5. Seat of arbitration

5. Seat of arbitration

The designation of the “seat” or “legal place” of arbitration is one of the most critical elements of the arbitration agreement. The seat serves as the formal legal home of the arbitration and, in the absence of a contrary agreement, determines the procedural law that governs the proceedings, as well as which court has the power to supervise or support the process.  

Choosing Hong Kong as the seat 

Choosing Hong Kong as the seat ensures that the arbitration will be subject to the Arbitration Ordinance (Cap. 609) and that the Court of First Instance of the High Court serves as the primary supervisory court, having jurisdiction to assist with interim measures, enforcement matters and applications to set aside an award. 

A unique advantage of seating an arbitration in Hong Kong is the Interim Measure Arrangement with Mainland China. Parties in Hong Kong-seated arbitrations administered by recognized institutions can seek asset, evidence, or conduct preservation orders directly from Mainland courts by relying on the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and the Hong Kong Special Administrative Region, a power not available to arbitrations seated elsewhere. 

Seat and governing law 

Parties should expressly agree on the seat of arbitration in the interests of certainty and to avoid expensive jurisdictional disputes after a dispute has arisen. The seat will not usually determine the substantive law governing the underlying contract. For example, a contract may be governed by Hong Kong law even though the arbitration is seated in Singapore, or vice versa. 

The seat is important because it determines matters such as: 

• the extent to which the courts of the seat may intervene in the arbitration; 
• whether there is any right of appeal or challenge to an award; 
• the court that may set aside the award; 
• the procedural law governing the arbitration; and 
• the legal framework supporting recognition and enforcement of the award. 

Factors to consider when selecting a seat 

When choosing the seat, parties should consider, taking local legal advice where necessary, whether: 

• the courts of the seat will enforce the arbitration agreement; 
• the courts will avoid undue interference in the arbitral process; 
• the courts will respect the finality of arbitral awards; 
• the award can be enforced in the seat as if it were a court judgment; and 
• the seat is in a jurisdiction that is party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, so that awards can be enforced internationally in other Convention states. 

Default position if no seat is specified 

Under section 48 of the Arbitration Ordinance, parties are free to agree on the seat of arbitration. If the agreement does not contain an express choice, the court or tribunal will first attempt to discern an implied choice of seat from the surrounding circumstances. An implied intention may be inferred from a reference to a specific venue for hearings, the choice of procedural law, or the grant of jurisdiction to a specific state’s courts. 

If no express or implied choice can be discerned, the arbitral tribunal will determine it. In making this determination, the tribunal must have regard to the circumstances of the case, including the convenience of the parties. Factors considered include geographic proximity, ease of access, political stability, and the existence of a modern commercial arbitration law in the proposed jurisdiction. 

Parties often determine the seat indirectly by incorporating institutional rules that contain default provisions. These institutional defaults often apply before the tribunal is constituted. For example, if HKIAC Administered Arbitration Rules are adopted, the seat of an arbitration conducted under these rules is Hong Kong unless the arbitral tribunal determines, having regard to the circumstances of the case, that another seat is more appropriate. 

Practical hearing logistics 

It is important to distinguish the legal seat from the physical location of hearings. A tribunal may meet at any geographical location or hold virtual hearings for convenience without changing the legal seat or the applicable procedural law. That said, if hearings are likely to take place in the seat, parties should also consider practical logistics, including travel, visas, rights of audience for legal representatives, hearing facilities, availability of interpreters, and access for parties, counsel, witnesses and experts.