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Seat, Place And Venue: How Do We Differ?

As an alternative to litigation, arbitration was introduced, as the parties have the autonomy, to select the procedural law that will govern their agreement, the place of their legal proceedings, and the court they will go to in the event of a conflict. The parties reach a consensus on the substantive law, lex arbitri. "Lex arbitri" essentially relates to the law of the arbitration's seat.
  • Place:
    The definition of seat or venue of arbitration is not mentioned anywhere in the Arbitration & Conciliation Act, 1996, but the 'place' of arbitration is defined under Section 20 of the Act, which reads as follows: "The parties at their own discretion can decide upon the place of arbitration, but where the parties have failed in deciding the place of arbitration, in such case the arbitral tribunal having considered the circumstances of the case and upon the convenience decides upon the place of arbitration for the parties." In the UNCITRAL model, the place of the arbitration is crucial for enforcing a UNCITRAL award.
  • Venue:
    The "venue" is the place where the arbitration processes are conducted, including the hearing of witnesses, experts, or parties as well as the examination of goods and premises. While the seat will be the key determining element of the curial law applicable to the proceedings, the venue/place just refers to the physical site of the arbitration procedures. Subject to a combined interpretation of the entire agreement/clause and the presence of any other clearly opposite indications, the venue/place shall be deemed to be the seat of arbitration in the lack of any particular mention or agreement regarding the seat of the arbitration.
  • Seat:
    The law that governs the arbitration, including its procedural components, is determined by the arbitration's seat. Whenever the parties choose an applicable law as the one that regulates the arbitration agreement, they are referring to the legal seat of the arbitration. The place or venue of the hearings or other proceedings related to the arbitration may not necessarily be the same as the Seat of Arbitration. Because its courts have supervisory power over the arbitral procedure, the Seat of Arbitration is extremely significant. The legislation controlling the arbitration process, and frequently more crucially, the procedure and rights pertaining to the execution of the arbitration result, are determined by the choice of the seat.
As stated by Justice Siddhartha. "The term "seat" is of utmost importance as it connotes the situs of arbitration. The term "venue" is often confused with the term "seat" but it is more a place often chosen as convenient location by the parties to carry out arbitration proceedings but should not be confused with "seat". The term "seat" carries more weight than "venue" or "place".

"According to the Shashoua[1] English judgment, the arbitration seat will have exclusive jurisdiction over any legal actions that result from the arbitration. This established the substantial contrary indicia test, according to which a clause specifying a place for arbitration means that place will serve as the arbitration's seat and, in the absence of any significant contrary indicia, will serve as the lex fori. A Division Bench of the Supreme Court of India upheld this view in Roger Shashoua & Ors v. Mukesh Sharma & Ors[2].

Comparison between Seat and Venue of Arbitration:
  1. The place of the arbitration hearing need not be the same as the seat of the arbitration. Location and even if hearings occur throughout the Arbitration in several different nations, the selected Seat of Arbitration will continue to be unaffected regardless of the geographic location of the proceedings.
  2. In Enercon (India) Ltd and Ors v. Enercon Gmbh and Anr[3], a dispute developed over the non-delivery of supplies under an Intellectual Property License Agreement ("IPLA") with an arbitration provision. The case was heard by the Hon. Supreme Court of India.
  3. A series of legal actions were brought both in India and England, asking for declarations about the legality of the arbitration clause and for anti-suit injunctions. Although London was not the seat of the arbitration, the Hon'ble Bombay High Court had determined that the English Courts would have concurrent jurisdiction because London was the place of the arbitration.
  4. The prestigious Indian Supreme Court ruled that "Although London was named as the venue, Indian law was chosen to govern the substantive contract, the arbitration agreement, and the arbitration itself. India was the closest and most real connection, so the express mention in the arbitration clause that London was the venue of the arbitration could not lead to the inference that London was to be the Seat. Indian Courts would have sole supervisory authority once the seat was there, and English Courts could not exercise concurrent jurisdiction."
Judicial pronouncements regarding Seat, Venue & Place of Arbitration:
  1. Bharat Aluminium Co vs. Kaiser Aluminium Technical Service Inc.[4]:
    1. The Supreme Court of India (SC) addressed the issue of 'seat' and 'venue' of the arbitration for the first time in this decision.
    2. This judgement made it clear that the seat, once decided, takes on a persistent nature that defines the arbitration's authority and the court that would have ultimate supervisory jurisdiction over and the venue, in comparison, is portrayed as temporary and just there for administrative convenience.
    3. In its decision in this case, the Supreme Court stated that choosing a different nation as the seat for the arbitration invariably implies consenting to the application of that nation's laws governing the conduct and supervision of arbitrations to the proceedings.
    4. Even if the contract specifies that the Indian Arbitration Act shall govern the arbitration proceedings, Indian courts cannot exercise supervisory jurisdiction over the arbitration or the award if it is determined or held that the arbitration agreement provides for a seat or place of arbitration outside of India.
  2. Union of India (UOI) vs. Hardy Exploration & Production (India) Inc. [5]
    1. In this case, the arbitrator held a meeting/sitting in Kuala Lumpur to sign the verdict; it did not choose the place of the arbitration. This does not refer to the place of arbitration in the legal sense.
    2. The court concluded that the sittings at different locations were only for venue and were not in any way regarded as the seat of arbitration. Observations made by the Supreme Court in Hardy Exploration that are pertinent.
    3. Context must be taken into account when using the word "decision." When a "place" is chosen, it acquires the status of "seat," which refers to the legal seat. As we've already mentioned, the words "place" and "seat" are frequently used interchangeably.
    4. When the word "place" is the only one used and no other conditions are proposed, it is identical to the word "seat," which completes the aspect of jurisdiction. But if the term "place" carries a condition prior, that condition must be met before the place may be considered comparable to a seat. In this instance, any of the two different and disjunct parties must be met in order for a place to exist. It is clear that there is no consensus.

When the arbitration agreement only specifies the "venue" for holding the arbitration sittings and not the "seat," the SC referred Union of India v. Hardy Exploration and Production[6] to a three-judge bench of the SC to decide the basis and principles on which the "seat" of the arbitration is to be determined. The substantive contract in the current instance was governed by Indian law.

The UNCITRAL Model Legislation served as the guiding law for the arbitration procedures. The arbitration hearings were held in Kuala Lumpur and in its judgement dated September 25, 2018, the three-judge bench of the SC stated that when the "place" is indicated and no other conditions are connected to it, it is identical to the "seat," which resolves the jurisdictional dispute. However, if the term "place" has a condition linked to it, that condition must be met in order for the "place" to become equal to the "seat."

To conclude this debate or argument pertaining to the confusion between seat/venue and place of arbitration that there persists, a certain conflict regarding the place, seat, and venue of arbitration proceedings. Here we can infer that, also, lack of proper mention in arbitration agreements/clauses is one of the apparent causes of the same, as is evident from the aforementioned judicial precedents. There must be absolute assurance that the arbitration agreements/clauses are impenetrable and that there are no room for any interpretational loopholes because there are significant sums of money and commercial transactions involved, as well as the effectiveness of continued business.

The arbitration agreements or clauses must clearly state the seat, place, venue, and the laws that will apply to the proceedings and each term must also be defined in detail. The Arbitration and Conciliation Act of 1996, the Arbitration and Conciliation (Amendment) Act of 2015, and the Arbitration and Conciliation (Amendment) Act of 2019 all lack definitions for any of these words, which only makes the already dire situation in the arbitration sector worse.

If the legislation in the 1996 act, or at least in the 2015 act, had strictly established any of the aforementioned terms, much of the confusion surrounding this rather heated debate would have been avoided, and many cases and disputes would not have ended up in the limbo that has dogged the arbitration industry for years on end.

  • (2009) EWHC 957
  • (2017) 14 SCC 722
  • SLP (C) No. 10924 of 2013
  • (2012) 9 SCC 552
  • (2019) 13 SCC 472
  • Civil Appeal No. 4628 of 2018
Written By:
  1. Priyam Jesani (Institute of Law, Nirma University)
  2. Manind Hinge (SLS, Noida)

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