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The Seat of Arbitration: What It Is and How to Choose It
Choosing a seat for arbitration is one of the most important decisions parties can make when drafting an arbitration clause or agreeing to arbitrate a dispute. The seat of arbitration, also known as the legal place or the lex arbitri, is not the same as the physical location of the arbitration hearings, which can be held in any convenient place. The seat of arbitration determines the legal framework and the supervisory courts that apply to the arbitration proceedings and the arbitral award.
Why does the seat matter?
The choice of seat has significant legal and practical implications for the parties and the arbitrators. Some of the main consequences are:
- The seat determines the procedural law governing the arbitration, which may affect issues such as the constitution of the arbitral tribunal, the conduct of the proceedings, the confidentiality of the arbitration, and the availability of interim measures. For example, some jurisdictions allow parties to choose their arbitrators, while others require them to follow certain rules or criteria. Some jurisdictions also have specific rules on evidence, disclosure, or witness examination that may differ from other legal systems.
- The seat also determines which mandatory rules apply to the arbitration, which cannot be waived by the parties or the arbitrators. These rules may vary depending on the jurisdiction and may include requirements such as impartiality and independence of arbitrators, due process and equal treatment of parties, and public policy considerations. For example, some jurisdictions prohibit arbitrations involving certain subject matters, such as criminal matters or consumer disputes. Some jurisdictions also have mandatory provisions on arbitrator liability, challenge or removal of arbitrators, or grounds for setting aside awards.
- The seat confers jurisdiction on the courts of the seat to exercise a supervisory role over the arbitration, which may include supporting or interfering with the arbitration process, granting or denying interim relief, and reviewing or setting aside the arbitral award. For example, some courts may have a more interventionist or pro-arbitration approach than others. Some courts may also have exclusive or concurrent jurisdiction over certain matters related to arbitration, such as jurisdictional challenges, anti-suit injunctions, or enforcement of awards.
- The seat also affects the enforceability of the arbitral award, as it may influence whether the award is considered domestic or foreign and whether it falls within the scope of international conventions such as the New York Convention. For example, some jurisdictions may require additional formalities or conditions for an award to be recognized or enforced, such as legalisation or translation. Some jurisdictions may also apply different standards or criteria for refusing recognition or enforcement of awards, such as public policy or sovereignty.
How to choose a seat?
There is no definitive answer to how parties should choose a seat for arbitration, as it depends on various factors such as the nature of the dispute, the preferences of the parties, and the characteristics of different jurisdictions. However, some general criteria that parties may consider are:
- The neutrality of the seat, which means that it should not favour one party over another or create any bias or disadvantage for any party. For example, parties may prefer to avoid choosing a seat that is located in one party's home country or has close ties with one party's interests. Parties may also prefer to choose a seat that has a stable and impartial legal system and judiciary.
- The arbitration-friendliness of the seat, which means that it should have a modern and supportive legal framework for arbitration, a judiciary that respects party autonomy and upholds arbitral awards, and a reputation for efficiency and reliability in arbitration matters. For example, parties may prefer to choose a seat that has adopted international standards or best practices for arbitration, such as the UNCITRAL Model Law on International Commercial Arbitration or the IBA Rules on Taking Evidence in International Arbitration. Parties may also prefer to choose a seat that has established and reputable arbitration institutions or centres that can administer arbitrations efficiently and effectively.
- The convenience of the seat, which means that it should be easily accessible and have adequate infrastructure and facilities for conducting arbitration hearings, such as the availability of venues, interpreters, experts, etc. For example, parties may prefer to choose a seat that is located in a major city or hub that has good transportation and communication links. Parties may also prefer to choose a seat that has a favourable time zone or climate for holding hearings.
- The cost of the seat, which means that it should not impose excessive fees or expenses for arbitration proceedings or court interventions. For example, parties may prefer to choose a seat that has reasonable fees for arbitrators, institutions, lawyers, experts, etc. Parties may also prefer to choose a seat that has low taxes or duties for arbitration-related transactions.
Examples of popular seats
Some of the most popular seats for arbitration in different regions of the world are:
- In Europe: London, Paris, Geneva, Stockholm, Vienna
- In Asia: Singapore, Hong Kong, India, Tokyo, Seoul
- In North America: New York, Washington D.C., Toronto
- In Middle East: Dubai, Abu Dhabi
- In Africa: Johannesburg, Cairo
These seats are generally regarded as having well-developed arbitration laws and institutions, supportive and independent courts, and high standards of quality and professionalism in arbitration practice.
Advantages and disadvantages of different seats
Each seat has its advantages and disadvantages that parties should weigh carefully before making a choice. Some of the pros and cons of some popular seats are:
- London: London is one of the leading seats for arbitration in the world, with a long history and tradition of arbitration. It has a sophisticated and flexible legal system that is based on common law and incorporates international standards for arbitration. It also has a highly respected and independent judiciary that adopts a pro-arbitration and non-interventionist approach. It has a wide range of arbitration institutions and centres, such as the London Court of International Arbitration (LCIA), the International Chamber of Commerce (ICC), and the Chartered Institute of Arbitrators (CIArb). It also has a large pool of qualified and experienced arbitrators, lawyers, experts, etc. However, London is also one of the most expensive seats for arbitration in the world, with high fees and costs for arbitration proceedings and court interventions. It also has a complex and lengthy procedure for challenging or enforcing arbitral awards, which may cause delays or uncertainties.
- Singapore: Singapore is one of the fastest-growing seats for arbitration in Asia and the world, with a modern and dynamic legal system that is based on common law and influenced by civil law. It has a supportive and innovative legal framework for arbitration that is based on the UNCITRAL Model Law and incorporates features such as emergency arbitration, expedited procedure, early dismissal of claims or defences, etc. It also has a competent and impartial judiciary that respects party autonomy and enforces arbitral awards. It has a prominent arbitration institution, the Singapore International Arbitration Centre (SIAC), which is known for its efficiency and quality in administering arbitrations. It also has a diverse and multicultural pool of arbitrators, lawyers, experts, etc. However, Singapore is also a relatively expensive seat for arbitration in Asia, with high fees and costs for arbitration proceedings and court interventions. It also has some limitations on the arbitrability of certain subject matters, such as intellectual property or insolvency.
- Dubai: Dubai is one of the emerging seats for arbitration in the Middle East, with a hybrid legal system that is based on civil law and influenced by Islamic law. It has a developing and evolving legal framework for arbitration that is based on the UNCITRAL Model Law and incorporates features such as joinder of parties, consolidation of arbitrations, tribunal-appointed experts, etc. It also has two distinct jurisdictions for arbitration: the mainland Dubai courts and the offshore Dubai International Financial Centre (DIFC) courts. The mainland Dubai courts are more conservative and interventionist in their approach to arbitration, while the DIFC courts are more liberal and pro-arbitration. It has two major arbitration institutions: the Dubai International Arbitration Centre (DIAC), which operates under the mainland Dubai courts; and the DIFC-LCIA Arbitration Centre (DIFC-LCIA), which operates under the DIFC courts. It also has a growing pool of arbitrators, lawyers, experts, etc. However, Dubai is also a relatively unstable seat for arbitration in the Middle East, with frequent changes and uncertainties in its legal system and judiciary. It also has some challenges enforcing arbitral awards within or outside its jurisdiction.
Conclusion
Choosing a seat for arbitration is a crucial decision that can significantly impact the outcome and enforceability of an arbitral award. Parties should carefully consider their options and consult with experienced arbitration practitioners before agreeing on a seat. A well-chosen seat can enhance the efficiency and effectiveness of arbitration as a dispute resolution mechanism.
- The seat of arbitration is the legal place of arbitration, which determines the legal framework and the supervisory courts that apply to the arbitration proceedings and the arbitral award.
- The choice of seat has significant legal and practical implications for the parties and the arbitrators, such as the procedural law, the mandatory rules, the courts of the seat, and the enforceability
- The parties should carefully consider various factors when choosing a seat for arbitration, such as the neutrality, the arbitration-friendliness, the convenience, and the cost of the seat.
