Jahanvi Agarwal
On 18th February 2024, the Delhi High Court, under the guidance of Justice Jasmeet Singh, addressed a significant aspect of arbitration agreements. The court upheld the validity of arbitration agreements stipulating multiple seats, providing parties with a choice. The case stemmed from a purchase order between Vedanta Limited (Petitioner) and Shreeji Shipping (Respondent) regarding coal transportation.
The Petitioner invoked the Arbitration Clause due to discrepancies in transported quantities and contractual disputes. Consequently, they filed a Section 11 application under the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator. However, the Respondent contested the existence of an arbitration agreement, arguing that the purchase order was never accepted and that the arbitration clause was not agreed upon.
The central dispute revolved around the jurisdiction of the arbitration agreement, specifically Clause 10.1(ii) concerning the seat of arbitration. The Respondent contended that this clause was void under Section 29 of the Indian Contract Act, 1872, and challenged the jurisdiction of the Delhi High Court, advocating for courts in Gujarat.
The High Court, in its observations, emphasized its limited role in a Section 11 petition, which is to ascertain the prima facie existence of an arbitration agreement. It noted that the purchase order, despite the Respondent’s denial, was sent via email, and the Respondent’s invoices referenced the purchase order, indicating acknowledgment of the contract and the arbitration agreement.
Regarding the applicability of Section 29 of the Indian Contract Act, of 1872, the High Court ruled that the arbitration clause offering multiple seats did not fall under its purview. It cited the Supreme Court’s decision in Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd. [(2017) 7 SCC 678] and likened designating the seat of arbitration to an exclusive jurisdiction clause.
Ultimately, the High Court upheld its jurisdiction to decide the Section 11 petition, allowing it and appointing Mr. Abhijat as the sole arbitrator to resolve the dispute between the parties.
Case Name: Vedanta Limited v. Shreeji Shipping
Diary Number: 342/2023
Bench: Justice Jasmeet Singh