Venue Designation as Seat: Exclusive Jurisdiction in Domestic Arbitration Agreements

Introduction

This commentary examines the Patna High Court’s decision in M/s Pramila Motors Pvt. Ltd. v. M/s Okinawa Autotech International Pvt. Ltd. (Request Case No. 53 of 2024, decided 22‑03‑2025). The case arises out of a dealership agreement dated 04‑08‑2022, under which Pramila Motors invested heavily to become a dealer of electric vehicles for Okinawa Autotech. Disputes over delayed supplies and unsettled dues led the petitioner to terminate the agreement and invoke the arbitration clause (Clause 36). When the parties could not agree on an arbitrator, the petitioner sought appointment of an independent arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The respondent objected on jurisdictional grounds, pointing to Clause 36.3 which designates New Delhi as the “venue” for arbitration.

Summary of the Judgment

The Acting Chief Justice held that in a domestic arbitration clause where only the “venue” is specified and there are no contrary indicia, that venue is to be treated as the juridical “seat” of arbitration. By specifying New Delhi as the sole venue, the parties excluded all other fora, including the Patna High Court. Reliance was placed on precedents such as Brahmani River Pellets Ltd. v. Kamachi Industries Ltd. (2020), which treats a venue clause as an exclusive jurisdiction clause, and Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd. (2017), which equates a designated seat with exclusive jurisdiction. Consequently, the petition under Section 11(6) was dismissed for lack of jurisdiction.

Analysis

Precedents Cited

BGS SGS SOMA JV v. NHPC Ltd. (2020): In the context of international arbitration, the Supreme Court held that an express designation of “venue” without mentioning a seat ordinarily identifies the juridical seat. The Patna Court noted its distinction: the case before it is purely domestic.
Ms. Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar (2022): The Supreme Court clarified that “seat” and “venue” are distinct, and venue alone does not establish the seat; other clauses and party conduct must corroborate the intention. The Patna Court found no such contrary indicia here.
Brahmani River Pellets Ltd. v. Kamachi Industries Ltd. (2020): Held that when a contract specifies a forum for dispute resolution, that forum’s court has exclusive jurisdiction, excluding all others. The Patna Court applied this principle to treat the specified venue as exclusive.
Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd. (2017): Confirmed that a designated seat constitutes an exclusive jurisdiction clause. The Patna Court extended this principle to a designated venue in a domestic arbitration clause.

Legal Reasoning

The Court’s reasoning unfolds in several key steps:

Nature of the Clause: Clause 36.3 specifies only the venue (“New Delhi”) without naming a seat or alternative forums.
Domestic vs. International Context: Unlike BGS SGS (an international arbitration), the present dispute is entirely domestic; hence, the default presumption is that venue = seat.
Exclusion of All Other Courts: Drawing on Brahmani River Pellets, the Court held that specifying a venue for arbitration inherently excludes other fora, regardless of absence of words like “exclusive” or “only.”
Absence of Contrary Indicia: No other clause or party conduct pointed to a different seat; the respondent’s head office in Gurgaon and the petitioner’s in Aurangabad did not override the agreed venue.
Jurisdictional Consequence: With New Delhi as the exclusive seat, only the Delhi High Court can entertain Section 11(6) applications, not Patna High Court.

Impact

This decision has immediate and broader ramifications:

Drafting of Arbitration Clauses: Parties in domestic contracts must be precise in differentiating between “seat” and “venue,” or expressly provide alternative seats to preserve flexibility.
Forum Selection Certainty: The ruling reinforces that a single venue clause in a domestic arbitration agreement forecloses forum shopping by either party.
Future Disputes: Lower courts will likely follow this approach, treating unqualified venue clauses as exclusive seats, unless parties can show clear contrary intention.

Complex Concepts Simplified

Seat vs. Venue: The “seat” is the legal home of the arbitration, determining the supervisory court; the “venue” is the physical location of hearings. In domestic arbitrations, specifying only a venue typically fixes the legal seat as well.
Section 11(6), Arbitration Act: Empowers a court at the seat of arbitration to appoint an arbitrator if parties cannot agree.
Exclusive Jurisdiction Clause: A contract provision that confines disputes to a designated forum, excluding all others.

Conclusion

The Patna High Court’s decision in M/s Pramila Motors Pvt. Ltd. v. M/s Okinawa Autotech International Pvt. Ltd. cements the principle that, in domestic arbitration agreements, the designation of a “venue” without alternative forums or contrary terms operates as the exclusive “seat” and confers sole jurisdiction on the courts of that venue. This outcome underscores the importance of careful clause drafting and provides clear guidance to practitioners on the interplay between venue, seat and jurisdiction under the Arbitration and Conciliation Act, 1996.