Delhi High Court Rejects Section 11 Petition: Arbitration Venue Deemed Seat of Proceedings Unless Clear Contrary Intention

Delhi High Court Rejects Section 11 Petition: Arbitration Venue Deemed Seat of Proceedings Unless Clear Contrary Intention

Delhi High Court Justice Anup Jairam Bhambhani ruled that, in the absence of clear indications to the contrary, the venue specified in an arbitration clause should be deemed the seat of arbitral proceedings. The court emphasized the importance of understanding the parties' intentions by thoroughly examining all terms of the contract.

The petitioner filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, before the Delhi High Court seeking arbitration for disputes between the petitioner and the respondent. The petitioner cited clause 9 of the General Conditions of Contract (GCCs) as the arbitration agreement, contending that the venue of arbitration should be New Delhi as per clause 9.0.4.0 of the GCCs. This was despite the reference to Mathura in Article 4.1 of the contract regarding jurisdiction.

The argument put forth by the petitioner was that Article 4.1 of the contract pertains only to the territorial jurisdiction of courts, while the venue specified in clause 9.0.4.0 should dictate the seat of arbitration. It was asserted that since a specific venue is stipulated, it should be deemed as the mutually agreed-upon seat of arbitration between the parties.

The respondent contends that upon a plain reading of clause 9.0.4.0, it is evident that the parties referred therein only to the geographical location, i.e., the venue, where the arbitration would be conducted.

The respondent contends that since there is a specific territorial jurisdiction clause in Article 4.1, which begins with a non-obstante phrase and specifies that regardless of any other court having jurisdiction over the reference, all actions and proceedings arising from the contract, including any arbitration, shall be under the jurisdiction of the civil court in Mathura, Uttar Pradesh, it is evident that the parties had agreed that the "seat" of arbitration would be in Mathura, where the subject refinery is also situated.

The High Court referred to the decision of the Supreme Court in BGS SGS Soma JV v. NHPC Limited, which essentially holds that the court should ascertain the intention of the parties by examining the terms of the contract collectively. Only in the absence of contrary indications, the "venue" specified in an arbitration clause would constitute the "seat" of arbitral proceedings.

The High Court noted that while clause 9.0.4.0 mentions a "venue" that the arbitrator can modify with the parties' consent, Article 4.1 presents a clear contrary indication by explicitly addressing the territorial jurisdiction of courts. It specifies that all actions and proceedings arising from the contract, including arbitration, must be conducted in the civil court of competent jurisdiction in Mathura, where the contract was signed.

Consequently, the High Court concluded that although the arbitral proceedings could take place in New Delhi or any other venue with mutual consent, the seat of arbitration was in Mathura, Uttar Pradesh, as specified in the territorial jurisdiction clause of the contract.

Based on this determination, the court found that it lacked territorial jurisdiction to entertain or adjudicate the present petition under Section 11 of the Arbitration and Conciliation Act. Therefore, the petition was dismissed, granting the petitioner the liberty to seek relief from the court of competent jurisdiction, as per the law. The petition was disposed of accordingly.