THE PLACE TO BE: FINDING THE RIGHT SEAT OF ARBITRATION
Arbitration provides numerous well-known advantages with regard to the resolution of disputes arising in the context of international transactions between commercial entities. In this article we illustrate the importance of a specific procedural detail that may seem inconspicuous at first glance but in fact determines some of the most essential features of individual international commercial arbitration proceedings: the seat of the arbitration. The seat sets out the ‘nationality’ of arbitration proceedings – and consequently the nationality of the arbitral award.
While international commercial arbitration is to a large extent governed by the principle of party autonomy, arbitration proceedings are necessarily embedded in a framework of national procedural laws. The seat of the arbitration constitutes the intersection between the largely autonomous arbitration proceedings and the national legal framework.
It is important to note that the parties are free to choose the seat of the arbitration. No connection between the nationality of the parties or the subject matter of the business relationship and the seat is required. Choosing the seat of an arbitration means choosing its procedural frame. Clearly, parties should aim to find the frame that best fits their potential disputes. Given its significant legal implications, the parties should agree on a seat in the written arbitration agreement.
Jul-Sep 2018 issue