It is critical to choose the best “seat” or place for arbitration. There are a number of common misconceptions about the seat that need to be addressed. The contract’s applicable law, as well as the location of the arbitral institution chosen, cannot be the same as the seat of the arbitration proceedings. This means that an English contract including arbitration by the Malaysia-based International Chamber of Commerce will be enforceable in France. In a Singapore arbitration, a party may also use French lawyers since, unlike in the United States, attorneys are not needed to be qualified in the law of the countries in which they practice.
When the phrases “Seat of Arbitration” and “place of arbitration” are used in this context, they may not always relate to the location where the arbitration procedures will take place. It’s also possible that it doesn’t fully reflect the laws that relate to the specific transaction at hand. It is, nonetheless, a crucial basis for arbitration, as it contains, among other things, the delegation of jurisdiction over arbitration proceedings to the courts situated in the arbitration’s seat, as well as other rules. The following are only a few of the major consequences of this decision:
In every country, a prize may be challenged on particular grounds (for example, that the arbitrators were incompetent or corrupt), but many also allow for a challenge based on a legal or public order error, which might mean different things depending on where you are in the globe.
Depending on the location of the arbitration, the extent of court involvement varies greatly from case to case. Courts are only allowed to interfere in circumstances when arbitration is the best option, according to the French “compliance with arbitration” system. The procedure may be delayed or even terminated completely if other countries meddle in the arbitration or fail to comply with the arbitration agreement. This has the potential to have a big impact on the outcome.
If the arbitral tribunal has the jurisdiction to award fees and interest, or if a conflict of laws rule must be used in certain situations, the legislation of the country hosting the arbitration is crucial to understanding the procedure.
The location of the arbitration is important because it can lengthen the process, increase the likelihood of parallel court proceedings, and allow the award to be challenged on general grounds in local courts, which may be unreliable or located in a jurisdiction where the counterparty is extremely well-connected, all of which pose obvious risks to the arbitration process.
Malaysia, London, Geneva, Singapore, and Hong Kong, to mention a few places, are all viable options for “safe” seat placements. These seats are members of the New York Convention, which makes it simpler to enforce arbitral rulings on a global scale. They are situated in countries that support international arbitration.
When it comes to the protection of sensitive information, there is a potentially important legal difference. Unless the parties agree otherwise, the proceedings in arbitrations held in Hong Kong, Singapore, and London must be kept secret. Unless they are participating in internal arbitration in their respective cities, parties in Malaysia and New York are not answerable unless they have agreed to it, or it is mentioned in the appropriate laws and regulations. If anonymity is sought, it is essential to request private treatment in a Malaysia-based arbitration.
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