I.
INTRODUCTION

 

During the negotiation of arbitration agreements, parties used
to unduly dismiss the issue of the seat
of arbitration and not pay much attention to consequences of choosing the seat
of arbitration. In recent years, as arbitration has continued its march forward,
the choice of the seat has become crucial
and has taken on significance with many ramifications. The clauses in an arbitration
agreement may vary significantly from
contract to contract, however, we see
that a clause on the seat of arbitration has become a regular part of
arbitration agreements nowadays.

In essence,
the legal jurisdiction of an arbitration is tied
to the “seat” of the arbitration. It is almost
universally acknowledged that, with regards to an international arbitration,
the seat of arbitration has an important
role to play1. In the words of one
leading commentator:

“A concept of central importance to the
international arbitral process is that of the arbitral seat.  The
location of the arbitral seat is fundamental to de?ning the legal framework for
international arbitral proceedings and can have profound legal and practical
consequences in an international arbitration2”

Similar statements can be found in most
accounts of the law of international arbitration3.

There are various international arbitration institutions
all over the world and their institutional
rules are becoming standardized and according to
modern international instruments, the arbitral proceedings shall be governed by
the will of the parties and by the law of the country in whose territory
arbitration takes place4.The
wordings of international conventions like 1923 Geneva protocol and the Newyork
convention has been influenced and derived from it. Article 2 of the 1923 Geneva Protocol states: ‘The arbitral
procedure, including the constitution of the arbitral tribunal, shall be
governed by the will of the parties and by the law of the country in whose
territory the arbitration takes place5.Therefore
the law applicable to each arbitration will be the law of the place or the country
where the arbitration takes place i.e ‘Lex Arbitri’.The basic framework for arbitration is properly called as Lex Arbitri,
which translates from Latin as the law of arbitration.6
Parties generally do not make a direct choice of the law which will be
applicable to their arbitration, instead, they make a choice with the regards
to the seat of the arbitral tribunal, this choice is generally dependent on the
various preferences of the parties and the applicable ‘Lex arbitri’ then stems
from this choice7.

The relationship between
the seat and the applicable law is vividly described by Redfern and hunter8

                            “To say that the parties have ‘chosen’ that
particular law to govern  the arbitration
is rather like saying that an English woman who takes her car to France has
‘chosen’ French traffic law, which will oblige her to drive on the right-hand
side of the road, to give priority to vehicles approaching from the right, and
generally to obey traffic laws to which she may not be accustomed. But it would
be an odd use of language to say that this notional motorist had opted for
‘French traffic law’; rather, she has chosen to go to France—and the
applicability of French law then follows automatically. It is not a matter of
choice”

The seat of arbitration directly influences a number of issues like arbitrability,
determination of the governing law, whether substantive or procedural and determination of the place for
the annulment proceedings of the arbitral award. The parties to an
international arbitration have the autonomy to choose the arbitral seat9
so the parties should bear in mind different options which are available to
them as by selecting a place as the seat of arbitration, that country’s mandatory national laws are also then
applicable to the arbitration and parties might be surprised by the
unfamiliarity of the applicable procedural law.

This article is divided into
three parts. The first part will briefly introduce the concept and significance
of the seat. The second part will set out the relevant considerations in
selecting a seat. Finally, the third part will illustrate the importance of
drafting the arbitration agreement clearly so that the selection of the seat
and curial law is clear to parties, tribunals and any court which has to
consider the issue

1  G Petrochilos, Procedural Law in International
Arbitration (OUP 2004) ch 2 and 3.

2 GB
Born, International Arbitration: Lawand Practice (Kluwer LawInternational 2012)
105.

3  See, for example, N Blackaby et al, Redfern
and Hunter on International Arbitration (5th edn, OUP 2009) para 3.51; Lord
Collins et al (eds), Dicey, Morris & Collins on the Con?ict of Laws (15th
ednn, Sweet & Maxwell 2012) para 16–036

4 Article
2 of the Protocol on Arbitration clauses (adopted 24 september 1923)

5 Article
2 of the 1923 Geneva protocol

6
Alastair Henderson Lex Arbitri, Procedural Law and the seat of Arbitration (
Singapore Academy law Journa 2014l) 887

7 Nigel
Blackaby et al, Redfern and Hunter on international Arbitration (Oxford
University press, 6th ED, 2014) at para 3.63

8 Nigel
Blackaby et al, Redfern and Hunter on international Arbitration (Oxford
University press, 6th ED, 2014) at para 3.63

9 UNCITRAL
Model Law, art 20.1; Arbitration Act 1996, section 3(a).