THE BEYOND OBITER LAW BLOG: Legal News
3 min read
The Supreme Court has held that where an arbitration agreement provides for more than one possible seat or venue of arbitration but also contains an express clause conferring exclusive jurisdiction on a particular court, the exclusive jurisdiction clause will prevail in determining the court exercising supervisory jurisdiction over the arbitration proceedings. The Court further held that the principle of forum non conveniens (court determines that another jurisdiction or forum is a much more appropriate and convenient place to try the lawsuit) has no application in such circumstances.
The judgment was delivered by a Bench of Justice Joymalya Bagchi and Justice Vipul M. Pancholi.
The dispute arose from a challenge to orders of the Telangana High Court appointing an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The petitioner contended that the Gauhati High Court alone had jurisdiction, arguing that the work order was issued from Guwahati and the entire cause of action arose there.
Examining the arbitration clause, the Court noted that it provided for a twin seat/venue arrangement - either Hyderabad, Telangana or Guwahati, Assam. However, the same clause expressly stipulated that courts at Hyderabad would have exclusive jurisdiction over matters arising from the agreement.
The Bench observed:
“A holistic reading of the clause would show that though twin Seat/Venue of arbitration, that is, either ‘Hyderabad, Telangana state or Guwahati, Assam State’ is prescribed, the subsequent part of the clause unequivocally states that the courts in Hyderabad shall have exclusive jurisdiction over matters relating to or arising from this agreement.”
The petitioner relied on the Supreme Court’s decision in Arif Azim Company Limited v. Micromax Informatics FZE, where the Court had held that principles of forum non conveniens may apply when multiple seats are designated. However, the Bench distinguished that decision on facts, observing that the present agreement contained a clear and express conferment of exclusive jurisdiction upon the Hyderabad courts.
Emphasising the centrality of party autonomy in arbitration law, the Court held:
“Such proposition of law though unexceptionable is inapplicable in the facts where the parties have themselves agreed to the exclusive jurisdiction of the Courts in Hyderabad in the arbitration clause itself. Party autonomy being of primary importance in interpretation of the arbitration agreement, we are of the considered view, the ratio in Arif Azim Company Limited (supra) is factually distinguishable where the supervisory jurisdiction of the Telangana High Court over the arbitration is clearly discernible from the clause itself.”
The Court concluded that the parties had consciously agreed to confer exclusive jurisdiction upon the courts at Hyderabad and that such intention must be given effect. Consequently, the supervisory jurisdiction of the Telangana High Court was clearly established from the arbitration agreement itself.
Finding no error in the Telangana High Court’s exercise of jurisdiction, the Supreme Court dismissed the Special Leave Petitions challenging the appointment of the arbitrator.