Layman’s English Or Lawman’s English: Ever Given A Thought?-Jus Dicere

Once you start your Law degree, your thought processes slowly start conforming to a legal perspective. Little things, like commas, have the power to change the course of history. The way a lawyer, or a law student, looks at things is different from normal societal views. But that’s probably some form of a God Complex taking over our minds, right? Or is it? To bring things into perspective, let’s take into consideration two deceptively similar words- Seat and Venue. For a very long time, Indian Courts were unable to create a distinction between the two. However, the Indian Arbitration Act does. And not that too successfully at that. The ambiguity in law was furthered by the fact that the different Courts in India had different opinions on the matter. But we don’t care about the age-old decisions, do we? So let’s fast forward to May 1st, 2018. A Division Bench of the Supreme Court was fed up of this ambiguity, but considered itself inept to take on the call to clear the confusion, as one of the Counsels brought to the Courts notice that there were too many Precedents of varying strengths from both sides of the argument. As a result, the case was referred to a larger bench.[1] But what exactly was the problem?

The problem was that the Arbitration and Conciliation Act, 1996 makes no mention of the words “seat” or “venue”. Rather, it uses the word, “place”. However, while drafting of Arbitration Agreements, lawyers use all 3 of these words, often interchangeably. This is where the problem started. Courts have more or less unanimously agreed on the meaning of “Seat” and “Venue”. The venue is a mere geographical or physical location where an Arbitration, or parts of it, are conducted. The venue is mostly chosen on the basis of convenience of the Parties. On the other hand, Seat is the place whose law governs the Arbitration or the appropriate Court having exclusive jurisdiction to support arbitration proceedings. The Supreme Court in the case of Enercon India vs. Enercon GmBh,[2] stated that in case there was a conflict between the 2, the law of the Seat of Arbitration would prevail. Things got even more complicated after this.

Part I of the Arbitration and Conciliation Act, which initially only applied to domestic Arbitrations, was partially extended to International Commercial Arbitrations, via the Arbitration and Conciliation (Amendment) Act, 2015. This change allowed Indian Courts to apply certain provisions, such as interim measures (Section 9) or taking of evidence (Section 27), to International Commercial Arbitrations. In the Enercon, the apex court stated that merely because the venue of arbitration is chosen to be London, it could not lead to the inference that UK courts could be approached by either of the Parties, to seek interim measures during arbitration proceedings. Otherwise, it would lead to utter chaos, confusion, and unnecessary complications.[3] Therefore, Indian Courts could pass Interim Orders or hear Appeals, even when the Arbitration was being conducted outside the territory of India. A question came up, at this point, as to whether 2 Indian entities could opt for an International Arbitration, ousting the jurisdiction of Indian Courts. The Supreme Court, in the case of TDM Infrastructure, was vehemently against this. It held that 2 Indian Nationals or 2 Indian Companies cannot opt for a foreign seat of Arbitration, as it would derogate Indian laws and would be against Public Policy.[4]

This, however, left too many unanswered questions. What happens when both, venue and seat are mentioned separately in the Arbitration Agreement? Or further, when the ONLY venue is mentioned, and the Agreement is silent on the “Seat”? The Enercon judgment was clear in stating that if the Seat of Arbitration was in India, Indian Courts would have exclusive Jurisdiction, irrespective of where the venue of the Arbitration is. No Court, however, has laid down any manner to determine what exactly the Seat is. What happens if the Arbitration Agreement is silent on the Curial Law, i.e. the law that applies to the Arbitration? Do the Parties get to choose which law they want to apply? Or does the Substantive Law of the Contract apply to the Arbitration? Further, can only Indian Courts enforce an award if the Seat is in India?

There are too many unanswered questions. All of them stemming from the difference in a layman’s and lawyer’s understanding of terms. Words which don’t appear in the bare legislations are applied in course of life. But the only thing this creates is another grey area in the legal system, which the Courts seem incapable of clearing up, and shrewd lawyers seem too capable of manipulating. All that can be done now is to wait and see what the larger bench of the Supreme Court does in the case of Hardy Exploration. Will it give another opinion to add the ever-growing plethora of contradicting perspectives? Or will it achieve the impossible and actually set a proper and clear precedent for the future?

[1] Enercon (India) Ltd. & Ors vs. Enercon GmBh and Anr., (2014) 5 SCC 1

[2] Union of India v. Hardy Exploration and Production (India) INC, Civil Appeal No. 4628 of 2018, 2018 SCC OnLine SC 474, decided on 01.05.2018

[3] Seat versus Venue, Indu Bhan, The Financial Express, Available At- https://www.financialexpress.com/archive/seat-versus-venue/1229641/

[4] TDM Infrastructure Pvt. Ltd vs UE Development India Pvt. Ltd., (2008) 14 SCC 271

By Sharbani

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