Why the seat is important?
The “seat” of the arbitration, in essence, is the legal jurisdiction to which the arbitration is tied. This tie to a certain location is significant as it will determine the procedure or rules which govern the arbitration. It will also determine which national court may intervene during the arbitration and ultimately the extent of this intervention.
By selecting a given place or seat of arbitration, that country’s mandatory national laws are also then applicable to the arbitration. Given that there may be wide divergences between the extent of court intervention in the arbitral process and between mandatory laws that can apply, a party should consider their choice of seat carefully. Failure to do so can result in difficulties at an advanced stage in the arbitral process. For example, the degree to which an arbitral award may be challenged will be determined according to the seat of the arbitration. The court of the seat will hear the challenge to the award and the extent of judicial review permissible will also be governed by the law of the seat. Given that finality is such an important consideration for parties in international arbitration, it is advisable that your seat choice can fulfill this consideration.
The choice of seat will also have a bearing on convenience for the parties and arbitrators and issues such as availability of appropriate venues and a supportive arbitral infrastructure are also important to allow the arbitration to run smoothly.