Choosing the Seat: Calcutta High Court Clarifies Jurisdictional Rules in Arbitration

In a significant ruling concerning the territorial jurisdiction of courts in arbitration disputes, the Calcutta High Court has clarified how the "seat" of arbitration dictates where parties may file subsequent challenges. Justice Sabyasachi Bhattacharyya held that, despite prior filings in other jurisdictions, the court associated with the established seat of arbitration remains the sole competent authority under Section 42 of the Arbitration and Conciliation Act, 1996.

The Background: Where is the Seat?

The dispute emerged between Kessels Engineering Works Pvt. Ltd. (the petitioner) and Neo Metalicks Limited (the respondent). At the heart of the litigation was an arbitration clause specifying the seat as either "Delhi or Kolkata."

Before the present challenge under Sections 34 and 36 of the Act could proceed in Calcutta, a preliminary question arose: did the Calcutta High Court have the authority to hear the matter, given that an earlier application under Section 14 had been filed before the Delhi High Court?

Conflicting Legal Interpretations

The respondent argued against the maintainability of the applications in Calcutta, suggesting that once an application is filed in a court, Section 42 mandates that the same court retains jurisdiction over all subsequent matters. They contended that since the arbitration proceeded to termination, the "arbitral proceeding" had reached a terminus, thereby potentially bypassing the Section 42 restriction for enforcement applications under Section 36 .

Conversely, the petitioner relied on established Supreme Court precedents, arguing that the true seat of arbitration—determined by the parties' conduct and the location of proceedings—defines the court of competent jurisdiction.

Judicial Analysis: From Inchoate Possibilities to Frozen Reality

Justice Sabyasachi Bhattacharyya performed a deep dive into the nature of party autonomy. He observed that while the agreement allowed for "Delhi or Kolkata," the parties had already conducted multiple sittings in Kolkata, effectively "freezing" the choice of seat.

Drawing a creative parallel, the Court noted: > "The said proposition has some similarity to quantum mechanics, inasmuch as the choice of the parties remained inchoate and in the realm of mere possibilities till an option was exercised by the parties... However, once such option is exercised by choosing Kolkata to be the seat of arbitration, the inchoate possibilities became frozen into reality."

The Court distinguished the present case from Sundaram Finance Limited v. Abdul Samad , finding that the principle established in BGS SGS SOMA JV v. NHPC Limited —which prioritizes the chosen seat of arbitration—provided the more applicable rule of law.

Key Observations

The judgment clarifies that the "competent court" is defined by the seat of arbitration, not necessarily by the court where the first paper happened to be filed. Key reasons included:

• On the reach of Section 42 : "Even applications 'arising out of' arbitral proceedings have been covered within the umbrella provision of Section 42 , which is wider in connotation than the expression 'in respect of' used in the earlier part of the said Section."
• On Universal Application: "The principle laid in BGS SGS SOMA JV (supra) is the one which is required to be followed universally, both in respect of applications under Section 36 as well as Section 34 of the 1996 Act."
• On Jurisdiction: "The mere fact of the first application having been filed in a different Court would be immaterial for the simple reason that such Court would not be construed to be a competent Court of jurisdiction."

The Verdict and Its Impact

Ultimately, the Calcutta High Court affirmed its own jurisdiction, ruling that because the seat of arbitration was finalized as Kolkata through the parties' conduct, the Delhi proceedings did not bar the current applications.

This decision reinforces the primacy of the arbitral seat, providing a predictable framework for parties and preventing "forum shopping" at the early stages of a dispute. The court has directed the parties to proceed with arguments on the merits, setting the next hearing for January 9, 2026.