Each country has its own procedural rules and which country's rules apply is determined by the parties agreeing as to the seat of the arbitration.

It is sometimes called the place of the arbitration and sometimes called the Lex arbitri.

It provides the general framework for rights, duties and conduct of the arbitration

The arbitration agreement must be construed to determine the seat.

It is different to the venue of the arbitration.

For example if the Sydney Australia was designated as the seat then the Commercial Arbitration Act 1974 (Cth) would apply subject to the other provisions of that act applying.

Thereafter the agreement pursuant to which the arbitration was commenced must be examined to see if it incorporates any rules or not.

Sometimes the agreement may incorporate some rules by reference.

eg. the ACICA model arbitration clause provides:

Any dispute, controversy or claim arising out of, relating to or in connection with this contract,
including any question regarding its existence, validity or termination,
shall be resolved by arbitration in accordance with the ACICA Arbitration Rules.
The seat of arbitration shall be Sydney, Australia [or choose another city].
The language of the arbitration shall be English [or choose another language].
The number of arbitrators shall be one [or three, or delete this sentence and rely on Article 8 of the ACICA Arbitration Rules].

It can be seen that by using this clause the entire ACICA Arbitration rules are incorporated and apply.

Our view is that the rules required for each arbitration vary and hence having one rule to suit all does not work.

In American Diagnostica Inc v Gradipore Ltd ¹⁾, Giles CJ Comm D said²⁾:

The seat of the arbitration is not necessarily where it is held,
although where the parties have failed to choose the law governing the conduct of the arbitration
it will prima facie be the law of the country in which the arbitration is held
because that is the country most closely connected with the proceedings³⁾

The seat of the arbitration as compared to the actual place of hearing can be important
because it determines the procedural law to be applied and not just who has to pay for the airfares to get to the place where the dispute is heard.

Sometimes the governing law, which determines the applicable substantive laws, is the same as the seat but not always.

If it is not the same then problems can arise.

• Commercial Arbitration Act 2010 (NSW), s28
  • The arbitral tribunal must decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute.
  • Any designation of the law or legal system of a given State or Territory must be construed, unless otherwise expressed, as directly referring to the substantive law of that State or Territory and not to its conflict of laws rules.
  • Failing any designation by the parties, the arbitral tribunal must apply the law determined by the conflict of laws rules which it considers applicable.
  • The arbitral tribunal must decide the dispute, if the parties so agree, in accordance with such other considerations as are agreed to by the parties.
  • In all cases, the arbitral tribunal must decide in accordance with the terms of the contract and must take into account the usages of the trade applicable to the transaction.