Arbitration is a consensual contractual agreement. Before there can be any arbitration, there must be an agreement to arbitrate.
There are essentially 3 types of arbitration clauses, the main one of which is contractual.
Contractual arbitration clauses
There is a broad spectrum of what can constitute a contractual arbitration clause.
Theoretically, academics have stated that “any dispute is to be settled by arbitration in London” would be considered a valid agreement to arbitrate. The essence of this, is that there is a clear ‘agreement’ to arbitrate (as opposed to litigate), and as such, this consent is what allows the clause to survive the contract, ie even if the contract to which the arbitration agreement is contained becomes void or terminated, the arbitration clause remains valid by standing as a separate, independent agreement.
Most international arbitration institutions such as UNCITRAL, ICC, and the LCIA have their own recommended model clause. As a rule of thumb, it is generally advisable (once it is agreed what the forum or rules the arbitration should be governed by) to use those model clauses as a starting template, to be edited and tailored to the contract’s unique requirements.
Usually, these clauses, in both domestic and international arbitrations ensure that:
- There is a dispute. And that future and/or existing disputes are covered. The New York Convention provides clarity and confirmation for this to parties – “all or any differences which have arisen or which may arise between them” (emphasis added)
- It is arbitrable i.e. that it is capable of being settled by arbitration. It is vital that the dispute is covered by the clause. If not, any award will not be enforceable. Generally issues of patents, antitrust and competition laws, securities, insolvency, bribery and corruption, fraud, natural resources, and corporate governance need to be looked at closely to ensure that they are arbitrable in the jurisdiction the dispute is taking place at.
- There is a mechanism to commence the arbitration. This differs from ad hoc arbitrations to institutional arbitrations, but usually will take the form of a formal notice.
- This mechanism should also include the method by which the arbitrators are chosen.
Whatever your Arbitration enquiry – our team has the expertise to help you. FWJ are experienced in helping clients domestically and internationally resolve their disputes, including through the use of Arbitration. No matter what your issues – call our team of experts today and we can help.