HC reiterates once an arbitration clause is accepted, the seat specified therein would be binding on the parties [Read Judgment]

A single judge bench of the Madras High Court comprising of Justice Senthil Kumar Ramamoorthy allowed a petition while withholding that once an arbitration clause with a specified seat is accepted by the parties, it would be binding on them.

Facts:

The petitioner and the respondent entered into an agreement with an arbitration clause which was duly communicated in the tax invoices issued by the petitioner to the respondents. The relevant arbitration clause said, “All disputes shall be subject to Arbitration, there shall be sole arbitrator nominated by FGIPL. The seat of Arbitration at Chennai.” The petitioner also issued a notice under Section 21 of the Arbitration and Conciliation Act 1996 (the Arbitration Act) on 17.01.2022 in respect of the dispute relating to the non-payment of a total outstanding of Rs.19,70,828.50, pursuant to the agreement. The said notice was replied to by the respondents' counsel on 31.01.2022. In particular, learned counsel points out that the respondents admitted that the contract between the parties contains an arbitration clause. Although the respondents asserted that they do not accept jurisdiction in Chennai after the acceptance of the arbitration clause.

Observations of the Court:

After a bare perusal of the documents presented to the court, the bench held that it was evident that there existed an arbitration clause and that the existence of such an arbitration clause was expressly admitted by the respondents. The relevant arbitration clause specifies the seat of arbitration in Chennai. Once the arbitration clause is accepted, the seat specified therein would be binding on the respondents.

Decision: Accordingly, the Arb. O.P. (Com. Div.) No. 350 of 2022 was allowed and the seat of arbitration was ordered to be setup in Chennai.

Case: Fuso Glass India Pvt. Ltd. vs. Newtech International Projects and ors.

Coram: Justice Senthil Kumar Ramamoorthy

Citation: Arb.O.P.(Comm.Div.) No.350 of 2022

Decided on: 14.09.2022

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