Conduct of Arbitral Proceeding: Section 20 of Arbitration and Conciliation Act
Section 20: Place of Arbitration
Text of Section 20:
“Place of arbitration—
The parties are free to agree on the place of arbitration.
Failing such agreement, the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.
The arbitral tribunal may, unless otherwise agreed by the parties, conduct the arbitration proceedings at any place it considers appropriate for consultation among the parties, hearing of witnesses, or inspection of documents or property.
A reference in this Part to the place of arbitration is a reference to the legal place of arbitration, rather than the place where the arbitral proceedings are conducted.”**
Explanation:
1. Freedom of Parties:
The Act emphasizes party autonomy — the parties can decide where the arbitration will be held. This place is crucial because it determines the procedural law governing the arbitration.
2. Default Rule:
If the parties fail to agree on the place, the arbitral tribunal will decide the venue considering convenience and other factors related to the case.
3. Physical vs Legal Seat:
The tribunal may conduct hearings or meetings anywhere (even virtually or at multiple locations), but the "place of arbitration" refers to the legal seat of arbitration.
The legal seat affects jurisdiction, procedural rules, and court supervision.
Key Points:
Legal Seat: The place of arbitration is primarily the seat (legal jurisdiction) which determines the procedural law and supervisory courts.
Venue vs Seat: Hearings can happen in any convenient place, but the legal seat remains fixed.
Convenience: The tribunal’s choice balances convenience and neutrality.
Importance: The seat affects the enforceability of awards and the extent of judicial intervention.
Relevant Case Law:
1. Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO case), (2012) 9 SCC 552
While this case primarily dealt with the jurisdiction of Indian courts over foreign-seated arbitration, it reinforced the importance of the legal seat of arbitration in determining procedural rules and court intervention.
2. Enercon (India) Ltd. v. Enercon GMBH, (2014) 5 SCC 1
The Supreme Court held that the place of arbitration (legal seat) determines the law governing the arbitration procedure.
Even if hearings are held elsewhere, the supervisory jurisdiction lies at the legal seat.
3. Venture Global Engineering v. Satyam Computer Services Ltd., (2008) 4 SCC 190
The Supreme Court recognized the importance of party autonomy in deciding the place of arbitration.
Practical Implications:
Choosing Seat Carefully: Parties should choose the seat wisely because it decides which country’s courts will have supervisory powers.
Multiple Hearing Locations: Tribunals have flexibility to hold hearings in various locations for convenience.
If No Agreement: Tribunal’s choice is binding, and courts generally respect it unless arbitrary.
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