Seat of Arbitration vs Venue: Seat Decides Jurisdiction Even If Hearings Are Held Elsewhere, Supreme Court Reiterates

NEW DELHI — The courts at the seat of arbitration named in the parties' agreement have exclusive jurisdiction over a challenge to the award, even where every hearing was held in another city, the Supreme Court has reiterated, setting aside a Delhi High Court order that had entertained a petition under Section 34 of the Arbitration and Conciliation Act, 1996 in an arbitration seated in Mumbai. A two-judge bench delivered the judgment on 15 October in Kosmos Energy v. Veda Power.

The dispute arose under a power purchase agreement whose arbitration clause provided that "the seat of arbitration shall be Mumbai". The three-member tribunal, with the parties' consent, held all its hearings in Delhi, where two of the arbitrators and most counsel were based, and signed the award there. The losing party challenged the award in the Delhi High Court, which held that it had jurisdiction because the proceedings had taken place within its territory. The Supreme Court disagreed.

"Seat is a legal concept. Venue is a hotel booking," the bench said.

Seat vs venue: the difference

	Seat	Venue
What it is	The juridical home of the arbitration	The place where hearings are physically held
Statutory basis	Section 20(1) and (2): the "place" of arbitration agreed by the parties or fixed by the tribunal	Section 20(3): the tribunal may meet at any place it considers appropriate for hearings, consultation or inspection
Consequence	Determines the supervisory court and the procedural law of the arbitration	No legal consequence; can change from hearing to hearing
Can it move?	Only by agreement of the parties	At the tribunal's discretion, subject to the agreement

The law so far

• BALCO v. Kaiser Aluminium, (2012) 9 SCC 552. A Constitution Bench adopted the seat-centric approach: the courts at the seat have supervisory jurisdiction over the arbitration, and "place" in Section 20 means the juridical seat.
• Indus Mobile Distribution v. Datawind Innovations, (2017) 7 SCC 678. Once a seat is designated, it is equivalent to an exclusive jurisdiction clause; the courts at the seat have jurisdiction even if no part of the cause of action arose there.
• BGS SGS Soma JV v. NHPC, (2020) 4 SCC 234. A clause that designates a "venue" for the arbitration proceedings is treated as designating the seat unless there is a significant contrary indication. The decision also held that a court before which an application is first made under Section 42 acquires jurisdiction only if it was a court that had jurisdiction in the first place.
• Mankastu Impex v. Airvisual, (2020) 5 SCC 399. Where the agreement says the "place" of arbitration is one city but contains contrary indicia — an exclusive jurisdiction clause in favour of another — the court reads the whole agreement to find the seat.

What the court held

1. The seat was Mumbai, in terms. The clause used the word "seat", named one city and contained no contrary indication. There was nothing to construe.
2. Hearings in Delhi were venue, not seat. Section 20(3) permits the tribunal to meet anywhere for hearings. The parties' consent to Delhi hearings was consent to a venue; it did not amend the clause, which required an agreement in writing to vary.
3. Section 42 did not help. The respondent argued that because it had filed the first application in Delhi, Section 42 vested jurisdiction there. Following BGS SGS Soma, the court held that Section 42 applies only to applications made to a court that has jurisdiction, and cannot create jurisdiction where none exists.
4. Return, with time excluded. The Section 34 petition was directed to be returned for presentation before the Bombay High Court within four weeks, with the period spent in Delhi excluded under Section 14 of the Limitation Act, 1963, since the respondent had prosecuted the petition in good faith.

Seat is a legal concept. Venue is a hotel booking.

From the judgment

Drafting lessons

• Use the word seat, name one city, and say in the same clause that the courts at the seat have exclusive jurisdiction. Avoid "place" and "venue" as synonyms for seat.
• If hearings are expected elsewhere, say so separately: "The tribunal may hold hearings at any venue it considers convenient; this shall not affect the seat."
• Check that any general jurisdiction clause elsewhere in the contract does not point to a different city; conflicting clauses are the most common source of litigation.
• Institutional rules usually supply a default seat; confirm it matches the parties' intention.
• Virtual hearings have no venue at all, which makes an express seat essential.

What happens next

The challenge to the award will now be heard by the Bombay High Court's commercial division under Section 34, with the limitation period preserved by the Supreme Court's exclusion order. Enforcement of the award under Section 36 remains stayed only if that court grants a stay on the petitioner's application and, where money is awarded, on terms of deposit.

The Counsel will report the Bombay High Court's decision on the Section 34 petition. Parties drafting or disputing arbitration clauses should take advice from a qualified arbitration lawyer on the seat before proceedings begin.

This report is for general information only and does not constitute legal advice. Readers should consult a qualified lawyer about their own circumstances. Case citations are to The Counsel Reports (TCR) unless otherwise stated.