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Autonomy in Arbitration Agreements: Can there be Multiple Seats of Arbitration?
Arbitration is a process of Alternate Dispute Resolution by which a conversation between parties to a dispute is facilitated by a neutral third party, an arbitrator in this case, thereby allowing the arbitrator to hear both perspectives of the dispute and analyse evidence in order to make a fair and just decision, and pronounce an appropriate arbitral award. Arbitration has escalated in popularity with the enactment of the Arbitration and Conciliation Act, 1996 and the rise in commercial transactions and partnerships which prefer the quick resolution offered by Alternate Dispute Resolution. Arbitration is a unique mechanism of Alternate Dispute Resolution where parties are given ample freedom to choose their arbitrator, seat of arbitration, venue where the arbitration proceedings shall be conducted, time of proceedings and the procedural law that shall be applied in guiding the proceedings and the arbitral award. With this much autonomy granted to parties, there is bound to be misunderstandings and confusion regarding the practical application of certain provisions and this became reality in the case of CVS Insurance and Investments v. Vipul IT Infrasoft Pvt. Ltd[1]. where the arbitration agreement specified exclusive jurisdiction to courts in Noida but parties were confused as to whether the seat of arbitration should be in Delhi or Noida.
The facts of the case go like this, two companies entered into a partnership which contained an arbitration clause that referred all future disputes to arbitration where the venue of arbitration would be “Noida/New Delhi”. The parties eventually had disagreements regarding the payment of money and when a dispute arose they were puzzled by whether the seat of arbitration would be in Delhi or Noida. The matter reached the High Court and the bench, after considering the facts, held that the Arbitration Agreement between the parties did not specify that exclusive jurisdiction would lie with courts in Noida or New Delhi but the facts suggest that the cause of action arose in Noida and therefore the seat of arbitration must be in Noida but parties can choose the venue depending on their convenience[2]. The Court also went on to clarify that there does exists a difference between “seat” and “venue” even in the Arbitration and Conciliation Act, 1996. According to the Supreme Court’s interpretation of Section 20(1) and 20(2)of the Act in the case of Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovation Pvt. Ltd. & Ors[3]., the term “place” refers to “juridical seat” but underSection 20(3) the term “place” means “venue.” The Court also held that the moment the seat of arbitration is specified in the arbitration clause or arbitration agreement it creates exclusive jurisdiction akin to the jurisdiction of a Civil Court.
Therefore, even though parties who choose to refer disputes to arbitration have the freedom of choosing their preferred seta of arbitration and venue where proceedings shall be conducted, the High Court of Delhi ruled that the arbitration agreement must specify a single seat of arbitration and when such a seat is fixed it creates exclusive jurisdiction.
[1] CVS Insurance and Investments v. Vipul IT Infrasoft Pvt. Ltd, (2017), Arb.P. No. 9 of 2017.
[2] Editor, Recent Cases on Arbitration Law in India, VakilNo1, (May, 29, 2018, 7:21 PM), https://www.vakilno1.com/legal-news/recent-cases-arbitration-law-in-india.html.
[3] Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovation Pvt. Ltd. & Ors, (2017) 7 SCC 678.
- Alternate Dispute Resolution
- Arbitration
- Arbitration Seat
