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Choice of Arbitration Venue in International Arbitration Agreement

Parties to an international commercial arbitration are generally free to choose for themselves where that arbitration should take place. The failure to make a clear choice of the place of arbitration in the arbitration clause of a contract may lead to unexpected results. A court in the United States ordered an arbitration to proceed in California under the AAA Rules where the arbitration clause did not specify a place of arbitration even though a separate clause in the contract specified that if an arbitration was necessary and was to be held in Peking it was to be subject to the Rules of Procedure of the Foreign Trade Arbitration Commission in Peking. The parties may make the choice of a plaee at any time before the arbitration begins; or they may leave it to be made on their behalf by an arbitral institution (if the arbitration is to be conducted under institutional rules) or by the arbitral tribunal itself.

At some stage, however, a choice will have to be made. The question which then arises is where should an international commercial arbitration be held? Should it, for example, be held in London or Washington, Paris or Geneva, Cairo or Kuala Lumpur? There is no simple or universal answer to this question. The nationalityof the parties to the arbitration will have to be taken into account, since the general practice is to hold an arbitration in a country which is neutral, in the sense that it is not the country of any of the parties to the dispute. The usual residence or place of business of the parties must be taken into account too, because of the need to cut down as far as possible on the expense and inconvenience of travelling. There are political factors, such as the general acceptability of the particular location to the parties and, in particular, the question of whether any restriction is likely to be imposed on the entry of the arbitral tribunal, the Parties, their advisers and witnesses.

There are economic factors, such as freedom to transfer the necessary funds to and from the country concerned. There may well be a need for skilled local support-from lawyers competent to advise on matters relevant to the conduct of the arbitration, or from engineers, surveyors, lawyers and other professionals to provide expert assistance and evidence. Such assistance is less expensive if it is available at the place of arbitration.

There are other practical considerations too, such as the availability of suitable rooms for the hearing, and suitable acommodation for the parties, their advisers and witnesses. Some major cities experience an acute shortage of hotel accommodation at certain times of the year. Other relevant requirements include good transportation facilities, by rail or by air; good communications, by telephone, fax and telex; and support facilities, in terms of shorthand writers, interpreters and so on. These services and facilities form part of the infrastructure of an arbitration. The suitability of a particular place for an international arbitration will depend in part on whether there is a sufficient infrastructure to accommodate the parties; but the more important considerations have to do with the legal environment of the prospective place of arbitration. This will be relevant both to the conduct of the arbitration and to the enforceability of any award rendered.

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