SEAT OF ARBITRATION, DOES IT REALLY MATTER? – SWEDEN AS A SEAT FOR INTERNATIONAL ARBITRATION FOR ASIAN DISPUTES FROM THE EYES OF AN INTERNATIONAL ARBITRATOR AND INTERNATIONAL ARBITRATION PRACTITIONER.
INBAVIJAYAN VEERARAGHAVAN AND SAMEENA SYED
In an arbitration proceeding especially in an international arbitration be it an investment or commercial dispute in nature, seat/place of arbitration is considered paramount due to its vitality it holds in an arbitration proceeding. The seat of arbitration stems out of the arbitration agreement/ clause concluded between the parties , for instance,
Any/All disputes shall be resolved by arbitration and seat of arbitration shall be Chennai, India.
In the above-mentioned reference “Chennai, India” implies the seat of arbitration in an arbitration proceeding accruing from this arbitration clause.
In principle, seat/place of arbitration is nothing but the physical location where the arbitration shall take place elected by the parties. It is always advised to be mindful of the selection of arbitration seat/place as it determines the framework of the arbitration proceeding.
In other words, the governing law and procedural law governing the arbitration as well as the language of the arbitration shall be influenced by the seat/place of arbitration if it is not already agreed by the parties or is silent in the arbitration agreement. Furthermore, in the post award scenario, when it comes to challenge of an arbitral award, the challenge proceedings shall be instituted inconsonance with Art. 5 of New York convention at the seat/place of arbitration.
Considering its vitality and procedural nuance, a legal question arises in terms of Asian practice, i.e. what is the best seat/place for arbitration for disputes arising out of Asian countries?
In this piece, we discuss Sweden as a best seat/place for arbitration for disputes arising out of Asian countries, be it commercial or investment dispute for the following reasons;
NEUTRAL PLACE FOR ARBITRATION:
As Gonzalo Vial recalls in his research work , which is also reflected by the Chartered Institute of Arbitrators, one of the most favourable attributes for the determination of a seat for an arbitration proceeding is neutrality i.e. the legal location opted by the parties must be free from external hindrances and must serve as an arbitration-friendly environment. Thus, a party must bear in mind neutrality as an aspect for selection of the seat.
In the past years, Sweden has established itself and has been perceived internationally to be a neutral as well as arbitration-friendly environment. It still holds its long-standing repute to this day and has been a consistent jurisdiction for arbitration resolution. Furthermore, no external hindrance has come in the way of arbitration resolutions nor has any internal hindrance hampered an arbitration proceeding that has taken place in Sweden. Thus, it is our belief that Sweden shall serve as a neutral seat/place for arbitration for disputes arising out of Asian countries.
LAW OF ARBITRATION
One of the prime factors for selection of seat also depends on the law of arbitration present in a particular jurisdiction or legal place. The law sets the framework for arbitration in that particular jurisdiction. It is always advised to prefer for a seat/place where the arbitration law is in its advanced stages meeting all the current needs especially in the international arbitration forefront. Moreover, a jurisdiction where the framework moots for less interference of the courts.
Sweden follows an UNCITRAL Model law on arbitration and wherein there is limited to no interference from the court is observed. For instance, Section 4 of the arbitration act states the following;
A court may not, over an objection of a party, rule on an issue which, pursuant to an arbitration agreement, shall be decided by arbitrators.
The wordings “A court may not” curtails the power of the courts in terms of interference other that when mandated, where there is a clear reference to arbitration.
As Asian practitioners, we believe the viability and rigidity concerning the stakeholders’s responsibility in lines with the parties agreement revolving around the arbitral tribunal paves a reasonable opportunity to shy away from the national courts with no reference to annulment pertain to public policy.
Broadly, the expertise more particularly the legal expertise facilitating the better choice of arbitrators in Sweden with potential arbitrators list familiarity on the dual ground of procedural and substantive element catalyst the race as an acceptable juridical seat.
In Sweden, Stockholm chamber of commerce, institute for arbitration (SCC) administers and manages institutional arbitrations. Furthermore, by way of advance technologies and rules that are up to date the institution is one of the predominant institutions in the arbitration community.
We believe that SCC is also one of the reasons to elect Sweden when it comes to selection of arbitration seat.
PARTIES TO THE CONVENTION AND TREATIES
When it comes to selection of seat of arbitration, it is also imperative to look into seats where the respective country is a party to conventions such as New York convention, Geneva convention, etc. It becomes vital and necessary when it comes to enforcement of arbitral awards.
When deeply examined, Sweden is a party to conventions which also makes it favourable for it to considered as a seat for arbitration.
Thus, for all the reasons mentioned above and the other allied reasons we believe Sweden is the best seat for disputes arising out of Asian countries.