INTERNATIONAL ARBITRATION
SELECTING THE VENUE AND LAW OF ARBITRATION
BY
PROFESSOR JOSEPH NNABUEZH MBADUGHA
mbadughaj@mccarthymbadugha.com; mbadughaj@yahoo.com






OUTLINE
INTRODUCTION
ISSUES TO CONSIDER IN CHOOSING A VENUE
BY THE PARTIES
◦ Equal Access to Justice
◦ Costs
◦ Kompetenz-Kompetenz
◦ Scope of Review of Arbitral Awards
◦ Extent of Judicial Support/Intervention
◦ Enforcement of Award
◦ Parties Legal System
◦ Pool of Arbitrators
BY THE TRIBUNAL
ISSUES TO CONSIDER IN CHOOSING LAWS
INTRODUCTION
VENUE AND LAW OF ARBITRATION ARE CRUCIAL:
1. in realizing the goal of arbitration;
2. they enable the tribunal know the principles to use in determining the
parties rights and obligations;
3. they enable the tribunal know the procedure to follow
A venue or law of arbitration or both may be chosen either the parties or the
arbitral tribunal. The need for a tribunal to choose either or both arises where
there is no express choice by the parties.
ISSUES TO CONSIDER IN CHOOSING A VENUE
BY THE PARTIES
A. Equal Access to Justice
Access to justice is the right to bring one’s dispute before a tribunal or a court,
and the right to enter and participate in the judicial process of adjudication of the
dispute by either a court or a tribunal. It is also the right to have questions
bordering on ones civil right and obligation determine judicially by either courts
or tribunals.
One major importance of access to justice is that commercial men, being aware of their unhindered
right or freedom to submit their disputes to a neutral body for settlement, would naturally and freely
engage in their activities, knowing that any dispute that arises would be so resolved. It becomes
important therefore, in choosing the venue of arbitration, that parties consider the issue of accessibility
of justice. This will involve looking at the law and rules of arbitration of the particular jurisdiction they
intend to choose. This is imperative because procedural and substantive laws of some countries may
contain provisions which may directly or indirectly prevent the disadvantaged from accessing arbitration
and thereby constitute a bar to accessing justice.
Arbitration law of some countries provides for Security for costs which include costs of legal
representation while in some the cost of legal representation is excluded. An order for security for costs
is usually made after commencement of arbitration (upon a respondent’s application) but before the
determination of the substantive dispute. Also, in some jurisdictions, security for costs is not restricted
to arbitration alone. It applies to Litigation 1 to such an extent that if there is an appeal against an award,
the appellant would ordinarily be required to provide security for the respondent’s cost. If an arbitral
tribunal makes an order for security for cost and it is not complied with, the tribunal may dismiss the
claim.
A major disadvantage of security for costs is that it can bar access to Justice as a Respondent may use it
as both a shield and a sword to prevent a financially disadvantaged claimant from pursuing its claim.
B.Costs
One of the objects of arbitration is to obtain a fair resolution of disputes by an
impartial tribunal at less cost to the parties. In some jurisdiction, arbitration may
be expensive because of:
1
Civil Procedure Rules 1998; The Supreme Court Practice (Sweet & Maxwell) 1999, Vol. 1, para 23/1



Pattern of legal representation. In some jurisdictions, there is no fusion of Barrister and
Solicitor whilst in others there is. In the jurisdiction where there is no fusion, a lawyer qualifies as
either of the two; and for any matter requiring the services of a solicitor and a barrister, a party
involved therein must engage both a solicitor and a barrister. The effect of this is that both the
solicitor and barrister are paid separately for the same work. This automatically increases the cost
of arbitration in addition to parties paying the tribunal’s fees unlike in a jurisdiction where there is
no such division;
Foreign exchange rate. Arbitration will be expensive in a jurisdiction where the exchange
rate of its currency is very high in relation to the parties’ or other currencies. The reverse will be
the case in a country which its currency exchanges at or a low rate with the parties’ currencies
Pattern of legal representation and exchange rate impact on costs of
arbitration as parties may appoint arbitrators as well as retain lawyers who
practice at the venue of the arbitration.
C. Kompetenz-Kompetenz
This is a German terminology but in English it means Competence –Competence.
This refers to powers a venue’s law confers on arbitral tribunals to decide
questions of its own jurisdiction, existence and validity of the arbitration
agreement as well as arbitrability of the dispute referred to it.


Consider whether a venue allows arbitral tribunal to rule on issue of its
jurisdiction, existence and validity of arbitration agreement as well as its
arbitrability. See Article 16, UNCITRAL Model Law; Article 1180(1), 5th Part
of the Polish Code of Civil Procedure, amended in 2005; S.12 Arbitration &
Conciliation Act, Laws of Federation of Nigeria 2004; Article 1466 of the
French Code –all permitted this but China does not allow this; and USA
does not allow this except parties agree otherwise
Advantages
--avoids spurious challenges to jurisdiction in court
--saves time and possibility of action being time barred
--saves cost as well

The above advantages may be lost by an appeal against an award on
question of the tribunal’s jurisdiction, validity and existence of an arbitration
agreement as well as arbitrability of the dispute referred to it. However, to
avoid this, an award on the objection may be made at the same time with an
award on the merit of the case. That is, the tribunal renders two awards in
one. This will also avoid multiple appeals, that is, an appeal against any earlier
ruling on the question of jurisdiction and on a subsequent award on the
merit.
D. Scope of Review of Arbitral Award


Arbitration, a private tribunal for resolution of commercial disputes, is less
strict or formal than the regular courts and has no appellate arbitral tribunal
for review of arbitral proceedings and awards
This would lead to:
--likelihood of sacrificing justice at the altar of arbitration
--rights and liabilities of parties may not be determined judicially
--wrong decisions may go unventilated
--suffocating effect on commerce and commercial law
These may erode the confidence of commercial men in arbitration. There is
therefore need for judicial review of arbitral awards by court
 A venue that permits judicial review of arbitral award is advisable although it
depends on what the parties want. If the parties do not want a judicial review,
they may exclude their rights of appeal or choose a jurisdiction that does not
allow appeal.
E. Extent of Judicial Support/Intervention
The doctrine of party autonomy presupposes that once parties chose to arbitrate,
courts would not intervene in the arbitration since that would be in contravention
of the parties’ freely exercised will. However, Arbitral Tribunals do not have
coercive powers to ensure compliance with its proceedings and orders or to
forestall the breach of the arbitration agreement and therefore needs courts’
support.

Tribunals need court support in:
--constituting of arbitral tribunals
--extension of time to commence arbitration
--securing attendance of witnesses and taking evidence
--stay of proceedings in favour arbitration
--preservation of properties
 Courts in most Jurisdictions that adopted UNCITRAL Model Law support
arbitration as stated above. Therefore, in selecting a venue it is advisable to
ensure that the intended venue supports/intervene in arbitration within
limits.
F. Enforcement of Award

New York Convention award enforceable on basis of reciprocity – it must be
an award rendered in a contracting State
-- See Article I(3), New York Convention

Award rendered anywhere enforceable in UNCITRAL Model Law State
--See Articles 1(2), 17H, 17I,17J, 35 & 36 of the UNCITRAL Model Law
> Not all the countries that incorporated New York Convention adopted
Articles 17H,17I,17J, 35 & 36 of UNCITRAL Model Law whilst incorporating
the UNCITRAL Model Law. A good example is UK


If venue is not signatory to either the New York Convention or has not
incorporated Articles 17H, 17I, 17J, 35 and 36 of the UNCITRAL Model Law
and an award debtor had no or insufficient assets at the venue, enforcement
of any award render in that venue in other countries where the award
debtor may have assets is impossible
Therefore before selecting a venue ensure the intended venue has
incorporated either the New York Convention or the UNCITRAL Model law
or to both
G. Pool of Arbitrators
Some jurisdictions may have large pool of arbitrators whilst some may not.
Disadvantages of small pool of arbitrators include:
--scarcity of arbitrators
--arbitrators’ fees may be high
--may lead to appointing arbitrators not resident in the venue. Appointing
arbitrators not resident in the venue of arbitration may cause some
inconvenience to arbitration in terms of scheduling meetings and sittings of
the tribunal, travelling cost and accommodation of the arbitrator.
> Availability of Arbitrators in an intended venue to be taking into consideration
in selecting a venue for arbitration although it depends on what the parties
want.
H. Accessibility of the intended Venue
 Lawyers from other jurisdictions who are not qualified to practice in another
jurisdiction may not be permitted to practice arbitration either as an
attorney or an arbitrator by the laws of that jurisdiction. By Japanese laws for
example, a lawyer who is not qualified under Japanese law to practice in
Japan is not allowed to practice any form of law including arbitration in Japan
 It may be very difficult if not impossible to obtain entry permit or visa of
some countries
 Immigration issues at the entry port. In some countries the immigration laws
may be very harsh and the country issues visa on the ground of non access
to paid or unpaid employment. The immigration officers at the entry port of
such country may conceive a person entering into the country to participate
in international arbitration either as a counsel or arbitrator as going to have
access to paid employment and may by that reason deny such person entry
into that country.
 Where
any of the above happens to any party’s counsel or appointed
arbitrator, the party may be disappointed in arbitration and may feel it has
been denied the right to fair hearing and trial though not by the tribunal but
the blame will definitely be on the tribunal and any person instrumental to
the choice of such a country as the venue of the arbitration.
I. Public Policy
Where a contract or the manner of its performance is contrary to the public
policy of any given country, courts of that country will not enforce such a
contract or provide any remedy arising from the contract. Likewise
arbitration as a form of dispute resolution in that given country will not
assist either of the parties in a dispute arising from such a contract or its
performance. There are certain objects which if contracted upon or form
part of a contract or manner of its performance would be invalidated on
grounds of public policy. There may include:
i.
ii.
iii.
iv.
v.
objects which are illegal by common law or statute;
objects that are injurious to good governance either in the field of
domestic or foreign affairs;
objects which interfere with the proper working of the machinery of
government;
objects economically against public interest;
objects injurious to marriage and morality 2.
Thus, in the Nigeria case of Pan Bisbilder (Nig.) Ltd. v. F.B.N Ltd., 3, the
Supreme Court of Nigeria refused to enforce an illegal contract on grounds
of public policy expressed in the maxim’ex turpi causa non oritur actio’.
Also, in the English cases of Soleimany v. Soleimany 4 the court refused to
enforce an award for being contrary to public policy and that the
underlying contract was illegal.
Therefore, it is worthwhile to consider whether the underlying contract and
its mode of performance will be contrary to public policy by the substantive
law or by the law of the intended venue as certain degree of public policy
are international and will be applied by several countries to any dispute
arbitrated in their country whether the contract was entered into in their
country or not.
Selecting the venue
J. By the Tribunal
The need for the tribunal to choose a venue arises if parties fail to choose the
venue either at the time of agreement or Preliminary meeting
--See Article 1184(2), Polish CCP; Article 20(1) UNCITRAL Model Law 2006;
Article 14(1) ICC Rules 1998
In exercising this function the tribunal will take the following into consideration:
--Law of the substantive dispute /arbitration; where the cause of action arose;
location of parties’ legal representatives and witnesses
2
3
4
Chitty on Contracts OP Cit. Page 941 para 16-005
(2000)1 Nigerian Weekly Law Report (Pt.642), 682 at 695, paras 14-1
(1998) 3 WLR 811. See also Westacre Investment Inc. v. Jugimport-SDPR Holding Co. Ltd & Anor.
(1999) Pt.2 Lloyd’s Rep. Vol. 2p 65.
ISSUES TO CONSIDER IN CHOOSING THE LAW OF
ABITRATION
Different systems of laws may apply to different components or parts of
international arbitration but I will at the stage be concerned with the laws that
determine the validity of the arbitration agreement and the laws governing the
arbitration, the curial law or law of the seat of arbitration. In choosing these laws
by the parties they should take the following into consideration: accessibility and
equal access to Justice
K. Accessibility
In determining this, parties should take the following into consideration:
. Availability of case law and statute to parties
. Whether an expert opinion on any provision of the law is obtainable with ease
. The above necessary where the laws are not that of the seat of arbitration
L. Equal Access to Justice
The same principles as discussed under this heading in choosing the venue are
applicable here.
M. CONCLUSION
A CAREFUL CONSIDERATION OF THESE ISSUES WILL ENABLE ONE AVOID
POSSIBLE PITFALLS IN PLANNING ARBITRATION.