Where the parties have chosen a court which has jurisdiction out of two or more competent courts having jurisdiction, only such court will have the jurisdiction to entertain a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996

The Apex Courts also reiterated Section 20 of the Arbitration and Conciliation Act parties party autonomy and the parties are free to agree on the place of arbitration.

The above ratio was passed in the matter of Brahmani River Pellets Limited vs. Kamachi Industries in Civil Appeal No. 5850 2019 (Arising out of SLP(C) No.15672 of 2019) dated 25.07.2019

Challenge

The question for consideration before the Apex Court was whether the Madras High Court could exercise jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996 despite the fact that the agreement contained a clause that venue of arbitration shall be Bhubaneswar. The Madras High Court vide impugned order appointed an arbitrator by holding that mere designation of “Seat” by parties does not oust the jurisdiction of other courts other than at the Seat of arbitration. The High Court held that in absence of any express clause excluding jurisdiction of other courts, both the Madras High Court and the Orissa High Court will have jurisdiction over the arbitration proceedings.

The appellant submitted that when the parties have agreed for a place/venue for arbitration, it gets the status of Seat which is the juridical Seat and therefore only, the Orissa High Court will have the jurisdiction under the Act. It was further submitted that in domestic arbitration, unless the parties tie themselves to an exclusive jurisdiction of the court in the agreement, mere mention of “venue” as a place of arbitration will not confer exclusive jurisdiction upon that court. It was urged that apart from mere mention of “venue” as place of arbitration, there should be other concomitant circumstances like use of words “alone”, “exclusive”, “only” etc. or other circumstances, then only the jurisdiction of the other court which otherwise would have had jurisdiction would stand excluded.

Held

The Apex Court held that as per Section 20 of the Act, parties are free to agree on the place of arbitration. Party autonomy has to be construed in the context of parties choosing a court which has jurisdiction out of two or more competent courts having jurisdiction therefore, where the contract specifies the jurisdiction of the court at a particular place, only such court will have the jurisdiction to deal with the matter and parties can be said to have intended to exclude all other courts. It was noted that in the present case, the parties had agreed that the “venue” of arbitration shall be at Bhubaneswar. Considering the agreement of the parties having Bhubaneswar as the venue of arbitration, the intention of the parties was to exclude all other courts. The Court further clarified that non-use of words like “exclusive jurisdiction”, “only”, “exclusive”, “alone” is not decisive and does not make any material difference. The Court ultimately held that when the parties have agreed to have the “venue” of arbitration at Bhubaneswar, the Madras High Court erred in assuming the jurisdiction under Section 11(6) of the Act. Therefore only Orissa High Court will have the jurisdiction to entertain the petition filed under Section 11(6) of the Act, the impugned order was set aside.