Unpacking the concept of the seat of arbitration
THE concept of the “seat of arbitration” is of fundamental importance in international commercial arbitration. The “seat” of international arbitral proceedings is their juridical abode or legal domicile. Parties usually choose the seat in their arbitration agreement, however, it can also be selected on behalf of the parties by the arbitral tribunal or arbitral institution. Article 20 (1) of the UNCITRAL Model Law (“the Model Law”), which is the law applicable in Zimbabwe, states that the parties are free to elect an arbitral seat failing which the seat shall be determined by the tribunal.
It is imperative to understand that the notion of the seat of arbitration is a choice-of-law concept or legal construct, not a geographic or physical location. The English Arbitration Act of 1996, provides that the seat of arbitration means “juridical seat of the arbitration”. In the words of R. Merkin (1991), “the juridical seat of the arbitration’ means the state or territory where, for legal purposes, ‘the arbitration’ is to be regarded as situated.” Thus in one international arbitration in which the author acted as counsel, the arbitral seat was at Lusaka in Zambia but the physical venue of the arbitration was in Cape Town, while the ICC’s International Court of Arbitration, being the arbitral institution, sat at Paris.
Almost all the authorities concur that the seat of arbitration is the jurisdiction selected by the parties (or on their behalf), as the juridical home or domicile for the arbitration, whose laws dictate an important and unique legal framework for all arbitrations seated within it. According to G. Petrochilos (2004) there exists a time-honoured view that there must be in place a lex arbitri (law of arbitration) that is, a unique law which globally regulates arbitral proceedings and by the standards of which the validity of the arbitration and the resultant award are evaluated.
Notwithstanding this, it is often said that a tribunal presiding over an international arbitration is different from a national court because it is bereft of any lex fori (law of the forum). As G. Petrochilos puts it, “an international arbitral tribunal does not, conceptually or practically, have the equivalent of a lex fori in the generally understood sense of the term.” This position was echoed by the US Supreme Court in
Mitsubishi Motor Corporation v. Soler Chrysler-Plymouth,
a 1985 case, where the Court observed that “the international arbitral tribunal owes no prior allegiance to the legal norms of particular states; hence it has no direct obligation to vindicate their statutory dictates.”
Be that as it may, in terms of the
New York Convention and the preponderance of modern national arbitration statutes, the arbitration law of the seat of arbitration provides a peremptory, essentially territorial legal framework for international arbitral proceedings which plays a role broadly comparable to that of a lex fori. That legal framework is of substantial importance to the international arbitration process.
The law which regulates the conduct of an international arbitration (the “lex arbitri”) is often misconstrued to be confined to procedural matters. In practice, the lex arbitri governs a host of issues including, but not limited to the appointment, removal and replacement of arbitrators, time-limits, interim relief, consolidation of arbitrations, representation before the arbitrator, the form and validity of the award, and the finality of the award, are amongst the matters which can fall within the purview of the lex arbitri.
The New York Convention has three connected provisions which accord recognition to the concept of the seat of arbitration. These are Articles II(1), V(1)(d) and V(1) (e). Articles V(1)(d) and V(1)(e) enumerate instances where the enforcement of an award will be refused for violation or inconsistency with the laws of the seat. None of these Articles specifically employ the term “seat of arbitration” or “arbitral seat” although Article V(1)(d) makes fleeting reference to the “place of the arbitration”. Notwithstanding this absence of any specific reference to the “arbitral seat”, it is important to note that both Articles V(1)(d) and V(1)(e) recognize the concept of a seat of arbitration and accord substantial importance to the law and courts of the seat.
The UNCITRAL Model Law, not to be outdone, accentuates the paramount role of the arbitral law and the supervisory functions of the courts of the seat of arbitration. The Model Law assumes a predominantly territorial attitude towards the legal framework for international arbitrations. It provides, in general terms, that the law of the seat (which the Model Law calls “the place of arbitration”) regulates a broad range of crucial issues arising in arbitral proceedings. In particular, Article 1(2) of the revised Model Law (as amended in 2006) provides that “the provisions of this Law, except Articles 8, 9, 17H, 17I, 17J, 35 and 36, apply only if the place of arbitration is in the territory of this State.”
Therefore, under the Model Law, almost all aspects of international arbitration proceedings’ external interaction with municipal courts are determined by where the seat of arbitration is situated. This applies, among other things, to provisions which deal with judicial power to appoint arbitrators, to remove arbitrators, to consider jurisdictional issues, to assist in evidence-taking and to annul arbitral awards.
In the final analysis, the seat has special legal significance because by choosing a particular seat, the parties elect the procedural law which will govern their arbitration. The seat of the arbitration is the place of the lex loci arbitri. The election of a seat amounts to submission to the laws of that seat and its courts to supervise the arbitration. However, the lex arbitri can be some other law other than the law of the seat. For instance parties seated in Qatar can actually choose the procedural law of England. The lex arbitri, therefore, is not necessarily the lex loci arbitri. It is safe to conclude that the lex arbitri is the totality of legal rules that will regulate the arbitral procedure.