State's Prolonged Acquiescence Leads to Waiver of Right to Object; Writ Petition Dismissed
In a significant ruling, the Jharkhand High Court has dismissed a writ petition filed by the Road Construction Department, Government of Jharkhand, challenging the fixation of Delhi as the seat of arbitration by the Arbitral Tribunal in its procedural order dated 22nd September 2023. The judgment, delivered by Mr. Ananda Sen, J., emphasized the principle of waiver under Section 4 of the Arbitration and Conciliation Act, 1996, and upheld the tribunal's decision based on the prolonged acquiescence of the petitioner.
The case originated from an agreement executed on 22nd September 2010 between the Road Construction Department and Ramky Infrastructure Limited for the rehabilitation and upgradation of a section of the Jharkhand State Road Project. The agreement specified the venue of arbitration but did not determine a seat. In a procedural order, the Arbitral Tribunal fixed Delhi as the seat of arbitration, a decision that remained unchallenged by the petitioner for over three years.
The petitioner's attempt to contest the seat's fixation arose only after an application under Section 29A for extending the tribunal's mandate was filed in the Delhi High Court, which held jurisdiction based on the established seat of arbitration. The Jharkhand High Court noted that the petitioner accepted the order extending the arbitral mandate and did not appeal against the decision regarding the seat at the Delhi High Court.
The court reiterated that the seat of arbitration holds jurisdictional significance, determining procedural law and supervisory jurisdiction. It held that prolonged silence on the part of the petitioner amounted to a waiver of the right to object, as per Section 4 of the Act.
The judgment also clarified that writ jurisdiction cannot be invoked to re-examine the merits of a procedural decision made by an arbitral tribunal under Section 16 of the Act. Consequently, the writ petition was dismissed, affirming the procedural order of the Arbitral Tribunal.
Bottom Line :
Arbitration - Seat of arbitration determined by Arbitral Tribunal - Parties cannot challenge fixation of seat after prolonged acquiescence - Waiver of right to object under Section 4 of Arbitration and Conciliation Act, 1996.
Statutory provision(s): Section 4, Section 16, Section 20, Section 29A of the Arbitration and Conciliation Act, 1996
