The parties can agree on the place of arbitration. If the parties fail to agree on the place, the arbitrator shall determine considering the circumstances and convenience of the parties. Section 20(3) allows the arbitrator to meet at any place it considers appropriate after consulting the parties for hearing witness, expert or the parties or for inspection of document, property, etc.
This distinction was made clear by the Supreme Court in the following cases –
Bhatia International v Bulk Trading S.A. & Anr, (2002) 4 SCC 105:
In Bhatia, the question before the Supreme Court was whether parties to an International Commercial Arbitration (ICA) seated outside India could approach Indian courts for interim relief, even though Section 9 (on interim relief) falls within Part I of the 1996 Act. A bench of three-judges of the Supreme Court of India held that Part I applied to all ICA including arbitrations seated outside India, unless the applicability of the same was excluded, expressly or impliedly, by the parties. This decision was extensively criticized as it went against the ‘seat theory’ of arbitration whereby the courts of the seat of arbitration were presumed to have jurisdiction in the absence of any stipulation in the arbitration agreement to the contrary.
The above view was reiterated and to some extent expanded in Venture Global Engineering vs Satyam Computer Services Ltd. & Anr, (2008) 4 SCC 190.
Bharat Aluminium Co. v Kaiser Aluminium Technical Services, Inc. (BALCO), (2012) 9 SCC 552:
BALCO prospectively overruled the decision taken in Bhatia case. It was held that Part I will only apply to arbitrations seated in India. Post the decision of the Supreme Court in BALCO, Indian arbitration law has become seat centric. It was also held that once the seat of arbitration has been fixed, it would be in the nature of an exclusive jurisdiction clause and it confers exclusive jurisdiction to the “seat” courts i.e. courts which exercise supervisory powers over the arbitration.
Enercon India vs Enercon GmBh, (2014) 5 SCC 1
It was held by the Supreme Court that it is the seat that actually decides the appropriate court which will have exclusive jurisdiction to support the arbitration proceedings. The Supreme Court sided with the seat of the arbitration for resolving any dispute in an appropriate court rather than the venue. In this case, the Court held that merely because the venue of arbitration is chosen to be London, it could not lead to the inference that UK courts could be approached to seek interim measures during arbitration proceedings as it would lead to utter chaos, confusion and unnecessary complications.
Reliance Industries Ltd. v Union of India, 2015 (10) SCALE 149:
It was held that the supervisory jurisdiction of courts over the arbitration goes along with the seat.
Roger Shashoua v. Mukesh Sharma, (2017) 14 SCC 722:
The law governing the contract was Indian and the arbitration clause designated London as the ‘venue’ of arbitration and that “arbitration proceedings shall be in accordance with “ICC Rules”
The English High Court ruled that when there is an express designation of ‘venue’ without any designation of an alternate place as the ‘seat’, and there are no significant indicative factors to the contrary, the specified venue would inevitably be the seat of arbitration. This is in light of the strong presumption that the parties would intend to have the seat in the same jurisdiction as that of the venue of arbitration. The Supreme Court ruled that “venue cannot be equated with the seat/place of arbitration”, but when only a prescription for venue exists in the agreement, the court would be required to analyse the facts on a case-to-case basis to determine the juridical seat. The Court expressed its agreement with the decision of the English Courts that such a factual scenario would imply that London had, in fact, been selected as the seat of arbitration.
Union of India v Hardy Exploration and Production (India), (2018) 7 SCC 374 Two Judge Bench in UOI v. Hardy Exploration referred Enercon, Roger Shashoua, Reliance,Imax, etc. to a larger Bench. A three-judge bench of the Apex Court was called upon to address the question that when the arbitration agreement provides the ‘venue’ of the arbitral proceedings but does not specify the ‘seat’ of arbitration, on what basis shall the ‘seat’ of arbitration be determined? In answering this reference, the Supreme Court has clarified that in the absence of an explicit seat, the venue can be considered to be the seat of arbitration only if an additional factor(s) is present as a concomitant. The Supreme Court did not lay down the condition precedent but the same can be construed only by comprehensive reading of an arbitral clause in the light of surrounding circumstances.