(Re) Emphasising the Importance of the Seat of Arbitration

International arbitration practitioners are acutely aware of the importance of the seat of arbitration and its impact on the conduct of arbitration proceedings and any subsequent court applications to set aside and enforce.

In A v B [2007] 1 Lloyd’s Rep 237, the English court observed that an agreement as to the seat of the arbitration was analogous to an exclusive jurisdiction clause. The court stated that “[a]ny claim for a remedy going to the existence or scope of the arbitrator’s jurisdiction or as to the validity of an existing interim or final award is agreed to be made only in the courts of the place designated as the seat of the arbitration” [255-256). In that case, it was held that it would be a breach of the arbitration agreement seating the arbitration in Switzerland for either party to invite the courts of any other jurisdiction to resolve an issue relating to the validity of the agreement.

Gary Born, in “International Commercial Arbitration” (2nd Ed, 2014) states that under Article 1(2) of the Model Law, virtually all aspects of an international arbitration’s “external” relationship with national courts are determined by where the “place” or “seat” of arbitration is located. Among other things, the law of the arbitral seat applies to provisions regarding judicial power to appoint and remove arbitrators (Articles 11-13), to consider jurisdictional issues (Article 16), to assist in evidence-taking (Article 27) and to annul arbitral awards (Article 34). These various judicial powers may be exercised by – and only by – the courts in the arbitral seat: in particular, only the courts in the seat of the arbitration may remove an arbitrator or annul an award made in the arbitration. Born goes on to state that the same conclusion applies, also by virtue of Article 1(2) of the Model Law, to “internal” procedural issues including the applicability of basic guarantees regarding party autonomy and due process. Thus, Articles 18 and 19 of the Model Law provide mandatory requirements regarding the equal treatment of the parties and the recognition of the parties’ procedural autonomy from which the parties may not deviate – in each case applicable only to arbitrations seated locally and not to foreign arbitrations.

Last month, we posted an article on the Singapore Court of Appeal’s 18th November 2019 decision in Sanum Investments Limited v ST Group Co Ltd & Ors [2019] SGCA 65, where the CA also emphasised the importance of the seat of arbitration, concluding that once an arbitration was wrongly seated (and absent any waiver), any award that ensues should not be recognised and enforced by other jurisdictions because such award had not been obtained in accordance with the parties’ arbitration agreement. (See our earlier post here).

Two important passages from the judgment [96]:

“The choice of an arbitral seat is one of the most important matters for parties to consider when negotiating an arbitration agreement because the choice of seat carries with it the national law under whose auspices the arbitration shall be conducted. Arbitration is built on autonomy and free choice. Thus, as it must, the Model Law recognises the autonomy of the parties in relation to the seat. It provides specifically by Art 20(1) that parties are “free to agree on the place of arbitration”. Additionally, Art 31(3) provides that the award is to state “its date and the place of arbitration as determined in accordance with Article 20(1)” which means the Award must state what the seat was. While the parties can, of course, whether deliberately or neglectfully, omit to specify a seat such a course has been described as unwise…”

And [98]:

“In addition to the external relationship with national courts, the law of the seat is also vital in governing significant issues relating to the conduct of an international arbitration and the validity and finality of the award resulting from the proceedings. The choice of the seat in and of itself represents a choice of forum for remedies. In PT Garuda Indonesia v Birgen Air [2002] 1 SLR(R) 401, this Court recognised that a Singapore court only has the power to set aside an arbitration award if that arbitration was seated in Singapore. As a collorary, in Hilton International Manage (Maldives) Pvt Ltd v Sun Travels & Tours Pvt Ltd [2018] SGHC 56, Belinda Ang Saw Ean J held that an agreement to arbitrate gives rise to a negative obligation not to set aside or otherwise actively attack an arbitral award in jurisdictions other than the seat of the arbitration.”

In light of the above, it seemed timely to post an article titled “Lex Arbitri, Procedural Law and the Seat of Arbitration”, written by Alastair Henderson of Herbert Smith Freehills in 2014 and originally published in the Singapore Academy of Law Journal. The article provides a comprehensive review of the meaning, scope and sources of procedural law and lex arbitri; the rights of parties to opt out and create their own procedural framework, and the limits on that freedom; and the process for determining the seat of arbitration as the primary source of the lex arbitri in the absence of agreement by the parties.

About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Hong Kong Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

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