The Application of the Delocalization Theory and Seat Theory in International Commercial Arbitration

Abstract

This article aims to study delocalization theory and seat theory in international commercial arbitration because such theories have different perspective on the issue whether or not, when parties select particular country as the seat of arbitration, the courts and local laws of that country will govern the arbitral procedure. Delocalization theory argues that arbitration proceedings should be free from any intervention by local laws and courts of the seat of arbitration. Only domestic courts and laws that can intervene are the courts and laws of the place of enforcement.  However, there is another concept which is called seat theory asserting that the national laws and courts of the seat of arbitration have an automatic and legitimate right to govern arbitral proceedings when the arbitration takes place in their jurisdiction. This article argues that it is inappropriate to completely separate the two concepts. It sounds reasonable to recognize autonomy of the parties, principle supporting delocalization, as the core of arbitration, but in some circumstances, arbitral tribunals need assistance from local laws and court of the seat when the arbitral system and arbitration agreement are ineffective in practice to resolve some issues, so the local laws and courts of the seat of arbitration are required to ensure that the arbitration procedures are effective and achieve their goal. Therefore, it may be better to acknowledge that both concepts should work together.