Arbitration Clause Names Two Places: Supreme Court Settles Which Is the Juridical Seat
Background
In Arcis Clean Energy Pvt. Ltd. v. Parshva Innovation, 2026 INSC 1109, the appeal arose from an order passed by the Delhi High Court on 11.11.2025. In exercise of its powers under Section 11(6) of the Arbitration and Conciliation Act, 1996, the High Court appointed a sole arbitrator to adjudicate the disputes arising between the parties under the Franchise Agreement dated 03.08.2023.
Clause 32.4 of the Agreement stated that the “precise location” of the arbitration would be within Delhi. Clause 32.5 stated that the arbitration proceedings would be held in Goa. Clause 38 provided that the parties submitted to the exclusive jurisdiction of the competent courts in Goa.
The respondent proposed an arbitrator on 25.03.2025, and the appellant rejected the proposal on 19.04.2025. The respondent then approached the Delhi High Court, which appointed the arbitrator. The appellant challenged the order before the Supreme Court, arguing that the juridical seat was Goa, that Delhi was only a venue, and that the Delhi High Court therefore had no jurisdiction. The respondent argued that the arbitration clause is independent of the rest of the contract, so Clause 38 could not decide the seat, and that Clause 32.4 prevailed over Clause 32.5 because it appeared first.
The Court’s Reasoning
First, the Court relied on Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited and Others (2017) 7 SCC 678, which held that choosing a “seat” is similar to an exclusive jurisdiction clause, and that the courts at the seat have exclusive jurisdiction over the arbitral proceedings.
Secondly, the Court applied the three-condition test laid down in BGS SGS SOMA JV v. NHPC Limited, (2020) 4 SCC 234, to determine whether a designated “venue” could be treated as the “seat” of arbitration. First, the arbitration clause must designate only one place. Second, the arbitral proceedings must be anchored exclusively to that place, without any scope for change. Third, there must be no significant contrary indication suggesting that the designated place is merely a venue and not the seat. When all three conditions are satisfied, the venue may be treated as the seat of arbitration. If more than one place is named, that place cannot be taken as the seat by default. In the present case, the first condition was not satisfied, as the arbitration clause referred to both Delhi and Goa. Therefore, Delhi could not automatically be treated as the seat of arbitration.
Thirdly, the Court held that where an arbitration clause refers to two places, the governing law and jurisdiction clauses must be considered to determine the juridical seat. Clause 32.5 stated that the proceedings would be held in Goa, while Clause 38 conferred exclusive jurisdiction on the courts at Goa. Reading Clauses 32.4 and 32.5 together, and in conjunction with Clause 38, the Court concluded that Goa was the juridical seat of arbitration, while Delhi was merely a venue.The Court rejected the respondent’s contention that the arbitration clause, being independent of the main contract, alone determined the seat. Although it acknowledged the principle laid down in Sasan Power Ltd. v. North American Coal Corporation (India) Pvt. Ltd., (2016) 10 SCC 813, that an arbitration agreement is independent of the underlying contract, it held that this principle did not assist the respondent, particularly because the arbitration clause mentioned two places and the governing law and jurisdiction clauses could not be disregarded. The Court also relied on Mankastu Impex (P) Ltd. v. Airvisual Ltd., (2020) 5 SCC 399, which clarified that the expression “place of arbitration” does not, by itself, establish the parties’ intention regarding the seat. Such intention must be ascertained from the agreement as a whole and the parties’ conduct. Applying this principle, the Court concluded that the parties had intended Goa to be the juridical seat of arbitration.Consequently, as Goa was the juridical seat, the Court held that the Delhi High Court lacked jurisdiction under Section 11(6). It set aside the Delhi High Court’s order, leaving the parties at liberty to approach the appropriate jurisdictional High Court.
Understanding “Seat” and “Venue”
The seat is the legal home of the arbitration. It decides which courts supervise the arbitration, including applications for appointment of arbitrators and challenges to the award. The venue is only the place where hearings are physically held, and it does not by itself give jurisdiction to the courts at that place.
The two often coincide, so the difference is easily missed. Where they are named separately, courts read the whole agreement to find the true intention of the parties.
Significance for Practice
The judgment clarifies that where an arbitration clause names multiple places, the juridical seat must be determined by reading the agreement as a whole, with particular weight given to exclusive jurisdiction clauses. Practitioners should expressly specify the seat, ensure consistency between the arbitration and jurisdiction clauses, and verify the seat before filing a Section 11 petition before the appropriate High Court.
