Venue Anchoring Arbitration Process Overrides General Exclusive Jurisdiction Clause: Delhi High Court
The Delhi High Court allowed a petition granting an extension of time for completing arbitral proceedings and issuing the arbitral award holding that a venue where the arbitration process is anchored serves as the 'seat of arbitration' and takes precedence over a general exclusive jurisdiction clause does not serve as evidence against the venue becoming the arbitration's seat.
The Bench of Justice Sachin Datta observed:
“On a conspectus of the aforesaid judgments, the position of law that emerges is that when the contract contains an arbitration clause that specifies a “venue”, thereby anchoring the arbitral proceedings thereto, then the said “venue” is really the “seat” of arbitration. In such a situation the courts having supervisory jurisdiction over the said “seat” shall exercise supervisory jurisdiction over the arbitral process, notwithstanding that the contract contains a clause seeking to confer “exclusive jurisdiction” on a different court.“
The petition had been filed under Section 29A (4) and (5) of the Arbitration and Conciliation Act, 1996, seeking an extension of time for completing arbitral proceedings and issuing the arbitral award.
The petitioner participated in bids for Rural Electrification works in Pilibhit and Hardoi Districts, Uttar Pradesh, under the Rajiv Gandhi Gramin Vidyutikaran Yojana, with bids submitted in May 2005. The General Conditions of Contract (GCC) for the works stated that disputes shall be resolved through arbitration, with the Court of Delhi having exclusive jurisdiction. The petitioner was awarded contracts based on their successful bids, and the Letter of Awards (LOA) indicated that disputes would be settled through arbitration, with specific courts having exclusive jurisdiction.
Disputes arose between the parties regarding the contracts, leading to arbitration proceedings initiated by the petitioner in January 2017. An Arbitral Tribunal was constituted but later terminated with mutual consent. A Sole Arbitrator was appointed in August 2018, and thus in this petition an extension of time for the Sole Arbitrator to issue the arbitral award was sought.
Advocate Nikhil Chawla appeared for the Petitioner and Advocate Anurag Kishore appeared for the Respondent.
On the merits, they contended that the appointment/substitution of the Sole Arbitrator was a continuation of proceedings from August 04, 2017. The award timeline expired on February 03, 2019, and the application's filing on March 06, 2020, constituted substantial delay. They argued that Section 29A amendments apply only prospectively, not retrospectively.
The issues before the Court were:
(i) Whether this court has territorial jurisdiction to entertain the present petition?
(ii) Whether in the facts and circumstances, the present petition suffers from delay and laches, and whether there is sufficient cause for allowing the present petition?
The Court analyzed these issues in the context of various legal precedents and judgments. It discussed several cases where the courts had interpreted arbitration agreements and clauses specifying the "venue" or "seat" of arbitration.
The Court noted that the clause in the Letter of Agreement (LOA) indicating "exclusive jurisdiction" is general and doesn't specifically pertain to arbitration. This clause doesn't contradict Delhi being the true "seat" of Arbitration. Thus, it can't be used to deny the jurisdiction of the Courts over the arbitration's seat.
The fact that the LOA is "subjected to" the General Conditions of Contract (GCC) reinforces this. Notably, GCC Clause 48.1.2 designates Delhi as the "venue" of Arbitration, and Clause 8 grants exclusive jurisdiction to Delhi's Courts. These GCC provisions take precedence, affirming Delhi as the "seat" of Arbitration, the Court observed.
The Court stated that it cannot be said that there has been any lack of expedition on the part of the Sole Arbitrator in completing the arbitral proceedings. Further, given that the matter is at the stage of recording of evidence, there is no impediment in granting suitable time extension for completing the arbitral proceedings and making the arbitral award.
“In any event, in terms of Section 29A (4) and (5) of the Act, the mandate of the Arbitrator can be extended by the Court even after expiry of the time for making of the arbitral award on sufficient cause being shown by the party making the application.”
In light of these findings, the Court allowed the petition and concluded that it has territorial jurisdiction over the arbitration proceedings and that the present petition was maintainable. Additionally, the Court extended the time for completing the arbitration proceedings and making the arbitral award by a year from the date of the judgment.
Cause Title: Reliance Infrastructure Limited v. Madhyanchal Vidyut Vitran Nigam Limited [Neutral Citation No.: 2023:DHC:5745]