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If there is “Seat of Arbitration” and also an “exclusive jurisdiction” clause mentioned in the contract, then which court will have the right to deal with matters arising out of the arbitration like the appointment of arbitrators. The Hon’ble Delhi High Court answered this query in this case.

Facts of the Case:

M/s. Alcott Town Planners Pvt. Ltd. (“Alcott”) and Sumithra Inn (“Respondent”) executed a Management Services Agreement (“MSA”) on October 29, 2018. As per Articles 10.1 and 10.3 of the MSA, the place of arbitration was New Delhi, and the courts at New Delhi were also conferred with exclusive jurisdiction to deal with all disputes arising out of the MSA. Clause 10.1 of the MSA was amended on March 7, 2019, and the courts at Bengaluru were given the “exclusive jurisdiction” to deal in all matters arising out of this Agreement, while the place of arbitration still remained to be New Delhi.

Alcott transferred its rights under the MSA to its group company, My Preferred Transformation & Hospitality Pvt. Ltd. (“Petitioner”) with effect from June 1, 2019. The Respondent did not hand over the possession of the property to the Petitioner within the time stipulated in the MSA, which forced the Petitioner to send a legal notice to the Respondent. In response, the Respondent terminated the MSA and sent a reply notice invoking the arbitration clause in the MSA. The Petitioner responded to the Reply Notice on December 31, 2019, nominating Hon’ble Mr. Justice Kurian Joseph, a retired Judge of the Supreme Court, to be the sole arbitrator to arbitrate the dispute.

The Respondent communicated the name of Sri P. Ravindranath, a retired Additional Director General, CPWD, to be the sole arbitrator to arbitrate on the dispute between the parties. In its letter, the Respondent reiterated that the courts at Bengaluru would have exclusive jurisdiction to decide all matters arising out of the arbitration as the “exclusive jurisdiction” was on the Bangalore courts. The Respondent filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) before the High Court of Karnataka, for appointing an arbitrator as both the parties failed to agree on a single arbitrator.

As per the Petitioner, for all matters relating to Arbitration, the sole jurisdiction is with the courts at the seat of arbitration. Based on this contention, the Petitioner filed the application before the Delhi High Court, under Section 11(6) of the Arbitration Act, for the appointment of an arbitrator.

Reasoning & Judgment:

The Hon’ble Court heard the arguments of both the parties. From the arguments of the parties, the Court pointed out that when it comes to “Seat of Arbitration” and “Exclusive Jurisdiction” clauses, there can be four scenarios, namely, agreements which contained (i) only a “seat of arbitration” clause; (ii) only an “exclusive jurisdiction” clause; (iii) a seat of arbitration clause and an exclusive jurisdiction clause, and both clauses conferring jurisdiction on the same court; and (iv) a seat of arbitration clause and an exclusive jurisdiction clause with the clauses conferring jurisdiction on different courts. The Court examined this fourth category in a detailed manner, as the facts of the case squarely fit into this category.

The Delhi Court held that the courts located at the seat of arbitration has the jurisdiction to deal with all matters arising out of arbitration, unless there is a specific clause which stipulates that all dispute related matters including “those issues related to arbitration will be dealt by another court”. The Delhi High Court observed that a clause which merely states “exclusive jurisdiction in all matters arising out of the MSA” vests with the courts at Bengaluru, will not result in conferment of Section 11 jurisdiction on the High Court of Karnataka. Since no such specific conferment was provided in the MSA, the Delhi High Court held that the right to appoint arbitrators under Section 11 will vest with the Delhi High Court, and not with the High Court of Karnataka. The Delhi High Court appointed G. S. Sistani, a retired Judge of the Delhi High Court, as the Sole Arbitrator to arbitrate on the disputes between the parties.