International arbitration agreements, particularly in commercial agreements, have specific mention of the ‘Venue’ i.e. the location of the arbitration proceedings and ‘Seat’ i.e. the specific jurisdiction of the court to exercise its juridical powers with respect to arbitration proceedings. However, where an arbitration agreement has a mention of the ‘Venue’ for holding the proceedings but does not specify the ‘Seat’, what principle would apply to determining the applicability of laws of a particular country for deciding the post-award arbitration proceedings? This question was inquired into in Union of India vs. Hardy Exploration and Production before the Supreme Court.

The present appeal was filed challenging the Delhi High Court order that held that the Indian Courts do not have jurisdiction to entertain the application of the Appellant under Section 34 of the Arbitration and Conciliation Act to question the legality of the award rendered in an international commercial arbitration proceeding. While the Counsel for the Appellant Mr. Tushar Mehta, learned ASG; and the Counsel for the Respondent Dr. Abhishek Manu Singhvi argued on the question of applicable principle in the parties to decide the place of ‘Seat’ in the absence of specific mention of the venue of ‘Seat’ in the arbitration agreement, the Supreme Court observed as follows:

“In our opinion, though, the question regarding the “seat” and “venue” for holding arbitration proceedings by the arbitrators arising under the Arbitration Agreement/International Commercial Arbitration Agreement is primarily required to be decided keeping in view the terms of the arbitration agreement itself, but having regard to the law laid down by this Court in several decisions by the Benches of variable strength as detailed above, and further taking into consideration the aforementioned submissions urged by the learned counsel for the parties and also keeping in view the issues involved in the appeal, which frequently arise in International Commercial Arbitration matters, we are of the considered view that this is a fit case to exercise our power under Order VI Rule 2 of the Supreme Court Rules, 2013 and refer this case (appeal ) to be dealt with by the larger Bench of this Court for its hearing.”

The primary issue at hand awaits to be concluded upon by the Hon’ble Supreme Court which is of critical importance to future international commercial arbitration proceedings.

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Judgment:Union of India Versus Hardy Exploration and Production