‘Seat’ & ‘Venue’ In Domestic Arbitration : A Critical Look At SC Decision In Brahmani River Case

The interference by courts in arbitration and arbitral awards has been widely discussed and debated across the globe. In India, the legislature as well as the Supreme Court has come out in complete support of this alternative dispute resolution mechanism. Whether it is the amendments brought to the Arbitration Act[1] or the recent line of judgments rendered by the Supreme Court, both clearly are aimed at projecting India to be an arbitration friendly or pro arbitration jurisdiction with minimal interference by courts.

Stemming from the above comes the question of – which court possesses jurisdiction in arbitration cases?

Insofar as international commercial arbitrations are concerned, court proceedings arising out of and in connection with the conduct of Arbitration are generally vested with the Courts of the seat of arbitration, including any challenge to the arbitral award. Even after such a well-established doctrine in place, in case after case we see that the jurisdiction of a particular court becomes as hotly contested as the merits of the dispute which caused the parties to arbitrate.

A five-judge bench of the Supreme Court in BALCO[2] was seized with the issue as to whether Part I of the Arbitration Act would apply to foreign seated arbitrations. Answering the question, the Court held that provisions contained in Part I of the Arbitration Act will not apply to cases where parties has opted for an arbitral seat outside India. Resultantly, Indian Courts cannot exercise jurisdiction in a foreign seated arbitration, except for certain exceptions brought in by way of 2015 amendments[3].

While it can be said that BALCO has more or less, put to rest the controversy surrounding the designation of seat and its bearing on international commercial arbitration. The said judgment has also paved the way for concept of seat to command centre stage in domestic arbitrations, despite a legislative intent to the contrary.

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