CLARITY BETWEEN SEAT AND VENUE IN ARBITRATION

I. ABSTRACT
In the backdrop of insufficient clarity available for seat and venue of arbitration this article aims to bring the
one stop reading solution to clarify the intricacies of seat and venue which is the important constituents of an
arbitration agreement. The article begins with briefly introducing the concepts and their relevancy in an
arbitration agreement. With that it focusses on the legislative provisions enumerated under Arbitrationand
Conciliation Act 1996 which explains and regulates the concepts. Not only the articlestates the legal
framework under the concerned statute but also discusses the loopholes andgave the detailed knowledge by
breaking down the concepts into simpler interpretations. After that it gives detailed discussion on the
evolution of seat and venue and it’s journey ofclarification from time to time through a series of precedents
and explained the newestamendment brought by Law Commission Report no. 246 to said issue. It has
discussed all thelandmark judgments and principle governing the minute crucial aspects of seat and venue
inarbitration. The article tried to cite case laws which includes judgments of both Foreign andIndian Courts
so that it will give better understanding of the concepts in the context ofdomestic and cross-border
jurisdictions.Lastly, the article gave the analysis and opinion of the author and its way forward in
thecontinuing the cases of arbitration.

II. INTRODUCTION
Arbitration being another wing and the final stage of alternative dispute resolution mechanism means that
the process of settlement of disputes between the parties through a quasi-judicial authority (herein arbitral
tribunal) without dragging the case to lengthy procedures of the Courts. The first and foremost thing right
after the parties agree to go for arbitration for settling their disputes in future and expressly mentions them in
the contract it is of utmost importance to decide and clearly mention the seat and venue of their arbitration.
Seat and Venue acts as a technical tool in the whole arbitration process as it deals with jurisdiction,
choice of arbitral proceedings, law governing the entire arbitration process, power and scope of judicial
interference in the matters of arbitration. Below we will discuss the conundrum of seat and venue of
arbitration in a detailed manner.

III. FUNDAMENTALS OF SEAT AND VENUE

Initially, both the concepts may seem to be of have the same approach in law and same meaning which gives
rise to many confusions. However, both of them are different and has evolved over the period of time as
different Courts in India and abroad has defined their meaning, role and scope to make the roadmap of
arbitration clearer. Under Arbitration and Conciliation Act 1996, till now there is no such express provision
that defines the seat and venue of arbitration. However, the Law Commission Report 246 in 2014 decided to
bring the concepts of seat and venue by clearly mentioning them under section 20 of Arbitration and
Conciliation Act 1996. As of now, the provision talks about the place of arbitration under section 20 1 where
section 20(1) says that parties have the freedom to agree and settle their place of arbitration as per their
convenience and on mutual terms. Section 20(2) says that even parties are free to choose and agree on the
procedure which is to be followed by the arbitral tribunal during their arbitration proceedings. Section
20(3)says that the arbitral tribunal if not otherwise agreed by the parties may allow the parties to meet at any
place that it is appropriate or convenient for them for consulting, hearing of witnesses, inspection of
documents, etc.
This provision represents very insufficient knowledge and vague information regarding seat and venue of
arbitration. In simple words decoding the word “seat” as “situs” of arbitration which acts as the epicenter of
whole arbitration proceedings and govern three main aspects which are territorial jurisdiction of an
arbitration matter, procedures to be followed and power of Courts to interfere in the matter of arbitration. On
the other hand, “venue” simply means the place where the hearings of the arbitration will be held.
Further breaking down into simpler terms, seat of arbitration basically leads the role of supervisory
jurisdiction and determination of procedural law or curial law that is to be followed in the entire arbitration
process. Now this procedural law chosen by the parties has to be mentioned expressly in the arbitration
agreement or in the arbitration clause so that right after the time when the disputes arise and comes before
the arbitral tribunal, this law starts governing the whole arbitration matter. Some of the examples of
procedural law of some distinctive institutional arbitral tribunals are which are often chosen by the parties
are- the rules prescribed by Singapore International Arbitration Centre (SIAC), International Chamber of
Commerce, London Court of International Arbitration(LCIA), New Delhi International Arbitration Centre,
ad hoc arbitrations before the High Courts will follow and enjoy the liberties enumerated under the
concerned legislation.
Thus, seat lays down entire power and capacity of Courts to interfere, freedom and liberty of parties to
choose the procedures and most importantly the governing law to be followed in cases of institutional or ad
hoc arbitration. In fact, at international level the decision of seat of arbitration helps in determination of lex
arbitriand curial law for the entire arbitration process.
Therefore, to magnify the difference between seat and venue, the role and scope of seat is much wider and
heavier than the venue of arbitration which shows that the parties has to be very cautious while drafting their
arbitration agreement or arbitration clause since the seat ends up as the governing law for the entire
arbitration matter.

1
The Arbitration and Conciliation Act,1996,§ 20,No. 26, Acts of Parliament, 1996 (India)
IV. EVOLUTION OF “SEAT” AND “VENUE” IN ARBITRATION
In this context we have to consider a series of precedents and principle that has tried to define a clear
concept and role of seat and venue in arbitration.
In the case of Bharat Aluminium Co. Vs Kaiser Aluminium Technical Service Inc.,2 disputes arose
regarding non-performance of the contract and when the matter was referred to arbitration issues raised
regarding governing law or the curial law for the arbitration agreement after the award was passed in favour
of the appellants. The parties in this case chose London as their venue for arbitration, seat in England and
prevailing Indian law as the governing law. However, English Arbitration law was made applicable to those
proceedings in London thus lex fori (the law of the forum or venue in which a legal action is taken) was the
English Arbitration Law and the substantive law for the arbitration was the prevailing Indian Law. The
appellants challenged that English law cannot be made binding since the substantive law for the agreement is
Indian law.
Hon’ble Supreme Court after going through the submissions held that the intention of the parties in
choosing any place thereby referring it to “venue” and “seat” is to be examined thoroughly. In this case, the
Court observed that the parties choose England to be the seat of arbitration which clearly shows that the
proceedings initiated to decide the rights and obligations of the parties under arbitration clause or the
arbitration agreement will be governed by the English Arbitration Law even though the substantive law for
the contract is Indian Law. Also, the Apex Court found that parties even made reference to Glasglow as a
venue which will not impact the seat or the curial law in any way. The seat and place of arbitration is used
interchangeably and in international commercial arbitration venue can be changed as per the convenience on
mutual terms of the parties. Besides, Supreme Court upheld that no appeal filed under section 34 of the Act
can be set aside on the basis of choice of seat and venue so as to determine the curial law and lex arbitri as
application under section 34 falling under Part I of the Act can only be set aside for domestic arbitrations
seated in India.
In the matter of Enercon (India) Limited & Ors. Vs Enercon GmbH and Ors, 3 issues arose regarding anti-suit
injunction and jurisdiction of English Court in this case. Briefly stating the facts of the case where parties in
the contract has agreed to choose London as their venue of Arbitration without determining the seat of
arbitration. However, in their contract they have agreed to be binded by Indian Arbitration law as their
substantive law for the contract.
The Court after examining the clauses for seat and venue in the contract found that the parties chose lex
arbitrias curial law that means that the arbitration proceedings will be governed by the Indian Arbitration
law. This states that when there is no express mentioning about the seat of arbitration in the contract then the
governing law or the substantive law of the contract which the parties agreed to apply on their contract will
2
Bharat Aluminium Co. Vs Kaiser Aluminium Technical Service Inc., MANU 2012 SCOR 6940
3
Enercon (India) Limited &Ors. Vs Enercon GmbH and Ors., MANU 0102 SC 2014
become the curial as in whole and not in parts for the arbitration in the case. Now, the Court held that the
choice of selecting London as their venue is the convenient geographical location to hold the hearing of the
arbitration and the English Courts have the concurrent jurisdiction to support the arbitration if need.
V. THE SHASHOUA PRINCIPLE
Next, we come to the Shashoua Principle which has evolved the ruling of England and Wales High Court
(Commercial Division) in the case of Shashoua Vs Sharma,4 where the claimants prayed before the Court to
grant them anti-injection in the arbitration case but their agreement stated that the anti-injunction should be
obtained on the basis of seat of the arbitration.
In this case, the parties chose London as their venue of arbitration without expressly mentioning the seat of
their arbitration. Thus, the issue came before the Court that how the seat of arbitration will be determined in
the absence of any expressive term in the contract?
Justice Cooke held that when there is expressive term of venue made by the parties in their arbitration
agreement or contract without defining the seat for their arbitration then except anything contrary mentioned
in the contract it is to be concluded that the jurisdiction of venue will become the juridical seat in the case
and the law of that jurisdiction will become the curial law for the entire arbitration proceedings. Therefore,
in this case London was the venue of the arbitration chosen by the parties and that London will become the
juridical seat and the English Law will become the curial law for the lex arbitri. This judgment became a
rescue in the circumstances absence of crucial elements of jurisdiction of arbitration are absent concerning
the conduct of arbitration.
However, in the case of Union of India Vs Hardy Exploration and Production (India) 5 this principle has
been given negative reference in the context of Indian Arbitration. In this case, the parties chose Kuala
Lumpur as their venue but did not mention the seat for their arbitration. After an appeal was filed before the
Delhi High Court, the Court found that since the parties chose their venue as Kuala Lumpur and remained
silent on the seat and that by only choosing venue will not automatically determine the seat of arbitration on
the basis of venue. The Court deviating from the Shashuoa principle held that to become a seat from venue
there has to be a positive act and something concomitant should be attached to it and thus any of the criteria
has to be satisfied to construe venue as the seat of arbitration.
But again, in the case of BGS –SGS SOMA,6 same issue came before the Court regarding determination of
seat in the absence of expressed term or clause and in presence of an expressed term about venue where it
held that when venue is mentioned and award to be obtained at that venue, the venue becomes the seat of the
arbitration provided that there is no such contrary provision is made with respect to the venue of the
arbitration. This judgment reiterated the Shashuoa principle and overrule the judgment of Hardy Exploration.

4
Shashoua Vs Sharma, MANU 2009 UKCM 0160
5
Union of India Vs Hardy Exploration and Production(India), MANU 2018 SC 1046
6
BGS SGS SOMA JV Vs NHPC Ltd, MANU 2019 SC 1715
In 2014 by Law Commission Report no.246 it has been notified that amendment to be brought to section 20
of Arbitration and Conciliation Act 1996 where which says that the word “place” is to be deleted and the
words “seat” and “venue” is to be inserted before the word arbitration. Also, in section 20(1) to delete the
word “place” after the words “agree on the” and add “seat and venue” and in section 20(3) to delete the word
“place” after the words “meet at any” and add the word “venue”. This amendment will clearly define the seat
and venue, that the parties may have a clear idea while choosing the conduct of their arbitration and thereby
bringing focus on the technicalities and crucial role of seat and venue in arbitration.

VI. CONCLUSION
The long discussion of this article clearly promotes the effort of the judiciary to remove the confusion
between seat and venue in arbitration in cases where the clauses in the arbitration agreement are silent and
vague. However, after the detailed discussion of the evolution of seat and venue it seems that the judgment
held in Hardy Exploration is welcoming since it has brought the concept of criteria that is to be satisfied in
cases of silent and vague clauses of seat in arbitration. This minute scrutiny of the essential elements will
bring more solutions and scope to build strong and tight conditions for seat and venue so as to prevent any
deviation or losses in commercial agreements. Lastly, in this confused environment the Law Commission
Report no. 246 was the need of the hour to clearly dictate the concept and necessity of “seat” and “venue” in
arbitration.