Multiple Seats Of Arbitration Will Not Invalidate Agreement: Delhi HC

The Delhi High Court recently held that if an arbitration agreement allows the parties to choose multiple seats of arbitration, it will not be void under Section 29 of the Indian Contract Act 1872.

Section 29 of the Indian Contract Act states that agreements, the meaning of which is not certain, or capable of being made certain, are void.

The matter pertained to a Purchase Order which came to be executed between the parties for handling the transportation of coal from Kandla Port to Bhachau Plant and Bedi Port to Khambalia Plant. The parties also executed the Standard Terms and Conditions for Transport Agreement to the Purchase Order. Since there were shortfalls in the amount which was contracted to be transported and the amount actually transported and since there were disputes, the petitioner invoked the Arbitration Clause.

The Counsel for the respondent stated that as per the arbitration agreement, the seat of arbitration shall be “local jurisdiction in Goa, local jurisdiction in Karnataka/ Delhi”. He contended  that the particular Clause was hit by Section 29 of the Indian Contract Act, 1872, and Section 20 of CPC should apply to determine jurisdiction. He stated that no part of cause of action arose within the territorial jurisdiction of the Court and it shall only be the Courts at Gujarat, where cause of action arose, which will have jurisdiction to entertain the Section 11 (Arbitration and Conciliation Act 1996) application.

Bench comprising Justice Jasmeet Singh observed that, "In the present case, the arbitration clause clearly states that the seat of arbitration is Goa, Karnataka or Delhi. It merely gives a choice to the parties to invoke the jurisdiction of either of these courts. There is no ambiguity in the clause, as it intended for the parties to choose either of these jurisdictions to govern the arbitration proceedings invoked by the parties. The same is certain, or is capable of being made certain. Hence, I am of the view that arbitration clause is not hit by Section 29 of the ICA." 

The Court said that because the seat of arbitration was at three places, the parties were at liberty to approach any one of the said three places.

The Court appointed a sole arbitrator in the matter and allowed the Section 11 application.

Counsel for Petitioner: Mr. Krishendu Dutta, Sr. Adv. with Mr. Anurag Tandon, Mr. Rajat Sinha, Mr. Shiva Pande, Advs.

Counsel for Respondent: Mr. Navin Pahwa, Sr. Adv. with Ms. Aastha Mehta, Mr. Yash Goyal, Ms. Prerna Mohapatra, Advs.