Venue of arbitration cannot change intention of parties to vest jurisdiction in courts: Delhi HC

The Delhi High Court has held that the venue of arbitration cannot change the intention of the parties to vest the courts in a specific region with exclusive jurisdiction over disputes arising out of the arbitration or its award..The judgment was passed by a Single Judge Bench of Justice Prathiba M Singh while deciding a preliminary objection with respect to the jurisdiction of the Delhi High Court in a Section 34 petition..After a dispute arose between the petitioner, M/s Spentex Industries Ltd and the respondent, M/s Louis Dreydus Commodities India Pvt. Ltd. with respect to sale of Indian raw cotton, an arbitral tribunal was constituted by the Cotton Association of India (CAI)..The arbitration was conducted under the Rules and Bye-laws of CAI and proceedings were held in CAI’s office in Mumbai. The arbitral tribunal decreed a sum of Rs.15,07,11,688 along with interest in favour of the respondent..An appeal was filed against this award by the petitioner before the Board of Directors of CAI, and the same was dismissed. The petitioner then challenged the said award under Section 34 of the Arbitration and Conciliation Act, 1996..Before the High Court, the respondent raised a preliminary objection on the maintainability of the petition..It was the respondent’s case that since the arbitration was conducted under the Rules and Bye-laws of CAI and proceedings were held in CAI’s office in Mumbai, only courts in Mumbai could entertain a challenge to the award..The petitioner, on the other hand, argued that as per the jurisdiction clause in the contract, any dispute arising out of the arbitration proceedings or the award was to be decided exclusively by the Courts in Delhi. It was further submitted that Mumbai was only the venue, and not the seat of the arbitration, and the CAI Rules and By-laws merely governed the procedure..After perusing the rules and bye-laws of CAI, the Court noted that the place or venue or arbitration could be anywhere in India. However, for convenience, the venue of arbitration was the office of CAI in Mumbai..It further noted that the contract clearly expressed the intention of the parties to vest exclusive jurisdiction in Delhi courts, for any issues arising out of the arbitration proceedings or the award..The Court further observed that the use of words like “alone” and “exclusive” in the arbitration clause indicates a clear and unambiguous intention between the parties, which cannot be overlooked by considering the By-laws and Rules of the CAI..“This clause brooks no ambiguity or vagueness. Thus, unlike a court jurisdiction clause, the parties clearly vested the Courts in Delhi with supervisory jurisdiction over the arbitral proceedings. The venue cannot change the intention of the parties to vest the Courts in Delhi with exclusive jurisdiction.”.It thus concluded that in light of the intention of the parties being “clearly decipherable” from the contract, the preliminary objection as to the jurisdiction ought to be rejected..The petitioner was represented by Advocates Ramesh Singh, Arun Arora and Preeti Thakur. .The respondent was represented by Senior Advocate Sanat Kumar, with Advocates Virendra Rawat, Ramesh, Kamal Kapoor and Vinayak Bhatta..Read the judgment: