The Supreme Court has held that mentioning a place for arbitration does not automatically make it the legal seat of arbitration when the agreement identifies another location and grants exclusive jurisdiction to courts there. The Court stressed that the agreement must be read as a whole to determine the parties’ intention.
A Bench of Justice Manoj Misra and Justice Vijay Bishnoi set aside a Delhi High Court order appointing an arbitrator in a dispute, in which it was held that Goa was the juridical seat of arbitration, while Delhi was merely a venue. Consequently, the Delhi High Court lacked jurisdiction to entertain the application under Section 11(6) of the Arbitration and Conciliation Act, 1996.
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The dispute arose from a franchise agreement dated August 3, 2023. Clause 32 provided for resolving disputes through friendly consultations and negotiations, followed by arbitration if no settlement was reached within 30 days of a dispute notice.
The agreement contemplated a sole arbitrator appointed mutually by the parties. However, its provisions referred to two different places for arbitration.
Clause 32.4 stated that the precise location of arbitration would be within Delhi. Clause 32.5 separately provided that arbitration proceedings would be held in Goa and conducted in English.
The agreement also contained a governing law and jurisdiction provision. Clause 38 stipulated that the agreement would be interpreted under Indian law and that the parties would submit to the exclusive jurisdiction of competent courts in Goa.
On March 25, 2025, Parshva Innovation issued a notice proposing the appointment of a sole arbitrator. Arcis Clean Energy rejected the proposal through a response dated April 19, 2025.
Parshva Innovation then approached the Delhi High Court under Section 11(6) of the Arbitration Act. By an order dated November 11, 2025, the High Court appointed an arbitrator and permitted him to select the venue for hearings in consultation with the parties.
Arcis Clean Energy challenged that appointment before the Supreme Court.
Arcis Clean Energy argued that the Delhi High Court had no jurisdiction because Goa was the juridical seat of arbitration. It relied on the combined effect of Clause 32.5, which provided for proceedings in Goa, and Clause 38, which conferred exclusive jurisdiction on courts in Goa.
According to the company, the reference to Delhi in Clause 32.4 concerned only the venue and could not displace the parties’ choice of Goa as the legal seat.
Parshva Innovation defended the High Court’s order. It contended that an arbitration agreement is independent of the substantive contract and, therefore, the general governing law and jurisdiction clause could not determine the arbitration seat.
It also argued that the specific reference to Delhi in Clause 32.4 should prevail over Clause 32.5 because the former appeared earlier in the agreement.
The Supreme Court examined earlier decisions distinguishing the juridical seat of arbitration from the venue of arbitral proceedings.
In practical terms, the seat establishes the legal location of arbitration and determines which courts exercise supervisory jurisdiction. The venue concerns the place where proceedings or hearings are conducted.
Referring to Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited, the Court reiterated that the designation of a seat operates like an exclusive jurisdiction clause. Once the seat is determined, courts at that location have exclusive jurisdiction to regulate arbitral proceedings arising from the agreement.
The Court explained that parties may choose a neutral seat even where no part of the cause of action arose. Arbitration jurisdiction therefore does not depend solely on the ordinary territorial rules applicable to civil suits.
Drawing on BGS SGS SOMA JV v. NHPC Limited and Arif Azim Company Limited v. Micromax Informatics FZE, the Bench discussed the conditions under which a designated venue may be treated as the seat.
The arbitration clause should identify only one place, anchor the arbitral proceedings to that place without scope for change, and contain no significant contrary indication showing that the location is merely a venue.
Those conditions were not satisfied in the present agreement because the arbitration clause itself referred to both Delhi and Goa.
The Court therefore held that the reference to Delhi could not automatically establish it as the juridical seat. The other contractual provisions had to be examined to resolve the ambiguity.
The Bench found that Clause 38 was relevant because it expressly vested exclusive jurisdiction in courts at Goa. Read alongside Clause 32.5, which required arbitration proceedings to be held in Goa, it demonstrated the parties’ intention to choose Goa as the seat.
The Court adopted a harmonious interpretation of the provisions so that neither reference became redundant. On that reading, Goa was the juridical seat and Delhi was a venue.
It rejected the contention that the independence of an arbitration agreement required courts to disregard the other terms of the contract when identifying the seat.
The Bench acknowledged the principle of separability but explained that it did not justify ignoring the jurisdiction clause where the arbitration provisions themselves mentioned two different places. Determining the seat required a holistic reading of the agreement.
Relying on Mankastu Impex (P) Ltd. v. Airvisual Ltd., the Court also reiterated that the expression “place of arbitration” alone does not conclusively establish the seat. The parties’ intention must be gathered from the other clauses of the agreement, including their conduct where relevant.
The Supreme Court concluded that the juridical seat was Goa and that the Delhi High Court lacked jurisdiction to entertain the Section 11(6) application.
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