was hailed by many as significant.

Nonetheless, the judgement being contrary to Hardy has added fuel to the already undying
debate on “seat vs. venue”. Also, the Court held that the law laid down in Hardy shouldn’t be
considered a good law as being contrary to the judgement of a five-judge bench in BALCO
and Roger Shashoua.

However, the Mankatsu Impex Private Limited vs. Airvisual Limited (2020) judgement of the
Apex Court has again brought the issue of “seat vs. venue” into the limelight. Let’s discuss
the case in detail.

Mankastu Impex Private Limited vs. Airvisual Limited (2020)

Facts of the case- The Petitioner (Mankastu Impex Private Limited) and the Respondent
(Airvisual Limited) entered into an MoU for the exclusive distribution right to be awarded to
the Petitioner for the Respondent’s air quality monitor products for five years. Subsequently,
the respondent company was acquired by an entity named IQAir AG, which refused to
honour the pre-existing MoU as entered between the Petitioner and the Respondent and
the dispute arose between the parties as the Petitioner claimed the exclusive right of the
sale of the Air Visual’s product for five years as per the terms as mentioned in the MoU.

The dispute resolution clause (Clause 17.1 of the MoU) between the parties specified that
the agreement between the parties would be governed by Indian laws, and the courts of
New Delhi would have jurisdiction. Clause 17.2 of the MoU specified that if any dispute
arose out of or relating to the agreement, it was to be resolved by arbitration that was to be
administered in Hong Kong and mentioned Hong Kong as the place of arbitration.

The clause further specified that parties have the right to seek preliminary injunctive reliefs
from the courts having jurisdiction. After the dispute arose, the Petitioner approached the
Delhi High Court to file a petition under Section 9 of the Act seeking interim relief and the
Petitioner obtained the same and subsequently approached the Apex Court under Section
11(6) of the Act for the appointment of a sole arbitrator.

Issue- Whether the Indian Courts have the jurisdiction to entertain the petition filed under
Section 11(6) of the Act?

Held- The Court began its analysis by highlighting the importance of determining the
difference between the “seat” and “venue” of any arbitration proceedings, as the seat tends
to help in deciding the curial law, which thereafter has implications on remedies available
through judicial review of the proceedings.

It was observed by the court that the mere expression “place of arbitration” can’t be
regarded as the focal point on the questions related to the seat and venue of the arbitration
proceedings, instead, the court upheld the fact that the same should be determined by the
conduct and the agreement between the parties.

So, while arriving at this conclusion the Court was of the view that Clause 17.1 shows that it
will be the substantive law of India that will be governing the substantive contracts. But,
after analysing Clause 17.2, the Court was of the view that the seat of the said arbitration
proceedings is to be Hong Kong. The court, while considering the principle of territoriality as
held in the five-judge bench decision in BALCO, dismissed the petition made under section
11(6). The judgement of the Mankatsu case laid down the same law as in Hardy.

The BALCO judgement made it clear that the supervisory jurisdiction of the court would be
“seat-centric” and not at the place of Cause of action. The Court in the BALCO gave exclusive
supervisory jurisdiction to the “seat of arbitration”. However, the Delhi High Court in Antrix
Corporation Ltd vs. Devas Multimedia Pvt Ltd, held that the court at the seat and the court of
the cause of action have concurrent jurisdiction over arbitration applications.

The Delhi High Court view has been overruled in BGS Soma and specified the strict stand
regarding exclusive supervisory jurisdiction to court at the seat. The view of the judiciary to
determine the seat of arbitration has been continuously changing since BALCO. The BGS
Soma was considered as the end of the conundrum but the Mankatsu again revived the
conundrum.

However, it can’t be said that the BGS Soma case stands overruled, as there was nothing in
the judgement to declare the same as bad law. Further, both the judgements being of the
same coordinate bench can’t overrule the other. Also, it can’t be said that the Mankatsu
judgement is in complete contradiction to the BALCO judgement as while negating other
laws of the BALCO judgement, Mankatsu upheld the Principle of territoriality as held in
BALCO.

However, in light of the above observations, it can be said that the Mankatsu judgement is a
missed opportunity for the Apex Court to clear this conundrum by referring the matter to
the larger bench.

So, now it would be interesting to see what will be the future course of action of the High
Courts as presently due to the ‘negligence’ of the Apex Court there are umpteen
contradictory cases in front of the parties to the arbitration, which thereby hampers the
growth of India, to become the global hub of arbitration.

Tests for Determining The ‘Seat’ Of Arbitration

The Courts effectively provided some respite in the whole debate by interpreting the vague
sections of the Act. Two acceptable tests have been devised through precedents for
conclusive determination of the seat. They are:

1. Closest and most intimate connection, and

2. Bright-line test.

The Sulamerica case establishes that when an agreement lacks an express or implied choice
of law governing the arbitration agreement, the system of law which has the closest and
most intimate connection is significant. The expressly selected substantive law of contract is
the implied choice of law for the arbitration agreement. In the case of Enercon (India) Ltd.
[Link] GmbH (‘Enercon’), the division bench of the Supreme Court relied on
the NavieraAmazonica case and devised the first set of tests. As per this, careful attention is
to be paid towards party intention and whether the legal system where the proceedings are
to be conducted have a close and intimate connection to the arbitral process. The test is
applicable when the arbitration clause is silent or unclear and fails to ascertain the
applicable law. The intention of the parties becomes the most decisive factor in clearing up
the confusion. Further, the location where the arbitration is to be conducted is a relevant
point of consideration.

Proceeding to the second test, the Shashou principle, laid down in Roger Shashoua &Ors. v.
Mukesh Sharma elucidates when the ‘venue’ can be considered as the juridical ‘seat’ in any
proceeding. The ‘venue’ must be expressly designated without providing any
alternative situs as the ‘seat’. There must be no ‘contrary indicia’ or anything indicating the
contrary combined with the arbitration being governed by a supranational body of rules.

This was conclusively applied by the three Judge Bench of the Apex Court in BGS SGS SOMA
JV v. NHPC Ltd. (‘SOMA JV’). It stated that use of expressions like “arbitration proceedings”
that “shall be held” at a “venue” emphatically denotes the ‘venue’ being the appointed
‘seat’, subject to no contrary indication of the same.

The judgment was successful in resolving the ‘seat’ and ‘venue’ dilemma. It demystified the
ambiguous portion of the BALCO judgment which sought to introduce the concept of
concurrent jurisdiction, and reiterated that once parties have chosen the seat of arbitration
the same would indicate that the role of the seat is to have exclusive jurisdiction. It would
mean that they have consented to ousting the jurisdiction of the courts of cause of action.

SOMA JV case solidifies the principle of party autonomy, and holds the judgment
pronounced in Union of India v. Hardy Exploration and Production (India) Ltd. (‘Hardy’) to be
bad in law. The Hardy case, limiting party autonomy holds that ‘venue’ would not ipso
facto imply the appointment of ‘seat’ without a positive indicator in furtherance of the same
intention. As a test, it is precisely contrary to the bright-line test. The ‘venue’ would become
the ‘seat’ only where there is something submitted in concomitance of it. However, the
compeer bench of the SOMA JV case cannot inexorably overrule the Hardy case principle.

Recent Case laws on seat vs. venue

The discussion on seat vs. venue has been longstanding and full of complexities which makes
it crucial to understand the recent judgements by courts to understand the complexity of
this topic through the lens of judges and their interpretation of the same.

Following are the recent case laws on seat vs. venue:

In the case of BGS SGS Soma JV vs. NHPC Limited (2020), the Supreme Court pointed out
that if an agreement mentions a specific location “venue” without specifying any other place
as the “seat” and there’s no conflicting sign in the agreement or the behaviour of parties and
the mentioned venues should be considered as Juridical seat of the arbitral proceeding. The
Court observed that subsection (3) of Section 20 of the Arbitration Act refers to the “venue”
while the term “Place” mentioned in subsections 1 and 2 refers to the jurisdictional seat.

The Supreme Court of India in Sumitomo Heavy Industries Ltd. vs. ONGC Ltd. and
Others (1997) noted that in a situation where the parties in the agreement are unable to
make the decision to the seat of the arbitration, the arbitration agreement would be subject
to the same law as the contract even if the arbitration agreement holds a different legal
status from the contractual agreement.

In the Bhatia International case, as per fact both parties entered into a contract containing
an arbitration clause specifying that arbitration would be conducted according to the rules
of the ICC i.e., International Chamber Of Commerce. An argument arose between the parties
when the respondent referred the arbitration proceedings at ICC which led to the decisions
made by the High Court and Lower Court being challenged at the Supreme Court. The Court
decided that International Commercial Arbitration consists of the involvement of an Indian
party and proceeding to take place anywhere globally, Indian courts would have the
jurisdiction to exercise their power under Part 1 of the Arbitration and Conciliation Act,
1996.

In Reliance Industries Ltd. and And. vs. Union of India, (2023), where both parties being
Indian, referred to International Commercial Arbitration in which the Supreme Court of India
observed that if parties to the agreement have selected London as the place of arbitration
and concluded that the agreement shall be governed by the law of London which made it
clear that part 1 of the Act would not apply.

In Harmony Innovation Shipping Ltd. vs. Gupta Coal India Ltd. and Anr, (2015) – The Supreme
Court based on its previous decision on the principle of implied exclusion which means an
agreement may exclude the jurisdiction of other courts if more than one court has
jurisdiction, but jurisdiction can only be granted to the court that originally held it. It was laid
down in the case of Bhatia International and as per this principle, if the case of international
commercial arbitration is happening outside of India then the provisions of Part 1 will apply
until the parties are excluded by agreement it might be implied or expressed.

In Eitzen Bulk A/S & others vs. Ashapura Minechem Ltd. and Anr, (2016).– The arbitration
was referred to be resolved in London as per English law. The Supreme Court held that
choosing a certain location outside India as the venue of the arbitration clearly expresses
that the parties wish to exclude themselves from being governed by Indian arbitration law.

Aniket SA Investments LLC vs. Janapriya Engineers Syndicate (P) Ltd (2021)– The parties
chose mumbai as the seat for the arbitration but when the dispute arose on the execution of
the real estate project which was situated in Hyderabad, the respondent raised an issue on
the same. The Bombay High Court held that a choice of seat is in itself an expression of party
autonomy and carries with it the effect of conferring exclusive jurisdiction on the courts of
the seat.

Indus Mobile Distribution Private Ltd. vs. Datawind Innovations Pvt. Ltd, (2017)– According to
the facts of the case when the parties entered into an agreement to conduct a business,
mentioned the clause of arbitration where the disputes would be solved through the
Arbitration Act at Mumbai in the English language. However, the Court referred to
the BALCO case and observed that the Bombay Court would not have jurisdiction to deal
with the matter as no cause of action had occurred there and also neither CPC (Section 16-
20) had been attracted.

In the case of Vasudev Garg vs Embassy Commercial project, (2023), there was an underlying
ambiguity about jurisdiction as Mumbai and New Delhi both were mentioned. The Delhi
High Court held that the venue clause as well as an exclusive jurisdiction clause included in
the agreement is subject to the venue clause. It limits exclusive jurisdiction courts in
resolving disputes which are not covered by the arbitration /venue clause.

In Orissa Metaliks Pvt. Ltd. vs. SBW Electro Mechanics Import Export Corporation, (2023) the
Plaintiff pointed out that the agreement contained ambiguity about the seat and venue to
which the High Court of Calcutta ruled that if an agreement between parties has clearly not
mentioned any venue for arbitration, it would be the same as the seat of arbitration.

In Damodar Valley Corporation vs. BLA Projects Pvt Ltd, (2023), the question arose whether
the High Court of Calcutta had the jurisdiction to set aside the award to which Justice
Moushumi Bhattacharya held there was no evidence or reason to remove the arbitration
from its current location i.e. the High Court of Calcutta.

In the case of BBR (India) Private Limited vs S.P Singla Constructions Private Limited,
(2022) the Supreme Court noted that once the arbitrator determined ‘the seat’ subsection
(2) of Section 20 of the Act, the arbitrator cannot alter ‘the seat’ of the arbitration until the
parties to the agreement mutually agree and specifically state that ‘seat of arbitration’
should be relocated to another place. The court made certain observations which are as
follows:

1. Changing the venue does not result in changing the ‘seat of arbitration’.

2. Place of jurisdiction or ‘the seat’ must be definite and fixed, not vague or changeable.

While the courts overseeing the arbitration proceedings have a relevant role to play in
supervisory jurisdiction, it’s not the final deciding factor when the venue is not designated as
the main place of arbitration.

A Bench consisting of Justice Rohinton Fali Nariman and Hrishikesh gave an important
decision in the case of M/s Inox Renewables Ltd vs. Jayesh Electricals Ltd, (2021). The bench
followed the previous precedent BGS SGS Soma JV vs NHPC Ltd, which held that the
arbitration venue will be the judicial seat of arbitration unless there is an absence of
contrary intention of the parties.

International Arbitration conventions signed by India

International Conventions can be regarded as the backbone of the legal framework
particularly in the scenario of arbitration to ensure consistency across various jurisdictions.
The following are the conventions signed by India that outline comprehensive guidelines to
resolve disputes in the scenario of International Arbitration:

The New York Convention of 1958

The New York Convention of 1958 aims to ensure the enforcement of foreign arbitration
awards worldwide. The New York Convention comprises 16 articles. The Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) plays a
crucial role in recognizing and enforcing international arbitration. The New York Convention
applies to recognizing and enforcing foreign arbitral awards; it also includes court referrals to
arbitration. This Convention applies to recognizing and enforcing arbitral awards made in the
territory of a state different from where their recognition and enforcement are sought,
arising from disputes between persons, whether physical or legal and sought in a state other
than where they were made.

The UNCITRAL Model Law Rules

The UNICTRAL Model Law is created to assist States in updating and modernising their laws
concerning mediation procedures. It provides uniform rules for the mediation process,
aiming to promote the utilisation of mediation while enhancing predictability and certainty
in its application.

The Model Law provides consistent regulations regarding the enforcement of settlement
agreements and outlines the party’s right to invoke a settlement agreement in a procedure.
It includes an exhaustive list of grounds that a party can invoke in a procedure governed by
the Model Law.

The Geneva Protocol of 1923

The Geneva Protocol of 1923 aims to ensure that agreements to settle disputes through
arbitration are recognized and enforced between countries. It covers the recognition of
arbitration agreements, the arbitration procedure, and the enforcement of arbitral awards,
as well as denunciation and territorial exclusions.

ICSID Convention

The International Centre for Settlement of Investment Disputes (ICSID) provides an

independent platform for mediating and arbitrating such conflicts. ICSID provides the
institutional facility and procedural provisions for impartial conciliation commissions and
arbitral tribunals formed for each specific case. ICSID facilitates foreign investment by
providing a multilaterally-agreed system for dispute settlement.

Conclusion
Litigation on the determination of the seat/venue conundrum is becoming increasingly
rampant. This case highlights the need for the arbitration clauses to be drafted carefully and
with precision. Arbitration clauses should specify the ‘seat’ and ‘venue’ of arbitration
distinctly to ensure that the effectiveness and finality of the arbitration mechanism are not
eclipsed by long-drawn litigation proceedings afterwards.

Furthermore, clarity can be brought into Section 20 itself by implementing the suggestions
of the 246th Law Commission of India Report. Usage of the word ‘Place’ has caused
immense confusion and therefore to bring the Arbitration Act in line with the judicial
interpretation, ‘place’ should be replaced with ‘seat’ in Section 20(2) and with ‘venue’ in
Section 20(3).

The Arbitral Tribunal can also play a pivotal role in this respect to reduce litigation on the
vexed question of determining the seat/venue of arbitration. Similar to Inox, wherein the
Sole Arbitrator recorded the intention of the parties to affix Ahmedabad with the status of
the seat in the Arbitral Award itself, Arbitral Tribunals in other proceedings can record the
party’s intentions in clear unambiguous language. If the matter then goes before the Courts,
such clear expression with respect to the party’s intention would greatly facilitate the Courts
in deciding the question.

Inox will be binding on such cases before the Indian Courts where the seat of the arbitration
has not been declared and only the venue of arbitration has been identified in the
arbitration clause. If the conduct of the parties shows that the venue was in fact intended to
be the seat, then the Court would consider the venue to be tantamount to the seat of
arbitration in such cases. It is indeed appreciable that by determining the seat of arbitration
in the context of the intention displayed by the parties and by looking at the conceptual
essence of a seat vis-à-vis venue of arbitration, the Supreme Court of India in Inox has
successfully managed to digress from the narrow reasoning adopted by the Gujarat High
Court that took a literal interpretation of the arbitration clause. Such an approach is
welcome and it can be expected that this case law will set the evolving Indian jurisprudence
on the seat/venue conundrum of the arbitration on the correct course of development.