Seat of Arbitration
For those who aren’t familiar with international arbitration, the concept of the seat of arbitration is complicated and even unintuitive, yet it is indispensable.
The choice of the seat of arbitration can influence the arbitration proceedings in different ways. Some examples include:
- The New York Convention – an arbitration award made in a contracting state of the New York Convention is enforceable in other contracting states. Currently, the Convention has 160 contracting states. Needless to say, it will be foolish to choose a seat which is not a contracting state of the Convention.
- Parties are afforded a high degree of autonomy in international arbitration – they can choose the language, arbitrators, the procedural law, they can even limit the scope of appeal to an award. However, such autonomy is not absolute. It is bound by the mandatory law of the arbitral seat.
- Courts of the seat of arbitration can aide or intervene in arbitration proceedings. It can assist in formation of the arbitration tribunal, forcing document production, restraining another party from commencing court proceedings in another jurisdiction.
- Courts of the seat of arbitration is exclusively competent to set aside the award. Once an award has been annulled by the courts of the seat, its enforcement in other jurisdictions would become difficult. Some jurisdictions may not be willing to enforce awards which have been annulled and some may be differential to the findings of the courts of the seat.
It goes without saying that the evaluation of the choice of the seat in an arbitration clause should be taken vigorously. A jurisdiction with well drafted arbitration legislation is far from enough to guarantee its status as a preferred seat. The availability of legal expertise in the jurisdiction and of the court is equally important as the arbitration legislation.
Generally, the courts of more sophisticated seats are less inclined to intervene in arbitration proceedings. Currently, some of the most popular seats include Geneva, Hong Kong, London, New York, Paris and Singapore.
A note of caution – it is recommended the seat of arbitration should always be clearly specified in the arbitration clause. The major arbitration institutions such as the International Chamber of Commerce (ICC), the London International Court of Arbitration (LCIA) have sample arbitration clauses available on their websites. If a contract consists of more than one documents, special care should be taken to ensure that proper and consistent references of the arbitration clause (and also the governing law for the underlying contract) are made in each document. Inconsistent references of the seat of arbitration are invitation to unnecessary legal hiccup!