In a significant ruling, the Supreme Court has affirmed that once an arbitration’s “seat” is determined, only the courts within that seat have the authority to oversee and regulate proceedings. This decision eliminates the concept of concurrent jurisdiction, establishing the seat as an exclusive jurisdictional zone for arbitration management.
The case involved a dispute between Micromax, an Indian mobile phone maker, and Arif Azam & Co, an Afghan distributor, over a distributorship agreement. The agreement specified Dubai as the arbitration location under UAE rules. When Micromax failed to respond to a notice from Arif Azam initiating arbitration over a financial claim, Arif sought Supreme Court intervention to appoint an arbitrator.
The core question was whether Indian courts could act on the case, given the agreement’s stipulation for dispute resolution in Dubai. In its decision, the Court noted that an arbitration agreement’s designated location functions as the “seat” of arbitration, even if only referred to as the “venue.” By designating Dubai as the arbitration site, the agreement implicitly excluded Indian jurisdiction for oversight.
Referencing the 2012 BALCO case, the Court reiterated that Part I of India’s Arbitration and Conciliation Act (covering domestic arbitration) is inapplicable to foreign-seated arbitrations, even when agreements pre-date 2012. The ruling emphasized that only if Indian law or jurisdiction is expressly chosen by both parties would Indian courts have authority over arbitration processes.
The Court underscored the primacy of party autonomy, asserting that any choices made within an arbitration agreement must be respected, particularly the seat of arbitration. In this case, with Dubai confirmed as the arbitration seat, Indian jurisdiction was deemed non-maintainable.
The Supreme Court’s verdict sets a clear precedent: once a “seat” is designated, it is the sole regulatory authority over the arbitration, underscoring the autonomy of parties to dictate the terms and legal environment for their disputes.
