In a recent case in mainland China, the Taizhou Intermediate People’s Court refused to enforce an ICC award on the grounds of public policy because the court had previously held that the arbitration clause was invalid. This outcome could have been avoided if the parties had specified a suitable arbitral seat in the arbitration clause.
ARBITRAL SEAT
The seat is an important legal concept, as its law provides the supporting legal framework for the arbitration, and its courts supervise the arbitration. Furthermore, the seat usually determines the nationality of the award that is relevant to enforcement.
The seat can therefore have a material impact on the course and outcome of the arbitration. The seat is not to be confused with the factual venue where arbitration meetings and hearings are conducted.Absent any agreement to the contrary, the law of the seat, which is often not the same as the substantive law of the contract, usually also governs the arbitration clause.
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Business Law Digest is compiled with the assistance of Baker & McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker & McKenzie by e-mailing Danian Zhang (Shanghai) at: danian.zhang@bakermckenzie.com
