Exclusive jurisdiction Clause in Arbitration Agreement Ousts Jurisdiction of other Courts

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1189

December 11, 2017

CVS Insurance and Investments vs. Vipul IT Infrasoft Pvt. Ltd.

Date of Judgement- December 08, 2017

In the case, the Delhi High Court gave the ruling that there shall be only one seat of arbitration though venues may be different and where the arbitration seat is fixed only such court shall have an exclusive jurisdiction.

In this case, the seminal issue between the parties was whether the seat of the arbitration should be at Delhi or Noida when the agreement between the parties give exclusive jurisdiction to courts at Noida?

In the case, parties entered into Arbitration Agreement in 2013 and later on had some disputes related to payments. The impugned provision in the agreement which is the cause of action in the instant case is reproduced herein below:

12.1 This Agreement shall be construed, interpreted and applied in accordance with and shall be governed by the laws of India. 12.2 Any dispute arising between the parties in relation to this Agreement and its schedules, annexures (if any) or the Maintenance Agreement or any other congruent Agreement, shall first be tried to be amicably resolved by the parties. Failing amicable resolution within 30 days of the commencement of negotiations, the dispute shall be referred to a Sole Arbitrator as appointed by the Company. The Intending Sub Lessee hereby agrees and confirms that it shall have no objection to such appointment. The Arbitration shall be conducted as per the Arbitration and Conciliation Act, 1996  or its statutory modifications, amendments or re- enactments thereof. The Award of the Arbitrator shall be final and binding upon the parties. The venue of arbitration shall be Noida/New Delhi.

It is agreed by and between the Parties hereto that the arbitration proceedings and all other matters connected to arbitration and any disputes, suits, complaints, litigation, claim or any other matter arising out of or in relation to this Agreement, shall be subject to the exclusive jurisdiction of Courts at Noida.

Bench’s Verdict

  • That there cannot be two or more seats of arbitration though the venue of arbitration may depend upon convenience of the parties. Article 12 of the Agreement gives exclusive jurisdiction to courts at Noida while keeping Delhi and Noida as venue for arbitration.
  • Difference between seat and venue- The Bench referred to Supreme Court’s verdict in the recent case of Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. & Ors.[1], wherein the Apex Court ruled that Section 20(1) and 20(2) where the word “place” is used, refers to “juridical seat”, whereas in Section 20 (3), the word “place” is equivalent to “venue”. In this case it was further held that the moment the seat is designated, it is akin to an exclusive jurisdiction clause.
  • Section 20 of the Arbitration and Conciliation Act provides for the place of arbitration.
  • That there shall be only one seat of arbitration though venues may be different and where the arbitration seat is fixed only such court shall have an exclusive jurisdiction.
  • That in view of the facts barring the registered office of the respondent company at Delhi, none of the cause of action arose within the jurisdiction of Delhi High Court. Admittedly the agreement was executed at Noida; it was to be performed at Noida; payments pursuant to the agreement were to be made at Noida; the agreement pertains to a sub- lease of unit based in Noida; the stamp paper on which the agreement was executed pertains to Utter Pradesh; and that the petitioner and respondent had agreed to an exclusive jurisdiction of Noida as per Article 12(3).
  • That the contention that there is no High Court in Noida would not confer the jurisdiction upon the Courts at U.P. and that would result in stretching Article 12 in the Agreement too much. The subject agreement when refer to the venues of arbitration be at Noida/New Delhi it relate only to the convenience of parties in holding arbitral hearings and does not in any way confer jurisdiction upon Delhi Courts.
  • That in the light of an exclusive jurisdiction clause in relation to arbitration proceedings, which excludes the jurisdiction of all other Courts than the Court mentioned therein, the application would only lie before the High Court exercising jurisdiction over Noida, Uttar Pradesh and not before this Court.

 

[1] (2017) 7 SCC 678