2019 (7) TMI 1287 - SC - Indian Laws

Territorial Jurisdiction - venue of arbitration in different state - Whether the Madras High Court could exercise jurisdiction under Section 11(6) of the Arbitration and Conciliation Act 1996 despite the fact that the agreement contains the clause that venue of arbitration shall be Bhubaneswar? HELD THAT - Where the contract specifies the jurisdiction of the court at a particular place only such court will have the jurisdiction to deal with the matter and parties intended to exclude all other courts. In the present case the parties have agreed that the venue of arbitration shall be at Bhubaneswar. Considering the agreement of the parties having Bhubaneswar as the venue of arbitration the intention of the parties is to exclude all other courts. As held in Swastik non-use of words like exclusive jurisdiction only exclusive alone is not decisive and does not make any material difference - When the parties have agreed to have the venue of arbitration at Bhubaneswar the Madras High Court erred in assuming the jurisdiction under Section 11(6) of the Act. Since only Orissa High Court will have the jurisdiction to entertain the petition filed under Section 11(6) of the Act the impugned order is liable to be set aside. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Jurisdiction of Madras High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996.
2. Interpretation of arbitration clause specifying Bhubaneswar as the venue.
3. Applicability of legal precedents and principles regarding arbitration seat and venue.

Issue-wise Detailed Analysis:

1. Jurisdiction of Madras High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996:
The primary issue was whether the Madras High Court could exercise jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996, given that the agreement specified Bhubaneswar as the venue of arbitration. The appellant argued that the designation of Bhubaneswar as the "Seat" of arbitration conferred exclusive jurisdiction to the Orissa High Court. The Madras High Court, however, held that the mere designation of a "Seat" did not oust the jurisdiction of other competent courts unless there was an express clause excluding such jurisdiction. The Supreme Court ultimately held that the Madras High Court erred in assuming jurisdiction under Section 11(6) of the Act, as the parties had agreed to Bhubaneswar as the venue of arbitration, thereby intending to exclude other courts' jurisdiction.

2. Interpretation of arbitration clause specifying Bhubaneswar as the venue:
Clause 18 of the agreement stated, "Arbitration shall be under Indian Arbitration and Conciliation Law 1996 and the Venue of Arbitration shall be Bhubaneswar." The appellant contended that this clause designated Bhubaneswar as the juridical seat, giving exclusive jurisdiction to the Orissa High Court. The respondent argued that both Madras and Orissa High Courts had jurisdiction since the cause of action arose in both places. The Supreme Court analyzed the distinction between "Seat" and "Venue" and concluded that the intention of the parties was to confer exclusive jurisdiction to the courts at Bhubaneswar, as per the agreement.

3. Applicability of legal precedents and principles regarding arbitration seat and venue:
The Supreme Court referred to several precedents, including Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited and others, Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO), and Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. These cases established that the designation of a "Seat" of arbitration confers exclusive jurisdiction to the courts at that seat. The Court emphasized that the use of terms like "exclusive jurisdiction" or "only" is not necessary to exclude other courts' jurisdiction if the parties' intention is clear. The Supreme Court reiterated that the "Seat" of arbitration is akin to an exclusive jurisdiction clause, and in this case, Bhubaneswar being the agreed venue, the Orissa High Court alone had jurisdiction.

Conclusion:
The Supreme Court set aside the impugned order of the Madras High Court and allowed the appeal, directing the parties to approach the Orissa High Court for the appointment of an arbitrator. The judgment reinforced the principle that the agreed "Seat" of arbitration confers exclusive jurisdiction to the courts at that seat, reflecting the parties' autonomy in choosing the place of arbitration.

← Previous Next →