8 October 2021 |Kei-Rsos Petrolium & Energy Pvt. Ltd. v. RAK Ceramics (I) Pvt. Ltd | Arbitration Application No. 2 of 2019| Arup Kumar Goswami CJ | High Court of Andhra Pradesh at Amaravati | 2021 SCC OnLine AP 3114

A clause of the agreement (executed in 2015, post-bifurcation of the then State of Andhra Pradesh) was tilted “governing law and dispute resolution.”

The first sub-clause stated: “The Courts of the State of Andhra Pradesh alone shall have sole and exclusive jurisdiction with respect to any proceedings arising out of or in relation to this Agreement.” The second sub-clause provided for a resolution of disputes by arbitration. The third sub-clause stated: “The arbitration proceedings shall be conducted in English and the place of arbitration shall be Hyderabad or any place mutually agreed by parties in Andhra Pradesh.”

In an application for appointment, the question of territorial jurisdiction arose, and hence the question what was the seat of arbitration? If the seat of the arbitration was Hyderabad, the High Court of Telangana had jurisdiction, and not the High Court of the State of Andhra Pradesh where the application was filed.

The court allowed the application and ruled that the seat of arbitration was Andhra Pradesh.

The court’s reasons were that:

1. The intention of the parties is clear that the courts of State of Andhra Pradesh shall have sole and exclusive jurisdiction.
2. The distinction between “seat of arbitration” and “venue of arbitration” assumes utmost importance if there is any contrary indicia. “Venue” in all circumstances is not synonymous with the “seat” of arbitration. Here, the expression used is “place of arbitration.”
3. Seat is fixed but the place of arbitration can be at the convenience of the parties and in such circumstances the place is merely a “venue” for holding arbitration hearings/meetings.
4. In this case place of arbitration is not confined to Hyderabad alone. It could be Hyderabad “or any place mutually agreed by parties in Andhra Pradesh.”
5. The clauses do not suggest parties intended to anchor arbitral proceedings at Hyderabad.

Read the judgment here.