Originally from The American Review of International Arbitration (ARIA)

PREVIEW

I. INTRODUCTION

The legal seat of the arbitration is of paramount importance and anchors the arbitral proceedings in a national legal system.  Amongst other important functions, the seat dictates the applicable lex arbitri and provides the courts of the seat with jurisdiction in relation to the arbitral proceedings.  Against that background, a transfer of seat from one jurisdiction to another is rarely sought. Unsurprisingly therefore, the legal literature and commentary on the transfer of seat are scarce.  However, there have been (even rarer) instances where applications to transfer the seat have been successful.  Those tend to involve radical political changes or factual obstacles, which effectively lead to one party losing its ability to present its case and where simply holding the hearing elsewhere would not be sufficient.

Nevertheless, given the increasing geopolitical challenges, unilateral transfers of the seat might feature more prominently in the years to come—especially in relation to arbitrations involving sovereign States, where the legal seat of the arbitral tribunal is in the territory of the Respondent State. Already back in the 90s, several such situations occurred and led to notable awards, e.g., in relation to the Milošević Regime. Some of those awards, where arbitral tribunals refused to transfer their legal seat, were rightfully criticized.  Against the re-emergence of similar circumstances in several jurisdictions, e.g. the ongoing Russian war of aggression against Ukraine, engaging with this part of recent arbitral history might turn out to be less of a purely theoretical exercise.

The first part of this contribution will be providing an overview of the traditional justification for unilaterally transferring the seat: the severability of arbitration agreement and venue clause, which has notably been advanced by the U.S. courts (II.). In the second part, we will present case law and arbitral awards which then applied different versions of the rebus sic stantibus principle to the venue clause (III.). Having thus laid out the current state of debate, we will argue in the third part that there could even be a duty on arbitrators to transfer the seat of the arbitral tribunal in certain circumstances and to ensure fair proceedings leading to an enforceable award (IV.). We will deduce this duty from well-established duties of arbitrators enshrined in the New York Convention and the UNCITRAL Model law. We will conclude by summarizing our main findings (V.).