Case: A.V. Vijayakumar V. Sharekhan Limited O.P.No.216 of 2016
In this case, the critical issue lies in defining the territorial jurisdiction to decide the Application for setting aside an arbitral award made under Section 34 of the Arbitration and Conciliation Act, 1996 between an intermediary and a client within a national stock exchange framework.
1. SEBI released a Circular on August 22, 2011, which replaced the Client Broker Agreements with an account opening form incorporating a Know Your Client (KYC) form and additional documents gathering more information about the client about the trading account. Clause No.17, the jurisdiction clause, was introduced by the 2011 amendment to the National Stock Exchange bylaws following this circular.
2. Clause 17 of the NSE bylaws states that jurisdiction for Arbitration, Appellate Arbitration, and Applications to set aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, should be submitted to the competent court nearest to the address provided by the Client in the KYC form.
3. This was reiterated in the SEBI circular dated 5th July 2013.
It was held that NSE bylaws may have a statutory flavour, but it may not be necessary to go into them. The parties’ autonomy kicks in when there is an arbitration agreement. Considering that the parties have knowingly and consciously agreed that the Courts of Mumbai will have jurisdiction, it is unnecessary to go into the bylaws, which only operate absent a specific agreement to the contrary.
Done By: Sowmiya R.K , B.A.,LL.B(Hons), LLM (Business Law), Junior Legal Consultant
For Origin Law Labs
