First of all, have you ever heard of the word arbitration? Do you know what it is for and the importance of choosing the right venue and seat for arbitration?
The arbitration venue or known as the seat or site of arbitration, has significant significance and should not be taken carelessly. The location of an arbitration affects the participation of local courts in the arbitration, the arbitration’s conduct, and, eventually, the enforceability of the decision. The venue of arbitration is generally regarded as a geographical term, as an arbitration must be held in a physical location somewhere in a certain jurisdiction.
Parties should carefully study the local laws of a venue because the power of the local courts and the degree of their participation in an arbitration varies substantially between jurisdictions. These are the importance of choosing the right arbitration venue before, while and after the arbitration or proceedings:
Before to the commencement of arbitral proceedings
Choosing the incorrect seat can cause the arbitration to be severely delayed, increase the risk of parallel court proceedings, and allow the award to be challenged on broad grounds in local courts, which may not be reliable or may be in a jurisdiction where the counterparty is very well-connected, posing obvious risks. Arbitration works best when courts dismiss objections to arbitral jurisdiction swiftly, as long as the parties’ contract has a valid and enforceable arbitration clause.
Local courts in the chosen jurisdiction are frequently relied upon to give considerable assistance to the parties even before the arbitration procedure is begun. Although arbitration is primarily an extra-judicial process, it is not uncommon for a party to initiate judicial proceedings seeking preliminary relief, contesting the validity of an arbitration clause, or claiming that the specific dispute does not fall within the jurisdiction of the arbitral tribunal and should instead be litigated.
During the arbitration
The local courts’ stance on compelling testimony and evidence is one of the most critical elements in this category. Fact-finding is essential for successful dispute settlement, but arbitral tribunals have little authority over third parties. As a result, parties may require help from local courts in obtaining testimony from third parties or compelling them to provide evidence. However, the help that state courts may give differs by jurisdiction.
Many parties think that once the arbitral procedure has begun, the local courts of the location have no control over it. However, this is not always the case. The courts have the authority to interfere in the arbitral procedure, and they frequently do so. Before deciding on a location, the parties should thoroughly comprehend the conditions that may need such intervention.
Some of the most significant consequences of venue selection are discovered only after the arbitration. As a result, the grounds for annulment of the arbitral judgment differ depending on the location. While most local courts would rescind an award for “breach of public policy,” the understanding of what constitutes a violation of public policy varies greatly between locations. The term during which the parties can seek annulment varies greatly by jurisdiction. Finally, the parties should keep in mind that the award may only be set aside in the venue’s local courts under their local laws and procedures, and that the proceedings are conducted in the local language.