Holding

The petition under Section 11 is not maintainable because the seat of arbitration is Dubai, UAE, and the arbitration agreement is governed by UAE law, rendering Part I of the Arbitration and Conciliation Act, 1996 inapplicable.

Summary

M/s Arif Azim Co. Ltd., an Afghan distributor, entered into a 2010 distributorship agreement with M/s Micromax Informatics FZE (UAE) that contained an arbitration clause designating Dubai as the venue and subjecting the arbitration to UAE Arbitration and Conciliation rules. After a credit dispute, the petitioner sought appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, claiming the Indian courts had jurisdiction. The Supreme Court examined whether Part I of the 1996 Act applied, focusing on the seat of arbitration and the governing law of the arbitration agreement. Applying the post‑BALCO rule that Part I applies only when the seat is in India or Indian law governs, and interpreting the clause designating Dubai as the seat (per the Shashoua principle and the BGS‑SOMA test), the Court held the seat was Dubai and the agreement was governed by UAE law. Consequently, the Indian court lacked jurisdiction to entertain the Section 11 petition and dismissed it.

Issues considered

Whether the petition under Section 11 of the Arbitration and Conciliation Act, 1996 is maintainable in India.
Whether Part I of the Arbitration and Conciliation Act, 1996 applies to the arbitration clause in the distributorship agreement.
Whether the seat of arbitration under the agreement is in India or elsewhere.

Legislation cited

Arbitration Act, 1940
Arbitration and Conciliation Act, 1996s. 11, s. 20, s. 2(2), s. 37, s. 45, s. 48(1)(e), s. 9
Arbitration (Protocol and Convention) Act, 1937
Foreign Awards (Recognition and Enforcement) Act, 1961
UNCITRAL Model Law on International Commercial Arbitration

Headnote

Issue for Consideration (a) Whether the present petition under section 11 of the Arbitration and Conciliation Act, 1996 maintainable in India; (b) whether seat of arbitration designated under the aforesaid Distributorship Agreement is in India; (c) whether could be said to be governed by the Indian laws. Headnotes† Arbitration and Conciliation Act, 1996 – Application of Part-I: Held: Part I of the Act, 1996 and the provisions thereunder only applies where the arbitration takes place in India i.e., where either (I) the seat of

Subjects

Consumer Distributorship AgreementArbitration clauseSection 11 of the Arbitration and Conciliation Act, 1996Seat of arbitrationApplication of Part-I of Arbitration and Conciliation Act, 1996Determination of seat of arbitrationExclusive jurisdiction clauseClosest Connection TestShashoua PrincipleChoices of parties and their intentions in Arbitration agreementDoctrine of Forum Non Conveniens

Judgment

[2024] 11 S.C.R. 1142 : 2024 INSC 850

M/s Arif Azim Co. Ltd.
v.
M/s Micromax Informatics Fze
(Arbitration Petition No. 31 of 2023)
07 November 2024
[Dr. Dhananjaya Y. Chandrachud, CJI.,
J.B. Pardiwala* and Manoj Misra, JJ.]

Issue for Consideration
(a) Whether the present petition under section 11 of the Arbitration
and Conciliation Act, 1996 maintainable in India; (b) whether
seat of arbitration designated under the aforesaid Distributorship
Agreement is in India; (c) whether the arbitration agreement could
be said to be governed by the Indian laws.

Headnotes†
Arbitration and Conciliation Act, 1996 – Application of Part-I:
Held: Part I of the Act, 1996 and the provisions thereunder only
applies where the arbitration takes place in India i.e., where either
(I) the seat of arbitration is in India OR (II) the law governing the
arbitration agreement are the laws of India. [Para 71(i)]

Arbitration and Conciliation Act, 1996 – Part-I – Arbitration
agreements executed after or prior to 06.09.2012 – Applicability
of provisions of the Act:
Held: Arbitration agreements executed after 06.09.2012 where
the seat of arbitration is outside India, Part I of the Act, 1996 and
the provisions thereunder will not be applicable and would fall
beyond the jurisdiction of Indian courts – Even those arbitration
agreements that have been executed prior to 06.09.2012 Part I
of the Act, 1996 will not be applicable, if its application has been
excluded by the parties in the arbitration agreement either explicitly
by designating the seat of arbitration outside India or implicitly by
choosing the law governing the agreement to be any other law
other than Indian law. [Paras 71(ii), 71(iii)]

* Author
[2024] 11 S.C.R. 1143

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

Arbitration and Conciliation Act, 1996 – Determination of
seat – Exclusive jurisdiction clause:
Held: The moment ‘seat’ is determined, it would be akin to an
exclusive jurisdiction clause whereby only the jurisdictional courts
of that seat alone will have the jurisdiction to regulate the arbitral
proceedings – The notional doctrine of concurrent jurisdiction
has been expressly rejected and overruled by this Court in its
subsequent decisions. [Para 71(iv)]

Arbitration and Conciliation Act, 1996 – Determination of
seat – Closest Connection Test – No longer a viable criterion:
Held: The ‘Closest Connection Test’ for determining the seat of
arbitration by identifying the law with which the agreement to
arbitrate has its closest and most real connection is no longer a
viable criterion for determination of the seat or situs of arbitration
in view of the Shashoua Principle – The seat of arbitration cannot
be determined by formulaic and unpredictable application of
choice of law rules based on abstract connecting factors to the
underlying contract – Even if the law governing the contract has
been expressly stipulated, it does not mean that the law governing
the arbitration agreement and by extension the seat of arbitration
will be the same as the lex contractus. [Para 71(v)]

Arbitration and Conciliation Act, 1996 – Determination of seat
of Arbitration – More appropriate criterion:
Held: The more appropriate criterion for determining the seat of
arbitration in view of the subsequent decisions of this Court is that
where in an arbitration agreement there is an express designation of
a place of arbitration anchoring the arbitral proceedings to such place,
and there being no other significant contrary indicia to show otherwise,
such place would be the ‘seat’ of arbitration even if it is designated
in the nomenclature of ‘venue’ in the arbitration agreement – Where
the curial law of a particular place or supranational body of rules
has been stipulated in an arbitration agreement or clause, such
stipulation is a positive indicium that the place so designated is
actually the ‘seat’, as more often than not the law governing the
arbitration agreement and by extension the seat of the arbitration
tends to coincide with the curial law. [Para 71(vi), 71(vii)]

Arbitration and Conciliation Act, 1996 – Seat of Arbitration –
Choices of parties and their intentions in Arbitration agreement:
1144 [2024] 11 S.C.R.

Digital Supreme Court Reports

Held: Merely because the parties have stipulated a venue without
any express choice of a seat, the courts cannot sideline the specific
choices made by the parties in the arbitration agreement by imputing
these stipulations as inadvertence at the behest of the parties as
regards the seat of arbitration – Deference has to be shown to
each and every choice and stipulations made by the parties, afterall
the courts are only a conduit or means to arbitration, and the sum
and substance of the arbitration is derived from the choices of the
parties and their intentions contained in the arbitration agreement –
It is the duty of the court to give weight and due consideration to
each choice made by the parties and to construe the arbitration
agreement in a manner that aligns the most with such stipulations
and intentions. [Para 71(viii)]

Arbitration and Conciliation Act, 1996 – Where there is no
express or implied designation of a place of arbitration –
Closest Connection Test:
Held: It is not said that the Closest Connection Test has no
application whatsoever, where there is no express or implied
designation of a place of arbitration in the agreement either in the
form of ‘venue’ or ‘curial law’, there the closest connection test may
be more suitable for determining the seat of arbitration. [Para 71(ix)]

Arbitration and Conciliation Act, 1996 – Doctrine of Forum
Non Conveniens – Where two or more possible places that
have been designated in the arbitration agreement either
expressly or impliedly:
Held: Where two or more possible places that have been designated
in the arbitration agreement either expressly or impliedly, equally
appear to be the seat of arbitration, then in such cases the conflict
may be resolved through recourse to the Doctrine of Forum Non
Conveniens, and the seat be then determined based on which
one of the possible places may be the most appropriate forum
keeping in mind the nature of the agreement, the dispute at hand,
the parties themselves and their intentions – The place most suited
for the interests of all the parties and the ends of justice may be
determined as the ‘seat’ of arbitration. [Para 71(x)]

Arbitration and Conciliation Act, 1996 – s.11 – Petitioner herein
and respondent no.1 entered into a Consumer Distributorship
Agreement inter-alia for distribution of handsets manufactured
by respondent no.1 and the same was executed by the
[2024] 11 S.C.R. 1145

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

parties in Kabul, Afghanistan – Distributorship Agreement
also contained Arbitration clause – The said Distributorship
Agreement inter-alia stipulates that the said agreement will be
governed by the laws of UAE and subject to the non-exclusive
jurisdiction of the Dubai Courts – Dispute arose between the
parties – Petitioner invoked Arbitration clause – The petitioner
sought appointment of an arbitrator u/s. 11(6) of the Act:
Held: In the instant case, clause 26 of the aforesaid Distributorship
Agreement stipulates that the arbitration shall be subject to UAE
Arbitration and Conciliation rules – The aforesaid arbitration clause
further designates only one place i.e., Dubai, UAE as the venue
of arbitration – Since only one place has been designated in the
arbitration clause, and such place has been categorically fixed
inasmuch as there is no scope for the place designated as venue
to change in terms of Clause 26, and furthermore, the said clause
has explicitly stipulated that the curial law would be the UAE
Arbitration and Conciliation rules and there being no other contrary
indicia let alone a significant contrary indicia, this Court is of the
considered opinion that the Dubai, UAE has not been designated
merely as a venue but rather as the juridical seat of arbitration in
terms of clause 26 of the Distributorship Agreement – And since
the Distributorship Agreement already designates Dubai, UAE as
the seat of arbitration, the same would be akin to an exclusive
jurisdiction clause with only the courts in Dubai, UAE having the
jurisdiction over such arbitration – This Court, also will not have
jurisdiction to entertain the present Section 11 petition because,
Part I of this Act, 1996 will not be applicable where the seat of
arbitration is outside India or where the law governing the arbitration
agreement is not Indian laws – As the Distributorship Agreement,
more particularly Clauses 26 & 27 respectively makes it abundantly
clear that the seat of arbitration is in fact Dubai, UAE, furthermore
both the law governing the contract and the curial law are not
Indian laws – Even if it is assumed that Clause 27 of the aforesaid
Distributorship Agreement conferred concurrent jurisdiction to both
the courts in UAE and the other courts and thus, the petitioner
herein was well-within its right to approach this Court in terms of the
non-exclusive jurisdiction clause for the purpose of appointment of
arbitrator, this Court can decline to exercise its jurisdiction if there
exists a more appropriate forum – The more appropriate forum
suitable for appointment of arbitrator is Dubai, UAE and not the
courts of India – Thus, the present petition under Section 11 of the
Act, 1996 is not maintainable as neither the seat of arbitration is
1146 [2024] 11 S.C.R.

Digital Supreme Court Reports

India nor is the arbitration agreement governed by laws of India.
[Paras 55, 56, 62, 63, 70, 72]

Case Law Cited
National Thermal Power Corporation v. Singer Company & Ors.
[1992] 3 SCR 106 : (1992) 3 SCC 551; Sumitomo Heavy Industries
Ltd. v. ONGC Ltd. & Ors. [1997] Supp. 6 SCR 186 : (1998) 1
SCC 305; Bhatia International v. Bulk Trading S.A. [2002] 2 SCR
411 : (2002) 4 SCC 105; Venture Global Engineering v. Satyam
Computer Services Ltd. [2008] 1 SCR 501 : (2008) 4 SCC 190;
Indtel Technical Services (P) Ltd. v. W.S. Atkins Rail Ltd. [2008]
12 SCR 673 : (2008) 10 SCC 308; Enercon (India) Ltd. & Ors.
v. Enercon GMBH & Anr [2014] 2 SCR 855 : (2014) 5 SCC 1;
BGS SGS SOMA JV v. NHPC LTD. [2019] 17 SCR 742 : (2020)
4 SCC 234; Mankastu Impex Private Ltd. v. Airvisual Ltd. [2020]
4 SCR 565 : (2020) 5 SCC 399; Indus Mobile Distribution (P) Ltd.
v. Datawind Innovations (P) Ltd [2017] 4 SCR 744 : (2017) 7 SCC
678; Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. [2013] 7 SCR
581 : (2013) 9 SCC 32; Modi Entertainment Network v. W.S.G.
Cricket Pte. Ltd [2003] 1 SCR 480 : (2003) 4 SCC 341 – relied on.
Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc
[2012] 12 SCR 327 : (2012) 9 SCC 552; Union of India v. Reliance
Industries Ltd. & Ors. [2015] 10 SCR 85 : (2015) 10 SCC 213;
Roger Shashoua (2) v. Mukesh Sharma [2017] 7 SCR 442 : (2017)
14 SCC 722 – referred to.
Roger Shashoua (1) v. Sharma [2009] EWHC 957 (Comm);
Sulame´rica Cia Nacional de Seguros SA v. Enesa Engelharia SA
(2013) 1 WLR 102 (CA); Spiliada Maritime Corp v. Cansulex Ltd.
[1987] AC 460 – referred to.

Books and Periodicals Cited
New York Convention of 1958; UNCITRAL Model Law on
International Commercial Arbitration.

List of Acts
Arbitration and Conciliation Act, 1996; Arbitration (Protocol and
Convention) Act, 1937; Geneva Convention, Arbitration Act,
1940; Foreign Awards (Recognition and Enforcement) Act, 1961;
UNCITRAL Model Law and Rules; UAE Arbitration and Conciliation
Rules.
[2024] 11 S.C.R. 1147

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

List of Keywords
Consumer Distributorship Agreement; Arbitration clause; Section 11
of the Arbitration and Conciliation Act, 1996; Seat of arbitration;
Application of Part-I of Arbitration and Conciliation Act, 1996;
Determination of seat of arbitration; Exclusive jurisdiction clause;
Closest Connection Test; Shashoua Principle; Choices of parties
and their intentions in Arbitration agreement; Doctrine of Forum
Non Conveniens.

Case Arising From
CIVIL ORIGINAL JURISDICTION: Arbitration Petition No. 31 of 2023
(Under Section 11 sub-section (6)(a) read with Section 11 sub-
section (12)(a) of the Arbitration and Conciliation Act, 1996)

Appearances for Parties
R. Sathish, Rajesh Kumar, Mohan Das Kk, Mathan Joseph,
Mrs. S. Geetha, Advs. for the Petitioner.
Mudit Sharma, Ms. Nandini Sharma (Gidwaney), Advs. for the
Respondent.

Judgment / Order of the Supreme Court

Judgment

J.B. Pardiwala, J.

For the convenience of exposition, this judgment is divided into the
following parts: -

INDEX*

A. FACTUAL MATRIX ........................................................... 3
B. SUBMISSIONS OF THE PARTIES ..................................... 11
i. Submissions on behalf of the Petitioner .................. 11
ii. Submissions on behalf of the Respondent .............. 18
C. ISSUES FOR DETERMINATION ..................................... 21

* Ed. Note: Pagination as per the original Judgment.
1148 [2024] 11 S.C.R.

Digital Supreme Court Reports

D. ANALYSIS .......................................................................... 21
i. The Notional Doctrine of Concurrent Jurisdiction
and Applicability of Part I of the Arbitration &
Conciliation Act, 1996 ............................................ 24
a. Pre-BALCO Regime .............................................. 26
b. Post BALCO Regime .......................................... 43
ii. Criterion or Test for Determination of Seat of
Arbitration: Conflict of ‘Venue’ versus ‘Seat’ of
Arbitration ................................................................ 56
a. Closest Connection Test – Place of Arbitration
to be ascertained by the Law governing the
Arbitration Agreement and not the Place of
Arbitration ............................................................. 56
b. The Shashoua Principle – ‘Venue’ to be construed
as ‘Seat’ .............................................................. 71
iii. Whether the Seat of Arbitration in the underlying
Distributorship Agreement is in India? ................ 81
iv. Doctrine of Forum non Conveniens .................... 89
E. CONCLUSION ................................................................... 95

1. The present petition has been filed under Section 11 sub-section
(6)(a) read with Section 11 sub-section (12)(a) of the Arbitration
and Conciliation Act, 1996 (for short, the “Act, 1996”) seeking a
referral of the disputes that have arisen between the parties to
arbitration and consequent appointment of an arbitrator by this
Court in terms of clauses 26 and 27 of the Consumer Distributorship
Agreement respectively dated 09.11.2010 (hereinafter referred to
as the “Agreement”) entered into between the petitioner and the
respondent herein.
2. The petitioner, ‘M/s Arif Azim Co. Ltd.’, is a company based in
Afghanistan, having its registered office at 1st Floor, Zarnigar Hotel,
Mohammed Jan Khan Watt, Kabul, Afghanistan and is inter-alia
engaged in the business of distribution of handsets which are
manufactured by the respondent no. 1 in the territory of Kabul,
Afghanistan. The respondent no. 1, ‘M/s Micromax Informatics FZE’
is a Free Zone Establishment company incorporated under the
[2024] 11 S.C.R. 1149

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

laws of United Arab Emirates having its office at 28, Shed No. 18,
Technology Park, Free Trade Zone, Ras-Al-Khaimah, UAE. Whereas,
the respondent no. 2, ‘M/s Micromax India’ is a public limited company
incorporated in India having its registered office at Block A, Plot No.
21/14, Naraina Industrial Area, Phase-II New Delhi. The respondent
no. 1 company is a wholly owned subsidiary of the respondent no. 2
company with the same Board Members in both the companies,
and together they are engaged in the business of manufacturing,
importing and supplying various mobile handsets under its brand
name ‘Micromax’ worldwide. We may clarify at the outset, that the
respondent no. 2 company herein is a non-signatory to the arbitration
agreement in respect of which the present Section 11 petition has
been filed.

A. FACTUAL MATRIX
3. The petitioner herein and the respondent no. 1 company entered
into a Consumer Distributorship Agreement dated 09.11.2010 (for
short, the “Distributorship Agreement”) inter-alia for the distribution
of handsets which are manufactured by the respondent no. 1 and
the same was executed by the parties in Kabul, Afghanistan. As
per the terms of the aforesaid agreement, the petitioner herein
became the authorized distributor of the respondent’s products
including mobile handsets and was granted a non-exclusive right
to market and distribute the same under its own account in the
territory of Afghanistan as allotted and delineated under the said
agreement.
4. Before proceeding further, it would be apposite to first highlight some
of the salient features of the aforesaid Distributorship Agreement which
are relevant to the case at hand. Under the terms of the aforesaid
Distributorship Agreement, it is stipulated that all payments shall
be made by the distributor in full before the physical delivery of the
products, and it further specifies that the mode of such payment shall
be through a letter of credit (L/C). The Distributorship Agreement
further provides that no additions or modifications made to the
aforesaid agreement shall be binding unless it is in writing and is duly
signed by the authorized representatives of the parties. Additionally,
the said Distributorship Agreement defines a ‘supplementary
agreement’ to mean and include any further agreement or agreements
1150 [2024] 11 S.C.R.

Digital Supreme Court Reports

that may be executed by the parties including such other terms and
conditions that are not incorporated in the main agreement. The
relevant clauses read as under: -
“1. DEFINITIONS
In this agreement, unless the context otherwise requires,
the following expressions have the following meanings:

xxx xxx xxx
Supplementary Agreement: means the further
agreement(s) as may be executed between the parties
including such other commercial terms and conditions
which are not incorporated in this Agreement.

xxx xxx xxx
5. DISTRIBUTOR’S OBLIGATIONS

xxx xxx xxx
5.4 Payment
5.4.1 Invoice and Payment Terms. Unless credit terms
have been expressly agreed by Micromax, payment for the
Products shall be made through irrevocable and confirmed
letter of credit (L/C) in full before physical delivery of the
Products to Distributor (or Distributor’s customer). Time
for payment is of the essence and Micromax reserves the
right to charge interest on sums overdue, on a day to day
basis at the rate of 24% per annum. Such interest shall
be payable on demand.
5.4.2. Payments not received by Micromax as per the
payment terms shall constitute a default by the Distributor.
Micromax shall have the right to invoke the bank guarantee
furnished by the Distributor for securing payments in case
of default. Distributor agrees not to seek any adjustments,
set-off of any other amounts outstanding to Micromax in
respect of the bank guarantee nor counter claim from
Micromax.

xxx xxx xxx
[2024] 11 S.C.R. 1151

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

23. ENTIRE AGREEMENT
23.1 This Agreement together with the Conditions of
Sale, supersedes all prior agreements, arrangements,
understandings and undertakings between the parties
and constitutes the entire agreement between the parties
relating to the subject matter hereof.
23.2 No addition to or modification of any provision of
this Agreement shall be binding upon the parties unless
made by a written instrument signed by a duly authorized
representative of each of the parties.
23.3 Distributor hereby warrants to Micromax that it has
not been induced to enter into the Agreement by any
prior oral or written representations (whether innocently
or negligently made) except as specifically contained in
the Agreement.”
5. Furthermore, the aforesaid Distributorship Agreement inter-alia
stipulates that the said agreement will be governed by the laws of
UAE and subject to the non-exclusive jurisdiction of the Dubai Courts.
The said Distributorship Agreement also contains an arbitration clause
which states that any dispute or difference pertaining to the said
agreement or arising therefrom shall be resolved through arbitration
alone, the venue of the arbitration shall be Dubai, UAE and that the
arbitration shall be subject to the UAE Arbitration & Conciliation rules.
The relevant clauses are reproduced hereunder: -
“26. DISPUTE RESOLUTION
In the event of any dispute or difference arising out of the
Agreement, its validity, applicability, then the same shall be
referred to the arbitration. The arbitration shall be subject
to UAE Arbitration and Conciliation rules made there under.
The venue of arbitration shall be Dubai, UAE.
27. LAW AND JURISDICTION
This Agreement shall be governed by and construed in
accordance with the laws of UAE and shall be subject to
the non-exclusive jurisdiction of the Dubai Courts.”
6. Pursuant to the aforesaid Distributorship Agreement several
transactions took place between the petitioner and the respondents
1152 [2024] 11 S.C.R.

Digital Supreme Court Reports

for the purchase and distribution of mobile handsets. It is the case
of the petitioner that the business practice mutually followed by the
parties for undertaking these transactions involved the petitioner first
placing a purchase order, after which the respondents would raise
an invoice, and the requisite payment would then be made either to
the respondent no. 1 or the respondent no. 2 as per the instructions
of the respondents.
7. Around March, 2012 the petitioner herein placed an order for
purchase of 8000 (approx..) mobile handsets from the respondent
no. 1. Against this purchase the respondent no. 1 raised a proforma
invoice to the tune of $109,500/- (USD One hundred nine thousand
five hundred) and as per the invoice the said amount was payable
by the petitioner to the respondent no. 1 company.
8. According to the petitioner, although the terms of the Distributorship
Agreement mandated that both the delivery of handsets and the
payments thereof be processed through the respondent no. 1 yet,
interestingly, this time the handsets and the corresponding invoices
for the same were issued by the respondent no. 2 instead. The
respondent no. 2 supplied only 7300 handsets to the petitioner and
issued a new invoice for the same amount i.e., $109,500/- (USD
One hundred nine thousand five hundred), which was now payable
directly to the respondent no. 2 instead.
9. It is the case of the petitioner herein that as on 12.05.2012, the
petitioner company had a credit balance of $190,625/- (USD One
hundred ninety six hundred twenty-five) with the respondent no. 1
company i.e., the running account of the respondent no. 1 reflected
a sum of $190,625/- (USD One hundred ninety six hundred twenty-
five) in favour of the petitioner company as outstanding credit.
However, the respondent no. 2 whilst raising the invoice for supply
of the aforesaid 7300 handsets, ignored the abovementioned credit
balance of the petitioner and demanded payment, to be made directly
to the respondent no. 2 in India.
10. Thereafter some email correspondences were exchanged between
the petitioner company and one Shri Vikas Jain, the executive director
of the respondent no. 1 and the business director of the respondent no.
2 company for the adjustment of the abovementioned credit balance
lying in favour of the petitioner against the outstanding invoices. On
23.10.2012, the respondents vide an email informed the petitioner
[2024] 11 S.C.R. 1153

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

company that since the accounts of Micromax Informatics FZE &
M/s Micromax India are separate, the credit balance lying in its favour
in the respondent no. 1’s account cannot be directly adjusted for the
invoices raised by the respondent no. 2. It further stated that, the
petitioner company should first make payment to the respondent
no. 2 towards the invoices that have been raised, and thereafter,
the respondent no. 1 company would remit the outstanding credit
balance to the petitioner. The relevant portion of the respondent’s
email dated 23.10.2012 is reproduced below: -
“Dt. 23.10.2012
Subject: Account Statement
Dear Sir,
Kindly note that from Arif Azim we need to receive USD
109500 for sales made in MMX India and Need to pay
USD 190625 in respect of advance received respect
of sale to be made in FZE. Both these accounts are of
separate Cos.
Hence we should first receive payment of MMX India
account; then let Micromax FZE pay to Arif.
Regards, Anita”
11. On 15.01.2013, the petitioner made the requisite payment of
$109,500/- (USD One hundred nine thousand five hundred), which
was now payable directly to the respondent no. 2 towards the aforesaid
invoices raised by it. Thereafter, it appears from the materials on
record, that over a period of time many more transactions took place
between the petitioner company and respondent no. 1 inter-alia for
purchase and supply of various products whereby the credit balance
lying in the respondent no.1’s account in favour of the petitioner
company now came out to be $88,425/- (USD Eighty-Eight Thousand
Four Hundred Twenty-Five).
12. On 09.09.2019, the petitioner vide an email again requested Shri
Vikas Jain to confirm the credit balance lying in its favour with the
respondent no. 1 and to undertake steps to transfer the same to the
petitioner’s account. In response, Shri Vikas Jain directed the finance
department of respondent no. 1 to confirm the credit balance lying
1154 [2024] 11 S.C.R.

Digital Supreme Court Reports

with it in favour of the petitioner and further requested the petitioner
to furnish its statement of account so that the two books of account
may be reconciled for making the requisite payment.
13. Thereafter, several more correspondences took place between the
petitioner and Shri Vikas Jain on behalf of the respondents through
emails and texts inter-alia requesting for various documents and
statements for the purpose of ascertaining the outstanding credit
balance in favour of the petitioner. On 06.05.2022, the petitioner
furnished the necessary statement of accounts to the respondents
and requested for an update on the payment.
14. It appears from the material on record, that over the next 2-months
several requests were made by the petitioner to the respondents for
furnishing the outstanding credit balance in its favour and to make
the requisite payment; however, the same were to no avail. Shri
Vikas Jain, on behalf of the respondents’ time to time expressed his
difficulty in ascertaining the exact figure for the outstanding credit
balance, inter-alia citing that it was a very old running account and
that the accountants responsible for maintaining the records had left
the company, and thus requested for more time to do the needful.
15. On 14.09.2022, the petitioner sent a notice for invocation of arbitration
under Section 21 of the Act, 1996, in terms of Clause 26 of the
Distributorship Agreement to the respondent nos. 1 & 2. Vide the
notice, the petitioner raised a claim of $88,425/- (USD Eighty-Eight
Thousand Four Hundred Twenty-Five) with interest @24% p.a. as
per the terms agreed in the Distributorship Agreement and nominated
Shri. V. Giri and Shri. R. Basant, Senior Advocate as its nominee
arbitrators and called upon the respondents to accordingly appoint
an arbitrator either from the above suggested panel or any other
suitable name within 28-days from receipt of the said notice.
16. It is material to note that in the aforesaid notice of invocation dated
14.09.2022, the petitioner further alluded that in the Distributorship
Agreement more particularly Clause 27 the parties had not designated
a specific court to the exclusion of all other courts to adjudicate
the dispute, thus no exclusive jurisdiction had been conferred by
the parties upon any particular court. It further stated that, as the
cause of action had concurrently both in Afghanistan and India, the
petitioner expressed its preference to resolve the dispute through
arbitration administered under the jurisdiction of the courts in India.
[2024] 11 S.C.R. 1155

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

17. Since no reply to the aforesaid notice of invocation of arbitration was
elicited from either of the respondents, the present petition came to
be filed by the petitioner on 19.04.2023 before this Court for seeking
appointment of an arbitrator under Section 11(6) of the Act, 1996 in
other words due to the failure on part of the respondents in nominating
an arbitrator as per the mutually agreed upon terms and procedure
under the aforesaid Distributorship Agreement.

B. SUBMISSIONS OF THE PARTIES

i. Submissions on behalf of the Petitioner.
18. Mr. R. Sathish the learned counsel appearing for the petitioner in
his written submissions has stated thus: -
“WRITTEN SUBMISSIONS MADE BY R. SATHISH,
ADVOCATE ON BEHALF OF THE PETITIONER
1. The Dispute Resolution clause defined the venue of
arbitration as Dubai and the curial law as UAE Arbitration
and Conciliation Rules and the jurisdiction clause,
suggestive of control, does not confer jurisdiction to Dubai
courts to the exclusion of all other courts.
2. For international arbitrations, the concept of seat
assumes greater significance as it acts as the indicator for
both curial law as well as supervisory jurisdiction whereas
venue is not associated with the jurisdiction.
3. The agreement, in so far the identity of Dubai courts,
for jurisdiction, suffers from vagueness in that, it doesn’t
specify which of the courts of Dubai and the laws governing
thereunder, shall have jurisdiction to hear the disputes
among three different courts constituted, namely
(i) The UAE Courts (the language is not English)
(ii) Dubai International Financial Court (DIFC-Common law)
(iii) Abu Dhabi Global court (ADGM-common law).
Therefore, at the threshold, it is submitted that the 2nd part
of clause 27 dealing with jurisdiction that “……….and shall
be subject to the non-exclusive jurisdiction of the Dubai
1156 [2024] 11 S.C.R.

Digital Supreme Court Reports

courts” is a valid opting out of the exclusive jurisdiction
of Dubai courts, as the parties have intended to avoid
impracticable and inconvenient process and procedures as
a result of subsequent amendments and modifications to
the agreement involving 3 countries, Afghanistan, India and
UAE. This submission is discernible from a plain reading
of various clauses in the subject of the agreement as well
as the conduct of the parties including a non -signatory
to the agreement.
4. As held in Bharat Aluminium vs Kaiser Aluminium
Technical Services Inc. 2012 (9)SCC 522, at para 99,
that, it would be a matter of construction of the individual
agreement to decide, whether the designated foreign “seat”
would be read as in fact only providing a “venue”/“place”
where the hearings would be held; and in the present
case on hand, given the choice of UAE Arbitration and
Conciliation Rules as being the curial law and the venue
at Dubai, will not dictate what the governing or controlling
law would be when the 2nd part of clause 27 reiterates
the parties’ autonomy in deciding/choosing the seat by
expressly stating its intention that “This agreement shall
be subject to the non-exclusive jurisdiction of the Dubai
Courts”. Regard being to other clauses in the agreement,
this clause has been incorporated to avoid conflicts related
to the jurisdictions of courts and confer jurisdiction on other
courts too, it is submitted. (Emphasis supplied).
5. At the outset, be it kindly noted that, the relied upon
decision by the respondent to oust the jurisdiction of Indian
courts in Mankatsu Impex Private Limited vs Airvisual
Limited 2010 (5) SCC 399 is misplaced as it was a case of
exclusive jurisdiction in terms conferred by the agreement.
A clause therein like Cl.17.2 which provides “the place
of arbitration shall be Hong Kong”, in addition to, also
providing that “all disputes arising out of the MoU shall be
referred to and finally resolved and administered in Hong
Kong”…is conspicuously absent in the subject agreement.
Still on a matter of law, emphasising the Party’s autonomy,
Mankatsu Impex held;
[2024] 11 S.C.R. 1157

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

Quote “20. It is well-settled that “seat of arbitration” and
“venue of arbitration” cannot be used interchangeably. It
has also been established that mere expression “place of
arbitration” cannot be the basis to determine the intention
of the parties that they have intended that place as the
“seat” of arbitration. The intention of the parties as to the
“seat” should be determined from other clauses in the
agreement and the conduct of the parties.” Unquote
5. Proposition
(i) Where in substance, the parties agreed that the local
laws of one country will govern and control a given
arbitration, the place where the arbitration is to be heard
will not dictate what the governing law or controlling law
will be. (Bharath Aluminium vs Kaiser Aluminium Technical
services 2012 (9) SCC552 at page 613 Para 107.
(ii) When an agreement expressly designates the venue
without any express reference to seat, given the various
factors connecting the dispute to India in a contract
executed in Kabul and wholly to be performed in India
and Afghanistan and the absence of any foreign factors
connecting the dispute to Dubai with its vagueness and
uncertainty of what the parties had intended by their
reference to the “Dubai courts”, the burden is on the
respondents to establish that its terms constituted Dubai
as the seat of arbitration.

SUBMISSIONS ON BEHALF OF THE PETITIONER
6. The petitioner submits that the laws of the country with
which the subject agreement was most closely connected
are India and Afghanistan. The recitals in Sub- Cl. 22.4
(Interpretation Clause) of the Distribution agreement and
the conduct of the parties reveal that the parties had
attached very little importance to its local subsidiary FZE
within the “Micromax Group” of companies that ultimately
signed the Distributor agreement. It was formed to take
advantage of concessional benefits in a free economic
zone. The intention of the parties as to the “seat” should
1158 [2024] 11 S.C.R.

Digital Supreme Court Reports

be determined from other clauses in the agreement and
the conduct of the parties.
7. A plain conjoint reading of the following 6 clauses in
the agreement with a supplementary agreement executed
by Micromax Inc. (Non-signatory parent Co.) in the form
of two emails forming its integral part (Pages 37 to 54)
would negate the contra plea of the respondents as to the
jurisdiction of Indian courts.
(i) Clause 26 Clause 27 deals with Dispute Resolution;
law and jurisdiction.
Quote..”Cl. 26. Dispute Resolution In the event of any
dispute or difference arising out of the agreement, its
validity, applicability, then the same shall be referred
to arbitration. The arbitration shall be subject to UAE
Arbitration and conciliation rules made there under. The
venue of arbitration shall be Dubai, UAE.
Cl. 27. Law and jurisdiction
This shall be governed by and construed in accordance with
the laws of UAE and shall be subject to the non-exclusive
jurisdiction of the Dubai Courts.” ....Unquote
8. Petitioner submits that Clause 27 preserved the party’s
autonomy in allowing the concerned parties to choose their
seat/jurisdiction. The second part of jurisdictional Cl. 27
discloses the intention - an agreement by itself- to opt out
of Dubai court’s jurisdiction and this is what the parties
had intended by their reference to “the non-exclusive
jurisdiction of the Dubai Courts. Since the parties had
agreed not to confer exclusive jurisdiction to courts in
Dubai, neither of the parties to the agreement construed
the arbitration clause as designating courts in Dubai as
the seat of arbitration.
Vide PASL vs GE 2021 SCC online 226.
9. DETERMINATION OF THE SEAT BASED ON THE
CLOSEST CONNECTION TEST IF IT IS UNCLEAR THAT
THE SEAT HAS BEEN DESIGNATED EITHER BY THE
PARTIES.
[2024] 11 S.C.R. 1159

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

The petitioner submits that the laws of the country with
which the subject agreement was most closely connected
is India. However, there is no stipulation whatsoever in
the subject agreement about the supervisory power over
the arbitration proceedings. In Enercon (India) Limited
and others v. Enercon GMBH and another (2014) 5
SCC 1, the arbitration clause provided London as the
venue and not the seat. The Court pointed out various
factors connecting the dispute to India and the absence
of any foreign factors connecting the dispute to England.
Supreme Court held that “the location of the Seat will
determine the courts that will have exclusive jurisdiction
to oversee the arbitration proceedings. It was further
held that the Seat normally carries with it the choice of
that country’s arbitration/curial law”. In the present case,
the parties have only agreed on Dubai as a “Venue” of
arbitration and not the juridical seat of the arbitration.
If Dubai is treated as seat of the arbitration, ipso jure,
local laws will be applied. So much so, the stipulation
regarding the governing law of the agreement -Laws of
UAE - contained in the first part of Cl. 27 will not dictate,
what the governing or controlling law would be, whereas
the second part applies to both the substantive law and
curial law, did not concede an exclusive jurisdiction to
Dubai courts. Therefore on a matter of construction, Dubai
cannot be the seat of Arbitration.
10. In Indus Mobile Distribution Pvt. Ltd. v. Datawind
Innovations Pvt. Ltd. and Ors. (2017) 7 SCC 678 followed
by M/s Emkay Global Financial Services Ltd. v. Girdhar
Sondhi reiterated that “seat” in the context of arbitration
proceedings is akin to an exclusive jurisdiction clause and
would not vest the courts with seat if exclusive jurisdiction
is not conceded.
11. Submission is that “supervisory control over the arbitral
proceedings” is not exclusively given to Dubai courts by
the 2nd part of Clause 27 and the party’s autonomy is
thus preserved.
1160 [2024] 11 S.C.R.

Digital Supreme Court Reports

12. 2nd submission. The Bi-party Agreement executed
between the petitioner and a foreign company in Kabul was
altered by invoking the Group of Companies doctrine by a
non-signatory to the agreement. In terms, the agreement
has become a tri-partite agreement where a non-signatory
to the original agreement directed the petitioner to make a
direct payment of $109500 to India by changing the original
invoice raised by a party to the agreement. Submission
is, 2nd part of Cl.27 envisages a jurisdictional situation
as had happened subsequently by the conduct of parties.
12.1 A jurisdiction clause is suggestive of control. In the
context of this particular case, the Dubai Courts would have
no real control or supervisory jurisdiction over the arbitral
process, in as much as, this supplementary agreement
further reiterates the party’s autonomy of choosing the
juridical seat of Arbitration in consonance with 2nd part
of Cl.27 in which case, a reference to the “venue” cannot
be treated as the “seat” of the arbitration.
12.2 Micromax Inc.’s insistence on payment in India by
altering the original terms is a non-contest/in terrorem
clause or a condition precedent which again substantiates
the Party’s autonomy lest the respondents would have
terminated the subsisting distribution agreement for
violating the supplementary agreement by giving written
notice under clause 15. Equally, clause 16.7 (Effect of
termination), obliges respondents to pay forthwith any
amount standing to the credit of distributor, should they
choose to terminate the agreement. Respondents have
perpetrated a continuous wrong.
12.3. The petitioner’s submission in this regard are
fortified by a plain reading of the following clauses r/w the
supplementary agreement, in the form of emails forming an
integral part of the Agreement u/s 7 (4) (b) and Mc. Dermott
International vs Burn Standard (2006 (11) SCC 181)
Clause 1. Definitions.
Quote “Products: means goods but not spare or
replacement parts supplied by Micromax (but not
[2024] 11 S.C.R. 1161

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

necessarily manufactured, assembled or, in the case of
software, owned by Micromax Inc. or any of its subsidiary
companies or affiliates) to the Distributor. ..Unquote
(emphasis supplied)
Quote “Supplementary agreements: means further
agreement(s) as may be executed between the parties
including such other commercial terms and conditions
which are not incorporated in this agreement”.
Cl. 5.4 Payment
………..
Cl. 5.4.3 “Micromax shall be entitled to deduct from any
monies due to the Distributor any sums owed by Distributor
to Micromax……” Unquote
Cl. 22 Interpretation
………
“22.4. references to Micromax shall be deemed to include
reference to affiliates of Micromax where the context so
requires”.
24. Assignment - Micromax may assign or otherwise
transfer this Agreement or any of its rights and obligations
hereunder whether in whole or in part” …….. Unquote.
12.5 Acting upon the supplementary terms, the petitioner
made a payment of $109500 by SWIFT to Micromax Inc. in
Bombay. (page 64 Annexure P7). In juxtaposition, curated
details of the two emails originating from Sh. Vikash Jain
(deponent in the counter) who is the Executive Director of
Micromax FZE (at page 62 Annex P-4) and an authorised
representative of Micromax Inc. is given below:
Date: 11 December, 2012
Dear Ali Bhai,
Please find attached your debit balance to Micromax, India.
Also sending a credit balance statement from FZE, Would
appreciate if you can make the mentioned payment to
India and we remit credit balance to you back from FZE.
1162 [2024] 11 S.C.R.

Digital Supreme Court Reports

Thanks
Vikas” (Page 52 of the Paper book)
“Date 11 December, 2012
Dear Ali Bhai,
This is about $190K that we owe back to your firm from
FZE. Would appreciate if we can resolve the accounts at
the fastest.
Thanks
Vikas” (Page 54 of the Paper book)
Final submission- Mere expression of venue of arbitration
will not entail that the parties intended it to be the seat. The
intention of the parties- keeping intact Party autonomy -
has to be determined from other clauses of the Agreement
and the conduct of the parties.”

ii. Submissions on behalf of the Respondent.
19. Mr. Mudit Sharma the learned counsel appearing for the petitioner
in his written submissions has stated thus: -
“WRITTEN SUBMISSIONS ON BEHALF OF THE
RESPONDENTS “M/S MICROMAX FZE (UAE)”
I. PETITION NOT MAINTAINABLE AND THIS HON’BLE
COURT LACKS JURISDICTION:
1. It is humbly submitted that this Hon’ble Court does
not have the jurisdiction to either entertain the Petition
under Section 11(6) of the Arbitration and Conciliation
Act, 1996 (“the Act”) and / or appoint an Arbitrator
in terms of the Arbitration Agreement between the
Petitioner and the Respondent i.e. M/s. Micromax
Informatics FZE(UAE) for neither the arbitration seat
is India nor the parties ever envisaged the redressal
of disputes through arbitration in terms of Indian laws
and in India as per the Distributor Agreement dated
09.11.2010 between the Parties (Ann. P-1 @ Pg.
37 ( PDF Pg. 66 of Petition) (hereinafter referred
to as “Distributor Agreement”)
[2024] 11 S.C.R. 1163

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

2. Moreover, admittedly, both the Petitioner (an entity
of Afghanistan) and the Respondent, M/s. Micromax
Informatics FZE(UAE) (an entity of UAE) are body
corporates incorporated, registered and situated
outside India (Please see description of Parties,
Ann. P-1 @Pg.37 (PDF Pg. 66) & 50 (PDF Pg. 79)
of Petition) and the Distributor Agreement admittedly
was entered and executed between the parties
outside India.
3. The Territory defined under the Distributor Agreement
is Afghanistan (Please see Ann. P1 Clause
1 -Territory @Pg.50 (PDF Pg. 66) read with the
Schedule @ PDF Pg. 79 of Petition). All business
transactions are outside India.
4. Clause 26 (Distributor Agreement, Ann. P-1 @
Pg. 49 (Pdf Pg. 78 of Petition) of the Distributor
Agreement provides for dispute resolution at Dubai,
UAE under UAE Arbitration and Conciliation rules.
5. Clause 27 of the Distributor Agreement (Ann. P-1,
@Pg. 49 (Pdf Pg. 78 of Petition) specifically provides
that governing law to be exclusively of UAE.
6. There is clear intent between the parties that Dubai
shall be the seat of Arbitration and the venue in
the present case has to be construed as seat of
arbitration.
7. Section 2 (2) of the Act with respect to the applicability
of Part-1 stipulate that Section 11 of the Act has no
application to arbitrations seated outside India. Thus,
this a an arbitration seated outside India and Part-1
of the Act would have no applicability.
8. An “International Commercial Arbitration” in terms of
Section 2(f) to attract the applicability of Section 11 for
exercise of power of appointment of Arbitrator by this
Hon’ble Court mandates that at least one party should
be an individual or a body corporate in India and the
1164 [2024] 11 S.C.R.

Digital Supreme Court Reports

arbitration agreement should compulsorily provide for
seat of Arbitration in India. Admittedly neither of the
Parties are individuals or body corporates in India
nor the Distributor Agreement provides for arbitration
seat in India.
9. Reliance is placed on the two Judgements of this
Hon’ble Court:
i. “Mankatsu Impex Private Limited Vs.
Airvisual Ltd. (2020) 5 SCC 399”; relevant
Paras being Para 20 at Page 406; Para 25 at
Page 408 and Para 26 and Para 27 at Page
409 and
ii. “BGS SGS Soma JV Vs. NHPC Limited (2020)
4 SCC 234”; relevant Paras being Paras 61, 62
and 67 at are Page 242).
10. It is further submitted that the use of “non-exclusive
jurisdiction of Dubai Courts” in Distributor Agreement
did not ever envisage jurisdiction of Courts outside
UAE and in no manner whatsoever the “Courts of
India”. The word “non-exclusive: has been used in
the context that jurisdiction of other Courts in UAE
may not be restricted.
11. Invoking of the provisions under section 11 of the
Act; would tantamount to re-writing the terms of
the Distributor Agreement and taking away parties’
autonomy which is the sole principle on which
arbitration is based. As such; this Hon’ble Court
cannot exercise its powers of appointment of
Arbitrator to the present alleged dispute between
the Parties.
12. Given that the Governing law and jurisdiction is of
Courts in UAE and Arbitration is stipulated to be
under UAE Arbitration and Conciliation rules ; this
Hon’ble Court has no jurisdiction to either entertain
the present Petition and apply any provisions of the
Arbitration Act or any other Indian law.
[2024] 11 S.C.R. 1165

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

II. NO PRIVITY OF CONTRACT BETWEEN PETITIONER
AND MICROMAX INFORMATICS LTD. (INDIA):
13. Admittedly the Distributor Agreement dated 09.11.2010
containing the Arbitration Clause provides for dispute
resolution between the Petitioner and Respondent,
M/s. Micromax Informatics FZE (UAE), an entity of
UAE. Admittedly, Micromax Informatics Ltd. (India)
is neither a party nor a signatory to the Distributor
Agreement. Micromax Informatics Ltd. (India) is
not even a Respondent to the present proceedings
but has been sought to be impleaded by an Interim
Application No.110064/2023. Thus, there exists no
privity of contract between the Petitioner and the
Indian Entity, Micromax Informatics Ltd. (India).
14. Further, the Petitioner has sought to rely on
communications between the Parties to establish
privity of contract and assert Micromax Informatics
Ltd. (India) as party to dispute. But in an email
dated 23.12.2012 (Ann. P-2 @Pg.52 (PDF Pg. 81)
of Petition); Micromax Informatics Ltd. (India) while
making reference to M/s. Micromax Informatics FZE
(UAE) and Micromax Informatics Ltd. (India) has
explicitly and categorically stated that the accounts
of both companies are separate and there are sums
receivable in Micromax Informatics Ltd. (India).
15. Even assuming though not admitting that the
transactions with Micromax India were under the
Distributor Agreement then too, the terms of the
Distributor Agreement with respect to territory,
rules of arbitration, governing law, jurisdiction and
other terms of agreement would remain same and
cannot be considered to be varied. The Distributor
Agreement in Clause 23.2 (Ann. P-1 at Pg. 48) (PDF
Pg 77) stipulates that no addition to or modification
of any provision of this agreement shall be binding
unless made by a written instrument signed by duly
authorized representative of each of the parties.
1166 [2024] 11 S.C.R.

Digital Supreme Court Reports

In view of the above, it is most respectfully prayed that
the present Petition may kindly be dismissed.”

C. ISSUES FOR DETERMINATION
20. Having heard the learned counsel appearing for the parties and
having gone through the materials on record, the following questions
of law fall for our consideration: -
I. Whether, the present petition under Section 11 of the Act, 1996
is maintainable?
II. Whether, Part I of the Act, 1996 is applicable to the arbitration
clause contained in the Distributorship Agreement dated
09.11.2010?
III. What is the seat of the arbitration in terms of the Distributorship
Agreement dated 09.11.2010?

D. ANALYSIS
21. It is necessary to delve into the history of the law of arbitration in
India. Prior to the 1996 Act, three Acts governed the law of Arbitration
in India — the Arbitration (Protocol and Convention) Act, 1937, which
gave effect to the Geneva Convention, the Arbitration Act, 1940 (for
short, the “Act, 1940”), which dealt with domestic awards, and the
Foreign Awards (Recognition and Enforcement) Act, 1961 (for short,
the “Act, 1961”) which gave effect to the New York Convention of
1958 and which dealt with challenges to awards made which were
foreign awards. Thereafter, in order to consolidate and amend the law
relating to domestic arbitration, international commercial arbitration,
enforcement of foreign arbitral awards and to define the law relating
to conciliation, taking into account the said UNCITRAL Model Law
and Rules, the Act, 1996 was enacted.
22. The Act, 1996 is divided into four parts. Part I which is headed
“Arbitration”; Part II which is headed “Enforcement of Certain Foreign
Awards”; Part III which is headed “Conciliation” and Part IV being
“Supplementary Provisions”.
23. There was no concept of “juridical seat” or “situs of arbitration” under
the Act, 1940, rather the jurisdiction of courts was determined on the
basis of the definition of “court” under Section 2(c) of the Act, 1940
[2024] 11 S.C.R. 1167

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

which was defined as any civil court having jurisdiction to decide
questions forming the subject-matter of the reference to arbitration
if the same had been the subject-matter of a suit.
24. Under the UNCITRAL Model Law on International Commercial
Arbitration (as adopted by the United Nations Commission on
International Trade Law on 21-6-1985) which forms the basis of the
Act, 1996, the concept of ‘place of arbitration’ or ‘seat of arbitration’
was encompassed in Article 20 which reads as under: -
“20. Place of arbitration.—
(1) The parties are free to agree on the place of
arbitration. Failing such agreement, the place of
arbitration shall be determined by the Arbitral Tribunal
having regard to the circumstances of the case,
including the convenience of the parties.
(2) Notwithstanding the provisions of paragraph (1) of
this article, the Arbitral Tribunal may, unless otherwise
agreed by the parties, meet at any place it considers
appropriate for consultation among its members,
for hearing witnesses, experts or the parties, or for
inspection of goods, other property or documents.”
25. When the Act, 1996 was enacted replacing the earlier Act, 1940, a
new provision of Section 20 was inserted by the legislature which was
absent in the earlier Act, 1940. The said provision reads as under: -
“20. Place of arbitration.—
(1) The parties are free to agree on the place of arbitration.
(2) Failing any agreement referred to in sub-section (1),
the place of arbitration shall be determined by the
Arbitral Tribunal having regard to the circumstances
of the case, including the convenience of the parties.
(3) Notwithstanding sub-section (1) or sub-section (2),
the Arbitral Tribunal may, unless otherwise agreed by
the parties, meet at any place it considers appropriate
for consultation among its members, for hearing
witnesses, experts or the parties, or for inspection
of documents, goods or other property.”
1168 [2024] 11 S.C.R.

Digital Supreme Court Reports

26. A cursory reading of the aforesaid provision would reveal that it is a
replication of Article 20 of the UNCITRAL Model Law whereunder,
the place or seat of arbitration has been given pride and primacy.
However, despite the aforesaid inclusion, the legislature retained
the definition of “court” from the Act, 1940 in Section 2(e) of the
Act, 1996 with a minor tweak that instead of any civil court of the
lowest grade competent to entertain the subject-matter, now only the
principal civil court or the High Court of original jurisdiction which
is competent to entertain the subject-matter shall have jurisdiction.
Due to this, the concept of juridical seat of the arbitral proceedings
and its interrelationship with the jurisdiction of courts in respect of
arbitral proceedings the Doctrine of Concurrent Jurisdiction emerged
in the Indian Arbitration Regime.

i. The Notional Doctrine of Concurrent Jurisdiction and
Applicability of Part I of the Arbitration & Conciliation
Act, 1996.
27. It can thus be seen from the discussion in the preceding paragraphs
of this judgment that the scheme of the Act, 1996 is bifurcated into
distinct parts being Part I, II, III & IV. Each of these parts delineates
a unique scheme that deals with different aspects of arbitration or
conciliation as the case may be. Section 11 of the Act, 1996 which
inter-alia empowers this Court to appoint an arbitrator in case of an
international commercial arbitration is contained in Part I of the said
Act. Section 2(2) in Part I of the Act, 1996 expressly provides that
this part (sic Part I and by extension the provisions thereunder) shall
apply where the place of arbitration is in India. The said provision is
reproduced hereunder: -
“2. Definitions.

xxx xxx xxx
(2) This Part shall apply where the place of arbitration is
in India.
Provided that subject to an agreement to the contrary the
provisions of section 9, 27 and clause (a) of sub-section
(1) and sub-section (3) of Section 37 shall also apply to
international commercial arbitration, even if the place of
arbitration is outside India, and an arbitral award made or
[2024] 11 S.C.R. 1169

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

to be made in such place is enforceable and recognized
under the provisions of Part II of this Act.”
28. Thus, a cursory reading of the aforesaid provision makes it clear that
the exercise of power to appoint an arbitrator under Section 11 of the
Act, 1996 is dependent upon whether the said Part is applicable in
the first place or not. As such it would be apposite to first understand
the scope of Part I of the Act, 1996, more particularly the import of
the expression “where the place of arbitration is in India” occurring
in Section 2(2) of the Act and in which situations is the said Part
applicable in order to enable this Court to exercise its powers under
Section 11 to appoint an arbitrator.

a. Pre-BALCO Regime.
29. In National Thermal Power Corporation v. Singer Company &
Ors. reported in (1992) 3 SCC 551, although the award which was
the subject-matter of the said case had been challenged under the
then Act, 1940 yet the observations made therein by this Court in
regards the applicability of the Act, 1940 are significant insofar as the
Act, 1996 is concerned. In the aforesaid case, the question before
this Court was whether the Act, 1940 was applicable to the arbitration
agreement between the parties therein. This Court held as follows: -
(i) First, it held that the choice of law governing the arbitration
agreement i.e., the lex arbitri would determine which system of
law would be applicable. It observed that since the arbitration
agreement therein was to be governed by Indian laws, the Act,
1940 would be applicable to such arbitration proceedings. The
relevant observations read as under: -
“2. The National Thermal Power Corporation (the
‘NTPC’) appeals from the judgment of the Delhi
High Court in FAO (OS) No. 102 of 1990 dismissing
the NTPC’s application filed under Sections 14, 30
and 33 of the Arbitration Act, 1940 (No. X of 1940)
to set aside an interim award made at London by
a tribunal constituted by the International Court of
Arbitration of the International Chamber of Commerce
(the “ICC Court”) in terms of the contract made at
New Delhi between the NTPC and the respondent —
the Singer Company (the ‘singer’) for the supply of
1170 [2024] 11 S.C.R.

Digital Supreme Court Reports

equipment, erection and commissioning of certain
works in India. The High Court held that the award
was not governed by the Arbitration Act, 1940; the
arbitration agreement on which the award was made
was not governed by the law of India; the award fell
within the ambit of the Foreign Awards (Recognition
and Enforcement) Act, 1961 (Act 45 of 1961) (the
‘Foreign Awards Act’); London being the seat of
arbitration, English courts alone had jurisdiction to
set aside the award; and, the Delhi High Court had
no jurisdiction to entertain the application filed under
the Arbitration Act, 1940.
xxx
47. The decisions relied on by counsel for the Singer
do not support his contention that the mere fact
of London being the place of arbitration excluded
the operation of the Arbitration Act, 1940 and the
jurisdiction of the courts in India. In Whitworth Street
Estates (Manchester) Ltd. v. James Miller & Partners
Ltd. the parties had not expressly stated which law
was to govern their contract. On an analysis of the
various factors, the House of Lords held that in the
absence of any choice of the law governing arbitration
proceedings, those proceedings were to be considered
to be governed by the law of the place in which the
arbitration was held, namely, Scotland because it was
that system of law which was most closely connected
with the proceedings. Various links with Scotland,
which was the place of performance of the contract,
unmistakably showed that the arbitral proceedings
were to be governed by the law of Scotland, although
the majority of the learned Law Lords (Lords Reid and
Wilberforce dissenting on the point) held that, taking
into account certain other factors, the contract was
governed by English law. That case is no authority
for the proposition that, even where the proper law
of the contract is expressly stated by the parties, and
in the absence of any contrary indication, a different
law governed arbitration. The observations contained
[2024] 11 S.C.R. 1171

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

in that judgment do not support the contention urged
on behalf of the Singer that merely because London
was designated to be the place of arbitration, the law
which governed arbitration was different from the law
expressly chosen by the parties as the proper law
of the contract.
xxx
51. In sum, it may be stated that the law expressly
chosen by the parties in respect of all matters arising
under their contract, which must necessarily include
the agreement contained in the arbitration clause,
being Indian law and the exclusive jurisdiction of the
courts in Delhi having been expressly recognised by
the parties to the contract in all matters arising under it,
and the contract being most intimately associated with
India, the proper law of arbitration and the competent
courts are both exclusively Indian [...]
xxx
54. The Delhi High Court was wrong in treating the
award in question as a foreign award. The Foreign
Awards Act has no application to the award by
reason of the specific exclusion contained in Section
9 of that Act. The award is governed by the laws in
force in India, including the Arbitration Act, 1940.
Accordingly, we set aside the impugned judgment of
the Delhi High Court and direct that Court to consider
the appellant’s application on the merits in regard to
which we express no views whatsoever. The appeal
is allowed in the above terms. We do not, however,
make any order as to costs.”
(Emphasis supplied)

(ii) Secondly, the Court held that where the parties have agreed
to two distinct choices of law, one governing the arbitration
agreement and the other governing the arbitration proceedings
i.e., both lex arbitri and lex curiae, then the appropriate
courts under both the laws will have concurrent jurisdiction in
1172 [2024] 11 S.C.R.

Digital Supreme Court Reports

respect of the matters governed by their respective system of
law. Thus, where the parties have agreed that the arbitration
agreement would be governed by the Indian Laws whereas the
arbitration proceedings would be conducted in accordance with
the English Laws, then in such cases two different courts will
have concurrent jurisdiction in respect of matters as agreed
upon by the parties i.e., the competent English Courts will
have jurisdiction in respect of procedural matters concerning
the conduct of arbitration while the competent courts in India
will have jurisdiction over all matters pertaining to and arising
out of the arbitration agreement. The relevant observations
read as under: -
"26. Whereas, as stated above, the proper law
of arbitration (i.e., the substantive law governing
arbitration) determines the validity, effect and
interpretation of the arbitration agreement, the
arbitration proceedings are conducted, in the absence
of any agreement to the contrary, in accordance with
the law of the country in which the arbitration is held.
On the other hand, if the parties have specifically
chosen the law governing the conduct and procedure
of arbitration, the arbitration proceedings will be
conducted in accordance with that law so long as it
is not contrary to the public policy or the mandatory
requirements of the law of the country in which the
arbitration is held. If no such choice has been made
by the parties, expressly or by necessary implication,
the procedural aspect of the conduct of arbitration
(as distinguished from the substantive agreement
to arbitrate) will be determined by the law of the
place or seat of arbitration. Where, however, the
parties have, as in the instant case, stipulated that
the arbitration between them will be conducted in
accordance with the ICC Rules, those rules, being
in many respects self-contained or self-regulating
and constituting a contractual code of procedure, will
govern the conduct of the arbitration, except insofar
as they conflict with the mandatory requirements of
the proper law of arbitration, or of the procedural law
[2024] 11 S.C.R. 1173

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

of the seat of arbitration. [See the observation of Kerr,
LJ. In Bank Mellat v. Helliniki Techniki SA. See also
Craig, Park and Paulsson, International Chamber of
Commerce Arbitration, 2nd edn. (1990).] To such an
extent the appropriate courts of the seat of arbitration,
which in the present case are the competent English
courts, will have jurisdiction in respect of procedural
matters concerning the conduct of arbitration. But
the overriding principle is that the courts of the
country whose substantive laws govern the arbitration
agreement are the competent courts in respect of all
matters arising under the arbitration agreement, and
the jurisdiction exercised by the courts of the seat
of arbitration is merely concurrent and not exclusive
and strictly limited to matters of procedure. All other
matters in respect of the arbitration agreement fall
within the exclusive competence of the courts of the
country whose laws govern the arbitration agreement.
[See Mustil & Boyd, Commercial Arbitration, 2nd edn.;
Allen Redfern and Martin Hunter, Law & Practice of
International Commercial Arbitration, 1986; Russel
on Arbitration, 20th edn. (1982); Cheshire & North’s
Private International Law, 11th edn. (1987).]”
(Emphasis supplied)

30. Thus, this Court for the first time in NTPC (supra) laid down the
Doctrine of Concurrent jurisdiction in arbitration albeit in a limited
sense inasmuch as the exercise of concurrent jurisdiction by
two different but competent courts was limited only to matters
of procedure and conduct of arbitration, and that the exercise of
jurisdiction by courts at the seat or situs of arbitration over the
arbitration agreement and its ancillaries was still regarded to be
an exclusive jurisdiction.
31. The applicability of the Act, 1940 was again looked into by this Court
in Sumitomo Heavy Industries Ltd. v. ONGC Ltd. & Ors. reported
in (1998) 1 SCC 305. The said decision is in three-parts: -
(i) First, it was held that as per Section 47 of the Act, 1940 the
provisions of the said Act applies to all arbitrations and to all
1174 [2024] 11 S.C.R.

Digital Supreme Court Reports

proceedings thereunder, and as such where the agreement to
arbitrate is governed by the laws of India, then the said Act
would be applicable. The relevant observations read as under: -
“16. The law which would apply to the filing of the
award, to its enforcement and to its setting aside
would be the law governing the agreement to arbitrate
and the performance of that agreement. Having
regard to the clear terms of clause 17 of the contract
between the appellant and the first respondent, we
are in no doubt that the law governing the contract
and the law governing the rights and obligations of
the parties arising from their agreement to arbitrate,
and, in particular, their obligation to submit disputes
to arbitration and to honour the award, are governed
by the law of India; nor is there any dispute in this
behalf. Section 47 of the Indian Arbitration Act, 1940,
reads thus:
“47. Act to apply to all arbitrations.—Subject
to the provisions of Section 46, and save
insofar as is otherwise provided by any law
for the time being in force, the provisions
of this Act shall apply to all arbitrations and
to all proceedings thereunder:
Provided that an arbitration award
otherwise obtained may with the consent
of all the parties interested be taken
into consideration as a compromise or
adjustment of a suit by any court before
which the suit is pending.”
17. [...] By reason of Section 9(b), the 1961 Act
does not apply to any award made on an arbitration
agreement governed by the law of India. The 1961 Act,
therefore, does not apply to the arbitration agreement
between the appellant and the first respondent. The
1940 Act applies to it and, by reason of Section 14(2)
thereof, the courts in India are entitled to receive the
award made by the second respondent. We must
add in the interests of completeness that it is not the
[2024] 11 S.C.R. 1175

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

case of the appellant that the High Court at Bombay
lacked the territorial jurisdiction to do so.”
(Emphasis supplied)

(ii) Secondly, it reiterated that, where the parties have chosen both
the law governing the arbitration agreement i.e., lex arbitri and
the law governing the arbitrator’s procedure and conduct thereof
i.e., the curial law, it would confer concurrent jurisdiction whereby
the competent courts under the curial law will have jurisdiction to
administer the procedure of arbitration and the competent courts
under the law governing the arbitration agreement will have
jurisdiction to administer the performance of such agreement
and the arbitrability of the dispute including the enforcement or
setting aside of an award pursuant to such agreement. It further
observed that the court administering the curial law will only have
the jurisdiction to administer the conduct of such arbitration or
reference. As soon as the arbitration concludes the curial law
ceases and with it the jurisdiction of the courts to administer
it ceases as well. The relevant observations read as under: -
"11. The conclusion that we reach is that the curial law
operates during the continuance of the proceedings
before the arbitrator to govern the procedure and
conduct thereof. The courts administering the curial
law have the authority to entertain applications by
parties to arbitrations being conducted within their
jurisdiction for the purpose of ensuring that the
procedure that is adopted in the proceedings before
the arbitrator conforms to the requirements of the
curial law and for reliefs incidental thereto. Such
authority of the courts administering the curial law
ceases when the proceedings before the arbitrator
are concluded.”
(Emphasis supplied)

(iii) Lastly, this court added that, when it comes to the courts
administering the law governing the arbitration agreement / the
reference to arbitration, they will continue to exercise concurrent
jurisdiction when it comes to the performance of the arbitration
1176 [2024] 11 S.C.R.

Digital Supreme Court Reports

agreement even if the arbitration has concluded inasmuch as
it is competent to first apply the lex arbitri to see if the dispute
is arbitrable and then to apply the curial law to see how the
reference ought to be conducted in order to give effect to the
award. The relevant observations read as under: -
“12. The proceedings before the arbitrator commence
when he enters upon the reference and conclude
with the making of the award. As the work by Mustill
and Boyd aforementioned puts it, with the making of
a valid award the arbitrator’s authority, powers and
duties in the reference come to an end and he is
“functus officio” (p. 404). The arbitrator is not obliged
by law to file his award in court but he may be asked
by the party seeking to enforce the award to do so.
The need to file an award in court arises only if it is
required to be enforced, and the need to challenge it
arises if it is being enforced. The enforcement process
is subsequent to and independent of the proceedings
before the arbitrator. It is not governed by the curial
or procedural law that governed the procedure that
the arbitrator followed in the conduct of the arbitration.
xxx
15. We think that our conclusion that the curial law
does not apply to the filing of an award in court
must, accordingly, hold good. We find support for the
conclusion in the extracts from Mustill and Boyd which
we have quoted earlier. Where the law governing
the conduct of the reference is different from the
law governing the underlying arbitration agreement,
the court looks to the arbitration agreement to see
if the dispute is arbitrable, then to the curial law to
see how the reference should be conducted, “and
then returns to the first law in order to give effect to
the resulting award”.
(Emphasis supplied)

32. The aforesaid Doctrine of Concurrent Jurisdiction in Arbitration was
further expanded by this Court in Bhatia International v. Bulk
[2024] 11 S.C.R. 1177

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

Trading S.A. reported in (2002) 4 SCC 105, wherein this Court
examined the scope of Section 2(2) viz-a-viz Section 2(1)(e) & (f)
of the Act, 1996 and held that Part I of the said Act applies to both
(i) domestic arbitrations that take place in India and (ii) international
commercial arbitrations that take place outside India. It held that unless
the arbitration agreement states to the contrary, even if the seat or
place of arbitration is outside India, the national courts in India will
have concurrent jurisdiction in terms of Section 2(1)(e) along with
the courts situated in the seat jurisdiction in terms of the arbitration
agreement. The aforesaid decision is in two-parts: -
(i) First, it held that although Section 2 sub-section (2) of the Act,
1996 says that Part I will apply where the place of arbitration
is in India, yet the Act more particularly Section 2(1)(f) makes
no distinction between international commercial arbitrations
held in India or outside India, thus the courts in India will
have jurisdiction in terms of Section 2(1)(e) even in respect of
international commercial arbitrations. The relevant observations
read as under: -
"14. At first blush the arguments of Mr Sen appear
very attractive. Undoubtedly sub-section (2) of Section
2 states that Part I is to apply where the place of
arbitration is in India. [...]
xxx
16. A reading of the provisions shows that the said Act
applies to arbitrations which are held in India between
Indian nationals and to international commercial
arbitrations whether held in India or out of India.
Section 2(1)(f) defines an international commercial
arbitration. The definition makes no distinction
between international commercial arbitrations held
in India or outside India. An international commercial
arbitration may be held in a country which is a
signatory to either the New York Convention or the
Geneva Convention (hereinafter called “the convention
country”). An international commercial arbitration may
be held in a non-convention country. The said Act
nowhere provides that its provisions are not to apply
1178 [2024] 11 S.C.R.

Digital Supreme Court Reports

to international commercial arbitrations which take
place in a non-convention country. Admittedly, Part
II only applies to arbitrations which take place in a
convention country. Mr Sen fairly admitted that Part
II would not apply to an international commercial
arbitration which takes place in a non-convention
country. He also fairly admitted that there would be
countries which are not signatories either to the New
York Convention or to the Geneva Convention. It is
not possible to accept the submission that the said
Act makes no provision for international commercial
arbitrations which take place in a non-convention
country.
xxx
20. Section 2(1)(e) defines “court” [...] A court is one
which would otherwise have jurisdiction in respect of
the subject-matter. The definition does not provide
that the courts in India will not have jurisdiction if
an international commercial arbitration takes place
outside India. Courts in India would have jurisdiction
even in respect of an international commercial
arbitration. As stated above, an ouster of jurisdiction
cannot be implied. An ouster of jurisdiction has to
be express.”
(Emphasis supplied)

(ii) Secondly, this Court observed that Section 2 sub-section (2)
of the Act, 1996 nowhere specifies that Part I will “only” apply
where the place of arbitration is in India, nor does it provide
that Part I shall not apply where the place of arbitration is not
in India. Thus, by not specifically providing in black and white,
whether Part I of the Act, 1996 would apply to international
commercial arbitrations held outside India, the legislature’s
intention appears to be to allow the parties the freedom to
choose whether Part I or any of its provisions therein would
apply or not by an express or implied agreement. The relevant
observations read as under: -
[2024] 11 S.C.R. 1179

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

"21. Now let us look at sub-sections (2), (3), (4)
and (5) of Section 2. Sub-section (2) of Section 2
provides that Part I would apply where the place of
arbitration is in India. To be immediately noted, that
it is not providing that Part I shall not apply where
the place of arbitration is not in India. It is also not
providing that Part I will “only” apply where the place
of arbitration is in India (emphasis supplied). Thus
the legislature has not provided that Part I is not to
apply to arbitrations which take place outside India.
The use of the language is significant and important.
The legislature is emphasising that the provisions of
Part I would apply to arbitrations which take place in
India, but not providing that the provisions of Part I
will not apply to arbitrations which take place out of
India. The wording of sub-section (2) of Section 2
suggests that the intention of the legislature was to
make provisions of Part I compulsorily applicable to
an arbitration, including an international commercial
arbitration, which takes place in India. Parties cannot,
by agreement, override or exclude the non-derogable
provisions of Part I in such arbitrations. By omitting
to provide that Part I will not apply to international
commercial arbitrations which take place outside India
the effect would be that Part I would also apply to
international commercial arbitrations held out of India.
But by not specifically providing that the provisions of
Part I apply to international commercial arbitrations
held out of India, the intention of the legislature
appears to be to ally (sic allow) parties to provide by
agreement that Part I or any provision therein will not
apply. Thus in respect of arbitrations which take place
outside India even the non-derogable provisions of
Part I can be excluded. Such an agreement may be
express or implied.
22. If read in this manner there would be no conflict
between Section 1 and Section 2(2). The words
“every arbitration” in sub-section (4) of Section 2
and the words “all arbitrations and to all proceedings
1180 [2024] 11 S.C.R.

Digital Supreme Court Reports

relating thereto” in sub-section (5) of Section 2 are
wide. Sub-sections (4) and (5) of Section 2 are not
made subject to sub-section (2) of Section 2. It
is significant that sub-section (5) is made subject
to sub-section (4) but not to sub-section (2). To
accept Mr Sen’s submission would necessitate
adding words in sub-sections (4) and (5) of Section
2, which the legislature has purposely omitted to
add viz. “subject to provision of sub-section (2)”.
However read in the manner set out hereinabove
there would also be no conflict between sub-section
(2) of Section 2 and sub-sections (4) and/or (5) of
Section 2.”
(Emphasis supplied)

Thus, this Court held that Part I of the Act, 1996 would apply to all
arbitrations. Where such arbitration is held in India, the provisions
of Part I would be compulsorily applicable, and parties may deviate
only to the extent permitted by the derogable provisions of Part I. In
cases of international commercial arbitrations held out of India the
provisions of Part I would apply unless the parties by agreement,
express or implied, exclude all or any of its provisions. In that case
the laws or rules agreed upon by the parties would prevail. Any
provision, in Part I, which is contrary to or excluded by that law or
rules will not apply. The operative portion reads as under: -
“32. To conclude, we hold that the provisions of Part I
would apply to all arbitrations and to all proceedings
relating thereto. Where such arbitration is held in India the
provisions of Part I would compulsorily apply and parties
are free to deviate only to the extent permitted by the
derogable provisions of Part I. In cases of international
commercial arbitrations held out of India provisions of Part I
would apply unless the parties by agreement, express or
implied, exclude all or any of its provisions. In that case
the laws or rules chosen by the parties would prevail. Any
provision, in Part I, which is contrary to or excluded by
that law or rules will not apply.
xxx
[2024] 11 S.C.R. 1181

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

35. Lastly, it must be stated that the said Act does not
appear to be a well-drafted legislation. Therefore the High
Courts of Orissa, Bombay, Madras, Delhi and Calcutta
cannot be faulted for interpreting it in the manner indicated
above. However, in our view a proper and conjoint reading
of all the provisions indicates that Part I is to apply also
to international commercial arbitrations which take place
out of India, unless the parties by agreement, express
or implied, exclude it or any of its provisions. Such an
interpretation does not lead to any conflict between any
of the provisions of the said Act. On this interpretation
there are no lacunae in the said Act. This interpretation
also does not leave a party remediless. Thus such an
interpretation has to be preferred to the one adopted by
the High Courts of Orissa, Bombay, Madras, Delhi and
Calcutta. It will therefore have to be held that the contrary
view taken by these High Courts is not good law.”
(Emphasis supplied)

33. In yet another decision of this Court in Venture Global Engineering
v. Satyam Computer Services Ltd. reported in (2008) 4 SCC 190 it
was held that Part I of the Act, 1996 and the provisions thereunder
would apply to all arbitrations including international commercial
arbitrations. It further clarified that although Part II of the Act, 1996
provides a special set of provisions that are applicable only to “foreign
awards” passed pursuant to international commercial arbitrations held
outside yet this in no manner means that by virtue of the same the
Part I would be inapplicable. Part I of the Act, 1996 would apply to all
arbitrations outside India including “foreign awards” passed pursuant
thereto unless its application has been specifically excluded by the
parties. The relevant observations read as under: -
“19. Mr Nariman heavily relied on para 26 of Bhatia
International which we have extracted supra. According to
him, the said paragraph contains not only the submissions
of Mr Sen, who appeared for Bhatia International therein
but also the ultimate conclusion of the Bench. He reiterated
that the Court concluded:
26. … Thus Section 44 (in Chapter I) and Section
53 (in Chapter II) define foreign awards, as being
1182 [2024] 11 S.C.R.

Digital Supreme Court Reports

awards covered by arbitrations under the New
York Convention and the Geneva Convention
respectively. Part II then contains provisions
for enforcement of ‘foreign awards’ which
necessarily would be different. For that reason
special provisions for enforcement of foreign
awards are made in Part II. To the extent that
Part II provides a separate definition of an arbitral
award and separate provisions for enforcement
of foreign awards, the provisions in Part I dealing
with these aspects will not apply to such foreign
awards. It must immediately be clarified that the
arbitration not having taken place in India, all or
some of the provisions of Part I may also get
excluded by an express or implied agreement
of parties. But if not so excluded the provisions
of Part I will also apply to ‘foreign awards’. The
opening words of Sections 45 and 54, which
are in Part II, read ‘notwithstanding anything
contained in Part I’. Such a non obstante clause
had to be put in because the provisions of Part I
apply to Part II.”
xxx
31. On close scrutiny of the materials and the dictum
laid down in the three-Judge Bench decision in Bhatia
International20 we agree with the contention of Mr K.K.
Venugopal and hold that paras 32 and 35 of Bhatia
International1 make it clear that the provisions of Part I of
the Act would apply to all arbitrations including international
commercial arbitrations and to all proceedings relating
thereto. We further hold that where such arbitration is held
in India, the provisions of Part I would compulsorily apply
and parties are free to deviate to the extent permitted by
the provisions of Part I. It is also clear that even in the
case of international commercial arbitrations held out of
India provisions of Part I would apply unless the parties
by agreement, express or implied, exclude all or any
of its provisions. We are also of the view that such an
interpretation does not lead to any conflict between any of
[2024] 11 S.C.R. 1183

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

the provisions of the Act and there is no lacuna as such.
The matter, therefore, is concluded by the three-Judge
Bench decision in Bhatia International.
32. The learned Senior Counsel for the respondent based
on para 26 submitted that in the case of foreign award which
was passed outside India is not enforceable in India by
invoking the provisions of the Act or CPC. However, after
critical analysis of para 26, we are unable to accept the
argument of the learned Senior Counsel for the respondent.
Paras 26 and 27 start by dealing with the arguments of
Mr Sen who argued that Part I is not applicable to foreign
awards. It is only in the sentence starting at the bottom of
para 26 that the phrase “it must immediately be clarified”
that the finding of the Court is rendered. That finding is
to the effect that an express or implied agreement of
parties can exclude the applicability of Part I. The finding
specifically states: “But if not so excluded, the provisions
of Part I will also apply to all ‘foreign awards’. …”
(Emphasis supplied)

34. Thus, the concept of “concurrent jurisdiction” in arbitration in India
was further expanded in Venture Global (supra) inasmuch as by
holding Part I of the Act, 1996 to be applicable to foreign awards as-
well, this Court clarified that even after the arbitration has concluded
and the award has been passed, the courts in India will continue to
have jurisdiction in terms of Section 2(e) of the said Act.
35. Similarly, in Indtel Technical Services (P) Ltd. v. W.S. Atkins Rail
Ltd., reported in (2008) 10 SCC 308, this Court reiterated that Part I of
the Act, 1996 applies to both domestic and international arbitrations,
notwithstanding the provisions of Section 2(2) of the said Act and
irrespective of whether the seat of arbitration is in India or not. It
further observed that the courts of the country, whose substantive
laws govern the arbitration agreement, are competent courts in
respect of all matters arising under the arbitration agreement, and
the jurisdiction exercised by the courts of the seat of arbitration is
merely concurrent and not exclusive and strictly limited to the matter
of procedure. Thus, an application under Section 11 for appointment
of arbitrator in India was held to be maintainable though the seat of
arbitration was in England. The relevant observations read as under: -
1184 [2024] 11 S.C.R.

Digital Supreme Court Reports

“16. The submissions made on behalf of Bhatia International
were accepted by this Court upon a finding that, although,
Section 2(2) of the Arbitration and Conciliation Act, 1996,
provides that Part I of the Act would apply where the place
of arbitration is in India, it did not provide that Part I would
not apply where the place of arbitration is not in India. It
was also held that it was nowhere provided that Part I of
the aforesaid Act would not apply to arbitrations taking
place outside India. …
xxx
26. Referring to the decision in NTPC case [(1992) 3
SCC 551] which had also been referred to by Mr Gupta,
Mr Tripathi submitted that in the said decision the views
of jurists such as Dicey, Mustill and Boyd and Russell
had been reiterated in support of the contention that the
overriding principle is that the courts of the country, whose
substantive laws govern the arbitration agreement, are
competent courts in respect of all matters arising under
the arbitration agreement, and the jurisdiction exercised
by the courts of the seat of arbitration is merely concurrent
and not exclusive and strictly limited to the matter of
procedure. Mr Tripathi submitted that the decision in the
aforesaid case supports the proposition that when the
parties to the contract, do not express any choice with
regard to the law governing the contract or the arbitration
agreement in particular, a presumption has to be drawn
that the parties intended that the proper law of the contract
as well as the law governing the arbitration agreement
would be the same as the law of the country which is the
seat of arbitration. But when the parties expressly choose
the proper law of the contract, as in the instant case, in
the absence of a clear intention such law must govern
the arbitration agreement also though it is collateral and
ancillary to the main contract.
xxx
36. Although the matter has been argued at great length
and Mr Tripathi has tried to establish that the decision of
this Court in Bhatia International case [(2002) 4 SCC 105]
[2024] 11 S.C.R. 1185

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

is not relevant for a decision in this case, I am unable to
accept such contention in the facts and circumstances of
the present case. It is no doubt true that it is fairly well
settled that when an arbitration agreement is silent as to
the law and procedure to be followed in implementing
the arbitration agreement, the law governing the said
agreement would ordinarily be the same as the law
governing the contract itself. The decisions cited by Mr
Tripathi and the views of the jurists referred to in NTPC
case [(1992) 3 SCC 551] support such a proposition. What,
however, distinguishes the various decisions and views
of the authorities in this case is the fact that in Bhatia
International [(2002) 4 SCC 105] this Court laid down the
proposition that notwithstanding the provisions of Section
2(2) of the Arbitration and Conciliation Act, 1996, indicating
that Part I of the said Act would apply where the place
of arbitration is in India, even in respect of international
commercial agreements, which are to be governed by
the laws of another country, the parties would be entitled
to invoke the provisions of Part I of the aforesaid Act
and consequently the application made under Section 11
thereof would be maintainable.
37. The decision in Bhatia International case [(2002)
4 SCC 105 has been rendered by a Bench of three
Judges and governs the scope of the application under
consideration, as it clearly lays down that the provisions
of Part I of the Arbitration and Conciliation Act, 1996,
would be equally applicable to international commercial
arbitrations held outside India, unless any of the said
provisions are excluded by agreement between the
parties expressly or by implication, which is not so in
the instant case.”
(Emphasis supplied)

b. Post BALCO Regime.
36. The correctness of the decision in Bhatia International (supra)
came under cloud, and the same was ultimately referred to a larger
bench, which then culminated into the landmark decision of a 5-Judge
1186 [2024] 11 S.C.R.

Digital Supreme Court Reports

Constitution Bench of this Court in Bharat Aluminium Co. v. Kaiser
Aluminium Technical Services Inc reported in (2012) 9 SCC 552.
37. This Court in BALCO (supra) after a thorough examination of the
scheme of the Act, 1996 held that the conclusions reached by this
Court in Bhatia International (supra) are neither supported by the
text nor the context of the provisions of Section 1(2) and the proviso
thereto or Section 2(2) of the said Act. It held that the applicability of
Part I of the Act, 1996 is limited only to arbitrations that take place
in India. The said decision is in two-parts: -
(i) First, it held that a plain reading of Section 2(2) makes it
clear that Part I of the Act, 1996 is limited in its application to
arbitrations which take place in India. It observed that although
the UNCITRAL Model Law which was the basis for the Act,
1996 has not been boldly adopted, yet it does not mean that
the territorial principle envisaged under the Model Law has not
been accepted. It held that the Parliament through Section(s)
1(2) and 2(2) of the Act, 1996 has clearly given recognition to
the territorial principle that Part I of the said Act will only apply
to arbitrations having their place / seat in India. The relevant
observations read as under: -
“64. [...]Thereafter, this Court has given further
instances of provisions of the Arbitration Act, 1996,
not being in conformity with the Model Law and
concluded that “… The Model Law and judgments
and literature thereon are, therefore, not a guide to
the interpretation of the Act and, especially of Section
11 thereof”. The aforesaid position, according to Mr
Sorabjee has not been disagreed with by this Court
in SBP & Co. We agree with the submission of Mr
Sorabjee that the omission of the word “only” in
Section 2(2) is not an instance of “casus omissus”.
It clearly indicates that the Model Law has not been
bodily adopted by the Arbitration Act, 1996. But that
cannot mean that the territorial principle has not been
accepted. We would also agree with Mr Sorabjee
that it is not the function of the court to supply the
supposed omission, which can only be done by
Parliament. In our opinion, legislative surgery is not
[2024] 11 S.C.R. 1187

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

a judicial option, nor a compulsion, whilst interpreting
an Act or a provision in the Act.
xxx
67. We are unable to accept the submission of the
learned counsel for the appellants that the omission
of the word “only” from Section 2(2) indicates that
applicability of Part I of the Arbitration Act, 1996 is
not limited to the arbitrations that take place in India.
We are also unable to accept that Section 2(2) would
make Part I applicable even to arbitrations which take
place outside India. In our opinion, a plain reading
of Section 2(2) makes it clear that Part I is limited
in its application to arbitrations which take place in
India. We are in agreement with the submissions
made by the learned counsel for the respondents,
and the interveners in support of the respondents,
that Parliament by limiting the applicability of Part I to
arbitrations which take place in India has expressed a
legislative declaration. It has clearly given recognition
to the territorial principle. Necessarily therefore, it
has enacted that Part I of the Arbitration Act, 1996
applies to arbitrations having their place/seat in India.
xxx
70. [...] Therefore, the Arbitration Act, 1996 consolidates
the law on domestic arbitrations by incorporating the
provisions to expressly deal with the domestic as
well as international commercial arbitration by taking
into account the 1985 Uncitral Model Laws. It is
not confined to the New York Convention, which is
concerned only with enforcement of certain foreign
awards. It is also necessary to appreciate that the
Arbitration Act, 1996 seeks to remove the anomalies
that existed in the Arbitration Act, 1940 by introducing
provisions based on the Uncitral Model Laws, which
deals with international commercial arbitrations and
also extends it to commercial domestic arbitrations.
Uncitral Model Law has unequivocally accepted the
territorial principle. Similarly, the Arbitration Act, 1996
1188 [2024] 11 S.C.R.

Digital Supreme Court Reports

has also adopted the territorial principle, thereby
limiting the applicability of Part I to arbitrations, which
take place in India.
xxx
77. We are of the opinion that the omission of the
word “only” in Section 2(2) of the Arbitration Act,
1996 does not detract from the territorial scope of its
application as embodied in Article 1(2) of the Model
Law. The article merely states that the arbitration law
as enacted in a given State shall apply if the arbitration
is in the territory of that State. The absence of the
word “only” which is found in Article 1(2) of the Model
Law, from Section 2(2) of the Arbitration Act, 1996
does not change the content/import of Section 2(2) as
limiting the application of Part I of the Arbitration Act,
1996 to arbitrations where the place/seat is in India.
78. For the reasons stated above, we are unable to
support the conclusion reached in Bhatia International
and Venture Global Engg., that Part I would also
apply to arbitrations that do not take place in India.
xxx
81. We quote the above in extenso only to demonstrate
that Section 2(2) is not merely stating the obvious.
It would not be a repetition of what is already
stated in Section 1(2) of the Arbitration Act, 1996
which provides that “it extends to the whole of
India”. Since the consolidated Arbitration Act, 1996
deals with domestic, commercial and international
commercial arbitrators, it was necessary to remove
the uncertainty that the Arbitration Act, 1996 could
also apply to arbitrations which do not take place in
India. Therefore, Section 2(2) merely reinforces the
limits of operation of the Arbitration Act, 1996 to India.”
(Emphasis supplied)

(ii) Secondly, this court rejected the contention that the Act, 1996
is ‘subject-matter centric’ and not exclusively ‘seat centric’. It
[2024] 11 S.C.R. 1189

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

observed that the words “subject-matter of the arbitration” and
“subject-matter of the suit” occurring in Section 2(1)(e) should
not be conflated as the former confers jurisdiction on the basis
of cause of action while the latter confers jurisdiction on the
basis of “place of arbitration”, thus, the Act, 1996 is not merely
‘subject-matter centric’. It observed that although the legislature
by use of the words “subject-matter of arbitration” in addition to
“subject-matter of the suit” under Section 2(1)(e) has conferred
jurisdiction to two-courts i.e., the court of jurisdiction over the
cause of action and the court of the seat of the arbitration
process, yet the expression “subject-matter of suit” occurring in
Section 2(1)(e) is confined only to Part I of the Act, 1996, and
thus, wherever it is found that the seat or place of arbitration is
outside India, Part I would be inapplicable and the jurisdiction
then will be “exclusively seat centric”. In other words, where the
seat of arbitration is outside India, only those courts situated
where the ‘subject-matter of arbitration’ lies i.e., at the place of
arbitration will be competent to exercise supervisory jurisdiction
over arbitration in terms of Section 2(1)(e) of the Act, 1996. The
relevant observations read as under: -
“95. The learned counsel for the appellants have
submitted that Section 2(1)(e), Section 20 and Section
28 read with Section 45 and Section 48(1)(e) make it
clear that Part I is not limited only to arbitrations which
take place in India. That these provisions indicate that
the Arbitration Act, 1996 is subject-matter centric and
not exclusively seat-centric. That therefore, "seat” is
not the “centre of gravity” so far as the Arbitration Act,
1996 is concerned. We are of the considered opinion
that the aforesaid provisions have to be interpreted by
keeping the principle of territoriality at the forefront. We
have earlier observed that Section 2(2) does not make
Part I applicable to arbitrations seated or held outside
India. In view of the expression used in Section 2(2),
the maxim expressum facit cessare tacitum, would not
permit by interpretation to hold that Part I would also
apply to arbitrations held outside the territory of India.
The expression “this Part shall apply where the place of
arbitration is in India” necessarily excludes application
1190 [2024] 11 S.C.R.

Digital Supreme Court Reports

of Part I to arbitration seated or held outside India. It
appears to us that neither of the provisions relied upon
by the learned counsel for the appellants would make
any section of Part I applicable to arbitration seated
outside India. It will be apposite now to consider each
of the aforesaid provisions in turn.
96. [...] We are of the opinion, the term “subject-matter
of the arbitration” cannot be confused with “subject-
matter of the suit”. The term “subject-matter” in
Section 2(1)(e) is confined to Part I. It has a reference
and connection with the process of dispute resolution.
Its purpose is to identify the courts having supervisory
control over the arbitration proceedings. Hence, it
refers to a court which would essentially be a court
of the seat of the arbitration process. In our opinion,
the provision in Section 2(1)(e) has to be construed
keeping in view the provisions in Section 20 which give
recognition to party autonomy. Accepting the narrow
construction as projected by the learned counsel
for the appellants would, in fact, render Section 20
nugatory. In our view, the legislature has intentionally
given jurisdiction to two courts i.e. the court which
would have jurisdiction where the cause of action is
located and the courts where the arbitration takes
place. This was necessary as on many occasions
the agreement may provide for a seat of arbitration
at a place which would be neutral to both the parties.
Therefore, the courts where the arbitration takes place
would be required to exercise supervisory control over
the arbitral process. For example, if the arbitration is
held in Delhi, where neither of the parties are from
Delhi, (Delhi having been chosen as a neutral place
as between a party from Mumbai and the other from
Kolkata) and the tribunal sitting in Delhi passes an
interim order under Section 17 of the Arbitration
Act, 1996, the appeal against such an interim order
under Section 37 must lie to the courts of Delhi being
the courts having supervisory jurisdiction over the
[2024] 11 S.C.R. 1191

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

arbitration proceedings and the tribunal. This would
be irrespective of the fact that the obligations to be
performed under the contract were to be performed
either at Mumbai or at Kolkata, and only arbitration
is to take place in Delhi. In such circumstances, both
the courts would have jurisdiction i.e. the court within
whose jurisdiction the subject-matter of the suit is
situated and the courts within the jurisdiction of which
the dispute resolution i.e. arbitration is located.
97. The definition of Section 2(1)(e) includes “subject-
matter of the arbitration” to give jurisdiction to the
courts where the arbitration takes place, which
otherwise would not exist. On the other hand,
Section 47 which is in Part II of the Arbitration Act,
1996 dealing with enforcement of certain foreign
awards has defined the term “court” as a court having
jurisdiction over the subject-matter of the award.
This has a clear reference to a court within whose
jurisdiction the asset/person is located, against which/
whom the enforcement of the international arbitral
award is sought. The provisions contained in Section
2(1)(e) being purely jurisdictional in nature can have
no relevance to the question whether Part I applies
to arbitrations which take place outside India.
xxx
Only if the agreement of the parties is construed
to provide for the “seat”/“place” of arbitration being
in India — would Part I of the Arbitration Act, 1996
be applicable. If the agreement is held to provide
for a “seat”/“place” outside India, Part I would be
inapplicable to the extent inconsistent with the
arbitration law of the seat, even if the agreement
purports to provide that the Arbitration Act, 1996 shall
govern the arbitration proceedings.
xxx
117. It would, therefore, follow that if the arbitration
agreement is found or held to provide for a seat/place
1192 [2024] 11 S.C.R.

Digital Supreme Court Reports

of arbitration outside India, then the provision that
the Arbitration Act, 1996 would govern the arbitration
proceedings, would not make Part I of the Arbitration
Act, 1996 applicable or enable the Indian courts to
exercise supervisory jurisdiction over the arbitration
or the award. It would only mean that the parties
have contractually imported from the Arbitration Act,
1996, those provisions which are concerned with the
internal conduct of their arbitration and which are not
inconsistent with the mandatory provisions of the
English procedural law/curial law. This necessarily
follows from the fact that Part I applies only to
arbitrations having their seat/place in India.”
(Emphasis supplied)

Thus, this Court held that Part I of the Act, 1996 is only applicable
to arbitrations that take place in India and as such the decision
of this Court in Bhatia International (supra) and Venture
Global (supra) are no longer a good law. However, to avoid
the chaos that might ensue upon arbitrations agreements and
proceedings thereto which are already underway pursuant to
the ratio of Bhatia International (supra) and Venture Global
(supra), this Court held that the law declared by it will only
apply prospectively to all arbitration agreements that have been
executed on or after 06.09.2012 i.e., the date of pronouncement.
This Court ultimately summed up its findings with the following
conclusions reproduced below: -
“Conclusion
194. In view of the above discussion, we are of the
considered opinion that the Arbitration Act, 1996 has
accepted the territoriality principle which has been adopted
the Uncitral Model Law. Section 2(2) makes a declaration
that Part I of the Arbitration Act, 1996 shall apply to all
arbitrations which take place within India. We are of the
considered opinion that Part I of the Arbitration Act, 1996
would have no application to international commercial
arbitration held outside India. Therefore, such awards
would only be subject to the jurisdiction of the Indian
[2024] 11 S.C.R. 1193

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

courts when the same are sought to be enforced in India
in accordance with the provisions contained in Part II of
the Arbitration Act, 1996. In our opinion, the provisions
contained in the Arbitration Act, 1996 make it crystal clear
that there can be no overlapping or intermingling of the
provisions contained in Part I with the provisions contained
in Part II of the Arbitration Act, 1996.
195. With utmost respect, we are unable to agree with
the conclusions recorded in the judgments of this Court
in Bhatia International and Venture Global Engg. In our
opinion, the provision contained in Section 2(2) of the
Arbitration Act, 1996 is not in conflict with any of the
provisions either in Part I or in Part II of the Arbitration
Act, 1996. In a foreign-seated international commercial
arbitration, no application for interim relief would be
maintainable under Section 9 or any other provision, as
applicability of Part I of the Arbitration Act, 1996 is limited
to all arbitrations which take place in India. Similarly, no suit
for interim injunction simpliciter would be maintainable in
India, on the basis of an international commercial arbitration
with a seat outside India.
196. We conclude that Part I of the Arbitration Act, 1996
is applicable only to all the arbitrations which take place
within the territory of India.
197. The judgment in Bhatia International was rendered
by this Court on 13-3-2002. Since then, the aforesaid
judgment has been followed by all the High Courts as
well as by this Court on numerous occasions. In fact, the
judgment in Venture Global Engg. has been rendered on
10-1-2008 in terms of the ratio of the decision in Bhatia
International. Thus, in order to do complete justice, we
hereby order, that the law now declared by this Court
shall apply prospectively, to all the arbitration agreements
executed hereafter.”
(Emphasis supplied)

38. This Court in Union of India v. Reliance Industries Ltd. & Ors.
reported in (2015) 10 SCC 213 clarified the true import and effect of
1194 [2024] 11 S.C.R.

Digital Supreme Court Reports

the decision in BALCO (supra). It held that although the doctrine of
concurrent jurisdiction had been prospectively overruled in BALCO
(supra) yet it would not mean or understood that all arbitration
agreements prior to the date of pronouncement of BALCO (supra)
will continue to be governed by Bhatia International (supra). It
observed that Bhatia International (supra) itself had held that Part I
of the Act, 1996 will not apply if it has been excluded expressly or by
necessary implication. It said that the position of law that emerges
from a conjoint reading of BALCO (supra) and Bhatia International
(supra) is that where the court comes to a determination that the
juridical seat is outside India or where law other than Indian law
governs the arbitration agreement, Part I of the Arbitration Act,
1996 would be excluded by necessary implication and the doctrine
of concurrent jurisdiction will not apply irrespective of whether the
arbitration agreement pre-dates BALCO (supra) or not. The relevant
observations read as under: -
“13. It can be seen that this Court in Singer case did not give
effect to the difference between the substantive law of the
contract and the law that governed the arbitration. Therefore,
since a construction of Section 9(b) of the Foreign Awards
Act led to the aforesaid situation and led to the doctrine of
concurrent jurisdiction, the 1996 Act, while enacting Section
9(a) of the repealed Foreign Awards Act, 1961, in Section
51 thereof, was careful enough to omit Section 9(b) of the
1961 Act which, as stated hereinabove, excluded the Foreign
Awards Act from applying to any award made on arbitration
agreements governed by the law of India.
14. This being the case, the theory of concurrent jurisdiction
was expressly given a go-by with the dropping of Section
9(b) of the Foreign Awards Act, while enacting Part II of the
Arbitration Act, 1996, which repealed all the three earlier
laws and put the law of arbitration into one statute, albeit
in four different parts.
15. However, this Court in Bhatia International v. Bulk Trading
S.A., resurrected this doctrine of concurrent jurisdiction by
holding, in para 32, that even where arbitrations are held
outside India, unless the parties agree to exclude the
application of Part I of the Arbitration Act, 1996, either
[2024] 11 S.C.R. 1195

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

expressly or by necessary implication, the courts in India
will exercise concurrent jurisdiction with the court in the
country in which the foreign award was made. Bhatia
International was in the context of a Section 9 application
made under Part I of the 1996 Act by the respondent in
that case for interim orders to safeguard the assets of
the Indian company in case a foreign award was to be
executed in India against it. The reductio ad absurdum of
this doctrine of concurrent jurisdiction came to be felt in a
most poignant form in the judgment of Venture Global Engg.
v. Satyam Computer Services Ltd., by which this Court
held that a foreign award would also be considered as a
domestic award and the challenge procedure provided in
Section 34 of Part I of the 1996 Act would therefore apply.
This led to a situation where the foreign award could be
challenged in the country in which it is made; it could also
be challenged under Part I of the 1996 Act in India; and
could be refused to be recognised and enforced under
Section 48 contained in Part II of the 1996 Act.
16. Given this state of the law, a five-Judge Bench of this
Court in BALCO v. Kaiser Aluminium Technical Services
Inc., overruled both Bhatia International and Venture
Global Engg. [...]
17. It will thus be seen that facts like the present case attract
the Bhatia International3 principle of concurrent jurisdiction
inasmuch as all arbitration agreements entered into before
12-9-2012, that is, the date of pronouncement of BALCO
judgment, will be governed by Bhatia International.
18. It is important to note that in para 32 of Bhatia
International itself this Court has held that Part I of the
Arbitration Act, 1996 will not apply if it has been excluded
either expressly or by necessary implication. Several
judgments of this Court have held that Part I is excluded
by necessary implication if it is found that on the facts of
a case either the juridical seat of the arbitration is outside
India or the law governing the arbitration agreement is a
law other than Indian law. …
xxx
1196 [2024] 11 S.C.R.

Digital Supreme Court Reports

21. The last paragraph of BALCO judgment has now to
be read with two caveats, both emanating from para 32 of
Bhatia International itself — that where the Court comes
to a determination that the juridical seat is outside India
or where law other than Indian law governs the arbitration
agreement, Part I of the Arbitration Act, 1996 would be
excluded by necessary implication. Therefore, even in the
cases governed by the Bhatia principle, it is only those
cases in which agreements stipulate that the seat of the
arbitration is in India or on whose facts a judgment cannot
be reached on the seat of the arbitration as being outside
India that would continue to be governed by the Bhatia
principle. Also, it is only those agreements which stipulate
or can be read to stipulate that the law governing the
arbitration agreement is Indian law which would continue
to be governed by the Bhatia rule."
(Emphasis supplied)

39. Thus, the legal position that emerges from a conspectus of all the
decisions referred to above is that Part I of the Act and the provisions
thereunder only applies where the arbitration takes place in India
i.e., where either (I) the seat of arbitration is in India OR (II) the
law governing the arbitration agreement is Indian law. As a natural
corollary to the above, the position of law may be summarized as
under: -
(i) Arbitration agreements executed after 06.09.2012 where the
seat of arbitration is outside India, Part I of the Act, 1996 and
the provisions thereunder will not be applicable and would fall
beyond the jurisdiction of Indian courts by virtue of the decision
of this Court in BALCO (supra).
(ii) Even those arbitration agreements that have been executed
prior to 06.09.2012 and thus, governed by Bhatia International
(supra), Part I of the Act, 1996 may not necessarily be
applicable, if its application has been excluded by the parties
in the arbitration agreement either explicitly by designating the
seat of arbitration outside India or implicitly by choosing the law
governing the agreement to be any other law other than Indian
law, by virtue of Reliance Industries (supra).
[2024] 11 S.C.R. 1197

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

(iii) Thus, irrespective of the date of execution of arbitration
agreement, Part I of the Act, 1996 will be applicable only to those
arbitration agreements where the seat or place of arbitration is
in India OR in the absence of any categorical finding as to the
place or seat of arbitration, where such agreement stipulates or
can be read to stipulate that the law governing the arbitration
agreement would be Indian law.
40. The petitioner contended that since the aforesaid Distributorship
Agreement that contains the arbitration agreement was executed
on 09.11.2010 i.e., prior to the decision of BALCO (supra), Part I
of the Act, 1996 would be applicable. However, as discussed in
the foregoing paragraphs, Part I of the Act, 1996 is applicable
to arbitration agreements prior to BALCO (supra) if the seat of
arbitration is in India or where the arbitration agreement is found
to be governed by Indian laws. Thus, now the only question that
remains to be answered in the present case is whether the seat of
arbitration designated under the aforesaid Distributorship Agreement
is in India, if not, whether the arbitration agreement could be said to
be governed by the Indian laws?

ii. Criterion or Test for Determination of Seat of Arbitration:
Conflict of ‘Venue’ versus ‘Seat’ of Arbitration.
41. Before proceeding further with the analysis, it would be apposite to
first understand what is the criterion or test for determining the ‘seat’
or place of arbitration.

a. Closest Connection Test – Place of Arbitration to be
ascertained by the Law governing the Arbitration Agreement
and not the Place of Arbitration.
42. The “closest connection test” is a legal principle used to determine
which law governs an arbitration agreement when the parties have
not expressly chosen a governing law or where there is a conflict
between the choice of law by the parties. This test seeks to identify
the jurisdiction that has the closest relationship with the subject-matter
in question or simplicter the dispute between the parties by identifying
which system of law has the closest and most real connection with
the transaction or dispute between the parties.
1198 [2024] 11 S.C.R.

Digital Supreme Court Reports

43. The ‘Closest Connection Test’ was first applied by this Court in its
decision in NTPC (supra). In the aforesaid case, the main substantive
contract therein had been executed in India, the general terms
and conditions appended to the main contract stipulated that the
said contract shall be construed and governed according to Indian
laws. It further stipulated that the courts of Delhi were conferred
exclusive jurisdiction in all matters arising under the said contract.
It also contained an arbitration clause which inter-alia stipulated
that where the dispute concerns a foreign contractor, then it will
be resolved through arbitration and that the rules of conciliation
and arbitration of the International Chamber of Commerce shall
apply to such arbitrations. Pursuant to the above, arbitration was
conducted between the parties therein by a tribunal constituted by
the International Chamber of Commerce and an interim award was
made at London. The appellant therein approached the Delhi High
Court for setting aside the said interim award, however the High
Court held that the award was not governed by the Act, 1940 and
could only be set-aside at London being the designated seat of
arbitration. Aggrieved by it, the appellant therein approached this
Court by way of an appeal.
44. This Court in NTPC (supra) held that the law governing the contract
will be the proper law governing the arbitration agreement and by
it the place of arbitration itself. Where the parties have expressly
chosen the proper law of the contract, the courts of that system of law
will have jurisdiction. Where however, the parties have not expressly
chosen the substantive law governing the contract, there the intention
has to be discovered by applying the ‘Closest Connection Test’ to
determine which place or system of law has its closest and most
real connection with the transaction or dispute. It further, cautioned
that mere selection of place of arbitration will not be sufficient to
draw an inference as to the intention of parties as regards the seat
of arbitration, unless there is a significant link with such place. The
aforesaid decision may be better understood in three-parts: -
(i) First, it observed that the proper law of the arbitration agreement
is normally the same as the proper law of the contract or the
substantive law governing the contract. Where the proper law
of the contract is expressly chosen by the parties then such
law must, in the absence of an unmistakable intention to the
[2024] 11 S.C.R. 1199

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

contrary, govern the arbitration agreement which, though
collateral or ancillary to the main contract, is nevertheless a
part of such contract. In other words, if the proper law of the
contract is expressly chosen and the arbitration agreement forms
part and parcel of such contract, then the substantive law of
such contract will govern the arbitration agreement, and by its
extension the place of arbitration. The relevant observations
read as under: -
“24. The validity, effect and interpretation of the
arbitration agreement are governed by its proper law.
Such law will decide whether the arbitration clause
is wide enough to cover the dispute between the
parties. Such law will also ordinarily decide whether
the arbitration clause binds the parties even when one
of them alleges that the contract is void, or voidable
or illegal or that such contract has been discharged
by breach or frustration. (See Heyman v. Darwins
Ltd.) The proper law of arbitration will also decide
whether the arbitration clause would equally apply
to a different contract between the same parties or
between one of those parties and a third party.
25. The parties have the freedom to choose the law
governing an international commercial arbitration
agreement. They may choose the substantive law
governing the arbitration agreement as well as
the procedural law governing the conduct of the
arbitration. Such choice is exercised either expressly
or by implication. Where there is no express choice
of the law governing the contract as a whole, or the
arbitration agreement in particular, there is, in the
absence of any contrary indication, a presumption
that the parties have intended that the proper law
of the contract as well as the law governing the
arbitration agreement are the same as the law of
the country in which the arbitration is agreed to be
held. On the other hand, where the proper law of
the contract is expressly chosen by the parties, as
in the present case, such law must, in the absence
1200 [2024] 11 S.C.R.

Digital Supreme Court Reports

of an unmistakable intention to the contrary, govern
the arbitration agreement which, though collateral or
ancillary to the main contract, is nevertheless a part
of such contract.”
(Emphasis supplied)

(ii) Secondly, if there is no express statement about the governing
law, then the true intention of parties as to the place or seat
of arbitration has to be discovered by applying sound ideas of
business, convenience and sense to the language of the contract
itself in order to determine the proper law of the contract. This
may be done by applying the ‘Closest Connection Test’ whereby
the courts impute an intention by applying the objective test to
determine what the parties would have as just and reasonable
persons intended as regards the applicable law had they applied
their minds to the question. For this purpose, the place where
the contract was made, the form and object of the contract,
the place of performance, the place of residence or business
of the parties, reference to the courts having jurisdiction and
such other links are to be examined to determine the system
of law with which the transaction has its closest and most real
connection. The relevant observations read as under: -
“13. [...] Where, however, the intention of the parties
is not expressly stated and no inference about it can
be drawn, their intention as such has no relevance.
In that event, the courts endeavour to impute an
intention by identifying the legal system with which the
transaction has its closest and most real connection.
xxx
16. Where the parties have not expressly or impliedly
selected the proper law, the courts impute an intention
by applying the objective test to determine what the
parties would have as just and reasonable persons
intended as regards the applicable law had they
applied their minds to the question. 7 The Judge
has to determine the proper law for the parties in
such circumstances by putting himself in the place
of a “reasonable man”. He has to determine the
[2024] 11 S.C.R. 1201

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

intention of the parties by asking himself how a just
and reasonable person would have regarded the
problem” [...]
17. For this purpose the place where the contract was
made, the form and object of the contract, the place
of performance, the place of residence or business of
the parties, reference to the courts having jurisdiction
and such other links are examined by the courts to
determine the system of law with which the transaction
has its closest and most real connection.”
(Emphasis supplied)

(iii) Lastly, the choice of place of arbitration or selection of courts
of particular country for submission to its jurisdiction, will have
little relevance in determining the system of law to govern the
arbitration agreement and may not be sufficient to draw an
inference as to the intention of parties to regard the chosen
place as the proper law of arbitration unless it is supported by
the law governing the contract or in its absence if there is a
significant link with such place that gives a strong indication
that the law governing the arbitration agreement is the law of
the place chosen for arbitration. The relevant observations
read as under: -
“15. In the absence of an express statement about
the governing law, the inferred intention of the
parties determines that law. The true intention of
the parties, in the absence of an express selection,
has to be discovered by applying “sound ideas of
business, convenience and sense to the language
of the contract itself". In such a case, selection of
courts of a particular country as having jurisdiction in
matters arising under the contract is usually, but not
invariably, an indication of the intention of the parties
that the system of law followed by those courts is
the proper law by which they intend their contract
to be governed. However, the mere selection of a
particular place for submission to the jurisdiction of
the courts or for the conduct of arbitration will not, in
1202 [2024] 11 S.C.R.

Digital Supreme Court Reports

the absence of any other relevant connecting factor
with that place, be sufficient to draw an inference as
to the intention of the parties to be governed by the
system of law prevalent in that place. This is specially
so in the case of arbitration, for the selection of the
place of arbitration may have little significance where
it is chosen, as is often the case, without regard to
any relevant or significant link with the place. This
is particularly true when the place of arbitration is
not chosen by the parties themselves, but by the
arbitrators or by an outside body, and that too for
reasons unconnected with the contract. Choice of
place for submission to jurisdiction of courts or for
arbitration may thus prove to have little relevance
for drawing an inference as to the governing law
of the contract, unless supported in that respect
by the rest of the contract and the surrounding
circumstances. Any such clause must necessarily
give way to stronger indications in regard to the
intention of the parties.”
(Emphasis supplied)

45. Accordingly, this Court in NTPC (supra) held that since the proper
law governing the contract was expressly stipulated to be the laws
in force in India and because the parties had specifically accepted
the exclusive jurisdiction of the courts in Delhi in all matters arising
under the contract it meant that the law governing the arbitration
agreement would be same as the proper law governing the contract
which contained the relevant arbitration clause. It further observed
that since London had no significant connection with the contract or
the parties except being a neutral place that had been chosen only
because of the rules of the International Chamber of Commerce,
it held that, the stipulation of such rules merely governed the
procedure and conduct of the arbitration and could not in any manner
supersede the overriding jurisdiction and control of the Indian law
and the Indian courts that governed the main contract including the
arbitration clause that formed part and parcel of the main contract.
The aforesaid relevant observations read as under: -
[2024] 11 S.C.R. 1203

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

“26. [...]Where, however, the parties have, as in the instant
case, stipulated that the arbitration between them will be
conducted in accordance with the ICC Rules, those rules,
being in many respects self-contained or self-regulating
and constituting a contractual code of procedure, will
govern the conduct of the arbitration, except insofar as
they conflict with the mandatory requirements of the proper
law of arbitration, or of the procedural law of the seat of
arbitration.
27. The proper law of the contract in the present case
being expressly stipulated to be the laws in force in India
and the exclusive jurisdiction of the courts in Delhi in all
matters arising under the contract having been specifically
accepted, and the parties not having chosen expressly or
by implication a law different from the Indian law in regard
to the agreement contained in the arbitration clause, the
proper law governing the arbitration agreement is indeed
the law in force in India, and the competent courts of this
country must necessarily have jurisdiction over all matters
concerning arbitration. Neither the rules of procedure for the
conduct of arbitration contractually chosen by the parties
(the ICC Rules) nor the mandatory requirements of the
procedure followed in the courts of the country in which
the arbitration is held can in any manner supersede the
overriding jurisdiction and control of the Indian law and
the Indian courts.
xxx
50. The arbitration clause must be considered together
with the rest of the contract and the relevant surrounding
circumstances. In the present case, as seen above, the
choice of the place of arbitration was, as far as the parties
are concerned, merely accidental insofar as they had not
expressed any intention in regard to it and the choice was
made by the ICC Court for reasons totally unconnected with
either party to the contract. On the other hand, apart from
the expressly stated intention of the parties, the contract
itself, including the arbitration agreement contained in
1204 [2024] 11 S.C.R.

Digital Supreme Court Reports

one of its clauses, is redolent of India and matters Indian.
The disputes between the parties under the contract have
no connection with anything English, and they have the
closest connection with Indian laws, rules and regulations.
In the circumstances, the mere fact that the venue chosen
by the ICC Court for the conduct of arbitration is London
does not support the case of the Singer on the point. Any
attempt to exclude the jurisdiction of the competent courts
and the laws in force in India is totally inconsistent with
the agreement between the parties.
51. In sum, it may be stated that the law expressly chosen
by the parties in respect of all matters arising under their
contract, which must necessarily include the agreement
contained in the arbitration clause, being Indian law and
the exclusive jurisdiction of the courts in Delhi having
been expressly recognised by the parties to the contract
in all matters arising under it, and the contract being
most intimately associated with India, the proper law of
arbitration and the competent courts are both exclusively
Indian, while matters of procedure connected with the
conduct of arbitration are left to be regulated by the
contractually chosen rules of the ICC to the extent that
such rules are not in conflict with the public policy and
the mandatory requirements of the proper law and of the
law of the place of arbitration. The Foreign Awards Act,
1961 has no application to the award in question which
has been made on an arbitration agreement governed
by the law of India.
xxx
53. All substantive rights arising under the agreement
including that which is contained in the arbitration clause
are, in our view, governed by the laws of India. In respect
of the actual conduct of arbitration, the procedural law
of England may be applicable to the extent that the ICC
Rules are insufficient or repugnant to the public policy or
other mandatory provisions of the laws in force in England.
Nevertheless, the jurisdiction exercisable by the English
[2024] 11 S.C.R. 1205

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

courts and the applicability of the laws of that country in
procedural matters must be viewed as concurrent and
consistent with the jurisdiction of the competent Indian
courts and the operation of Indian laws in all matters
concerning arbitration insofar as the main contract as
well as that which is contained in the arbitration clause
are governed by the laws of India.”
(Emphasis supplied)

46. What has been conveyed in so many words by this Court in NTPC
(supra) is that the law which governs the contract including the
arbitration agreement, the courts of that system of law will have
the supervisory jurisdiction over the arbitration. Where however the
parties have expressly chosen a place of arbitration or selected a
court of particular country for submission to the jurisdiction or selected
the law for conduct of arbitration i.e., curial law, such place will only
be regarded as venue, unless such factor is supported by relevant
connecting factor sufficient to draw an inference as to what the parties
would have intended as regards the applicable law. Thus, a mere
place chosen by the parties will only be regarded as a venue and
will not be construed as seat unless there is a significant link with
such place to be ascertained by applying the ‘Closest Connection
Test’ to determine which place or system of law has the most real
with the transaction or dispute.
47. Similarly, in Enercon (India) Ltd. & Ors. v. Enercon GMBH & Anr.
reported in (2014) 5 SCC 1 this Court, held that where the parties
have expressly agreed that the law governing the contract, the law
governing the arbitration agreement and the law of arbitration / curial
law would be Indian laws, then the seat or place of arbitration would
be India. It further observed that mere mentioning of London as the
place of arbitration will not designate it as the seat of arbitration, in the
absence of anything to connect it to the arbitration agreement. This
Court applying the closest connection test, held that the place with
the closest and most real connection with the arbitration agreement
and the law of arbitration was India and not London. The relevant
observations read as under: -
"98. We find much substance in the submissions of Mr
Nariman that there are very strong indicators to suggest
1206 [2024] 11 S.C.R.

Digital Supreme Court Reports

that the parties always understood that the seat of
arbitration would be in India and London would only be the
“venue” to hold the proceedings of arbitration. We find force
in the submission made by the learned Senior Counsel
for the appellants that the facts of the present case would
make the ratio of law laid down in Naviera Amazonica
Peruana S.A. applicable in the present case. Applying the
closest and the intimate connection to arbitration, it would
be seen that the parties had agreed that the provisions
of the Indian Arbitration Act, 1996 would apply to the
arbitration proceedings. By making such a choice, the
parties have made the curial law provisions contained in
Chapters III, IV, V and VI of the Indian Arbitration Act, 1996
applicable. Even Dr Singhvi had submitted that Chapters
III, IV, V and VI would apply if the seat of arbitration is in
India. By choosing that Part I of the Indian Arbitration Act,
1996 would apply, the parties have made a choice that
the seat of arbitration would be in India. Section 2(2) of
the Indian Arbitration Act, 1996 provides that Part I “shall
apply where the place of arbitration is in India”. In Balco,
it has been categorically held that Part I of the Indian
Arbitration Act, 1996, will have no application, if the seat
of arbitration is not in India. In the present case, London
is mentioned only as a “venue” of arbitration which, in
our opinion, in the facts of this case cannot be read as
the “seat” of arbitration.
99. We are fortified in taking the aforesaid view since
all the three laws applicable in arbitration proceedings
are Indian laws. The law governing the contract, the
law governing the arbitration agreement and the law of
arbitration/curial law are all stated to be Indian. In such
circumstances, the observation in Naviera Amazonica
Peruana S.A. would become fully applicable. In that case,
the Court of Appeal in England considered the agreement
which contained a clause providing for the jurisdiction of
the courts in Lima, Peru in the event of judicial dispute;
and at the same time contained a clause providing that
the arbitration would be governed by the English law
and the procedural law of arbitration shall be the English
[2024] 11 S.C.R. 1207

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

law. The Court of Appeal summarised the state of the
jurisprudence on this topic. [...]
xxx
116. The submission made by Dr Singhvi would only be
worthy of acceptance on the assumption that London is the
seat. That would be to put the cart before the horse. Surely,
jurisdiction of the courts cannot be rested upon unsure or
insecure foundations. If so, it will flounder with every gust
of wind from different directions. Given the connection to
India of the entire dispute between the parties, it is difficult
to accept that parties have agreed that the seat would be
London and that venue is only a misnomer. The parties
having chosen the Indian Arbitration Act, 1996 as the
law governing the substantive contract, the agreement to
arbitrate and the performance of the agreement and the law
governing the conduct of the arbitration; it would, therefore,
in our opinion, be vexatious and oppressive if Enercon
GmbH is permitted to compel EIL to litigate in England. …
xxx
123. The cases relied upon by Dr Singhvi relate to the
phrase “arbitration in London” or expressions similar
thereto. The same cannot be equated with the term “venue
of arbitration proceedings shall be in London”. Arbitration
in London can be understood to include venue as well
as seat; but it would be rather stretching the imagination
if “venue of arbitration shall be in London” could be
understood as “seat of arbitration shall be London”, in
the absence of any other factor connecting the arbitration
to London. In spite of Dr Singhvi’s seemingly attractive
submission to convince us, we decline to entertain the
notion that India would not be the natural forum for all
remedies in relation to the disputes, having such a close
and intimate connection with India. In contrast, London is
described only as a venue which Dr Singhvi says would
be the natural forum.
xxx
1208 [2024] 11 S.C.R.

Digital Supreme Court Reports

135. In the present case, even though the venue of
arbitration proceedings has been fixed in London, it cannot
be presumed that the parties have intended the seat to be
also in London. In an international commercial arbitration,
venue can often be different from the seat of arbitration. In
such circumstances, the hearing of the arbitration will be
conducted at the venue fixed by the parties, but this would
not bring about a change in the seat of the arbitration. [...]”
(Emphasis supplied)

48. What can be discerned from the above decision of this Court in
Enercon (supra) is that for determining the seat of arbitration the
closest connection test involves identifying the law with which the
agreement to arbitrate has its closest and most real connection. Where
the parties have expressly or impliedly provided the law governing
the substantive contract, the arbitration agreement and the curial
law, the law with which the agreement to arbitrate has its closest
and most real connection would be the law of the seat of arbitration.
Where the question before the courts involves ascertaining whether a
particular place is the seat or venue of arbitration, the place with the
closest connection with the law governing the arbitration agreement
would be the seat of arbitration. Interestingly, although this Court
deliberately did not address whether seat is to be determined based
on the closest connection with the law governing the arbitration
agreement or the curial law since in the facts of the said case
both the law governing the contract and the curial law were the
same, yet this Court approvingly referred to two other decisions in
Roger Shashoua (1) v. Sharma, [2009] EWHC 957 (Comm) and
Sulame´rica Cia Nacional de Seguros SA v. Enesa Engelharia
SA, (2013) 1 WLR 102 (CA) wherein the seat of arbitration was
construed on the basis of the curial law. The relevant observations
read as under: -
"105. We are also unable to accept the submission made
by Dr Singhvi that in this case the venue should be
understood as reference to place in the manner it finds
mention in Section 20(1), as opposed to the manner it
appears in Section 20(3) of the Indian Arbitration Act,
1996. Such a submission cannot be accepted since the
[2024] 11 S.C.R. 1209

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

parties have agreed that curial law would be the Indian
Arbitration Act, 1996.
xxx
124. In Shashoua, such an expression was understood as
seat instead of venue, as the parties had agreed that the
ICC Rules would apply to the arbitration proceedings. In
Shashoua, the ratio in Naviera and Braes of Doune has
been followed. In that case, the Court was concerned with
the construction of the shareholders’ agreement between
the parties, which provided that “the venue of the arbitration
shall be London, United Kingdom”. It provided that the
arbitration proceedings should be conducted in English in
accordance with the ICC Rules and that the governing law of
the shareholders’ agreement itself would be the law of India.
The claimants made an application to the High Court in New
Delhi seeking interim measures of protection under Section
9 of the Indian Arbitration Act, 1996, prior to the institution
of arbitration proceedings. Following the commencement of
the arbitration, the defendant and the joint venture company
raised a challenge to the jurisdiction of the Arbitral Tribunal,
which the panel heard as a preliminary issue. The Tribunal
rejected the jurisdictional objection.

xxx

131. Upon consideration of the entire matter, it was
observed in Sulamérica that “In these circumstances
it is clear to me that the law with which the agreement
to arbitrate has its closest and most real connection
is the law of the seat of arbitration, namely, the law of
England”. It was thereafter concluded by the High Court
that the English law is the proper law of the agreement
to arbitrate.

xxx

133. We also do not find any merit in the submission
of Dr Singhvi that the close and the most intimate
1210 [2024] 11 S.C.R.

Digital Supreme Court Reports

connection test is wholly irrelevant in this case. It is true
that the parties have specified all the three laws. But
the Court in these proceedings is required to determine
the seat of the arbitration, as the respondents have
taken the plea that the term “venue” in the arbitration
clause actually makes a reference to the “seat” of the
arbitration.”

(Emphasis supplied)

49. Thus, with the decision of Enercon (supra), the stage is now set to
examine the decision of Roger Shashoua (1) (supra) to trace the
evolution of the Shashoua Principle.

b. The Shashoua Principle – ‘Venue’ to be construed as ‘Seat’
50. In Roger Shashoua (1) a Queen’s Bench Division (Commercial
Court) of the England & Wales High Court held that when there is
an express designation of the arbitration venue as London and no
designation of any alternative place as the seat, combined with a
supranational body of rules governing the arbitration and no other
significant contrary indicia, the inexorable conclusion would be
that such venue in-fact is the juridical seat. It observed that often
in arbitration agreements it is much more likely that the law of the
arbitration agreement will coincide with the curial law, and thus any
express stipulation of the curial law would aid in determination of the
juridical seat. The relevant observations read as under: -
"26. The Shareholders Agreement provided that “the
venue of arbitration shall be London, United Kingdom”
whilst providing that the arbitration proceedings should be
conducted in English in accordance with ICC Rules and
that the governing law of the Shareholders Agreement
itself would be the laws of India. It is accepted by
both parties that the concept of the seat is one which
is fundamental to the operation of the Arbitration Act
and that the seat can be different from the venue in
which arbitration hearings take place. It is certainly not
unknown for hearings to take place in an arbitration in
more than one jurisdiction for reasons of convenience of
[2024] 11 S.C.R. 1211

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

the parties or witnesses. The claimants submitted that in
the ordinary way, however, if the arbitration agreement
provided for a venue, that would constitute the seat. If a
venue was named but there was to be a different juridical
seat, it would be expected that the seat would also be
specifically named. Notwithstanding the authorities cited
by the defendant, I consider that there is great force in
this. The defendant submits however that as “venue”
is not synonymous with “seat”, there is no designation
of the seat of the arbitration by clause 14.4 and, in the
absence of any designation, when regard is had to the
parties’ agreement and all the relevant circumstances,
the juridical seat must be in India and the curial law must
be Indian law.
27. In my judgment, in an arbitration clause which provides
for arbitration to be conducted in accordance with the
Rules of the ICC in Paris (a supranational body of rules),
a provision that the venue of the arbitration shall be
London, United Kingdom does amount to the designation
of a juridical seat. The parties have not simply provided
for the location of hearings to be in London for the sake of
convenience and there is indeed no suggestion that London
would be convenient in itself, in the light of the governing
law of the Shareholders Agreement, the nature and terms
of that agreement and the nature of the disputes which
were likely to arise and which did in fact arise (although
the first claimant is resident in the UK).
28. The defendant relies upon the nature of the Shareholders
Agreement, the provision for the proper law of the
agreement to be that of India, the application of the ICC
Rules and the Interim Measures Application made by the
claimants in India as pointing to Indian law as, not only
the curial law, but also that of the agreement to arbitrate.
Furthermore reliance is placed on clause 14.5 of the
Shareholders Agreement which provides that each party is
to bear its own costs of the arbitration, which, on its face,
is inconsistent with section 60 of the Arbitration Act. It is
said that this conflict, when seen objectively, must militate
1212 [2024] 11 S.C.R.

Digital Supreme Court Reports

against the application of English law to the arbitration and
to the seat being London. In my judgment none of these
matters will bear the weight which the defendant seeks
to put upon them.
29. The defendant contends that the law of the agreement
to arbitrate is Indian law, essentially because the proper
law of the Shareholders Agreement is Indian law. As
appears from the decided authorities however, although
there have been dicta to this effect, recent decisions,
where the focus has been on the seat of the arbitration
and the agreement to arbitrate, establish that it is much
more likely that the law of the arbitration agreement will
coincide with the curial law. This does not therefore much
assist the defendant and the argument that the nature of
the Shareholders Agreement points to Indian law as the
curial law is in reality no more than an argument that its
nature points to Indian law as the substantive law of the
Shareholders Agreement, which is in any event expressly
provided. [...]
xxx
34. “London arbitration” is a well known phenomenon which
is often chosen by foreign nationals with a different law,
such as the law of New York, governing the substantive
rights of the parties. This is because of the legislative
framework and supervisory powers of the courts here
which many parties are keen to adopt. When therefore
there is an express designation of the arbitration venue
as London and no designation of any alternative place
as the seat, combined with a supranational body of rules
governing the arbitration and no other significant contrary
indicia, the inexorable conclusion is, to my mind, that
London is the juridical seat and English law the curial law.
In my judgment it is clear that either London has been
designated by the parties to the arbitration agreement as
the seat of the arbitration or, having regard to the parties’
agreement and all the relevant circumstances, it is the
[2024] 11 S.C.R. 1213

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

seat to be determined in accordance with the final fall
back provision of section 3 of the Arbitration Act.”
(Emphasis supplied)

51. In Roger Shashoua (2) v. Mukesh Sharma reported in (2017)
14 SCC 722 this Court held that the test that was applied in
NTPC (supra) was no longer a good law in view of the repeal
of Section 9(b) of the Act, 1961. It further, held that the principle
enunciated in Roger Shashoua (1) had been expressly approved
by the 5-Judge Bench decision of this Court in BALCO (supra).
Accordingly, this Court applying the Shashoua Principle held that
the mention of London in the arbitration agreement was not merely
as a location but as a juridical seat. The relevant observations
read as under: -
"46. As stated earlier, in Shashoua Cooke, J., in the
course of analysis, held that “London arbitration” is
a well-known phenomenon which is often chosen by
foreign nationals with a different law, such as the law
of New York, governing the substantive rights of the
parties and it is because of the legislative framework
and supervisory powers of the courts here which many
parties are keen to adopt. The learned Judge has
further held that when there is an express designation
of the arbitration venue as London and no designation
of any alternative place as the seat, combined with a
supranational body of rules governing the arbitration
and no other significant contrary indicia, the inexorable
conclusion is that London is the juridical seat and English
law the curial law.
xxx
54. We had earlier extracted extensively from the said
judgment, as we find, the Court after adverting to various
aspects, has categorically held that the High Court had
not followed the Shashoua principle. The various decisions
referred to in Enercon (India) Ltd., the analysis made and the
propositions deduced leads to an indubitable conclusion that
1214 [2024] 11 S.C.R.

Digital Supreme Court Reports

Shashoua principle has been accepted by Enercon (India)
Ltd. It is also to be noted that in Balco, the Constitution Bench
has not merely reproduced few paragraphs from Shashoua
but has also referred to other decisions on which Shashoua
has placed reliance upon. As we notice, there is analysis
of earlier judgments, though it does not specifically state
that “propositions laid down in Shashoua are accepted”.
On a clear reading, the ratio of the decision in Balco, in the
ultimate eventuate, reflects that the Shashoua principle has
been accepted and the two-Judge Bench in Enercon (India)
Ltd., after succinctly analysing it, has stated that the said
principles have been accepted by the Constitution Bench.
Therefore, we are unable to accept the submission of Mr
Chidambaram that the finding recorded in Enercon (India)
Ltd. that Shashoua principle has been accepted in Balco
should be declared as per incuriam.
xxx
60. Tested on the aforesaid principle, we find that the
question that arose in Balco and the discussion that has
been made by the larger Bench relating to Shashoua and
C v. D are squarely in the context of applicability of Part I
or Part II of the Act. It will not be erroneous to say that the
Constitution Bench has built the propositional pyramid on
the basis or foundation of certain judgments and Shashoua
and C v. D are two of them. It will be inappropriate to
say that in Enercon (India) Ltd. the Court has cryptically
observed that observations made in Shashoua have been
approvingly quoted by the Court in Balco in para 110. We
are inclined to think, as we are obliged to, that the Shashoua
principle has been accepted in Balco as well as Enercon
(India) Ltd. on proper ratiocination and, therefore, the
submission advanced on this score by Mr Chidambaram,
learned Senior Counsel for the respondent, is repelled.
xxx
72. It is worthy to note that the arbitration agreement is not
silent as to what law and procedure is to be followed. On
[2024] 11 S.C.R. 1215

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

the contrary, Clause 14.1. lays down that the arbitration
proceedings shall be in accordance with the Rules of
Conciliation and Arbitration of ICC. In Enercon (India)
Ltd., the two-Judge Bench referring to Shashoua case
accepted the view of Cooke, J. that the phrase “venue of
arbitration shall be in London, UK” was accompanied by
the provision in the arbitration clause or arbitration to be
conducted in accordance with the Rules of ICC in Paris.
The two-Judge Bench accepted the Rules of ICC, Paris
which is supranational body of Rules as has been noted by
Cooke, J. and that is how it has accepted that the parties
have not simply provided for the location of hearings to be
in London. To elaborate, the distinction between the venue
and the seat remains. But when a court finds that there
is prescription for venue and something else, it has to be
adjudged on the facts of each case to determine the juridical
seat. As in the instant case, the agreement in question has
been interpreted and it has been held that London is not
mentioned as the mere location but the courts in London
will have the jurisdiction, another interpretative perception
as projected by the learned Senior Counsel is unacceptable.
xxx
74. It is apposite to note that the said decision has been
discussed at length in Union of India v. Reliance Industries
Ltd. The Court, in fact, reproduced the arbitration clause
in Singer Co. and referred to the analysis made in the
judgment and noted that notwithstanding the award, it
was a foreign award, since the substantive law of the
contract was Indian law and the arbitration law was part
of the contract, the arbitration clause would be governed
by Indian law and not by the Rules of International
Chamber of Commerce. On that basis the Court held in
Singer Co. that the mere fact that the venue chosen by
the ICC Court or conduct of the arbitration proceeding
was London, does not exclude the operation of the Act
which dealt with the domestic awards under the 1940 Act.
and thereafter opined:
1216 [2024] 11 S.C.R.

Digital Supreme Court Reports

“13. It can be seen that this Court in Singer
case 9 did not give effect to the difference
between the substantive law of the contract
and the law that governed the arbitration.
Therefore, since a construction of Section 9(b)
of the Foreign Awards Act led to the aforesaid
situation and led to the doctrine of concurrent
jurisdiction, the 1996 Act, while enacting
Section 9(a) of the repealed Foreign Awards
Act, 1961, in Section 51 thereof, was careful
enough to omit Section 9(b) of the 1961 Act
which, as stated hereinabove, excluded the
Foreign Awards Act from applying to any award
made on arbitration agreements governed by
the law of India.
14. This being the case, the theory of concurrent
jurisdiction was expressly given a go-by with the
dropping of Section 9(b) of the Foreign Awards
Act, while enacting Part II of the Arbitration Act,
1996, which repealed all the three earlier laws
and put the law of arbitration into one statute,
albeit in four different parts.”
75. We respectfully concur with the said view, for there is
no reason to differ. Apart from that, we have already held
that the agreement in question having been interpreted
in a particular manner by the English courts and the said
interpretation having gained acceptation by this Court, the
inescapable conclusion is that the courts in India have no
jurisdiction.”
(Emphasis supplied)

52. This Court in its decision in BGS SGS SOMA JV v. NHPC LTD.,
reported in (2020) 4 SCC 234 held that wherever in the arbitration
agreement there is designation of a place of arbitration as ‘venue’
of the ‘arbitral proceedings’, then such place effectively is the ‘seat’
of arbitration. This is because, the expression ‘arbitral proceedings’
does not refer to individual hearings but rather the whole arbitration
[2024] 11 S.C.R. 1217

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

process including the making of the award. It further held that where
the parties have anchored the arbitral proceedings to one fixed location
or place, it would indicate that the parties intended such place to be
the seat of arbitration. It held that where the place designated as
venue in the arbitration agreement is coupled with there being no
other significant contrary indicia that such place is merely a venue,
then such place would be construed as the ‘seat’ of the arbitral
proceedings. This Court also added that the international context
where a supranational body of rules is to govern the arbitration
in or in the national context the laws of a particular country then
this would further be an indicia that the ‘venue’ designated in the
arbitration agreement is really the seat of arbitration. The relevant
observations read as under: -
"82. On a conspectus of the aforesaid judgments, it may be
concluded that whenever there is the designation of a place
of arbitration in an arbitration clause as being the “venue”
of the arbitration proceedings, the expression “arbitration
proceedings” would make it clear that the “venue” is really
the “seat” of the arbitral proceedings, as the aforesaid
expression does not include just one or more individual or
particular hearing, but the arbitration proceedings as a whole,
including the making of an award at that place. This language
has to be contrasted with language such as “tribunals are
to meet or have witnesses, experts or the parties” where
only hearings are to take place in the “venue”, which may
lead to the conclusion, other things being equal, that the
venue so stated is not the “seat” of arbitral proceedings,
but only a convenient place of meeting. Further, the fact
that the arbitral proceedings “shall be held” at a particular
venue would also indicate that the parties intended to
anchor arbitral proceedings to a particular place, signifying
thereby, that that place is the seat of the arbitral proceedings.
This, coupled with there being no other significant contrary
indicia that the stated venue is merely a “venue” and not the
“seat” of the arbitral proceedings, would then conclusively
show that such a clause designates a “seat” of the arbitral
proceedings. In an international context, if a supranational
1218 [2024] 11 S.C.R.

Digital Supreme Court Reports

body of rules is to govern the arbitration, this would further
be an indicia that “the venue”, so stated, would be the
seat of the arbitral proceedings. In a national context, this
would be replaced by the Arbitration Act, 1996 as applying
to the “stated venue”, which then becomes the “seat” for
the purposes of arbitration.”
(Emphasis supplied)

53. Thus, this Court in BGS SGS SOMA (supra) laid down a three-
condition test as to when ‘venue’ can be construed as ‘seat’ of
arbitration. The conditions that are required to be fulfilled are as
under: -
i. The arbitration agreement or clause in question should designate
or mention only one place;
ii. Such place must have anchored the arbitral proceedings i.e.,
the arbitral proceedings must have been fixed to that place
alone without any scope of change;
iii. There must be no other significant contrary indicia to show that
the place designated is merely the venue and not the seat.
Where the aforesaid conditions are fulfilled, then the place that
has been designated as ‘venue’ can be construed as the ‘seat’ of
arbitration. It is clarified that, while applying the aforesaid test, it must
be borne in mind that where a supranational body of rules has been
stipulated in an arbitration agreement or clause, such stipulation is
not to be regarded as a contrary indicium, such stipulation does not
mean that no seat has been designated rather such stipulation is
a positive indicia that the place so designated is actually the ‘seat’.
54. The aforesaid test was approvingly applied by this Court in Mankastu
Impex Private Ltd. v. Airvisual Ltd. reported in (2020) 5 SCC 399
and it was held that where the reference to a place in the arbitration
agreement is not simply as “venue” and rather a reference as place
for final resolution by arbitration, such place shall be construed as
the seat of arbitration. The relevant observations read as under: -
“20. It is well settled that “seat of arbitration” and “venue
of arbitration” cannot be used interchangeably. It has
[2024] 11 S.C.R. 1219

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

also been established that mere expression “place of
arbitration” cannot be the basis to determine the intention
of the parties that they have intended that place as the
“seat” of arbitration. The intention of the parties as to the
“seat” should be determined from other clauses in the
agreement and the conduct of the parties.
21. In the present case, the arbitration agreement entered
into between the parties provides Hong Kong as the place
of arbitration. The agreement between the parties choosing
“Hong Kong” as the place of arbitration by itself will not
lead to the conclusion that the parties have chosen Hong
Kong as the seat of arbitration. The words, “the place of
arbitration” shall be “Hong Kong”, have to be read along
with Clause 17.2. Clause 17.2 provides that “… any
dispute, controversy, difference arising out of or relating to
MoU shall be referred to and finally resolved by arbitration
administered in Hong Kong….”. On a plain reading of the
arbitration agreement, it is clear that the reference to Hong
Kong as “place of arbitration” is not a simple reference as
the “venue” for the arbitral proceedings; but a reference to
Hong Kong is for final resolution by arbitration administered
in Hong Kong. The agreement between the parties that
the dispute “shall be referred to and finally resolved by
arbitration administered in Hong Kong” clearly suggests
that the parties have agreed that the arbitration be seated
at Hong Kong and that laws of Hong Kong shall govern the
arbitration proceedings as well as have power of judicial
review over the arbitration award.
22. As pointed out earlier, Clause 17.2 of MoU stipulates
that the dispute arising out of or relating to MoU including
the existence, validity, interpretation, breach or termination
thereof or any dispute arising out of or relating to it shall
be referred to and finally resolved by the arbitration
administered in Hong Kong. The words in Clause 17.2 that
“arbitration administered in Hong Kong” is an indicia that
the seat of arbitration is at Hong Kong. Once the parties
have chosen “Hong Kong” as the place of arbitration to
be administered in Hong Kong, the laws of Hong Kong
1220 [2024] 11 S.C.R.

Digital Supreme Court Reports

would govern the arbitration. The Indian courts have no
jurisdiction for appointment of the arbitrator.”
(Emphasis supplied)

iii. Whether the Seat of Arbitration in the underlying
Distributorship Agreement is in India?
55. Now coming to the facts of the present case, Clause 26 of the
aforesaid Distributorship Agreement stipulates that the arbitration shall
be subject to UAE Arbitration and Conciliation rules. The aforesaid
arbitration clause further designates only one place i.e., Dubai, UAE
as the venue of arbitration.
56. In view of the law laid down by this Court in BGS SGS SOMA
(supra), since only one place has been designated in the arbitration
clause, and such place has been categorically fixed inasmuch as
there is no scope for the place designated as venue to change in
terms of Clause 26, and furthermore, the said clause has explicitly
stipulated that the curial law would be the UAE Arbitration and
Conciliation rules and there being no other contrary indicia let alone
a significant contrary indicia, we are of the considered opinion that
the Dubai, UAE has not been designated merely as a venue but
rather as the juridical seat of arbitration in terms of clause 26 of the
Distributorship Agreement.
57. We are further reinforced in our findings in light of the Shashoua
Principle as laid down in Roger Shashoua (1) (supra) wherein it was
held that more often than not the law of the arbitration agreement and
by it the seat of the arbitration coincides with the curial law. Since
the parties herein have expressly chosen the curial law of arbitration
to be the UAE Arbitration and Conciliation rules, there is no second
opinion that the seat of arbitration in the underlying Distributorship
Agreement is Dubai, UAE and not India.
58. It has been contended by the petitioner herein that, no one fixed place
or seat of arbitration has been designated under the Distributorship
Agreement since Clause 27 of the aforesaid Agreement stipulates
that it shall be subject to the non-exclusive jurisdiction of the Dubai
Courts. It has been submitted that since the parties had agreed not to
confer exclusive jurisdiction to courts in Dubai, neither of the parties to
[2024] 11 S.C.R. 1221

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

the agreement construed the arbitration clause as designating courts
in Dubai as the seat of arbitration. It was also contended that the
non-exclusive jurisdiction clause had been specifically incorporated
to confer jurisdiction on other courts too.
59. In Enercon (supra), this Court held that the ‘seat’ or the situs of
arbitration is a crucial location as it determines the courts that will
have exclusive jurisdiction to oversee the arbitration proceedings.
The relevant observations read as under: -
“97. This now clears the decks for the crucial question i.e.
is the “seat” of arbitration in London or in India. This is
necessarily so as the location of the seat will determine
the courts that will have exclusive jurisdiction to oversee
the arbitration proceedings. Therefore, understandably,
much debate has been generated before us on the
question whether the use of the phrase “venue shall be
in London” actually refers to designation of the seat of
arbitration in London.”
(Emphasis supplied)

60. Similarly, in Indus Mobile Distribution (P) Ltd. v. Datawind
Innovations (P) Ltd reported in (2017) 7 SCC 678, this Court held
that in arbitration law, the moment ‘seat’ is determined, it would be
akin to an exclusive jurisdiction clause whereby only the jurisdictional
courts of that seat will have the jurisdiction to regulate the arbitral
proceedings. It further held that where more than one court has
jurisdiction, it is open for the parties to exclude all other courts and
choose to submit to the jurisdiction of one court alone. The relevant
observations read as under: -
“19. A conspectus of all the aforesaid provisions shows
that the moment the seat is designated, it is akin to an
exclusive jurisdiction clause. On the facts of the present
case, it is clear that the seat of arbitration is Mumbai
and Clause 19 further makes it clear that jurisdiction
exclusively vests in the Mumbai courts. Under the Law
of Arbitration, unlike the Code of Civil Procedure which
applies to suits filed in courts, a reference to “seat” is a
1222 [2024] 11 S.C.R.

Digital Supreme Court Reports

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 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.
20. It is well settled that where more than one court has
jurisdiction, it is open for the parties to exclude all other
courts. …”
(Emphasis supplied)

61. In Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd., reported in
(2013) 9 SCC 32, it was held that in a jurisdictional clause even
if words like “alone”, “only”, “exclusive” or “exclusive jurisdiction”
have not been used it would make no material difference as to the
exclusive nature of the jurisdiction conferred by such clause. This
Court observed that this is because, the moment a jurisdiction is
conferred, the maxim expressio unius est exclusio alterius i.e.,
expression of one is the exclusion of another comes into play, and
it would be as if its an exclusive clause if there is nothing to indicate
the contrary. The relevant observations read as under: -
“31. In the instant case, the appellant does not dispute
that part of cause of action has arisen in Kolkata. What
appellant says is that part of cause of action has also arisen
in Jaipur and, therefore, the Chief Justice of the Rajasthan
High Court or the designate Judge has jurisdiction to
consider the application made by the appellant for the
appointment of an arbitrator under Section 11. Having
regard to Section 11(12)(b) and Section 2(e) of the 1996
Act read with Section 20(c) of the Code, there remains
no doubt that the Chief Justice or the designate Judge of
the Rajasthan High Court has jurisdiction in the matter.
[2024] 11 S.C.R. 1223

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

The question is, whether parties by virtue of Clause 18 of
the agreement have agreed to exclude the jurisdiction of
the courts at Jaipur or, in other words, whether in view of
Clause 18 of the agreement, the jurisdiction of the Chief
Justice of the Rajasthan High Court has been excluded?
32. For answer to the above question, we have to see the
effect of the jurisdiction clause in the agreement which
provides that the agreement shall be subject to jurisdiction
of the courts at Kolkata. It is a fact that whilst providing
for jurisdiction clause in the agreement the words like
“alone”, “only”, “exclusive” or “exclusive jurisdiction” have
not been used but this, in our view, is not decisive and
does not make any material difference. The intention of the
parties—by having Clause 18 in the agreement—is clear
and unambiguous that the courts at Kolkata shall have
jurisdiction which means that the courts at Kolkata alone
shall have jurisdiction. It is so because for construction of
jurisdiction clause, like Clause 18 in the agreement, the
maxim expressio unius est exclusio alterius comes into
play as there is nothing to indicate to the contrary. This
legal maxim means that expression of one is the exclusion
of another. By making a provision that the agreement is
subject to the jurisdiction of the courts at Kolkata, the parties
have impliedly excluded the jurisdiction of other courts.
Where the contract specifies the jurisdiction of the courts
at a particular place and such courts have jurisdiction to
deal with the matter, we think that an inference may be
drawn that parties intended to exclude all other courts. A
clause like this is not hit by Section 23 of the Contract
Act at all. Such clause is neither forbidden by law nor it
is against the public policy. It does not offend Section 28
of the Contract Act in any manner.
xxx
55. It will be seen from the above decisions that except in
A.B.C. Laminart [A.B.C. Laminart (P) Ltd. v. A.P. Agencies
(1989) 2 SCC 163] where this Court declined to exclude
the jurisdiction of the courts in Salem, in all other similar
1224 [2024] 11 S.C.R.

Digital Supreme Court Reports

cases an inference was drawn (explicitly or implicitly) that
the parties intended the implementation of the exclusion
clause as it reads notwithstanding the absence of the words
“only”, “alone” or “exclusively” and the like. The reason for
this is quite obvious. The parties would not have included
the ouster clause in their agreement were it not to carry
any meaning at all. The very fact that the ouster clause
is included in the agreement between the parties conveys
their clear intention to exclude the jurisdiction of courts other
than those mentioned in the clause concerned. Conversely,
if the parties had intended that all courts where the cause
of action or a part thereof had arisen would continue to
have jurisdiction over the dispute, the exclusion clause
would not have found a place in the agreement between
the parties.”
(Emphasis supplied)

62. As discussed in the foregoing paragraphs, since the Distributorship
Agreement already designates Dubai, UAE as the seat of arbitration,
the same would be akin to an exclusive jurisdiction clause with only
the courts in Dubai, UAE having the jurisdiction over such arbitration
in view of the decision of this Court in Indus Mobile Distribution
(supra).
63. Even if it is assumed that the aforesaid clause does not confer
jurisdiction exclusively to the courts where the seat of arbitration is
situated, still this Court will not have jurisdiction to entertain the present
Section 11 petition. This is because, in view of the law laid down in
BALCO (supra) and Reliance Industries (supra), Part I of this Act,
1996 will not be applicable where the seat of arbitration is outside India
or where the law governing the arbitration agreement is not Indian
laws. In the present case as discussed in the foregoing paragraphs,
the Distributorship Agreement, more particularly Clauses 26 & 27
respectively makes it abundantly clear that the seat of arbitration is
in fact Dubai, UAE, furthermore both the law governing the contract
and the curial law are not Indian laws. In such scenario, even if the
argument of the petitioner that the non-exclusive jurisdiction clause
had been incorporated to confer jurisdiction on other courts too is
accepted in toto, even then this Court will not have any jurisdiction
[2024] 11 S.C.R. 1225

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

to exercise its powers under Section 11 of the Act, 1996 as neither
the seat is India nor is the arbitration agreement governed by Indian
laws. Since Part I of the Act, 1996 is inapplicable, the parties cannot
confer any jurisdiction to a court which otherwise has no jurisdiction
even if such conferment is permissible as per the Distributorship
Agreement.
64. Clause 27 of the aforesaid Distributorship Agreement reads as follows:
“This Agreement shall be governed by and construed in accordance
with the laws of UAE and shall be subject to the non-exclusive
jurisdiction of the Dubai Courts”. The expression “non-exclusive
jurisdiction of the Dubai Courts” occurring in the said clause cannot
be singled out and construed devoid of its context. The said clause
provides the law governing the entire Distributorship Agreement and
the stipulation that it shall be subject to the non-exclusive jurisdiction
of the Dubai Court only relates to the substantive agreement and not
the arbitration agreement contained in the preceding clause. The said
clause can at best be construed to stipulate that any substantive part
pertaining to such agreement which might not fall within the scope
of ‘disputes’ covered under Clause 26 i.e.., those disputes which are
not arbitrable between the parties will then in turn be amenable to
the jurisdiction of Dubai Courts or any other courts. The said clause
in no manner can be construed to mean that there exists no ‘seat’
or ‘situs’ of arbitration and that parties merely because there is no
court that has been conferred exclusive jurisdiction in respect of the
said agreement. It is the seat of arbitration which determines which
court will have exclusive jurisdiction and not vice-versa.

a. Doctrine of Forum non Conveniens
65. The aforesaid may be looked at from one another angle, through the
doctrine of forum non conveniens. The term ‘forum non conveniens’
is a latin term which means “an inconvenient forum” and provides
that a court which otherwise might have jurisdiction may decline
jurisdiction over a case if there is a more appropriate forum available
to the parties, and is typically invoked in respect of cross-border
subject-matters that are amenable to multiple concurrent jurisdictions.
Depending upon the nature of the dispute, the subject-matter involves
and the parties thereto, the courts by invoking this doctrine proceed to
determine which one of the available forums may be more convenient
and fair for entertaining and adjudicating the matter.
1226 [2024] 11 S.C.R.

Digital Supreme Court Reports

66. In order to apply the doctrine of forum non conveniens an dequate
alternative forum must exist where the subject-matter may be
espoused. The alternative forum must be capable of providing a
fair and adequate remedy for the dispute, however this does not
mean that the alternative forum must offer identical remedies, and
this doctrine may be applied as long as the other alternative forum
offers a reasonably fair process of remedy and is more convenient or
appropriate in the opinion of the court invoking the doctrine. Courts
in doing so must weigh the relative importance of private and public
interest factors. In doing so, they exercise a high level of discretion
and often issue rulings that are fact-specific.
67. In Spiliada Maritime Corp v. Cansulex Ltd. reported in [1987]
AC 460, the House of Lords while considering a non-exclusive
jurisdiction clause laid down the test for applying the doctrine of
forum non conveniens to decline jurisdiction on the grounds that
another forum is more appropriate. It held that where the court is
satisfied that there is some other available forum, having competent
jurisdiction, which is more appropriate to decide the dispute the
courts can decline its jurisdiction or stay the proceedings before it
in favour of a more suitable forum for the interests of all the parties
and the ends of justice. The relevant observations read as under: -
“The existence of a non-exclusive jurisdiction clause is a
factor, but it is not conclusive. It must be weighed alongside
other considerations of convenience and connection to
determine the appropriate forum.
The basic principle is that a stay will only be granted on
the ground of forum non conveniens where the court is
satisfied that there is some other available forum, having
competent jurisdiction, which is the appropriate forum for
the trial of the action, i.e., in which the case may be tried
more suitably for the interests of all the parties and the
ends of justice. The principle of forum non conveniens
allows discretion to stay proceedings in favor of a clearly
more appropriate forum unless justice requires the case to
proceed in the chosen forum due to special circumstances.
If the court concludes at the end of stage one that there
is another clearly more appropriate forum, it will ordinarily
grant a stay unless the plaintiff can show that there are
[2024] 11 S.C.R. 1227

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

special circumstances by reason of which justice requires
that the trial should nevertheless take place in England.
While the plaintiff’s choice of forum is significant, it is not
decisive; the court must weigh it against factors that might
inconvenience the defendant or make the chosen forum
less appropriate for the interests of justice.
If the defendant shows another available forum is more
suitable, then the court should only retain jurisdiction
if the plaintiff can show that substantial justice would
not be achieved in the alternative forum. In determining
whether there is another forum which is more appropriate
for the trial of the action, the court will look for the forum
with which the action has the most real and substantial
connection.”
(Emphasis supplied)

68. In Modi Entertainment Network v. W.S.G. Cricket Pte. Ltd.
reported in (2003) 4 SCC 341, this Court observed that while
construing a non-exclusive jurisdiction clause, where more forums
than one are available, the court in exercise of its discretion will
examine as to which is the appropriate forum (forum conveniens)
having regard to the convenience of the parties. It further observed
that Where parties have agreed, under a non-exclusive jurisdiction
clause, to approach a neutral foreign forum and be governed by
the law applicable to it for the resolution of their disputes arising
under the contract, ordinarily should not be entertained as s it shall
be presumed that the parties have thought over their convenience
and all other relevant factors before submitting to the non-
exclusive jurisdiction of the court of their choice which cannot be
treated just as an alternative forum. It also held that the burden of
establishing that the forum of choice is a forum non-conveniens or
the proceedings therein are oppressive or vexatious would be on
the party so contending to aver and prove the same. The relevant
observations read as under: -
"24. From the above discussion the following principles
emerge:
(1) In exercising discretion to grant an anti-suit injunction
the court must be satisfied of the following aspects:
1228 [2024] 11 S.C.R.

Digital Supreme Court Reports

(a) the defendant, against whom injunction is sought, is
amenable to the personal jurisdiction of the court;
(b) if the injunction is declined, the ends of justice will be
defeated and injustice will be perpetuated; and
(c) the principle of comity — respect for the court in which
the commencement or continuance of action/proceeding
is sought to be restrained — must be borne in mind.
(2) In a case where more forums than one are available,
the court in exercise of its discretion to grant anti-suit
injunction will examine as to which is the appropriate forum
(forum conveniens) having regard to the convenience of
the parties and may grant anti-suit injunction in regard to
proceedings which are oppressive or vexatious or in a
forum non-conveniens.
(3) Where jurisdiction of a court is invoked on the basis
of jurisdiction clause in a contract, the recitals therein in
regard to exclusive or non-exclusive jurisdiction of the
court of choice of the parties are not determinative but
are relevant factors and when a question arises as to
the nature of jurisdiction agreed to between the parties
the court has to decide the same on a true interpretation
of the contract on the facts and in the circumstances of
each case.
(4) A court of natural jurisdiction will not normally grant
anti-suit injunction against a defendant before it where
parties have agreed to submit to the exclusive jurisdiction of
a court including a foreign court, a forum of their choice in
regard to the commencement or continuance of proceedings
in the court of choice, save in an exceptional case for good
and sufficient reasons, with a view to prevent injustice in
circumstances such as which permit a contracting party to
be relieved of the burden of the contract; or since the date
of the contract the circumstances or subsequent events
have made it impossible for the party seeking injunction
to prosecute the case in the court of choice because the
essence of the jurisdiction of the court does not exist or
because of a vis major or force majeure and the like.
[2024] 11 S.C.R. 1229

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

(5) Where parties have agreed, under a non-exclusive
jurisdiction clause, to approach a neutral foreign forum and
be governed by the law applicable to it for the resolution
of their disputes arising under the contract, ordinarily no
anti-suit injunction will be granted in regard to proceedings
in such a forum conveniens and favoured forum as it shall
be presumed that the parties have thought over their
convenience and all other relevant factors before submitting
to the non-exclusive jurisdiction of the court of their choice
which cannot be treated just as an alternative forum.
(6) A party to the contract containing jurisdiction clause
cannot normally be prevented from approaching the court
of choice of the parties as it would amount to aiding
breach of the contract; yet when one of the parties to
the jurisdiction clause approaches the court of choice in
which exclusive or non-exclusive jurisdiction is created,
the proceedings in that court cannot per se be treated as
vexatious or oppressive nor can the court be said to be
forum non-conveniens.
(7) The burden of establishing that the forum of choice
is a forum non-conveniens or the proceedings therein
are oppressive or vexatious would be on the party so
contending to aver and prove the same."
(Emphasis supplied)

69. What can be discerned from above is that where more than one
forum is available, it is the discretion of the court to entertain the
matter by examining as to which is the appropriate forum more suited
for the interests of all the parties and the ends of justice. Ordinarily,
the burden to prove that the court or forum in seisin of the matter
is an inconvenient forum or the proceeding therein are oppressive
or vexatious lies on the party contending the same, yet the choice
of forum by the other party is not decisive, and that it is for the
court to determine whether the proceedings before it might be an
inconvenience to the interests of the parties or less appropriate for
the subject-matter in question.
70. Thus, even if it is assumed that Clause 27 of the aforesaid
Distributorship Agreement conferred concurrent jurisdiction to both the
1230 [2024] 11 S.C.R.

Digital Supreme Court Reports

courts in UAE and the other courts and thus, the petitioner herein was
well-within its right to approach this Court in terms of the non-exclusive
jurisdiction clause for the purpose of appointment of arbitrator, this
Court can decline to exercise its jurisdiction if there exists a more
appropriate forum. As discussed in the foregoing paragraphs, the
seat of arbitration in terms of the aforesaid Distributorship Agreement
is Dubai, UAE, both the law governing the contract and the curial
law are the laws of UAE, the respondent no. 1 herein with whom
the petitioner’s credit account lies is also situated in Dubai, even the
venue of arbitration is Dubai, thus by all reasons of logic the more
appropriate forum suitable for appointment of arbitrator is Dubai,
UAE and not the courts of India.

E. CONCLUSION
71. From the above exposition of law, the following position of law
emerges: -
(i) Part I of the Act, 1996 and the provisions thereunder only applies
where the arbitration takes place in India i.e., where either (I)
the seat of arbitration is in India OR (II) the law governing the
arbitration agreement are the laws of India.
(ii) Arbitration agreements executed after 06.09.2012 where the
seat of arbitration is outside India, Part I of the Act, 1996 and
the provisions thereunder will not be applicable and would fall
beyond the jurisdiction of Indian courts.
(iii) Even those arbitration agreements that have been executed prior
to 06.09.2012 Part I of the Act, 1996 will not be applicable, if its
application has been excluded by the parties in the arbitration
agreement either explicitly by designating the seat of arbitration
outside India or implicitly by choosing the law governing the
agreement to be any other law other than Indian law.
(iv) The moment ‘seat’ is determined, it would be akin to an exclusive
jurisdiction clause whereby only the jurisdictional courts of
that seat alone will have the jurisdiction to regulate the arbitral
proceedings. The notional doctrine of concurrent jurisdiction
has been expressly rejected and overruled by this Court in its
subsequent decisions.
(v) The ‘Closest Connection Test’ for determining the seat of
arbitration by identifying the law with which the agreement
[2024] 11 S.C.R. 1231

M/s Arif Azim Co. Ltd. v.
M/s Micromax Informatics Fze

to arbitrate has its closest and most real connection is no
longer a viable criterion for determination of the seat or
situs of arbitration in view of the Shashoua Principle. The
seat of arbitration cannot be determined by formulaic and
unpredictable application of choice of law rules based on
abstract connecting factors to the underlying contract. Even if
the law governing the contract has been expressly stipulated, it
does not mean that the law governing the arbitration agreement
and by extension the seat of arbitration will be the same as
the lex contractus.
(vi) The more appropriate criterion for determining the seat of
arbitration in view of the subsequent decisions of this Court
is that where in an arbitration agreement there is an express
designation of a place of arbitration anchoring the arbitral
proceedings to such place, and there being no other significant
contrary indicia to show otherwise, such place would be the
‘seat’ of arbitration even if it is designated in the nomenclature
of ‘venue’ in the arbitration agreement.
(vii) Where the curial law of a particular place or supranational
body of rules has been stipulated in an arbitration agreement
or clause, such stipulation is a positive indicium that the place
so designated is actually the ‘seat’, as more often than not
the law governing the arbitration agreement and by extension
the seat of the arbitration tends to coincide with the curial law.
(viii) Merely because the parties have stipulated a venue without any
express choice of a seat, the courts cannot sideline the specific
choices made by the parties in the arbitration agreement by
imputing these stipulations as inadvertence at the behest of
the parties as regards the seat of arbitration. Deference has
to be shown to each and every choice and stipulations made
by the parties, afterall the courts are only a conduit or means
to arbitration, and the sum and substance of the arbitration
is derived from the choices of the parties and their intentions
contained in the arbitration agreement. It is the duty of the
court to give weight and due consideration to each choice
made by the parties and to construe the arbitration agreement
in a manner that aligns the most with such stipulations and
intentions.
1232 [2024] 11 S.C.R.

Digital Supreme Court Reports

(ix) We do not for a moment say that, the Closest Connection Test
has no application whatsoever, where there is no express or
implied designation of a place of arbitration in the agreement
either in the form of ‘venue’ or ‘curial law’, there the closest
connection test may be more suitable for determining the seat
of arbitration.
(x) Where two or more possible places that have been designated
in the arbitration agreement either expressly or impliedly,
equally appear to be the seat of arbitration, then in such cases
the conflict may be resolved through recourse to the Doctrine
of Forum Non Conveniens, and the seat be then determined
based on which one of the possible places may be the most
appropriate forum keeping in mind the nature of the agreement,
the dispute at hand, the parties themselves and their intentions.
The place most suited for the interests of all the parties and the
ends of justice may be determined as the ‘seat’ of arbitration.
72. Thus, for all the foregoing reasons, we have reached the conclusion
that the present petition under Section 11 of the Act, 1996 is not
maintainable as neither the seat of arbitration is India nor is the
arbitration agreement governed by laws of India.
73. In the result, the present petition filed by the petitioner fails and is
hereby dismissed.
74. The parties shall bear their own costs.
75. Pending application(s), if any, also stand disposed of.

Result of the case: Petition dismissed.

†
Headnotes prepared by: Ankit Gyan