Seat and place of arbitration

I am a chief operations officer at a certain company in Tanzania. Our company is intending to conclude a certain commercial contract with a South African company. We have allowed our internal lawyer to review the contract and one of his comments is that our arbitration clause is not clear, for it confuses place and seat of arbitration. We are not sure if these are different and, if yes, whether the difference has any significant implication on the arbitration proceedings. Kindly advise.

DJ, Arusha

Thank you for your interesting question. Although we have not read your arbitration clause, we can still clarify the point. It should be noted that in a contract containing arbitration clause, it is accepted that there could be multiple applicable laws. First, the substantive law, which is applicable in construing the substantive provisions of the underlying contract. Secondly, the law governing arbitration (internal lex arbitri) which governs certain procedural aspects of arbitration such as appointment of arbitrators, commencement of arbitration proceedings, hearings and proceedings of the arbitral tribunal, and the formal requirements of the award. These are in fact internal rules of the parties. However, the parties may opt to adopt the available modal arbitration rules such as UNCITRAL Arbitration Rules. Third, the curial or procedural law (external lex arbitri) which governs the external relationship between the arbitral tribunal and the Courts, concerning the exercise by the Courts of their supervisory and support jurisdiction to the arbitral tribunal on matters such as granting of interim and preservative orders, securing the attendance of witnesses, removal of arbitrators and enforcement of the award.

In international arbitration law and practice, the jurisdiction that supplies the procedural law that defines the extent to which local Courts will involve themselves in the arbitration proceedings becomes the seat or arbitral seat of arbitration. Section 8 of the Arbitration Act of Tanzania defines seat of arbitration as juridical seat of arbitration designated in accordance with the law applicable on matters that are subject of the arbitration; by the parties to the arbitration agreement; or by any arbitral tribunal or other institution or person vested by the parties with powers in that regard.

As such, while the country that hosts arbitration hearings becomes a place of arbitration, the country that becomes a juridical or legal home of arbitration is a seat of arbitration. Seat of arbitration is a legal construct, not a geographical location. A country of seat of arbitration supplies the law that determines the extent to which national Courts will have supervisory jurisdiction over arbitration, nationality of award, and how the award may be challenged.