Six cities were named as the venue and one as the forum. Andhra Pradesh High Court holds the exclusive jurisdiction clause fixes the seat

Justice Balaji Medamalli holds that a clause conferring jurisdiction on the courts at Visakhapatnam identifies the seat, so a Section 34 challenge to an international commercial award lies there.

The Visakhapatnam Steel Plant contracted with an Italian engineering company, the contract said arbitration could be held in any of six Indian cities, and a separate clause said the courts at Visakhapatnam would have jurisdiction. When the award came and the steel plant wanted to challenge it, the respondents said the Andhra Pradesh High Court was the wrong court. Justice Balaji Medamalli has held it is the right one — because a clause naming a court, in an arbitration agreement, is how parties identify the seat.

The clauses

The applicant is Rashtriya Ispat Nigam Ltd., which operates the Visakhapatnam Steel Plant. The respondents are an Italian company and its Indian arm, a third Indian company, and the presiding arbitrator. The application is one under Section 34 of the Arbitration and Conciliation Act, 1996, brought in the High Court's ordinary original civil jurisdiction as an international commercial arbitration application, with two execution petitions listed alongside it.

Two provisions of the contract pull in different directions on their face. One says that the courts at Visakhapatnam shall have jurisdiction. The other says the venue of arbitration may be any one of New Delhi, Mumbai, Chennai, Kolkata, Hyderabad or Visakhapatnam — with the General Conditions of Contract providing, for foreign contracts, that the venue shall be at New Delhi or Mumbai.

The applicant's case was that the six-city stipulation pertains only to the venue of the arbitral proceedings and does not confer exclusive jurisdiction on the courts of any of those places; that exclusive jurisdiction was conferred on the courts at Visakhapatnam; and that since the dispute arises out of an international commercial arbitration, the Section 34 application is maintainable before the High Court.

Seat and venue

The distinction the case turns on is one of the most litigated in Indian arbitration law, and it is worth stating plainly because the words are used loosely in contracts.

The seat of an arbitration is its juridical home. It determines which country's courts have supervisory jurisdiction over the arbitration — which court can appoint an arbitrator, grant interim relief, and hear a challenge to the award. The venue is merely where hearings are physically held, and may be chosen for convenience, changed, or spread across several places without affecting anything legal.

The Court worked through the Supreme Court's line on this, taking the extract from BGS SGS Soma JV v. NHPC, which gathers the earlier authorities. Reliance Industries Ltd. v. Union of India had held that it is too late in the day to contend that the seat of arbitration is not analogous to an exclusive jurisdiction clause: once parties consciously agree on a juridical seat, it is no longer open to them to contend that Part I of the Act applies as well. Videocon Industries Ltd. v. Union of India had applied that to hold that a High Court lacked jurisdiction to entertain a Section 9 petition where the parties had agreed the arbitration agreement would be governed by English law. The judgment also notes the approval in Balco v. Kaiser Aluminium Technical Services, and its reiteration in Enercon (India) Ltd. v. Enercon GmbH, of the English Court of Appeal's analysis in C v. D on the effect of choosing a seat.

The thread running through all of it is that a seat clause operates as an exclusive jurisdiction clause. The corollary, which decides this case, is that the relationship can be read in reverse: where parties have conferred exclusive jurisdiction on the courts of a particular place in an arbitration agreement, that choice tells you what they intended the seat to be.

There is a further wrinkle peculiar to this contract that sharpens the point. The General Conditions of Contract carried their own provision for foreign contracts, confining the venue to New Delhi or Mumbai — neither of which is Visakhapatnam. So on the respondents' reading the parties had named a court in one place and committed to arbitrate in another, with the court they chose having no supervisory role at all. That is a possible arrangement, but it is an odd one to attribute to commercial parties by implication, and the Court's construction avoids it: the jurisdiction clause identifies the seat, and the venue provisions govern only where the tribunal convenes.

The holding

Applying that, the Court held it has jurisdiction to entertain the Section 34 application. The parties expressly agreed on the jurisdiction of the courts at Visakhapatnam, which ultimately refers to the seat of arbitration; and the proceedings being an international commercial arbitration, the High Court exercising ordinary original civil jurisdiction may entertain the application.

The six-city clause was given its proper, lesser work. The place of arbitration mentioned in the award and the addendum award, the Court held, shall be the venue of arbitration in terms of the agreement and the General Conditions of Contract. Wherever the tribunal in fact sat, that was a venue; it did not move the seat, and it did not displace the court the parties had named.

The question was answered in favour of the applicant and against the respondents, and the main application and the two execution petitions were listed for a later date — so the challenge to the award itself is still to be heard. What has been decided is only where it will be heard.

Order

The Court held that it has jurisdiction to entertain the application under Section 34 of the Arbitration and Conciliation Act, 1996, and listed the main international commercial arbitration application together with the execution petitions for hearing.

The drafting lesson is the one worth taking away, and it applies to a great many Indian contracts with foreign counterparties. Standard forms frequently carry a general jurisdiction clause inherited from the commercial terms and a separate arbitration clause that names a list of possible places for hearings. The two were drafted to answer different questions and are rarely read together. When a dispute arises, the party that dislikes the forum points at the list of cities and calls it the seat; the party that likes it points at the jurisdiction clause. This judgment holds that in that contest the clause naming a court prevails, and the list of cities is treated as what it says it is — a venue provision.

The stakes behind the technicality are worth spelling out. A Section 34 challenge is the only route by which an Indian court may set aside a domestic award, and which court hears it determines a great deal: the law applied to the challenge, the pace at which it moves, the appellate chain above it, and the forum in which the successful party must later execute. In an international commercial arbitration the choice also decides whether a High Court exercises original jurisdiction over the matter at all, as it does here, rather than a district court. A finding on seat is therefore not a preliminary technicality in these cases; it frequently decides how long the losing party can keep the award at bay.

Parties who want a different answer have a simple remedy: say so. A clause that uses the word “seat”, and says which law governs the arbitration agreement, removes the argument entirely. Where contracts leave the word out, courts are left to infer the seat from the jurisdiction clause — and on the authority this judgment applies, that inference now runs strongly in one direction.