The SC had referred Union of India v. Hardy Exploration and Production[1] to a three-judge bench of the SC to decide the basis and principles on which the ‘seat’ of the arbitration is to be determined when the arbitration agreement specifies the ‘venue’ for holding the arbitration sittings but not the ‘seat’. In the present case, the law governing the substantive contract was Indian law. The law governing the arbitration proceedings was the UNCITRAL Model Law. The venue of the arbitration proceedings was Kuala Lumpur. Article 20 of the UNCITRAL Model Law provides that the parties are free to agree on the ‘place’ of arbitration, failing which the arbitral tribunal shall determine the place of arbitration.

The three-judge bench of the SC, in its decision dated September 25, 2018, observed that when the ‘place’ is specified, and no other condition is attached to it, it is equivalent to ‘seat’ and that finalizes the issue of jurisdiction. However, if a condition is attached to the term ‘place’, the attached condition has to be satisfied for the ‘place’ to become equivalent to ‘seat’. The three-judge bench concluded that in this case neither the parties had chosen a juridical seat nor the tribunal had made an express determination of the ‘seat’ in the arbitral award. Therefore, the conditions attached to the term ‘place’ had not been satisfied. Reiterating the settled distinction between the ‘juridical seat’ and ‘venue’ of arbitration, the SC held that Kuala Lumpur could not be considered to be the ‘juridical seat’ merely because it was the venue and that the award was signed in Kuala Lumpur. In view of the above, the three-judge bench came to the conclusion that the courts in India have jurisdiction to hear the application for setting aside under Section 34 under the Arbitration and Conciliation Act, 1996 (‘A&C Act’).

[1] Civil Appeal No. 4628 of 2018.