The choice of an arbitration forum can significantly affect the arbitral process. Prakash Pillai and Cynthea Zhou argue that parties should not just settle for a neutral jurisdiction
Arbitration clauses, which are usually dealt with at the end of the negotiation process, are often the most poorly conceived and badly understood clauses in cross-border agreements. They are also frequently mishandled by negotiating parties who are overeager to draw the process to a close.
Functioning on autopilot
One aspect of this problem is the seemingly simple issue of choosing the right forum for dispute resolution through arbitration. Negotiating parties often use a set formula to determine the forum and it goes like this: party A chooses his home jurisdiction; party B disagrees and choose his home jurisdiction; parties finally settle by choosing a city that neither is particularly connected with and which is located halfway in between both.
This simplistic approach is not just lazy, it is also risky as it severely underestimates the importance of the task at hand.
Choice of forum is important as it determines the seat of the arbitration and thereby the procedural laws by which it will be conducted. The forum provides the legal infrastructure for the arbitration and that translates to the laws supporting the arbitration. The legal infrastructure can be broken down into two main categories: statutes and judicial pronouncements.
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Prakash Pillai is the head of the South Asia practice and partner in the international arbitration practice at Rajah & Tann LLP in Singapore. Cynthea Zhou is an associate at the firm’s international arbitration practice.
