Unless Clear Contrary Intention, Venue In Arbitration Clause Should Be Seat Of Arbitral Proceedings: Delhi High Court Rejects Section 11 Petition

Brief Facts:

The Petitioner approached the Delhi High Court (“Delhi High Court”) under Section 11 of the Arbitration & Conciliation Act 1996 (“Arbitration Act) seeking arbitration reference for disputes between the Petitioner and the Respondent. The Petitioner referred to the arbitration agreement in clause 9 of the General Conditions of Contract (“GCCs”), arguing that the venue of arbitration should be New Delhi as per clause 9.0.4.0 of the GCCs, notwithstanding the mention of Mathura in Article 4.1 of the Contract regarding jurisdiction.

It contended that Article 4.1 of the Contract deals solely with territorial jurisdiction of courts and that the venue specified in clause 9.0.4.0 should determine the seat of arbitration. It asserted that since a venue is specifically stipulated, it should be considered as the agreed-upon seat of arbitration between the parties.

Conversely, the Respondent, argued that clause 9.0.4.0 merely denoted the geographical location or venue for arbitration proceedings. It maintained that the parties' consent was required for any change in venue, which didn't occur. However, it contended that the specific territorial jurisdiction clause in Article 4.1, starting with a non-obstante phrase, indicates the parties' agreement for the seat of arbitration to be Mathura, Uttar Pradesh, where the refinery in question was located.

ARTICLE 4 JURISDICTION

“Notwithstanding any other court or courts having jurisdiction to decide the question(s) forming the subject matter of the reference if the same had been the subject matter of a suit, any and all actions and proceedings arising out of or relative to the contract (including any arbitration in terms thereof) shall lie only in the court of competent civil jurisdiction in this behalf at Mathura (where this Contract has been signed on behalf of the OWNER) and only the said Court(s) shall have jurisdiction to entertain and try any such action(s) and/or proceeding(s) to the exclusion of all other Courts.”

Clause 9.0.4.0 of the GCC

“The venue of the arbitration under Clause 9.0.1.0 shall be New Delhi, provided that the Arbitrator may with the consent of the OWNER and the CONTRACTOR agree upon any other venue, while the arbitration under Clause 9.0.2.0 shall be ·at the place where the General Manager is located, provided that the Arbitrator may with the consent of the Contractor agree upon any other venue.”

Observations by the High Court:

The High Court referred to the decision of the Supreme Court in BGS SGS Soma JV vs. NHPC Limited (2020) 4 SCC 234, and highlighted that unless there is clear contrary indication, the venue mentioned in an arbitration clause should be considered the seat of arbitral proceedings.

The High Court observed that while clause 9.0.4.0 provided for a venue that the Arbitrator can alter with the parties' consent, Article 4.1 contained a clear contrary indication. Article 4.1 explicitly addresses the territorial jurisdiction of courts, stating that all actions and proceedings arising from the contract, including arbitration, shall solely lie in the civil court of competent jurisdiction in Mathura, where the contract was signed.

Based on this analysis, the High Court held 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.

Consequently, the High Court held that it lacked territorial jurisdiction to entertain the petition under section 11 of the Arbitration Act.

Case Title: Ved Contracts Pvt Ltd Vs Indian Oil Corporation Ltd.

Citation: 2024 LiveLaw (Del) 336

Case Number: ARB.P. 511/2023 & I.A. 8821/2023.

Advocate for the Petitioner: Mr. Sanjeev Anand, Sr. Advocate with Mr. Bipin Prabhat, Advocate.

Advocate for the Respondent: Mr. Amit Meharia, Mr. Abinash Agarwal and Mr. Sambhav, Advocates.

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