Guide to Arbitral Institutions and the Seat of Arbitration in London

• What rules will apply to the arbitration process? (the Rules), and
• What national law will govern the procedure? (the Seat).

Our series will cover a variety of Rules and Seats, starting with the London Court of International Arbitration (“LCIA”) Rules, with the relevant arbitration seated in London, England. But first, back to basics — what are the Rules of an arbitration and what is the purpose of including the Seat in your arbitration agreement?

The Rules:

It is common, and typically preferred, for parties to choose an arbitral institution to administer the arbitration by choosing a set of arbitral rules. An administered arbitration significantly lowers the administrative burden on the parties and the tribunal, such as by the institution distributing documents, assisting with the establishment of the tribunal, managing fees and payments and managing the disclosure process during arbitrator appointments and conflict of interest challenges. An administered arbitration also allows for scrutiny of the arbitral award before it is sent to the parties. In contrast, an ad hoc arbitration does not guarantee the smooth running of the arbitration or any scrutiny of the award, as the parties will have to specifically agree on all of these steps. This can add to the time and cost of the arbitration process. Where an arbitral institution is chosen to administer the arbitration, that institution will generally have institutional rules that set out, amongst other things, the process and timing for commencing proceedings, how to establish a tribunal, management of hearings, and awards. It is key to carefully consider which set of rules is best for your specific circumstances, as each set of rules has a slightly different approach to various procedural issues.

The Seat:

The ‘seat’ of arbitration refers to the legal jurisdiction in which the arbitration is considered to be located for procedural and administrative purposes.

The seat determines the substantive law governing the arbitration proceedings (and, depending on the jurisdiction, may also govern the arbitration agreement itself) and the arbitration award. Where the law of the seat also applies to the arbitration agreement itself,¹ this includes laws related to the validity, interpretation, and enforcement of the arbitration agreement and the ultimate arbitral award. The seat determines where the award was made, which is key for enforceability. The courts of the seat also have a supervisory role, to support the arbitration process, including enforcement of interim measures.

A different system of law may be selected to decide the substantive issues in dispute. For example, you could have a sale and purchase agreement that is governed by the laws of France but provide for dispute resolution seated in London. When preparing your arbitration agreement, it is key that you consult your counsel team on the potential impact of the arbitration agreement, including the interrelation between your governing law and the arbitration agreement.

The below sets out a handy checklist of key considerations if you plan to include the LCIA Rules with the arbitration seated in London, England in your arbitration agreement.

The London Court of International Arbitration Rules 2020² and London, England as the Seat of arbitration

THE RULES

How to commence arbitration under the LCIA Rules

Any party wishing to commence arbitration under the LCIA Rules must submit a written Request for Arbitration to the Registrar of the LCIA Court and to all other parties to the arbitration. Submission is done electronically, and should include, amongst other things, the substantive details of the dispute as well as the procedural details of any dispute resolution process set out in the contract between the parties (e.g. arbitral seat, language), a copy of the contract and, if required in the arbitration agreement, the party’s nomination for arbitrator.

A registration fee must be paid for the arbitration to commence. The Commencement Date of the arbitration is the later of the date the Request for Arbitration is submitted, or the registration fee is received. This is a key point to bear in mind in relation to limitation periods.

How to respond to a Request for Arbitration

A responding party must submit a written Response to the Request for Arbitration to the Registrar within 28 days of the Commencement Date. Submission is done electronically, and should include, amongst other things, confirmation or denial of all or part of the claim advanced by the Claimant, a statement briefly summarising the details of the dispute, any counterclaim, a response to any statement regarding the procedural matters, and, if required in the arbitration agreement, the party’s nomination for arbitrator.

Failure to nominate or propose an arbitrator candidate within the time for delivery of a Response (or such other time period as is agreed by the parties) constitutes an irrevocable waiver of that party’s opportunity to nominate or propose any arbitrator candidate.

However, failure to deliver any or any part of a Response within time or at all will not (by itself) preclude the Respondent from denying any claim or from advancing any defence, counterclaim or cross-claim in the arbitration.

Under the LCIA Rules: How are arbitrators appointed?

The LCIA alone has the power to appoint the Tribunal. However, it will take into account any written agreement or joint nomination by the parties or nomination by the other candidates or arbitrators and in the majority of cases, the parties nominate the arbitrators rather than the LCIA.³

In practice, the parties often contract to nominate one arbitrator each, who then work together (and, if contracted to do so or if they so wish, with the parties) to select the presiding arbitrator. This is typically preferable, as it gives the parties the opportunity to select tribunal members that they consider to have particular relevant expertise for their case. If the parties are unable to agree on the arbitrators to be appointed, the LCIA Court shall make the nomination(s) and appointment.

If the LCIA nominates the Tribunal, it will appoint a sole arbitrator unless the parties have agreed otherwise in writing or the LCIA Court determines that in the circumstances a three-member tribunal is appropriate. While the LCIA maintains a database of arbitrators, it may select an arbitrator outside that pool.

Unless otherwise agreed in writing, where the parties are of different nationalities, a sole arbitrator or the presiding arbitrator shall not have the same nationality as any party.

Once the arbitrator(s) is/are nominated, the LCIA must appoint the Tribunal either:

a)      “promptly” following submission of the Response (due 28 days after the Request), or
b)      if no Response is received, “promptly” after 28 days from the date the Request for Arbitration is received.

Under the LCIA Rules: What is the general timeline for arbitration?

While, with the majority of arbitrations, the timeline for the proceeding is determined by the Tribunal (in discussion with the parties), there are certain procedural timelines prescribed under the LCIA Rules:

a)      the LCIA must appoint the arbitrators “promptly” following receipt of the Response, or, if no Response is received, after 28 days from the Commencement Date;
b)      the parties and the Tribunal must make contact no later than 21 days after the Tribunal is formed.

In addition, the LCIA Rules provide a timeline for the exchange of written submissions that may be relied on if the parties do not otherwise seek to agree upon an alternative timeline and have such timeline ordered by the Tribunal. The LCIA Rules provide that submissions be provided at intervals of 28 days, which may be suitable for simple disputes but may not be sufficient time for complex disputes with multiple witnesses and expert evidence.

The Award

The Tribunal may make separate awards on different issues at different times, including interim payments on account of any claim, counterclaim or cross-claim. If there is any disagreement on any issue, the majority of the Tribunal will decide.

The Tribunal will make any award in writing. Unless the parties agree otherwise, the award shall state the reasons upon which the decision is based. All assenting arbitrators must sign the award. The Tribunal may express the award in any currency.

The presiding arbitrator is responsible for delivering any award to the LCIA Court. The LCIA Court Registrar will authenticate the award and transmit it to the parties. The LCIA Court will not transmit the award if there are any outstanding fees owing.

The award is final and binding on the parties. The parties are obligated to carry out the award immediately, unless there is need for correction.

Corrections to the Award

Within 28 days of receipt of any award, a party may request the Tribunal to:

a)      correct in the award any error in computation, any clerical or typographical error, any ambiguity or any mistake of a similar nature; OR
b)      make an additional award as to any claim, counterclaim or cross-claim presented in the arbitration but not decided in any award.

Requests are made by submitting a written request to the LCIA Registrar (copying all of the parties).

The Tribunal will consult with the parties and may deal with the request by recording it in an addendum to the award. The Tribunal may also amend ay computational or clerical errors on its own initiative, within 28 days of the date of the award.

Under the LCIA Rules: Are there restrictions on what arbitral seat or applicable law may be selected?

Parties may select any seat or applicable law.

However, if there is no agreement, the default seat is London, England and the law applicable to the arbitration agreement shall be the law of the seat (i.e. English law).

The hearing may be held in any geographical location, regardless of the nominated seat.

Under the LCIA Rules: Is there an option for an expedited procedure?

There is no specific expedited arbitration procedure or rules, however, the LCIA Rules allow for parties to apply to have the arbitrators appointed more quickly than normal where there is “exceptional urgency”.

The Tribunal does have power (either on application of a party, or its own initiative) to issue an “Early Determination” of any claim, defence, counterclaim, cross-claim, defence to counterclaim or defence to cross-claim. The Tribunal may conclude (and issue an award) that a matter is manifestly outside the jurisdiction of the Tribunal, or is inadmissible or manifestly without merit.

Under the LCIA Rules: Can parties appoint an Emergency Arbitrator?

Before the Tribunal is formed, the parties may apply at any time for the appointment of a temporary sole arbitrator (an “Emergency Arbitrator”) to decide a claim for “emergency relief”, including, for example, freezing orders and injunctions.

If the application is accepted, the LCIA will appoint the Emergency Arbitrator within 3 days of receiving the application (or if not, as soon as possible).

The Emergency Arbitrator must decide the claim within 14 days of their appointment.

It is important to note that, under the Arbitration Act 1996 (discussed further in relation to the Seat below), the English court has power to make orders supporting arbitration where it is urgent and necessary to preserve evidence or assets. However, this power is limited where the Tribunal has power or is able to act. Subject to the terms of the relevant contract, the court may not be able to act where timely and effective relief through appointment of an Emergency Arbitrator is available under LCIA Rules.

Under the LCIA Rules: How are the fees for arbitration assessed?

From 1 December 2023, and as of the date of publication, the Registration fee (payable with the filing of a Request) is £1,950.

The parties will be required to pay an Advance Payment for Costs. This amount is usually determined by reference to the amount in dispute and other relevant factors. 

The LCIA provides a schedule of administrative fees (at £190 to £300 per hour) and arbitrators’ fees (at £250 to £650 per hour, unless exceptional circumstances require higher fees), which the parties are required to pay, along with administrative and arbitrator expenses.

Under the LCIA Rules: Can the parties have a virtual or hybrid hearing?

The LCIA Rules do not include express provisions on procedures for virtual or hybrid hearings, but they generally provide flexibility for parties to agree on the conduct of hearings and conferences, which can include virtual hearings by conference call or videoconferencing. In practice, it is very common for procedural hearings to be held via conference call or videoconferencing, and virtual hearings have become more common since the Covid-19 pandemic (though they are not necessarily the default position, particularly for a complex dispute requiring fact or expert witness evidence).

Under the LCIA Rules: How can proceedings be consolidated?

At the request of a party, the Tribunal may decide to consolidate proceedings with one or more other arbitrations if all arbitrations are subject to the LCIA Rules, and:

a)      the parties agree in writing;
OR
b)      the arbitrations were commenced under the same arbitration agreement or compatible arbitration agreements; AND
c)      the arbitrations are either between the same disputing parties, or arise from the same transaction (or series of transactions).

 The Tribunal also has power to initiate consolidation without a party application.

Under the LCIA Rules: What disclosures do arbitrators and parties have to make?

Arbitrators are required to disclose any circumstances that may give rise to justifiable doubts as to their impartiality or independence, and to avoid any conflicts of interest. This is an ongoing duty. These disclosure requirements aim to ensure the integrity and fairness of the arbitration process.

Under the LCIA Rules: Are awards and hearings confidential?

The LCIA Rules contain strict confidentiality obligations, which apply to the parties, the arbitrators and the LCIA itself. The LCIA does not publish any documents relating to the arbitration, the award or any part of the award or the outcome, without the prior written consent of all parties and the Tribunal.

The undertaking of confidentiality in an LCIA arbitration extends to all those involved in the arbitration including any party, any authorised representative, witness of fact, expert, service provider, Tribunal Secretary, arbitrator, and any expert to the Tribunal.

Under the LCIA Rules: Does the LCIA have a dedicated hearing centre?

The LCIA does not have its own dedicated hearing centre. However, arbitrations governed by the LCIA Rules that take place in London could be held at the International Dispute Resolution Centre (1 Paternoster Lane, St. Paul’s, London EC4M 7BQ | idrc.co.uk) or the International Arbitration Centre (190 Fleet Street, London, EC4A 2AG | iac-london.com), as dedicated hearing centres, amongst a number of other venues.

What is the case load of the LCIA?

In its Annual Report on 2023, the LCIA noted its case load continues to trend upwards. In 2023, it received 377 referrals, including 327 referrals for LCIA Arbitration.

What is the approach of the LCIA to diversity?

In its Annual Report on 2023, the LCIA reported that female arbitrators were appointed in 48% of all appointments made by the LCIA. However, where parties and arbitrators were responsible for nominations the percentage was lower.

The LCIA has signed the Equal Representation in Arbitration Pledge and the Equal Representation for Expert Witnesses Pledge.

The LCIA only publishes data with respect to gender diversity.

THE SEAT

What legislation is applicable to the arbitration agreement?

For disputes administered under the LCIA rules, unless the parties have agreed otherwise in writing, the default position is that the seat of arbitration shall be London (England).

The Arbitration Act 1996 applies where the seat of the arbitration is in England, Wales or Northern Ireland. It provides a modern and flexible legal framework for arbitration, based on the principles of party autonomy and minimal judicial intervention. The Act allows parties to choose their own arbitrators, determine the procedure for their arbitration, and enforce arbitral awards with minimal interference from the courts.

English law generally respects the confidentiality of arbitration proceedings and awards, providing parties with a level of privacy and discretion that may not be available in other jurisdictions. This confidentiality can be particularly important for parties involved in sensitive commercial disputes or seeking to protect proprietary information.

 The court has powers to:

a)      compel witnesses to give oral evidence, produce documents or other evidence, provided the witness is in the United Kingdom and the arbitral proceedings are conducted in England, Wales or Northern Ireland;
b)      make orders:

i.            requiring a party to comply with a peremptory order made by the Tribunal;
ii.            regarding evidence and asset preservation;
iii.            restricting actions in relation to property and goods the subject of proceedings; and
iv.            for granting of an interim injunction or the appointment of a receiver

Are there any mandatory laws that impact the procedure?

The mandatory provisions of the Arbitration Act 1996 are listed in Schedule 1 to the Act.

The key provisions to be aware of are:

a)      the court’s power to extend statutory and contractual limitation periods;
b)      the power of the court to remove an arbitrator (albeit in limited circumstances);
c)      the requirement that parties raise any objections to jurisdiction of the Tribunal at the outset of the proceedings; and
d)      the parties are jointly and severally liable to pay the arbitrators’ fees.

Can the Tribunal rule on issues of jurisdiction?

Under the Arbitration Act 1996, a Tribunal is empowered to rule on its own jurisdiction, including the validity of the arbitration agreement, the arbitrability of the subject matter of the dispute, and constitution of the Tribunal.

The corollary of this is that local courts will generally stay any court proceedings brought in breach of an arbitration agreement and related provisions.

ENFORCEMENT AT THE SEAT

Is the United Kingdom a contracting State to the New York Convention?

The Arbitration Act 1996 is the primary legislation governing enforcement of arbitral awards in England, however, in respect of awards from contracting states to the convention, the Act implements the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention.

The New York Convention is a pivotal international treaty that facilitates the recognition and enforcement of international arbitration agreements and awards. Its purpose is to ensure that arbitration agreements and awards are recognised and enforced across its member states with minimal procedural difficulty by requiring contracting states to:

a)      recognise and enforce arbitration agreements;
b)      enforce arbitral awards made in other contracting states; and
c)      only refuse recognition or enforcement of these awards on limited prescribed grounds.

The New York Convention has effect in England, Wales, Northern Ireland, and in Scotland. As of 2024, 173 countries are signatories to the New York Convention.

Enforcement challenges under English law

For an award made by a Tribunal pursuant to an arbitration seated in England, English courts have power to enforce the award in the same manner as a judgment or order of the court.

The court will not give leave to enforce an award if the party seeking to resist enforcement can show:

a)      that the Tribunal lacked substantive jurisdiction; or
b)      there was ‘serious irregularity’ affecting the Tribunal, the proceedings, or the award that has caused substantial injustice to the applicant;

If all parties agree, or with the permission of the court, parties can also appeal an award on a point of English law. The court must be satisfied that the decision on the question of law will substantially affect the rights of one or more parties.

For an award made by a Tribunal pursuant to an arbitration seated in a state which is a party to the New York Convention (other than the United Kingdom), English courts may refuse recognition and enforcement if the party resisting enforcement can prove:

a)      that a party to the arbitration agreement was under some incapacity;
b)      the arbitration agreement was invalid;
c)      it was not given proper notice of the appointment of arbitrators, or of the arbitral proceedings, or was otherwise unable to present its case;
d)      the award deals with matters that were not within the terms of the submission to arbitration;
e)      that the composition of the Tribunal, or the arbitral procedure, was not in accordance with the arbitration agreement (or otherwise with the law of the country where the arbitration took place); or
f)       the award has not yet become binding or has been suspended by the competent authority of the arbitral seat.

Typically, English courts are pro-arbitration and uphold awards unless there are compelling reasons to set them aside.

What are the requirements for a valid arbitration agreement?

 Where the chosen law and/or law of the seat is English law, the Arbitration Act 1996, requires that the arbitration agreement must be a written agreement to submit present or future disputes to arbitration. The agreement does not need to be signed; it can simply be evidenced in writing, including in an exchange of communications.

Unless the parties have agreed otherwise, the arbitration agreement is considered separable from any other agreement of which it is part, i.e., if the rest of the contract is invalid or ineffective, that will not impact the arbitration agreement, so that disputes regarding the overarching agreement will still be able to be determined in arbitration.

The Arbitration Act 1996 does not prescribe what types of disputes or subject matter are arbitrable, this is determined on a case-by-case basis, considering issues such as whether there is a matter of public interest. For example, criminal cases cannot be arbitrated, although criminal elements might be found in arbitration, such as allegations of bribery or fraud, if there are contractual safeguards against such actions.

From an enforcement perspective, under the New York Convention, an arbitration agreement must be:

a)      in writing;
b)      dealing with current or future disputes with a defined legal relationship;
c)      concerning a matter that is capable of settlement by arbitration;
d)      between parties that have legal capacity; and
e)      valid under the law chosen by the parties, or the law of the seat (if there is no choice).

¹ Under English law, the substantive law of the contract typically applies to the arbitration agreement. However, the Law Commission’s proposed amendments to the Arbitration Act 1996 (the “Arbitration Bill”) would reverse this presumption and the law of the seat would govern the arbitration agreement. The Arbitration Bill was proposed in November 2023 but, in view of the impending election, the bill will fall and the next steps for revising the Arbitration Act 1996 are not certain.

² For any dispute governed by 1998 or 2014 Rules, the information provided herein may not apply.

³ https://www.lcia.org/News/lcia-news-annual-report-on-2023-lcia-court-and-african-users-c.aspx