June 18, 2013

Session 4
Dos and Donts in Drafting an Arbitration
Agreement

Elodie Dulac
Solomon Ebere
Bahakal Yimer

Addis Ababa, June 18, 2013
1
Outline











I. Introduction
II. Different Types of Submissions to International Arbitration
III. Requirements for the Validity of an Arbitration Agreement
IV. The Principles of Severability and Kompetenz-Kompetenz
V. The Key Elements of an International Arbitration Agreement
VI. Bells and Whistles

2
I. Introduction




Importance of the drafting of an arbitration agreement
Words matter: an arbitration agreement in a contract is usually to be found
towards the end. Oftentimes, either in the euphoria of the deal or in the
exhaustion of negotiating the material clauses of the contract, parties fail to give
adequate attention to the formulation and drafting of the arbitration clause.
The drafting of an arbitration clause constitutes the first and most important
opportunity to take control of the arbitration
Danger of an incomplete or unclear dispute resolution clause: weakens settlement
leverage; will raise jurisdictional issues; will raise challenge and enforcement issues
after the award. At best, will add cost and time to the resolution of the dispute.
Example:
Any dispute shall be submitted for binding resolution under the ICC Rules.
Acceptance of arbitration does not deprive the Court of Madrid to hear any actual
dispute that may exist between the parties.
It would require litigating, in the first place, whether the dispute should be
heard in the court or in arbitration.










3
II. Different types of international dispute resolution
clauses





Arbitration agreement: agreement to arbitrate a category of future
disputes. Typically a clause in a contract.

Submission agreement: agreement to arbitrate an existing dispute.

Difficult to agree after a dispute arises. Preferable to incorporate dispute
resolution clause in the contract.






4
II. Submission Agreements in Ethiopia (BYI)




Arbitration Agreements v. Submissions Agreements Lesson: It is possible to have
arbitration agreements and/or submission agreements under Ethiopian law.

We have seen that while an arbitration clause refers to disputes not existing when the agreement is
executed (and these might never even arise), a submission agreement refers to conflicts that have already
arisen. This distinction is not made very clear under Ethiopian law and this possibly due to drafting errors;
and that is what I will kick start my initial discussion on. The Civil Code of the (then) Empire of Ethiopia
talks/prefers the use of submission agreements terminology, instead of arbitration agreement and this has
created debates amongst academicians in the field.
Art. 3325 Civ. C v. Article 3328
The arbitral submission is the contract whereby the parties to a dispute entrust its solution to a
third party, the arbitrator, who undertakes to settle the dispute in accordance with the principles
of law.
Seems to presuppose the existence of a dispute and makes no mention of parties to a contract
However, See Article 3328 of Civ. C The parties to a contract may also submit to arbitration
disputes which may arise out of the contract in the future.
Art. 1765 Civ. Code
Article 315 of Civ. Procedure C. persons have entered into a written agreement to present or
future differences to arbitration











5
III. Requirements for the Validity of the Arbitration
Agreement




Requirements for an arbitration agreement to be valid

1. Be the result of mutual consent

2. Formal requirement: be in writing (further discussed)

3. The parties must have legal capacity (further discussed)

4. It must arise out of a defined legal relationship

5. The subject matter must be arbitrable (further discussed)











6
III. Requirements for the Validity of the Arbitration
Agreement




2. Formal requirement: be in writing
Almost all arbitration laws contain this requirement
However, definition of in writing depends on applicable law: 4 poss.
1) Contained in a document signed by the parties (e.g., contract); or
2) in an exchange of letters, telex, telegrams or other means of
telecommunication which provide a record of the agreement; or
3) in an exchange of submissions or statements of claim and defence in
which the existence of an agreement is alleged by one party and not
denied by another; or
4) in a separate arbitration agreement referred to in a contract,
provided that the contract is in writing and the reference is such as
to make that clause part of the contract
Oral arbitration agreements possible?
Majority view: No, arbitration agreements shall be in writing
Minority view: Yes. France, Sweden, Mauritius, New Zealand and Peru














7




Validity Requirements under Ethiopian Law Form Lessons: Be very cautious of the kind of right the submission relates to and be
clear on the formality required to dispose of such right by agreement as it can be very tricky. Ethiopian courts need to be light in
interpreting this clause as it can at times be very restrictive. Follow up on Cassation Decisions as they relate to Donation/making of
public wills as such decisions may impact how arbitration agreements formality requirements can be interpreted.

the form required by law for disposing without consideration of the right to which the submission relates is the form to be
followed.

The legal framework that, as closely as possible, governs the act of disposing without consideration of ones right is the law of
Donation.

A donation relating to:

an immovable or a right on an immovable shall be of no effect unless it is made in the form governing the making of a
public will (Art. 881 883). Written Form + Notarization
corporeal chattels and bearer titles may be donated by mere delivery. They may also be donated in the form
governing the donation of immovables. Written Form or No Form - If no special form is required by law to dispose of a
right without consideration, then no other special form shall be required
Article 315 (1) Civ. Procedure makes a reference to written agreement as formality?

Further, where the Civ. C expressly provides for arbitration, the arbitration submission shall be subject to no special form.

Examples : Water Use Disputes (where a dispute arises between the Supervisory Authority and water use permit holder, matter
can be referred to arbitration (Article 36, Council of Ministers Regulation No. 115/2005); Cooperative Societies member
disputes














III. Requirements for the Validity of the Arbitration
Agreement
8
III. Requirements for the Validity of the Arbitration
Agreement




3. The parties must have legal capacity
Consequence of the lack of capacity: Invalidity of the arbitration
agreement
Law applicable to the legal capacity
No uniform understanding concerning the law applicable to the legal
capacity of individuals
Will depend on the system of conflicts of law of the forum called to
consider the arbitration agreement
Prevailing criterion: personal law of each party
The legal capacity to enter into an arbitration agreement:
Laws usually contain specific provisions on the capacity of the parties to
enter an arbitration agreement
Most common problems are those regarding the ability to act on behalf of
legal entities by the persons who execute the arbitration agreement











9
III. Requirements for the Validity of the Arbitration
Agreement




Validity Requirements under Ethiopian Law Capacity to arbitrate

The formation of a valid arbitration agreement requires that a contracting party needs to have
the capacity to dispose of a right without consideration (3326 (2) cum 2437)

Refers to a person(s) having full and unfettered right over a thing or a right (referencing to the
implicit full right to dispose of a thing without consideration) Eg) Married Couple _ mutual and joint
consent necessary.
If its a property encumbered or if it is a right held for others in custody, it definitely is not disposable
without consideration. Person submitting to arbitration is interdicted or insane at the time of signing.
No person shall submit unless he is capable under the law of disposing of such right
(Article 315 (3) Civil Pro. C)
Case of Managers of a Company
Special authority is required for an agent to possess the capacity to enter into an arbitration
agreement (Article 2205)

the agent may not without special authority consent to arbitration (Art. 2205 (2)
cum Art. 35 (Commercial Code)













10
III. Requirements for the Validity of the Arbitration
Agreement




The subject matter must be arbitrable

Under NYC what matters is arbitrability under the law of the place of
arbitration
Subject matters are, in general, arbitrable when they refer to economic
or disposable private rights
Questions arise most often with regard to matters such as antitrust,
securities exchange, IP/IT or disputes involving other statutes expressing
a strong public policy
Current trend in favour of arbitrability of these matters
Examples re Antitrust: Labinal (France, 1993) & Mitsubishi Motors
(US, 1985)
















11




Validity Requirements under Ethiopian Law Arbitrability Lessons Learned: It is important to know what matters are
arbitrable and which are not. When agreeing for finality of awards in International Arbitration, set expectations _ the
decision may always be reviewed by FSC Cassation bench. Even where its an international arbitration, as long as it has its
seat in Ethiopia, it is open for review by Cassation bench on ground of fundamental error of law.
Article 3328 Arbitration agreements are valid only in relation to disputes that flow from a contract or other specific
legal obligation. This is insignificant in terms of limiting the resort to arbitration in many instances as much of
disputes anyway arise either out of contracts or other specific legal obligations.
Matters such as Criminal Cases; Declaration of Divorce; Unfair Competition; tax law violations; petty offences are
examples of non-arbitrable matters in Ethiopia.
No clear and detailed provision, except Article 315 (2) Civ. Proc. C, that lays out matters not arbitrable.
No arbitration may take place in relations to administrative contracts _ does not refer to all contracts with
government bodies (Art 3132 _ administrative contracts expressly qualified as such; or is an activity
connected with public service or contains one or more provisions which could only have been inspired by
urgent consideration of general interest (those whose financial source is allocated from State budget)
Establishment Proclamations of some administrative bodies allow their directors to agree to settle disputes
out of court
Privatization of Public Enterprises Proclamation no. 146/1998
Ethiopian Roads Authority re-establishment council of Ministers Regulation 247/2011 (Art. 10 (2) H)
Ethiopian Civil Aviation Authority Establishment Proclamation
Public Procurement and Property Administration Proclamation no. 649/09
Finality of Arbitral Awards in Ethiopia (Case of National Mining Corporation PLC v. Dani Trading PLC)














III. Requirements for the Validity of the Arbitration
Agreement
12
IV. The Principles of Severability & Kompetenz
Kompetenz




Severability = Autonomy of the arbitration agreement
Even if the main contract ceases to exist or is invalid, this does not affect
the arbitration agreement, which retains all of its effects.
It ensures the continued exercise of jurisdiction where one party objects
to a tribunals jurisdiction on the ground that the main contract was
terminated or is invalid.

Kompetenz Kompetenz
Kompetenz Kompetenz gives arbitrators the possibility to examine and
decide in first instance on any objection to their jurisdiction.
Otherwise, mere contention of lack of jurisdiction could stop the arbitral
process.
However, the arbitrators decision is subject to subsequent judicial review.














13
IV. The Principles of Separability & Comptence
Competence




Separability under Ethiopian Law
No clear provision indicating its existence
However, considering the restrictive interpretation when it comes to jurisdictional issues and taking into consideration the
fact that Article 3328 Arbitration agreements are valid only in relation to disputes that flow from a contract or other specific
legal obligation. A contrario, without a valid contract or other valid legal obligation, it seems to suggest that the arbitration
agreement may not be valid itself.
Though not operational now, the Ethiopian Arbitration and Conciliation Center arbitration rules had incorporated the doctrine
of separablity. The 2008 rules of the AACCSA AI did not have such provision.
Kompetenz-Kompetenz under Ethiopian Law
Article 3330 (1) & (2) of Civil C.
Whether and the extent to which the Arbitral Tribunal could decide on its jurisdiction is doubtful
Arbitral submission may authorize the arbitrator to decide that difficulties arising out of the interpretation of the
submission
In particular authorize the arbitrator to decide disputes relating to its own jurisdiction
This seems to suggest Ethiopia has received and incorporated doctrine of Competence-Competence

Article 3330 (3): may in no case be required to decide whether the arbitral submission is or is not valid [This makes the
suggestion of existence of Competence Competence blurry. Tilahun Teshome: This provision is not clear enough to convey
the intention of the legislature through, especially when it is considered in conjuction with the other stipulations mad ein
that saem article under sub articles 1 and 2.
What would happen if arbitrators ignore Article 3330 (3) of the Civ. C if Ethiopian law is applicable law and they assert
jurisdiction or they rule on the validity of an the arbitration agreement? Seat in Ethiopia? Seat abroad?












14
V. The Key Elements of an International Arbitration
Agreement




Basic guidelines to negotiate an arbitration agreement
Dont assume one arbitration clause fits all transactions
As a general rule, arbitration clauses should be kept as simple as possible. Long and
complex arbitration clauses should be avoided (even in complex transactions).
Additional provisions provide further scope for dispute, increasing delays and cost.
Dont be adventurous with seats and rules/institutions
Select a strong but cheap(er) place of arbitration
Consider the seat and arbitral institutions/rules carefully, but once selected, stick to
them, dont innovate.
Provide for rules with an expedited procedure (e.g., SIAC Rules)
Agree to a sole arbitrator (where suitable)
Dont give up or restrict your right to choose an arbitrator

15
V. The Key Elements of an International Arbitration
Agreement




Beware of superficially attractive time-saving and cost-saving measures,
e.g.:
fixing time limits for rendering an award (which exclude tribunal
discretion)
opting for ad hoc arbitration
choosing the institution with the lowest arbitrator fee scale











16
V. The Key Elements of an International Arbitration
Agreement




What are the main elements of an arbitration clause?
1. Submission of disputes to arbitration
2. Place of arbitration
3. Arbitral institution/arbitration rules
4. Number and qualifications of arbitrators
5. Language of the arbitration

These should be assessed in light of different considerations arising in each
case, such as bargaining power, identity of counterparty, extent and location
of counterpartys assets, and need for enforcement.













17
V. The Key Elements of an International Arbitration
Agreement




1. Submission of disputes to arbitration
Arbitration agreement identifies a group of disputes that may arise in the
future (or an existing dispute in rare case of submission agreement) and
stipulates that the disputes identified will be resolved by arbitration.
Usual practice is to identify as broad a group as could possibly be
connected with the contract. Typical wording:
all disputes arising out or in connection with this contract.
Catch-all phrase which covers contractual claims and tort claims.
Will also cover defence that the contract never came into exist, and
disputes regarding the termination of the contract.











18
V. The Key Elements of an International Arbitration
Agreement




1. Submission of disputes to arbitration (contd)

Trying to be more specific can be risky: all disputes concerning the
interpretation and performance of this contract.
Arguable that this language does not cover disputes concerning the
termination of the contract.












19
V. The Key Elements of an International Arbitration
Agreement




1. Submission of disputes to arbitration (contd)
Unambiguous referral to arbitration of disputes identified
Once parties have identified the group of disputes they wish to have
resolved by arbitration, the next stage is to refer those disputes to
arbitration.
Select an unambiguous language, that leaves no room for argument that
arbitration is merely optional. Wording like shall be referred is better
than may be referred.
May could give rise to argument that arbitration is optional and that
a party may chose to submit dispute to courts instead.













20
V. The Key Elements of an International Arbitration
Agreement




2. Place of arbitration
Why does the place or seat of arbitration matter?
Choice of seat is the most important variable of the arbitration agreement.
Choice of the seat of arbitration brings with it at least three major legal
consequences:
a. it determines, at least in traditional thinking, which municipal law should
govern the arbitration (i.e. the law governing the procedure to be followed);
b. of most relevance in practice, the place of arbitration determines which
courts supervise and support or in some cases, interfere with and obstruct
the arbitration, and this includes which courts hear an action to set aside
the award; and
c. the place of arbitration determines the nationality of the award, which is
important for enforcement purposes.
It is for these reasons that the choice of the place of arbitration is so significant.
If unfriendly place of arbitration, delinquent party could derail any arbitration
held there, leading arbitration agreement to be effectively worthless.














21
V. The Key Elements of an International Arbitration
Agreement




2. Place of arbitration (contd)
Distinction between legal and physical venue
Legal venue = where arbitration is legally held (e.g., the place of arbitration
shall be Geneva)
Physical venue = where hearings actually held (e.g., the hearings shall be
conducted in Dubai)
Common misconception: location of arbitration institution = place of
arbitration = hearing venue. Example of misconception: choice of ICC = choice
of Paris as place of arbitration and hearing venue.
In fact, parties are free to mix and match, e.g., ICC arbitration, place of
arbitration Geneva, hearing in Addis Ababa
Reasons for hearing somewhere other than place of arbitration:
more convenient;
impracticality, e.g., if participants are effectively prevented from travelling to
place of arbitration or difficult (visas); anti-suit injunction at seat.












22
V. The Key Elements of an International Arbitration
Agreement




2. Place of arbitration (contd)
Recommended seats of arbitration
Select a neutral seat, generally chosen by parties or by institution
because it is a place with which the parties have no connection.
Test for a good neutral or objective places of arbitration is
whether an IA can be fairly and effectively held in that place, with
support from local courts, leading to an enforceable award.
have a modern arbitration law (eg UNCITRAL Model Law);
membership to NYC;
seat in which courts consistently apply the relevant laws and the NYC
in an arbitration-friendly manner.
Other considerations: geographical considerations, visa requirements.












23
V. The Key Elements of an International Arbitration
Agreement



2. Place of arbitration (contd)

Recommended seats of arbitration (contd)
Most popular places of arbitration: Dubai, Paris, Geneva or Zurich,
Hong Kong, London, New York, Singapore, Stockholm, The Hague.
An Africa seat: Mauritius?
Specify the city, not the country












24
Places of Arbitration: EDU
ICC International Court of Arbitration Bulletin*










City Number of Cases
Paris 124
London 70
Geneva 48
Zurich 30
Singapore 24
New York 23
Hong Kong 14
Vienna 13
Mexico 12
Miami 11
2010
Top 10 Cities Selected
2011
Top 10 Cities Selected
City Number of Cases
Paris 111
London 62
Geneva 53
Zurich 40
Singapore 24
New York 20
Frankfurt/M 14
Brussels 13
Madrid 13
So Paulo 12
25
V. The Key Elements of an International Arbitration
Agreement




2. Place of arbitration (contd)
What to do if a party insists on arbitration in a country unfriendly to
arbitration?
Fallback position: trading place of arbitration for governing law or
other concessions in the method of dispute resolution such as the
arbitral institution
Agree to hearing in other partys country but place of arbitration in a
third country.
There will be times when a dispute clause is so disadvantageous or
imperfect that it will not be in the interest of a business to accept the
risk of the contract = deal breaker.












26
V. The Key Elements of an International Arbitration
Agreement




3. Arbitral institution/arbitration rules
What does an arbitration institution do?
receives request for arbitration
appoints one or more arbitrators
decide challenges of arbitrators
organises payment by parties of arbitrators
supports arbitrators
scrutinises awards (ICC, SIAC)











27
V. The Key Elements of an International Arbitration
Agreement




3. Arbitral institution/arbitration rules (contd)
We generally advise against ad hoc arbitration (i.e. with no institution):
Un-administered (ad hoc) arbitration is rarely advisable.
The institution plays a critical role in the initial stages of an IA before
the tribunal is constituted and will manage the administrative aspects
of the arbitration
To leave these functions to the parties and/or tribunal often results in
additional cost and delay, especially in less arbitration-friendly
jurisdictions.
If ad hoc, best to refer to UNCITRAL Arbitration Rules, not pure ad
hoc.












28
V. The Key Elements of an International Arbitration
Agreement




3. Arbitral institution/arbitration rules (contd)
Various recommended institutions?
International Chamber of Commerce (ICC)
London Court of International Arbitration (LCIA)
International Centre for Dispute Resolution (ICDR)
Stockholm Chamber of Commerce (SCC)
Singapore International Arbitration Centre (SIAC)
Hong Kong International Arbitration Centre (HKIAC)
Dubai International Arbitration Centre (DIAC)
Swiss Chambers Arbitration Institution (Swiss Chambers)
Note: leading institutions arbitration rules are largely similar
Do not refer to an arbitration institution that does not exist!











29
V. The Key Elements of an International Arbitration
Agreement




3. Arbitral institution/arbitration rules (contd)
What to look for in an arbitration institution?
modern arbitration rules
do the institutions rules provide for international proceedings?
how many international arbitrations has the institution conducted
each year and in total?
qualified staff: legal knowledge and experience to advise tribunals
and parties
reasonable charges
does not go off beaten path











Arose out of a road construction sub contract agreement.

AACCSA AI was designated as an arbitration body. Parties also indicated to abide by Chambers
arbitration rules.

Cassation bench ruled that the finality of awards provision under the Chamber rules to which parties
have signed to cannot be said to have been given with full knowledge of the circumstances within
the meaning of Art. 350 (2) Civ. Procedure Code.
Despite parties agreement to refer their disputes to the Chambers institute, the Cassation bench
decided that in accordance with Article 1(1) of the Institutes arbitration rules, fi parties agreed in
writing for the resolution of their disputes to be decided under the arbitration rule, the award shall
be given under that rule. And for this to happen, when both parties come to the institute, the later
would have to procure a written agreement before proceeding to the case that the parties would
abide by its procedural rules.

WHEN PARTIES REFER THEIR DISPUTES TO THE INSTITUTE AND EXPRESSLY PROVIDE FOR THE
INSTITUTES ARBITRATION RULES OF PROCEDURE TO BE APPLIED, THE CASSATION BENCH HAS
DECIDED RATHER IN A BIZARRE FASHION THAT A SECOND LEVEL AGREEMENT OR SEPARATE
CONSENT POST THE DISPUTE IS REQUIRED FOR THE RULES OF THE ARBITRATION INSTITUTE TO
APPLY. THIS HIGHLY DIMINISHES THE STATUS OF INSTITUTIONAL ARBITRATION AGREEMENTS (in the
context of AACCSA AI to say the least) INTO ARBITRAL SUBMISSIONS THAT OCCUR AFTER DISPUTE
ARISES.
V. Dragdos v. Saba Construction
31
V. The Key Elements of an International Arbitration
Agreement




Basic model arbitration clause
All disputes, controversies or differences arising out of or in connection
with this contract, including any question regarding its breach, existence,
validity or termination, shall be referred to and finally resolved by
arbitration in [insert place of arbitration] under the auspices and in
accordance with the arbitration rules of the [insert arbitration
institution].
The Tribunal shall consist of [insert one or three] arbitrator(s).
The language of the arbitration shall be [insert language].










32
V. The Key Elements of an International Arbitration
Agreement




4. Number and qualifications of arbitrators: 1 or 3 arbitrators?








Guideline: Match the size of the tribunal to the size of likely disputes by:
agreeing before entering into the contract; or
specifying the number of arbitrators in the arbitration clause; or
leaving the question to be resolved by the arbitral institution; or
if ad hoc, by providing for an appointing authority


Pros Cons
Sole Arbitrator Cost efficient
Fast
No benefit of appointing co-
arbitrator
Not suited to large/complex
cases
3-member
tribunal
Benefit of appointing co-arbitrator
Safeguard against mistakes or
misconduct by tribunal
Better suited to large/complex cases
Costly
Lengthier
Risk that decision =fruit of
compromise
33
V. The Key Elements of an International Arbitration
Agreement




5. Language of the arbitration
Factors to consider when choosing the language of the arbitration
Language of the contract
Language of the related documentation
Likely effect of the choice on the pool of qualified arbitrators and
counsel
More than 1 language of arbitration?
Cons: may add difficulties (e.g., finding arbitrators able to conduct
arbitration proceedings in 2 languages), which would result in
additional costs and delays of the proceedings
Remedy: specify 1 language of arbitration, but provide that
documents may be submitted in another language = will avoid
translation costs














34
VI. Bells & Whistles





1. Multi-tier clauses
2. Joinder and consolidation
3. Arbitrator qualifications
4. Procedure and evidence
5. Allocation of costs
6. Time limits for award
7. Waiver of sovereign immunity













35
VI. Bells & Whistles




1. Multi-tier clauses
Definition:
Clauses that set out a number of escalating steps in the dispute
resolution process (negotiation > mediation > arbitration).
Guidelines:
Specify how the process is initiated.
Set short time-limits for each stage of the process.
Specify how a dispute is moved from one stage of the process to the
next. This should be triggered by a defined and indisputable event
(e.g., expiry of a time-period)
Specify whether the pre-arbitration steps are mandatory
Specify that arbitration is mandatory (not permissive)
Avoid using terms which may cause a dispute in themselves (e.g., that
requirement negotiations be conduced in good faith).
Define the disputes to be submitted to steps in identical terms.
















36
VI. Bells & Whistles




2. Joinder and consolidation
Joinder
Definition:
Joining third parties to the arbitration, involved in the underlying
project or transaction and their presence is needed for effective or at
least efficient resolution of the dispute. If a third party were joined,
the traditional two-sided arbitration would become what is referred
to as multi-party or multi-sided proceedings
Guidelines:
Check whether joinder is covered by applicable arbitration rules
Where appropriate, insert clause by which the parties agree to be
joined to an arbitration proceeding involving similar facts or issues
Address in the clause the consequences of the multiplicity of parties
for the appointment of (i) sole arbitrator or (ii) 3-member tribunal
Risk: more parties = more complex = more expansive process















37
VI. Bells & Whistles




2. Joinder and consolidation (contd)
Consolidation
Definition:
Where 2 or more arbitrations are pending between the same parties under
the same or similar contracts, joinder. In this case, there are 2 or more
arbitrations, not just one, and, generally, the parties are the same in each
proceeding, so there is no issue of having to include a new party to the
arbitration.
Guidelines:
It may, or may not, be in the parties interest to have these arbitrations dealt
with in a single consolidated arbitration. In some situations, one single
arbitration may be more efficient and cost-effective, while in other
circumstances, parties may have reasons to keep the arbitrations separate.
If the parties wish to permit consolidation of related arbitrations, first look at
whether the applicable arbitration rules provide for consolidation.
Where appropriate, parties should say so in the arbitration clause.
Tailor the wording to your needs.



















38
VI. Bells & Whistles




3. Arbitrator qualifications
Parties = free to choose arbitrators based on specialisation, nationality,
language fluency
Appointment of arbitrators = one of the most frequently cited advantages
of arbitration. Provides the parties with a great deal of control over the
quality of the tribunal = to appoint arbitrator with expertise in subject-
matter and arbitration process
Important: appointed arbitrator biased advocate
Guidelines:
Most arbitration rules provide that all arbitrators shall be impartial
and independent. If not, insert a clause to that effect.
Dont be too specific because it may reduce the pool of available
arbitrators to a dangerously low level.













39
VI. Bells & Whistles




4. Procedure and evidence
Parties = free to determine the procedures of each individual case
Institutional rules = light on details, even less in ad hoc arbitration
Freedom to include specific provisions about the procedure, including
regarding overall duration of the arbitration or timing of specific
procedural steps
Freedom to agree on issues of evidence, e.g., imposing the IBA Rules of
Evidence to be applicable
Only limit = basic procedural guarantees and equal treatment
Freedom to choose counsel
Guideline:
In the absence of a very specific contractual or project need, do not
include a detailed agreement on procedure and evidence. Arbitration
rules usually provide a framework. If not, refer to the IBA Rules as
guidelines.













40
VI. Bells & Whistles




5. Allocation of costs
Widespread practice: loser pays

Guidelines:
Do not insert a clause saying this as this is the default practice
Do not include an each side shall bear its own costs provision: the
probability that the claiming party will be required to pay the costs of
the defence is one factor that may discourage the pursuit of frivolous
claims. Therefore, it is inadvisable for parties to agree otherwise in
their contract.












41
VI. Bells & Whistles




6. Time limits for award
Parties = free to set a time limit by which the arbitrators must issue a final
award
Example: 6 or 9 months from the confirmation of the chair of the
arbitral tribunal
Pros:
encourages the arbitral tribunal to swiftly conclude the proceedings
before its term expires
Cons:
may make it more difficult for the parties to find arbitrators willing to
complete an arbitration within the specified time period.
risk that may not be possible in practice to comply with the time limit
and that one party will not agree to extend it, compromising the
validity and enforceability of the award.













42
VI. Waiver of sovereign immunity




7. Waiver of sovereign immunity
2 types of immunities:
from jurisdiction: party cannot be forced to defend itself in a lawsuit
before the tribunal
from execution: assets cannot be used to satisfy a judgment.
Issue is with immunity from execution immunity from jurisdiction being
accepted as automatically waived by the act of agreeing to arbitrate.
Important: where one party is a state or a state entity, the other party
should seek a waiver by the state party in the parties contract of any
immunity (particularly from execution) that the state party may enjoy.
Guideline:
waiver should be as comprehensive and specific as possible (e.g.,
cover assets used for diplomatic purposes) because domestic courts
may interpret waivers of sovereign immunity restrictively.












Contact Information
Elodie Dulac
King & Spalding LLP
9 Raffles Place, Level 31
Republic Plaza
Singapore 048619
Tel.: +65.6303.6004
Email: edulac@kslaw.com

Solomon Ebere
Schellenberg Wittmer
15 bis, rue des Alpes
P.O. Box 2088
1211 Geneva 1, Switzerland
Tel: +41227078000
Solomon.Ebere@swlegal.ch

Bahakal Yimer
Email: bahakal@yimer.com