The perplexity to clearly demarcate the eccentricities between venue and seat of the arbitral proceedings still persists. Even though the two terms can be used interchangeably sometimes, the venue denotes more of a geographical location of arbitration though seat denotes jurisdiction of a court. The Hon’ble Supreme Court has set out precedents to distinguish the two concepts  to an extent.

It is pertinent to mention that the Arbitration and Conciliation Act does not expressly mention the terms seat and venue under the Act. Rather, Section 20 of the Act mentions the term ‘place of arbitration’ that can be interchangeably used with venue or seat.

In  Bharat Aluminium Co. V Kaiser Aluminium Technical Service[1], famously known as the “BALCO” judgement clarifies the difference between the venue and the seat of arbitration. It highlights that selecting a seat reflects upon the intention of the parties to choose the law of that particular jurisdiction. It further clarifies that as per Section 2(1) (e) of Arbitration and Conciliation Act, 1996 (further referred as A & C Act), the jurisdiction lies under the (i) Court(s) of the geographical location where the cause of action has arisen (original jurisdiction) and (ii) Court(s) having jurisdiction to decide the subject matter of the arbitration (seat of arbitration).

Roger Shashoua V. Mukesh Sharma[2], established the ‘Shashoua Principle’ indicating venue will be the seat of arbitration only and only if nothing is mentioned on contrary.Although later in Union of India V. Hardy Exploration Production[3], the court deviated from the much-used shashoua principle and decided otherwise. In the matter, Kuala Lumpur was decided as the venue,but the contract did not mention the seat of arbitration. After the award was given in Kuala Lumpur it was later contested by the appellant in front of Delhi High Court. The Hon’ble Court decided that venue will only become the seat of arbitration if something else is also associated with the venue which reflects the intention of the parties to accept the law of that jurisdiction.

In another judgment Mankatsu Impex V. Airvisual Ltd.[4], the Supreme Court reiterated that while recognizing the seat it is crucial to take other pertinent factors into consideration in order to identify the true intention of the parties. According to the arbitration clause, the proceedings will be administered in Hong Kong though it would be governed by Indian law and New Delhi will have jurisdiction in the subject matter.

Further the bench of Justice Krishna Rao referred to the BGS SGS SOMA V. NHPC Ltd.[5]which states that the contrary indicia is the only factor which helps in determining that whether the venue can be equated as the seat of arbitration as well or not. (Orissa Metaliks Pvt. Ltd. v. SBW Electro Mechanics Import Export Corporation, 2023)

In a recent judgement, the High Court of Calcutta declared that the venue will not become the seat of arbitration if a clause of ‘exclusive jurisdiction’ is mentioned in the contract since this will amount to contrary indicia which will prevent venue from becoming the seat for arbitration. The bench of Justice Shekhar B. Saraf elaborated upon the issue of conflicting clauses present in a contract and how while interpreting the clauses a harmonious construction approach should be adopted to determine which court holds the jurisdiction. And as exclusive jurisdiction clause would imply the jurisdiction upon that court it would be contrary to the venue mentioned in the contract. (Homevista Décor & Furnishing Pvt. Ltd. v. Connect Residuary Pvt. Ltd. A.P., 2023).

In another case, the High Court of Calcutta held that the venue will be the seat of arbitration if there is no clause which amounts to contrary indicia. The court discussed that even if the law governing the arbitration is not clearly mentioned, the contract cannot be called ambiguous as long as the parties are clear that they have to refer the dispute to arbitration.

The judgments show that the Supreme Court of India has tried to demarcate the conceptual difference between venue and seat.One the other major drawbacks that still persists is the poor drafting of the clause which has led to the conceptual confusion. The much-needed bridge between venue and seat was built in the BALCO judgment which clarifies that the venue merely denotes the geographical location. However, the other courts, through the judgments, have blurred the division between the two concepts so it’s difficult to speculate that which principle will prevail in a particular circumstance. BGS SGS SOMA v. NHPC Ltd.’s emphasis on contrary indicia pays attention to the intention of the parties. It still remains a matter of circumstantial intention of parties in a contract. Though the parties can use dilatory tactics to hinder the arbitral process thereby deposing the original jurisdiction of the court as per the contract.

[1] (2012) 9 SCC 552

[2](2017) 14 SCC722

[3](2019) 13 SCC 472

[4](2020) 5 SCC 399

[5] (2020) 4 SCC 234

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