Arbitration Seat: Venue Becomes Seat If No Protest

Quick Summary

The Allahabad High Court has ruled that if parties participate in arbitration proceedings at a specific venue without objection, that venue will be considered the seat of arbitration, even if no formal agreement on the seat was made. This means courts in that location will have exclusive jurisdiction to supervise the proceedings. The court clarified that appeals against orders rejecting applications under Section 34 of the Arbitration and Conciliation Act are not covered by Section 37, but a petition under Article 227 of the Constitution is maintainable.

The Allahabad High Court has held that where the parties do not mention the seat of arbitration and have participated within the arbitral proceedings without any protest in a particular place, the events will be considered as by their conduct and the stated venue would be the place of proceedings and also arbitration.
Thus, the courts on the stated place would exclusively supervise the arbitration proceedings of this unique jurisdiction.
Justice Sangeeta Chandra held that under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), an order of rejecting the application involves no adjudication.
Therefore, won’t be applicable and appealable part section 37 of the A&C Act.
Petition under Article 227 of the Constitution of India is maintainable in opposition to the order.
The court was dealing with the respondent- Northern Railway, floated a Tender Notice and the petitioner - M/s. Zapdor-Ubc-Abnjv. The bid submitted by the petitioner was accepted.
After the awarded contract was terminated by the respondents for delay in completion of labour, the petitioner invoked the arbitration clause.
The proceedings held in Delhi rendered in favour of the petitioner, which were eventually challenged by the petitioner.
The high court dominated that s per the law laid down in BGS SGS Soma JV (2019),when a place is expressly held as the place for arbitrational proceedings, no other place would be the seat of arbitration, the stated venue would be the juridical seat of the arbitral proceedings.
In fact, there was no other contrary indicia that the designated state was not the venue for the proceedings. Thus, the decision is conclusive.
Further, the Bench referred to the decision of the Supreme Court in Inox Renewables Ltd versus Jayesh Electricals Ltd. (2021), irrespective of the venue, when a particular place is mutually decided upon by the parties for the proceedings, it becomes the designated place.
The Court thus ruled that the Commercial Court at Lucknow had no jurisdiction to entertain the application under Section 34. Hence, the Court allowed the request.

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