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Arbitration has evolved over the years to be one of the most preferred mechanisms for resolving disputes between parties, especially in the areas of international business. It is a method of alternative dispute resolution for the settlement of disputes where a final decision is taken by an impartial third party. In case of any dispute, there is significant time spent negotiating, choosing and drafting arbitration agreements to facilitating an efficient arbitral process and adjudication. In general, arbitration is a voluntary and cooperative mechanism and it is very important to take into account all the main factors that usually affect the arbitration process. In this respect, the choice of the seat of arbitration is one of the main factors underlying any arbitral agreement. Parties to the arbitration can arrive at a consensus towards the seat of arbitration at any point in time.

Choice of Seat of Arbitration and its Significance:

One of the founding principles on which arbitration is based is the liberty to select the seat of arbitration.

The term "seat" or place of arbitration can be defined as the geographical location where the arbitration is finally tried or otherwise provided for by the procedural law in the absence of any agreement. It implies that the seat of arbitration is the jurisdiction to which the parties decide to submit and the arbitration law, arbitration procedural law which will apply to the arbitration agreement consequent to such choice of seat.

The selection of the "appropriate seat" is one of the most vital decisions to be taken by parties to an arbitral agreement as in many aspects of international arbitration, when selecting the seat of the arbitration, the parties have great flexibility. The seat is often the town/city where the hearing takes place, although it does not always have to be. The seat may also, but not necessarily have to be in the same legal jurisdiction as the contract governing law. However, this diversity can cause uncertainty as to which jurisdiction's laws are attracted to the different aspects of the arbitral process.

In aspects of the growth of arbitration practice, the seat of arbitration plays the following critical role, which includes -

Validity: The legitimacy of the arbitration agreement cannot be easily disputed with the discretion of the parties in selecting arbitration as their dispute settlement. In deciding the fairness of an arbitration agreement and interpreting arbitration clauses, the relatively pro-arbitration policies make a country or a region a popular and often common seat of arbitration;

Efficiency: The assistance or support that a court or entity can provide for arbitration proceedings shall decide the efficacy of arbitration proceedings within a particular legal framework; 

Enforcement: The court at its seat shall carry out a judicial review of the arbitration award in the appeal proceedings challenging an arbitral award or for non-enforcement of the arbitral award.

The seat of the arbitration is important as it will usually decide the law and the process followed by the arbitral tribunal as well as the involvement that the courts will require in exercising jurisdiction over the seat.

In the case of Bharat Aluminium Company Ltd V. Kaiser Aluminium Technical Service Inc ("BALCO”)[1]-

The Hon’ble Supreme Court held that the choice of another country to be the seat of arbitration necessarily gives rise to the acceptance that the law of that country relating to the conduct and supervision of arbitration shall extend to the proceedings.

Key Factors in determining the ‘Seat of Arbitration’:

When establishing a seat for international arbitration, parties should be advised to consider the following determining factors-

Enforcement and Challenges:

While selecting the seat of arbitration, things should be kept in mind in regards to enforcement, it is essential to make sure the country in which the seat is located is a party to the New York Convention or Geneva Convention. Fortunately, approximately 150 countries are currently parties to the New York Convention or the Geneva Convention and includes most of the world’s developed countries. If an arbitral award is issued in a seat that is in one of these countries, it can be enforced in the domestic courts of any other country that is a party to these conventions.

Jurisdiction neutrality and impartiality:

Generally, all courts support the local group or party, and in such situations, independence of arbitrators adjudicating in the case is often called into question. Neutrality in the sense that none of the parties in that particular jurisdiction has any interest or stake in the matter, should always be a key factor. Here the idea of arbitration neutrality not only applies to the parties' right to select a neutral arbitral seat, but also to their ability to select a neutral arbitrator. This prevents prejudice against foreign parties from keeping the conflict from being fair and reasonably resolved.

Convenience for the parties and Arbitrators:

The convenience of the parties and arbitrators during arbitration is another significant aspect to consider.  The seat of arbitration should be geographically convenient for those interested (parties, witnesses, arbitrators and lawyers etc.) in the arbitration process.  Both the parties and the arbitrators must converse in a common lingua franca and conduct proceedings equally.

The seat of Arbitration V. Venue of Arbitration:

The physical location of Arbitration does not have the same legal significance as of the legal seat of Arbitration. Generally speaking, the position is determined based on the party’s comfort. It does not need to be the same and often, the same has been observed.  

Most arbitration laws and institutional rules acknowledge the difference between the place of the arbitration (place of arbitration) and the place of the hearing (the venue of arbitration).

Article 14 of the Arbitration Rules of the International Chamber of Commerce (ICC) states that[2]-

  1. The place of the arbitration shall be fixed by the Court unless agreed upon by the parties.
  2. The Arbitral Tribunal may, after consultation with the parties, conduct hearings and meetings at any location it considers appropriate unless otherwise agreed by the parties.
  3. The Arbitral Tribunal may deliberate at any location it considers appropriate.

And Article 16(1) of the Arbitration Rules of the London Court of International Arbitration (LCIA) states that[3]-

“The parties may agree in writing the seat (or legal place) of their arbitration at any time before the formation of the Arbitral Tribunal and, after such formation, with the prior written consent of the Arbitral Tribunal.”

According to Section 20 of the Indian Arbitration and Conciliation Act, 1996[4],

Place of arbitration. —

(1) The parties are free to agree on the place of arbitration. Failing such agreement, the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.

(2) Notwithstanding the provisions of paragraph (1) of this article, 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.

It is not necessary for the seat of arbitration and the place of arbitration to be the same (even if they are) and even though the proceedings take place in many different countries throughout the arbitration, the place of arbitration chosen would remain unchanged.

In the case of Mankastu Impex Pvt. Limited v. Airivisual Limited[5], the Hon’ble Supreme Court held that-

A key aspect of any arbitration proceedings is the seat of arbitration. The relevance of the seat of arbitration is determining the arbitration proceedings and arbitration proceedings, it decides the relevant law, as well as the judicial review of the arbitration award.

In the case, of Enercon (India) Ltd And Ors V Enercon Gmbh And Anr[6] before the Hon’ble Supreme Court of India, a dispute came in question for non-delivery of supplies under an Intellectual Property License Agreement (“IPLA”) containing an arbitration clause. 

The matter then went before the Hon’ble Supreme Court where the contention was that- assuming that the Seat of Arbitration was India, whether the English Courts would have concurrent jurisdiction as the venue of arbitration is in London?

The Hon’ble Supreme Court held that though London was specifically mentioned in the arbitration clause to be the location of the arbitration. But it could not lead to the inference that London was mandatory to be the Seat because London was called the venue, and the law governing the substantive agreement, the law governing the arbitration agreement and the law governing the conduct of the arbitration were chosen to be Indian law. Indian courts would have sole jurisdiction once the seat was in India, and English courts could not have concurrent jurisdiction.

GE Power Conversion India Pvt. Ltd. v. PASL Wind Solutions Pvt. Ltd.[7]

Court: Gujarat High Court, Case number: Petition under Arbitration Act No. 131 and 134 of 2019

The definition of a “foreign award” is set out under section 44 ACA. To qualify, one of the conditions is that the tribunal must have made the award in a territory notified by the Central Government as a New York Convention country. It is now given that an award is “made” at the arbitral seat. 

Can two Indian parties choose a foreign arbitral seat? Whether the resulting award would be a “foreign award” enforceable under section 44ACA?  In this case, enforcement of such an award was resisted on the ground that it did not qualify as a “foreign award” because Indian parties could not arbitrate in a foreign seat.

A single-judge bench of the Gujarat High Court – held that the arbitral seat was indeed at Zurich (as the tribunal had ruled), it also concluded that to qualify as a “foreign award”, the nationality of the parties was irrelevant. And, therefore, ruled that the award was a “foreign award.”. And, also found that the choice of a foreign seat was not contrary to the public policy of India

The Bench further found that none of the grounds to resist enforcement applied in the case and, therefore, allowed its enforcement. 

ODR and Seat of Arbitration:

Nearly a million disputes are resolved remotely using ODR every year around the world. ODR has become a key factor in dispute resolution through technology. In recent times, as more and more ODR platforms have become effective across the world, promoting specific types of dispute resolution for many national and international companies, by replacing the current ADR process with technology, many ODR platforms have made the conflict resolution process easy, making the process feasible and time-efficient altogether.

Many countries witnessed a considerable rise in the number of new filings as a consequence of the effect of the COVID-19 pandemic. In such a situation, ODR came in rescue in providing an efficient solution of resolving the disputes. In other words, the pandemic has emphasized the need for online dispute resolution to reach every organisations and institution, while attempting to provide equal justice for all.

But, one of the concerns of arbitrators who are willing to use the ODR facilities is how to define the “Seat of Arbitration" and the applicable laws. It has already been decided that the option of the law in effect could depend on the place of residence of the parties to the conflict as well as the place where the underlying contract was executed.

Therefore, if parties use a virtual arbitration system such as ODR, the "Seat of Arbitration" can be decided by the parties in any of the places where the jurisdiction would not be affected in any way. As it is natural for parties to a contract to agree on the 'Seat of Arbitration' either as part of the contract or when trying to fix a venue for arbitration, the best alternative for parties to acknowledge the virtual ODR dispute resolution mechanism is to specify in the contract immediately whether the relevant jurisdiction would be that of either of the contracting parties. Thus, the parties are free to declare a particular seat of arbitration in an ODR process.


Various determinative factors play an increasingly important role in deciding the jurisdiction. It is open to debate whether particular factors dominate other factors and whether such factors can even be determinative is debatable. For the time being when developing arbitration clauses/agreements, it should be suggested or encouraged that while drafting, parties and representatives to ensure clarity and inclusiveness as to their intentions in regards to the seat and venue of the arbitration. In other words, parties should acknowledge that a difference exists between the venue and the seat. For specific purposes of convenience, the parties may agree that place other than the seat of the arbitration, but the change of venue does not change the legal seat of the arbitration.  To reduce the possibility that the law preferred by the parties will not extend to a dispute the parties should specifically specify where the seat of the arbitration will be.


[1]Bharat Aluminium Company Ltd V. Kaiser Aluminium Technical Service Inc ("BALCO"), Civil Appeal No.7019 Of 2005(India), (November 16, 2020, 12:33 PM), https://indiankanoon.org/doc/52585881/

[2]Article 14 –Place of Arbitration, Arbitration Rules of International Chamber of Commerce, 1998, (November 16, 2020, 12:41 PM), https://www.jus.uio.no/lm/icc.arbitration.rules.1998/14.html

[3]Article 16 (1) - Arbitration Rules of the London Court of International Arbitration, 1998, (November 16, 2020, 12:41 PM), https://www.lcia.org/Dispute_Resolution_Services/lcia-arbitration-rules-2014.aspx#Article%2016

[4]Section 20 – Place of Arbitration, Indian Arbitration and Conciliation Act, 1996 No. 26, Acts of Parliament, 1996 (India), (November 16, 2020, 12:49 PM), https://ibclaw.in/section-20-place-ofarbitration/#:~:text=20.,the%20convenience%20of%20the%20parties

[5]Mankastu Impex Pvt. Limited v. Airivisual Limited, Arbitration Petition No. 32 OF 2018(India), (November 16, 2020, 12:53 PM), https://indiankanoon.org/doc/196897538/

[6]Enercon (India) Ltd And Ors V Enercon Gmbh And Anr, Civil Appeal No.2086 Of 2014, (November 16, 2020, 12:55 PM), https://indiankanoon.org/doc/146487961/

[7]GE Power Conversion India Pvt. Ltd. v. PASL Wind Solutions Pvt. Ltd, Petition under Arbitration Act No. 131 and 134 of 2019, (November 16, 2020, 11:21 PM), https://www.nfral.in/indian-parties-can-arbitrate-in-a-foreign-seat-the-resultant-award-would-be-a-foreign-award-enforceable-under-part-ii-of-the-arbitration-and-conciliation-act-1996-gujarat-high court/#:~:text=PASL%20and%20GE%20Power%2C%20both,Zurich%E2%80%9D%20under%20the%20ICC%20Rules