Seat of arbitration or venue of hearing?

In commercial arbitration proceedings, “seat of arbitration” (or place of arbitration) is a concept of critical legal significance, as the law of the country where the seat of arbitration is located will often regulate arbitration proceedings. However, in practice, “seat of arbitration” is frequently confused with “place of hearing” (or venue of hearing), which is the location where the arbitration hearing takes place. The following article will clarify some matters regarding legal implications and determination of the seat of arbitration according to current commercial arbitration law.  

1. Seat of arbitration

a. What is a seat of arbitration? 

Under the provisions of the UNCITRAL Model Law of the United Nations Commission on International Trade Law (“Model Law”) [1] and the Law on Commercial Arbitration of Vietnam 2010 (“LCA”), the seat of arbitration is understood as the legal place (not the physical place) in the arbitration proceedings and is determined as the place where the arbitral award is issued. 

Model Law: 

Article 31. Form and contents of award 

(3) The award shall state its date and the place of arbitration as determined in accordance with article 20(1). The award shall be deemed to have been made at that place.  

LCA: 

Article 3. Interpretation of terms 

8. Place for dispute settlement means a place in which an arbitral tribunal settles disputes… If a place for dispute settlement is within the Vietnamese territory, the award must be regarded as having been issued in Vietnam regardless of the place in which the arbitral award holds a meeting to issue such award.

Arbitration and Mediation Law Handbook 2018 of the Supreme People’s Court of Vietnam [2]: in Interpretation section: 

3) the place of arbitration – is the place where the arbitration proceedings are conducted and where the arbitral award is “made” (i.e. issued); it does not necessarily have to be the place where the arbitration hearing is held. 

In international transactions involving parties from different countries, the arbitration clause usually specifies the place of arbitration, whereas in domestic transactions, this content is often not defined. 

Since the place of arbitration is not a physical location, the parties may agree on a different place of arbitration from where the arbitration hearing is held. For example, in a financial consulting contract between a Japanese company (claimant) as a service provider and a Vietnamese company (defendant) as a service user, the parties agree as follows: Any disputes arising from and relating to this Contract shall be resolved by VIAC, and the place of arbitration shall be in Vietnam. In the dispute resolution process by arbitration, since the selected arbitrators all reside in Singapore, to save on travel costs for the arbitrators, the two parties agree that all hearings shall be held in Singapore. In this case, the place for dispute settlement and where the arbitral award is issued is still Vietnam, not Singapore. 

b. Legal implication of the seat of arbitration 

(i) The seat of arbitration is the basis for determining the law governing the arbitration proceedings (also known as “lex arbitri”). 

The law governing arbitration regulates matters related to the procedure for resolving disputes by arbitration, from determining whether the dispute is arbitrable to the issuance of the arbitral award. Some key issues under the scope of the law governing arbitration can be listed as follows. 

• Can the dispute type be resolved by arbitration? 

• Establishment of the arbitration panel (procedure for appointing arbitrators, conditions of arbitrators, etc.). 

• Right to request the Court to support the arbitration proceedings (support with evidence collection, review of the arbitration panel’s decisions, etc.). 

• Application of interim measures. 

• Court’s jurisdiction to supervise the arbitration proceedings. 

• Issuance of the arbitral award (time limit for issuing the award, mandatory contents of the award, etc.). 

In the above example of a financial consulting contract dispute, since the parties have chosen Vietnam as the seat of arbitration, all issues related to the dispute settlement procedure must comply with the LCA’s provisions. For example, if the claimant wants to request the Court to apply interim measures against the defendant as the defendant has demonstrating signs of asset dissipation, the claimant will need to submit a request to the competent Court of Vietnam, not the Court of Singapore. 

(ii) Failure to comply with the provisions of the law on arbitration proceedings

If the arbitration proceedings do not comply with the law on arbitration procedures, the arbitration award may be annulled (for domestic awards) or refused recognition and enforcement in the requested country (for foreign awards). This is uniformly regulated in the law on international commercial arbitration and commercial arbitration of Vietnam as follows. 

Model Law: 

Article 36. Grounds for refusing recognition or enforcement 

(1) Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only: 

… (iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; 

New York Convention on the recognition and enforcement of foreign arbitral award: 

Article V 

1. Recognition and enforcement of the award may be refused when…

(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or failing such agreement, was not in accordance with the law of the country where the arbitration took place;  

Civil Procedure Code 2015 

Article 459. Cases of non-recognition 

1. The Court does not recognise the foreign arbitral award when…
2. dd) The composition of the foreign arbitral tribunal or the dispute resolution procedure of the foreign arbitral tribunal is not in accordance with the arbitration agreement or with the law of the country where the foreign arbitral award was issued, if the arbitration agreement does not provide for such matters;

LCA 

Article 68. Grounds for annulment of arbitral awards 

2. An arbitral award shall be annulled in one of the following cases:
3. b) The composition of the arbitral tribunal or the arbitration proceedings are inconsistent with the agreement of the parties or contrary to the provisions of this Law.

1. Basis for determining the place of arbitration 

Consistent with the international commercial arbitration law, the LCA respects the parties’ right to agree on the choice of the seat of arbitration. In the absence of a specific agreement, the arbitration tribunal will have the right to decide on the seat of arbitration of the dispute. However, the LCA does not specify for the arbitration tribunal’s decision. Meanwhile, the Model Law stipulates that the arbitration tribunal will decide on the seat of arbitration based on the circumstances of the case. The circumstances of the case may include factors such as the location of the evidence or the subject matter of the dispute, the convenience of the parties and the arbitration tribunal. 

Model Law: 

Article 20. Place of arbitration 

 (1) The parties are free to agree on the place of arbitration. Failing such an 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. 

LCA: 

Article 11. Place for dispute settlement by arbitration 

1. The parties may reach agreement on place for dispute settlement. If no agreement is made, the arbitration panel shall decide on such place. A place for dispute settlement may be within or outside the Vietnamese territory.

2. Venue for arbitration hearing 

The venue of arbitration hearing is the geographical location where the arbitration hearing is held. The hearing venue can be at the offices of a specific arbitration center, at a hotel, or even via an online platform. 

Similar to the seat of arbitration, the arbitration hearing venue is also determined based on the parties’ agreement. In case the parties do not have an agreement, the arbitration panel has the right to decide the hearing venue. According to Clause 2, Article 11 of the LCA, the arbitration panel may hold a meeting at a venue regarded as appropriate for its members to exchange opinions, for taking witnesses’ statements, consulting experts or for assessing goods, assets or other documents. This matter is different form court proceedings in which a court meeting/trial is usually held at the People’s Court’s premises. 

[1] https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/19-09955_e_ebook.pdf  

[2] Pub_So-tay-PL-ve-TT-va-HG_TANDTC_2018.pdf (viart.org.vn) (page 159) 

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