Section 20
Place of Arbitration —
(1) The parties are free to agree on the place of arbitration.
(2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined
by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.
(3) Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal may, unless otherwise
agreed by the parties, meet at anyplace it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.
The determination of the place of arbitration is a crucial aspect of arbitral proceedings, as it directly influences the procedural law governing the arbitration and the jurisdiction of courts.
- Section 20(1) emphasizes the principle of party autonomy, which is fundamental to arbitration. The parties have the liberty to decide mutually the location where arbitration proceedings shall be conducted. This choice can be influenced by factors such as neutrality, accessibility, and legal considerations.
- In the absence of an agreement between the parties, Section 20(2) empowers the arbitral tribunal to decide the place of arbitration, considering the circumstances of the case. The tribunal must ensure that the chosen venue does not create unnecessary hardship for either party and is conducive to fair proceedings.
- Section 20(3) provides flexibility by allowing the tribunal to convene at different locations for specific purposes such as hearings, document inspections, and witness testimonies. This does not alter the designated place of arbitration but facilitates smoother proceedings.
In Raj Kumar Brothers v. Life Essential Personal Care Private Ltd., 2019 SCC OnLine Del 10803, the Hon’ble Court observed:
“The provisions of Section 20 of the Arbitration and Conciliation Act, 1996, inasmuch as sub-section 1 of Section 20 recognizes the freedom of the parties to fix the juridical place/seat of their choice. Sub-section 2 of the same section confers the power on the arbitral tribunal where the parties have failed to arrive at an agreement in that regard to fix a juridical place for the conduct of the proceedings. The Sub-section 3 of Section 20 give a discretion to the arbitral tribunal to meet at a place other than the jurisdictional place/seat of arbitration for variety of reasons such as recording of evidence, inspection of documents, goods or other property being at that place etc.”
A critical debate in arbitration law revolves around the difference between the “place” and “seat” of arbitration. While the term “place” in Section 20 is often interpreted as “seat”, certain judgments have clarified that procedural aspects of arbitration are governed by the seat rather than the physical location where hearings occur.
The Hon’ble Delhi High Court, in the case of Raj Kumar Brothers (supra), while relying on the judgments in BALCO (2012) 9 SCC 552 and Reliance Industries v. Union of India (2014) 7 SCC 603, observed:
“From the above, it is clear that in Sections 20(1) and 20(2) the word “place” is used to refer to juridical seat whereas in Section 20(3), the word “place” is equivalent to “venue” . The case in hand, wherein the parties have agreed to Gurugram to be the “venue”, it is a case which falls under Section 20(1) [not under Section 20 (2) or Section 20(3)] of the Arbitration and Conciliation Act and the word “venue” must read to mean “place” i.e. juridical seat.”
Conclusion
Section 20 of the Arbitration and Conciliation Act, 1996, plays a pivotal role in arbitration proceedings by enabling parties to choose a convenient place for dispute resolution. When parties fail to agree, the arbitral tribunal steps in to determine an appropriate location. Judicial pronouncements have further clarified the distinction between “place” and “seat” and reinforced the significance of party autonomy. Understanding Section 20 is crucial for parties involved in arbitration to ensure clarity on jurisdictional aspects and procedural applicability.
Disclaimer: This blog is for informational purposes only and does not constitute any legal advice. Readers should seek expert legal counsel before taking any action based on the content.