Roger Shashoua & Ors. v. Mukesh Sharma & Ors.
Background
The dispute arose from an arbitration agreement where proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 (challenging an arbitral award) were filed in both Gautam Budh Nagar (U.P.) and before the Delhi High Court, raising the question of whether Indian courts had jurisdiction at all. English courts had earlier interpreted the parties' arbitration clause as fixing London as the "seat" of arbitration (as opposed to merely a hearing "venue"), and that interpretation had already gained acceptance in related proceedings before the Supreme Court. The High Court of Delhi nonetheless held that Indian courts had jurisdiction and that the Section 34 petition should proceed before it.
Decision Breakdown
The Supreme Court held that because the arbitration agreement, as interpreted by the English courts and earlier accepted by this Court, fixed London as the seat (not merely the venue) of arbitration, Indian courts had no supervisory jurisdiction over the arbitration at all. The Court traced the legislative history distinguishing the old Foreign Awards Act's "concurrent jurisdiction" doctrine from the 1996 Act's clear separation of the law governing the underlying contract from the law governing the arbitration itself, and found no reason to depart from that settled position. It set aside the Delhi High Court's judgment and allowed the appeals, with no order as to costs.
Lesson Learnt
When an arbitration agreement designates a foreign "seat" of arbitration, Indian courts generally lose jurisdiction to entertain challenges to the award, regardless of where the underlying contract was performed, so parties must pay close attention to how a "seat" clause (as distinct from a mere "venue" clause) is worded when signing an arbitration agreement.