{"id":2383,"date":"2024-06-28T11:20:14","date_gmt":"2024-06-28T11:20:14","guid":{"rendered":"https:\/\/blog.nicarb.org\/?p=2383"},"modified":"2024-06-28T11:53:34","modified_gmt":"2024-06-28T11:53:34","slug":"do-tribunals-have-the-power-to-relocate-the-arbitral-seat","status":"publish","type":"post","link":"https:\/\/blog.nicarb.org\/index.php\/2024\/06\/28\/do-tribunals-have-the-power-to-relocate-the-arbitral-seat\/","title":{"rendered":"Do Tribunals Have the Power to Relocate the Arbitral Seat"},"content":{"rendered":"\n

Freshfields Bruckhaus Deringer
European Union\/June 21 2024<\/strong><\/p>\n\n\n\n

Over the past two years, the arbitration between the Heirs of Sulu and Malaysia has
featured repeatedly in the arbitration news. Surprisingly, however, a thorny legal question
that the sole arbitrator addressed has largely escaped the headlines: do tribunals have the
power to transfer the seat of arbitration absent agreement from the parties to the
proceedings?
As explained in more detail below, even though tribunals have found that the power to
transfer the seat may exist under the applicable rules, no tribunal to date has overridden a
party-agreed seat.
This post addresses this issue as follows: We first provide an overview of the applicable
legal principles, and then survey arbitral decisions addressing the issue. The post ends with
concluding remarks.
Party autonomy v. the tribunal\u2019s power to conduct the proceedings
The principle of party autonomy has been described as the cornerstone of international
arbitration. It extends to, among other things, the parties\u2019 freedom and right to determine the
legal seat, or place, of the arbitration. Along with the agreement to arbitrate and the
procedural rules, the choice of seat is one of the most important expressions of party
autonomy. It determines the courts with supervisory jurisdiction over the proceedings, the
remedies and recourse available in relation to the award and, in many cases, the law
applicable to procedural issues. The law of the seat can also govern the parties\u2019 capacity to
arbitrate.
For these reasons, choosing a seat should be a decision that the parties make by
thoughtfully and carefully weighing the benefits and disadvantages of different jurisdictions.
And when the choice of seat is included in the arbitration agreement, as any other
contractual clause, the seat may only be changed by agreement of the parties. However,
just like with other contractual clauses, there may be arguments\u2014like impossibility, duress,<\/p>\n\n\n\n

and a fundamental change in circumstances\u2014that could justify reforming or otherwise
changing the contractual text, depending of course on the dictates of the applicable law.
So, what happens when one of the parties considers that there are circumstances that
make it impossible to conduct the arbitration in the previously agreed seat?
Survey of arbitral decisions on the transfer of the seat
While uncommon, several tribunals have addressed the question of relocating the seat
without mutual agreement of the parties.
Based on the publicly available decisions, an alleged change of circumstances appears to
be the most frequently invoked ground for changing the seat. This is unsurprising given that
many jurisdictions generally recognize that a fundamental change of circumstances may
justify that a third party\u2014be it a court or arbitral tribunal\u2014revise the parties\u2019 contractual
arrangements (take, for example, the rebalancing of a contract in some civil law systems or
termination due to frustration).
With respect to the question at issue, both scholars and institutions agree that exceptional
circumstances may justify revising a parties\u2019 agreement on the seat. The Institut de Droit
International was among the first to acknowledge this possibility. In a 1989 resolution, the
Institut included the following provision: \u201cShould it become unduly difficult to carry on an
arbitration at the agreed place, the tribunal is entitled, after consultation with the parties, to
remove the arbitration to such place as it may decide.\u201d (see Article 3(d) of the Resolution ).
Since then, other institutions have addressed the issue. For instance, the\u00a0Secretariat\u2019s
Guide to ICC Arbitration\u00a0(chapter 3) notes that \u201c[i]n extreme cases\u00a0where the place of
arbitration initially agreed upon can no longer function as such . . . it is conceivable that a
party could apply to the arbitral tribunal to change the place of arbitration.\u201d In the same vein,
Gary Born notes that \u201crecognition of party autonomy is central to international arbitration
and only exceptional circumstances justify disregarding agreements on the arbitral seat.\u201d
(see G. Born, \u201cSelection of Arbitral Seat in International Arbitration,\u201d in\u00a0International
Commercial Arbitration\u00a0(2021) , \u00a714.04(B)(2)).
The issue has been addressed by tribunals, as follows:
\uf0b7 Himpurna California Energy Ltd. v. Republic of Indonesia (II)\u00a0(seeICCA
Yearbook Commercial Arbitration (Vol XXV), pp. 109-215): While this arbitration
seated in Jakarta was ongoing, the claimant applied to change the seat because the
Indonesian courts issued anti-arbitration injunctions and the respondent State
allegedly threatened the claimant\u2019s employees, witnesses and counsel and the
arbitral tribunal with fines and\/or imprisonment if the arbitration continued (later, it
was reported that the government allegedly arranged the abduction of a co-
arbitrator). The claimant alleged that these were changed circumstances making
arbitration in Jakarta unfeasible. The tribunal rejected the claimant\u2019s request, though
it relocated the physical venue to the Netherlands.
\uf0b7 ICC Cases No 10373 and 10439\u00a0(seeP. Lalive,\u00a0On the transfer of seat, p. 6): These
related cases (seated in Belgrade) concerned a dispute between a U.S. corporation
and the Serbian state and a Serbian state enterprise. The U.S. party applied to
transfer the seat given the open conflict between the United States and Serbia
during the Milosevic regime, which allegedly controlled the same Serbian judiciary
that had rendered decisions expropriating the claimant\u2019s investments, which gave<\/p>\n\n\n\n

rise to the arbitration. The tribunal rejected the request because none of the
arbitrators had been subject to pressure from either Serbia or the U.S., and hearings
could be held at a physical venue outside of Serbia.
\uf0b7 National Iranian Oil Co v Ashland Oil Co\u00a0(seeNat\u2019l Iranian Oil Co. v. Ashland Oil,
Inc., 817 F.2d 326 (5th Cir. 1987)): In this case, the claimant, an Iranian state owned
company, argued that the Iranian revolution had rendered the parties\u2019 arbitration
agreement in Tehran inoperable. The request was brought before a U.S. court,
which found that principles of contract law could be applied to deny recognition of an
arbitration agreement. However, it rejected the claimant\u2019s request to relocate the
seat because it considered that the claimant, as a state-owned entity, could not
claim that the revolutionary changes were unforeseen.
\uf0b7 Heirs to the Sultanate of Sulu v Malaysia,\u00a0Final Award, \u00b6\u00b6 133-45: The sole
arbitrator had set Madrid as the seat of the arbitration because the arbitration
agreement was silent on the issue. The claimants later requested that the seat be
relocated after the Madrid courts vacated the sole arbitrator\u2019s appointment. The sole
arbitrator reasoned that the Superior Court\u2019s judgment \u201ccreated a disruptive situation
in the arbitration\u201d that \u201cthreaten to render the [a]rbitration [a]greement inoperative or
incapable of being performed.\u201d The arbitrator granted the request and relocated the
seat to Paris.
\uf0b7 Pope & Talbot v Canada,\u00a0Ruling Concerning the Investor\u2019s Motion to Change the
Place of Arbitration, \u00b6 14): In\u00a0Pope & Talbot, a NAFTA dispute under the UNCITRAL
Rules, the tribunal accepted that it had the authority to change the seat of arbitration.
However, in that case the parties had not contractually agreed on the seat of the
arbitration, rather the tribunal itself had set the original seat of arbitration. The
tribunal ultimately denied the claimant\u2019s request because the proceedings were well
underway, and it was not efficient or effective to change the seat at that point.
\uf0b7 Europa Nova Ltd. V Czech Republic,\u00a0Award, \u00b6\u00b6 24, 26, 38: In this case, brought
under the Energy Charter Treaty, and the UNCITRAL Rules, the tribunal had set the
seat of arbitration in Paris. The claimant later requested the transfer of the seat of
arbitration citing the request of the European Commission for leave to intervene in
the proceedings and certain actions taken by it and E.U. courts in unrelated
arbitrations. The tribunal granted the request and transferred the seat to Geneva,
Switzerland.
Concluding remarks
The decisions discussed above show that while a tribunal may have the power to change
the seat, that power is typically exercised only in extreme situations. In the two cases in
which tribunals granted the request for transfer, the seat had been set by the tribunal itself,
and the decisions were motivated by circumstances that involved interference with the
arbitral proceedings. In neither case did the tribunal revise or replaced the seat agreed by
the parties\u2019 arbitration agreement.
Tribunals deciding on the transfer of the seat should carefully balance the principles at
stake, and consider the parties\u2019 autonomy and the extent to which the circumstances
invoked prevent the fair conduct of the arbitration.<\/p>\n","protected":false},"excerpt":{"rendered":"

Freshfields Bruckhaus DeringerEuropean Union\/June 21 2024 Over the past two years, the arbitration between the Heirs of Sulu and Malaysia hasfeatured repeatedly in the arbitration news. Surprisingly, however, a thorny legal questionthat the sole arbitrator addressed has largely escaped the headlines: do tribunals have thepower to transfer the seat of […]<\/p>\n","protected":false},"author":1,"featured_media":2386,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[20],"tags":[195,196],"class_list":["post-2383","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-arbitration-insights","tag-adr-2","tag-arbitration-2","col-lg-4 col-md-6"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/blog.nicarb.org\/wp-content\/uploads\/2024\/06\/ADR-Solutions-2.png?fit=1080%2C755&ssl=1","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pcb80P-Cr","jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/posts\/2383","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/comments?post=2383"}],"version-history":[{"count":3,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/posts\/2383\/revisions"}],"predecessor-version":[{"id":2408,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/posts\/2383\/revisions\/2408"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/media\/2386"}],"wp:attachment":[{"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/media?parent=2383"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/categories?post=2383"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/tags?post=2383"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}