The Best Practices In Drafting An International Arbitration Clause For Agreement

Also, be sure to carefully define the scope of the arbitration proceedings. If you do not agree that all disputes, including tort claims and other non-contractual remedies arising out of the contract and business relationship, must be resolved, be sure to exclude any dispute that should not be subject to arbitration. Be careful with the law of the seat and whether it explicitly excludes certain topics and disputes as indispensable (such as family law in most jurisdictions). This video offers an enlightening overview of clause formulation in international commercial arbitration. As with arbitration in general, international arbitration is a creation of treaties and parties must take into account a large number of unique considerations when deciding how and when they submit their current and future international disputes to a binding solution. International arbitration allows parties from different cultures and legal systems to preserve autonomous procedures by the method and manner in which their disputes are settled. The development of an effective international arbitration clause is therefore essential to avoid uncertainties, publicity and local practices related to disputes before national courts, while ensuring that the parties obtain an effective settlement of their dispute and an internationally applicable arbitral award. Arbitration proceedings are generally considered to be a faster, cheaper and more confidential method of dispute resolution compared to disputes. This only applies if the basis underlying any arbitration proceeding – the arbitration agreement – is properly drafted, valid and enforceable. Through their conciliation agreement, the parties not only express their willingness to submit their dispute to arbitration, but also define the aspects of a procedure that they wish to need. In order to obtain an arbitration award that is ultimately enforceable, this first step – a duly developed arbitration agreement – is crucial.

This article contains ten tips on what you should include and keep in mind in your contracts when designing arbitration clauses. In general, parties can rely on legislation based on the Model Law (although some countries have introduced amendments that deviate significantly from the Model Law). However, if the local arbitration law is not based on the model law, the parties should not choose the location without first considering the likely effects of its arbitration law. For example, local law may require the implementation of binding procedures; courts may intervene excessively during the arbitration proceedings; and there may be obstacles to the enforcement of judgments, including the possibility of multiple remedies. As a general rule, arbitration clauses cover all disputes arising out of the contract in question, and courts and arbitration tribunals will not favour arguments that state that certain disputes are not covered by the wording of the clause. Another result of the principle of severability discussed above is that an arbitration clause remains valid even if the contract in which it is found is supposedly invalid. In addition, the reasons for challenging the very validity of an arbitration clause are limited. The New York Convention provides that the courts of a signatory State must maintain an arbitration clause unless the clause is “void, void, ineffective or unen enforceable”. In contrast, ad hoc arbitration is an arbitration that the parties manage themselves. It shall be carried out in accordance with the rules adopted for the purposes of the specific arbitration procedure, without the participation of an arbitral institution. The parties may establish the arbitration rules themselves, leave the rules to the discretion of the arbitrators or, as usual, adopt specifically written rules for ad hoc arbitration proceedings, for example.B. the UNCITRAL rules.4 You then conduct the arbitration directly with the arbitrator.

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