Originally from International Arbitration Law and Practice, Third Edition

DOMESTIC VERSUS FOREIGN ARBITRATION

4.1. The Categories of National and Foreign Arbitration

According to a widespread view, in the past national and foreign arbitration would not have been distinguishable from one another because all arbitrations are the result of a contract between the parties. Consequently, all arbitrations could neither be connected to a particular state nor be thought to assume a given nationality. However, such a view (at least in several legal systems) clashes with the reality that the provisions on arbitration are statutory procedural provisions. This fact makes arbitration subject to the legal system to which the said procedural provisions pertain and hence gives it a specific nationality.

This is further confirmed by use of the term “foreign arbitral decision,” which is referred to as an arbitral award, and which is used both by national legislations and by international conventions. For example, Swedish law1 defines as “foreign” those arbitrations that take place in a foreign country.

The English Arbitration Act (1979)2 has defined “domestic” arbitrations as those taking place in the United Kingdom, if the parties to them are habitually resident, at the time they enter into the submission agreement, in the UK, or consist of bodies corporate incorporated in or centrally managed from the UK. Domestic arbitration is still defined in the English Arbitration Act 1996, but the distinction seems to be felt less now than before.

The Statute which ratifies the New York Convention in the United States excludes3 from the application of the Convention arbitral proceedings between U.S. citizens, and consequently treats them as national, unless they concern assets located in foreign countries, or services to be performed in foreign countries, or proceedings which have another reasonable link with one or more foreign states.