Arbitration is an alternative dispute resolution process, in which the parties to a contract, present the arguments and evidence to an independent and neutral third party known as the “arbitrator” who is appointed by mutual consent or a statutory provision. This arbitrator who acts as a judge makes a determination named as an “award” which is legally enforceable and binding on both the parties.
The arbitration process is similar to going to courts, but is distinct in various forms of other non-binding dispute resolutions like mediation and conciliation. Arbitration is the best alternative to court-based litigation and it is more expedient, neutral, efficient, enforceable and confidential. The next question that arises in one’s mind is, “Which laws will be applicable here?” Well, usually the arbitration agreements seldom make any provisions for the governing law of the arbitration agreements. In International arbitration what needs to be perused are a number of factors like, the laws that govern the contract, the arbitration agreement, the arbitration procedure or the legal seat of arbitration and the law of the States where the award will stand enforceable.
The arbitration agreement is a contract in its own right, and is separable from the substantive contract entered into by the parties .This depicts the doctrine of separability which means that the arbitration agreement can be governed by a different law than that of the governing law of the substantive contract. It is always advisable to incorporate a governing law clause in the arbitration agreement to obviate in future, and in case if it’s not specified in the agreement, then the guidelines laid down by the Court of Appeal in the English courts are referred to. Arbitration is preferred to litigation because the parties can select neutrals of appropriate nationality and choose the applicable law, language, venue and the Seat of arbitration.
Seat of Arbitration:
The seat of arbitration is also known as “the place” of arbitration or “the locale” and plays a significant role in arbitration as it determines the governing procedural law of the arbitration and the enforceability of the award. It is the legal jurisdiction to which the arbitration is tied and will determine the procedure or rules which govern the arbitration and also makes the mandatory national laws of that country applicable. The canonical model for arbitration is based on “lex arbitri” which means ‘the law of arbitration’ and this varies from country to country. It also contains provisions that regulate the internal and external elements like the composition and appointment of the tribunal, requirements for the arbitral procedure and due process, the enforceability of award, the neutral nature, and many more.
The Geneva Protocol on Arbitration Clauses 1923 exemplifies an early perception that the law applicable to the arbitration should be that of the arbitral seat, and the arbitral procedure including the constitution of the arbitral tribunal shall be governed by the will of the parties and the law of the country in whose territory the arbitration takes place. The basic approach of the Model law is that the law applicable to each arbitration (the lex arbitri) will be the law of the place where the arbitration takes place (the lex loci arbitri) and the selection of the “Seat” of arbitration ordinarily results in the arbitration being conducted in accordance with the jurisdictions legal framework, with such derogations or variation as may be permitted. So if Singapore is selected as the “seat” of arbitration, it mandatorily and automatically adopts the Singapore Arbitration Act or the International Arbitration Act. The place of arbitration is different from the physical venue of arbitration which is the place where the arbitral tribunal carries on the hearing witnesses, experts or the parties. Traditionally the most popular seats of arbitration were London, Paris, New York and Geneva, where the oldest arbitral institutions are based, but the latest surveys shows Singapore growing to be one of the most popular preferences.
The International Arbitration Survey, conducted yearly by the School of International Arbitration since 2006 has depicted improvements and innovations in International Arbitration practices and trends worldwide. It has Ranked Singapore as the fourth most preferred and widely used seat in the 2015 International Arbitration survey, making Singapore a leading venue for international Arbitration. Asia has seen a significant growth in Arbitration due to the global economic evolvements making the two financial centres of Asia, Singapore and Hong Kong major seats in that region.