21 October 2021 | Isgec Heavy Engineering Ltd. v. Indian Oil Corporation Limited | Arb. P. 164 of 2021| Sanjeev Narula J | Delhi High Court | 2021 SCC OnLine Del 4748

In a very crisp decision summarizing key aspects of the concept of seat, place and venue, Sanjeev Narula J has interpreted an arbitration clause which stated that “the venue of the arbitration shall be New Delhi, provided that the Arbitrators may with the consent of the (parties) agree upon any other venue.”

He concluded that New Delhi was not the juridical seat:

1. ‘Seat’ and ‘venue’ have different connotations. They are not synonymous. These two expressions do not find any mention under the ACA. The expression used in Section 20 ACA is ‘place’.
2. The Supreme Court’s BALCO judgment makes it clear that the expression “place” used in Section 20 (1) & (2) ACA refers to the juridical ‘seat’. But in Section 20 (3) ACA the word ‘place’ is equivalent to ‘venue’, i.e., the location of the meeting of arbitral proceedings.
3. In BGS SGS Soma, the Supreme Court ruled that whenever in an arbitration clause, there is a designation of someplace as being the ‘venue’ of the arbitration proceedings, the expression ‘arbitration proceedings’ would make it clear that the venue is really the seat
4. But, BGS also refers to “contrary indicia.” [Ed. BGS ruled that “venue” is really the seat if it is used in conjunction with “arbitration proceedings” (i.e., not any particular hearing but the proceedings as a whole including the making of the award). But, there should be no significant contrary indicia against such interpretation]
5. Here, the clause provides a general stipulation that the ‘venue’ so designated can be changed by the arbitrators, with the consent of the parties. This, prima facie, suggests that the ‘venue’ specified is not really envisaged as the ‘seat’ of the proceedings, which should be specified in certain terms.
6. This interpretation is also in sync with Section 20(3) ACA.

After this analysis the court referred to a provision of the contract that conferred exclusive jurisdiction on the courts at Guwahati. It found that that provision was worded in clear, unambiguous, and directory terms and was a ‘contrary indica’ demonstrating that the ‘venue’ in the other clause is only a physical place of meeting under Section 20(3) ACA. It held that the seat of the arbitration was Guwahati. [Ed. Several courts have said that seat is akin to exclusive jurisdiction and some courts have said that exclusive jurisdiction clause is akin to seat. In its sequence of reasoning, the court could well have first highlighted the exclusive jurisdiction point as the main reason why Delhi was not the seat, rather than stating it to be a contrary indicia].

Read the judgment here.