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Summary of the Payment and Settlement System Act, 2007
by: Adv. Kishan Dutt Kalaskar 2023-02-28 18:47:16
by: Adv. Kishan Dutt Kalaskar 2023-02-28 18:47:16
by: Adv. Kishan Dutt Kalaskar 2023-02-28 18:10:41
by: Adv. Kishan Dutt Kalaskar 2023-02-03 22:32:13
by: Admin 2023-02-01 16:45:35
by: Admin 2023-01-30 17:32:25
by: Admin 2023-01-30 17:16:37
Summary of the Payment and Settlement System Act, 2007
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Procedures involved in a Criminal Trial
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Death Certificate of a missing Person
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Highlight of important Dishonour of Cheque case laws in 2020
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Medical Negligence in India
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Rafale Deal And All About The Controversy
By: Adv. Latha Anand
Date:26 November 2021
Others
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Views:58479
Likes:0Rapid globalisation and an increase in multinational activities have led to an increase in commercial disputes. As a result, there is a pressing need for a fast and effective system for resolving conflicts. This would help to understand why international commercial arbitration has become so popular. Arbitration is a private process for resolving a contract dispute between the parties without the involvement of a court. The arbitrator is the person who assists in the resolution of the dispute. Arbitration is a flexible and mutually agreed-upon method of resolving disputes between contracting parties by referring the disagreement to a third party. It is a form of alternative dispute resolution that helps to relieve the strain on the courts. Arbitration is intended to provide a faster alternative to the courts when it comes to resolving disputes.
Concept of seat and venue
Both the terms 'Seat' and 'Venue' are significant in any arbitration case since they not only identify where the arbitration will take place, but they also determine the supervisory jurisdiction of courts and the curial law (lex arbitri) that will govern it. These terms are interlinked but cannot used interchangeably and poorly drafted arbitration agreements often fail to demonstrate the actual seat and venue of arbitration.
This inevitably leads to conflict and confusion while determining the actual seat of arbitration. The 'seat' of arbitration is the 'situs' of arbitration, that is, the location of the arbitration. The seat of arbitration determines the arbitration's curial law or procedural law, as well as which court(s) will have supervisory authority over the arbitration. For example, unless otherwise agreed, an arbitration hearing held in Mumbai shall be governed by the Arbitration and Conciliation Act, 1996, and any application challenging an arbitrator's award or decision (Sections 34 and 37) will be heard by the Bombay High Court. The idea of a seat is more important in international arbitrations since it serves as a marker for both curial and supervisory jurisdiction.
The 'Venue' of arbitration, on the other hand, only specifies the geographical location where the arbitration is held and has nothing to do with curial law or judicial jurisdiction. Parties are permitted to agree on the location of arbitration under Section 20 of the Arbitration and Conciliation Act, 1996. The term venue has no bearing on the dispute's curial law or substantive law.
Bharat Aluminium Co v. Kaiser Aluminium Technical (2012) established a distinction between the seat of arbitration and the location of arbitration. The Supreme Court declared unequivocally that when parties choose a country as the site of arbitration, they are knowingly accepting the laws of that country. The procedures shall be governed by the laws of that county governing the conduct and monitoring of arbitration. The Supreme Court also stated in Enercon (India) Limited and Ors. v. Enercon GMBH and Anr 2014 that the location of the seat of Arbitration would determine the courts having exclusive jurisdiction to monitor the arbitration procedures.
Neither the Arbitration Act of 1940 nor the Arbitration and Conciliation Act of 1996 ("Act") defines the terms "seat" and "venue." The term 'Place of Arbitration' is defined in Section 20 of the Act and is used interchangeably with the terms 'Seat of Arbitration' and 'Venue of Arbitration.' Despite the Law Commission's recommendation in the 2015 Amendment Act to assign distinct definitions for seat and venue, such ideas did not result in actual modifications. In the absence of a clear statutory framework, the law has been decided through a series of judicial decisions, some of which are contradictory.
"Seat" and "Venue" are two separate and distinct notions. Arbitration agreements that are poorly written fail to specify the real seat and venue of arbitration, and these phrases are frequently used interchangeably. When defining the actual seat of arbitration, this invariably leads to controversy and ambiguity.
Role of Judiciary
Courts have developed numerous criteria overtime to unravel the web and determine the real seat of arbitration in such ill-drafted contracts. However, these ideas have frequently been conflicting, adding to the uncertainty. Discussed below are some of the important judgments of the SC to enunciate the principles for determining the seat of arbitration.
However, there appeared to be grounds for the dispute in 2018, when it was discovered that the Supreme Court had diverged from the Shashoua Principle, which had been accepted by the same court in BALCO. In Union of India v. Hardy Exploration and Production (India) Inc., a three-judge panel was asked to decide whether the decision in Sumitomo Heavy Industries Ltd. v. ONGC Ltd. & Ors. will affect the juridical seat theory. The Court returned a negative response to the inquiry. Following its response to such a query, the Court proceeded to examine and select the arbitration seat. The arbitration provision in the Agreement specified Kuala Lumpur as the arbitration venue and the UNCITRAL Model Law on International Commercial Arbitration as the curial law. Kuala Lumpur is not the seat of arbitration, according to the Supreme Court. The Court ruled that the term "place" cannot be used to describe a seat. A venue does not become a seat by default. It necessitates a good action and something associated with it.
Similarly, when one of the above conditions is met, a location becomes a seat. It does not automatically gain the status of a seat. The Court came to the conclusion that a venue could only become an arbitration seat if something else was added to it concurrently. The Court's decision is clearly at odds with the Shashoua Principle, which was upheld by the same court in BALCO.
Conclusion
The notions of Seat and Venue have sparked a lot of debate in the courts and led to substantial judicial discourse. The issue relating to the exclusive jurisdiction of courts at the seat has finally been put to rest by BGS-SGS Soma (supra). This was a positive step taken by the Supreme Court to correct the confusion created by BALCO (supra) and such similar judgements. As pointed out in BGS-SGS Soma (supra), the interpretation of BALCO (supra) followed in Antrix Corporation can lead to absurd consequences, e.g. where a contract is performed across various states, a party can file proceeding in some remote district in Uttarakhand even though the Agreement states the seat to be New Delhi or Mumbai. Thus, it is undeniable that the seat of arbitration is far more important than the arbitration's location or venue, and it is also true that the uncertainty in this regard could be used by obstinate parties to sabotage the arbitral process by employing dilatory tactics in an attempt to avoid the jurisdiction of the seat's courts.
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