Seat, venue and the court that supervises an arbitration

Arbitration clauses are often agreed last and read least. Yet one phrase in them, the seat of the arbitration, decides which court stands behind the whole process.

Seat and venue are different things

The seat is the legal home of the arbitration. It determines which country’s arbitration law governs the procedure and which courts supervise it. The venue is only where hearings physically take place. A tribunal may sit wherever is convenient without changing the seat.

The Arbitration and Conciliation Act, 1996 does not use either word. It speaks of the “place” of arbitration. Section 20(1) uses that word in the sense of the seat, and section 20(3) in the sense of the venue, which is one reason clauses so often blur the two.

Why the seat matters

The courts at the seat are the ones that supervise the arbitration. Applications for interim measures under section 9 and challenges to the award under section 34 go to them, and the seat decides which High Court deals with the appointment of arbitrators under section 11.

In Bharat Aluminium Co. v. Kaiser Aluminium Technical Services (2012), a Constitution Bench of the Supreme Court held that Part I of the Act applies only to arbitrations seated in India. In Indus Mobile Distribution v. Datawind Innovations (2017), the Court held that choosing a seat works like an exclusive jurisdiction clause. The courts at the seat alone supervise the arbitration, even if nothing else about the dispute is connected with that place.

When the clause names only a venue

Many clauses say that “the venue of the arbitration shall be” a named city and say nothing about the seat. In BGS SGS Soma JV v. NHPC (2019), a three-judge bench of the Supreme Court held that where a clause fixes a place as the venue of the arbitration proceedings, and nothing in the contract points the other way, that place is the seat.

What counts as pointing the other way is where disputes arise. A different seat named elsewhere in the contract will do it. So may wording that shows the place was chosen only for the convenience of particular hearings. A general jurisdiction clause that names the courts of another city is a common source of conflict, and courts have reached different results on differently worded contracts.

Drafting points

• Use the word “seat”, and name a city.
• If hearings may be held elsewhere, say so separately, and call that the venue.
• Make the general jurisdiction clause consistent with the seat, for example by making it subject to the arbitration clause and naming the courts of the same city.
• State the law that governs the contract separately. It need not be the law of the seat.
• Say whether the arbitration is ad hoc or under the rules of an institution, how many arbitrators there will be and in what language.

A clause that names its seat in plain words rarely needs a court to interpret it.

This note is general information and is not legal advice. The law may have changed since it was written, and how it applies depends on the facts of each case.

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