SEAT AND VENUE OF THE ARBITRATION

The seat of an arbitration refers to the court which has exclusive jurisdiction over the transaction. Seat in the context of International Commercial Arbitration is one of the most crucial aspects that determines the course of arbitration proceedings. If in an arbitration agreement, a certain place is selected as the seat, then the courts of that place will have jurisdiction over that matter, if any dispute arises related to the agreement. Seat creates a legal base for arbitration because it determines how the arbitration will be conducted, what procedural rules will apply, and also governs the way the decision of arbitrators will be enforced. However, the role of the seat in arbitration is to decide the legal framework of the complete arbitration proceedings.

Venue refers to the geographical location where the parties will conduct the physical proceedings. Since arbitration is a mechanism to settle disputes outside the court, the place to conduct the proceedings is also crucial to decide by the parties. The venue in the arbitration should specify the city or country where both parties along with the arbitrator will meet to conduct the proceedings. Many arbitrations have the same place for the jurisdiction of the court as well as the physical place where the parties will meet to solve the dispute. However, the problem arises when the seat and venue are different. 

In MAHANADI COALFIELDS LTD & ORS. Versus M/s GSCO (GURMEET SINGH AND COMPANY) INFRASTRUCTURE PVT. LTD. - 2026 (10) TMI 103 - Supreme Court, the appellant, in the present appeal, floated a tender on 07.11.2012, for hiring of HEMM for transfer and transportation of materials in various strata including drilling, excavation, dumping spreading dozing and other allied works in specified areas of dumping as per the instructions of project officer/management of Kulda OCP, Basundhara – Garjanbahal areas of MCL at Sundargarh. The respondent participated in the bid and he was selected as a successful bidder. On this an agreement was executed between the appellant and the bidder. In the said agreement there was no clause for arbitration. The said project was completed by the respondent and the appellant issued a completion certificate. However, there were some issues in various claims under the contract.

The respondent, aggrieved on the non-disposal of the disputes, approached the High Court, Cuttack and filed 3 writ petitions. The High Court passed a common order on these 3 writ petitions. The High Court observed that the dispute is relating to interpretation of the condition of the contract. Appropriate remedy for the parties is to approach the Arbitrator. The parties on mutual consent submitted that this matter might be referred to the Arbitrator. The High Court appointed Mr. Justice M.M. Das (Retd.) as the Sole Arbitrator under Section 11(6) of the Act, to adjudicate the disputes between the parties on 25.03.2019.

Against the order of the High Court, the respondent filed 3 special leave petitions before the Supreme Court. The Supreme Court directed the respondent to file review petitions before the High Court. The respondents filed review petitions before High Court and also a recall petition. The High Court dismissed all these three petitions.

After the dismissal of the petitions by the High Court, the Arbitrator commenced his proceedings. After giving reasonable opportunities to the parties, the Arbitrator passed an award in favour of the respondent on 25.10.2021 in a common order. Against this order, the appellant filed 3 petitions under Section 34 of the Act before the District Court with a prayer to set aside the arbitral award. The respondent filed a petition before the District Court with a prayer to reject the petition filed by the appellant. The appellant raised the following objections before the Court-

• That the Section 34 petitions were barred by limitation, having been filed beyond the statutory period as prescribed in Section 34(3) of the Act, as claimed by GSCO.
• That the District Judge, Sundargarh lacked territorial jurisdiction to entertain the Section 34 petitions, owing to the seat of arbitration being at Cuttack.

The said application was dismissed by the District Court on 06.03.2024. The respondent filed a writ petition before the High Court challenging the dismissal order of the District Court.

The High Court held that, since the Section 11(6) petition for appointment of an Arbitrator was filed before the High Court at Cuttack, by operation of Section 42 of the Act, that Court alone would have jurisdiction over all subsequent applications arising from the same arbitration agreement. Consequently, the High Court held that the Section 34 petition filed before the Sundargarh Court would be barred by Section 42 of the Act. The High Court held that the delay in filing the petition far exceeded the period of three months and even if the condonable grace period of 30 days was considered, the petition under Section 34 of the Act would be clearly barred by limitation. Against this order the appellants filed the present appeal before the Supreme Court.

The appellants submitted the following before the Supreme Court-

• The objection petition under section 34 of the Act was filed within the period of limitation.
• The common Arbitral Award was dated 25.10.2021 and the applications under Section 34 of the Act were filed on 08.12.2021, well within the 3 months period prescribed in Section 34(3) of the Act.

The respondent submitted the findings of the High Court is erroneous. The respondent further submitted that the dispute arose out of a contract for execution of works at the Kulda Open Cast Project, Sundargarh, and that the contract itself contemplated that disputes would be subject to the jurisdiction of the competent court within whose territorial jurisdiction the work was executed. Since, the cause of action substantially arose at Sundargarh, and therefore, the Court at Sundargarh was the competent Court within the meaning of Section 2(1)(e) of the Act.

The Supreme Court observed that the subject work was executed within the district of Sundargarh. The Supreme Court relied on the circular issued by the Odisha State in which it was stated that no Commercial Court was assigned to the district of Sundargarh. The notification demarcates territorial jurisdictions of Commercial Courts, and since no Commercial Court had been established for Sundargarh at the relevant point of time, the applications under Section 34 could only be presented before the learned District Judge, Sundargarh. As per the Appellants, the arbitral proceedings were held at Cuttack only for the sake of convenience of the Arbitrator. Nothing to the contrary has been pointed out by learned senior counsel for the Respondent. Thus, mere conduct of arbitral proceedings could not per se determine the juridical seat of arbitration.

The Supreme Court, now, drew the differences between the ‘Seat’ and ‘venue’ of the arbitration. ‘Seat’ determines the Courts exercising supervisory jurisdiction over the arbitration proceedings, ‘Venue’ merely denoted the physical location where the sitting is held. In the absence of any express designation of Cuttack as the seat, the Supreme Court held that the High Court clearly erred in treating the venue of the arbitration as the seat. Merely because the seat of the High Court is at Cuttack would not confer jurisdiction on the District or Commercial courts at Cuttack. The High Court has clearly erred in restricting the jurisdiction of the High Court to the District within the territory of which the High Court is physically situated, i.e. Cuttack.

The Supreme Court further held that a High Court of a State exercises jurisdiction over the entire State and as such all the Commercial Courts/District Courts (where no commercial Court has been set up) within the territorial jurisdiction of the High Court would have jurisdiction to entertain a petition under section 34 of the Act, unless there is an agreement of the parties to the contrary or a specific determination of a ‘Seat’ in the order of appointment or any such stipulation/direction by the Court.

The Supreme Court allowed the appeal and set aside the impugned order of the High Court dated 20.06.2025 holding that the petition filed by the Appellants, under Section 34 of the Act before the Court of the District Judge, Sundargarh, was not maintainable for want of jurisdiction and also being time barred is not sustainable. The Petition under Section 34 of the Act, filed by the Appellants, is restored on the file of the District Judge, Sundargarh, who shall decide the same in accordance with law expeditiously.