Delhi high court: Designation of venue along with institutional arbitration rules indicates seat, rejects objection based on generic jurisdiction clause

Delhi High Court affirms that designating a venue with institutional arbitration rules establishes the seat, dismissing objections based on generic jurisdiction clauses.

Case Title: Government of India v. Qingdao Construction Engineering Group Company Ltd.

Coram: Justice Harish Vaidyanathan Shankar

The Delhi High Court has held that it has territorial jurisdiction to entertain a petition under Section 34 of the Arbitration and Conciliation Act, 1996, rejecting an application filed under Order VII Rule 11 of the Code of Civil Procedure, 1908 seeking rejection of the petition for want of jurisdiction.

Background

The dispute arose from an EPC Agreement dated May 7, 2018 between the parties. Clause 26.3.1 of the Agreement provided that disputes would be referred to arbitration under the Rules of the International Centre for Alternative Dispute Resolution, New Delhi, with the venue of arbitration stated to be New Delhi. Clause 27.1 separately provided that the Agreement would be governed by the laws of India and that courts at Panaji, Goa would have exclusive jurisdiction over matters arising out of or relating to the Agreement. The Supreme Court, by order dated July 28, 2023 in a Special Leave Petition between the parties, had earlier appointed a sole arbitrator and directed that the arbitration be held at New Delhi.

Contentions

The petitioner argued that Clause 26.3.1 designated New Delhi as the seat of arbitration, more so since the Supreme Court had directed the arbitration to be conducted at New Delhi, and that Clause 27.1 was a generic clause governing law and jurisdiction unrelated to arbitration. The respondent argued that venue is distinct from seat, that Clause 26.3.1 only fixed New Delhi as venue, and that Clause 27.1 constituted contrary indicia conferring exclusive jurisdiction on courts at Panaji, Goa.

Findings Of The Court

Relying on the Supreme Court's decision in BGS SGS SOMA JV v. NHPC Ltd. and the decision in J&K Economic Reconstruction Agency v. Rash Builders India (P) Ltd., the Court held that where an arbitration clause states that arbitration proceedings shall be held at a stated venue, and where a supranational or institutional body of rules is made applicable, such indicia point to that venue being the seat of arbitration. The Court found that Clause 26.3.1 satisfied both tests, since it stated that arbitration shall be held at New Delhi and made the ICADR Rules applicable.

The Court held that Clause 27.1, being a generic governing law and jurisdiction clause not specifically referring to arbitration proceedings, could not override or supersede the specific designation of New Delhi in the arbitration clause. Reliance was placed on the coordinate Bench decisions in Moonwalk Infra projects Pvt. Ltd. v. S.R. Constructions & Ors and Yassh Deep Builders LLP v. Sushil Kumar Singh and Anr, which had held that a specific venue clause confers supervisory jurisdiction on the court of that venue over a generic jurisdiction clause.

Holding that New Delhi is the seat of arbitration, the Court dismissed the application challenging its territorial jurisdiction and directed the Section 34 petition to be listed for hearing on merits.