Selecting An Arbitration Seat: The Art Of Being Specific

• Published date: 04 April 2024
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Law Firm: Azmi & Associates
• Author: Abu Daud Abd Rahim and Nik Amalia Suraya Nik Muhammad Saifuddin

Introduction

When parties opt for arbitration, the arbitration clause or agreement reflects their mutual consent to resolve disputes through arbitration. However, it is often overlooked that incorrectly drafting the arbitration clause can have significant implications, whether domestic or international.

Among the crucial factors to consider in drafting arbitration clauses are: what is the choice of law to govern the dispute? What is the country, state, or city of jurisdiction? Where is the seat of arbitration? What is the law of arbitration or lex arbitri to govern the arbitration proceeding?

These are important questions that come with important consequences. In this article, we will focus on one key element in drafting an arbitration clause: the selection of the seat of arbitration.

What is an arbitration seat?

An arbitration seat extends well beyond merely serving as the venue or geographical location of the arbitration, which many are often confused about. The seat of arbitration represents a location chosen by the parties as the legal locus or home of arbitration, thereby determining the procedural framework of the arbitration or lex arbitri that will be applicable whether it be international or domestic. Additionally, it also establishes which court possesses a 'curial role' or supervisory jurisdiction over the arbitration proceedings.¹

Significance of choosing a seat

Specifying the seat will have a very specific legal effect in either domestic or international arbitration. It will determine which country's procedural laws will apply to the arbitration proceeding. More importantly, the seat of the arbitration will be the place where the award is deemed to have been made.²

For example, an arbitration tribunal with its seat in London, specifically the London Court of International Arbitration, may be required to apply the law of Singapore or some other law as the case may be to the substantive issues between the parties. Nevertheless, its own arbitration proceedings will be governed by the London Court of International Arbitration Rules ("LCIA Rules").³

In essence, when parties select the seat of arbitration in a particular country, they ultimately adopt the legal framework of that country.⁴ If the law contains provisions that are mandatory, it must be obeyed and it is not a matter of choice.

Further, specifying a seat will also subsequently determine which court will have jurisdiction over the arbitration. Although courts of other jurisdictions have...