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Arbitration clauses invariably find themselves buried in voluminous agreements where the intention of the parties is just to move forward with their business initiatives. When parties agree to have their disputes resolved by arbitration, their intention is to ensure they do not find themselves litigating in municipal courts.

While attention to detail in the agreement is often paid to the obligations, rights, duties and liabilities of the parties, the dispute resolution clause in international contract execution tends to suffer. This can lead to a pathological arbitration clause where some error has crept in leading to confusion.

Arbitration trifecta: seat, venue, place

The holy trifecta when it comes to an arbitration are the “seat”, “venue” and “place” of the arbitration. This trifecta is expected to capture the court that would have supervision over the arbitration proceeding, the location where these arbitration proceedings are to be conducted, and the legal system that would oversee the arbitration process.

A failure to correctly name, identify and determine this trifecta would lead to a catastrophic delay in the commencement of arbitration.

The Indian Arbitration and Conciliation Act, 1996, does not use the words “seat” or “venue”, but the term “place”.

BALCO clarifies seat versus venue

The Supreme Court of India in its earliest instance held how the word place used in the act would mean seat and also venue. In this early case of BALCO v Kaiser Aluminium Technical Services Inc (2012), the Supreme Court has laid down a clear principle that the seat is a fixed place that is incapable of being varied.

But the venue, being a place of choice and convenience, would always be capable of being moved, either by the consent of the parties and/or the tribunal. However, any number of variations of the venue would not alter the seat of the arbitration.

Therefore, agreements that are executed by and between parties in different jurisdictions would therefore benefit if there is a clear enunciation of where the seat is expected to be, and which place constitutes the venue. This is also to ensure that parties are aware as to which court constitutes the “seat” court without any ambiguity.

However, as experience and precedent has shown us, the lack of the determination of a seat often leads to unforeseen delays in the commencement of arbitration proceedings. The very thing that parties sought to avoid by way of an arbitration – namely litigation in municipal courts – becomes a thing of reality and unavoidability.

Since the parties’ very intention was to stay away from municipal courts, this militates against the very idea of an international dispute resolution clause with a neutral court as a forum for disputes.

Supreme court warns on seats

From the time of BALCO up to the most recent Supreme Court judgments, in Arif Azim Co Ltd v Micromax Informatics FZE (2025) and Disortho SAS v Merill Life Sciences (2026), courts have grappled with cross-border agreements that do not set with clarity as to where the seat is located.

Additionally contentious is whether a particular determination by the parties is a determination of a seat or a venue, compelling municipal courts to step in and understand the intention of the parties and interpret it.

As recently as February 2026, the Supreme Court has strongly condemned that “confusing”, “ambiguous” and “shoddy” arbitration clauses in commercial contracts would amount to professional misconduct.

These municipal court proceedings would inevitably delay commencement of the arbitration proceedings. More importantly, these court proceedings also require the courts to step into the shoes of contracting parties and interpret what they thought they had consented to.

Clear arbitration clauses reduce delays

The simple remedy is to ensure that multijurisdictional agreements are drafted with clear and concise clauses where the seat, venue and place is determined without any ambiguity, such that the involvement of parties in a municipal court is minimal, if not all together eliminated.

This process could be aided with embracing more institutionalised arbitration mechanisms over ad hoc mechanisms.

Institutionalised arbitrations provide for clear determinations of a seat and venue in the clauses framed by these institutions. This would altogether, if not greatly, reduce delays in commencement of the arbitration process.

Thriyambak Kannan is a partner at Khaitan & Co