Anatomy of an arbitration Part II Key elements of an arbitration clause International arbitration br

Ashurst London
July 2013
International arbitration briefing
Anatomy of an arbitration Part II:

Key elements of an arbitration clause
In the second instalment of our series Proper reference to arbitration
providing practical insights into the
arbitration process, we examine the key The purpose of the arbitration clause is to refer
elements of an arbitration clause and the disputes arising under the contract to arbitration. The
importance of drafting the clause so that it parties must identify which disputes they want to
is effective. It should be of particular finally resolve by arbitration and ensure that the
interest to those unfamiliar with the drafting of the clause achieves that.
principles behind providing for arbitration
as a dispute resolution procedure in Parties will often want a "one-stop" dispute resolution
commercial agreements. procedure for all disputes arising in relation to a
contract. The arbitration clause should therefore be
Arbitration is founded upon the principle that two or broadly drafted to cover all disputes arising out of or
more parties have consented to their disputes being in connection with the contract in question, whether
resolved by arbitration rather than national courts. It those disputes are contractual or non-contractual in
is a creature of contract and requires agreement nature.
between the parties. That agreement is commonly
found in an arbitration clause (included in a contract Rules of arbitration
prior to a dispute arising) or a submission agreement
(entered into once a dispute has already arisen). In One of the benefits of arbitration over litigation is the
this article, we focus on the key elements of the ability of the parties to define the procedure by which
former. the arbitration will be conducted. The level of flexibility
accorded to the parties depends on whether they opt
Key elements of an arbitration clause to resolve their disputes through institutional or ad hoc
arbitration.
Proper If institutional arbitration is chosen, it is usual for the

Reference
selected institution's rules to govern the conduct of the
arbitration. If ad hoc arbitration is chosen, the parties
Sufficient may choose to draft their own rules or, as is more
Rules
Certainty
common, to use other rules, such as the UNCITRAL
Rules.
Key
Appointing authority
Number of Elements Appointing
Arbitrators Authority In an institutional arbitration, the selected institution
will be the appointing authority. Unless agreed
otherwise, the appointment of the arbitrators will be
governed by that institution's rules. However, in an ad
hoc arbitration it is important to specify a mechanism
Language Seat for appointment of the arbitrators in default of
appointment by the parties. This is usually done by
nominating a third party appointing authority. Most of
the arbitral institutions offer an appointing service,
even if their arbitral rules are not being used.
AUSTRALIA BELGIUM CHINA FRANCE GERMANY HONG KONG SAR INDONESIA (ASSOCIATED OFFICE) ITALY JAPAN PAPUA NEW GUINEA
SAUDI ARABIA SINGAPORE SPAIN SWEDEN UNITED ARAB EMIRATES UNITED KINGDOM UNITED STATES OF AMERICA
Seat of arbitration Ensure the arbitration clause is
sufficiently certain
The seat or place of the arbitration is one of the most
important matters to specify when drafting an National courts will generally try to uphold arbitration
arbitration clause. It is the law of the seat that provisions. However, the arbitration clause should
governs how the arbitral proceedings are to be always be clearly drafted to avoid any argument as to
conducted. So, for example, if the seat was specified its application once the parties' relationship has
to be London the English Arbitration Act 1996 would broken down.
apply to the arbitration.
Other points to consider
The choice of seat can also affect: whether the
national courts will intervene in the arbitration; The parties may also wish to make express provision
whether the subject matter of the dispute is capable of in the arbitration clause for the governing law of the
being resolved by arbitration; the ease by which an arbitration agreement (sensible if the law governing
arbitral award can be challenged or appealed; and the the contract does not coincide with the seat, e.g.
enforceability of an arbitral award in other jurisdictions. English law but French seat). Under the law of most
The parties should ensure that the chosen seat has developed arbitration jurisdictions, an arbitration
ratified the New York Convention to maximise the agreement is considered separate to the main contract
chances of an award being enforced in other in which it is located and so may be governed by a
jurisdictions. different law. Provision should also be made for the
exclusion of rights of appeal, confidentiality, and
Language interim measures.
The language of the arbitration will be the language of Invest in the drafting of the arbitration
the written and oral submissions and of any hearings. clause to avoid future difficulties
The language chosen will usually be the language of
the contract underlying the dispute. If the language is Parties should carefully consider what they want from
not specified in the arbitration clause, the arbitral the arbitral process and ensure that the drafting of the
tribunal will determine it. arbitration clause reflects those wishes. An ambiguous
arbitration clause is open to attack once a dispute
Number of arbitrators arises and the effectiveness of such a clause will likely
be contested, adding a further layer of expense and
Usually an arbitration is heard by one or three delay.
arbitrators. An even number of arbitrators should
always be avoided. Although cheaper, choosing a sole For further information and specimen clauses, please
arbitrator can be more risky as the award depends on refer to our International Arbitration Clause
the opinion of only one person. In complex disputes, Quickguide.
parties often feel more comfortable knowing that their
chosen arbitrator is part of a three person tribunal.
Contacts
Tom Cummins Robert Meade

Senior Associate, Dispute resolution Associate, Dispute resolution
T: +44 (0)20 7859 1051 T: +44 (0)20 7859 3381
E: tom.cummins@ashurst.com E: robert.meade@ashurst.com
This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying the information contained in this publication to specific issues or transactions. For more information
please contact us at Broadwalk House, 5 Appold Street, London EC2A 2HA T: +44 (0)20 7638 1111 F: +44 (0)20 7638 1112 www.ashurst.com.
Ashurst LLP and its affiliates operate under the name Ashurst. Ashurst LLP is a limited liability partnership registered in England and Wales under
number OC330252. It is a law firm authorised and regulated by the Solicitors Regulation Authority of England and Wales under number 468653. The
term "partner" is used to refer to a member of Ashurst LLP or to an employee or consultant with equivalent standing and qualifications or to an
individual with equivalent status in one of Ashurst LLP's affiliates. Further details about Ashurst can be found at www.ashurst.com.
© Ashurst LLP 2013 Ref:29457089 09 July 2013

Anatomy of an arbitration Part II Key elements of an arbitration clause International arbitration br

Uploaded by

Copyright:

Available Formats

Anatomy of an arbitration Part II Key elements of an arbitration clause International arbitration br

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Anatomy of an arbitration Part II Key elements of an arbitration clause International arbitration br

Uploaded by

Copyright:

Available Formats

Ashurst London

International arbitration briefing

Anatomy of an arbitration Part II:

Proper If institutional arbitration is chosen, it is usual for the

Tom Cummins Robert Meade

You might also like