How to Choose a Place of Arbitration

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One of the most important choices in international arbitration is deciding in which country to have the arbitral seat, often referred to as the place of arbitration.

The Parties should look for a robust legal framework, a good reputation and good services to ensure a smooth arbitration and to provide a reliable platform on which to enforce any final award.

Whilst factors such as proximity to a nice hotel, quick wifi and ample transport connections are undoubtedly important, choosing a place of arbitration has many significant legal consequences, too.

What is the place of arbitration?

The place of arbitration is what determines which country’s procedural laws shall apply. It is not to be confused with the venue chosen, which is called the place of hearing. It’s worth noting that the venue itself does not have any profound legal significance.

Confusingly, the place of arbitration and the governing law of the arbitral proceedings can be different. For example, an arbitration could take place in Hong Kong, be administered by the LCIA, but be governed by Canadian law.

Why is the place of arbitration so important?

The place, or seat, of arbitration defines the procedural law of the arbitration. This deals with procedural issues, such as how hearings must be conducted, whether an arbitration must be kept confidential and whether appeals are permitted. For example, if the place of arbitration is in London, an appeal, if allowed, would be made to a London court.

The governing law is what the arbitrator applies to determine the arbitral award. Governing law is particularly key in international disputes, where parties are likely to be multi-national, with different interests and governing laws. This can have wide-ranging legal consequences and so it is extremely important to identify governing laws with precision.

Deciding on the place of arbitration

There are many factors to consider when choosing a place of arbitration. According to the International Arbitration Survey by QMUL in 2015, the top five reasons for choosing a particular arbitral seat were:

  • The reputation and recognition of the seat
  • The law governing the substance of the dispute
  • The particularities of the contract/type of dispute (likely to arise)
  • A personal connection with the seat
  • Corporate policy, standard terms and conditions

The most popular institutions chosen to administer an arbitration were:

  • International Court of Arbitration of the International Chamber of Commerce (ICC)
  • London Court of International Arbitration (LCIA)
  • Hong Kong International Arbitration Centre (HKIAC)
  • Singapore International Arbitration Centre (SIAC)
  • Arbitration Institute of the Stockholm Chamber of Commerce (SCC)

The most popular seats of arbitration were:

  • London
  • Paris
  • Hong Kong
  • Singapore
  • Geneva

How to avoid problems when deciding on the place of arbitration

To avoid any problems with enforcing the arbitral award, parties should decide on both the place of arbitration and the governing law in their commercial agreement/arbitration clause or arbitration agreement.

As the venue is often referred to as the place of hearing, these terms can be lost or confused in translation, for example with a case of Nigerian law in 2019.

As such, parties should make sure that their choice is informed by appropriate legal advice, and have their agreement written and translated by appropriate legal counsel.

With a wealth of experience in international arbitration, as well as in-house barristers and senior solicitors, our team can remove the anxiety caused by arbitral proceedings. Get in touch with Carlsons Solicitors for expert, trusted advice.

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