Draft Arbitration Rules of PMAC: Navigating the applicable law and seat of arbitration

On 4 June 2025, the Patent Mediation and Arbitration Centre of the Unified Patent Court (Centre) launched a public consultation to gather feedback on its draft arbitration rules (Draft Rules). In our previous blog posts, we focused on the scope of application and FRAND/SEP disputes. This blog examines further fundamental elements of arbitral proceedings under the Draft Rules: the law applicable to the arbitration agreement (Art 10), the seat of arbitration (Art 18) and the law applicable to the merits of the dispute (Art 21). These elements are essential for obtaining clarity and predictability in cross-border patent disputes.

Law applicable to the arbitration agreement 

The Draft Rules define an arbitration agreement as “an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them”. Such agreement may take the form of an arbitration clause in a contract or may be concluded as a separate contract between the parties, before or after the dispute has arisen. 

The law applicable to the arbitration agreement matters in practice. It determines, inter alia, the formation of the arbitration agreement, its validity, and its scope (e.g. whether and to what extent third parties may be bound by the arbitration agreement). In the absence of an express choice by the parties, arbitral tribunals have applied different choice of law rules to decide on the law applicable to the arbitration agreement. Common approaches to determining the law applicable to the arbitration agreement include the law of the seat of arbitration, the law governing the main contract and the law with the closest connection with the arbitration. 

The Draft Rules provide in Art 10 that the law governing the arbitration agreement is either “(i) the law that the parties expressly agree applies to the arbitration agreement, or (ii) where no such agreement is made, the law of the seat of the arbitration in question.” Thus, this article establishes a default rule in the absence of an express agreement on the law applicable to the arbitration agreement, thereby reducing the risk of jurisdictional disputes which could delay the arbitration process. Given the importance of the law applicable to the arbitration agreement, the inclusion of an express default provision is to be welcomed. Moreover, the default rule proposed is consistent with the rules in many continental European jurisdictions as well as recent reforms of arbitration legislation in other jurisdictions. For example, the newly adopted English Arbitration Act 2025 introduces a similar provision.

Seat of arbitration 

The choice of the seat of arbitration plays a significant role, both during the arbitration proceedings and once an award is rendered. It is therefore always our recommendation to try to agree a seat of arbitration.

Although the parties’ agreement to use certain institutional rules determines much of the arbitration procedure, the arbitral law of the seat also plays a critical role in determining many fundamental procedural issues. The arbitral law of the seat also determines the domestic courts’ supervisory jurisdiction (for example such courts may hear applications on lack of jurisdiction of the arbitral tribunal) and the extent to which the domestic courts of the seat may assist the arbitration, including the taking of evidence or issuing interim measures in aid of arbitration. Once an award has been issued, the law of the seat determines the grounds on which the award can be recognised, set aside or enforced in the jurisdiction of the seat of the arbitration.

In Art 18, the Draft Rules propose three alternative mechanisms for determining the seat of arbitration, in the event that the parties have failed to agree a seat. Only one of these three approaches will be included in the final rules:

1. unless otherwise agreed by the parties, the seat of arbitration shall be determined by the Tribunal having regard to the circumstances of the case (Option 1); 

or

1. unless otherwise agreed by the parties, the seat of arbitration shall be determined by the Tribunal on the territory of a State which is a contracting member state of the UPCA or the EPC (both defined below) having regard to the circumstances of the case (Option 2);

or

1. unless otherwise agreed by the parties, the seat of arbitration shall be determined by the Tribunal among either one of the seats of the Centre or the seat of the Central Division of the Court of First Instance of the UPC (Option 3).

Option 1 maximises flexibility, enabling the Tribunal to select any jurisdiction based on case-specific factors such as the parties’ respective domiciles, the location of critical evidence or relevant legal frameworks. This approach aligns with leading arbitration rules, such as the rules issued by the United Nations Commission on International Trade Law (UNCITRAL), International Chamber of Commerce (ICC), German Arbitration Institution (DIS), Stockholm Chamber of Commerce (SCC) and Singapore International Arbitration Centre (SIAC). As a result, the approach is often used in practice and it generally works well: Tribunals or the relevant institutional body generally exercise their discretion sensibly and predictably.  

Option 2 limits the Tribunal’s choice to member states of the Agreement on a Unified Patent Court (UPCA) or the European Patent Convention (EPC). This would provide an additional degree of legal certainty, as the selected seat would always be within a jurisdiction familiar with the European patent legal framework. In return, Option 2 would naturally limit the choices and might eliminate appropriate options for certain patent disputes. 

Option 3 is the most restrictive, confining the seat to either one of the seats of the Centre (Ljubljana, Slovenia or Lisbon, Portugal) or the seat of the UPC’s Central Division of the Court of First Instance (Paris, France, which would likely also exclude the locations of the sections of the Central Division in Milan, Italy or Munich, Germany given the wording of Art 7(2) UPCA). This rule is similar to the Vienna International Arbitral Centre (VIAC), which designates Vienna as the default seat of arbitration. It is also similar to the approach taken by the London Court of International Arbitration (LCIA), with the important difference that the LCIA rules designate London as the default seat of arbitration, unless and until the Tribunal determines otherwise after hearing the parties and considering the circumstances of the case. The drafters of the Draft Rules may wish to expand Option 3, if indeed that option is preferred, to bring it closer to the approach under the LCIA rules and provide expressly that the Tribunal should hear the parties and take into account the particularities of the case in order to determine the seat.

Ultimately, agreeing on the seat of arbitration in advance is the most effective way to ensure predictability and procedural clarity throughout the arbitration process.

Law applicable to the merits of the dispute

The Draft Rules provide guidance on the choice of law applicable to the merits of the dispute in Art 21. The Tribunal is required to apply the law chosen by the parties to the substance of the dispute. This excludes the conflict of law provisions of the chosen law. If the parties have not chosen the applicable law to the merits of the dispute, ‘‘the Tribunal shall apply the rules of law which it deems most appropriate after hearing parties’ observations”. In doing so the Tribunal is required to consider ‘‘the provisions of any contract between the parties and relevant trade usages’’.

Next steps

The Draft Rules address issues which may complicate proceedings such as the law applicable to the arbitration agreement absent an express agreement, by determining the lex arbitri (i.e. law of the seat) as the default applicable law. The Centre also intends to improve legal certainty by providing guidance for the selection of the seat of arbitration. As the consultation period progresses, input from practitioners will be important to refine and finalise the Draft Rules. Indeed, the Centre specifically requested input on the options regarding the determination of a seat in the absence of express party agreement. 

Stakeholders are invited to submit their contributions by 4 August 2025. Freshfields stands ready to assist stakeholders in navigating these developments and to provide tailored guidance on the Draft Rules, including on complex issues such as the seat of arbitration and applicable law.