TMI Blog2017 (4) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... the neutral venue and neither would any of the provisions of Section 16 to 21 of the CPC be attracted. In arbitration law however, as has been held above, the moment “seat” is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties. Thus Mumbai courts alone have jurisdiction to the exclusion of all other courts in the country, as the juridical seat of arbitration is at Mumbai. This being the case, the impugned judgment is set aside. The injunction confirmed by the impugned judgment will continue for a period of four weeks from the date of pronouncement of this judgment, so that the respondents may take necessary steps under Section 9 in the Mumbai Court. Appeals are disposed of accordingly. - Civil Appeal Nos. 5370-5371 of 2017 (Arising Out of SLP (Civil) Nos. 27311-27312 of 2016) - - - Dated:- 19-4-2017 - Pinaki Chandra Ghose And R. F. Nariman, JJ. JUDGMENT R. F. Nariman, J. 1. Leave granted. 2. The present appeals raise an interesting question as to whether, when the seat of arbitration is Mumbai, an exclusive jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der this Agreement during the pendency of the Dispute. 19. All disputes differences of any kind whatever arising out of or in connection with this Agreement shall be subject to the exclusive jurisdiction of courts of Mumbai only. 4. Disputes arose between the parties and a notice dated 25.9.2015 was sent by Respondent No.1 to the appellant. The notice stated that the appellant had been in default of outstanding dues of ₹ 5 crores with interest thereon and was called upon to pay the outstanding dues within 7 days. Clause 18 of the Agreement was invoked by Respondent No.1, and one Justice H.R. Malhotra was appointed as the Sole Arbitrator between the parties. By a reply dated 15.10.2015, the appellant objected to the appointment of Justice Malhotra and asked Respondent No.1 to withdraw its notice. By a further reply dated 16.10.2015, the averments made in the notice were denied in toto. 5. Two petitions were then filed by Respondent No.1 the first dated September 2015, under Section 9 of the Arbitration and Conciliation Act, 1996 asking for various interim reliefs in the matter. By an order dated 22.9.2015, the Delhi High Court issued notice in the interim ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having, jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes; (2) This Part shall apply where the place of arbitration is in India. 20. Place of arbitration. (1) The parties are free to agree on the place of arbitration. (2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. (3) Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property. 31. Form and contents of arbitral award. (4) The arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Delhi, where neither of the parties are from Delhi, (Delhi having been chosen as a neutral place as between a party from Mumbai and the other from Kolkata) and the tribunal sitting in Delhi passes an interim order under Section 17 of the Arbitration Act, 1996, the appeal against such an interim order under Section 37 must lie to the courts of Delhi being the 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 either at Mumbai or at Kolkata, and only arbitration is to take place in Delhi. 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. [para 96] 11. Paragraphs 98 to 100 have laid down the law as to seat thus: We now come to Section 20, which is as under: 20. Place of arbitration.-(1) The parties are free to agree on the place of arbitration. (2) Failing any agreement referred to in sub-section (1), the pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an, however, that the Arbitral Tribunal must hold all its meetings or hearings at the place of arbitration. International commercial arbitration often involves people of many different nationalities, from many different countries. In these circumstances, it is by no means unusual for an Arbitral Tribunal to hold meetings-or even hearings-in a place other than the designated place of arbitration, either for its own convenience or for the convenience of the parties or their witnesses . It may be more convenient for an Arbitral Tribunal sitting in one country to conduct a hearing in another country-for instance, for the purpose of taking evidence . In such circumstances, each move of the Arbitral Tribunal does not of itself mean that the seat of arbitration changes. The seat of the arbitration remains the place initially agreed by or on behalf of the parties. This, in our view, is the correct depiction of the practical considerations and the distinction between seat [Sections 20(1) and 20(2)] and venue [Section 20(3)]. We may point out here that the distinction between seat and venue would be quite crucial in the event, the arbitration agreement designates a foreign cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench s statement of the law was further expanded in Enercon (India) Ltd. v. Enercon Gmbh, (2014) 5 SCC 1. After referring to various English authorities in great detail, this Court held, following the Constitution Bench, as follows: It is accepted by most of the experts in the law relating to international arbitration that in almost all the national laws, arbitrations are anchored to the seat/place/situs of arbitration. Redfern and Hunter on International Arbitration (5th Edn., Oxford University Press, Oxford/New York 2009), in Para 3.54 concludes that the seat of the arbitration is thus intended to be its centre of gravity . In BALCO [Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] , it is further noticed that this does not mean that all proceedings of the arbitration are to be held at the seat of arbitration. The arbitrators are at liberty to hold meetings at a place which is of convenience to all concerned. This may become necessary as arbitrators often come from different countries. Therefore, it may be convenient to hold all or some of the meetings of the arbitration in a location other than where the seat of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment was relied upon and followed by Harmony Innovation Shipping Limited v. Gupta Coal India Limited and Another, (2015) 9 SCC 172 (See: paragraphs 45 and 48). In Union of India v. Reliance Industries Limited and Others, (2015) 10 SCC 213, this Court referred to all the earlier judgments and held that in cases where the seat of arbitration is London, by necessary implication Part I of the Arbitration and Conciliation Act, 1996 is excluded as the supervisory jurisdiction of courts over the arbitration goes along with seat . 16. In a recent judgment in Eitzen Bulk A/S v. Ashapura Minechem Limited and Another, (2016) 11 SCC 508, all the aforesaid authorities were referred to and followed. Paragraph 34 of the said judgment reads as follows: As a matter of fact the mere choosing of the juridical seat of arbitration attracts the law applicable to such location. In other words, it would not be necessary to specify which law would apply to the arbitration proceedings, since the law of the particular country would apply ipso jure. The following passage from Redfern and Hunter on International Arbitration contains the following explication of the issue: It is also sometimes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dical seat; however, in line with international practice, it was observed that the arbitral hearings may take place at a location other than the seat of arbitration. The distinction between seat and venue was, therefore, recognized. In such a scenario, only if the seat is determined to be India, Part I would be applicable. If the seat was foreign, Part I would be inapplicable. Even if Part I was expressly included it would only mean that the parties have contractually imported from the Arbitration Act, 1996, those provisions which are concerned with the internal conduct of their arbitration and which are not inconsistent with the mandatory provisions of the [foreign] Procedural Law/Curial Law. The same cannot be used to confer jurisdiction on an Indian Court. However, the decision in BALCO was expressly given prospective effect and applied to arbitration agreements executed after the date of the judgment. 41. While the decision in BALCO is a step in the right direction and would drastically reduce judicial intervention in foreign arbitrations, the Commission feels that there are still a few areas that are likely to be problematic. (i) Where the assets of a party a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place of arbitration is proposed to make the wording of the Act consistent with the international usage of the concept of a seat of arbitration, to denote the legal home of the arbitration. The amendment further legislatively distinguishes between the [legal] seat from a [mere] venue of arbitration.] Amendment of Section 31 17. In section 31 (i) In sub-section (4), after the words its date and the delete the word place and add the word seat . 19. The amended Act, does not, however, contain the aforesaid amendments, presumably because the BALCO judgment in no uncertain terms has referred to place as juridical seat for the purpose of Section 2(2) of the Act. It further made it clear that Section 20(1) and 20 (2) where the word place is used, refers to juridical seat , whereas in Section 20 (3), the word place is equivalent to venue . This being the settled law, it was found unnecessary to expressly incorporate what the Constitution Bench of the Supreme Court has already done by way of construction of the Act. 20. A conspectus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive juri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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