The terms 'place', 'venue', and 'seat' of arbitration are often used interchangeably, therefore being misunderstood by most lawyers and litigants.
The Supreme Court of India in its recent judgments has attempted to clarify the position with regards to the place, venue, and seat of arbitration, more specifically in terms of challenge to arbitral awards and the jurisdiction of courts. However, the position still remains ambiguous and subject to the factual matrix and judicial interpretation.
The present article is about a recent judgment titled Omprakash & Ors. v. Vijay Dwarkada Varma1 W.P 4248/2019 ("Omprakash"), wherein the Bombay High Court, Nagpur Bench has attempted to crystallize the conflicting position set out in various Supreme Court decisions and has given its own opinion on the subject.
2. FACTS OF THE CASE
Petitioner No. 1, being the original applicant, carried out his business from Malkapur, Maharashtra; Petitioner No. 2 from Jatharpeth, Maharashtra, and Petitioner No. 3 from Khandwa, Madhya Pradesh, whereas the sole Respondent (original respondent) carried out his business from Jatharpeth, Maharashtra.
The facts giving rise to the Petition were such that the Petitioners and the Respondent entered into a partnership deed on April 01, 1997, inter alia having an arbitration clause. Following disputes between the parties, the Bombay High Court appointed a former judge as the sole arbitrator for adjudicating the disputes. The venue of arbitration was decided as Nagpur. The entire arbitration proceedings took place at Nagpur and the award was also pronounced and signed by the learned arbitrator at Nagpur on June 27, 2018 (the "Award"). However, the Award itself did not state that the same was pronounced and signed at Nagpur.
After the Award was pronounced by the arbitrator, it was challenged by the Petitioners under Section 34 of the Arbitration and Conciliation Act, 1996 (the "Arbitration Act") at the District Court of Malkapur, Maharashtra. Following this challenge, the Respondent filed an application for rejection of the petition on jurisdictional grounds. The district judge held that since the seat of arbitration was at Nagpur, only the courts in Nagpur would have jurisdiction to entertain an application under Section 34 of the Arbitration Act and that being the case, dismissed the petition under Section 34 of the Arbitration Act. Being aggrieved by the said order, the Petitioners challenged the same before the Bombay High Court.
The High Court was confronted with the question, which court would have the jurisdiction to hear the challenge to the Award and whether such jurisdiction would be exclusive or concurrent?
3. RELEVANT PROVISIONS
To understand the juxtaposition that has come about, it is important to first appreciate relevant provisions of the Arbitration Act as well as the interpretation given by various courts.
The first and most important aspect to be considered is the definition of the word 'court' under the Arbitration Act. The term court has been defined under Section 2(1)(e) of the Arbitration Act. For domestic arbitrations, the appropriate fora would be a principle civil court of original jurisdiction and the high court having jurisdiction to decide arbitration matters as if it were a regular suit. For international commercial arbitrations, the high court alone has been vested with powers under the Arbitration Act.
The second important definition is that of 'Place of Arbitration' as defined in Section 20 of the Arbitration Act. Since, arbitration proceedings in themselves are an exercise in party autonomy, the said provision gives the parties to the arbitration agreement freedom to also determine the place of arbitration. The choice of place of arbitration is extremely crucial, as we would see hereinafter, since it is now settled law that the courts which are at the place of arbitration have exclusive jurisdiction to deal with any issues arising from the said arbitration, including petitions under Section 9 and Section 34 of the Arbitration Act.
If parties fail to reach an agreement as to the place of arbitration, the arbitral tribunal has the power to decide the place of arbitration, under Section 20 (2) of the Arbitration Act. Section 20(3) of the Arbitration Act deals with the more practical aspect of the 'venue' of arbitration, which gives the parties/arbitral tribunal the flexibility to carry out hearings in different places without actually conferring any importance of jurisdictional value to such places.
Once the place and venue of arbitration have been decided, the third important provision comes into play. It is mandated under Section 31 (4) of the Arbitration Act that the arbitral award shall state the date and place at which the award was made. This declaration in the award ipso facto confers jurisdiction upon the place mentioned in the award. This can be seen as a way of the arbitral tribunal confirming or conforming, the place of arbitration, as the case may be.
The fourth provision to be considered is Section 42 of the Arbitration Act, beginning with a non-obstante clause and having blanket applicability on all other provisions under the Arbitration Act as well as the Civil Procedure Code, 1908 ('CPC') The provision postulates that when an application is made under Part I of the Arbitration Act in a 'court', that court itself has exclusive jurisdiction with regards to the arbitration proceedings and all subsequent applications. Therefore, as given under Section 42 of the Arbitration Act, it is only one court that is vested with the jurisdiction to try and decide matters arising out of a particular arbitration agreement or proceeding.
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1 Omprakash & Ors. v. Vijay Dwarkada Varma, W.P 4248/2019, Bombay High Court (Nagpur Bench)
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