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3 Key Questions About an Arbitration Seat Answered

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When you run a business, you may find that yourself disputing with those you commercially engage with. For example, you may have a contract with another business to provide you with certain services, which they then fail to do. Before attempting to resolve this dispute through litigation, you should consider alternative dispute resolution (ADR) methods such as international commercial arbitration. To maximise the benefits of arbitration, you must clearly understand the details associated with the procedure, including what an arbitration seat is. This article will answer three important questions about the arbitration seat in commercial arbitral proceedings. 

What is the Commercial Arbitration Process?

Commercial arbitration is an alternative dispute resolution (ADR) method you can use to resolve a commercial dispute. It is different from court proceedings, being confidential. It begins with a request for arbitration from one party to the other, after which both parties appoint a sole arbitrator or a panel of arbitrators. These individuals are experts in the area of dispute and become the arbitration tribunal. The tribunal will lay out a procedural order for the arbitration, which is followed by the arbitration hearing. During the hearing, you and the other party may present evidence, which the tribunal will consider when it decides the commercial dispute. This decision is the arbitral award.

An arbitral award is binding on the parties to the commercial arbitration. However, it cannot be enforced. If you wish to enforce the award, you may be required to take the dispute to court. A party to the arbitration process can appeal an arbitral award, but the right to do so is limited. 

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What are Key Points to Know About an Arbitration Seat?

Although you may be primarily focused on having an arbitral award that meets all of your interests, it is also essential to properly understand the arbitration process. Without this clear awareness, you risk not being effectively prepared to present the best possible case you can. An important part of the arbitration process is the arbitration seat. Below, we answer three key points about the arbitration seat you may have. 

1. What is an Arbitral Seat?

Generally, the arbitral seat or the seat of arbitration is the city where the arbitration takes place. Both parties mutually agree on this location, and thus, it tends to be neutral to you and the other party. Crucially, the arbitral seat becomes the “juridical basis” for the arbitration, meaning the city’s laws apply. You should take this critical factor into account when choosing a location for your arbitration since many commercial laws are not universal.  

2. Why Choose London as the Arbitral Seat?

When selecting a seat for your arbitration proceedings, you may choose London, which is one of the most popular arbitral seats. London is a popular location for both UK and global businesses because its arbitration proceedings tend to be effective and efficient. For example, more than 80% of parties to a pending arbitration proceeding in the London Court of International Arbitration (LCIA) are not English. 

Choosing London as the seat of commercial arbitration is also advantageous from a technical standpoint. This is because, since Brexit, you can prevent proceedings about a breach of an arbitration agreement from taking place in other states. This occurs through granting anti-suit injunctions. 

3. Why Does the Arbitral Seat Matter?

The arbitral seat in commercial arbitration is particularly significant to the arbitration proceedings. It determines the arbitration regime that your commercial dispute will be part of and the laws you will be subject to. This can affect the arbitral process in terms of:

  • the arbitration procedure; 
  • how a national court can affect the arbitration;
  • any restrictions on who can be an arbitrator; and
  • the final arbitral award.
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Key Takeaways

Arbitration is an alternative dispute resolution (ADR) process where an arbitrator listens to the evidence and makes a decision known as an arbitral award. When you carry out the arbitration process for your commercial dispute, a key factor to consider is the arbitration seat. This is where you and the other party agree to carry out the arbitration proceedings, making it a crucial consideration. When selecting a seat, you should consider:

  • how the laws of that location will affect your proceedings;
  • whether proceedings in that seat are efficient; and 
  • how the seat can impact the potential arbitral award. 

If you need help choosing an arbitration seat for your dispute in the UK, LegalVision’s experienced disputes and litigation lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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Clare Farmer

Clare Farmer

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