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                                <h1>Articles</h1>
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                                <h3>
                                    <a href="#!">Never ending Saga of “Seat” v/s “Venue” specially in relation to Challenge  Proceedings u/s 34 of Arbitration and Conciliation Act, 1996 “the  Act”(Commercial Arbitration)</a>
                                </h3>
                                <p>
                                    The word "place" appearing under section 20 of the Act assumes significance as it 
                                    connotes the <b>'seat of arbitration' or ‘venue’</b> depending upon circumstances in which 
                                    it has been chosen/determined and used. Thus, if initially a particular place (venue) is 
                                    unconditionally and unequivocally selected by the parties for conducting the arbitral 
                                    proceedings for any reason, said place would become 'juridical seat' of arbitration' 
                                    unless such place is chosen conditionally purely for temporary purpose of 
                                    convenience of parties. 
                                </p>
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                                <p>
                                    The Apex Court in <b>Indus Mobile Distribution Pvt. Ltd. v/s  Datawind Innovations 
                                    Pvt.  Ltd. and Ors</b> reported in <b>(2017)7 SCC 678</b> in a case wherein dispute arose as 
                                    regards the place/seat of arbitration mentioned in the agreement as having <b>“exclusive 
                                    jurisdiction”;</b> without any cause of action having occurred at that place. The Apex 
                                    Court relying upon <b>'Balco'</b> case held and observed thus; 
                                </p>
                                
                                <p>
                                    "9….. We are of the opinion, the term "subject-matter" of the arbitration 
                                    cannot be confused with "subject-matter" of the suit. The term "subject
                                    matter" in section 2(1)(e) is confined to part I. It has a reference and 
                                    connection with the process of dispute resolution. Its purpose is to identify the 
                                    Courts having supervisory control over the arbitration proceedings. Hence, it 
                                    refers to a Court which would essentially be a Court of the seat of the 
                                    arbitration process. In our opinion, the provision in section 2(1)(e) has to be 
                                    construed keeping in view the provisions in section 20 which give recognition 
                                    to party autonomy. Accepting the narrow construction as projected by the 
                                    learned counsel for the appellants would, in fact, render section 20 
                                    nugatory.……" 
                                </p>
                                
                                <p>
                                    It is settled law now, that once the seat has been agreed upon the said place 
                                    would have exclusive territorial jurisdiction for the purpose of Court. The 
                                    difficulty arises when the seat is not determined either by agreement or by the 
                                    arbitrator or the same is not clearly defined / worded under the contract.
                                </p>
                                
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                                <h3>
                                    <a href="#!">Apex Court in case of Union of India V/S Hardy Exploration and Production 
(India), AIR 2018 SC 4871 has held and observed thus; </a>
                                </h3>
                                
                                <p>
                                    "6…... In the absence of express agreement, there is a strong prima facie 
presumption that the parties intend the curial law to be the law of the seat of 
arbitration, i.e., the place at which the arbitration is to be conducted, on the 
ground that that is the country most closely connected with the 
proceedings….."
                                </p>
                                
                                <p>
                                    "33….. When a 'place' is agreed upon, it gets the status of seat which 
means the juridical seat. We have already noted that the term 'place' 
and 'seat' are used interchangeably. When only the term 'place' is 
stated for mentioned and no other condition is postulated, it is 
equivalent to 'seat' and that finalizes the facet of jurisdiction. But if a 
condition precedent is attached to the term place, the said condition 
has to be satisfied so that the place can become equivalent seat…" 
                                </p>
                                
                                
                                <p>
                                    The Apex Court of India again addressed this ongoing uncertainty, in the case of <b>BgS 
SGS Soma J.V. v. NHPC Ltd., 2019 (6) ARB LR 393(SC)</b> declared the previous 
judgment, Hardy Exploration,  AIR 2018 SC 4871, (on the similar issue) as 
incorrect. The Apex Court held that the place of arbitration is seat of arbitration as 
‘Lex Fori’ and declared the “Hardy Exploration” case to be incorrect as the term 
seat and venue were distinguished wrongly, observing thus;
                                </p>
                                
                                <p>
                                    “As we have seen hereinabove, the judgement of Cooke, J. in Roger Shashoua 
and Ors. v. Mukesh Sharma [2009] EWHC 957 (Comm) , was expressly 
approved by the 5-Judge Bench in BALCO (supra), as was stated by the 
Supreme Court of India in Roger Shashoua and Ors. v. Mukesh Sharma and 
Ors. (2017) 14 SCC 722 By failing to apply the Shashoua principle to the 
arbitration clause in question, the Three Judge Bench in Hardy Exploration 
and Production (India) Inc (supra) has not followed the law as to 
determination of a “juridical seat”, laid down by a Five Judge Bench of this 
Court in BALCO (supra). The result in Hardy Exploration and Production 
(India) Inc (supra) is <b>that a foreign award that would be delivered in Kuala 
Lumpur, would now be liable to be challenged in the Courts at Kuala 
Lumpur, and also be challenged in the courts in India,</b> under Section 34 of 
Part I of the Arbitration Act, 1996” 
                                </p>
                                
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                                <p>
                                    Thus Apex Court in <b>BGS SGS Soma J.V. v. NHPC Ltd</b> case declared that the 
Hardy Exploration was a bad law. It is curious to note that both the above judgments 
were passed by three-judge benches of Apex Court. Though we agree that ‘Hardy 
Exploration' did not lay down correct law, as mentioned in BGS SGS Soma case; 
however the ‘Hardy Exploration' being earlier judgement was binding; hence matter 
ought to have been referred to the larger bench to maintain judicial comity and 
discipline. The later judgment’s declaration of the earlier one being "no longer good 
law" may not lead to an overruling of said earlier judgement of <b>Hardy Exploration</b> ; 
albeit it may still be referred to a larger bench in some other matter by some other 
bench.
                                </p>
                                
                                
                                <h3>
                                    <a href="#!">Our Comments:</a>
                                </h3>
                                
                                <p>
                                    The words "seat" or "venue" do not find place in Arbitration and Conciliation Act, 
1996 (the Act) but have been coined in the decided cases, specially relating to 
International Arbitration. As far as definition of "Court" under section 2(1)(e)  is 
concerned; it stipulates a ‘Court’ having jurisdiction to decide the <b>‘questions forming 
the subject matter of the arbitration’</b>  as if subject matter of the suit. The words 
<b>"subject matter of the arbitration"</b> is of utmost importance and certainly should not 
be taken as ‘superfluous’. In other words it simply means that the Court which is 
competent to try particular subject/type of suit as Court and in case of monetary 
claim; having necessary pecuniary jurisdiction. The said definition does not include 
the aspect of "territorial jurisdiction"; because it would otherwise be in conflict with 
20(1) of the Act. Similarly the provisions of section 16 to 20 of civil Procedure Code 
cannot be and ought not be imported and read into sub-section (2) of section 20 of the 
Act; for it is self-contained code and refers only to ‘circumstances of the case’ 
including convenience of the parties for the purpose of determining the place of 
arbitration. In aforesaid context observations of Apex Court in case of <b>'Indus mobile 
distribution'</b> supra would be relevant as under; 
                                </p>
                                
                                <p>
                                     
"Under the Law of Arbitration, unlike the Code of Civil Procedure which 
applies to suits filed in courts, a reference to “seat” is a concept by which a 
neutral venue can be chosen by the parties to an arbitration clause. The 
neutral venue may not in the classical sense have jurisdiction – that is, no 
part of the cause of action may have arisen at the neutral venue and 
neither would any of the provisions of Section 16 to 21 of the CPC be 
attracted. In arbitration law however, as has been held above, the moment 
“seat” is determined, the fact that the seat is at Mumbai would vest 
Mumbai courts with exclusive jurisdiction for purposes of regulating 
arbitral proceedings arising out of the agreement between the parties..." 
                                </p>
                                
                                
                                <p>
                                    Taking a case that seat was not agreed upon or determined prior to impugned award; 
the question would be whether the 'Court' would have supervisory (Revisional) 
jurisdiction u/s 34 r/w sec.2 (1) (e) of the Act over the award passed and arbitral 
proceedings conducted by the learned arbitrator within its territorial jurisdiction; 
though no part of cause of action arose within its territorial jurisdiction. 
                                </p>
                                
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                                <p>
                                    1. In our considered view the ‘Court’ would have supervisory jurisdiction u/34 r/w 
sec.2(1)(e); for (a) at the place where arbitration was conducted; fixed consensually 
and also that the award has been passed at such place, (b) Section2(1)(e) 
unambiguously defines ‘Court’ as <b>Civil Court having 'subject matter jurisdiction'
 giving very wider meaning albeit excluding the concept of “territorial jurisdiction”
 of a civil Court or else it would infringe section 20(1) of the Act, as clearly held by 
Apex court in “Indus Mobile” case</b>
 . (c) Thus in case where "seat" has not been 
agreed upon/determined; there could be two supervisory concurrent jurisdictions
 ; one 
having territorial jurisdiction contemplated under section 15 to 20 of CPC, and 
second, the ‘court’ where arbitration takes place on the principles analogous to "Lex
fori" as clearly held in 'Balco'/ ‘
 BGS SGE Soma’ cases
 and <b>it is not necessary for the 
court to itself determine the ‘seat’ first for determining the 
supervisory/Revisional jurisdiction u/s 34.</b> In case of Application u/s 8 or 11(6), the 
considerations would be different while deciding the issue of “seat” and the classic 
principles of territorial jurisdiction/cause of action may apply unlike u/s 34 of the Act. 
As section 2(1)(e) does not contemplate ‘territorial jurisdiction’; it would be 
perversion to import such concept in said provision to determine supervisory 
jurisdiction u/s 34; which is undoubtedly akin to “Appellate/‘Revisional” jurisdiction. 
                                </p>
                                
                                <p>
                                    Even assuming for the sake of argument that the concept of territorial jurisdiction as 
understood u/s 15 to 20 of CPC could be read into section 2 (1)(e); still while deciding 
the “supervisory(Revisional) jurisdiction” u/s 34; the court must consider whether 
any case of "failure of justice" has been made out u/s 21 of CPC to oust the 
Revisional jurisdiction u/s 34 when it admittedly has "subject matter" jurisdiction. 
Unfortunately the Higher Courts in the county have adopted wrong way of  reading 
the ‘case laws’ i.e. in the exercise of analysing, there is tendency to interpret the 
judgements as if it were piece of statute at expense of  ignoring the statutory laws; 
giving rise to such a confused state of affairs. The case laws are appreciated and not 
interpreted. One has to confine to basic and fundamental aspects of Jurisdictions i.e. 
(i) ‘Subject jurisdiction’ which empowers the court to try matters of specific nature 
viz. Rent Act, Motor Accident, Industrial, Commercial disputes etc.,& (ii) pecuniary 
jurisdiction to exclusion of (iii) territorial jurisdiction/cause of action; when ‘seat’ has 
not been agreed upon or determined prior to impugned award. Thus one would be 
concerned with the “subject Jurisdiction” u/s 20 r/w 2(1) (e) of the Act, and not 
territorial jurisdiction u/s 20 CPC.Therefore  exclusivity of jurisdiction would not 
apply u/s 34 of the Act; since seat has not been determined.
                                </p>
                                
                                
                                <h5>
                                S. R. Singh & Co. 
                                </h5>
                                
                                <h6>
                                    Advocates
                                </h6>
                                
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