The Mystery of Seat and Place in International Arbitration: History & the Indian Connection

There is considerable confusion over the use of the term "place" to designate the seat of arbitration. This short post traces the history behind the preference to the term "place" over "seat" in international arbitration despite the considerable confusion that ensues as a result. 

The UNCITRAL Arbitration Rules, 1976 is one of the earliest significant attempts at harmonising procedural rules relating to international arbitration. The 1976 Arbitration Rules was a precursor to the UNCITRAL Model Law and most of the arbitration taxonomy used world over and concepts in the subject can be traced back to the 1976 Arbitration Rules.

In the early 1970s, UNCITRAL decided to come up with rules for use in ad hoc arbitrations arising in the course of international trade. Report of the United Nations Commission on International Trade Law on the work of its sixth session, 2-13 April 1973, Official Records of the General Assembly: Twenty-eighth Session, Supplement No. 17 (A/9017), para. 85, (UNCITRAL Yearbook, vol. IV: 1973, part one, II, A).]

UNCITRAL advised its Secretariat that the rules should be prepared in consultation with centres of international commercial arbitration. The Secretariat, in turn, invited the International Council for Commercial Arbitration to establish a representative group for consultation in the preparation of the above rules. Based on the consultation with the group, the Secretariat came up with a preliminary draft. [UNCITRAL, Report of the Secretary-General: Preliminary Draft Set of ArbitrationRules for Optional Use in Ad Hoc Arbitration relating to International Trade (UNCITRAL Arbitration Rules) (4 November 1974), A/CN.9/97.]

Article 14(1) as was discussed at that time read as follows:

“PLACE OF ARBITRATION: 

1. Unless the parties have agreed upon the place where the arbitration is to be held, such place shall be determined by the arbitrators.

2. If the parties have agreed upon the place of arbitration, the arbitrators may determine the locale of the arbitration within the country or city agreed upon by the parties.

3. The arbitrators may decide to hear witnesses, or to hold interim meetings for consultation among themselves, at any place they deem convenient.

4. The arbitrators may meet at any place they deem appropriate for inspection of goods, other property, or documents...”

This provision was based more or less on Article 14 of the Arbitration Rules of the United Nations Economic Commission for Europe, which stated: “Unless the parties agree on the place where the arbitration is to be held, such place shall be determined by the arbitrators.”. Note that the precursor of the Arbitration Rules, the New York Convention employed the phrase “where the arbitration took place” but did not use the term “seat”. 

What is interesting from an Indian point of view is that the draft was discussed in the fifth international arbitration congress was held at New Delhi from 7 to 10 January 1975. In the New Delhi congress, it was held that “place” of arbitration in Article 14 should be replaced with the term “seat” of arbitration. [A/CN.9/SER.A/1975, 1975 Yearbook, p. 35.] Another suggestion was that the tribunal should determine the seat at the commencement of the arbitral proceedings. The Commission took note of these suggestions. The Congress also felt that these changes would be in line with the New York Convention since the Convention accorded a special place to the seat of arbitration. [UNCITRAL 1975 Yearbook, p. 183]

A further suggestion was that the model arbitration clause drafted along with the rules should provide: “The seat of the arbitration shall be …” Thus, at one point in the drafting of the 1976 Rules, the expressions “seat” and “place” found their place in the draft.[ UNCITRAL, Summary Records of the One Hundred And Sixty-Fourth Meeting (of the Committee of the Whole II), A/CN.9/SR.164(see, comments from representative of the USA and the Federal Republic of Germany).] There were also misgivings expressed on the floating nature of arbitration. The retention of the term “seat” did not find favour with the UNCITRAL Secretariat. The reason why is not known. Perhaps, it is buried deep inside the archival vaults of the UNCITRAL.

Consequently, the draft rules retained the term “place” instead of “seat”. The final version of the 1976 Rules use the term “place” instead of “seat”.