Determination of Place of Arbitration

Introduction 

Section 20 of the Arbitration and Conciliation Act, 1996 deals with the determination of the place of arbitration. This provision is important because the place of arbitration determines which country's arbitration laws will apply and which courts will have jurisdiction to supervise the arbitration proceedings. The section establishes a clear order of priority for deciding the place of arbitration. 

Party Agreement Takes Priority 

• Sub-section (1) states that parties are free to agree on the place of arbitration. This means that the parties have the first right to choose where the arbitration will be conducted. They can specify this in their arbitration agreement or decide it later by mutual consent. 
• When parties agree on a place of arbitration, that place becomes the legal seat of the arbitration. This decision has important legal consequences. The arbitration laws of that place will govern the proceedings, the courts of that place will have supervisory powers, and the award will be considered domestic to that jurisdiction. The agreement of parties on the seat is binding and must be respected by the arbitral tribunal and courts. 

Tribunal's Power When Parties Do Not Agree 

• Sub-section (2) applies when the parties have not agreed on a place of arbitration. In such cases, the arbitral tribunal has the authority to determine the place. However, the tribunal cannot make this decision arbitrarily. It must consider the circumstances of the case and the convenience of the parties. 
• The tribunal should examine several relevant factors when making this determination. These include the location where the parties are based, where the witnesses are located, where important documents are kept, which location offers neutrality between the parties, and practical considerations such as accessibility and costs. 
•  The tribunal must balance all these factors to reach a fair decision that serves the interests of justice and efficiency. 
• The phrase "convenience of the parties" is given as an example, but it is not the only factor. The tribunal must take a comprehensive view of all relevant circumstances before deciding on the place of arbitration. 

Flexibility for Conducting Hearings and Meetings 

• Sub-section (3) makes an important distinction between the legal seat of arbitration and the physical locations where arbitration activities may take place. Even after the place of arbitration is determined under sub-sections (1) or (2), the arbitral tribunal can meet at any place it considers appropriate for various purposes. 
• This flexibility allows the tribunal to conduct meetings at different locations for consulting among its members, hearing witnesses and experts, taking submissions from parties, or inspecting documents, goods, or other physical evidence.  
• This provision recognizes that in modern arbitration, especially in international cases, it may not always be practical to conduct all activities at a single location. 
• However, parties can agree to restrict this flexibility. If the parties specifically agree that all proceedings must take place at one location, the tribunal must follow that agreement. 
• It is crucial to understand that holding hearings or meetings at different locations does not change the legal seat of arbitration. The place determined under sub-sections (1) or (2) remains the juridical seat regardless of where specific procedural activities occur.  
• The seat determines the governing law and court jurisdiction, while other venues are merely convenient locations for conducting particular proceedings. 

Legal Significance and Court Interpretation 

• Courts have repeatedly emphasized the distinction between "seat" and "venue" in arbitration. The seat is the legal home of the arbitration and has juridical significance, whereas venues are simply convenient places for conducting proceedings without legal implications. 
• The determination of the seat is a fundamental jurisdictional matter. It affects which courts can set aside an award, where the award can be enforced, and which procedural laws govern the arbitration. Therefore, clarity on the place of arbitration is essential at the outset of proceedings. 

Conclusion 

Section 20 provides a clear and practical framework for determining the place of arbitration. It respects party autonomy by giving parties the first right to choose the seat, provides a mechanism for determination when parties cannot agree, and allows procedural flexibility for conducting hearings at convenient locations. This balanced approach ensures that arbitration proceedings can be conducted efficiently while maintaining legal certainty regarding the governing law and supervisory jurisdiction.