Arbitration seat determines courts’ jurisdiction: SC

The Supreme Court of India recently held that when an agreement provided for a specific seat of arbitration and restricted the jurisdiction of all courts except for the court of the seat of arbitration, no other court will have any jurisdiction.

The Court further clarified that even if the cause of action arose in other jurisdictions, the court of other jurisdictions will still not have any jurisdiction as their jurisdiction has been ousted by the parties through an agreement.

The Court reiterated that once the seat of arbitration has been fixed, it would be in the nature of an exclusive jurisdiction clause as to the courts which exercise supervisory powers over the arbitration.

The Court held “Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to “seat” is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction – that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Sections 16 to 21 of the CPC be attracted. In arbitration law however, as has been held above, 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.”

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