LAW APPLICABLE IN CHOOSING SEAT OF ARBITRATION

This Court has drawn a distinction between a seat and venue which would be quite crucial in
the event, the arbitration agreement designates a foreign country as the seat/ place of the
arbitration and also select The Act as the curial law/ law governing the arbitration proceedings.
The Court further clarified that the choice of another country as the seat of arbitration inevitably
imports an acceptance that the law of that country relating to the conduct and supervision of
arbitrations will apply to the proceedings. The principle to be applied while determining the seat
is first and foremost the express intention of the parties. The English case of Shashoua&Ors. v.
Sharma lays down the principle as follows:

When therefore there is an express designation of the arbitration venue as London andno
designation of any alternative place as the seat, combined with a supranational body of rules
governing the arbitration and no other significant contrary indicia, the inexorable conclusion is,
to my mind, that London is the juridical seat and English law the curial law

In Enercon GmbH &Wobben Properties GmbH v. Enercon (India) Ltd. arbitration agreement did
not specify the seat of the arbitration, named the venue as London but also provided that the
Indian Arbitration and Conciliation Act 1996 should apply. The English court found that
determination of the seat was a question for the Indian courts because the issue of the arbitral
seat was already pending before them, the claimants had engaged fully in the Indian proceedings,
and because of the comity between England and India. Nonetheless, the English court held,
obiter, that the objective intention of the parties was for London to be the seat, and that there was
no significant contra indicia to this. The essential task was to give effect to the objective
intention of the parties. Case law and commentary both signify that the seat is in most cases
sufficiently indicated by the country chosen as the place of the arbitration, and that for such
choice of place not to be given effect as the seat there would need to be clear evidence that (i) the
parties agreed to choose another seat for the arbitration; and (ii) that choice would be effective to
endow the courts of that country with the jurisdiction to supervise and support the arbitration.
In the absence of some express and clear provision to the contrary, it must follow that an
agreement that the curial or procedural law of arbitration is to be the law of X has the
consequence that X is also to be the seat of the arbitration. The lexfori is then the law of X, and
accordingly X is the agreed forum of the arbitration. A further consequence then is that the courts
which are competent to control or assist the arbitration are the Courts exercising jurisdiction at
X. In the absence of a clear indication to the contrary, there is a presumption that the place
where the arbitration is to take place will constitute its seat of arbitration. In the case of an
agreement as to the seat of arbitration is analogous to an exclusive jurisdiction clause. When the
parties, by express agreement, have agreed that the law juridically controlling the arbitration
being Law of England, the seat of arbitration to be London; impliedly one can easily say that
they have excluded Part I of the 1996 Act. As a result, the seat being outside India, the proposed
arbitration will be an international commercial arbitration seated outside India, and thus Part I of
the Arbitration and Conciliation Act cannot apply to the case at hand, applying the principle in
BALCO .