Drafting ambiguous Arbitration Seat Venue Clauses that lead to Litigation is Professional Misconduct, says SC

Recently, the Supreme Court criticised the drafting of “confusing” arbitration clauses that spark avoidable litigation and clog already burdened Courts. While declining to interfere with the appointment of an arbitrator in a dispute between business entities, the Court warned that such drafting practices verge on professional misconduct and undermine the objective of speedy dispute resolution.

The dispute arose from an agreement containing two seemingly conflicting clauses, one providing that arbitration would be held in New Delhi, and another granting exclusive jurisdiction to courts at Jajpur. The Delhi High Court treated New Delhi as the arbitral seat based on the venue clause and appointed Senior Advocate V. Mohana as sole arbitrator under the aegis of the Delhi International Arbitration Centre.

Himadri Speciality Chemicals Limited challenged the order before the Apex Court, arguing that divergent High Court rulings on the interplay between jurisdiction and venue clauses required authoritative clarification, particularly since identifying the “seat” determines which court hears future challenges under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996.

The bench led by Chief Justice Surya Kant, with Justice Joymalya Bagchi and Justice Vipul Pancholi, expressed strong disapproval of drafting practices that create artificial disputes. Calling such provisions “luxury clauses,” the Chief Justice observed, “Creating, generating litigation is part of a serious professional misconduct on the part of the law professionals.”

The Court questioned how firms could fail to clearly distinguish between “seat” and “venue,” remarking that a single, well-drafted line could have avoided the entire controversy. Stressing that domestic arbitration must be expedited rather than derailed by technical objections, the Court dismissed the plea and allowed the arbitral process to proceed.

Case Title: Himadri Speciality Chemicals Limited, Vs. Jindal Coke Limite,

Case No.: Special Leave to Appeal (C) No(s).6470/2026

Coram: Hon'ble Chief Justice Suryakant, Hon'ble. Justice Joymalya Bagchi, Hon'ble. Justice Vipul M. Pancholi,

Advocate for the Petitioner: Sr. Adv. Jayant K Mehta, AOR. Astha Sharma, Adv. Anju Thomas, Adv. Himanshu Chakravarty, Adv. Mansvini Jain,

Advocate for the Respondent: None.

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