The seat determines the procedural law of the arbitration, the courts with supervisory jurisdiction, and the place where the award is made for enforcement purposes.
Distinct from venue. Hearings may be held anywhere, in person or remotely, without changing the seat. Clauses should say so expressly.
What the seat determines. The law governing the arbitration agreement in some analyses; the grounds and procedure for challenging an award; court assistance with interim measures, evidence and appointments; and whether the courts are supportive or interventionist.
Selection criteria. A contracting state to the enforcement convention; a modern arbitration statute; a judiciary with a record of supporting arbitration and limiting intervention; neutrality relative to the parties; and practical factors including visa access and hearing facilities.
Neutral seats are standard in cross-border contracts, and insisting on one’s home seat is frequently the point on which a clause negotiation stalls.
The governing law of the contract is a separate choice and need not match the seat, though a mismatch introduces complexity about which law governs the arbitration agreement itself.
Consequences of getting it wrong. A seat in a jurisdiction permitting broad review, or one that is not a convention party, undermines the entire reason for choosing arbitration.