India: Designation Of Venue Of Arbitration In Its Entirety Implies That It Shall Also Be The Seat Of Arbitration: (Priya Malay Sheth v VLCC Heath Care Ltd)

Designation Of Venue Of Arbitration In Its Entirety Implies That It Shall Also Be The Seat Of Arbitration: (Priya Malay Sheth V VLCC Heath Care Ltd)¹

The Bombay High Court has recently held that if a place is designated as the “venue” at which the arbitration proceeding shall be held in its entirety, then that venue is implicitly also the “seat” of the arbitration proceedings.

Facts

Disputes arose between Ms Sheth and VLCC Health Care Ltd in relation to an agreement under which Ms Sheth was an “Infrastructure Provider” for VLCC's service centre in Mumbai. Under the agreement, Ms Sheth invested to undertake the development of a VLCC centre. The arbitration clause stipulated that the “venue of the Arbitration shall be Delhi”. Differences arose in September 2019 regarding the functioning of the centre.

Arbitration

Ms Sheth invoked arbitration and nominated a former judge of the Bombay High Court as an arbitrator to adjudicate the dispute. VLCC responded stating that: (i) the arbitrator could only be appointed by VLCC, and (ii) the proceedings were to be held in Delhi. Ms Sheth thereafter approached the Bombay High Court for the appointment of an arbitrator.

Bombay High Court

The Court relied on precedents in Perkins Eastman Architects DPC v HSCC (India) Ltd² and TRF Ltd v Energo Engineering Projects Ltd³ to conclude that VLCC could not have unilateral authority to appoint an arbitral tribunal.

In relation to the issue of the “venue” and “seat” of the arbitration proceedings, the Court relied on precedents⁴ to conclude that once a place is designated as the “venue” of the arbitration proceedings, and the arbitration clause uses the expression “shall be held”, then that place is also the “seat” of the arbitration. On this basis, the Court held that in the present case the Courts in Delhi would have the requisite jurisdiction.

Conclusion

The venue of the arbitration is also the seat depending on the formulation of the arbitration clause.

Footnotes

1 Decision dated 6 June 2022 passed by the Bombay High Court in Commercial Arbitration Application (L) No. 3094 of 2022

2 2019 SCC OnLine SC 1517

3 (2017) 8 SCC 377

4 BGS SGS SOMA JV v NHPC Ltd. (2020) 4 SCC 234; Mankastu Impex Pvt. Ltd. v Airvisual Ltd (2020) 5 SCC 399

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