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Under ‘Exclusive Jurisdiction Clause’ Only Fixed Seat Of Arbitration Can Have Jurisdiction

The Supreme Court, in Indus Mobile Distribution Private Limited vs Datawind Innovations Private Limited, has held that when there is an exclusive jurisdiction clause in an arbitration agreement stating that the courts at a particular place alone would have jurisdiction in respect of disputes arising under the agreement, it would oust all other courts’ jurisdiction in the matter, even in a case where no part of cause of action arises at that place.

In the instant case, the arbitration agreement had fixed the seat of arbitration in Mumbai, and there was a clause stating that the courts at Mumbai alone would have jurisdiction in respect of disputes arising under the agreement.

A Section 9 petition was filed before the Delhi High Court contending that no part of the cause of action arose in Mumbai, only the courts of three territories could have jurisdiction in the matter, namely, Delhi and Chennai (from and to where goods were supplied), and Amritsar (which is the registered office of the appellant company).

The Delhi High Court confirmed the interim order and appointed arbitrator, directing the arbitration to be conducted in Mumbai. This was assailed before the apex court.

A bench comprising Justice Pinaki Chandra Ghose and Justice RF Nariman, referring to various decisions in the matter, observed that in arbitration law, the moment “seat” is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties.

“The moment the seat is designated, it is akin to an exclusive jurisdiction clause,” the bench observed.

Setting aside the Delhi High Court order, it said in the facts of this case, Mumbai courts alone have jurisdiction to the exclusion of all other courts in the country, as the juridical seat of arbitration is at Mumbai.

Article referred: http://www.livelaw.in/exclusive-jurisdiction-clause-arbitration-agreement-fixed-seat-arbitration-can-jurisdiction-sc-read-judgment/

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