BGS SGS Soma JV v. NHPC Ltd.
Supreme Court of India · 10 December 2019 · 3 judges
Designating a seat of arbitration works as an exclusive jurisdiction clause for the courts at the seat; an order returning a Section 34 petition is not appealable under Section 37; New Delhi was held to be the seat.
Facts
NHPC Ltd. awarded the petitioner a contract for works on the Subansri Lower Hydroelectric Project. Clause 67.3 provided for arbitration under the Arbitration Act, 1996 and stated that proceedings "shall be held at New Delhi/Faridabad, India". The tribunal sat at New Delhi and made its award there in 2016. NHPC filed a Section 34 petition at Faridabad, later transferred to the Special Commercial Court, Gurugram, which on the petitioner's application under Order VII Rule 10 CPC returned it for presentation at New Delhi. On NHPC's appeal under Section 37 read with Section 13 of the Commercial Courts Act, 2015, the Punjab and Haryana High Court held the appeal maintainable and held that New Delhi was only a venue, so Faridabad courts had jurisdiction because part of the cause of action arose there.
Questions before the Court
- Is an order returning a Section 34 petition for presentation to the proper court appealable under Section 37 of the Arbitration Act, 1996 read with Section 13 of the Commercial Courts Act, 2015?
- Once the seat of arbitration is designated, do the courts at the seat alone have jurisdiction, or do courts where part of the cause of action arose have concurrent jurisdiction?
- What tests decide whether a place named in an arbitration clause is the seat or only a venue, and is Union of India v. Hardy Exploration good law?
What the Court held
- Section 13(1) of the Commercial Courts Act gives no independent right of appeal; only orders listed in Section 37 are appealable. An order under Order VII Rule 10 CPC returning a Section 34 petition is not an order refusing to set aside an award under Section 34, so the appeals to the High Court were not maintainable.
- Read as a whole, BALCO holds that choosing a seat is akin to an exclusive jurisdiction clause; the concurrent jurisdiction statement in paragraph 96 conflicts with the rest of that judgment. The contrary view of the Delhi and Bombay High Courts, including Antrix v. Devas, was overruled.
- Where a place is named as the venue of the arbitration proceedings and no significant contrary indicia exist, that place is the seat. Words such as "shall be held" and the application of a supranational body of rules, or of the Arbitration Act in a national context, point to the seat.
- Hardy Exploration failed to apply the Shashoua principle approved in BALCO and is not good law.
- Since the proceedings were finally held and the awards signed at New Delhi, the parties chose New Delhi as the seat; New Delhi courts alone have jurisdiction and the Section 34 petition must be presented there.
Why it matters
The judgment settles that the designation of a seat confers exclusive jurisdiction on the courts at the seat, overruling contrary High Court decisions, and lays down tests for telling a seat from a venue. It declares the three judge decision in Hardy Exploration not good law as contrary to BALCO, and holds that Section 37 alone governs appeals in arbitration matters even after the Commercial Courts Act, 2015.
In the Court's words
Copied from the official judgment; each passage links to its page.
“Thus, the refusal to set aside an arbitral award must be under Section 34, i.e., after the grounds set out in Section 34 have been applied to the arbitral award in question, and after the Court has turned down such grounds.”
“whenever there is the designation of a place of arbitration in an arbitration clause as being the "venue" of the arbitration proceedings, the expression "arbitration proceedings" would make it clear that the "venue" is really the "seat" of the arbitral proceedings, as the aforesaid expression does not include just one or more individual or particular hearing, but the arbitration proceedings as a whole, including the making of an award at that place.”
“The decision in Hardy Exploration and Production (India) Inc. (supra) is therefore contrary to the Five Judge Bench in BALCO (supra), in that it failed to apply the Shashoua principle to the arbitration clause in question. The Hardy Exploration and Production (India) Inc. (supra) decision would lead to the result that a foreign award would not only be subject to challenge in the country in which it was made, but also subject to challenge under Section 34 of Part I of the Arbitration Act, 1996, which would lead to the chaos spoken of in paragraph 143 of BALCO (supra), with the concomitant risk of conflicting decisions,”
“However, the fact that in all the three appeals before us the proceedings were finally held at New Delhi, and the awards were signed in New Delhi, and not at Faridabad, would lead to the conclusion that both parties have chosen New Delhi as the "seat" of arbitration under Section 20(1) of the Arbitration Act, 1996. This being the case, both parties have, therefore, chosen that the Courts at New Delhi alone would have exclusive jurisdiction over the arbitral proceedings.”
Provisions interpreted
Related judgments
- Explains Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012)“If, therefore, the conflicting portion of the judgment of BALCO (supra) in paragraph 96 is kept aside for a moment, the very fact that parties have chosen a place to be the seat would necessarily carry with it the decision of both parties that the Courts at the seat would exclusively have jurisdiction over the entire arbitral process.” (page 59)
- Followed in Amazon.com NV Investment Holdings LLC v. Future Retail Ltd. (2021)
Case and bench
- Parties
- BGS SGS Soma JV v. NHPC Ltd.
- Case
- Civil Appeal No. 9307 of 2019 (arising out of SLP (Civil) No. 25618 of 2018)
- Decided
- 10 December 2019
- Bench
- R.F. Nariman, Aniruddha Bose, V. Ramasubramanian
- Opinions
- Unanimous. Judgment of the Court delivered by R.F. Nariman, J.
Questions on this case
From free Law Maker papers. Try each one before you open the answer.
Question 1 · Legal Current Affairs: July 2026
In A.K. Ghosh & Company v. Biman Bose (13 July 2026), the plaintiffs had appealed to the Commercial Appellate Division of the High Court against an order refusing them leave to file a belated written statement to a counter-claim. The Supreme Court held that the appeal was:
- A. maintainable only with the leave of the Commercial Appellate Division, which must be sought within sixty days of the order
- B. not maintainable, because the only remedy against such an order is a civil revision under Section 115 of the CPC
- C. maintainable under Section 13(1A) of the Commercial Courts Act, 2015, as every order closing a party's right to file a pleading is appealable
- D. not maintainable under Section 13(1A) of the Commercial Courts Act, 2015, as an order under Order VIII CPC is not listed in Order XLIII CPC
Show the answer
D. not maintainable under Section 13(1A) of the Commercial Courts Act, 2015, as an order under Order VIII CPC is not listed in Order XLIII CPC
Relying on Kandla Export Corporation and BGS SGS SOMA JV, the Court held that an appeal under Section 13(1A) lies only against orders enumerated in Order XLIII CPC or Section 37 of the Arbitration Act; an order under Order VIII CPC is not among them. A revision under Section 115 CPC lies only against subordinate courts, and Section 8 of the Commercial Courts Act bars revision against interlocutory orders of a Commercial Court.