INTRODUCTION
The idea of the seat of arbitration is crucial because it establishes which court will oversee the arbitration proceedings, uphold the arbitral result, and consider any challenges to the verdict. Section 2 (e) clause I and clause (ii) of the Arbitration and Conciliation Act, 1996 ("the Arbitration Act") specify such a court for domestic and foreign commercial arbitration, respectively. A district's primary Civil Court, which has original civil jurisdiction, and the High Court, which exercises its original civil jurisdiction, are the courts that can be used for domestic arbitration. A court for the purposes of international commercial arbitration, on the other hand, includes the High Court in its usual civil jurisdiction or a High Court with competence to hear appeals from judgments of its subordinate courts.
It is noteworthy that the Arbitration Act refers to the "seat of arbitration" as a "place of arbitration," which has caused misunderstanding among those in the arbitration community. Section 20 (1) of the Arbitration Act allows the parties to agree on the location of arbitration. The arbitral tribunal has the authority under subsection (2) to choose the location of the arbitration, taking into account the convenience of the parties and the pertinent facts of the dispute, if the parties are unable to reach an agreement. The arbitral tribunal has been given further authority under subsection (3) to convene at any appropriate location without the parties' consent to consult with its members, hear testimony from witnesses, experts, or the parties, or inspect any papers, commodities, or other property. It should be noted that various subsections of Section 20 of the Arbitration Act appear to have distinct interpretations for the "site of arbitration." The "venue" of arbitration is referred to in the paragraph referred to as the "site of arbitration" (3). However, subsections (1) and (2) appear to refer to both the arbitration venue and the arbitration seat.
Fortunately, in Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc (BALCO), the Supreme Court stated that the "place of arbitration" in sub-sections (1) and (2) should be interpreted as "seat of arbitration" and "venue of arbitration," respectively. To prevent additional misunderstanding, the terms "seat of arbitration" and "venue of arbitration" shall be used interchangeably in this article.
The geographical jurisdiction of a court of law normally cannot be chosen or decided by the parties, with the exception of the situations described above, even if Section 20 of the Arbitration Act gives the parties the authority to select the location of arbitration. The Civil Procedure Code ("the CPC") grants civil courts geographical jurisdiction if the following conditions are met: "The immovable property as the subject matter of the suit is placed, The cause of action arises,
The defendant (s) truly and willingly dwells,
The defendant (or defendants) works for personal benefit.
The defendant (s) conducts business.
The court whose jurisdiction includes the immovable property has exclusive jurisdiction over the case when the immovable property is the subject of the lawsuit. However, in other circumstances—as mentioned in paragraphs (b) to (e)—different courts can have contemporaneous jurisdiction over a certain lawsuit. The parties may, however, decide which court, out of the ones with concurrent jurisdiction, will have exclusive jurisdiction. In the BALCO case, the Supreme Court ruled that in order for a court to have jurisdiction, both the cause of action must originate within its geographical jurisdiction and the arbitration must take place there. However, if the parties have agreed on a specific location that would be fair to both parties, the courts of that location will have supervisory jurisdiction over the arbitration.
CONFUSION IN THE LEGAL SYSTEM
The parties are free to agree on the location of the arbitration, as was mentioned above, but this flexibility was formerly constrained since they could only select a location from among the courts that have jurisdiction under the CPC. To put it another way, the parties were prohibited from selecting supervisory courts that are not CPC-authorized. A court that lacks jurisdiction under the CPC or any other applicable legislation cannot be granted authority by a party in a contract, according to the established approach of the Indian courts. In Indus Mobile Distribution Pvt. V. DataWind Innovations Pvt. Ltd., the Delhi High Court took a similar approach, dismissing the jurisdiction of Mumbai courts, which had been agreed upon as the site of arbitration between the parties.
According to the High Court, the conflicts are outside the purview of Mumbai courts because no substantial portion of the cause of action originated there. As per the court, the cause of action occurred in Delhi and Chennai (where the items were provided), as well as Amritsar (where the Appellant's registered office was located), and hence the courts in these locations only had jurisdiction over the problems.
But the Supreme Court correctly overturned the Delhi High Court's judgement and stated that if the parties mutually agree to name a court with appropriate jurisdiction under Section 2(1)(e) of the Arbitration Act as the venue for the arbitration, that court or courts would have exclusive authority to hear appeals relating to the arbitration. The Supreme Court reasoned that the seat of the arbitration under the Arbitration Law is a notion in which the parties can jointly decide a seat of arbitration independent of the courts having jurisdiction therein under Sections 16 - 20 of the CPC. It made it clear that the courts in the arbitration's seat nevertheless have jurisdiction to hear cases involving the arbitration even when the cause of action does not entirely originate there. As a result, any dispute emerging from the arbitration will be heard exclusively in Mumbai courts.
The High Court departed from the Supreme Court's ruling in the Hinduja Leyland Finance Ltd. v. Debdas Routh & Anr. case and held that the parties cannot grant a court exclusive jurisdiction under the seat of arbitration unless the court first had statutory power under the CPC to consider the dispute. In Antrix Corporation Ltd. v. Devas Multimedia Pvt. Ltd., the Delhi High Court decided that parties' power to pick the seat of arbitration does not amount to an exclusive forum selection right. The High Court concluded if the seat of arbitration is viewed in the same way as an exclusive forum selection provision, then the parties' agreement on a seat renders Section 42 ineffectual.
However, in BGS SGS Soma JV v. NHPC Ltd., the Supreme Court reversed the judgements of the Calcutta High Court and the Delhi High Court once again. The Supreme Court highlighted that the abovementioned High Courts neglected to observe that the BALCO enforced the courts' "exclusive jurisdiction" inside the agreed-upon arbitration seat. The Delhi High Court's concern that Section 42 of the Arbitration Act was ineffectual was also addressed by the court in Antrix Corporation Ltd. It was clarified that Section 42's objective is to preclude any dispute in court jurisdiction by vesting exclusive competence to oversee an arbitration procedure in one court only. That is why the Section begins with a non-obstante clause and continues, "...where any application under this Part has been brought before a Court with respect to an arbitration agreement..." It goes without saying that the court where an application is filed will have jurisdiction to hear the case. As a result, when the parties agree on the seat of arbitration, only the courts of the seat will have exclusive jurisdiction over the arbitration procedures and any applications arising from them. Thus, the parties' agreement on the location of arbitration does not render Section 42 invalid.
The court took the matter further and addressed the question of a court's jurisdiction in cases where the arbitration agreement does not identify a location for the hearings or the arbitration. Multiple courts may have jurisdiction, in this case, depending on where the part of the claim originated, but the court that receives the first application will have exclusive jurisdiction over the arbitration procedure and any related proceedings. However, when the parties have just specified the location of the arbitration proceedings in the arbitration agreement, such location will be regarded as the seat of arbitration since it demonstrates the parties' determination to settle their disputes in a specific location.
CONCLUSION
A special law always triumphs over a general law, according to the generalia specializes non-derogant principle, which is typically invoked when interpreting conflicting sections of two statutes. The CPC is a broad regulation that establishes processes for resolving disputes resulting from common commercial interactions. It has no bearing on or limits any special laws or the unique jurisdictions granted to courts by other currently in-force laws. The Arbitration Act is unique legislation established to control arbitration procedures. It recognises the idea of party autonomy by allowing the parties to pick which courts shall have supervisory authority under the seat of arbitration. As a result, the Arbitration Act's requirements should take precedence over the CPC's general rules. As a result, special jurisdiction granted to the court by parties' agreement shall not be curtailed or impacted by CPC requirements. As a result, the Supreme Court's approach was correct in preserving the exclusive jurisdiction of the courts at the site of arbitration, regardless of the conditions specified in Sections 16-20 of the CPC.
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