The Delhi High Court recently addressed the interplay between arbitration clauses and exclusive jurisdiction clauses in contracts, particularly in the case of Precitech Enclosures Systems Pvt Ltd v. Rudrapur Precision Industries & Anr. In this matter, the court held that when an agreement contains an exclusive jurisdiction clause that explicitly covers arbitration proceedings, this clause takes precedence over the designated seat of arbitration.

Case Background: Precitech and Rudrapur entered into a Rent Agreement in 2017, which included Clause 20, stating that courts in Rudrapur, Uttarakhand, would have exclusive jurisdiction over disputes, including applications under the Arbitration and Conciliation Act, 1996.

Dispute: After disputes arose, Precitech filed a petition under Section 9 of the Arbitration Act in the Delhi High Court, seeking interim relief. They argued that since the arbitration was to be conducted in Delhi, the Delhi High Court had jurisdiction.

Court’s Decision: Justice C. Hari Shankar ruled that the exclusive jurisdiction clause in the Rent Agreement, which specifically covered arbitration proceedings, overrides the seat of arbitration. Therefore, the courts in Rudrapur have exclusive jurisdiction over the matter.

This decision underscores the importance of the specific language used in jurisdiction clauses within contracts. When an exclusive jurisdiction clause explicitly includes arbitration proceedings, it can override the general principle that the court at the seat of arbitration has supervisory jurisdiction.

Parties drafting contracts should be meticulous in defining jurisdiction clauses, ensuring clarity on which courts will have authority over disputes, including those related to arbitration.

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