The Seat of Arbitration: What does that mean?
Choosing the Seat of Arbitration to resolve your disputes, internationally and domestically, is essential. A few things that people may not know is that the seat does need to be the same as what is stated in the contract or based in the same places as the chosen arbitral institution. It also does not refer to where hearings will take place.
However, picking the wrong seat can bring severe consequences; such as delay in the arbitration, risk of parallel court proceedings, as well as allowing the award to be challenged by local courts.
With that in mind, read more to find out what is arbitration first and narrow it down to the seat of arbitration.
What is Arbitration?
A disagreement is referred to as arbitration using a procedure that has been agreed upon by the parties. Hence, they make a binding decision on the issue. After that, instead of going to court, the parties will select a private conflict resolution organization to assist them.
There are a few things that need to be considered during arbitration processes:
This procedure can only be taken place when all parties have agreed. If there is any case of dispute in the future under a contract, then the parties insert an attribution clause in the necessary contract. This is different compared to mediation where a party cannot back out from the arbitration.
The parties choose their arbitrator
Parties can select their arbitrator together. For example, if the parties choose to have a 3 member arbitral tribunal, each party is able to appoint one of the arbitrators. Then, those two people agree to be the arbitrator. Another option is the Center can recommend arbitrators with potential.
Apart from the neutrals of appropriate nationality, parties can choose important elements that are applicable to the law, language, and venue of the arbitration. Therefore, this ensures that no party has an advantage.
What is the Seat of Arbitration?
The Seat of Arbitration is a location that is selected by the parties as the legal place of arbitration. Hence, this decides the procedural framework of the arbitration.
Location of the Seat of Arbitration
International arbitration takes place in a location that is considered neutral by the parties. Hence, the location of arbitration can be Kuala Lumpur while the seat can be in Singapore. Furthermore, it is important to distinguish the seat of arbitration from the place of hearing – one can be a purely legal notion and the other is an operational choice.
Choice of the Seat of Arbitration
Other than the legal aspects of the seat, other aspects should be considered as well. This includes the role and attitude of the local courts when they are supervising and assisting, the geographical location of the subject matter, convenience of transportation, and suitable facilities.