SC Larger Bench To Decide Basis And Principle To Decide the Place Of ‘Seat’ of Arbitration [Read Judgment]

The Supreme Court, in Union of India vs. Hardy Exploration and Production, has referred the question as to when the arbitration agreement specifies the “venue” for holding the arbitration sittings by the arbitrators but does not specify the “seat”, then on what basis and by which principle, the parties have to decide the place of “seat” which has a material bearing for determining the applicability of laws of a particular country for deciding the post-award arbitration proceedings.

This question of law had arisen during the hearing of an appeal against the Delhi High Court order that held that the Indian courts have no jurisdiction to entertain the appellant's application under Section 34 of the Act to question the legality of award rendered in international commercial arbitration proceedings.

The counsel for Union of India and the respondent, ASG Tushar Mehta and senior advocate Abhishek Manu Singhvi, referred to multitude of decisions on the subject. Singhvi also submitted before the bench that the question as to what is the effect of UNCITRAL Model Law, when they are made part of the arbitration agreement for deciding the question of “seat” has also not been so far decided in any of the earlier decisions.

A bench of Justice RK Agrawal and Justice AM Sapre observed: “In our opinion, though, the question regarding the “seat” and “venue” for holding arbitration proceedings by the arbitrators arising under the Arbitration Agreement/International Commercial Arbitration Agreement is primarily required to be decided keeping in view the terms of the arbitration agreement itself, but having regard to the law laid down by this Court in several decisions by the Benches of variable strength as detailed above, and further taking into consideration the aforementioned submissions urged by the learned counsel for the parties and also keeping in view the issues involved in the appeal, which frequently arise in International Commercial Arbitration matters, we are of the considered view that this is a fit case to exercise our power under Order VI Rule 2 of the Supreme Court 12 Rules, 2013 and refer this case (appeal ) to be dealt with by the larger Bench of this Court for its hearing.”