On what basis is the “seat” of an arbitration determined if the arbitration agreement specifies only the venue of hearing? The three-judge bench of the Supreme Court answered this issue in Union of India v Hardy Exploration and Production (India).
An award made under the rules of the United Nations Commission on International Trade Law (model law) in Kuala Lumpur was challenged by the government of India in the Delhi High Court. The challenge was rejected on the technicality that the seat of arbitration was outside India as the award was made in Kuala Lumpur, and therefore Indian courts did not have jurisdiction. A review against the order and an appeal to the division bench of the high court met with a similar fate. The subsequent Supreme Court appeal was referred to a larger bench.
The court noted that, theoretically, there could be different laws that govern aspects of a contract containing an arbitration clause: (1) the governing law of the contract; (2) the proper law of the arbitration; and (3) the law governing the conduct of arbitration itself (curial law). The proper law of arbitration governs: the determination of arbitrability of a dispute, the scope of the arbitral reference, the constitution of the tribunal, the validity of and challenge to the award, and the discharge from obligation to arbitrate further.
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Karthik Somasundram is a partner and Sneha Jaisingh is a managing associate at Bharucha & Partners.
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