ARBITRATION vs. THE WORLD (ARTICLE SERIES) PART II: MAKING A MOUNTAIN OUT OF A MOLEHILL

Updated: Jun 19

Balaji Harish Iyer[1]

INTRODUCTION


In an earlier post[2] we had discussed the need to make a shift from traditional or offline arbitration to online arbitration. Over the last few weeks, several webinars have discussed the online arbitration; parties are regularly making applications to continue pending proceedings online[3]; arbitrators are setting new procedural timelines and exploring methods to organise hearings, conduct witness examinations and hear arguments: online arbitration is here to stay.


An objection that was raised in one of the author’s international commercial arbitrations, proceeding under the Rules of Arbitration of the International Chambers of Commerce was that continuing proceedings online would render the “place of arbitration” otiose. This second article in this series examines whether this really is the case. The arbitration world is ever preoccupied with the meaning of “place of arbitration” and the preoccupation in the context of online arbitrations is, in this author’s opinion, making a mountain out of a molehill.[4]


WHAT IS “PLACE OF ARBITRATION”?


All international commercial arbitrations deal with the interaction of multiple laws because it is trite that an arbitration clause stands separate from the main contract. Thus, a contract can involve the following three laws, viz.:[5]


  1. The substantive or governing law of contract that is, the law that is used to determine the rights and liabilities of the parties to the contract and the dispute;

  2. The substantive or governing law of arbitration that is, the law that is used to determine the existence and validity of the arbitration clause itself; and,

  3. Curial or procedural law governing the conduct of the arbitral proceedings.


“Place of arbitration” has been interpreted[6] to be an identifier of the curial law. It is settled law that curial law determines the seat of arbitration and consequently which court will have supervisory jurisdiction over the arbitration proceedings.[7] In essence, determining the seat is determining the legal framework that governs the entire arbitral procedure; stakeholders will know which courts to approach for interim reliefs before, during and after the proceedings, for annulling the award, terminating the mandate of the arbitral tribunal, or assistance in taking evidence.


HOW IS SEAT DETERMINED?


The curial law is primarily determined by party autonomy.[8] An example of an arbitration clause is reproduced below:[9]


Any dispute or controversy relating to or arising out of or in connection with this Agreement, including any question relating to its existence, validity and termination (“Dispute”), shall firstly be referred by written notice to each Party, who shall endeavor to resolve the Dispute within a period of thirty (30) days following notice of the Dispute. If the Dispute has not been resolved within 30 days, the Dispute shall be finally resolved by arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce (“I.C.C”). The place of arbitration shall be London. The Arbitration shall be conducted in the English language.


Here, the parties have themselves determined that the “place of arbitration shall be London”. This clarifies that the arbitration proceedings are governed by the English Arbitration Act.


There may be occasions where the parties do not expressly determine the place of arbitration. In such a scenario, the arbitral tribunal will determine what the seat of arbitration is.[10] To this end, there is generally a strong prima facie presumption that the parties intended the place at which the arbitration proceedings to be conducted to be the seat, on the ground that that is the country most closely connected with the proceedings.[11]


CAN THE PROCEEDINGS BE HELD AT ANOTHER VENUE?


It must be said that the determination of the seat creates a fictional link between the arbitral proceedings and a particular jurisdiction. The arbitral tribunal and parties may agree still to conduct proceedings at a different venue from the seat[12] if it is convenient to all stakeholders. In the example taken above, it is possible for the parties and tribunal to meet at Dubai, for instance, which is midway between India, Singapore and England. Simply meeting at Dubai and conducting proceedings there will not make the proceedings subject to Emirati curial law. The (English) Arbitration Act, 1996 will continue to apply to the proceedings; the courts of England will continue to have supervisory jurisdiction; the award can still only be challenged in English courts. This is because of the fictional link created by the parties or determined by the tribunal to exist between the arbitration proceedings and England as its seat.


WHAT DOES THIS MEAN FOR ONLINE ARBITRATION?


In a traditional, offline arbitration the proceedings may be conducted at a different venue from the seat if it is convenient to all stakeholders. Every meeting may be held at different venues, and simply changing the venue will not change the seat. In online arbitration, the parties can meet remotely over the internet, without any requirement for travel.[13] The internet becomes the environment that hosts the arbitration proceedings. Could there then be an argument that the “place of arbitration” is really at the location of the server where the video conference is hosted?[14] The answer must be “no”[15], because the location of the server or each of the parties or the arbitrators is irrelevant. The internet server’s location here has only as much importance as Dubai in the example taken earlier.


Courts have repeatedly decided that holding hearings, deliberations or rendering awards at places other than the seat will have no impact on the “place of arbitration”.[16] As long as the parties agree or the tribunal determines that the arbitration is subject to one particular curial law, dispute resolution practitioners should not allow arbitration proceedings to be jeopardised if parties choose to conduct the arbitration online. The internet environment has no value and is chosen by stakeholders for convenience. What we must remember is: “What counts is the choice of law, not the fact that the procedure may be conducted partially or totally online.”[17]


[1] Balaji Harish Iyer is an advocate practising before the Bombay High Court. His focus is on arbitration and alternate dispute resolution. Balaji obtained his Master’s degree in law (International Dispute Resolution) from Humboldt University of Berlin and Bachelor’s degree (with Honours) from National Law University, Delhi. Mobile: +917349360143. [2] See Balaji Harish Iyer, Arbitration vs The World (Article Series) Part I: International Arbitration in the Time of Covid-19, The Arbitration Workshop (2020), https://www.thearbitrationworkshop.com/post/arbitration-vs-the-world-article-series-part-i-international-arbitration-in-the-time-of-covid-19 (last visited Apr 24, 2020). [3] See, Ihab Amro, Online Arbitration in Theory and in Practice: A Comparative Study in Common Law and Civil Law Countries, Kluwer Arbitration Blog (2019), http://arbitrationblog.kluwerarbitration.com/2019/04/11/online-arbitration-in-theory-and-in-practice-a-comparative-study-in-common-law-and-civil-law-countries/ (last visited Apr 8, 2020). [4] For similar views, see, Mirèze Philippe, Hypochondria About the Place of Arbitration in Online Proceedings, Kluwer Arbitration Blog (2015), http://arbitrationblog.kluwerarbitration.com/2015/09/16/hypochondria-about-the-place-of-arbitration-in-online-proceedings/ (last visited Apr 8, 2020). [5] Prashant Daga, Seat, Venue or Place Of Arbitration: Analysis Of Hardy Exploration And Production (India) Inc, Mondaq (2018), https://www.mondaq.com/india/trials-appeals-compensation/750704/seat-venue-or-place-of-arbitration-analysis-of-hardy-exploration-and-production-india-inc (last visited Apr 24, 2020). [6] See most recently in India, Union of India v. Hardy Exploration & Production (India) Inc., MANU/SC/1046/2018, for the discussion on the meaning of “place”, “venue” and “seat”. [7] See for e.g., Roger Shashoua v. Mukesh Sharma, (2017) 14 S.C.C. 722. [8] See, Gary Born, International Arbitration: Cases and Materials 599–600 (2 ed. 2015). [9] Clause reproduced from an ongoing I.C.C. arbitration between Indian and Singaporean entities. [10] Generally see, UNCITRAL Model Law on International Commercial Arbitration, 692–696 20(1); For a national law based on the Model Law, see, The Arbitration and Conciliation Act, 20 (1996); In England & Wales, see also, Arbitration Act, 53 (1996) which is not a Model Law arbitration law; See also, Osinachi Nwandem, Online Dispute Resolution: Scope and Matters Arising 15 (2014), https://papers.ssrn.com/abstract=2592926 (last visited Apr 8, 2020). [11] Union of India v. Hardy Exploration & Production (India) Inc., MANU/SC/1046/2018. [12] UNCITRAL Model Law on International Commercial Arbitration, supra note 10 at 20(2). [13] Balaji Harish Iyer, supra note 2; See, Adnan Ahmed, Challenges of Electronic Arbitration in Electronic Commerce Transactions, Multi-Knowledge Electronic Comprehensive Journal for Education and Science Publications (2017), https://www.mecsj.com/uplode/images/photo/Challenges_of_Electronic_Arbitration_in_Electronic_Commerce_transactions_2.pdf (last visited Apr 8, 2020). [14] See, Tiffany J. Lanier, Where on Earth Does Cyber-Arbitration Occur?: International Review of Arbitral Awards Rendered Online, 7 ILSA Journal of International & Comparative Law 1–14, 14 (2000); See also, Haitham A Haloush, Jurisdictional Dilemma in Online Disputes: Rethinking Traditional Approaches, 42 The International Lawyer 1129–1146, 1133–1141 (2008); See also, Salvomír Halla, Arbitration Going Online - New Challenges in 21st Century?, 5 Masaryk University of Law & Technology 215–225, 218–221 (2011). [15] Mirèze Philippe, ODR Redress System for Consumer Disputes, 1 IJODR 57–69, 62 (2014); See, Mirèze Philippe, Now Where Do We Stand with Online Dispute Resolution, 6 Int’l Bus LJ 563–576, 571–572 (2010); See also, Vikrant Sopan Yadav, Cyber Arbitration through Lenses of Indian Legal System: An Analysis, 2 International Journal of Law 31–33, 32 (2016). [16] Mirèze Philippe, supra note 15 at 574; See also, Richard Hill, On-line Arbitration: Issues and Solutions, Arbitration International (1999), http://www.umass.edu/dispute/hill.htm (last visited Apr 8, 2020). [17] Mirèze Philippe, supra note 15 at 575.

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