The Role of the Seat in International Arbitration: Theory, Practice, and Implications for Australian Courts

Abstract

A complex question in international commercial arbitration is the extent to which an enforcement court should defer to the decisions of courts at the seat of arbitration. In the recent case of Gujarat, the Federal Court of Australia held that it would generally be inappropriate for an Australian court, called upon to enforce an arbitral award under the International Arbitration Act 1974 (Cth) (IAA), to reach a different conclusion on the same question as that reached by the court at the seat of arbitration. This article critically examines Gujarat in light of the broader debate about the role of the seat in international arbitration jurisprudence. The article contends that the role of the seat is far from settled. In the first place, there are competing theories of international arbitration, each according to a different degree of importance to the seat of arbitration. Second, enforcement courts applying the provisions of the New York Convention have taken very different approaches to the decisions of courts at the seat of arbitration. US courts, for example, generally defer to the decisions of courts at the seat; French courts, on the other hand, tend to disregard the decisions of courts at the seat. Nevertheless, this article contends that the deferential approach taken by the Federal Court in Gujarat and the US courts is the correct one. Australian courts should, for strong policy reasons, defer to the decisions of courts at the seat of arbitration, save in exceptional cases where such decisions are shown on the basis of cogent evidence to be partial and dependent or in violation of basic principles of justice. This approach promotes finality and efficiency in international arbitration whilst upholding the international rule of law.