Zeph Investments Pte Ltd v The Commonwealth of Australia - PCA Case No 2023-40 - Decision on the Seat of the Arbitration - 28 September 2023
Country
Year
2023
Summary
1. The Tribunal refers to the Parties' submissions and communications of 3 July and 3 and 18 August 2023 regarding the seat of the arbitration. The Claimant argues in favor of Geneva, while the Respondent argues in favor of London, or alternatively The Hague, which the Tribunal had proposed as a compromise solution.
2. Article 25(5) of Chapter 11 of the AANZFTA provides that, unless the parties agree, the Tribunal must set the seat as follows:
Unless the disputing parties otherwise agree, the tribunal shall determine the place of arbitration in accordance with the applicable arbitration rules, provided that the place shall be in the territory of a State that is a party to the New York Convention.1
3. The "applicable arbitration rules" referred to in this provision are the 2021 UNCITRAL Arbitration Rules (the "UNCITRAL Rules").2 Article 18(1) of the UNCITRAL Rules states where relevant:
If the parties have not previously agreed on the place of arbitration, the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case.3
4. As for the applicability of the New York Convention, which Article 25(5) of Chapter 11 of the AANZFTA sets as a requirement for the choice of the seat, Geneva, London, and The Hague are all in the territory of a State party to the New York Convention.
5. As the Parties have not agreed on a place to serve as the seat of the arbitration, this is a matter for the Tribunal to determine "having regard to the circumstances of the case" under Article 18(1) of the UNCITRAL Rules. To that effect, the 2016 UNCITRAL Notes on Organizing Arbitral Proceedings (the "UNCITRAL Notes") offer some guidance.
6. As a general matter, the selection of the seat triggers the application of the international arbitration law of the seat and the jurisdiction of the local courts in aid and control of the arbitration. It also determines the "nationality" of the award for enforcement purposes. In this vein, the UNCITRAL Notes set out two "prominent legal factors" to determine the seat of the arbitration. First, the "suitability" of the seat's lex arbitri.4 Second, the "law, jurisprudence and practices" at the seat, particularly regarding "court intervention in the course of arbitral proceedings", the "scope of judicial review or of grounds for setting aside an award", and "any qualification requirements with respect to arbitrators and counsel representation".5 In addition, the UNCITRAL Notes provide for the New York Convention requirement already met by the Parties' seat proposals.
7. The UNCITRAL Notes further state that, when it is expected that hearings will be held at the seat, "other factors" may become relevant. 6 For instance, the "convenience of the location",7 the "availability and cost of support services",8 and the "location of the subject matter in dispute and proximity of evidence".9 In practice, these additional factors and other cost-efficiency considerations often play a role in the determination of the seat irrespective of whether it coincides or not with the venue for the hearings. Lastly, while the UNCITRAL Notes do not refer to the neutrality of the seat vis-à-vis the parties or the subject matter of the arbitration, this is a well-established factor, which both Parties have addressed in their submissions.
8. Against this background, it is undisputed, and rightly so, that Geneva, London, and The Hague meet the first and second prominent legal factors indicated above. That is, each option has a suitable lex arbitri and appropriate law, jurisprudence and practices in terms of court intervention, judicial review, and qualification requirements. Swiss, English and Dutch courts are also highly reputed and have ample experience in dealing with investment arbitrations.
Accordingly, the Parties' submissions on the seat focus on other factors: neutrality on the one hand (I), and cost, efficiency, and convenience on the other (II).
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17. Therefore, the inefficiencies or inconveniences, if any, associated with potential set aside proceedings in Switzerland, appear immaterial all things considered.
18. For the above reasons, the Tribunal determines that the seat of the arbitration shall be Geneva, Switzerland.
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