Venue of Arbitration, though not defined anywhere in the Arbitration and
conciliation act of 1996, is the place chosen by the parties of the arbitration
agreement to conduct the arbitration proceedings. The seat of Arbitration has a
distinct meaning from that of the venue. Seat of arbitration determines whether
the court has jurisdiction over an award, whereas venue refers to the location
where the arbitration proceedings are conducted.
Venue is the physical location
where the arbitration proceedings are held whereas seat of the arbitration
determines whether a court has jurisdiction over the award passed by the
arbitration proceedings. The seat of the arbitration establishes a legal
relationship between the arbitration proceedings and the legal framework of the
The seat of the Arbitration determines whether a court has jurisdiction over the
arbitration proceedings and the scope of supervisory powers. In the case
of Atlas Power v. National Transmission, the claimants filed an anti-suit
injunction to restrain the defendant from challenging the partial award passed
by the LCIA. Phillip J found that the jurisdiction of the court is wholly based
upon the Seat of arbitration proceedings which in the present case is London.
The Hon’ble judge referred to the case of C v. D in which it was regarded
that seat to necessarily provide for exclusive jurisdiction and thereby avoid
multiple jurisdictions over an arbitration proceeding and thus held that choice
of seat has paramount importance and shouldn’t be considered as a minute detain
in the arbitration clause.
UOI V. Hardy Exploration And Production Inc.
In this present case, UOI entered into a contract with HEPI in November 1996
under which HEPI could extract, develop, and produce hydrocarbons in the south
Asian block in India. The parties to the agreement have decided the venue of
arbitration to be Kaulalampur by mutual consent but haven’t agreed upon the seat
of the Arbitration proceeding.
However, it was decided that the contract is to
be governed by the Indian law and decided that the proceedings are to be in
accordance with UNCITRAL Model Law on International Commercial Arbitration of
1985 except in an event in when there is a conflict with Article 33 of the
arbitration agreement, the latter shall prevail.
The parties had a dispute later, and arbitration proceedings were conducted in
Kaula Lumpur in adherence to the arbitration clause. An award was passed in
favor of HEPI and aggrieved by the award passed, UOI challenged the award in the
Delhi High court.
This application was contented by the respondent that the
court doesn’t have jurisdiction under section 34 of the Arbitration and
conciliation act to entertain this application since the seat of the arbitration
proceeding isn’t India and thus doesn’t attract part 1 of the Arbitration and
conciliation act. Further, it was contended by the respondent that the parties
to the arbitration chose model law and not the Indian law to be applicable over
the arbitration clause and thereby the court doesn’t have jurisdiction by
section 34 of the Act.
The UOI contended that India has adopted UNCITRAL model
law and has incorporated the same under section 34 of the act. However, the
single-judge bench of the Delhi High Court accepted the preliminary objection of
the respondent and held that only Malaysian Courts have jurisdiction to
entertain this appeal. Aggrieved by this decision, UOI preferred appealed under
Section 37(2) of the Act before the Division Bench of the HC which concurred
with the decision of the single judge bench of Delhi High court.
Thereafter the UOI filed a special leave petition before the division bench of
the Supreme court who opined that the question of ‘seat’ and ‘venue’ frequently
rises in International commercial matters and exercised power under Order VI
Rule 2 of the Supreme Court Rules, 2013 and referred this case to the larger
Bench for hearing.
The issue before the court was whether venue of the arbitration proceedings
could be considered as the seat of the arbitration proceeding.
Mr. Tushar Mehta, learned Addl. Solicitor General appearing for UOI contended
that the only venue has been mentioned in the arbitration agreement and not the
seat of the arbitration. Article 20(1), 20(2) and 31(3) UNCITRAL model law was
drawn for the court’s attention by which the court opined that the parties to
the agreement are free to determine the place of the arbitration.
determined, it would be considered as the seat of the arbitration if it is
interpreted from the clause or if any concomitant factors are attached to the
place of arbitration which can be seen in the case of Harmony Innovation
Shipping Ltd in which it states about venue and something in addition by
which the seat is determinable. The court held that the place of arbitration
should not be assumed as the seat of arbitration unless one of the following
conditions is satisfied.
Thus, the place of arbitration would be considered as
the seat of arbitration if:
- Law governing arbitration agreement is the same as the law of the place
mentioned as venue. Thus, if the law which governs the law of the
arbitration agreement is the law in Malaysia, then Kaula Lumpur can be considered as the
seat of the arbitration.
- Law of the Matrix Contract and law of the venue/ place of arbitration
are the same. Thus, if the contract is governed by the laws of Malaysia
instead of India in the present case, then Kaula Lumpur would’ve been considered as the
seat of the arbitration.
- If the parties to the arbitration agreement decide to be governed by
institutional rules instead of any national law, two situations arise which
are when the institutional rules are localized and when they are
delocalized. In the case of Roger Shashoua v. Mukesh Sharma, the parties to the agreement have
provided for ICC rules, Paris to be followed and thus the court interpreted that
the parties never intended to be governed by the Indian law since they opted for
ICC rules, Paris which particularly applies for the said country.
In the present
case, the parties to the agreement have chosen for UNCITRAL model law which is
delocalized and doesn’t refer to any particular national law thus, and it would
even apply to India. If the parties to the agreement have opted for MCIA rules,
then the default place for arbitration would be considered as Mumbai.
Thus, the court has decided upon the first issue when the place of arbitration
is considered as the seat of the arbitration proceeding.
The second issue was whether by signing the arbitral award in Kaulalampur, would
it be determined as the seat of the arbitration. The court referred to Article
20(1) of UNCITRAL model law and section 20(2) of arbitration and conciliation
and considered the word ‘determine’ as positive determination and an expressive
opinion by the Arbitral tribunal. The court in the present case held that there
had been no determination in Kaulalampur since it is mere signing.
considered that if the arbitration proceedings are a failure, then it may be
continued at some other place. Thus, the place of the arbitration is only for
convenience but doesn’t act as the seat of arbitration.
The Supreme Court also referred to the case of Ashok Leyland Limited and State
of T.N. and another to determine the definition of ‘determination’ from Law
lexicon dictionary, Mills Ltd. v. Lakshmi Chand, Thomas Van Dyken Joint
Venture v. Van Dyken and concluded that there has been no adjudication or
expression of opinion in the present case.
Thus, it was held by the Supreme court in the present case that the word ‘place’
cannot be used as the ‘seat’ unless something is added to it as concomitant
which in the present case isn’t there in Kaulalampur and thus cannot be
considered as the seat of arbitration.
The court passed an order providing for jurisdiction to the courts over this
present case and thereby set aside the order passed by the Delhi High court.
Analysis of The Case Law
Prior to this judgment, the supreme court in the case of Sumitomo Heavy
Industries Ltd. v. ONGC Ltd. and Others observed that in circumstances where
the parties to the arbitration agreement failed to determine the seat of
arbitration, the curial law which governs the contract would govern the
arbitration agreement even though it has a separate legal status from the
contractual agreement on the ground that the rights and obligations in the
arbitration agreement arise from the contractual agreement.
In Bhatia International v. Bulk Trading S.A. & Another, the Supreme court
concluded that part 1 of the Arbitration and conciliation act would be
applicable on all arbitrations that have seat of arbitration in India and in the
case of international commercial arbitration, the supreme court referred to
Article 23 of the ICC rules and observed that Parties to the arbitration
agreement can apply before a competent for interim and conservatory measures
under section 34 of the Act.
This was reiterated in the case of Intel Technical Services Private Ltd. v. W.S.
Limited in which the court held that an application made under section 11 of
the act would be maintainable if it is international commercial arbitration.
This view of Supreme court differed in the case of Reliance Industries Limited
and another v. Union of India whereby the court observed that if the parties
to the agreement have decided that London as the seat of the arbitration and the
agreement to be governed by the laws of London, then part 1 of the Act wouldn’t
The same observation was given by the Supreme court in the case of Videocon
Industries Limited v. Union of India and another where the court referred to
section 3 of English arbitration act and the case of Dozco India Private Ltd. v.
Doosan Infracore Co. Limited and held that deciding the seat to be London,
the parties have impliedly excluded the applicability of part 1 of the Act.
The Supreme court in Bharat Aluminium Company v. Kaiser Aluminium Technical
Services INC overruled the decisions of Bhatia International and Venture
Global Engineering v. Satyam Computer Services Ltd. & another and held that
relief under section 9 of the act is not maintainable in international
The supreme court also clarified that the absence of the
word “only” in Section 2(2) of the Act, 1996 which is present in section 1(2) of
the model law does not change the scope of the Arbitration and conciliation Act
and concluded that part 1 of the Act would apply only on domestic arbitrations.
In Harmony Innovation Shipping Ltd. v. Gupta Coal India Limited and another,
the court has relied upon the principle of Implied exclusion laid down in the
case of Bhatia international.
Later in Eitzen Bulk A/s & others v. Ashapura Minechem Limited and another,
the court opined that by choosing the venue to be any place outside India, the
parties have intended to exclude themselves from the applicability of the Indian
law, and thus any application under section 34 challenging the award is not
The court has developed a peculiar jurisprudence in this case by
opining that the parties don’t get to choose by giving an example that if a
person travels to France, he doesn’t get to choose the traffic rules, but they
are mandated upon them, and the person cannot choose to follow traffic rules of
the USA in France. Thus it is held that once the venue is decided, the laws are
mandated upon them and it is not a matter of choice.
Further, in the case of Imax Corporation v. E-City Entertainment (India) Pvt.
Ltd., the parties to the agreement haven’t decided upon the venue nor the
seat of the arbitration and have decided that in case of any dispute, ICC would
choose the seat of the arbitration. later when a dispute arose and ICC was
requested to decide upon the seat for which ICC chose the seat as London after
consulting with the parties on their convenience. The court held that Indian
laws wouldn’t apply on the rule of implied exclusion.
In the present case, the supreme court has divulged entirely from the previous
precedents. The court held that Kaula lumpur is not the seat of arbitration by
analyzing what would not amount to be a seat of arbitration by laying down that
concomitants are required for the venue to be considered as a seat. But even
after concluding that at least one condition is to be satisfied for the venue to
be the seat, the court has not laid down the exact conditions required for the
determination since the court considered that it is not an exhaustive list and
must be considered from case to case basis.
The Supreme court could have instead decided upon a test which could help in
determining when a venue would be considered as a seat. In the present case, the
parties have not decided upon any institutional rules which lay down any default
seat of arbitration, and the parties to the agreement have not provided for any
contrary intentions for Kaula Lumpur being the seat of arbitration. The supreme
court must have taken these factors into consideration in deciding upon the
matter instead of adopting a semantic approach.
Article 31(3) of the UNCITRAL model law lays down that it is mandatory to write
down the place where the arbitration is done. This creates a legal fiction that
place is deemed to be the arbitral seat. In the present case, the parties
have explicitly agreed upon being adhered by the UNCITRAL model law, and thus
the court must have given this fact some weight in determining whether the
signed place is to be deemed as the arbitral seat.
In the case of Imax Corporation v. E-City Entertainment (India) Pvt Ltd, the
court laid down that in case where the parties have not decided upon the seat of
arbitration, then the place where the arbitration takes place acts as a major
determinant which in the Hardy case, the Supreme court failed to take notice of
this fact and also the GOI model production sharing contract where the words
‘seat’ and ‘venue’ are used interchangeably.
The court by this judgment has increased the scope for further legal disputes
whereby a party to an agreement where the seat is not determined can apply for
jurisdiction to determine the seat of arbitration before an Indian court thereby
increasing the multiplicity of proceedings thus failing the primary intention of
Arbitration clause in the contract.
The Supreme court has not laid down cogent principles as to determine when the
seat of arbitration would be considered as venue of Arbitration and has adopted
linguistic approach instead of a pragmatic approach for which the supreme court
in its defense opined that arbitration agreement has to be read in a holistic
The court by this decision has diverged itself from the precedents laid
down in Videocom and Roger Shashoua which overruled the oppressive rule of
implied exclusion laid down in the case of Bhatia international.
This judgment has increased the scope for legal disputes when the seat is not
determined in the agreement, thereby increasing the multiplicity of proceedings,
thus failing the intention of the Arbitration clause in the Contract.
Thus, it can be safely concluded that clarity and the highest level of detail
are required in drafting an arbitration agreement failing which would lead to
legal disputes in the future causing harm to the parties to the agreement.
 Atlas Power v National Transmission,  EWHC 1052 (Comm).
 C v D,  1 Lloyd’s Rep 239.
 Union of India v. Hardy Exploration and production Inc,(2018) 7 SCC 374.
 Harmony Innovation Shipping Ltd v. Gupta Coal India Limited and anr, (2015)
9 SCC 172.
 Harmony Innovation Shipping Ltd v. Gupta Coal India Limited and anr, (2015)
9 SCC 172.
 Dozco India v. Doosan Infrastructure, (2011) 6 SCC 179.
 Roger Shashoua v. Mukesh Sharma, (2009) EWHC 957 (Comm.).
 Harmony Innovation Shipping Ltd v. Gupta Coal India Limited and anr., (2015)
9 SCC 172.
 Ashok Leyland Limited and State of T.N. and another, (2004) 3 SCC 1.
Mills Ltd. v. Lakshmi Chand, AIR 1963 SC 677, 680.
Thomas Van Dyken Joint Venture v. Van Dyken, 90 Wis 236, 27 NW 2d 459,463.
 Sumitomo Heavy Industries Ltd. v. ONGC Ltd. and Others, (1998) 1 SCC 305.
 Bhatia International v. Bulk Trading S.A. & Another, (2002) 4 SCC 105.
 Intel Technical Services Private Ltd. v. W.S. Atkins Rail Limited (2008) 10
 Reliance Industries Limited and another v. Union of India, (2014) 7 SCC
 Videocon Industries Limited v. Union of India and another, (2011) 6 SCC
 Dozco India Private Ltd. v. Doosan Infracore Co. Limited, (2011) 6 SCC 179.
 Bharat Aluminium Company v. Kaiser Aluminium Technical Services INC, (2012)
9 SCC 552.
 Supra note 13.
 Venture Global Engineering v. Satyam Computer Services Ltd. & another,
(2008) 4 SCC 190.
 Harmony Innovation Shipping Ltd. v. Gupta Coal India Limited and another,
(2015) 9 SCC 172.
 Eitzen Bulk A/s & others v. Ashapura Minechem Limited and another, (2016)
11 SCC 508.
 Imax Corporation v. E-City Entertainment (India) Pvt. Ltd, (2017) 5 SCC
 Howard M. Holtzmann & Joseph E. Neuhaus , A Guide to the UNCITRAL Model Law
on International Commercial Arbitration: Legislative History and Commentary, pp.
 Supra note 23.
 Report of the Committee On the Production Sharing Contract Mechanism in
Petroleum Industry, available at http://petroleum.nic.in/sites/default/files/MPSC%20NELP-V.pdf .