Arbitration is agreed upon and formed by agreement of the parties for a private resolution of disputes instead of filing at the court. The independence of parties to operate in furtherance of their legal necessities is a foundational requirement of any successful procedure of arbitration. It forms part and is embodied in any basic arbitration agreement. This independence provides the parties the sole authority to choose and determine either to adopt institutional arbitration or ad hoc arbitration, choose the place of arbitration, whether to appoint a sole arbitrator of more than one arbitrator, arbitration procedure, the extend of the authority of arbitrators, and the governing law. Of the above, the seat and venue of the arbitration play a decisive factor while passing and upholding the validity of an arbitral award. Seat of arbitration is a location selected by the parties as to the legal place of arbitration, which consequently determines the procedural framework of the arbitration. The parties are generally free to agree on the seat of arbitration.
The following content aims to contribute a gist of a recently decided matter in the Apex Court of India, revolving around the question of the validity of seat of arbitration chosen by mutual consent and the difference between a seat and a venue. Through this judgment, the hon’ble division bench of the hon’ble court has provided an impetus to the autonomous element of ‘consent’ applied during an arbitration procedure, that parties to an arbitration agreement own, in the matter of selection of the seat of arbitration.