The Supreme Court has asserted that where an arbitration clause specifies two places and the governing law clause vests exclusive jurisdiction in courts at one of them, that place is the juridical seat and the other is merely the venue. Accordingly, the Apex Court set aside the Delhi High Court’s order appointing a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, holding that the Delhi High Court lacked jurisdiction because the juridical seat of arbitration was Goa and not Delhi.
The Apex Court reaffirmed the settled distinction between the ‘seat’ of arbitration and the ‘venue’ for arbitral proceedings, holding that the seat is akin to an exclusive jurisdiction clause and that courts at the seat have exclusive jurisdiction to regulate arbitral proceedings. Applying the three-condition test in BGS SGS SOMA JV v. NHPC Ltd. [(2020) 4 SCC 234], the Court held that where an arbitration clause specifies more than one place, the BGS SGS SOMA test is not satisfied and the venue so specified cannot automatically be treated as the juridical seat.
The Court held that in such a situation, the juridical seat must be determined by reading the agreement as a whole, including the Governing Law and Jurisdiction clause, and that the arbitration clause cannot be read in isolation from the rest of the contract for the purpose of ascertaining the seat.
Briefly, the appellant is Arcis Clean Energy Pvt Ltd, and the respondent is Parshva Innovation. Clause 32 of the Agreement governs arbitration and dispute resolution. Clause 32.4 states that the ‘precise location of the arbitration shall be within Delhi’, while Clause 32.5 separately provides that ‘the arbitration proceedings will be held in Goa’ and the language of the proceedings shall be English. Clause 38, the Governing Law and Jurisdiction clause, states that the Agreement shall be construed in accordance with the laws of India and that the parties ‘shall agree to submit to the exclusive jurisdiction of competent courts in Goa, India’.
The respondent proposed the name of a sole arbitrator by notice dated 25 March 2025, which the appellant rejected by response letter dated 19 April 2025. The respondent then moved the Delhi High Court under Section 11(6) of the 1996 Act for appointment of an arbitrator, and the High Court appointed the arbitrator by the impugned order, leaving it open to the arbitrator to select the venue for hearings in consultation with the parties.
A Two-Judge Bench comprising Justice Manoj Misra and Justice Vijay Bishnoi examined the settled distinction between the ‘seat’ of arbitration and the ‘venue’ for arbitral proceedings, drawing on Indus Mobile Distribution Pvt Ltd. v. Datawind Innovations Pvt Ltd. [(2017) 7 SCC 678], Swastik Gases (P) Ltd. v. Indian Oil Corporation Ltd. [(2013) 9 SCC 32], and Brahmani River Pellets Ltd. v. Kamachi Industries Ltd. [(2020) 5 SCC 462]. It reiterated that parties may, by agreement, confer exclusive jurisdiction upon courts at a particular place for regulating arbitral proceedings, regardless of whether any part of the cause of action arose within that court’s territorial jurisdiction.
The Court then applied the three-condition test laid down by the three-Judge Bench in BGS SGS SOMA JV v. NHPC Ltd. [(2020) 4 SCC 234] and affirmed in Arif Azim Company Ltd. v. Micromax Informatics FZE [(2025) 9 SCC 750], which requires that (i) the arbitration agreement should designate only one place, (ii) that place must have anchored the arbitral proceedings without scope of change, and (iii) there must be no other significant contrary indicia, before a designated ‘venue’ can be construed as the ‘seat’ of arbitration.
The Court noted that in the present case, the arbitration clause itself specifies two places, namely Delhi and Goa, and therefore the BGS SGS SOMA test is not satisfied to treat Delhi as the seat. It further reiterated that the mere expression ‘place of arbitration’ cannot be the basis for determining the parties’ intention as to the seat, and that the intention must be gathered from other clauses in the agreement, including the conduct of the parties.
