Unpacking The Court’s Decision In BGS SGS Soma JV V. NHPC Ltd: Distinguishing Between ‘Seat’ And ‘Venue’
Rohan Mitra 4th Year B.A. LL.B, O.P. Jindal Global University
FACTS AND SUBMISSIONS
BGS SGS Soma JV (Petitioner) was awarded a contract by NHPC Ltd. (Respondent) for certain construction works to be carried out in Assam and Arunachal Pradesh. The agreement between the parties contained an arbitration clause which read ‘Arbitration Proceedings shall be held at New Delhi/Faridabad, India’. When disputes arose between the parties, they agreed to arbitrate in accordance with the Arbitration Clause in the agreement. In 2016, after several arbitral proceedings in New Delhi, the arbitral award was delivered by the tribunal in favour of the Petitioner. The Respondent filed a Section 34 application the Arbitration and Conciliation Act, 1996 before the District and Sessions Court at Faridabad, Haryana. The Petitioner contested the jurisdiction of the Court and filed an application before Special Commercial Court, Gurugram, arguing that the appropriate court would be either at New Delhi, which the was the seat of the arbitration; or at Assam where the cause of action partly arose. The Court agreed with the Petitioner, and returned the Section 34 Petition to the Respondent, to be filed before the proper court in New Delhi. Aggrieved by the order, Respondent filed an appeal before the Punjab and Haryana High Court, under Section 37 of the Arbitration and Conciliation Act, 1996. The High Court adjudged in favour of the Respondents, returning the case back to Commercial Court in Gurugram. The Petitioner filed an appeal before the Supreme Court.
The Respondents reasoned that the order passed by the Court amounted to a refusal to set aside an arbitral award, and therefore appealable under Section 37. It was further argued that the arbitration clause did not expressly state that either New Delhi or Faridabad was to be the seat of the Arbitral Tribunal. Therefore, the arbitration clause only referred to a convenient venue, and the simple fact that the sittings were held at New Delhi, would not make New Delhi the seat of the arbitration under Section 20(1).
