Summary
A bridge subcontract executed at Panchkula had an arbitration clause silent on seat or venue. The first sole arbitrator fixed the venue at Panchkula at his first sitting on 05.08.2014 without objection; after his recusal the substitute arbitrator held all hearings at Delhi and pronounced the award there. The award-debtor challenged the award under Section 34 before the Delhi High Court while the award-holder moved the Panchkula court under Section 9; the Punjab and Haryana High Court held the Panchkula courts alone had jurisdiction. The Supreme Court dismissed the appeals: once the tribunal fixes the seat under Section 20(2) it stays fixed unless the parties expressly agree otherwise; later hearings elsewhere, even before a new arbitrator, are only a change of venue under Section 20(3), and Section 42 does not aid a party who approached a non-seat court after the seat was fixed.
Issues
- Whether conducting arbitration proceedings at Delhi following the appointment of a substitute arbitrator shifted the jurisdictional seat of arbitration from Panchkula, the place fixed by the first arbitrator under Section 20(2) of the Arbitration and Conciliation Act, 1996.
- Whether Section 42 of the Act conferred exclusive jurisdiction on the Delhi High Court because the Section 34 petition was filed there before the Section 9 application at Panchkula.
Provisions considered
- Sections 2(1)(e), 9, 20(1), 20(2), 20(3), 34 and 42, Arbitration and Conciliation Act, 1996Section 2(1)(e) must be read with Section 20 so that the courts of the seat have exclusive supervisory jurisdiction (BALCO; BGS SGS Soma; Indus Mobile). Where the parties have not agreed a seat, the place determined by the tribunal under Section 20(2) is the seat; Section 20(3) permits meetings elsewhere as venue only. The first arbitrator's order of 05.08.2014 fixed Panchkula as the seat, which the second arbitrator's sittings at Delhi could not relocate; Section 42 gives exclusivity only to a court competent when first approached, so the Section 34 petition at Delhi, filed after the seat was fixed, did not oust the Panchkula courts. (¶¶ 15, 16, 17, 20, 21, 22, 23, 24, 25, 28, 29, 31, 32)
Held
- The 'seat' under Sections 20(1) and 20(2) is the juridical seat whose courts alone exercise supervisory jurisdiction, akin to an exclusive jurisdiction clause, while Section 20(3) refers to the 'venue' where hearings may conveniently be held; where parties have not chosen a seat, the place where the tribunal holds the proceedings is by default the venue and consequently the seat, and the tribunal need not pass a reasoned order under Section 20(2) (BGS SGS Soma, holding Hardy Exploration per incuriam). (¶¶ 15, 16, 17, 18, 20, 21, 22)
- The first arbitrator's order of 05.08.2014 stipulating Panchkula as the place of proceedings, unobjected to and with no significant contrary indicia, fixed Panchkula as the jurisdictional seat under Section 20(2). Inox Renewables v. Jayesh Electricals, where the parties by mutual consent shifted the seat before arbitration commenced, is a Section 20(1) case founded on party autonomy and does not permit an arbitrator to change a seat fixed under Section 20(2); once fixed, the seat remains static and can be changed only by the express, clearly understood mutual consent of the parties. (¶¶ 23, 24, 25, 28)
- Certainty as to the court exercising jurisdiction must be given priority: treating subsequent hearings at a different location, or the appointment of a new arbitrator who sits elsewhere, as relocating the seat would breed confusion, a race to the courts and conflicting decisions. The venue may move under Section 20(3) but a change of venue does not change the seat, even where most or all substantive hearings and the award took place at the venue; the question is answered objectively, not by the facts of each case. (¶¶ 25, 26, 27, 28, 29)
- Section 42 vests exclusive jurisdiction in the court first approached only where that court is competent — the court of the seat, or, where no seat has been designated or determined, a court where part of the cause of action arose; since the seat had already been fixed at Panchkula before the Section 34 petition was filed at Delhi, the appellant cannot on a 'fastest finger first' basis claim exclusive jurisdiction for the Delhi courts. (¶¶ 29, 30, 31, 32)
Result
Appeals dismissed; the Punjab and Haryana High Court's orders of 14.10.2019 in FAO No. 317 of 2017 and 08.11.2019 in review, holding that the courts at Panchkula, Haryana, as the seat of arbitration, have exclusive jurisdiction and that the Delhi courts lack jurisdiction over the Section 34 challenge, affirmed. No order as to costs.