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Author

Ms Milica Savić

Senior Associate - Karanovic & Partners

Editor

Ms Anastasiya Ugale

International Lawyer - Solo International Law Practice

Seat of Arbitration

I. Definition

1.

Seat of arbitration is a location selected by the parties as the legal place of arbitration, which consequently determines the procedural framework of the arbitration.

II. Location

2.

An international arbitration usually takes place in a country/location that is neutral to the parties. Although the seat is defined as a location, it is in fact a legal construct, with a limited geographical relevance. It is important to distinguish the seat of arbitration from the place of the hearing1: whereas the first one is a purely legal notion, with its own set of consequences (see below), the latter is an operational (and geographical) choice. Practically, the parties may choose one country and its arbitration laws as the procedural law of the arbitration, but hold hearings and all other remaining activities in a different country without ever setting foot in the country chosen as the seat.

III. Party Autonomy in Choice of Seat

3.

The parties are generally free to agree on the seat of arbitration.2 Under some rare arbitration rules, the choice of the parties is limited.3 Failing an agreement between the parties, the seat may be determined by the arbitral tribunal or the administering arbitral institution, in accordance with and subject to the arbitration rules chosen by the parties.4 ICSID Additional Facility Rules limit the choice of place of arbitration to the States parties to the New York Convention.5 Arbitrations under the ICSID Convention are self-contained.6 The choice of the seat of the arbitration is a matter of pure convenience and carries no legal consequences as in non-ICSID arbitrations7. However, the ICSID Arbitration Rules provide that the Tribunal shall meet at the seat of ICSID, Washington, D.C., failing agreement between the parties to the contrary.8

IV. Significance

4.

The procedural law of the arbitration (lex arbitri) is an outer framework of the arbitration proceedings. Lex arbitri deals with a range of issues, but there are opinions that it mostly provides a “gap-filling” mechanism, absent parties’ agreement or specific provisions in the applicable arbitration rules. Seeing that the choice of the seat may ultimately determine whether the award is enforceable or not, the importance of a proper choice of lex arbitri is imperative, as it deals with the following:

  • definition and form of an agreement to arbitrate;
  • arbitrability of dispute;
  • constitution of the arbitral tribunal and any grounds for challenge of that tribunal;
  • entitlement of the arbitral tribunal to rule on its own jurisdiction (Kompetenz-Kompetenz);
  • equality of treatment of the parties;
  • freedom to agree upon detailed rules of procedure;
  • interim measures of protection and court assistance;
  • hearings;
  • default proceedings;
  • form and validity of the arbitration award; and the finality of the award, including any right to challenge it in the courts of the place of arbitration.

V. Choice of the Seat of Arbitration

5.

Apart from the legal aspects of the choice of seat, certain practical aspects should be taken into consideration when choosing a seat of arbitration, such as: the role and attitude of the local courts in terms of supervision and assistance, implementation of the New York Convention to maximise enforceability, geographical location, ease of transport and suitable facilities.

6.

For example, many bilateral investment treaties (BITs) have a provision which indirectly determines the place of arbitration, by stating that it should be in a State that is a party to the New York Convention.9 Other BITs specifically provide that the place of arbitration shall be a specific place, such as Paris10, Stockholm11, The Hague12 etc.

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