Exclusive Jurisdiction of Court under Arbitration Law - A new trend

  •  By Azeez Nazar Sabri 

Apex Court of India in a recent judgment in the matter of Indus Mobile Distribution Private Limited Vs. Datawind Innovations Private Ltd & Ors.( Civil Appeal Nos. 5370-5371 of 2017) has observed that Jurisdiction of the Courts shall be decided considering the juridical seat of arbitration.  

The substantial question of law before Apex Court was whether, when the seat of Arbitration is Mumbai, an exclusive jurisdiction in respect of disputes arising under the agreement would oust all other courts including the High Court of Delhi, whose Judgment is appealed against. Answering this question in affirmative Apex Court held that the Mumbai Courts alone shall have jurisdiction to the exclusion of all other courts in the Country, as the juridical seat of arbitration is At Mumbai.
Respondent Datawind Innovations Pvt. Ltd. has its registered office at Amritsar, Punjab and supplying good to appellant Indus Mobile Distribution Pvt. Ltd. at Chennai from New Delhi.

The disputes between the parties arose out of a contract agreement which contained an Arbitration clause. It was stipulated in Arbitration clause “all the disputes & differences of any kind whatever arising out of or in connection with this agreement shall be subject to the exclusive jurisdiction of courts of Mumbai Only.”

Arbitration clause was invoked by the Datawind Innovations Pvt. Ltd. and petitions under section 9 of Arbitration and Conciliation Act, 1996 for interim relief were filed in Delhi High Court. While granting injunction, Delhi High Court held that as no part of the cause of action arose in Mumbai, only court of three territories could have jurisdiction in the matter namely, Delhi and Chennai  ( from and to where goods were supplied), and Amritsar ( which is the registered office of the appellant Company).  The High Court of Delhi, therefore, held that the exclusive jurisdiction clause would not apply on facts, as the courts in Mumbai would have no jurisdiction at all. High Court of Delhi, therefore, determined that Delhi being the first Court that was approached would have jurisdiction in the matter and proceeded to confirm interim order and also proceeded to dispose Section 11 ( Arbitration Act) petition.

The said Judgment of the Delhi High Court was challenged before the Apex Court.  
Apex Court observed that under Section 20 of the Arbitration and Conciliation Act, 1996, parties are free to choose the seat of Arbitration. Once the seat of Arbitration has been fixed, it would be in the nature of an exclusive jurisdiction clause as to the courts which exercise supervisory powers over the Arbitration.
Apex Court relied on the following previous Judgments :
Reliance Industries Ltd. Vs. Union of India ( 2014) 7 SCC,603, wherein it was held that “juridical seat” is nothing but the “legal Place” of arbitration.
Harmony Innovation Shipping Limited Vs. Gupta Coal India Limited and Another, (2015) 9 SCC 172,
Union of India Vs. Reliance Industries Ltd and Others, ( 2015) 10 SCC 213, wherein Apex Court held that cases where the seat of arbitration is London, by necessary implication Part I of the Arbitration and Conciliation Act, 1996 is excluded as supervisor jurisdiction of courts over the arbitration goes along with “ seat”.
Apex Court Further relied on Eitzen Bulk A/S Vs. Ashapura Minechem Limited and Another, ( 2016) 11 SCC 508, wherein Apex Court observed that as a matter of fact the mere choosing of the juridical seat of arbitration attracts the law applicable to such location.
In concluding paras Apex Court observed that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. Under the law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in Courts, a reference to “Seat” is a concept by which a neutral venue can be chosen by the Parties to an arbitration clause. The neural venue may not in classical sense have jurisdiction- that is, no part of the cause of action may have arisen at the neutral venue and neither would any provision of Section 16 to 21 of CPC be attracted. In arbitration law, however, the “seat” is determined, the fact that the seat is at Mumbai would vest Mumbai Courts with exclusive jurisdiction for purpose of regulating arbitral proceedings arising out of the agreement between the parties.             

(Author can be contact at azeez_nazar@rediffmail.com)    

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