What Is The Seat Of Arbitration? 2024

Definition.1. Seat of arbitration is a location selected by the parties as the legal place of arbitration, which consequently determines the procedural framework of the arbitration.

What is the difference between place and seat of arbitration?

In general, the ‘seat’ is a place where the court have supervisory and governing powers over the arbitral proceedings. However, the ‘venue’ is a place where the proceedings of arbitration such as hearing of witnesses, experts or the parties or the inspection of goods and properties are concluded.

What is seat of arbitration in India?

2. Latest Pronouncements Governing the Field: – Without wasting too many words, let us analyze the four latest Supreme Court judgments, which govern the issue of ‘juridical seat’, in a condensed and capsulized manner. The first of these four judgments is the 2018, three-Judge bench decision, in Union of India (UOI) v.

Hardy Exploration & Production (India) Inc.3 Later, in 2019 came the co-ordinate Bench decision in BGS SGS SOMA JV v. NHPC Ltd.4, which allegorically speaking muddied the waters. Again, in 2020 came a three-Judge Bench decision in Mankastu Impex Private Limited v. Airvisual Ltd.5 Last is the division Bench decision in Inox Renewables Ltd.v.

Jayesh Electricals Ltd.6, which wholeheartedly follows the infirm decision in BGS Soma (supra).2.1. Hardy Exploration (supra)- The Appellant therein had filed an Application before the High Court U/s 34 of the Arbitration Act challenging the correctness of award made by Arbitrators in favour of Respondents.

The said Application was contested by Respondent on ground that courts in India did not have jurisdiction to entertain such an application. While dealing with the controversy the Supreme Court referred to the relevant Articles of the Contract in question to delineate on whether they oust the jurisdiction of the courts in India.

The relevant portion of Article 32 and 33 read as follows: “32.1 This Contract shall be governed and interpreted in accordance with the laws of India.32.2 Nothing in this Contract shall entitle the Contractor to exercise the rights, privileges and powers conferred upon it by this Contract in a manner which will contravene the laws of India.33.9 Arbitration proceedings shall be conducted in accordance with the UNICITRAL Model Law on International Commercial Arbitration of 1985 except that in the event of any conflict between the Rules and the provisions of this Article 33, the provisions of this Article 33 shall govern.

XXX 33.12 The venue of conciliation or arbitration proceedings pursuant to this Article unless the parties otherwise agree, shall be Kuala Lumpur and shall be conducted in English language. Insofar as practicable the parties shall continue to implement the terms of this contract notwithstanding the initiation of arbitration proceedings and any pending claim or dispute.” The Court noted that as per Article 33.12 ‘venue’ for arbitration was agreed to be Kuala Lumpur.

But the juridical seat was not agreed. Having regard to Article 33.9 above, the Court referred to Article 20 of the UNCITRAL Model Law, which is akin to Section 20 of the Arbitration Act. After so referring the Court held that there are two modes for determining the place of arbitration or to say the ‘juridical seat’.

What is the seat of arbitration UK?

Under section 2 of the Arbitration Act 1996 the supervisory powers of the English court over an arbitration apply – other than in very limited circumstances – where the seat of the arbitration is England.

Which is the place of arbitration?

The place of arbitration is of particular importance for the enforcement of an UNCITRAL award. The law of the place of arbitration will also determine the procedural framework of an arbitration and define the extent to which local courts can intervene in the arbitral proceedings.

suitability of the arbitration law at the proposed place of arbitration, including whether the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) is in force; location of evidence and/or subject matter of the dispute; and convenience of the place for the parties, counsel and arbitrators.

Some treaties and agreements contain additional requirements for choosing the place of arbitration. For example, the North American Free Trade Agreement (NAFTA), requires that the place of arbitration be in the territory of a DR-CAFTA Party that is also a signatory to the New York Convention, unless the parties agree otherwise (e.g.

Who decides the seat of arbitration?

1. Seat of arbitration is a location selected by the parties as the legal place of arbitration, which consequently determines the procedural framework of the arbitration.

Who chooses arbitration seat?

The authority of an arbitrator derives from an agreement between the parties while a judge is appointed by the State. Because arbitration rests on agreement, the parties can choose a tribunal which suits their specific needs. They may select one or three arbitrators and can specify the qualification of the arbitrators.

What arbitration means?

The Center makes available a Guide to WIPO Arbitration, which may be ordered or downloaded (PDF). Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute.

Arbitration is consensual

Arbitration can only take place if both parties have agreed to it. In the case of future disputes arising under a contract, the parties insert an arbitration clause in the relevant contract. An existing dispute can be referred to arbitration by means of a submission agreement between the parties. In contrast to mediation, a party cannot unilaterally withdraw from arbitration.

The parties choose the arbitrator(s)

Under the WIPO Arbitration Rules, the parties can select a sole arbitrator together. If they choose to have a three-member arbitral tribunal, each party appoints one of the arbitrators; those two persons then agree on the presiding arbitrator. Alternatively, the Center can suggest potential arbitrators with relevant expertise or directly appoint members of the arbitral tribunal.

Arbitration is neutral

In addition to their selection of neutrals of appropriate nationality, parties are able to choose such important elements as the applicable law, language and venue of the arbitration. This allows them to ensure that no party enjoys a home court advantage.

Arbitration is a confidential procedure

The WIPO Rules specifically protect the confidentiality of the existence of the arbitration, any disclosures made during that procedure, and the award. In certain circumstances, the WIPO Rules allow a party to restrict access to trade secrets or other confidential information that is submitted to the arbitral tribunal or to a confidentiality advisor to the tribunal.

The decision of the arbitral tribunal is final and easy to enforce

Under the WIPO Rules, the parties agree to carry out the decision of the arbitral tribunal without delay. International awards are enforced by national courts under the New York Convention, which permits them to be set aside only in very limited circumstances. More than 165 States are party to this Convention.

When venue is the seat of arbitration?

(2019) had ruled that whenever a place is designated as the ‘venue’ of the arbitration proceedings in an Arbitration Clause, the expression ‘arbitration proceedings’ would make it clear that the ‘venue’ is really the ‘seat’ of the arbitral proceedings.

Why is the law of the seat important in arbitration?

Introduction – The seat of arbitration, not to be confused with the geographical location of arbitration hearings, is an important aspect in both international and domestic arbitrations, and one that is often overlooked or not given proper consideration.

When drafting dispute resolution clauses, far too many lawyers (in many cases, those with very little practical arbitration or litigation experience) do not appreciate the implications of (i) choosing an inappropriate seat of arbitration or (ii) not clearly specifying the chosen seat.

The seat is effectively the home of the arbitration, and will generally determine the procedural law governing the arbitration.

The seat also determines which court has supervisory jurisdiction over the arbitration, which is a very important factor when it comes to the setting aside of an arbitral awards or applications for interim measures. In this article, we discuss (with reference to two very remarkable decisions) the recent trend adopted by the UAE courts when it comes to their approach in providing supervisory support to UAE-seated arbitrations.

What is an example of arbitration?

An example of an arbitration would be when two people who are divorcing cannot agree on terms and allow a third party to come in to help them negotiate.

How does an arbitration work?

Arbitration is an out-of-court method for resolving a dispute between a worker and an employer. Arbitration takes place in front of a neutral decision-maker called an ‘arbitrator’ (or in some cases, a group or ‘panel’ of arbitrators) who will listen to each side and make a decision about the case.

Can the seat of arbitration be changed?

Findings and the Decision – At the outset, the Court ascertained the seat of arbitration by relying on the award wherein it was clearly stated that the parties intended to specifically shift the venue/place of arbitration from Jaipur to Ahmedabad. The Court relied on the decision in BSG SGS SOMA JV vs.

NHPC Limited, 2 (BSG SOMA) wherein the Supreme Court dealt with the issue of concurrent jurisdiction head on and held “whenever there is the designation of a place of arbitration in an arbitration clause as being the “venue” of the arbitration proceedings, the expression “arbitration proceedings” would make it clear that the “venue” is really the “seat” of the arbitral proceedings, as the aforesaid expression does not include just one or more individual or particular hearing, but the arbitration proceedings as a whole, including the making of an award at that place.

This language has to be contrasted with language such as “tribunals are to meet or have witnesses, experts or the parties” where only hearings are to take place in the “venue”, which may lead to the conclusion, other things being equal, that the venue so stated is not the “seat” of arbitral proceedings, but only a convenient place of meeting.

Further, the fact that the arbitral proceedings “shall be held” at a particular venue would also indicate that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby, that that place is the seat of the arbitral proceedings.
This, coupled with there being no other significant contrary indicia that the stated venue is merely a “venue” and not the “seat” of the arbitral proceedings, would then conclusively show that such a clause designates a “seat” of the arbitral proceedings.” The Court further relied on its decision in Indus Mobile Distribution Private Limited vs.

Datawind Innovations Private Limited 3, (Indus) wherein it was held that the parties deciding on a seat in an agreement is akin to an exclusive jurisdiction clause vesting the jurisdiction to the Courts in the territory of the chosen seat. The Court in Indus also clarified the position of Venue and Seat with respect to Section 20 of the Act wherein it was held that the term ‘place’ appearing in Section 20(1) and (2) refers specifically to the juridical seat/venue of the arbitration whereas the same term appearing in Section 20(3) refers only to the place where the arbitration hearings are held.

Having discussed the law, the Court categorically held that the seat of the arbitration being changed with a mutual agreement to Ahmedabad would have the effect of Ahmedabad having exclusive jurisdiction as the juridical seat of arbitration. Applying the dicta of Indus, the Court categorically held that the “venue” being shifted from Jaipur to Ahmedabad is shifting of the venue/place in terms of Section 20(1) and not Section 20(3) of the Act.

Applying the law to the facts of the case, the Hon’ble Court set aside the impugned judgement of the High Court and referred the matter to the Courts at Ahmedabad for hearing the application for the challenge of the arbitral award.

Can there be multiple seats of arbitration?

Arbitration is a process of Alternate Dispute Resolution by which a conversation between parties to a dispute is facilitated by a neutral third party, an arbitrator in this case, thereby allowing the arbitrator to hear both perspectives of the dispute and analyse evidence in order to make a fair and just decision, and pronounce an appropriate arbitral award.

Arbitration has escalated in popularity with the enactment of the Arbitration and Conciliation Act, 1996 and the rise in commercial transactions and partnerships which prefer the quick resolution offered by Alternate Dispute Resolution.

Arbitration is a unique mechanism of Alternate Dispute Resolution where parties are given ample freedom to choose their arbitrator, seat of arbitration, venue where the arbitration proceedings shall be conducted, time of proceedings and the procedural law that shall be applied in guiding the proceedings and the arbitral award.

With this much autonomy granted to parties, there is bound to be misunderstandings and confusion regarding the practical application of certain provisions and this became reality in the case of CVS Insurance and Investments v. Vipul IT Infrasoft Pvt. Ltd,

Where the arbitration agreement specified exclusive jurisdiction to courts in Noida but parties were confused as to whether the seat of arbitration should be in Delhi or Noida.

The facts of the case go like this, two companies entered into a partnership which contained an arbitration clause that referred all future disputes to arbitration where the venue of arbitration would be “Noida/New Delhi”.

The parties eventually had disagreements regarding the payment of money and when a dispute arose they were puzzled by whether the seat of arbitration would be in Delhi or Noida. The matter reached the High Court and the bench, after considering the facts, held that the Arbitration Agreement between the parties did not specify that exclusive jurisdiction would lie with courts in Noida or New Delhi but the facts suggest that the cause of action arose in Noida and therefore the seat of arbitration must be in Noida but parties can choose the venue depending on their convenience,

The Court also went on to clarify that there does exists a difference between “seat” and “venue” even in the Arbitration and Conciliation Act, 1996.

According to the Supreme Court’s interpretation of Section 20(1) and 20(2)of the Act in the case of Indus Mobile Distribution Pvt. Ltd.v.
Datawind Innovation Pvt.

Ltd. & Ors,, the term “place” refers to “juridical seat” but underSection 20(3) the term “place” means “venue.” The Court also held that the moment the seat of arbitration is specified in the arbitration clause or arbitration agreement it creates exclusive jurisdiction akin to the jurisdiction of a Civil Court.

What is arbitrator role?

Definition and Role of an Arbitrator – An arbitrator reviews testimony and evidence presented by the disputed parties at a hearing and resolves the dispute by issuing a decision that may include an award of money. You can think of an arbitrator as a private judge hired by the disputing parties to resolve their dispute.

If the arbitration is binding, the parties cannot seek a reversal of the decision in court except under very limited circumstances.
However, the successful party can seek help from a court in enforcing the arbitrator’s decision.

An arbitrator serves as the decision-maker and ‘referee’ in an arbitration proceeding, much like a judge during court litigation.

The arbitrator is bound by the rules outlined in the parties’ arbitration agreement, If he is a member of a special arbitration organization, such as the American Arbitration Association, he will be bound by the rules of that organization as well, including a set of ethical rules.

What is the relevance of parties choosing the seat or venue of arbitration?

The significance of the seat It determines which country’s procedural laws will apply to many practical aspects of the arbitration including any rights of appeal, the availability of interim remedies and the extent to which the local courts will support or supervise the arbitration.

Can the seat of arbitration be changed?

NHPC Limited, 2 (BSG SOMA) wherein the Supreme Court dealt with the issue of concurrent jurisdiction head on and held “whenever there is the designation of a place of arbitration in an arbitration clause as being the “venue” of the arbitration proceedings, the expression “arbitration proceedings” would make it clear that the “venue” is really the “seat” of the arbitral proceedings, as the aforesaid expression does not include just one or more individual or particular hearing, but the arbitration proceedings as a whole, including the making of an award at that place.

Can governing law and seat of arbitration be different?

In case, the arbitral hearings are to be held at locations other than the Seat of Arbitration, then expressly mention in the contract that the Seat of Arbitration would be the governing law of arbitration and the same will remain impervious even if the hearings happen at various places/locations.

Does the place of arbitration change when the tribunal holds its hearing at a different place or places?

The Supreme Court has held that when parties change the ‘venue/place of arbitration’ by mutual agreement, the new venue/place will become the ‘seat of the arbitration’. Therefore, the Courts at the changed venue/place of arbitration will be having jurisdiction over the arbitral proceedings.A bench comprising Justices Rohinton Fali Nariman and Hrishikesh Roy gave this significant ruling in.

The Supreme Court has held that when parties change the ‘venue/place of arbitration’ by mutual agreement, the new venue/place will become the ‘seat of the arbitration’.
Therefore, the Courts at the changed venue/place of arbitration will be having jurisdiction over the arbitral proceedings.

A bench comprising Justices Rohinton Fali Nariman and Hrishikesh Roy gave this significant ruling in the case M/s Inox Renewables Ltd v Jayesh Electricals Ltd,

The bench followed the precedent in BGS SGS Soma JV vs NHPC Ltd, which held that the venue of arbitration will be the juridical seat of arbitration in the absence of contrary intention of the parties. Background Facts Gujarat Fluorochemicals Ltd and Jayesh Electricals Ltd had an agreement for manufacture and supply of power transformers.

This agreement had an arbitration clause, which fixed the venue of arbitration at Jaipur, Rajasthan and gave courts in Rajasthan exclusive jurisdiction over disputes arising out of the agreement.

Later, GFL sold its entire business to Inox Renewables Ltd.
The business transfer agreement between GFL and Inox also had an arbitration clause, which fixed the venue at Vadodara, Gujarat, and gave Courts at Vadodara exclusive jurisdiction.

When disputes arose between Inox and Jayesh Electricals, the latter approached the Gujarat High Court under Section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator. The High Court appointed a retired HC judge as an arbitrator.

Before the arbitrator, both the parties mutually agreed to have Ahmedabad as the venue of arbitration, despite the clause in the agreement which had fixed Jaipur as the venue.
The arbitrator proceeded with the arbitration at Ahmedabad, recording the consent of both the parties to hold the proceedings there.

The arbitrator passed an award in favour of Jayesh Electricals. This was challenged by Inox before a Commercial Court at Ahmedabad under Section 34 of the Act. The Ahmedabad Court dismissed the appeal holding that exclusive jurisdiction is vested with Vadodara Court as per the business transfer agreement.

Inox challenged this further before the Gujarat High Court.
The High Court affirmed the finding of the Ahmedabad Court that it had no jurisdiction to deal with the appeal.
However, the High Court observed that it was the court at Jaipur which had jurisdiction, instead of Vadodara Court.

Inox made a further appeal to the Supreme Court against the High Court decision.

Arguments in Supreme Court Senior Advocate Sachin Dutta, appearing for Inox, argued that Ahmedabad had become the juridical seat of the arbitration as the parties changed the venue to there by mutual consent.