Although the term ‘seat’ is usually used to refer to the place where the arbitration hearing is held, it more specifically refers to the jurisdictional location of the arbitration; this governs the applicable procedural law, i.e., what national or state arbitration law applies to the arbitration and which courts will hear disputes regarding the arbitration and appeals of the arbitral award. It does not affect the substantive law of the contract. In principle arbitrations can be, and often are, held in a location other than the seat. Specifying an English seat of arbitration is often favoured because English law is marginally more willing to countenance appeals of an arbitral award on grounds of error of law or gross error of procedure than many other legal sytems. See Home Field Advantage Clause.
It is usually wise to specify the seat of arbitration where the law of a contract is different from the location or venue for the arbitration. If the “seat” is not specifically identified, the law may determine that the ‘seat’ jurisdiction is the same as the venue, whcih may mean that two laws apply to the case. In Shashoua v. Sharma [2009] EWHC 957 (HC – Commercial), the law of the contract was India, but the venue of the arbitration was London, while the contract was silent on the ‘seat’ – the English High Court ruled that this meant that London was the seat and that thus appeals were to the English courts, the English arbitration act applied and procedural issues are thus subject to English law.
The impact of the ‘seat’ of the arbitration can be minor or profound, depending on what the law of the seat treats as procedural as opposed to substantive law. Thus, for example, the availability and extent of discovery will usually be a matter of procedural law, while some jurisdictions are more amenable to appeals of arbitral awards than others. Issues like prejudgement interest, set-off, etc., may be procedural under one jurisdiction’s law, but substantive under another. Indeed, the conflict of law rules that govern whether to select a law that treats a question as procedural or substantive are themselves highly variable between jurisdictions.