Citation: Civil Appeal No. 4628 of 2018
Court: Supreme Court of India
Coram: Dipak Misra
Date: September 25, 2018
Overview: In this case, the Supreme Court of India was presented with the question of which law would be applicable to post-award arbitration proceedings when only the venue and not the seat had been agreed upon by the parties. The Court here, in order to determine the seat, interpreted the arbitration agreement as well as the references made to the UNCITRAL Model Law on International Commercial Arbitration.
When the arbitration agreement specifies the “venue” for holding the arbitration but does not specify the “seat”, then on what basis do the parties have to decide the “seat”?
A contractual relationship existed between the two parties which was governed by a production sharing contract (PSC). Due to the arbitration clause mentioned in the PSC, when a dispute arose, it was referred to for arbitration. The arbitration clause however, only mentioned the venue of arbitration as Kuala Lumpur unless specified by the parties and based on this, an award was passed by the tribunal in favour of Hardy. The award was challenged under Section 34 and was later referred to the Supreme Court.
The Court stated that the words venue and seat could not be used interchangeably and a venue could only classify as the seat of arbitration if there were other factors added to it as a concomitant. Moreover, if it was the intention of the parties realised through the arbitration clause by the choice of venue and other factors to have the seat outside India, then Part I would be excluded.
Due to the arbitration clause making references to the UNCITRAL Model Law, the Court also looked into the relevant provisions which essentially states that if the place of arbitration is not determined by the parties, then the tribunal can determine the same. In this case, the Supreme Court observed that even though the award was signed in Kuala Lumpur, there was no actual or express determination by the tribunal for Kuala Lumpur to serve as the seat.
In this case, it was reiterated by the Court that the ability to expressly decide the seat of arbitration lies with the party and in the absence of this decision, it can be deduced from the arbitration agreement and concomitant factors. Moreover, the seat of arbitration can also be determined by the UNCITRAL Model Law if there has been a reference made to it.