What is Institutional Arbitration ?
An institutional arbitration is one in which a specialised institution intervenes and takes on the
role of administering the arbitration process. Each institution has its own set of rules which
provide a framework for the arbitration, and its own form of administration to assist in the
process. Institutional arbitration makes available a set of pre-established rules and procedures
which ensure the arbitration proceedings begin in a timely manner and ensures administrative
assistance from the institution. Generally, the contract between two parties will contain an
arbitration clause which will designate a particular institution as the arbitration administrator.
Some common institutions which offer arbitration services are the London Court of International
Arbitration (LCIA), the International Chamber of Commerce (ICC), the Dubai International
Finance Centre (DIFC) and the Dubai International Arbitration Centre (DIAC).
Applicable law in case of institutional arbitration in addition to a chosen seat of arbitration
When a party seeks to challenge the jurisdiction of the arbitral tribunal on the basis of the
substantive invalidity of the arbitration agreement, the proper law of the arbitration agreement
governs the inquiry. The prevailing approach adopted to determine this is a three-stage choice-
of-law analysis, set out in the Sulamérica case [2013] 1 WLR 102, strictly in the following
order:
(a) whether the parties have expressly chosen the proper law;
(b) if there is no express choice of law, whether the parties have impliedly chosen the proper
law; and
(c) if there is no express or implied choice of law, the system of law with which the
arbitration agreement has the ‘closest and most real connection’.
The same was applied in a recent decision of the Singapore High Court, BNA v BNB and
another [2019] SGHC 142 (“BNA”), wherein a the dispute arose out of the Agreement which
provided that any and all disputes shall be finally submitted to the Singapore International
Arbitration Centre (SIAC) for arbitration in Shanghai, which will be conducted in accordance
with its Arbitration Rules. It was construed that the Tribunal had valid jurisdiction, rules of SIAC
will be applicable (institution) and those of Shanghai (assumed seat) would be inapplicable. The
implied choice of law should presumptively be the proper law of the underlying contract (and not
the law of the seat).
At times, the rules of the institution itself mention about the choice of law issue. For instance,
Rule 18.1 of the SIAC Rules 2013 states that the parties may agree on the seat of arbitration,
failing which, the seat of arbitration shall be Singapore. Hence, in such scenarios, the proper law
shall be the that of the chosen seat of arbitration if real connection is established. The Model Law
also grants the arbitral tribunal the power to determine the place of the arbitration ‘having regard
to the circumstances of the case, including the convenience of the parties.’ Section 20(2) of the
Indian Arbitration and Conciliation Act, 1996 incorporates a similar provision.
Forum Non Conveniens
According to the doctrine, or principles of forum non conveniens, a court can, in exercise of its
inherent power, decline to exercise jurisdiction in a case brought before it, on the basis that a
court in another jurisdiction is the more appropriate venue for the trial of the matter. The
principle is of much relevance in arbitration proceedings wherein parties generally seek an anti-
arbitration injunction. Such ‘Anti-Arbitration Injunction’ plea is set up on the principles
prescribed under Section 45 of the Arbitration & Conciliation Act, 1996 to the effect that the
arbitration agreement between parties is “null” or “void” or ‘inoperative’ or “incapable of being
performed”. The applicability of this doctrine was sought in the case of Harmony Innovations
Shipping Ltd v. Gupta Coal Indian Ltd and Ors 1. The SC held that forum non conveniens with
respect to financial prejudice or geographical location cannot be contended in the case of a
contractually agreed mechanism of dispute resolution.
Choice of Law
Various choice-of-law issues may arise in international arbitration. Difficulty arises when one or
more of these laws are different.
1
Harmony Innovations Shipping Ltd v. Gupta Coal Indian Ltd and Ors, AIR 2015 SC 1504
First, regarding the law applicable to the merits of the case, arbitrators will determine it
according to the parties’ agreements. In the alternative, where parties have failed to agree, the
arbitral tribunal will choose the law applicable depending on the facts of the case at hand, using
criteria such as selecting the law with the closest connection to the dispute.
Second, regarding the law applicable to the arbitration agreement itself, parties may also agree
on such law. If the parties have not agreed on an applicable law, then the law applicable to the
arbitration agreement is often found to be the law of the arbitral seat, but may also be found to be
the law governing the parties’ contract, the venue or the law having the closest connection to the
dispute.
Third, the procedural law applicable will in most cases be the rules laid down by the arbitral
institution or as per the domestic arbitration law of the seat of arbitration. In most jurisdictions,
this law provides significant freedom to arbitrators in relation to the conduct of the proceedings,
as long as due process is respected.
Finally, the arbitral tribunal may decide the conflict-of-law rules that will apply for each
applicable law. The tribunal may resort, for instance, to applying the arbitral seat’s conflict of
law rules, or international conflict of law rules.
