Area of Jurisdiction
Querist :
Anonymous
(Querist) 28 May 2010
This query is : Resolved
Given below is a clause from a work order agreement signed by us and our client:
“This agreement shall be governed by and construed in all respects in accordance with the laws of India and jurisdiction being limited to Punjab and Haryana High Court. Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration in accordance with the arbitration rules for the time being in force, which rules are deemed to be incorporated by reference in this clause. This shall not prevent either party taking such steps as it seems necessary before the court to protect its rights hereunder including by way of injunctive relief.”
We interpret the clause as under:
1. In case of any dispute, Party 1 can drag Party 2 only in “Punjab & Haryana High Court” and nowhere else. If Party 1 summons Party 2 to say Ahmedabad High Court, can Party 2 respectfully intimate the Ahmedabad High Court that since the case falls out of Jurisdiction of Ahmedabad, Party 2 is not liable to be answerable in Ahmedabad.
2. Any dispute is to be resolved ultimately by arbitration only
In any dispute is to be resolved ultimately only by arbitration, then what is the role of a court. What benefit can the Party 1 get by dragging the Party 2 to court, apart from getting a stay order.
Can Party 1 still make criminal proceedings against Party 2 in Ahmedabad?
Would be of great help if you can guide whether out interpretations above are in the right direction.
s.subramanian
(Expert) 18 September 2010
1. Yes it is called ouster clause. It is recognised in law. When the parties to the contract specify the court that shall have jurisdiction,other courts cannot entertain such matters. You can inform the court about it. Nothing wrong in it.
2. When there is arbitration agreement,regular courts cannot interfere in the matter. It is prohibited by Sec.8 of the Arbitration and Conciliation ACt,1996.
