A Project

On
Seat of Arbitral Tribunal: Determination and Change, if any
Alternate Dispute Resolution






Supervised by: Submitted by:
Mrs. Apoorva Sharma Ms. Komal Singh
Faculty Semester VIII Sec- A
Roll no. 25





UNIVERSITY FIVE YEAR LAW COLLEGE
UNIVERSITY OF RAJASTHAN, JAIPUR
FEBRUARY-2014

CERTIFICATE


Mrs. Apoorva Sharma Date: 18
th
Feb, 2014
Faculty
University Five Year Law College
Jaipur

This is to certify that Ms. Komal Singh a student of VIII Semester Sec A, has
submitted project titled Seat of Arbitral Tribunal: Determination and Change, if
any under my supervision. The student has completed research work in stipulated
time and according to the norms prescribed for the purpose.




Supervisor





ACKNOWLEDGEMENT

I have written this project titled Seat of Arbitral Tribunal: Determination and
Change, if any under the supervision of Mrs. Apoorva Sharma, Faculty, University
Five Year Law College, University of Rajasthan, Jaipur. Her valuable suggestions
herein have not only helped me immensely in making this work but also in developing
an analytical approach in this work.
I found no words to express my sense of gratitude for Dr. Mahesh Koolwal,
Director, UFYLC
I am extremely grateful to librarian staff of the college for the support and co-
operation extended by them from time to time.





Komal Singh





Table of Contents

Certificate ii
Acknowledgement iii
Chapter-1 1.
Introduction
1.1 Research Methodology
Chapter-2 2-7.
Determination of Seat of Arbitral Tribunal
2.1 The place of arbitration
2.1.1 Institutional arbitration
2.1.2 Domestic arbitration
2.1.3 International arbitration
2.1.4 Foreign arbitration
2.2 Section 20
2.3 Section 28
Chapter-3 8.
Conclusion

Table of Cases
Bibliography


INTRODUCTION

Arbitral Tribunal means a sole arbitrator or a panel of arbitrators defined under section
2(1) of Arbitration and conciliation Act, 1996. An arbitrator constitutes a domestic
tribunal. It has been left to the parties to determine the number of arbitrators for
setting their dispute or difference, the only limitation being that an even number of
arbitration shall not be appointed. In case the parties do not determine the number of
arbitrators, the arbitral tribunal shall consist of sole arbitrator. Parties are also free to
agree on the place of arbitration under section 20(1). Section 20 is in Part I of the Act
and concerns arbitrations in India. Obviously, section 20(1) is subject to section 2(2)
in the case of arbitrations to which Part I applies, the place can only be in India. But in
case of Institutional Arbitration if it is stipulated in arbitration agreement that in case
of dispute or differences arising between them, they will be referred to a particular
institution. In case of International Arbitration, it can take place at such place either in
India or outside India in cases where there are ingredients of foreign origin relating to
the parties or the subject-matter of the dispute. The law applicable may be Indian law
or foreign law depending on the agreement between parties in this regard.
Research Methodology
In order to complete this project report I have taken the help of Doctrinal method such
as books, internet, etc
Hypothesis
Parties are free to agree upon the place of arbitration in absence of any agreement it
can be determined by the Arbitral Tribunal.
Scope of Study
This project deals with the place of Arbitration and its determination
CHAPTER- 2
Determination of Seat of Arbitral Tribunal

The seat or place of arbitration has been defined as the geographical location to which
the arbitration is ultimately tied and where arbitrator or arbitrators meet and where
arbitral proceedings are conducted.
2.1 The place of arbitration
The place of arbitration in following cases will be;
2.1.1 Institutional Arbitration
In an institutional arbitration it may stimulate in the arbitration agreement that in case
of dispute or differences arising between them, they will be referred to a particular
institution such as Indian Council of Arbitration (ICA) or International Chamber of
Commerce (ICC), Federation of Indian Chamber of Commerce & Industry (FICCI);
World Intellectual Property Organisation (WIPO) etc. All these institutions have
framed their own rules of arbitration which would be applicable to arbitral
proceedings conducted by these institution and place of arbitration will be at such
place where it decides.
2.1.2 Domestic Arbitration
Domestic arbitration takes place in India when the arbitration proceedings, the subject
matter of the contract and the merits of the dispute are all governed by the Indian Law;
or when the cause of action for the dispute arises wholly in India or where the parties
are otherwise subject to Indian Jurisdiction and seat of arbitration will be in India
only.
2.1.3 International Arbitration
International arbitration can take place either in India or outside India in cases where
there are ingredients of foreign origin relating to the parties or the subject-matter of
the dispute. The law applicable may be Indian law or foreign law depending on the
agreement between parties in this regard. So the place of arbitration can be in India or
at such place outside India:
1. Where one of the parties has business located abroad;
2. Where the agreement has to be performed abroad;
3. Where the subject-matter of the transaction is located abroad;
4. Where one of the parties to the transaction is a foreign national.
TDM infra-structure (P) Ltd. v. U.E. Development I ndia (P) Ltd.
1
, in this case, the
petitioner company was registered and incorporated under the Indian Companies
Act,1956 in India though its directors and shareholders were all residents of Malaysia.
Pursuant to the arbitration clause, respondent proposed change of arbitration venue to
Kuala Lumpur from New Delhi and determination of dispute in terms of Malaysian
law. The nominees proposed by parties were not acceptable to them; hence they
moved an application for appointment of sole arbitrator. The Court held that since all
the Board meetings in the instant case took place in Malaysia hence the court had no
jurisdiction to nominate an arbitrator and therefore, the application was dismissed.

2.1.4 Foreign Arbitration
A foreign arbitration is an arbitration which is conducted in a place outside India. It
shall be governed according to the two conventions i.e., the New York and the Geneva
Conventions.

2.2 Section 20
Section 20 of Arbitration and Conciliation Act, 1996 is modified on Article 20 of the
Model Law. Section 20(1) provides for place of arbitration, where the
arbitrator/arbitrators has/have to meet and conduct proceedings. Under sub-section (1)
the parties are free to select place of arbitration which may be decided by an
agreement.
Section 20(2) provides that if the party fails to select and fix any place of arbitration,
in such a situation the arbitral tribunal itself may select and fix place of arbitration.
However convenience of the parties and circumstances of the case is to be taken into
consideration while fixing place of arbitration as to remove scope of arbitrariness.

1
AIR 2008 SC 2928
Section 20(3) provides power to the arbitral tribunal that it may conduct its meeting at
any place which it considers proper for consultation among its members, for the
purpose of hearing witnesses, experts, or the parties, or for inspection of documents,
goods or other property
The Supreme Court in Sanshin Chemicals I ndustry v. Oriental Carbons and
Chemicals Ltd.
2
, observed that appeal against the decision relating to venue of
arbitration, can be maintained. Where the parties agreed for reference of disputes to
Arbitral Tribunal, the decisions on the venue of arbitration will have to be determined
by Joint Arbitration Committee. It was held that such decision of the Arbitration
Committee will be justified and final.
In Sulaikha Clay Mines v. Alpha Clays & Others
3
, the Arbitral Tribunal granted oral
hearings of parties at the premises of parties without notice to the other party and
inspections were conducted by it without notice to both the parties. Even evidence
collected from one party was kept secret from the other party and it was not disclosed
even at the time of hearing. The place of arbitration was also not determined and not
intimated to the parties. Thus the entire proceedings suffered from gross procedural
irregularities violating the provisions of Sections 18, 19, 20 and 24 of the Arbitration
and Conciliation Act, 1996. It was evident that arbitrator was not fair and had not
treated both the parties equally. The Kerala High Court, therefore, set aside the award
because of the procedural violation and directed the appellant to approach the Civil
Courts for redressal of its grievances.

2.2 Section 28
Section 28(1) refers to domestic arbitration where the substantive law of India would
be applicable.
Sub-section (1) (b) contains provision relating to the substantive law to be applied in
the dispute under arbitration in the case of International Commercial arbitration. Such
dispute shall be arbitrated in accordance with the law designated by the parties. If the
parties to International commercial arbitration fail to agree among themselves about
the applicability of the substantive law, the arbitral tribunal has the authority to apply

2
AIR 2001 SC 1219
3
AIR 2005 Ker.3
the rules of law it considers to be proper and appropriate in the given circumstances of
the case i.e., dispute.
Conflict of laws
It is generally observed that International commercial arbitration often gives rise to
the problem of conflict of law in which the laws of different countries are involved
and the countries have the freedom to choose the law which would be applicable to
arbitration proceedings to which they are parties. Foe example, if contract is made in
London between an Indian and an American to be performed in India, then there is
conflict of laws both for Indian Courts and American Courts as also the English
Courts. Now if suit is filed in an Indian or an American Court, the pertinent question
which shall arise is whether the Court has jurisdiction, and if it has, what law will it
apply to decide the case.
In the above situation the case is governed by Section 28 of the Arbitration and
Conciliation Act, 1996. The section provides that the parties to the contract have the
freedom to choose which of the national laws of different States will be applied and if
the parties fail to do so, the arbitral tribunal shall decide the applicability of law
keeping in mind the surrounding circumstances of the dispute before it for arbitration.
It must, however, be stated that international arbitrations are generally entrusted to an
arbitral institution and the parties are deemed to have authorized the institution to
exercise their freedom of choice of the law to be applicable in their case. Therefore,
the rules of the Institution govern the entire arbitral proceedings.
In Tzortzis & Sykias v. Monark Line A/B
4
, a contract between parties subject to the
jurisdiction of Sweden and Greece respectively provided for arbitration in London.
The Court held that even though English law was not the law of either party, they had
chosen English law to be applicable as the law of contract for redressal of their
disputes.
Foreign Jurisdiction Clause
Quite often, the parties to an international commercial transaction provide a clause in
their contract that all disputes between them arising out of the contract shall be
referred for arbitration to the exclusive jurisdiction for a foreign court. Such a clause

4
(1968) 1 WLR 406.
is indicative of the parties intention that their arbitration shall be governed by the law
of that country.
In Gas Authority of I ndia Ltd. (GAI L) v. Spie Capag,
5
the court held that where the
choice of applicability of law to arbitration is not expressly stated in the agreement the
intention of the parties must be gathered from the agreement itself, having regard to
other aspects of the contract which may serve as a link between the contract and the
country with which it is most closely and vitally connected. This may include
considerations as to (i) the place where the agreement has been entered into (lex loci)
(ii) the place where the contract is performed; and (iii) the place i.e., the forum where
the dispute has to be resolved (lex fori).
According to the Rules of International Chamber of Commerce (ICC), the arbitration
should normally be under the law of procedure chosen by the parties, failing which; it
should be conducted under the law of the country in which the arbitral tribunal holds
the proceedings
6
.
It would be pertinent to refer to facts and decision of Supreme Court in National
Thermal Power Corporation (NTPC) v. Singer Company,
7
wherein the question of
applicability of law as also the jurisdiction and place of arbitration was involved. The
facts of the case were briefly as follows:
The contract in this clause provided that all disputes and differences arising out of the
subject matter of the contract shall be settled by the process of arbitration. The
contractor in this case being a foreigner, one of the terms of the contract provided that
the arbitration was to be conducted by three arbitrators, one each to be nominated by
the owner and the contractor and the third to be named by the President of
International Chamber of Commerce (ICC), Paris. Except this arbitrators
appointment clause, the entire arbitration was to be governed by the Rules of
Conciliation and Arbitration of the ICC and the arbitration was to be conducted at
place determined by the arbitrators.
Consequent to a dispute arising between the parties, the arbitration was held at
London and the arbitrators made an interim award on preliminary issues. An
application was moved under the Arbitration Act, 1940 for setting aside the award in

5
(1994) 1 Arb LR 431 (Del.)
6
Article 16 of ICC
7
(1992) 3 SCC 551 (SC)
the Delhi High Court. The question before the Court for decision was whether a suit
for setting aside the interim award was maintainable in an Indian Court under the
arbitration law of India or it had to be filed in a London Court.
The High Court of Delhi held that the interim award under challenge, being a
foreign award and the arbitration having taken place at London, it could be challenged
in London Court as lex fori and the Indian Court had no jurisdiction to set aside the
award. The Court further observed that so far as the contract was concerned, it could
be governed by the Indian law of contract because the contract was entered into in
India but as regards the validity, interpretation and effect of the arbitration clause and
the arbitration proceedings, the law of the country in which the arbitration proceedings
were held (i.e., English Law in this case) would be applicable.
On appeal, the Supreme Court reversed the decision of the Delhi High Court and held
that in this case the contract was between an Indian company and foreign company. It
contained an arbitration clause stipulating that Indian law shall be applicable to all
matters arising out of the contract and the arbitration was to be governed by the Rules
of ICC Paris. The Supreme Court noted that the parties having selected Indian law as
proper law of contract, it could also be applicable to arbitration agreement which was
also a contract. Therefore, the award of the arbitral tribunal would also be governed by
the Indian Law of Arbitration and it was erroneous to think that it was a foreign
award. The Apex Court emphasized that merely because the arbitrators chose London
as the place of arbitration, it could not be inferred that English law of arbitration
would apply to determine the validity of interim award which was challenged in this
case.







Chapter-3
Conclusion
To sum up the provisions laid down in Section 20 of the Arbitration and Conciliation
Act, 1996 the parties are free to determine the place of arbitration as the venue of
arbitration, however it is to be fixed by the mutual consent of the parties. Where there
is no mutual consent as to place of arbitration, then the arbitrator has to fix the venue
of arbitration. It is to be noted that arbitrator while fixing the venue of arbitration has
to see the convenience of the parties and in absence of consent of the parties the
arbitrator has to perform this duty by consulting its members. In case of Institutional
Arbitration if it is stipulated in arbitration agreement that in case of dispute or
differences arising between them, they will be referred to a particular institution and
then that institution will appoint arbitrator or arbitrators and they will decide the place
of arbitration. In case of International Arbitration, it can take place at such place either
in India or outside India in cases where there are ingredients of foreign origin relating
to the parties or the subject-matter of the dispute. The law applicable may be Indian
law or foreign law depending on the agreement between parties in this regard.








Table of Cases

Gas Authority of India Ltd. (GAIL) v. Spie Capag , (1994) 1 Arb LR 431 (Del.)
Thermal Power Corporation (NTPC) v. Singer Company , (1992) 3 SCC 551
(SC)
Sanshin Chemicals Industry v. Oriental Carbons and Chemicals Ltd, AIR 2001
SC 1219.
Sulaikha Clay Mines v. Alpha Clays & Others , AIR 2005 Ker.3
TDM infra-structure (P) Ltd. v. U.E. Development India (P) Ltd , AIR 2008 SC
2928
Tzortzis & Sykias v. Monark Line A/B, (1968) 1 WLR 406.













Bibliography

Books
Dr. N.V. Paranjape, Law Relating to Arbitration and Conciliation in India,
fourth edition, 2011, Central Law Agency, Allahabad.
7
th
edition, 2009, Central Law Agency, Allahabad.
Websites
http://www.hg.org/article.asp?id=27514
http://indiankanoon.org/seach/?formInput=place%20of%20arbitration%20