In M/s Viva Infraventure Pvt Ltd v New Okhla Industrial Development Authority, Delhi High Court reaffirmed that an exclusive jurisdiction clause in an agreement takes precedence over a procedural order passed by an arbitral tribunal when the parties have not mutually consented to change the seat of arbitration.
Brief facts
The petitioner was awarded a project for constructing a 6-metre-wide road in Noida and Greater Noida in Uttar Pradesh by the respondent which led to the execution of a contract. Following a dispute, the petitioner approached the Allahabad High Court under section 11 of the Arbitration & Conciliation Act, 1996, and Justice GS Singhvi (Retd) was appointed as the sole arbitrator.
Clause 32 of the contract conferred exclusive jurisdiction to the courts in Gautam Budh Nagar, Uttar Pradesh. However, the arbitrator, in the first procedural order fixed New Delhi as the seat of arbitration without the respondent’s consent raising a jurisdictional issue. The key issue was whether the arbitrator’s procedural order could override the contract’s exclusive jurisdiction clause.
Court analysis
The court relied on Mankastu Impex (P) Ltd v Airvisual Ltd, and CARS24 Services (P) Ltd v Cyber Approach Workspace LLP, to reiterate that an exclusive jurisdiction clause in an arbitration agreement determines the “juridical seat” under section 20(1) of the arbitration act.
The court held that clause 32 of the contract conferred exclusive jurisdiction to Gautam Budh Nagar courts for enforcing the arbitration clause, thereby excluding courts in Delhi. It also observed that while arbitrators may choose the venue for hearings under section 20(3), the legal seat of arbitration, which determines supervisory jurisdiction, must be based on party consent.
The court further cited Precitech Enclosures Systems Pvt Ltd v Rudrapur Precision Industries & Anr, which confirmed that an exclusive jurisdiction clause prevails over any conflicting indication of seat unless both parties expressly agree otherwise.
Since the respondent had not consented to the arbitrator’s order fixing New Delhi as the seat and had even filed for clarification, the court held that such determination had no legal effect. At best, New Delhi could only be considered a venue, not the juridical seat.
Conclusion
The judgment reinforced the importance of party autonomy and the binding nature of exclusive jurisdiction clauses in determining the seat of arbitration. It distinguishes between “seat” and “venue”, clarifying that the arbitrator’s procedural discretion under section 20(3) cannot override an exclusive jurisdiction clause in the absence of express and mutual consent. The decision strengthens the position that the supervisory jurisdiction remains with the court expressly agreed on by the parties.
The dispute digest is compiled by Numen Law Offices, a multidisciplinary law firm based in New Delhi & Mumbai. The authors can be contacted at support@numenlaw.com. Readers should not act on the basis of this information without seeking professional legal advice.
