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-written by Lim Khiam Ing

The “seat” or place of arbitration has been defined as the geographical location to which the arbitration is ultimately tied and which in the absent of the agreement otherwise prescribes the procedural law of the arbitration[1]. Moreover, the seat of arbitration was also defined as the juridical connections which bind the parties to the arbitration and arbitrators, on one hand, to a state court forum and the national arbitration law, on the other hand[2].

Based on the above definitions, it can be summarise that the seat of arbitration is the jurisdiction where the parties intend the law of arbitration to apply in their arbitration agreement or the applicable procedural law of the arbitration (lex arbitri).

At his juncture, it must be noted that jurisdiction of the seat is not necessary the same as the governing law of the contract. For instance, the governing law of the contract can be the law of Singapore but the seat of arbitration can be in Malaysia, i.e the procedural law of the arbitration will be govern by the Arbitration Act 2005 [Act 646] of Malaysia while the main contract will be govern by Singapore law.

Moving on, I am of the opinion that the concept of the seat of arbitration is deeply rooted with the promotion of arbitration as a dispute resolution mechanism. It is well established that in commercial disputes, arbitration is an alternative to litigation due to advantages such as confidentiality, procedural flexibility and neutrality. It is also a better alternative compared to other form of dispute resolutions (e.g. mediation) as binding and enforceable outcome can be achieved through awards granted by the arbitral tribunal.  Besides that, arbitration endorses the principle of party autonomy whereby the parties are free to decide on the procedural law that govern the arbitration.

This line of argument is parallel with the four fundamental propositions of international arbitration law[3], namely as follows:

(a) Party autonomy in the choice of law of the arbitration is to be expressed in a choice of set of arbitration.

(b) Because a choice of seat operates as a choice of a legal system to regulate an arbitration, it is entirely without prejudice to the actual locale where various procedural acts take place an award is made. So the seat of an arbitration is entirely legal concept.

(c) The supervisory function of the courts of the seat should be exclusively reserved to arbitrations governed by that law.

(d) A choice of seat is not a wholesale choice of national law. In choosing the seat of the arbitration, the parties place confidence in that legal system to provide them a disinterested service and not to impose upon them any legal conceptions that are particular to it.

(emphasis added)

In addition, the concept of the seat of arbitration is best appreciated by understanding the operation of the seat itself under the relevant legislation. In this context, I would elaborate the concept of the seat of arbitration based on the Malaysia position. In Malaysia, section 2 of the Arbitration Act 2005 [Act 646], which adopted Article 20 of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”) defines the “seat of arbitration” as the place where the arbitration is based as determined in accordance with section 22 of Act 646. Whilst, section 22 of Act 646 provides as follows:

“22.  Seat of arbitration.

(1) The parties are free to agree on the seat of arbitration.

(2) Where the parties fail to agree under subsection (1), the seat of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.

(3) Notwithstanding subsections (1) and (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of goods, other property or documents.” (emphasis added)

From the perusal of both section 2 and 22 of Act 646, it clearly shows that the concept of the seat of arbitration derived from the principle of party autonomy as the parties in disputes were given the liberty to decide on the seat of arbitration (s.22(1) Act 646). Meanwhile, in circumstances where the parties fail to agree on the seat, the arbitral tribunal will determine the seat of arbitration by taking into considerations amongst others the convenience of the parties (s.22(2) Act 646). Furthermore, the parties in the arbitration are allowed to meet at any place without affecting the official seat of arbitration (s.22(3) Act 646), thus, promoting equal treatment and flexibility.

Having established that the concept of the seat of arbitration derived from the principle of party autonomy, it is also importance to evaluate the practical application of the concept of the seat of arbitration in Malaysia. In this context, over and above the principle of party autonomy it is crucial to consider three factors while choosing the seat of arbitration. They are namely, the recognition of the arbitration agreement, the proceeding of the arbitration and the enforcement of the arbitration agreement.

Recognition of the arbitration agreement

The wide but clear definition and form of arbitration agreement in section 9 of Act 646 recognised the various form of arbitration agreement in Malaysia provided that it is in writing. Furthermore, court before which proceedings are brought in respect of a matter which is the subject of an arbitration agreement shall, where a party makes an application before taking any other steps in the proceedings, stay those proceedings and refer the parties to arbitration (s.10 Act 646). With such these clauses, an arbitration which has its seat in Malaysia can be carried out.

Proceeding of the arbitration

In this regard, the seat of arbitration must be avoided in jurisdiction where the court has extensive judicial interference. Under section 8 of Act 646, it has been clearly mentioned that no court shall intervene in any of the matters governed by Act 646. Besides that, Therefore, the position in Malaysia is that the court will not unjustifiably interfere in an arbitration proceeding.

Enforcement of the arbitration agreement

Section 33(4) of Act 646 states that an award shall state its date and the seat of arbitration as determined in accordance with section 22 of Act 646 and shall be deemed to have been made at that seat. It is also provided for under section 36 of Act 646 that an award made by an arbitral tribunal pursuant to an arbitration agreement shall be final and binding on the parties. Further, on an application in writing to the High Court section 38 provide for the recognition and enforcement of award made in respect of a domestic arbitration or an award from a country which is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted by the United Nations Conference on International Commercial Arbitration in 1958. Hence, such clauses give recognition, enforceability and finality of award which has its seat of arbitration in Malaysia.

In a nutshell, I am of the view that the concept of the seat of arbitration is deeply rooted with the promotion of arbitration as a dispute resolution mechanism vis-a-vis the principle of party autonomy. In addition, from the brief discussion on the factors to be considered in choosing the seat of arbitration it is safe to conclude that the concept of the seat of arbitration is very practicable in Malaysia as Act 646 was drafted in the spirit of the Model Law.

[1] (see Russell on Arbitration 2003, para 2-209);

[2] (see Proudret and Besson, Comparative Law of International Arbitration, 2nd Edition, pg. 101);

[3] (see Procedural Law in International Arbitration, Georgios Petrochilos, Oxford University Press, 2004, para 3.30 pg. 64)

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  16. rahim says:

    Enforcement of the award

    “application in writing to the High court”

    is it by way of giving letter/notes or OS supported by aff ? Order 69 RHC still applicable if the arbitration is b4 2005 ? Ehmm. do we need to convert the award into judgment b4 we want to enforce it ?

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