Intention Of Parties As To Seat Of Arbitration Can Be Determined From Their Conduct: Kerala High Court

The Kerala High Court recently reiterated that the intention of the parties to an agreement, as to the seat of arbitration, can be determined from their conduct.

Justice N. Nagaresh was dealing with a case where the Sale Contract between the parties prescribed Haridwar as the seat of arbitration but the subsequent High Sea Sale Agreement prescribed Kollam as the seat.

While determining the question as to which of the above seats would be final, the High Court observed,

"Intention of the parties as to the seat of arbitration should be determined from other clauses in the agreement and the conduct of the parties...As the initial Sales Contracts were specifically made contingent upon signing of "mutually acceptable" High Sea Sales Agreements and the subsequently executed and "mutually acceptable" High Sea Sales Agreements specified that arbitration should be held at Kollam, the joint intent of the parties can only be taken as one deciding that the seat of arbitration should be Kollam."

The bench further observed,

 Contracts are to be interpreted according to their purpose.The purpose of contract is the interest, objectives and values that the contract is designed to actualise. It comprises joint interest of the parties.

The dispute between the parties pertained to an agreement for supply of raw cashew nuts. When the Respondent herein failed to respond to notice for appointing a Sole Arbitrator, the Petitioner filed the instant application under Section 11 of the Arbitration and Conciliation Act.

The application was opposed by the Respondent, stating that Kerala High Court has no jurisdiction to entertain the Arbitration Requests, since as per the Sales Contracts, the resolution of any disputes between the parties shall be through arbitration and the seat of arbitration shall be Haridwar.

The High Court rejected this contention upon finding that the Sales Contracts were made contingent upon signing of mutually acceptable High Sea Sales Agreements, which prescribed Kollam seat. It said that "joint intention" of the parties was to fix the seat of arbitration as Kollam.

The Court thereby held that the petitioners in the Arbitration Requests are entitled to relief and issued directions for the appointment of the Sole Arbitrator. 

Case Title: M.A. Hakkim v. M/S Patanjali Agro India Pvt. Ltd. and connected cases 

Citation: 2022 LiveLaw(Ker) 616

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