15 December, 2015
What is the seat of an arbitration?
The "seat" of arbitration is the legal place where an arbitration is held. Although physical hearings will often take place at the seat, that is not necessarily the case. Rather, the seat of an arbitration is important in determining:
- the procedural law applicable to the arbitration;
- the national courts responsible for applying that procedural law; and
- the "nationality" of an award for the purposes of enforcement.
These are issues which can have important implications for parties before, during, and after an arbitration. For example, users of arbitration can be surprised to find that a favourable award does not mark the end of their legal battle. Often, a dissatisfied party will apply to the courts of the seat to set aside an award. Although grounds for setting aside an award typically will be limited, applications of this type can sometimes amount to attempted back-door appeals on the merits, or simply as means of frustrating a winning party through further delay. Arbitration works most effectively where the parties select a seat with a judiciary which resolves applications of this type promptly and with a view to limiting court intervention in the arbitral process.
What are the Principles?
The Principles have been described by the CIArb as listing out the characteristics "necessary for an effective, efficient and 'safe' seat for the conduct of International Arbitration". The Chief Justice of Singapore, Sundaresh Menon, in his Patron's Address at the CIArb's London Centenary Conference in July this year, commented that the Principles "serve as a blueprint for nascent arbitration jurisdictions and as a yardstick for the more established ones".2
In summary, the ten Principles for an "effective, efficient and safe seat" are:
- Law: A clear, effective and modern arbitration law that recognises and respects the parties' choice to arbitrate by providing a framework for facilitating fair and just resolution of disputes through the arbitration process.
- Judiciary: An independent judiciary experienced in international commercial arbitration and respectful of party autonomy.
- Legal expertise: A legal profession experienced in international commercial arbitration and international dispute resolution, offering choice to those seeking representation in arbitration and before the national courts.
- Education: A commitment to education of all key players and to the development of learning in the field.
- Right of representation: A clear right for parties to be represented in arbitration by party representatives of their choice whether from inside or outside the seat.
- Accessibility and safety: Easy accessibility, adequate safety and protection for parties, their documentation and information.
- Facilities: Functional facilities for the provision of all services required to run an effective and efficient arbitration.
- Ethics: Professional and other norms embracing a diversity of legal and cultural traditions and the developing norms of international ethical principles governing the behaviour of arbitrators and party representatives
- Immunity: A clear right to arbitrator immunity from civil liability for matters done, or omitted to be done, in good faith in capacity as arbitrator.
For the CIArb, the hope is that the Principles will assist the continued growth and effectiveness of arbitration as a means of dispute resolution, perhaps prompting states to amend laws, institutions to provide appropriate facilities, and so on.
For users of arbitration, the Principles are useful at several levels:
- First, they provide a reminder that the choice of seat is important in arbitration. We recommend that the choice of seat should be considered carefully at the time of contracting and that the choice should be stated expressly in the arbitration Notes agreement (although some institutional rules, such as the Rules of the Singapore International Arbitration Centre, contain default provisions).
- Second, and while different parties may see different factors as more or less important in the choice of seat (for example, some will see an independent judiciary as a more important factor than the availability of facilities for hearings), the Principles function as a "checklist" against which proposed seats can be measured. If a proposed seat does not have all or most of the characteristics identified in the Principles, parties should ask themselves whether that place is an appropriate choice.
- Finally, in a business environment in which commercial parties will often seek a perceived "home advantage" by pushing for arbitrations to be seated in their own jurisdictions, the Principles may assist parties instead to propose a neutral seat which has the characteristics identified by the CIArb.
1 A draft of the Principles were launched and debated during the London Centenary Conference in July 2015. The official CIArb "London Centenary Principles" are available here.
2 See here for the full address.
For further information, please contact:
Rob Palmer, Partner, Ashurst