Applicable Laws in International and Domestic Arbitration:

Determination of Seat and its legal significance

GUEST LECTURE: ALOK VAJPEYI, SINGHANIA & CO., MUMBAI
  Difference between International & Domestic
What will I Arbitration.
Applicable laws in International Commercial
cover?

Arbitration.
 Significance and Determination of Seat law.
 Cause of the confusion.
 Delocalized or A-national Arbitration.
 Indian Scenario.
 Indian case laws on the seat law.
 Model Clause.
 The term ‘international’ is used to mark the
Difference

difference between arbitrations that are purely
‘national’ or ‘domestic’ and those that in some way
between transcend national boundaries, hence are
‘international’ or ‘transnational’. 
Domestic &  Art. 1(3), UNCITRAL Model Law: (1) Parties from

International different States; (2) Place outside the Host nations or

place of performance outside; (3) subject matter
relates to more than one country.
Arbitration
  the law governing the arbitration agreement and the
Applicable performance of that agreement;
the law governing the existence and proceedings of
laws in ICA

the arbitral tribunal;
 the law, or the relevant legal rules, governing the
substantive issues in dispute (generally described as
the ‘applicable law’, the ‘governing law’, ‘the
proper law of the contract’, or ‘the substantive
law’);
 other applicable rules and non-binding guidelines
and recommendations;
 the law governing recognition and enforcement of
the award.
  Legal domicile or juridical home of the arbitration.
Significance &  Why we need seat: To supervise.

Determination of 


Who selects: Parties, Tribunal or Institution.
Internal Procedures: (1) Required procedural steps & timetable;
the Seat (2) evidentiary & pleading rules; (3) permissibility and
administration of oaths for witnesses; (4) conduct of hearings; (5)
disclosure & discovery power of the arbitrator; (6) party
autonomy; (7) arbitrator relationship with parties, ethical
standards, appointment & removal; (8) Cost issues etc.
 External Procedures (between ICA Proceedings & the National
Courts): (1) Judicial assistance in relation to constitution of
tribunal, including selection, substitution and removal of
arbitrator; (2) interim measures; (3) evidence taking and
discovery; (4) judicial review of awards and annulment action.
 Confusion in the usage of the term ‘Place’ instead of
Cause of the

‘seat’: 1923 Geneva Protocol, Geneva Convention,
New York Convention, Uncitral Model Law,
Confusion Institution Rules.
 Cultural Difference & the divide between Common
and Civil law.
 Dispute Resolution Clauses: Mid night clause or the
last-minute clause.
 Lack of training.
  Arbitration has no lex fori and may produce floating or delocalized arbitral
awards.
 Parties have departed from Court for a neutral and non national dispute

Delocalized or 
settlement mechanism.
A few states have permitted the parties to contract out of most aspects of

A-national
local arbitration law. The leading examples are Belgium and Switzerland,
provide for the choice of parties to allow other courts to annul the
arbitration awards.

Arbitration Award in ICC Case No. 2321, I Y.B. Comm. Arb. 133, 134 (1976): “I...do

not see any need for referring to any particular set of national law rules or
court practice of any particular country in this respect....Nor do I see any
necessity for relying...upon Swedish law as the law of the place of
arbitration. Furthermore, the court and other authorities of Sweden can in
no way interfere with my activities as arbitrator, neither direct me to do
anything which I think I should not do nor to direct me to abstain from
anything which I think I should do”.
  The Arbitration & Conciliation Act, 1996 provides
Indian for provisions relating to Domestic Arbitration, ICA,
India Seated Arbitration (Part I) and Foreign Seated
Scenario Arbitration for Recognition and Enforcement (Part
II).
 Definition of Court.
 Section 20 of the A & C Act, 1996: Dealing with the
distinction between seat and venue.
 Section 31(4): “The arbitral award shall state its
date and the place of arbitration as determined in
accordance with section 20 and the award shall be
deemed to have been made at that place.”
  Bhatia International v. Bulk Trading S.A., (2002) 4 SCC 105:
Section 9 Application, Part I is applicable to ICA held outside India
unless the parties by agreement, express or implied, exclude all or
any of its provision. Parties agreed that the arbitration be held in
Paris, France.

Indian Case  Venture Global Engg. v. Satyam Computer Services Ltd., (2008) 4
SCC 190, Section 34 Application, Followed Bhatia. Foreign award
can be challenged and enforced in India under Section 34.
laws on the  Indtel Technical Services (P) Ltd. v. W.S. Atkins Rail Ltd., (2008) 10
SCC 308, Section 11 Application, SC has the power to appoint

seat law 
arbitrator in case of ICA with a foreign seat.
Videocon Industries Ltd. v. Union of India, (2011) 6 SCC 161:
Section 9, Seat is London or Kuala Lumpur?, Parties specifically
mentioned that the arbitration agreement would be governed by
English Law. Hence, Section 9 in Delhi HC not maintainable.
  Bharat Aluminium Co. v. Kaiser Aluminium Technical
Services Inc., (2012) 9 SCC 552: Prospectively overruled
Bhatia and Venture, Part I is only applicable to arbitrations
which take place in India, seat of arbitration is analogous to
exclusive jurisdiction clause, venue and seat different.
Indian Case  Reliance Industries Ltd. v. Union of India, (2014) 7 SCC
603: Lex Contractus India, Law governing arbitration
laws on the agreement was English law. Hence, applicability of A & C,
Act rule out by parties through conscious decision and
seat law (2) 
agreement. Juridical place or seat to be London.
Enercon (India) Ltd. v. Enercon Gmbh, (2014) 5 SCC 1:
Indian and German Party, Venue was London. A & C will
apply. The law governing contract was India. SC reiterated
not appropriate to read venue as seat.
  Eitzen Bulk A/S v. Ashapura Minechem Ltd., (2016) 11 SCC 508:
London seated arbitration under English law. Gujarat HC DB held
that Section 34 is maintainable. Bombay HC allowed enforcement
under Part II. SC held that foreign award passed in London cannot

Indian Case 
be challenged u/s 34. Gujarat HC proceedings dismissed.
IMAX Corpn. v. E-City Entertainment (India) (P) Ltd., (2017) 5

laws on the SCC 331: Lex Contractus is Singapore and jurisdiction of courts at
Singapore Arbitration under ICC rules. ICC Court decided London
as juridical seat of arbitration, which parties accepted. Section 34

seat law (3) filed in Bombay HC. SC held conduct of parties excludes
applicability of Part 1.
 Roger Shashoua v. Mukesh Sharma, (2017) 14 SCC 722):
Arbitration under ICC Rules. SHA governed by Indian law. Venue
is London. London is the seat of Arbitration. V
  Union of India v. Hardy Exploration & Production (India) Inc.,
(2019) 13 SCC 472: The arbitration agreement provided that the
arbitration procedure shall be governed by UNCITRAL Rules and
the venue of arbitration shall be Kuala Lumpur. SC held that venue
can become a seat of something else is added to it as a
concominant.
 Brahmani River v. Kamachi Industries, (2019) SCC OnLine SC
Indian Case 929: Domestic Arbitration. Venue of arbitration is Bhubaneshwar
and seat not specified. SC held that courts of the venue and not
where the cause of action had arisen, had exclusive jurisdiction.
laws on the  BGS SGS SOMA JV v. NHPC, (2020) 4 SCC 234: The arbitration
agreement provided that the arbitration be held at New
seat law (4) Delhi/Faridabad under the ‘UNCITRAL Rules’. SC followed the
Shashoua principle. Any choice of venue, in absence of contrary
indicia, would be interpreted as designating a seat.
 Mankastu Impex v. Airvisual Ltd., 2020 SCC OnLine 301:
Arbitration administered and seated in Hong Kong. The Court held
mere expression “place of arbitration” cannot be the basis for
determination of seat of arbitration. The intention to be the seat has
to be determined form other clauses.
  Any dispute arising out of or in connection with this contract,
Model Clause including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by
arbitration in accordance with the Arbitration Rules of the
Mumbai Centre for International Arbitration (“MCIA Rules”),
which rules are deemed to be incorporated by reference in
this clause.
 The seat of the arbitration shall be ________________.
 The Tribunal shall consist of [one/three] arbitrator(s).
 The language of the arbitration shall be ________________.
 The law governing this arbitration agreement shall be
________________.
 The law governing the contract shall be______________.
 Thank you.

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