Hon’ble Justice Surya Kant at ICA London[1]

I. Introduction

At the end of the London Arbitration Week 2026 and the ICA event at London it is apposite to reflect on an important aspect of arbitration that has plagued the eco system particularly in India, related to speedy arbitration.

In numerous judgments culminating in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552, the basic principles governing the construction of arbitration agreements have been authoritatively laid down in India. These principles, informed by leading decisions in foreign jurisdictions, emphasise the necessity of clarity in drafting arbitration clauses—particularly with respect to the designation of the seat of arbitration, the applicable law governing the arbitration agreement, and the curial law governing the arbitral proceedings.

Notwithstanding this settled jurisprudence, arbitration clauses in commercial agreements continue to suffer from imprecise and inconsistent drafting. Essential elements such as the “seat of arbitration,” “place or venue of arbitration,” and governing law are often ambiguously expressed, reflecting an absence of consensus ad idem on material terms. This lack of clarity gives rise to jurisdictional disputes at the very threshold, often resulting in parallel proceedings across multiple jurisdictions and conflicting judicial determinations.

This article argues that while courts have developed doctrinal tools to salvage such defective clauses, that ordinarily ought to be declared as vague and indefinite, the process is costly and time-consuming, often undermining the very efficiency arbitration seeks to achieve. In this context, it proposes that mediation—now statutorily recognised under the Mediation Act, 2023—can serve as an effective pre-arbitral mechanism to resolve disputes concerning the seat of arbitration and related jurisdictional issues.

II. The Problem of Ambiguity in Arbitration Clauses

Ambiguity in arbitration agreements has far-reaching consequences. Under the Arbitration and Conciliation Act, 1996, the “seat” of arbitration determines the juridical home of the arbitration and, consequently, the supervisory jurisdiction of courts (Sections 2(1)(e) and 20). The distinction between “seat” and “venue,” although doctrinally established, continues to generate confusion in practice. The Scheme of the Arbitration Act postulates minimum judicial interference in the arbitration process.

Poorly negotiated and drafted clauses often blur this distinction, leading parties to initiate proceedings in different jurisdictions. This results in applications under Sections 9, 11, and 34 or akin to them being filed before competing forums, accompanied by anti-suit or anti-arbitration injunctions. The outcome is multiplicity of proceedings—the very mischief that arbitration is intended to avoid. The Hon’ble Chief Justice at the 4^th edition of the ICA: India- UK Economic Partnership event stated:

This issue has troubled courts across jurisdictions (see Sul America Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] 1 Lloyd’s Rep 275; Anupam Mittal v. Westbridge [2023] 1 SLR 349; BCY v. BCZ [2017] 3 SLR 357). A recent illustration is MSA Global LLC (Oman) v. Engineering Projects (India) Ltd [2025] SGHC 199, where conflicting interpretations across jurisdictions have led to prolonged and costly litigation.

III. Judicial Responses: Salvaging the Arbitration Agreement

Faced with such ambiguities, courts in India and other prominent foreign jurisdictions have for long adopted a pro-arbitration approach, seeking to preserve arbitration agreements by employing interpretative techniques. While this approach promotes the enforceability of arbitration clauses, it often requires extensive judicial intervention and ingenuity, thereby delaying the commencement of arbitration. Some examples of the issues faced by the Courts are recounted below.

(A) Mankastu Impex: Reconciling Inconsistent Clauses

In Mankastu Impex (P) Ltd. v. Airvisual Ltd., (2020) 5 SCC 399, the arbitration clause provided that the agreement was governed by Indian law and conferred jurisdiction upon courts in New Delhi, while simultaneously stipulating that arbitration would be administered in Hong Kong with the “place of arbitration” being Hong Kong.

The clause further permitted parties to seek interim relief from “courts having jurisdiction,” thereby adding another layer of ambiguity. The central issue was whether New Delhi was the juridical seat or whether Hong Kong was both the venue and the seat.

The Supreme Court held that Hong Kong was the seat of arbitration. In doing so, it effectively harmonised internally inconsistent provisions, assigning primacy to the designation of Hong Kong as the place of arbitration. This decision underscores the Court’s willingness to read coherence into a clause that was, on its face, contradictory.

(B) Roger Shashoua: The Dilution of the Closest Connection Test

In Roger Shashoua v. Mukesh Sharma, (2017) 14 SCC 722, the arbitration clause provided for ICC Rules with London as the venue of arbitration. It was argued that the agreement had its closest and most real connection with India, relying on the factors considered in NTPC v. Singer (1992) 3 SCC 551.

The Supreme Court, however, held that London was the seat of arbitration, notwithstanding the absence of an explicit designation and despite the underlying transaction having stronger factual links to India.

The decision marks a significant shift, effectively diluting the “closest connection test” in favour of a presumption that the designated venue may, in appropriate cases, be treated as the seat.

(C) Arif Azim: Forum Conveniens and Reaffirmation of Closest Connection test

In Arif Azim Co. Ltd. v. Micromax Informatics FZE, (2025) 9 SCC 750, the arbitration clause referred to UAE Arbitration Rules and designated Dubai as the venue. A separate clause conferred non-exclusive jurisdiction courts for determination of disputes.

The Supreme Court held that the repeated references to Dubai indicated that it was intended to be the seat of arbitration. The Court further invoked the doctrine of forum conveniens to hold that Dubai was the most appropriate forum. Importantly, it clarified that the “closest connection test” retains relevance but only where the agreement does not expressly or impliedly designate a seat or curial law.

IV. The Limits of Judicial Gap-Filling

A common thread across these decisions is that substantial judicial dexterity, time and cost is expended merely to determine the seat of arbitration—a foundational issue that should ideally be resolved at the drafting stage. The consequence is a delay in the commencement of arbitration, often involving multiple rounds of litigation across jurisdictions.

While the judiciary’s pro-arbitration stance is commendable, its reliance on interpretative “gap-filling” raises concerns:

1. It may undermine party autonomy, by attributing intentions not clearly expressed
2. It introduces uncertainty, as different interpretative tools by different judges may yield different and even conflicting outcomes
3. It imposes transactional costs, contrary to the objectives of arbitration

The continuing litigation in MSA Global v. Engineering Projects (India) Ltd demonstrates that doctrinal evolution and ingenuity alone has not resolved the practical difficulties arising from poorly drafted clauses.

V. Mediation as a Pre-Arbitral Corrective Mechanism

In this context, mediation offers a pragmatic and under-explored solution. With the enactment of the Mediation Act, 2023, mediation has acquired statutory recognition as an effective and efficient form of dispute resolution.

(A) Conceptual Basis

Unlike adjudicatory processes, mediation enables parties to arrive at mutually acceptable solutions without being constrained by rigid jurisdictional doctrines. A dispute concerning the “seat of arbitration,” while legal in form, often reflects a deeper commercial disagreement regarding convenience, neutrality, and strategic advantage. Such disputes are particularly amenable to consensual resolution.

(B) Institutional and Procedural Integration

Mediation could be integrated into arbitration in several ways:

1. as a pre-arbitral step in dispute resolution clauses
2. through court referral at the Section 11 stage

• via institutional mechanisms, such as Arb-Med-Arb models (e.g., SIAC, ICC, MCIA)

A mediated settlement on the choice of seat, once reduced to writing, may be enforceable under the Mediation Act, thereby providing finality to the issue. The obvious advantages are the it is a neutral forum not tied to jurisdictional assertions, it ensures confidentiality thereby preserving commercial relationships, it has flexibility, allowing creative solutions (e.g., hybrid seats/venues, procedural compromises) it may provide a speedy resolution and avoid threshold litigation and may perhaps resolve the entire litigation.

It may be argued that a party may refuse to participate in mediation or that Mediation may add an additional layer of delay or that the determination of the “seat” is a legal issue unsuited to mediation. However, these objections are misplaced. First, mediation may be contractually mandated or judicially encouraged. Second, the time spent in mediation is significantly less than that consumed by multi-jurisdictional litigation. Third, mediation does not replace legal determination but facilitates consensual clarification of forum preference, which is ultimately a matter of party autonomy.

Ambiguities in arbitration clauses continue to generate significant jurisdictional disputes, undermining the efficiency and effectiveness of arbitration as a dispute resolution mechanism. While courts have developed sophisticated interpretative frameworks to salvage such clauses, the resulting litigation delays the commencement of arbitration and increases costs.

In this landscape, as suggested by the Hon’ble Chief Justice of India, Justice Surya Kant, there is need for a properly designed hybrid dispute resolution mechanisms that combine arbitration and mediation. Mediation offers a simple and commercially pragmatic solution. By enabling parties to resolve disputes concerning the seat of arbitration at a preliminary stage, mediation can reduce jurisdictional conflicts and expedite the arbitral process. Unless drafting practices improve significantly, the integration of mediation as a pre-arbitral mechanism may serve as a necessary corrective to the persistent problem of ambiguity in arbitration agreements.

[1]4th Edition of International Conference on“ARBITRATING INDO-UK COMMERCIAL DISPUTES”: CJI Surya Kant 4th ICA Conference “Arbitrating Indo-UK Commercial Disputes” | SCC Times

*Arjun Harkauli is an Advocate practising before the Delhi High Court and the Supreme Court of India. A graduate of the National Law School of India University, Bengaluru, he has over 23 years of experience in commercial disputes and arbitration. He may be reached at Arjunharkauli@ahchambers.com.