Arbitration jurisprudence in India continues to vacillate when it comes to the interplay between exclusive jurisdiction clause and arbitration clause, particularly in the realm of domestic arbitration. A key challenge lies in determining which Court will have supervisory jurisdiction over arbitral proceedings — especially when the arbitration clause and jurisdiction clause are not in harmony.
The most recent illustration of this ongoing judicial debate can be found in the Delhi High Court’s judgment in Precitech Enclosures Systems Pvt Ltd v. Rudrapur Precision Industries, 2025 DHC 1677 (“Precitech case”). This judgment brings to the fore the difficulties in reconciling exclusive jurisdiction and arbitration clauses that appear to be conflicting.
In agreements that contain an arbitration clause, a jurisdiction clause conferring either exclusive or non-exclusive jurisdiction on a Court is generally considered insignificant for the purpose of determining supervisory jurisdiction of court especially when the seat of arbitration is designated. This is for two reasons – first a typical jurisdiction clause is intended to cover only those matters that are either non-arbitrable or not covered by the arbitration clause and second, it is well settled in arbitration law that the moment ‘seat’ is designated, 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. Thus, the two clauses operate in different fields. The words “subject to” are often used in jurisdiction clauses to make this separation apparent.
Arbitration Clauses that specify “venue” but not “seat”
The Supreme Court in its judgment in BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234 (“Soma case”) reaffirmed and adopted the English Shashoua principle[1]. The Court held that if a contract designates a venue for arbitration proceedings, it is to be treated as the juridical seat of arbitration unless there are other significant contrary indicia. This is because the expression “arbitration proceedings” does not refer to individual hearings but the whole arbitration 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 they intended such place to be the seat of arbitration. The seat determines the exclusive supervisory jurisdiction of the Court over arbitration proceedings, displacing jurisdiction of all other Courts.
Would the above conclusion change if the arbitration clause is coupled with a jurisdiction clause that nominates jurisdictional courts other than that of the designated venue?
No, the Supreme Court in M/s Arif Azim Co. Ltd. v. Micromax Informatics FZE, 2024 SCC OnLine SC 3212 (“Arif Azim case”) reaffirmed that the seat of arbitration — not the jurisdiction clause — determines which Court has exclusive supervisory authority. In this case, the distributorship agreement between an Afghan and a UAE entity provided that arbitration would be “subject to UAE Arbitration and Conciliation Rules,” with “the venue of arbitration” designated as Dubai, UAE. Although a separate clause conferred “non-exclusive jurisdiction” on Dubai Courts, the Court held that the explicit designation of venue, coupled with the chosen curial law and absence of any contrary indicators, was sufficient to treat Dubai as the juridical seat. Citing Soma case and the Shashoua principle, the Court observed: “Dubai, UAE has not been designated merely as a venue but rather as the juridical seat of arbitration”, and further clarified that “it is the seat of arbitration which determines which Court will have exclusive jurisdiction and not vice-versa”.
However, as observed in the Precitech case,reconciliation becomes even more problematic where the jurisdiction clause and arbitration clause overlaps and presents a conflict. In this case, although the parties had mutually agreed via email to conduct arbitration in Delhi, the Rent Agreement conferred exclusive jurisdiction on Rudrapur Courts for “any application under the Arbitration and Conciliation Act, 1996.” Despite Delhi being the agreed venue and the situs of previous arbitration-related filings, the Court dismissed the Section 9 petition filed in Delhi for lack of territorial jurisdiction — affirming that specific jurisdictional choice acts as contra indicia for the purpose of determining seat of arbitration, which in turn determines the supervisory jurisdiction of court.
A similar view has been taken by the Gujarat High Court in its judgment the case of Instakart Services Private Limited v. Megastone Logiparks Pvt. Ltd. R/PETN. under Arbitration Act No. 159 of 2022, where the Gujarat High Court dealt with the issue of whether arbitration proceedings were to be governed by the Courts at Ahmedabad or Bangalore. The arbitration clause in the Lease Agreement stated that the arbitration would be conducted at Bangalore, but also included a jurisdiction clause that read: “Subject to the foregoing, the Courts at Ahmedabad only shall have exclusive jurisdiction in all matters arising out of this agreement.” The Court held that the reference to Bangalore was only a designation of the venue, not the seat, and that the express and exclusive jurisdiction clause in favour of Ahmedabad was a strong contrary indicium.
Concluding remarks
While the law laid down by the Supreme Court first in Soma case and then in Arif Azim isclear, its application across High Courts has been divided. It is the “seat” that determines jurisdiction and not vice versa. Thus, if it is clear from an arbitration clause that parties have anchored the arbitral proceedings to one fixed location or place even if the place or location is styled as “venue”, it would indicate that the parties intended such place or location to be the “seat” of arbitration. In such situations, an exclusive jurisdiction clause that includes within its sweep supervisory court proceedings, cannot be regarded as a strong contrary indicia for determining seat.
Given the divergence in judgments, it is prudent to frame a clear arbitration clause, designate a juridical seat of arbitration, and avoid inconsistency or conflicting jurisdiction clauses, in order to avoid the needless risk of litigation.
[1] Ratio laid down by the England and Wales High Court in Roger Shashoua v. Mukesh Sharma 2009 EWHC 957 (Comm) commonly referred to as the Shashoua Principle by Indian Courts