UNION OF INDIA versus HARDY EXPLORATION AND PRODUCTION (INDIA) INC

Citation: [2018] 13 S.C.R. 379 · Decided: 25-09-2018 · Supreme Court of India · Bench: DIPAK MISRA · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 14 · see the full citation network in Lexace

Judgment (excerpt)

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UNION OF INDIA
v.
HARDY EXPLORATION AND PRODUCTION (INDIA) INC
(Civil Appeal No.4628 of 2018)
SEPTEMBER 25, 2018
[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
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,
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
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
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
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
[2018] 13 S.C.R. 379
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SUPREME COURT REPORTS
[2018] 13 S.C.R.
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
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
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
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
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
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’
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,
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either of them have to be satisfied to

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