Court says arbitral tribunal could not shift the seat to New Delhi merely by recording it in the terms of reference and award, where contract gave exclusive jurisdiction to Visakhapatnam courts.
The Andhra Pradesh High Court has ruled that it has jurisdiction to hear a petition under Section 34 of the Arbitration and Conciliation Act, 1996, filed by Rashtriya Ispat Nigam Ltd. (RINL) challenging an arbitral award passed in an international commercial arbitration dispute with Danieli and C. Officine Meccaniche Spa, Italy, and others.
Justice Sri Balaji Medamalli held that the contractual clauses between the parties clearly conferred exclusive jurisdiction on the courts at Visakhapatnam. The court found that this contractual arrangement effectively fixed Visakhapatnam as the juridical seat of arbitration. It further held that the arbitral tribunal could not, in the absence of any request or mutual consent to change the seat, treat New Delhi as the seat merely because the terms of reference and award referred to it as such.
The dispute arose out of a 2009 contract relating to the construction of a structural mill. RINL argued that Article 18 of the agreement and Clause 34.2 of the General Conditions of Contract made it clear that all disputes were deemed to have arisen in Visakhapatnam and that the courts there alone had jurisdiction. The company maintained that the references to New Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Visakhapatnam were only venues for arbitration, not the seat.
The respondents, however, contended that the contract was a foreign contract governed by ICC Rules and that the terms of reference signed by the parties specifically recorded New Delhi as the seat of arbitration. They argued that RINL, having signed those terms and earlier participated in the proceedings, could not later deny New Delhi’s status as the seat.
Rejecting the respondents’ preliminary objection, the court held that Section 20 of the Arbitration Act permits parties to agree on the place of arbitration, and in the absence of such agreement the tribunal may determine it. But where the contract itself already fixes jurisdiction and indicates the seat, the tribunal has no occasion to alter it without a proper request or consent. The court said the tribunal’s recital in the terms of reference could not override the express contractual clause.
The court also noted that the respondents had earlier approached the same High Court under Section 9 of the Act for interim relief, which supported the view that the parties had treated Visakhapatnam as the forum with supervisory jurisdiction. Relying on Supreme Court precedents including BGS SGS Soma JV, BALCO, and Indus Mobile, the court reiterated that the seat of arbitration is akin to an exclusive jurisdiction clause.
Accordingly, the High Court held that the Section 34 petition is maintainable before it and directed that the main application and execution petitions be listed for further hearing.
Bottom Line :
Arbitration and Conciliation Act, 1996 - International commercial arbitration - Agreement conferred exclusive jurisdiction on Courts at Visakhapatnam and separately provided multiple cities only as venue of arbitration - Arbitral Tribunal could not, in absence of any request or consent to change seat, treat New Delhi as seat merely by recording so in Terms of Reference/award - Section 34 petition held maintainable before Andhra Pradesh High Court.
Statutory provision(s): Section 2(1)(e)(ii), Section 9, Section 20, Section 31(4), Section 34, Section 42, Arbitration and Conciliation Act, 1996
