Law governing the arbitral process and procedure (Lex Arbitri or Curial Law)

When parties to an arbitration agreement choose a seat of arbitration, it is generally a place that has no connection to them or their commercial relationship. It is typically a neutral location, where the national law is arbitration-friendly and the rule of law respected. Increasingly, the seat chosen will be in a jurisdiction where the judiciary has limited powers to intervene in the arbitral process but is nonetheless able to support the arbitration, particularly in respect of compelling witnesses/the production of documents and the ordering of interim measures.

It is a well-established principle that the arbitration will be governed by the law of the seat or forum of the arbitration. This principle is sometimes referred to as “seat theory”. It is a principle that underpins the New York Convention, which is predicated on the basis of the law of the state where the arbitration takes place and the award made. The UNCITRAL Model Law follows the same territorial link between the legal place (seat) of arbitration and the law governing the arbitration proceeding and its procedure.

Seat theory also includes the notion that an arbitration is positively shaped, as well as governed, by the law of the seat as the legal place of the arbitration. Sometimes a particular jurisdiction might itself be colloquially described as being arbitration-friendly. This usually connotes that the courts and judiciary support, and seek to uphold, the arbitral process and that the law of that jurisdiction, when that jurisdiction is the place of arbitration, allows for the effective and efficient conduct of the arbitral process. It is that national law that will provide for judicial support and assistance through the arbitral process and that will assist parties in, for example, the appointment of the members of the arbitral tribunal where other means of appointment have failed. It should be borne in mind that although the UNCITRAL Model Law has become an international legislative norm, jurisdictions often add to it or amend it.

As such, the choice of the seat of arbitration should be informed by the parties considering carefully what the law of that seat or place actually provides. The law of the seat is likely to be unfamiliar to the parties and it is therefore important that the practitioner provides to the client clear and concise advice on what the choice of seat or place will entail by way of law governing the arbitration. The law of the place or seat in governing the arbitration is often described as the lex arbitri. Only very rarely (and, in practice, where parties have made a positive and usually unwise choice to the contrary) will a law other than the law of the seat govern the arbitration proceedings.

The ambit and content of the lex arbitri is a matter for the particular state. However, the lex arbitri, as the law governing the arbitration, will be expected to comprise a set of rules that shape and govern the conduct of the arbitral process, and it will also invariably contain provisions that seek to ensure fairness and equality of treatment to the parties, while at the same time giving the parties sufficient opportunity to choose their own procedure and rules of evidence. The law of the seat as the lex arbitri (especially where the UNCITRAL Model Law has been followed) will not purport to set out detailed procedural rules as to the way in which the arbitration is conducted.

Those will be matters for the institutional rules used or the procedure agreed in an ad hoc arbitration. However, there are a number of matters that are generally covered by the lex arbitri: • definition of an agreement to arbitrate and the form of such an agreement • what is arbitral under the lex arbitri (that is, what sort of disputes may be referred to arbitration) • the constitution of the arbitral tribunal and grounds for challenging the tribunal • power of an arbitral tribunal to rule on its own jurisdiction (the “competence-competence principle” even in circumstances where the substantive agreement is void on the basis of the principle of separability) • equality of treatment as between the parties • the parties’ ability to agree upon detailed rules of procedure • interim measures to protect the processes and the parties interests within those processes • provision and service of proclaim and defence • proceedings in default • powers of the national court of assist in and support the arbitral process; • powers vested in the arbitrators • form and validity of an arbitral award, and • finality of any award made, including any right to challenge and seek to set aside the award in the courts of the seat of the arbitration.

It is the lex arbitri that ensures effective conduct of proceedings. The legal framework will ensure that the arbitrator’s power to order interim measures are enforced and that judicial assistance is available to support the conduct of the arbitration as appropriate. In addition, it may contain powers for an arbitral tribunal or a court to consolidate two or more arbitrations, as well addressing the issue of arbitrability. In that regard, it should be remembered that differing approaches to arbitrability may have profound practical effect. For example, a claim may be capable of being arbitrated under the lex arbitri, but not under the law of the territory that is the place where recognition and enforcement are sought. In such circumstances, even a valid award might ultimately prove unenforceable.

The law governing the arbitration is often more than simply a set of procedural provisions. Certainly, in some civil law states , such as France, the lex arbitri is very much a procedure tool, but generally, as the list of matters capable of being addressed by the lex arbitri indicates, it is in reality much more.

As a postscript to the above, sometimes the parties concluding an arbitration agreement are tempted to consider whether an arbitration proceeding seated in one jurisdiction should be subject to the lex arbitri of another state (that is, using the law governing arbitration proceedings in state B to be used as the lex arbitri when the arbitration is seated in state A).

Such a course of action has the potential to complicate matters considerably and would mean that, in reality, regard would need to be had to two procedural laws, given that there will be provisions in the arbitration law of the seat that will, in any event, be mandatory.

In practical terms, if parties feel that the arbitration law of a state other than that of the jurisdiction of the seat should be the lex arbitri and is of particular value, the better course might be to seat the arbitration in that other country instead.