India: The Changed "Venue" Of Arbitration Becomes The "Seat": Inox Renewables Ltd v Jayesh Electricals Ltd

The Supreme Court has ruled on the "seat" and "venue" of an arbitration, and the impact that a change in venue has upon the seat and the subsequent challenge proceedings.

Facts

Arbitration commenced under a purchase order which named Jaipur as the venue, but the parties agreed to hold the proceedings at Ahmedabad. The award was passed in the Respondent's favour and subsequently challenged in Ahmedabad.

The Petitioner said that as the arbitration was held in Ahmedabad, the Ahmedabad courts had exclusive jurisdiction to hear the challenge. The Ahmedabad Court and, subsequently, the High Court disagreed, and the Petitioner approached the Supreme Court.

Decision

The Supreme Court found that the parties had agreed to change the venue to Ahmadabad, and said there was no need for this agreement to be in writing. Once Ahmedabad became the venue, it also became the "seat" of the arbitration, so the Ahmedabad courts had exclusive jurisdiction over any challenges.

Conclusion

This decision is in line with BGS SGS Soma[¹] where it was held that in the absence of anything to the contrary, the agreed "venue" would also be the "seat".

However, BGS SGS Soma conflicted with Hardy Exploration[²] where it was held that the "venue" would not automatically be the "seat", and there must be accompanying factors which indicate that the parties intended for the "venue" to also be the "seat".

Given the conflicting judgments, clarity from a larger bench may be needed.

Footnotes

1 BGS SGS Soma JV v NHPC Ltd (2020) 4 SCC 234

2 Union of India v Hardy Exploration and Production (India) Inc (2019) 13 SCC 472