Why You Should Consider California as the Seat for Your Arbitration

As all the parties to an arbitration know, choosing the seat of the arbitration is extremely important because the law of the seat dictates key elements of the arbitral process, and matters such as interim relief, confirmation, and vacatur of the award may require engagement with the local courts.

The most common seats for international arbitration are cities like London, Singapore, Hong Kong, Paris, New York, and Geneva. The advantages of these cities are that they are well known, they have a long track record of hosting arbitrations, and they have supportive local courts as well as a neutral and trusted legal infrastructure.

But there are several cities and regions that are up and coming as popular choices for arbitration, including Stockholm, Seoul, and Dubai. In addition to these, I’d like to urge the consideration of California (specifically, San Francisco and Los Angeles) as another excellent choice for parties to consider not only as the seat for international arbitrations but also as a venue for international arbitration hearings, which may be seated elsewhere. This is a crucial choice for international arbitration practioners as the seat determines the governing arbitration law, which may have substantial legal implications on the arbitration proceedings, including the nature and scope of the supervisory role played by the local courts.

The advantages of choosing cities like San Francisco or Los Angeles in California as the seat for international arbitration become clear after only a cursory examination. California’s international arbitration law is based on the UNCITRAL Model Law, creating a highly recognizable and favorable statutory environment for international arbitrations. It is one of the few states within the US to have adopted the Model Law. Consequently, California’s courts are extremely supportive of international arbitration and are also efficient and impartial. Furthermore, California also has an impeccable record for enforcement of international arbitration agreements and awards.

In addition to being chosen as the seat of arbitration, California is often selected as a venue for international arbitration hearings in cases involving interests in Asia and the Pacific Rim which, for example, may be seated in jurisdictions like Singapore or Hong Kong.  Geographically, California is conveniently located for Asian visitors, and major international airports in Los Angeles and San Francisco make travel extremely convenient. The state is also world-renowned for its rich culture, beautiful nature, and delicious cuisine (and wine). More than 210 million visitors travel to California each year, so it’s an easy yes for most people when they are presented with an opportunity to come. That may also be a big reason why many Asia-based institutions have already set up offices in California.

The case that California is well positioned as a seat for international arbitrations as well is also surpported by its very strong FIFO (“fly-in-fly-out”) representation laws.  Since January 1, 2019, California has led the world in liberalizing FIFO rules, including the new Article 1.5 of the California International Commercial Arbitration and Conciliation Act (CIACA), which now allows foreign or out-of-state attorneys to represent parties in international arbitrations seated in California.

Of course, California is also known the world over as a home to robust and innovative international businesses.  From the technology giants of Silicon Valley to the global entertainment companies in Hollywood, California’s entrepreneurial orientation keeps it on the leading edge of global business. 

If you compare California’s GDP (approximately $3.4 trillion in 2021) to other countries, the state would rank as the 5th largest economy in the world.  This position as a “home to innovators” has resulted in the development of unique legal expertise within the state. California also houses many major international firms that are pioneering work in innovative industries where the law is still in flux. 

California’s case law is particularly well developed across many of these innovative business sectors. This explains why the legal and arbitration communities in California have such a depth of expertise. As you can see on the CalArb.org website, California is home to many top international arbitrators and commercial dispute resolution practitioners, each of whom is prepared to handle any case, no matter how complex.  California also clearly has the technological infrastructure capable of hosting cases, even with online participants, securely and effectively.

California has a particular focus on arbitrator independence and impartiality.  Arbitrators practicing in California have no hesitation about making full disclosures, and they have a strong allegiance to due process.  California has long been a leader in implementing mediation and other alternative dispute resolution techniques, and its openness to flexible approaches to resolving legal disputes fits well with Asian models and Latin American Models.

There are many good choices for arbitrations seats around the world, and I would love to see more articles on Arbitrate.com calling out the advantages and disadvantages of other geographies. But California has a strong case to make as a top seat for international arbitration, and I expect we will see the volume of international arbitrations seated in California to grow over the next decade.

author

Colin Rule

Colin Rule is the CEO of Resourceful Internet Solutions, the parent company of mediate.com, arbitrate.com, and odr.com.

author

Indraneel Gunjal

Indraneel is an attorney from India specializing in dispute resolution, including international cross-border disputes, global trade disputes, commercial arbitration, and Online Dispute Resolution (ODR). He is passionate about working with businesses, institutions, and individuals for designing efficient and accessible dispute resolution systems as well as improving economic laws and regulatory…

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