Arbitration – Bar of Section 42 – Territorial Jurisdiction
Arbitration – Bar of Section 42 – Territorial Jurisdiction
Agreement dated 19.5.2006 in clause 53 provided for arbitration dispute resolution and the “venue” at Delhi.
On 20.3.2007, Section 9 AA application was filed by the respondent in the Commercial Court, Gautam Buddh Nagar.
On 11.9.2007, the Delhi High Court appointed Sole Arbitrator on section 11 AA application of the petitioners. The respondent did not object to the same. The proceedings were held at Delhi and the Award passed.
However, the petitioners filed Section 34 AA application in the Commercial Court Gautam Buddh Nagar, challenging the award.
By the order dated 15.3.2022, the Commercial Court, Gautam Buddh Nagar, had returned section 34 application for filing before appropriate territorial Court.
HELD that when two entities embroiled in a commercial disagreement opt for arbitration as their chosen mode of resolution they may often find themselves at the cross roads of jurisdictional ambiguity. It is here that Section 42 of the Act assumes pivotal importance. The only exception to the bar of Section 42 is the application under Section 8 or Section 11. By availing itself of the jurisdiction of the District Court at Gautam Buddh Nagar, the respondent implicitly recognised the authority of that court to adjudicate matters arising out of arbitration agreement between the parties. This recognition coupled with the principle of estoppel precludes the respondent from subsequently disavowing the jurisdiction of the said Court to entertain subsequent applications under Part I of the AA.
By centralizing jurisdiction in a designate Court, Section 42 of the Act mitigates the risk of parallel proceedings thus expediting resolution of disputes and reducing legal costs.
Whether initiated before, during or after conclusion of arbitration, application under Part I of the AA are subject to the jurisdictional constrains of Section 42 of the AA.
Judgment dated 17.5.2024 in Matters under Article 227 No.2199 of 2023 of the Allahabad High Court (Neutral Citation – 2024 : AHC : 89177 Court No.1)
