Meaning
Geographic and legal locations chosen by contracting parties for arbitration that lie outside their home jurisdictions determine the court system that will supervise the dispute. The selection of foreign arbitral seats ensures that neither party enjoys a domestic court advantage during dispute resolution. This legal choice establishes the procedural framework and the grounds for setting aside an arbitral award.
Procedural Law
Choosing a neutral location for arbitration attaches the arbitration law of that specific country to the proceedings. Under these terms, the courts of the chosen seat hold exclusive jurisdiction over applications to challenge arbitrators, resolve procedural bottlenecks, or hear actions to set aside the final award. This legal relationship remains distinct from the governing law of the contract, which might be the law of a third country.
Establishing such a separation protects the process from local court interference and ensures that international standards apply to the arbitration.
Judicial Intervention
The degree of court support varies significantly depending on the arbitration friendliness of the chosen seat. Well-developed legal centers provide experienced judges who understand international commercial law and refrain from reviewing the merits of the dispute.
Strategic Choice
Selecting a seat in a country that is a signatory to the New York Convention facilitates the subsequent enforcement of the award. The winning party can take the final award to almost any country where the counterparty owns assets and seek direct enforcement.
