Arbitration Agreement and Territorial Jurisdiction under the Indian Contract Act

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June 28, 2019

The place of arbitration constitutes an essential clause in any Arbitration Agreement. When speaking of territorial jurisdiction in an arbitration agreement it is Section 28 of the Indian Contract Act, 1872 which plays an important role.

Territorial Jurisdiction u/Section 28 of the Indian Contract Act

Section 28 of the Indian Contract Act states that when more than one Court has territorial jurisdiction, it is open for the parties to agree to confine the jurisdiction to anyone or more of such several Courts having territorial jurisdiction.

In this context, reference can be made to the case of M/s Jain Udyog Ltd. v. M/s Mahindra & Mahindra Ltd., wherein the Court was of the view that where more than one Court has territorial jurisdiction, it is open under Section 28 of the for the parties to agree to confine the jurisdiction to anyone or more of such several Courts having territorial jurisdiction. What Section 28 prohibits is firstly a total ouster of Civil Courts jurisdiction by Contract and it also prohibits creation of jurisdiction in a Civil Court by agreement which otherwise has no territorial jurisdiction.