The seat of an arbitration is, without a doubt, one of the most important aspects of an arbitration

agreement, as are the proceedings that result from the said agreement, which not only determines the
governing law for the conduct of arbitration proceedings, but also which courts will have supervisory
power over the arbitration and the scope of those powers, particularly in relation to award
enforcement. The seat of Arbitration is quite independent of the place or venue where arbitration
proceedings will take place.

The venue is only a geographical location of convenience for both the parties. It is where the
proceedings are physically conducted, it rarely has anything to do with which curial law/lex arbiter
would be at play. However, it must be noted that in a lot of cases, in the absence of the contrary, the
venue has been considered to be the seat of an Arbitration when read with the entire agreement
including necessary details.

Lex arbiter is an international principle which dictates that the governing law of the arbitration will be
the law of the country chosen as the seat. Laws that govern Arbitration are different and several. Parties
can choose from several option; National laws, International Conventions, Rules detailing the
proceedings of the Arbitration (ICC, LCIA, etc.), model rules (UNCITRAL), and case specific soft rules that
can be invoked during the procedure. Lex arbiter is a wide term and includes not only the national law
but all five of the aforementioned choices. Some portions of the lex arbiter are mandatory while some
are not. The aforementioned five options are to be chosen for non-mandatory parts of the Arbitration.
Parties can deviate from the law of the seat only to the extent that the law of the seat allows such a
deviation. Lex arbiter is the law applicable in the arbitration as well as to the arbitration.

a) In the decision of Bharat Aluminium Co vs. Kaiser Aluminium Technical Service Inc., India's
Supreme Court ("SC") settled the legal problem between a "seat" and a "venue" of arbitration
for the first time. This judgment highlighted that, once chosen, the seat of the arbitration
acquires a permanent character that determines the scope of the powers and the court that has
ultimate supervisory authority over the arbitration. The venue, on the other hand, is defined as
temporary and solely for administrative efficiency and personal convenience.
In its ruling in this case, the Supreme Court observed that the selection of another nation as the
Seat of Arbitration entails an admission that the laws of that country related to the conduct and
supervision of Arbitrations shall apply to the proceedings. If the Arbitration agreement is found
or held to provide for a Seat / place of Arbitration outside of India, even if the contract specifies
that the Indian Arbitration Act shall govern the arbitration proceedings, Indian courts cannot
exercise supervisory jurisdiction over the Arbitration or the award. It would only mean that the
parties have agreed upon the internal conduct of the Arbitration to be conducted by a law which
will not be contrary to the mandatory provisions of the chosen seat.

In Indus Mobile Distribution Pvt. Ltd. vs. Datawind Innovations Pvt. Ltd., if the parties have not
chosen a seat of arbitration then subject-matter interpretation would apply but otherwise it
would amount to an exclusionary clause. If a seat of Arbitration is given then courts of the
country would have supervisory jurisdiction. It is to be noted here that s.24 of the Act says that
whichever court is approached first will be deemed to have the authority to carry on all
 subsequent action and proceedings. This was highlighted in the case of Antrix Corporation Ltd
vs. Devas Multimedia Pvt Ltd and subsequently overturned in BGS SGS SOMA.

The final case to decide on the matter is BGS SGC SOMA JV vs. NHPC Ltd., SC decided that a
judgment has to be read as a whole and the crux of the judgment in BALCO was the seat theory.
It says that the seat is the centre of gravity of any Arbitration, and the courts at the seat will
have supervisory jurisdiction. It also said that the court of the seat will have to be approached in
case of any issues with respect to the Arbitration proceedings.

b) There are numerous instances of poorly drafted Arbitration agreemenst where the Seat is not
specifically mentioned even though the Venue is. A lot of times the words place, venue, and seat
are interchanged or used in wrong contexts. A venue does not usually attract any legal
consequences, but is a place of convenience agreed upon by the partiesfor the conduct of their
affairs.

The first case to highlight the aforementioned problem was P.T. Garuda Indonesia vs. Birgen
Air, which distinguished between the concept of seat and venue. There was a contract where
seat and venue for Arbitration was Jakarta, Indonesia but due to unforeseen circumstances and
the breaking out of a riot both the parties agreed to shift the venue to Singapore. On a prima
facie reading it becomes clear that this was done out of a matter of convenience and safety.
After losing the case Garuda filed for appeal in Singapore which rejected it on the grounds that it
had no supervisory jurisdiction by virtue of it being a mere venue and not the designated seat.

Another very important case to be looked at is Roger Shashoua v. Mukesh Sharma, where the
Shashoua Principle was laid down. It said that in order to decide the seat one had to look at:
i) The designated venue
ii) No other designation of a place as the seat
iii) The chosen supranational body of rules to govern the Arbitration
iv) No contrary indicia (with respect to the seat or otherwise)

In the case, the rules of the Arbitration were ICC, laws governing substantive rights and liabilities
were Indian, and the venue was London. The court was led to conclude that the stated venue
was actually the seat.

In the case of Harmony Innovation Shipping v. Gupta Coal India it was concluded that since
both the parties agreed to the venue as London, combined with the facts that the governing law
would be English law and Arbitration proceedings will be in accordance of procedure laid down
by London Maritime Arbitration Association, the stated venue is the seat.

It is pertinent to mention in passing the effect of BGS SGS SOMA case which stressed on the test
known as, “No other significant contrary indicator”. There being no mention of a seat but the
expression “Arbitration proceedings” followed by the venue, in absence of a significant indicator
to the contrary would imply that the stated venue is the seat.
 There have been two cases which have held the venue to not be the seat of Arbitration, and are
imperative to be looked at. The first instance is of Enercon (India) v. Enercon GMBH (Germany)
where the governing law was Indian, the provisions of Indian Arbitration Act were to apply, but
the venue was London. This provided the necessary contrary indicia to London being the seat,
and a holistic reading of the agreement led the courts to deem India as the seat. The court took
the approach of finding the closest and most immediate connection to the dispute, which was
India.

The case of UoI v. Hardy Exploration, was a 3 judge decision wherein the designated venue was
Kuala Lumpur and the procedure to be followed was the UNCITRAL model. Here, the SC noted
that if the intention of the parties by their choice of venue and additional factors leads to the
conclusion that the seat is outside India, then Part I of the Indian Arbitration Act will be
excluded. This ruling was declared per incuriam by the SC itself in a subsequent judgment (BGS
SGS SOMA case). Hardy Exploration ignores the Shashoua Principles. The venue in Hardy was
Kuala Lumpur, and only supranational legal system was involved. Hence, no contrary indicia can
be drawn from the intent or actions of the parties. The most important significane of this case
was the reiteration in the subsequent judgment of the fallacies this case had led to, and the fact
that later cases stress on a holistic reading of agreements.

The confusion regarding the place, seat, and venue of Arbitration has arisen mainly due to very poorly
drafted Arbitration agreements. The seat, place, and venue should be unequivocally be made crystal
clear in the agreement itself. The 246 th Law Commision report has called for adding a definitional clause
in s. 2 to define seat as the juridical seat and amending s. 20 to use the word seat or venue instead of
place of Arbitration. The seat of the Arbitration also defines the nationality of the Arbitral Award and in
accordance to the New York Convention; the place for recognition of the award has to be a country
which is not the seat of the Arbitration. The award has to be foreign for applicability in one own country.