Holding

The arbitration clause did not designate Kuala Lumpur as the seat; no seat was agreed, and the arbitral tribunal failed to make a statutory "determination" of the seat, so Indian courts have jurisdiction under Section 34 and the appeal is allowed.

Summary

The Union of India challenged an arbitral award made in its favour by Hardy Exploration and Production (India) Inc, contending that Indian courts had jurisdiction to entertain a Section 34 application despite the arbitration agreement specifying Kuala Lumpur as the "venue" for proceedings. The Delhi High Court held that the venue clause excluded Indian jurisdiction, a decision the Union appealed. The Supreme Court examined whether a reference to "venue" without an explicit "seat" creates an implied exclusion of Part I of the Arbitration and Conciliation Act, 1996. It held that the clause did not designate Kuala Lumpur as the seat; no agreement on the seat existed and the tribunal had not made a "determination" of the seat as required by UNCITRAL Model Law Articles 20 and 31. Consequently, Indian courts retained jurisdiction under Section 34, the High Court order was set aside, and the appeal was allowed.

Issues considered

Whether a reference to "venue" in an arbitration agreement, without an explicit "seat", excludes the applicability of Part I of the Arbitration and Conciliation Act, 1996 and Indian court jurisdiction under Section 34.
Whether the place where arbitrators held meetings (Kuala Lumpur) can be treated as the seat of arbitration when conditions precedent are attached.
Whether the arbitrators' meeting and signing of the award constitute a "determination" of the seat under UNCITRAL Model Law Articles 20 and 31.
How the arbitration clause should be interpreted holistically to ascertain the seat and the consequent jurisdictional consequences.
The relevance of the implied exclusion principle (Bhatia International) and the BALCO principle in the present context.

Legislation cited

Arbitration and Conciliation Act, 1996s. 2(2), s. 34, s. 37(2)
UNCITRAL Model Law on International Commercial Arbitration (1985)s. 20, s. 31

Subjects

ArbitrationSeat of arbitrationVenueSection 34Arbitration and Conciliation Act 1996UNCITRAL Model LawImplied exclusionJurisdictionInternational commercial arbitrationDetermination

Judgment

[2018] 13 S.C.R. 379 379

UNION OF INDIA A
v.
HARDY EXPLORATION AND PRODUCTION (INDIA) INC
(Civil Appeal No.4628 of 2018)
SEPTEMBER 25, 2018 B
[DIPAK MISRA, CJI, A. M. KHANWILKAR AND
DR. D.Y. CHANDRACHUD, JJ.]

Arbitration and Conciliation Act, 1996 – s.34 – “seat” and
“venue” for holding arbitration proceedings under the Arbitration C
agreement – Arbitrator held meeting at Kuala Lumpur and signed
the arbitral award in favour of the respondents – Appellant
challenged the legal propriety and correctness of the award u/s.34
– High Court held that in the terms of the arbitration agreement,
the Indian Courts had no jurisdiction to entertain the application, D
as Art.33 of the agreement mentioned Kuala Lumpur as a venue for
arbitration – Aggrieved, appellant filed appeal – Two judge Bench
of Supreme Court referred the matter to the larger Bench to decide
the question regarding “seat” and “venue” for holding arbitration
proceedings under the Arbitration agreement/ International
Commercial Arbitration agreement – Held: The arbitration clause E
has to be appositely read to understand its intention so as to arrive
at a conclusion on whether it determines the seat or not – Further,
it has to be read in a holistic manner so as to determine the
jurisdiction of the Court – That apart, if there is mention of venue
and something else is appended thereto, depending on the nature F
of the prescription, the Court can come to conclusion that there is
implied exclusion of Part-I of the Act – The sittings at various places
are relatable to venue – However, it cannot be equated with the seat
of arbitration or place of arbitration – Insofar place of arbitration
between the parties in present case is concerned, place of arbitration
had not been agreed upon between the parties – In case of failure G
of agreement between the parties, the Arbitral Tribunal was required
to determine the same u/Art.20 of the UNCITRAL Model Law – It
was also incumbent on the Arbitral Tribunal that the determination
was clearly stated in the ‘form and contents of award’ as postulated
in Art.31 of the UNCITRAL Model Law – In instant case, there was
H
379
380 SUPREME COURT REPORTS [2018] 13 S.C.R.

A no determination or in other words, there was no adjudication and
expression of an opinion – Thus, the word ‘place’ cannot be used
as ‘seat’, though normally ‘place’ and ‘seat’ are used
interchangeably – A place unlike seat, as seen in the contract, can
become a seat if one of the conditions precedent is satisfied – It
does not ipso facto assume the status of seat – As conditions precedent
B
were not satisfied, Kaula Lumpur was not the seat or place of
arbitration – Therefore, Courts in India had jurisdiction to entertain
application u/s.34 of the Act – UNCITRAL Model Law – Arts.20
and 31.
Allowing the appeal, the Court
C
HELD: 1. In view of the various Supreme Court judgments,
there is no confusion with regard to what the seat of arbitration
and venue of arbitration mean. There is no shadow of doubt that
the arbitration clause has to be read in a holistic manner so as to
determine the jurisdiction of the Court. That apart, if there is
D mention of venue and something else is appended thereto,
depending on the nature of the prescription, the Court can come
to a conclusion that there is implied exclusion of Part I of the
Act. [Para 23] [399-E-F]
2. In the present case, the place of arbitration was to be
E agreed upon between the parties. It had not been agreed upon ;
and in case of failure of agreement, the Arbitral Tribunal is
required to determine the same taking into consideration the
convenience of the parties. It is also incumbent on the Arbitral
Tribunal that the determination shall be clearly stated in the ‘form
F and contents of award’ that is postulated in Article 31. There has
been no determination. [Para 31] [403-A-B]
3. The word ‘determination’ has to be contextually
determined. When a ‘place’ is agreed upon, it gets the status of
seat which means the juridical seat. The terms ‘place’ and ‘seat’
G are used interchangeably. When only the term ‘place’ is stated
or mentioned and no other condition is postulated, it is equivalent
to ‘seat’ and that finalises the facet of jurisdiction. But if a condition
precedent is attached to the term ‘place’, the said condition has
to be satisfied so that the place can become equivalent to seat.
In the instant case, as there are two distinct and disjunct riders,
H
UNION OF INDIA v. HARDY EXPLORATION AND 381
PRODUCTION (INDIA) INC

either of them have to be satisfied to become a place. As is A
evident, there is no agreement. As far as determination is
concerned, there has been no determination. [Para 34][403-D-F]
4. The expression of determination signifies an expressive
opinion. In the instant case, there has been no adjudication and
expression of an opinion. Thus, the word ‘place’ cannot be used B
as seat. To elaborate, a venue can become a seat if something
else is added to it as a concomitant. But a place unlike seat, at
least as is seen in the contract, can become a seat if one of the
conditions precedent is satisfied. It does not ipso facto assume
the status of seat. Thus understood, Kuala Lumpur is not the
seat or place of arbitration and the interchangeable use will not C
apply in stricto sensu. Thus, the Courts in India have jurisdiction
and, therefore, the order passed by the Delhi High Court is set
aside. [Para 34] [404-B-E]
Union of India v. Hardy Exploration and Production
(India) INC (2018) 7 SCC 374 ; Govt. Of India v. D
Petrocon India Ltd. (2016) SCC Online MYFC 35 ;
Sumitomo Heavy Industries Ltd. v. ONGC Ltd. and Others
(1998) 1 SCC 305 ; Bhatia International v. Bulk Trading
S.A. and Another (2002) 4 SCC 105 ; Venture Global
Engineering v. Satyam Computer Services Ltd. & E
Another (2008) 4 SCC 190 ; Videocon Industries Limited
v. Union of India and Another (2011) 6 SCC 161 ;
Dozco India Private Ltd. v. Doosan Infracore Co.
Limited (2011) 6 SCC 179 : [2010] 12 SCR 259 ; Bharat
Aluminium Company v. Kaiser Aluminium Technical
Services INC (2012) 9 SCC 552 : [2012] 12 SCR F
327 ; Enercon (India) Ltd. & Others v. Enercon GMBH
& Another (2014) 5 SCC 1: [2014] 2 SCR 855 ;
Reliance Industries Limited and Another v. Union of
India (2014) 7 SCC 603 : [2014] 6 SCR 456 ; Harmony
Innovation Shipping Ltd. v. Gupta Coal India Limited G
and Another (2015) 9 SCC 172 : [2015] 2 SCR 697 ;
Union of India v. Reliance Industries Limited and Others
(2015) 10 SCC 213 : [2015] 10 SCR 85 ; Eitzen Bulk
A/s & Others v. Ashapura Minechem Limited and
Another (2016) 11 SCC 508 : [2016] 2 SCR 634 ; Imax
H
382 SUPREME COURT REPORTS [2018] 13 S.C.R.

A Corporation v. E-City Entertainment (India) Pvt. Lid.
(2017) 5 SCC 331 : [2017] 4 SCR 833 ; Roger
Shashoua and Others v. Mukesh Sharma and Others
(2017) 14 SCC 722 : [2017] 7 SCR 442 ; Indtel
Technical Services Private Ltd. v. W.S. Atkins Rail
Limited (2008) 10 SCC 308 : [2008] 12 SCR 673 ;
B
Ashok Leyland Limited v. State of T.N. and Another
(2004) 3 SCC 1 : [2004] 1 SCR 306 – referred to.
Lesotho Highlands Development Authority v. Impregilo
SpA (2005) 3 WLR 129; Naviera Amazonica Peuana
S.A. v. Compania International de Seguros del Peru
C (1998) 1 Lloyd’s Law Reports 116 (CA) ; Union of
India v. McDonnell Douglas Corporation (1993) 2
Lloyd’s Law Reports 48 ; Hiscox v. Outhwaite (1992)
1 AC 562 ; C v. D (2007) EWCA Civ 1282 (CA) ;
C v. D (2008) 1 Lloyd’s Law Reports 239 ; Braes of
D Doune Wind Farm (Scotland) Limited v. Alfred McAlpine
Business Services Limited (2008) EWHC 426 (TCC) ;
Shashoua and Ors. v. Sharma (2009) EWHC 957
(Comm.) ; Sulamerica Cia Nacional De Seguros S.A.
and Ors. v. Enesa Engenharia SA & Ors. (2012) EWCA
Civ 638 ; (1) Enercon GMBH (2) Wobben Properties
E GMBH v. Enercon (India) Ltd. (2012) EWHC 3711
(Comm.) – referred to.
Black’s Law Dictionary, 6th Edition – referred to.
Case Law Reference
F (2018) 7 SCC 374 referred to Para 3
[1997] 6 Suppl. SCR 186 referred to Para 3
[2002] 2 SCR 411 referred to Para 3
[2008] 1 SCR 501 referred to Para 3
G [2011] 8 SCR 569 referred to Para 3
[2010] 12 SCR 259 referred to Para 3
[2012] 12 SCR 327 referred to Para 3
[2014] 2 SCR 855 referred to Para 3
H
UNION OF INDIA v. HARDY EXPLORATION AND 383
PRODUCTION (INDIA) INC

[2014] 6 SCR 456 referred to Para 3 A
[2015] 2 SCR 697 referred to Para 3
[2015] 10 SCR 85 referred to Para 3
[2016] 2 SCR 634 referred to Para 3
[2017] 4 SCR 833 referred to Para 3 B
[2017] 7 SCR 442 referred to Para 3
[2008] 12 SCR 673 referred to Para 11
[2004] 1 SCR 306 referred to Para 33
C
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4628
of 2018.
From the Judgment and Order dated 27.07.2016 of the High Court
of Delhi at New Delhi in FAO (OS) No. 59 of 2016.
Tushar Mehta, ASG, Rajat Nair, K. R. Sasiprabhu, Nakul Dewan, D
Somiran Sharma, Robhin V. S., Ms. Kanu Agrawal, Advs. for the
Appellant.
C. U. Singh, Sr. Adv., Ameet Naik, Rishi Agrawala, Abhishek
Kale, Harshwardan Jha, Karan Luthra, Ms. Devika Mohan(for
E.C. Agrawala), Advs. for the Respondent. E
The Judgment of the Court was delivered by
DIPAK MISRA, CJI 1. The present appeal arose from the final
judgment and order dated 27th July, 2016 passed by the High Court of
Delhi at New Delhi in FAO No. 59 of 2016 whereby the Division Bench
of the High Court had dismissed the appeal preferred by the Union of F
India, the appellant herein, assailing the order dated 9th July, 2015 passed
by the learned Single Judge in OMP No. 693 of 2013 and the order
dated 20th January, 2016 passed in Review Petition No. 400 of 2015 in
OMP No. 693 of 2013. The Division Bench took note of the fact that
the appellant had challenged the legal propriety and correctness of the
G
award made by the Arbitrators in favour of the respondents under Section
34 of the Arbitration and Conciliation Act, 1996 (for brevity ‘the Act’).
The said application was contested by the respondent raising many a
ground, but the thrust of the objection related to the maintainability of the
application under Section 34 of the Act. It was contended before the
High Court that the courts in India do not have the jurisdiction to entertain H
384 SUPREME COURT REPORTS [2018] 13 S.C.R.

A an application under Section 34 of the Act to challenge the legality of the
award in question. The learned Single Judge, vide order dated 9th July,
2015, accepted the preliminary objection and came to hold that in view
of the terms of the agreement and the precedents holding the field, the
Indian courts have no jurisdiction to entertain the application. Being of
this view, the learned Single Judge did not advert to the other grounds
B
urged in the petition.
2. Being grieved by the aforesaid order, the Union of India preferred
an appeal under Section 37(2) of the Act before the Division Bench
which concurred with the opinion expressed by the learned Single Judge.
3. In appeal by special leave, the two-Judge Bench in Union of
C
India v. Hardy Exploration and Production (India) INC1 referred to
certain decisions from foreign jurisdictions, namely, Naviera Amazonica
Peruana S.A. v. Compania Internacional De Seguros Del Peru2,
Hiscox v. Outhwaite3, Union of India v. McDonnell Douglas Corpn.4,
C v. D5, C v. D6, Braes of Doune Wind Farm (Scotland) Limited v.
D Alfred McAlpine Business Services Limited7, Shashoua and Ors. v.
Sharma8, Sulamerica Cia Nacional De Seguros S.A. and Ors. v.
Enesa Engenharia SA & Ors.9, (1) Enercon GMBH (2) Wobben
Properties GMBH v. Enercon (India) Ltd.10 and Govt. Of India v.
Petrocon India Ltd.11 Apart from the above, the decisions rendered in
Sumitomo Heavy Industries Ltd. v. ONGC Ltd. and Others12, Bhatia
E
International v. Bulk Trading S.A. and Another13, Venture Global
Engineering v. Satyam Computer Services Ltd. & another 14 ,
Videocon Industries Limited v. Union of India and another15, Dozco
India Private Ltd. v. Doosan Infracore Co. Limited 16, Bharat
1
(2018) 7 SCC 374
2
F (1988) (1) Lloyd’s Law Reports 116
3
(1992) 1 AC 562
4
(1993) 2 Lloyd’s Law Reports 48
5
(2007) EWCA Civ 1282 (CA)
6
(2008) 1 Lloyd’s Law Reports 239
7
(2008) EWHC 426 (TCC)
8
(2009) EWHC 957 (Comm.)
G 9
(2012) EWCA Civ 638
10
(2012) EWHC 3711 (Comm.)
11
(2016) SCC Online MYFC 35
12
(1998) 1 SCC 305
13
(2002) 4 SCC 105
14
(2008) 4 SCC 190
15
(2011) 6 SCC 161
H 16
(2011) 6 SCC 179
UNION OF INDIA v. HARDY EXPLORATION AND 385
PRODUCTION (INDIA) INC [DIPAK MISRA, CJI]

Aluminium Company v. Kaiser Aluminium Technical Services A
INC 17 , Enercon (India) Ltd. & Others v. Enercon GMBH &
Another18, Reliance Industries Limited and another v. Union of
India19, Harmony Innovation Shipping Ltd. v. Gupta Coal India
Limited and another20, Union of India v. Reliance Industries Limited
and Others21, Eitzen Bulk A/s & others v. Ashapura Minechem
B
Limited and another22, Imax Corporation v. E-City Entertainment
(India) Pvt. Lid. 23 and Roger Shashoua and others v. Mukesh
Sharma and others24 were also referred to.
4. The two-Judge Bench noted:-
“17. The argument of both the learned senior counsel mainly
C
centered around to one question which, in our opinion, does arise
in the appeal, namely, when the arbitration agreement specify the
“venue” for holding the arbitration sittings by the arbitrators but
does not specify the “seat”, then on what basis and by which
principle, the parties have to decide the place of “seat” which has
a material bearing for determining the applicability of laws of a D
particular country for deciding the post award arbitration
proceedings.
xxx xxx xxx
20. One of the arguments of Dr. Singhvi, learned senior counsel
was that the decision rendered by Three Judge Bench in the case E
of Sumitomo Heavy Industries Ltd. vs. ONGC Ltd. & Others
(supra) on which great reliance was placed by Mr. Tushar Mehta,
learned ASG has lost its efficacy, though approved by another
recent decision of Three Judge Bench in Bharat Aluminum
Company vs. Kaiser Aluminum Technical Services INC (supra),
F
for the reason that it was rendered under the Arbitration Act,
1940, which now stands repealed by Arbitration Act, 1996 and
secondly, it was rendered in relation to Section 9 of the Foreign
Awards (Recognition and Enforcement) Act, 1961, which also
now stands repealed by 1996 Act.
17
(2012) 9 SCC 552 G
18
(2014) 5 SCC 1
19
(2014) 7 SCC 603
20
(2015) 9 SCC 172
21
(2015) 10 SCC 213
22
(2016) 11 SCC 508
23
(2017) 5 SCC 331
24
(2017) 14 SCC 722 H
386 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 21. It was his submission that while approving the ratio of
Sumitomo Heavy Industries Ltd. (supra) these two factors which
have some relevance on its efficacy do not seem to have been
examined in the case of Bharat Aluminum Company (supra) .
22. Dr. Singhvi also urged that what is the effect of UNCITRAL
B Model Law, when they are made part of the arbitration agree-
ment for deciding the question of “seat” has also not been so far
decided in any of the earlier decisions.”
5. Appreciating the same, the learned Judges opined thus:-
“23. In our opinion, though, the question regarding the “seat” and
C “venue” for holding arbitration proceedings by the arbitrators
arising under the Arbitration Agreement/ International Commercial
Arbitration Agreement is primarily required to be decided keeping
in view the terms of the arbitration agreement itself, but having
regard to the law laid down by this Court in several decisions by
D the Benches of variable strength as detailed above, and further
taking into consideration the aforementioned submissions urged
by the learned counsel for the parties and also keeping in view the
issues involved in the appeal, which frequently arise in International
Commercial Arbitration matters, we are of the considered view
that this is a fit case to exercise our power under Order VI Rule
E 2 of the Supreme Court Rules, 2013 and refer this case (appeal )
to be dealt with by the larger Bench of this Court for its hearing.”
That is how the matter has been placed before us.
6. At the very beginning, we may note with profit that Mr. Tushar
F Mehta, learned Additional Solicitor General appearing for the Union of
India and Dr. Abhishek Manu Singhvi, learned senior counsel appearing
for the respondent very fairly stated that no reference was called for
and there is no justification to answer the reference, but to deal with the
case on its own merits. In spite of the said submission advanced at the
Bar, we think it appropriate to put the controversy to rest as the two-
G Judge Bench thought it appropriate to refer the matter to a larger Bench.
7. It may be usefully noted that the two-Judge Bench has also
taken note of some of the decisions rendered by the Constitution Bench
and some by a strength of three Judges and two Judges. One of the
submissions that was advanced before the two-Judge Bench was that in
H
UNION OF INDIA v. HARDY EXPLORATION AND 387
PRODUCTION (INDIA) INC [DIPAK MISRA, CJI]

Bharat Aluminium Company (supra), the decision in Sumitomo Heavy A
Industries Ltd. (supra) had not been examined. To appreciate the
controversy, first we have to analyse what has been said in Sumitomo
Heavy Industries Ltd. (supra). The controversy in the said case related
to laws governing arbitration under the Arbitration Act, 1940 (hereinafter
referred to as ‘the 1940 Act’). The learned Judges referred to some
B
passages from paragraph 10 which contains a chapter on ‘The Applicable
Law and the Jurisdiction of the Court’. The three-Judge Bench
reproduced some passages from sub-title ‘Laws Governing the
Arbitration’ which read thus:-
“An agreed reference to arbitration involves two groups of
obligations. The first concerns the mutual obligations of the C
parties to submit future disputes, or an existing dispute to
arbitration, and to abide by the award of a tribunal constituted in
accordance with the agreement. It is now firmly established that
the arbitration agreement which creates these obligations is a sepa-
rate contract, distinct from the substantive agreement in which it D
si usually embedded, capable of surviving the termination of the
substantive agreement and susceptible of premature termination
by express or implied consent, or by repudiation or frustration, in
much the same manner as in more ordinary forms of contract.
Since this agreement has a distinct life of its own, it may in
principle be governed by a proper law of its own, which need not E
be the same as the law governing the substantive contact.
The second group of obligations, consisting of what is
generally referred to as the ‘curial law’ of the arbitration,
concerns the manner in which the parties and the arbitrator are
required to conduct the reference of a particular dispute. F
According to the English theory of arbitration, these rules are to
be ascertained by reference to the express or implied terms of
the agreement to arbitrate. The being so, it will be found in the
great majority of cases that the curial law, i.e. the law governing
the conduct of the reference, is the same as the law governing G
the obligation to arbitrate. It is, however, open to the parties to
submit, expressly or by implication, the conduct of the reference
to different law from the one governing the underlying arbitration
agreement. In such a case, the court looks first at the arbitration
agreement to see whether the dispute is one which should be
H
388 SUPREME COURT REPORTS [2018] 13 S.C.R.

A arbitrated, and which has validly been made the subject of the
reference; it then looks to the curial law to see how that
reference should be conducted; and then returns to the first law
in order to give effect to the resulting award.
xxx xxx xxx
B It may therefore be seen that problems arising out of an
arbitration may, at least in theory, call for the application of any
one or more of the following laws-
1. The proper law of the contract, i.e. the law governing the
contract which creates the substantive rights of the parties, in
C respect of which the dispute has arisen.
2. The proper law of the arbitration agreement, i.e. the law
governing the obligation of the parties to submit the disputes to
arbitration, and to honour an award.

D 3. The curial law, i.e. the law governing the conduct of the
individual reference.
xxx xxx xxx
1. The proper law of the arbitration agreement governs the
validity of the arbitration agreement, the question whether a
E dispute lies within the scope of the arbitration agreement; the
validity of the notice of arbitration; the constitution of the tribunal;
the question whether an award lies within the jurisdiction of the
arbitrator; the formal validity of the award; the question whether
the parties have been discharged from any obligation to arbitrate
future disputes.
F
2. The curial law governs’ the manner in which the reference is
to be conducted; the procedural powers and duties of the
arbitrator; questions of evidence; the determination of the proper
law of the contract.
G 3. The proper law of the reference governs; the question whether
the parties have been discharged from their obligation to continue
with the reference of the individual dispute.
xxx xxx xxx

H
UNION OF INDIA v. HARDY EXPLORATION AND 389
PRODUCTION (INDIA) INC [DIPAK MISRA, CJI]

In the absence of express agreement, there is a strong prima A
facie presumption tha the parties intend the curial law to be the
law of the ‘seat’ of the arbitration, i.e., the place at which the
arbitration is to be conducted, on the ground that that is the
country most closely connected with the proceedings. So in
order to determine the curial law in the absence of an express
B
choice by the parties it is first necessary to determine the seat of
the arbitration, by construing the agreement to arbitrate”
After reproducing the same, the Court opined:-
“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 C
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 D
then returns to the first law in order to give effect to the resulting
award.
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 E
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 obligations to F
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 in so far as is otherwise provided by any law G
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
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390 SUPREME COURT REPORTS [2018] 13 S.C.R.

A consideration as a compromise or adjustment of a suit by any
Court before which the suit is pending.”
Eventually, the Court concluded:-
“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
B 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
C that is not the case of the appellant that the High Court at Bombay
lacked the territorial jurisdiction to do so.”
8. On a careful reading of the aforesaid decision, it is quite vivid
that the controversy related to the 1940 Act and the discussion pertained
to foreign award under the Foreign Awards (Recognition and
D Enforcement) Act, 1961 (for brevity, ‘the 1961 Act’). Thus, the principle
laid down therein is in no way applicable to the concept of determination
of jurisdiction as has been dealt with in BALCO case and also the
conception of implied exclusion as Bhatia International (supra) states.
Quite apart from that, we shall also advert to the later authorities how
they have understood the said decision.
E
9. In Bhatia International (supra), a Bench of this Court was
dealing with the applicability of Section 9 of the Act and the jurisdiction
of the courts in India. Referring to various aspects, the Court held:-
“To conclude we hold that the provisions of Part I would apply to
F all arbitrations and to all proceedings relating thereto. Where such
arbitration is held in India the provisions of Part I would compulsory
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
G 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.”
10. A contention was raised before the Court that when the parties
had agreed that the arbitration shall be as per the ICC Rules, by necessary
H
UNION OF INDIA v. HARDY EXPLORATION AND 391
PRODUCTION (INDIA) INC [DIPAK MISRA, CJI]

implication, Section 9 would not apply. The learned Judges referred to A
Article 23 of the ICC Rules and, thereafter, came to hold that:-
“Thus Article 23 of the ICC rules permits parties to apply to a
competent judicial authority for interim and conservatory mea-
sures. Therefore, in such cases an application can be made under
Sectionof the said Act. B
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 C
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 is no
lacunae in the said Act. This interpretation also does not leave a D
party remedyless. 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.”
11. In Indtel Technical Services Private Ltd. v. W.S. Atkins E
Rail Limited25, the designated Judge was called upon to decide the
issue of appointment of sole arbitrator. Analysing the arbitration clause
and the authority in Lesotho Highlands Development Authority v.
Impregilo SpA26, the Court came to hold as follows:-
“It is no doubt true that it is fairly well settled that when an arbitration F
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 v. Singer Co. case support G
such a proposition. What, however, distinguishes the various
decisions and views of the authorities in this case is the fact that
in Bhatia International this Court laid down the proposition that
25
(2008) 10 SCC 308
26
(2005) 3 WLR 129 H
392 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 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
B
consequently the application made under Section 11 thereof would
be maintainable.”
12. In Reliance Industries Ltd. (I), (supra), the appellant had
challenged the decision of the High Court of Delhi whereby it had
entertained the petition preferred under Section 34 of the Act. The
C Court scanned the clause relating to “Sole expert, conciliation and
arbitration” and the clause that pertained to “applicable law and
arbitration” and further other clauses and came to hold that once the
parties had consciously agreed that the juridical seat of the arbitration
would be at London and that the agreement would be governed by the
D laws of London, the provisions of Part I of the Act would not be applicable.
13. In Videocon Industries Limited (supra), the Court referred
to Section 3 of the English Arbitration Act, 1996 which deals with the
seat of arbitration and Section 53 that stipulates the place where the
award is treated as made. It referred to the authority in Dozco India P.
E Ltd. (supra) and, eventually, came to hold that:-
“In the present case also, the parties had agreed that
notwithstanding Article 33.1, the arbitration agreement contained
in Article 34 shall be governed by laws of England. This necessarily
implies that the parties had agreed to exclude the provisions of
F Part I of the Act. As a corollary to the above conclusion, we hold
that the Delhi High Court did not have the jurisdiction to entertain
the petition filed by the respondents under Section 9 of the Act
and the mere fact that the appellant had earlier filed similar
petitions was not sufficient to clothe that High Court with the
jurisdiction to entertain the petition filed by the respondents.”
G
14. The Constitution Bench in Bharat Aluminium Company
(supra) overruled the judgments of this Court in Bhatia International
(supra) and Venture Global Engineering (supra) and opined:-
“In our opinion, the provision contained in Section 2(2) of the
Arbitration Act, 1996 is not in conflict with any of the provisions
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UNION OF INDIA v. HARDY EXPLORATION AND 393
PRODUCTION (INDIA) INC [DIPAK MISRA, CJI]

either in Part I or in Part II of the Arbitration Act, 1996. In a 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 simplicitor would be
B
maintainable in India, on the basis of an international commercial
arbitration with a seat outside India.
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.”
C
15. Be it noted, the larger Bench ruled that in order to do complete
justice, the law declared by this Court shall apply prospectively to all the
arbitration agreements executed after the date of delivery of the judgment.
In the said case, the Constitution Bench, while dealing with the concept
of seat/place/situs of arbitration, referred to the decisions in Naviera
Amazonica Peuana S.A. v. Compania International de Seguros del D
Peru27and Union of India v. McDonnell Douglas Corporation28 and
came to hold thus :-
“76. It must be pointed out that the law of the seat or place where
the arbitration is held, is normally the law to govern that arbitration.
The territorial link between the place of arbitration and the law E
governing that arbitration is well established in the international
instruments, namely, the New York Convention of 1958 and the
UNCITRAL Model Law of 1985. It is true that the terms “seat”
and “place” are often used interchangeably. In Redfern and
Hunter on International Arbitration (Para 3.51), the seat theory F
is defined thus: “The concept that an arbitration is governed by
the law of the place in which it is held, which is the ‘seat’ (or
‘forum’ or locus arbitri) of the arbitration, is well established in
both the theory and practice of international arbitration. In fact,
the Geneva Protocol, 1923 states:
G
“2. The arbitral procedure, including the constitution of the Arbitral
Tribunal, shall be governed by the will of the parties and by the
law of the country in whose territory the arbitration takes place.”
27
(1998) 1 Lloyd’s Rep 116 (CA)
28
(1993) 2 Lloyd’s Rep 48 H
394 SUPREME COURT REPORTS [2018] 13 S.C.R.

A The New York Convention maintains the reference to “the law of
the country where the arbitration took place” [Article V(1)(d)]
and, synonymously to “the law of the country where the award is
made” [Articles V(1)(a) and (e)]. The aforesaid observations
clearly show that the New York Convention continues the clear
territorial link between the place of arbitration and the law
B
governing that arbitration. The author further points out that this
territorial link is again maintained in the Model Law which provides
in Article 1(2) that:
“1. (2) the provision of this Law, except Articles 8, 9, 35 and 36,
apply only if the place of arbitration is in the territory of the State.”
C
Just as the Arbitration Act, 1996 maintains the territorial link
between the place of arbitration and its law of arbitration, the law
in Switzerland and England also maintain a clear link between the
seat of arbitration and the lex arbitri. The Swiss Law states:
D “176(I). (1) The provision of this chapter shall apply to any
arbitration if the seat of the Arbitral Tribunal is in Switzerland
and if, at the time when the arbitration agreement was concluded,
at least one of the parties had neither its domicile nor its habitual
residence in Switzerland.”

E (Emphasis supplied)
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
F 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.
G
16. In this context, we may carefully analyse what has been stated
in Harmony Innovation Shipping Limited (supra). In the said case,
the Court relied on Reliance Industries Ltd. (I) (supra) and other
decisions, analysed the arbitration clause and held:-

H
UNION OF INDIA v. HARDY EXPLORATION AND 395
PRODUCTION (INDIA) INC [DIPAK MISRA, CJI]

“45. Coming to the stipulations in the present arbitration clause, it A
is clear as day that if any dispute or difference would arise under
the charter, arbitration in London to apply; that the arbitrators are
to be commercial men who are members of the London Arbitration
Association; the contract is to be construed and governed by the
English law; and that the arbitration should be conducted, if the
B
claim is for a lesser sum, in accordance with small claims procedure
of the London Maritime Arbitration Association. There is no other
provision in the agreement that any other law would govern the
arbitration clause.
xxx xxx xxx
C
48. In the present case, the agreement stipulates that the contract
is to be governed and construed according to the English law.
This occurs in the arbitration clause. Mr Viswanathan, learned
Senior Counsel, would submit that this part has to be interpreted
as a part of “curial law” and not as a “proper law” or “substantive
law”. It is his submission that it cannot be equated with the seat D
of arbitration. As we perceive, it forms as a part of the arbitration
clause. There is ample indication through various phrases like
“arbitration in London to apply”, arbitrators are to be the members
of the “London Arbitration Association” and the contract “to be
governed and construed according to the English law”. It is worth E
noting that there is no other stipulation relating to the applicability
of any law to the agreement. There is no other clause anywhere
in the contract. That apart, it is also postulated that if the dispute
is for an amount less than US $50,000 then, the arbitration should
be conducted in accordance with small claims procedure of the
London Maritime Arbitration Association. When the aforesaid F
stipulations are read and appreciated in the contextual perspective,
“the presumed intention” of the parties is clear as crystal that the
juridical seat of arbitration would be London. In this context, a
passage from Mitsubishi Heavy Industries Ltd. v. Gulf Bank
K.S.C. is worth reproducing: G
“It is of course both useful and frequently necessary when
construing a clause in a contract to have regard to the overall
commercial purpose of the contract in the broad sense of the type
and general content, the relationship of the parties and such
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396 SUPREME COURT REPORTS [2018] 13 S.C.R.

A common commercial purpose as may clearly emerge from such
an exercise. However, it does not seem to me to be a proper
approach to the construction of a default clause in a commercial
contract to seek or purport to elicit some self-contained
‘commercial purpose’ underlying the clause which is or may be
wider than the ordinary or usual construction of the words of
B
each sub-clause will yield.”
xxx xxx xxx
50. Thus, interpreting the clause in question on the bedrock of the
aforesaid principles it is vivid that the intended effect is to have
C the seat of arbitration at London. The commercial background,
the context of the contract and the circumstances of the parties
and in the background in which the contract was entered into,
irresistibly lead in that direction. We are not impressed by the
submission that by such interpretation it will put the respondent in
an advantageous position. Therefore, we think it would be
D appropriate to interpret the clause that it is a proper clause or
substantial clause and not a curial or a procedural one by which
the arbitration proceedings are to be conducted and hence, we
are disposed to think that the seat of arbitration will be at London.
51. Having said that the implied exclusion principle stated in Bhatia
E International would be applicable, regard being had to the clause
in the agreement, there is no need to dwell upon the contention
raised pertaining to the addendum, for any interpretation placed
on the said document would not make any difference to the ultimate
conclusion that we have already arrived at.”
F 17. The aforesaid passages clearly show that the arbitration clause
has to be appositely read to understand its intention so as to arrive at a
conclusion on whether it determines the seat or not.
18. In Reliance Industries Limited (II), the Court, after referring
to various decisions, came to hold that the applicability of Part I of the
G Act can be excluded by necessary implication if it is found that on the
facts of the 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. Referring to the decision in Harmony Innovation Shipping
Limited (supra), the Court said:-
H
UNION OF INDIA v. HARDY EXPLORATION AND 397
PRODUCTION (INDIA) INC [DIPAK MISRA, CJI]

“20. It is interesting to note that even though the law governing A
the arbitration agreement was not specified, yet this Court held,
having regard to various circumstances, that the seat of arbitration
would be London and therefore, by necessary implication, the
ratio of Bhatia International would not apply.”
19. In Eitzen Bulk A/S (supra), the Court analysed the arbitration B
clause that stipulated that the disputes under the COA were to be settled
and referred to arbitration in London and the English Law would apply.
Interpreting the said clause, the Court held:-
“33. We are thus of the view that by Clause 28, the parties chose
to exclude the application of Part I to the arbitration proceedings C
between them by choosing London as the venue for arbitration
and by making English law applicable to arbitration, as observed
earlier. It is too well settled by now that where the parties choose
a juridical seat of arbitration outside India and provide that the
law which governs arbitration will be a law other than Indian law,
Part I of the Act would not have any application and, therefore, D
the award debtor would not be entitled to challenge the award by
raising objections under Section 34 before a court in India. A court
in India could not have jurisdiction to entertain such objections
under Section 34 in such a case.
34. As a matter of fact the mere choosing of the juridical seat of E
arbitration attracts the law applicable to such location. In other
words, it would not be necessary to specify which law would
apply to the arbitration proceedings, since the law of the particular
country would apply ipso jure. The following passage from
Redfern and Hunter on International Arbitration contains the F
following explication of the issue:
“It is also sometimes said that parties have selected the
procedural law that will govern their arbitration, by providing
for arbitration in a particular country. This is too elliptical and,
as an English court itself held more recently in Breas of Doune G
Wind Farm it does not always hold true. What the parties have
done is to choose a place of arbitration in a particular country.
That choice brings with it submission to the laws of that country,
including any mandatory provisions of its law on arbitration.

H
398 SUPREME COURT REPORTS [2018] 13 S.C.R.

A To say that the parties have “chosen” that particular law to
govern the arbitration is rather like saying that an English
woman who takes her car to France has “chosen” French
traffic law, which will oblige her to drive on the right-hand side
of the road, to give priority to vehicles approaching from the
right, and generally to obey traffic laws to which she may not
B
be accustomed. But it would be an odd use of language to say
this notional motorist had opted for “French traffic law”. What
she has done is to choose to go to France. The applicability of
French law then follows automatically. It is not a matter of
choice.
C Parties may well choose a particular place of arbitration precisely
because its lex arbitri is one which they find attractive. Nevertheless,
once a place of arbitration has been chosen, it brings with it its own law.
If that law contains provisions that are mandatory so far as arbitration
are concerned, those provisions must be obeyed. It is not a matter of
D choice any more than the notional motorist is free to choose which local
traffic laws to obey and which to disregard”.”
20. In IMAX Corporation (supra), interpreting the arbitration
clause and the ICC Rules and referring to earlier precedents, the Court
ruled:-
E “39. If in pursuance of the arbitration agreement, the arbitration
took place outside India, there is a clear exclusion of Part I of the
Arbitration Act. In the present case, the parties expressly agreed
that the arbitration will be conducted according to the ICC Rules
of Arbitration and left the place of arbitration to be chosen by
F ICC. ICC in fact, chose London as the seat of arbitration after
consulting the parties. The arbitration was held in London without
demur from any of the parties. All the awards i.e. the two partial
final awards, and the third final award, were made in London and
communicated to the parties. We find that this is a clear case of
the exclusion of Part I vide Eitzen Bulk A/S, and the decisions
G referred to and followed therein.”
21. In Roger Shashoua (supra), apart from dealing with the
concept of precedents, the two-Judge Bench also scanned the anatomy
of the arbitration clause and held:-

H
UNION OF INDIA v. HARDY EXPLORATION AND 399
PRODUCTION (INDIA) INC [DIPAK MISRA, CJI]

“…the distinction between the venue and the seat remains. But A
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
B
will have the jurisdiction, another interpretative perception as
projected by the learned Senior Counsel is unacceptable.”
22. We may now focus on the discussion and the ultimate
conclusion in Sumitomo Heavy Industries Ltd. (supra) and how the
later decisions under the 1996 Act perceived the same. In Bharat
Aluminium Corporation (supra) (BALCO-II), the three-Judge Bench C
dealt with the decisions in Sumitomo Heavy Industries Ltd (supra)
and Reliance Industries Limited (supra) and noted thus:-
“13. Sumitomo is of no avail to the appellant. In Sumitomo, there
was no specific choice on the law of arbitration agreement and
this Court held that in absence of such choice, the law of arbitration D
agreement would be determined by the substantive law of the
contract. That is not the case in this agreement.”
It laid emphasis on Reliance Industries Limited (II) (supra) and
opined that an application under Section 34 of the 1940 Act was not
maintainable. E

23. In view of the aforesaid development of law, there is no
confusion with regard to what the seat of arbitration and venue of
arbitration mean. There is no shadow of doubt that the arbitration clause
has to be read in a holistic manner so as to determine the jurisdiction of
the Court. That apart, if there is mention of venue and something else is F
appended thereto, depending on the nature of the prescription, the Court
can come to a conclusion that there is implied exclusion of Part I of the
Act. The principle laid down in Sumitomo Heavy Industries Ltd. (supra)
has been referred to in Reliance Industries Limited (II) and
distinguished. In any case, it has no applicability to a controversy under G
the Act. The said controversy has to be governed by the BALCO principle
or by the agreement or by the principle of implied exclusion as has been
held in Bhatia International.
24. Thus, we answer the reference accordingly.
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400 SUPREME COURT REPORTS [2018] 13 S.C.R.

A 25. Having addressed the reference, we shall advert to the
arbitration clause to delineate on whether it ousts the jurisdiction of the
courts in India. Article 32 of the arbitration agreement reads as follows:-
“32.1 This Contract shall be governed and interpreted in
accordance with the laws of India.
B 32.2 Nothing in this Contract shall entitle the Contractor to exercise
the rights, privileges and powers conferred upon it by this Contract
in a manner which will contravene the laws of India.”
26. Article 33 deals with “Sole expert, conciliation and arbitrator”.
Article 33.9 and 33.12 read thus:-
C
“33.9 Arbitration proceedings shall be conducted in accordance
with the UNICITRAL Model Law on International Commercial
Arbitration of 1985 except that in the event of any conflict between
the rules and the provisions of this Article 33, the provisions of
this Article 33 shall govern.
D
xxx xxx xxx
33.12 The venue of conciliation or arbitration proceedings pursuant
to this Article unless the parties otherwise agree, shall be Kuala
Lumpur and shall be conducted in English language. Insofar as
practicable the parties shall continue to implement the terms of
E
this contract notwithstanding the initiation of arbitration proceedings
and any pending claim or dispute.”
[Emphasis supplied]
27. It is submitted by Mr. Tushar Mehta, learned Additional Solicitor
F General appearing for the Union of India that there is no specific mention
of juridical seat but reference is to the venue. He has also drawn our
attention to the UNCITRAL Model Law which is referred to in Article
33.9 of the agreement. Article 20 of the UNCITRAL Model Law reads
as follows:-
G “Article 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.

H
UNION OF INDIA v. HARDY EXPLORATION AND 401
PRODUCTION (INDIA) INC [DIPAK MISRA, CJI]

(2) Notwithstanding the provisions of paragraph (1) of this article, A
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.”
[Emphasis added] B
Thus, Article 20(1) mandates “determination” of “juridical seat”
while Article 20(2) leaves it open to the Arbitral Tribunal to select
“venue”.
28. Article 31(3) of the UNCITRAL Model Law is as follows :-
C
“Article 31. Form and contents of award.—
(3) The award shall state its date and the place of arbitration as
determined in accordance with article 20(1). The award shall be deemed
to have been made at that place.”
29. On a perusal of Articles 20 and 31(3) of the UNCITRAL D
Model Laws, we find that the parties are free to agree on the place of
arbitration. Once the said consent is given in the arbitration clause or it
is interpretably deduced from the clause and the other concomitant factors
like the case of Harmony Innovation Shipping Ltd. which states about
the venue and something in addition by which the seat of arbitration is
E
determinable. The other mode, as Article 20 of the UNCITRAL Model
Law provides, is that where the parties do not agree on the place of
arbitration, the same shall be determined by the Arbitral Tribunal. Such a
power of adjudication has been conferred on the Arbitral Tribunal. Article
31(3) clearly stipulates that the Award shall state the date and the place
of arbitration as determined in accordance with Article 20(1). F
30. In IMAX Corporation (supra), there is reference to the ICC
Rules and the Rules provide that the place of arbitration shall be fixed by
the Court unless agreed upon by the parties. In the said case, the appellant
had proposed the venue of Arbitration as Paris in France. The
International Court of Arbitration decided that London, United Kingdom G
would be the juridical seat of arbitration in view of Article 14(1) of the
ICC Rules and, therefore, provided on the basis of Part I of the English
Arbitration Act, 1996. The three-Judge Bench ruled:-

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402 SUPREME COURT REPORTS [2018] 13 S.C.R.

A “24. In the present case, the arbitration clause contemplates an
award made in pursuance of the ICC Rules without specifying
the applicable law for the arbitration agreement. It would therefore
be appropriate to hold that the question of validity of the award
should be determined in accordance with the law of the State in
which the arbitration proceedings have taken place i.e. the English
B
Law. Though for the purposes of this decision we would only hold
that the conduct of the parties exclude the applicability of Part I.
In other words, where the parties have not expressly chosen the
law governing the contract as a whole or the arbitration agreement
in particular, the law of the country where the arbitration is agreed
C to be held has primacy.
25. Here, an express choice has been made by the parties regarding
the conduct of arbitration i.e. that a dispute shall be finally settled
by arbitration according to the ICC Rules of Arbitration. The
parties have not chosen the place of arbitration. They have simply
D chosen the rules that will govern the arbitration, presumably aware
of the provision in the rules that the place of arbitration will be
decided by ICC vide Article 14(1) of the ICC Rules. ICC having
chosen London, leaves no doubt that the place of arbitration will
attract the law of UK in all matters concerning arbitration.”
E The Court further noticed that in the said case, the seat of
arbitration had not been specified at all in the arbitration clause. There
was a stipulation that the arbitration shall be conducted according to the
ICC Rules and opining on the same, it was observed:-
“29. We find that in the present case, the seat of arbitration has
F not been specified at all in the arbitration clause. There is however
an agreement to have the arbitration conducted according to the
ICC Rules and thus a willingness that the seat of arbitration may
be outside India. In any case, the parties having agreed to have
the seat decided by ICC and ICC having chosen London after
consulting the parties and the parties having abided by the decision,
G it must be held that upon the decision of ICC to hold the arbitration
in London, the parties agreed that the seat shall be in London for
all practical purposes. Therefore, there is an agreement that the
arbitration shall be held in London and thus Part I of the Act
should be excluded.”
H
UNION OF INDIA v. HARDY EXPLORATION AND 403
PRODUCTION (INDIA) INC [DIPAK MISRA, CJI]

31. In the present case, the place of arbitration was to be agreed A
upon between the parties. It had not been agreed upon ; and in case of
failure of agreement, the Arbitral Tribunal is required to determine the
same taking into consideration the convenience of the parties. It is also
incumbent on the Arbitral Tribunal that the determination shall be clearly
stated in the ‘form and contents of award’ that is postulated in Article
B
31. There has been no determination.
32. Be it noted, the word ‘determination’ requires a positive act to
be done. In the case at hand, the only aspect that has been highlighted
by Mr. C.U. Singh, learned senior counsel, is that the arbitrator held the
meeting at Kuala Lumpur and signed the award. That, in our considered
opinion, does not amount to determination. The clause is categorical. C
The sittings at various places are relatable to venue. It cannot be equated
with the seat of arbitration or place of arbitration which has a different
connotation as has been held in Reliance Industries Ltd. (I), (II) (supra),
Harmony Innovation Shipping Limited (supra) and in Roger
Shashoua (supra). D
33. The word ‘determination’ has to be contextually determined.
When a ‘place’ is agreed upon, it gets the status of seat which means
the juridical seat. We have already noted that the terms ‘place’ and
‘seat’ are used interchangeably. When only the term ‘place’ is stated or
mentioned and no other condition is postulated, it is equivalent to ‘seat’ E
and that finalises the facet of jurisdiction. But if a condition precedent is
attached to the term ‘place’, the said condition has to be satisfied so that
the place can become equivalent to seat. In the instant case, as there
are two distinct and disjunct riders, either of them have to be satisfied to
become a place. As is evident, there is no agreement. As far as
determination is concerned, there has been no determination. In Ashok F
Leyland Limited and State of T.N. and another29, the Court has
reproduced the definition of ‘determination’ from Law Lexicon, 2nd Edition
by Aiyar, P. Ramanatha and Black’s Law Dictionary, 6th Edition. The
relevant paragraphs read thus:-
“Determination or order.—The expression ‘determination’ signifies G
an effective expression of opinion which ends a controversy or a
dispute by some authority to whom it is submitted under a valid
law for disposal. The expression ‘order’ must have also a similar
meaning, except that it need not operate to end the dispute.
9
(2004) 3 SCC 1 H
404 SUPREME COURT REPORTS [2018] 13 S.C.R.

A Determination or order must be judicial or quasi-judicial. Jaswant
Sugar Mills Ltd. v. Lakshmi Chand30 (Constitution of India, Article
136).”
“A ‘determination’ is a ‘final judgment’ for purposes of appeal
when the trial court has completed its adjudication of the rights of
B the parties in the action. Thomas Van Dyken Joint Venture v. Van
Dyken31.”
The said test clearly means that the expression of determination
signifies an expressive opinion. In the instant case, there has been no
adjudication and expression of an opinion. Thus, the word ‘place’ cannot
C be used as seat. To elaborate, a venue can become a seat if something
else is added to it as a concomitant. But a place unlike seat, at least as is
seen in the contract, can become a seat if one of the conditions precedent
is satisfied. It does not ipso facto assume the status of seat. Thus
understood, Kuala Lumpur is not the seat or place of arbitration and the
D interchangeable use will not apply in stricto sensu.
D
34. In view of the aforesaid analysis, the irresistible conclusion is
that the Courts in India have jurisdiction and, therefore, the order passed
by the Delhi High Court is set aside. Resultantly, the appeal stands
allowed and the High Court is requested to deal with the application
E preferred under Section 34 of the Act as expeditiously as possible. There
E shall be no order as to costs.

Ankit Gyan Appeal allowed.

F

G

30
AIR 1963 SC 677, 680
31
90 Wis 236, 27 NW 2d 459,463
H