The parties are free to agree on a procedure for appointing the arbitrator or arbitrators: High Court Of New Delhi

Petitioner seeks appointment of an Arbitrator in terms of Clause of the General Conditions of Contract and the same issue was held in the judgement passed by a single bench judge comprising HON’BLE MR. JUSTICE SANJEEV NARULA, in the matter ISGEC HEAVY ENGINEERING LTD. V. INDIAN OIL CORPORATION LIMITED dealt with an issue mentioned above.

The present petition under Section 11 (4) and (6) of the Arbitration and Conciliation Act, 1996 [hereinafter, ‘the Act’] seeks appointment, a Work Order SANJEEV NARULA, J. 1 1 Work Order No. 24875185. was issued to the Petitioner for carrying out the works of “Residual Process Design, Engineering, Detailed Engineering (including HAZOP Study) and a lot more of the Respondent. And also they have mentioned that ‘Formal Agreement for Work’ dated 26th September 2016 was executed at Guwahati [hereinafter, ‘Contract’].

During the pendency of the Contract, the Respondent – i.e., Indian Oil Corporation Ltd. Issued a suspension order dated 06th August 2018, 2 which lead to Petitioner – i.e., ISGEC Heavy Electrical Ltd. Exercising its right to terminate the Contract vide letter dated 24th December 2019.

Mr Neelanjan Deka, counsel for IOCL does not dispute the existence of the Arbitration Agreement, however, he opposes the present petition by making the following submissions:

  • The present petition is not maintainable as this Court does not have the territorial jurisdiction to appoint an Arbitrator.
  • All activities about the Contract viz. – floating of tender, allotment of work, placing of the purchase order, signing and execution of Contract, execution of work, etc. have been carried out in Guwahati; There is no connection with New Delhi to confer jurisdiction here.
  • Reliance is placed upon Section 20 (3) of the Act to contend that the venue of arbitration can be changed with the consent of the parties. Thus, it cannot be said that parties have agreed to subject themselves to the exclusive jurisdiction of the court(s) at Delhi.

Mr Shambu Sharan, counsel for the Petitioner, submits that he argued that the law on this issue stands settled by the Supreme Court in BGS SGS Soma JV v. NHPC Ltd. 3, and the said decision is squarely applicable to the facts of the case. He further argued that ‘venue’ provided in the aforenoted clause is akin to defining the seat of arbitration. Reliance was also placed upon Inox Renewables Ltd. v. Jayesh Electricals Ltd.

The Court has considered the contentions of the counsels. In the ANALYSIS 3 (2020) 4 SCC 234. ARB.P. 164/2021 Page 5 of 9 instant case, Clause of the GCC provides that the ‘venue’ of arbitration shall be New Delhi. The said clause also provides that the Arbitrators may, with the consent of the Owner (IOCL), and the Contractor (IGSEC) agree upon any other venue.

And also, the question that arises for consideration is whether the term ‘venue’ provided in Clause of the GCC is equivalent to ‘seat’ of arbitral proceedings or is it merely a ‘venue’/ ‘place’ i.e., a geographical location to conduct meetings/ proceedings.

The court perused the facts and argument’s presented, it thought that- “For the reasons laid out above, this Court is of the view that Clause only provides a ‘venue’ of arbitration, and the juridical ‘seat’ shall vest with the civil court(s) at Guwahati. Given the above, this Court does not have the jurisdiction to entertain the present petition and accordingly, the same is dismissed”.

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Judgment Reviewed by: Mandira BS 

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