Clauses name Delhi and Goa: Goa exclusive jurisdiction and Goa hearings make Goa the seat; Delhi High Court could not appoint arbitrator

The Court began by considering decisions that distinguish the seat of arbitration from the venue for arbitral proceedings. Indus Mobile held that a seat is akin to an exclusive jurisdiction clause, and once the seat is fixed the courts there have exclusive jurisdiction to regulate the arbitral proceedings. Swastik Gases, Brahmani River Pellets and Activitas Management show that a clause giving jurisdiction to courts at one place can exclude all other courts, even without words such as exclusive or only. In Activitas, an exclusive jurisdiction clause in a governing law clause was read as relating to arbitration and the seat was held to be Mumbai. The Court said parties may choose their own place for arbitration and may confer exclusive jurisdiction on courts at a particular place, whatever part of the cause of action arose within it.

A question arises, the Court said, when an agreement names a place for arbitration but gives exclusive jurisdiction to courts at another place. It applied the three-condition test of BGS SGS SOMA, affirmed by a three-Judge Bench in Arif Azim: the clause should designate only one place, the proceedings must be anchored to that place alone without scope of change, and there must be no significant contrary indicia. Here Delhi was not the only place specified, since both Delhi and Goa were named for holding arbitration. So the place named as venue did not automatically become the seat, and Clause 38 could be used to find the seat. Clause 38 gave exclusive jurisdiction to courts at Goa and Clause 32.5 said proceedings would be held in Goa, which showed that the parties agreed on Goa as the juridical seat, with Delhi as venue only.

The Court rejected the argument that the arbitration clause alone fixes the seat. The clause itself named two places. Relying on Mankastu Impex v. Airvisual, it noted that the expression place of arbitration cannot by itself show that the parties intended that place to be the seat, and that intention must be found from other clauses and the conduct of the parties. Clauses 32.4 and 32.5 appeared to conflict, but read harmoniously to ensure that none becomes redundant, and together with Clause 38, they pointed to Goa as the seat.

The decisions cited for the respondent were distinguished. Sasan Power, that an arbitration agreement is independent, was not disputed, but here the clause named two places and one had been chosen for exclusive court jurisdiction, so Clause 38 could not be ignored. Cable Corporation dealt with a clause naming a single place. In Sunil Kumar Chandra the arbitration clause was not extracted and it was unclear whether the other place was for arbitration. Ramkishorelal only states the general rule that an instrument is construed by finding the parties' intention from all its words. Shree Bhowani Cotton Mills held that an exclusive jurisdiction clause does not nullify an arbitration agreement, which was not in issue. Lyrus Life Sciences concerned a clause that named a single location.

Reading the Agreement as a whole, the Court found that the juridical seat was Goa and that the Delhi High Court lacked jurisdiction to entertain the Section 11(6) application. The appeal was allowed and the High Court's order was set aside. The parties are at liberty to take recourse to appropriate proceedings before the jurisdictional High Court. Pending applications stand disposed of.