1

UNIVERSITY OF BUCHAREST
DRAFTING
INTERNATIONAL
ARBITRATION CLAUSES
MASTERS THESIS
COMPARATIVE INTERNATIONAL ARBITRATION
PART I

Nicu oltoianu
6/30/2014



A thesis submitted to the University of Bucharests Graduate School of Law by Nicu oltoianu, in artial
fulfillment of the re!uirements for the de"ree of #aster of Laws, $nternational Arbitration %ro"ram
&

ABSTRACT
This study is concerned with techniques, tips and reviews for the drafting of arbitral clauses
in international commercial contracts, with regard to both local law and international conventions.
The easy enforceability of arbitral awards is considered one of the main factors in the success of
international commercial arbitration. Thus, this thesis not only attempts at comprehensive analysis
of the requirements of and procedures for drafting an effective arbitration clause, but also evaluates
whether an arbitration clause complies with best international practice standards, especially as
embodied in the 1958 New York Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, the 1985 UNCITRAL Model Law on International Commercial Arbitration, as
well as worlds major arbitral institutions.
The thesis comprises of three chapters. The first chapter examines the arbitration clause as a
legal concept, and provides a brief analysis of the nature, forms and role of the arbitration clauses in
international commercial contracts. Chapter two looks at general requirements regarding drafting of
an arbitration clause, for that clause to be valid, and points out the most frequent errors that affect
the validity of the arbitration clause. Chapter three purports to make a classification of arbitration
clauses according to their hierarchy and importance for the arbitration agreement, as proposed by us,
along with a brief comment. The concluding chapter summarises the problems thrown up by the
study, and suggests several measures that could make an arbitration clause be as effective as
possible.








'

ACKNOWLEDGEMENTS

I would like to express my sincere gratitude to my supervisor Prof. Dr. Crengua Leaua for
her guidance, support, encouragement, advice and invaluable help throughout this study.
My grateful thanks to my mother and father for their endless love and encouragement. My
indebtedness to my family is too deep to be expressed here. I am grateful to them for always
believing in and encouraging me.
I also thank to my friends and colleagues for their patience and moral support and to all who
contributed to the completion of this study.













(

TABLE OF CONTENTS
ABSTRACT ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &
ACKNOWLEDGEMENTS )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) '
LIST OF ABBREVIATIONS ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) *
LITERATURE REVIEW )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) +
INTRODUCTION )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) ,
CHAPTER I: GENERAL CONSIDERATIONS ABOUT ARBITRAL CLAUSES ))))))))))))))))))))))))))))))))))))) 11
1. The autonomous nature of the arbitration clause )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) 11
2. Model and standard clauses ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) 1&
3. Incorporation of arbitration clauses by reference )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) 1'
CHAPTER II: DRAFTING AN EFFECTIVE ARBITRATION AGREEMENT )))))))))))))))))))))))))))))))))))))))))) 1-
1. Arbitrability )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) 1-
2. The need for consent and agreement in writing )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) 1*
3. Pathological arbitration clauses )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) 1.
CHAPTER III: CLASSIFICATION AND ANALYSIS OF ARBITRATION CLAUSES )))))))))))))))))))))))))))) &1
1. Basic clauses ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &1
1.1. Essential clauses )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &1
a. Adoption of arbitration as a method to resolve disputes ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &1
b. Final and binding )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &&
c. Scope of arbitration ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &&
d. Ad hoc or Institutional arbitration ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &'
1.2. Important clauses ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &(
a. Number of arbitrators )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &(
b. Method of selecting arbitrators )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &(
c. Place of arbitration ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &-
d. Language of arbitration ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &+
e. Authorization for a court to enter judgment ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &,
2. General clauses ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &,
2.1. Helpful clauses )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &,
a. Qualifications and conduct of the arbitrators ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &,
b. Interim measures ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) &.
c. Waiver of appeal ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) '/
2.2. Unusual clauses ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) '1
-

a. Costs and attorneys fees ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) '1
b. Expert determination ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) '&
c. Interest )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) ''
d. The currency of the award ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) '(
e. Exclusion of punitive and consequential damages )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) '-
3. Complex clauses)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) '-
3.1. Related clauses )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) '*
a. Notice )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) '*
b. Confidentiality ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) '*
c. Discovery )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) ',
d. Multi-party arbitration )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) '.
e. Consolidation of arbitral proceedings )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) (1
f. Split clauses )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) ('
g. Governing law ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) ((
h. Equitable principles ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) (-
i. Written procedure (summary disposition) )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) (*
j. Adaptation of contracts and gap filling )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) (.
3.2. Multi-tiered dispute resolution ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) (.
CONCLUSION )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) -&
REFERENCES ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) -(









*

LIST OF ABBREVIATIONS
AAA
ADR
Art.
Bull.
Ed.
e.g.
FAA
HKLR
IBA
ICC
ICSID
J. Intl. Arb.
LCIA
Nr.
Rep.
Rev.
Supp.
UNCITRAL
Vol.
WIPO
Y.B.
American Arbitration Association
Alternative dispute resolution
article
bulletin
edition
example
Federal Arbitration Act
Hong Kong Law Reports
International Bar Association
International Chamber of Commerce
International Centre for Settlement of Investment Disputes
Journal of International Arbitration
London Court of International Arbitration
number
report
review
supplement
United Nations Commission for International Trade Law
volume
World Intellectual Property Organization
Year book
+

LITERATURE REVIEW
The topic of drafting international arbitration clauses is treated in detail, in one form or
another, in almost every textbook of international arbitration. Also, many articles have been written
on this topic, each author addressing the issue according to its own methodology. But this wide
range of approach to the subject is far from absolutely solving the issue concerned, because it rather
creates more ambiguity and, therefore, causes a need for further research. In developing this study,
we used the corresponding doctrine in the field concerned, international conventions, arbitration
laws and regulations issued by various international organizations and institutions, as well as
internet resources. A summary list of the used literature can be found in References, at the end of
this study.















,

Enforcement begins when the arbitration clause is drafted.
Claudia T. Salomon and J.P. Duffy
INTRODUCTION
Background
The subject of how to draft an arbitration clause is one about which much has been
written.
1
Numerous articles analyze the essential ingredients for an arbitral clause and sometimes
conclude with the presentation of the miracle clause that will solve almost every problem inherent
in an arbitration. However, there are several difficulties in putting most of these miraculous clauses
into practice.
First, too often, as has been said, the dispute resolution clause is done as an afterthought, and
without very much thought. Preparation and study of the matter is essential.
Second, the other party may have very different ideas as to what constitutes an ideal clause.
The relative bargaining strength of the parties comes into play and the negotiator must know what is
essential to his interests and what can safely be given up.
Third, the all-purpose clause may not, in fact, be suitable for all situations. For example, it is
all very well to provide clearly the ideal arbitration clause for payment of interest, but if you ever
have to execute upon an award based on such a clause in Saudi Arabia or certain other countries, the
mention of interest may render the entire arbitration clause and award invalid. So too, it is generally
preferable to indicate in the arbitration clause the place of arbitration. However, if that place is in a
particularly unstable country so that there is a chance that when a dispute arises it might not be
possible, for political or security reasons, to hold the arbitration in the place designated, the result
may be to render the clause unworkable and to forfeit the right to arbitrate.
Still, the fact remains that because of the consensual nature of arbitration and the various
requirements for the validity of the arbitral clause, if you desire that arbitration be the method of
dispute resolution between yourself and a business partner, you will have to have an arbitral clause.
It is also true that many of the difficulties that most often complicate and delay an arbitral

1
William Laurence Craig, William W. Park, Jan Paulsson, International Chamber of Commerce Arbitration,
2
nd
edition 1990; Nicolas C. Ulmer, Drafting International Arbitration Clause in The International Lawyer,
Vol.20, Nr. 4, 1986.
.

proceeding and the possible enforcement of an arbitral award can be removed or diminished by a
well-drafted arbitration clause.
Moreover, the more effective the arbitral clause that is negotiated, the less likely it is that it
will ever be used. This is because an ineffective dispute resolution clause will be less of a deterrent
to a party that is considering a breach of contract. So, even businessmen who wish to deal with
lawyers as little as possible have a major interest in involving an attorney in the negotiation of the
dispute settlement provision unless those businessmen wish to prove, once again, the old adage that
arbitration is a procedure that has too few lawyers in the beginning (when the clause is drafted) and
too many in the end (when an arbitration is actually under way).
2

Methodology of the Thesis
This study is library based, drawing on the library of the Universities of Bucharest. Also
accessed are electronic databases such as Kluwer Arbitration, UNCITRAL Web Site, Westlaw,
LexisNexis and Hein Online etc for cases, articles, legislation, the travaux preparatoires of the New
York Convention, the working documents of UNCITRAL, reports and official information. The
research method is mainly analytical and comparative. The approach of different jurisdictions is
contrasted to discover similarities, dissimilarities, strengths and weakness, in order to determine the
optimal approach.
Scope and importance of the Thesis
This thesis relates to previous studies on the same topic, but because it is a thesis and,
therefore, being a part of the gray literature, and given the researchers poor practical experience in
the field of arbitration, it is not aimed at revolutionizing the current practice and doctrine of how to
draft an arbitration clause, or at filling the gaps in the research. It is rather the researchers own
opinion on the topic at issue, formed on the basis of the studied literature. Therefore, the thesis deals
with the problem of drafting arbitration clauses only for illustrative, comparative and analytical
purposes. However, it could serve as theoretical support and guidance for students and practitioners.
Further research on the topic is encouraged and advised.
Structure of the Thesis

2
Stephen R. Bond, How to Draft an Arbitration Clause (Revisited), ICC Intl Ct. Arb. Bull. (Dec. 1990) at
14.
1/

This thesis consists of introduction, three chapters, nine sub-chapters and six paragraphs. The
content of the chapters is described in the Abstract section supra.

















11

CHAPTER I: GENERAL CONSIDERATIONS ABOUT ARBITRAL CLAUSES
1. The autonomous nature of the arbitration clause
In general, the arbitration agreement provides the basis for arbitration. It is defined as an
agreement to submit present or future disputes to arbitration.
The generic concept comprises two basic types:
3

a. A clause in a contract, by which the parties to a contract undertake to submit to arbitration
the disputes that may arise in relation to that contract (arbitration clause); or
b. An agreement by which the parties to a dispute that has already arisen submit the dispute to
arbitration (submission agreement).
The arbitration clause therefore refers to disputes not existing when the agreement is
executed. Such disputes, it must be noted, might never arise. That is why the parties may define the
subject matter of the arbitration by reference to the relationship out of which it derives.
The submission agreement refers to conflicts that have already arisen. Hence, it can include
an accurate description of the subject matters to be arbitrated. Some national laws require the
execution of a submission agreement regardless of the existence of a previous arbitration clause. In
such cases, one of the purposes of the submission agreement is to complement the generic reference
to disputes by a detailed description of the issue to be resolved.
4

Historically, it used to be interpreted that when the arbitration agreement was in the form of
a clause contained in a contract, the clause was accessory to the contract. It was thus concluded that
the invalidity of the contract also entailed the invalidity of the arbitration agreement. On the basis of
that interpretation, whenever a party pleaded invalidity of the main contract and perforce of the
arbitration agreement, thereby challenging the arbitrators jurisdiction, the arbitrators were obliged
to suspend the arbitration proceedings until the question was decided by a court.
5


3
United Nations Conference on Trade and Development, Dispute Settlement, International Commercial
Arbitration, 5.2 The Arbitration Agreement, New York and Geneva, 2005, at 3.
4
Ibidem.
5
Ibidem, at 36.
1&

In order to avoid this situation, most modern laws and rules on arbitration have included two
main principles: the principle of separability, autonomy or independence of the arbitration
clause, and that of Kompetenz-Kompetenz or competence de la competence.
6

Since the arbitration agreement is currently regarded as autonomous or separate from the
main contract, the invalidity of the contract does not entail the automatic invalidity of the arbitration
agreement. Moreover, as arbitrators are empowered to examine and rule on pleas raised against their
jurisdiction, the arbitration is not terminated or suspended by the mere raising of a motion that the
arbitrators lack jurisdiction.
7

2. Model and standard clauses
Many contracting parties (and counsel) treat the negotiation and drafting of international
arbitration clauses as an afterthought, focusing on other seemingly more substantive aspects of the
contract negotiations. This is unfortunate, as dispute resolution clauses can have a significant
impact on any subsequent dispute that may develop between the contracting parties. International
arbitration clauses should be thought of as insurance policies of sorts a last line of defense in case
the unthinkable happens. At the absolute minimum, it is essential that the parties draft an efficient,
workable arbitration clause that will not create problems down the road.
8

Arbitral institutions provide model arbitration clauses to help contracting parties avoid such
problems when a dispute arises. Usually, the leading international arbitral institutions provide a
useful list of the model arbitration clauses. It is important to note that these model clauses are
offered as a starting point only the specific circumstances of each contractual relationship may
require customized arbitration clauses suited to the parties needs. Beyond adopting a model clause
as a starting point, some of the issues to consider include:
9

The scope of the arbitration clause: should its coverage be broad or narrow? (Most model
arbitration clauses tend to be drafted very broadly.)
The cost of the arbitration in proportion to the size of the transaction or contract: some
arbitral institutions' administrative fees are significantly more expensive than others, and three-

6
Ibidem.
7
Ibidem.
8
http://www.ezcarbitrationlawfirm.com/model-arbitration-clauses.html
9
Ibidem.
1'

member tribunals obviously will be more costly than sole arbitrators. Are the modalities designated
in the arbitration clause appropriate for the type and size of the transaction at hand?
Specific procedures for arbitral proceedings: sophisticated parties may want to include, or
exclude, specific procedures, such as the type or extent of discovery allowed, expedited proceedings,
and so on.
The impact of the law of the chosen arbitral seat on any dispute are the arbitration statutes
of the place of the arbitration sufficiently modern, or will they hinder arbitration? Do they
specifically exclude or limit the specific subject matter of the contract and resulting dispute? Might
the law of the arbitral seat create enforcement issues?
Which arbitral institution and corresponding arbitration rules are most appropriate for the
transaction? If a party does not get its first choice, can it suggest an acceptable alternative, in return
for bargaining leverage on other important negotiated issues, such as governing law?
Is there a need for a multi-tiered dispute resolution clause? Should the parties first require
settlement talks or mediation prior to initiating arbitration proceedings? Should specific clauses of
the contract be carved out for separate litigation or expertise procedures?
10

3. Incorporation of arbitration clauses by reference
Major projects may involve the negotiation and drafting of many different but interrelated
agreements, in some cases dozens of separate contracts. If the parties desire to include the same
arbitral clause in each agreement, rather than typing the same language into each and taking the risk
of varying language, which could lead to different results, the parties may prefer to negotiate a
single master or umbrella arbitration agreement. This master agreement can then be incorporated
into each separate contract by reference. If this is done, each separate contract should contain
language incorporating the master arbitral agreement. Even if the arbitral clause will be somewhat
different in some of the project agreements, a master arbitration agreement can still be used, with
any additions or deletions drafted into specific contracts.
It is not uncommon in same trades for the parties to conclude contracts by telexes or other
similar means in which they agree to price, quantity and the general terms and conditions of an
industry association standard-form document, which may include an arbitration clause. Courts have
generally upheld the incorporation by reference of an arbitration clause in this manner, provided the
contract is between experienced businessmen and they are (or should be) familiar with the document

10
Ibidem.
1(

incorporated.
11
In France, for an incorporation by reference to be valid, the existence of the
arbitration agreement must either be mentioned in the main contract or the contents of the
incorporated document must be known to the parties.
12
It is generally preferable for the language
incorporating the other document to refer specifically to the arbitration clause in order to show the
parties were aware of it and intended arbitration.
If an arbitral clause from an unrelated agreement is to be incorporated by reference into a
specific contract, the parties should be careful to insure that all aspects of the clause fit their
agreement.
13











11
Tradax Export, S.A. v. Amoco Iran Oil Co., 11 Y.B. Com. Arb. 532, 534-535 (1986) (Swiss Federal
Supreme Court); Lawrence Craig, William Park & Jan Paulsson, International Chamber of Commerce
Arbitration 5.08 at 94 (2d ed. 1990).
12
Bomar Oil v. Enterprise Tunisienne dActivites Petrolieres, decision of the French Cour de Cassation, 11
October 1989, cited in Richard Kreindler, Practical Issues in Drafting International Arbitration Clauses, 63
Arbitration 47,51 (1997).
13
Progressive Casualty Ins. Co. v. Reaseguradaora Nacional de Venezuela, 802 F. Supp. 1069, 1079
(S.D.N.Y. 1992), revd, 991 F.2d 42, 47 (2d Cir. 1993). Brian Drewitt & Giles Wintage-Saul, Drafting
Arbitration Clauses, 62 Arbitration 39, 44 (1996).
1-

CHAPTER II: DRAFTING AN EFFECTIVE ARBITRATION AGREEMENT
1. Arbitrability
Those involved in an international commercial contract which provides arbitration as the
dispute resolution method have to consider whether the subject matter in dispute is arbitrable. The
parties have to address this question when contemplating entering into an arbitration agreement. The
arbitrators have to decide upon the issue when determining whether a disputes can be tried on its
merits. In addition, the issue may have to be considered by the court at the place of arbitration when
deciding whether an arbitral award shall be set aside, and the court or competent authority in the
jurisdiction where the future arbitral ward is to be enforced when deciding if an arbitral award is
enforceable.
14

In formal treatments of the subject, arbitrability is typically divided into subjective
arbitrability and objective arbitrability. Subjective arbitrability is when national laws restrict or limit
some subjects to enter into arbitration agreements. Objective arbitrability is when national laws
impose some limitations or restrictions based on the subject matter of the dispute. When introducing
the issue of arbitrability in international commercial arbitration, it is necessary to focus on: 1) the
law applicable to questions of arbitrability; 2) the limitations imposed in different countries; 3)
whether arbitration tribunals have the right and duty to deal with the issue of arbitrability on their
own initiative.
15

By their nature, the subject matter of some disputes is not capable of arbitration. In general,
two groups of legal procedures cannot be subjected to arbitration:
16

Procedures which necessarily lead to a determination which the parties to the dispute may
not enter into an agreement upon. Some court procedures lead to judgments which bind all members
of the general public, or public authorities in their capacity as such, or third parties, or which are
being conducted in the public interest. For example, until the 1980s, antitrust matters were not
arbitrable in the United States. Matters relating to crimes, status and family law are generally not
considered to be arbitrable, as the power of the parties to enter into an agreement upon these matters
is at least restricted. However, most other disputes that involve private rights between two parties

14
Per Sundin and Erik Wernberg, The scope of arbitrability under Swedish law, The European Arbitration
Review, 2007, at 63.
15
Katarina Chovancova, Arbitrability, available at http://www.paneurouni.com/files/sk/fp/ulohy-
studentov/2rocnikmgr/arbitrability-students-version.pdf.
16
http://en.wikipedia.org/wiki/Arbitration#Arbitrability.
1*

can be resolved using arbitration. In some disputes, parts of claims may be arbitrable and other parts
not. For example, in a dispute over patent infringement, a determination of whether a patent has
been infringed could be adjudicated upon by an arbitration tribunal, but the validity of a patent could
not: As patents are subject to a system of public registration, an arbitral panel would have no power
to order the relevant body to rectify any patent registration based upon its determination.
Some legal orders exclude or restrict the possibility of arbitration for reasons of the
protection of weaker members of the public, e.g. consumers. Examples: German law excludes
disputes over the rental of living space from any form of arbitration, while arbitration agreements
with consumers are only considered valid if they are signed by either party, and if the signed
document does not bear any other content than the arbitration agreement.
17

If the subject matter in dispute is non-arbitrable an arbitral award may be declared invalid or
challenged, depending on the provisions of the law applicable to the subject matter.
18

2. The need for consent and agreement in writing
Arbitration is always based on agreement. Consent to arbitration is an indispensable
requirement for a tribunals jurisdiction. Both parties must have expressed their consent. Parties to
an arbitration agreement must have legal capacity to enter into that agreement, otherwise it is
invalid. The concept of capacity concerns the contractual sphere and, particularly, the possibility of
entering into a binding arbitration agreement this agreement being separable from the main
contract.
19

The capacity of parties to enter into an arbitration agreement is governed by the law
applicable to the parties. The general rule is that any natural or legal person who has the capacity to
enter into a valid contract also has the capacity to conclude a valid arbitration agreement. Except for
restrictions aimed at protecting consumers, national laws rarely impose restrictions on the capacity
to enter into arbitration agreements. In state-controlled economies, there may be a lack of capacity
where the necessary foreign trade license is missing.
20

A corporation is required to act through its directors and officers in accordance to its
constitution and its own governing law. The doctrine of ultra vires, which limits the capacity of

17
Ibidem.
18
Supra note 11.
19
Andrea M. Steingruber, Consent in International Arbitration, Oxford University Press, 15 March 2012.
20
Ibidem.
1+

entities to the activities authorized by their charter, is virtually extinct, and private legal entities are
generally recognized as enjoying full capacity to enter into legal relationships including arbitration
agreements, notwithstanding any disposition to the contrary in their articles of incorporation or by-
laws. Indeed, it is not unusual for states to have specific rules of law that restrict or abrogate the
doctrine of ultra vires, so as to protect persons dealing in good faith with corporations.
21

While cases concerning capacity of commercial entities stricto sensu are quite exceptional
and unlikely to occur on a regular basis, a much more likely situation is where the organs of a
company or its officers enter into an arbitral agreement exceeding their powers. In fact, a frequent
challenge is that a person who signed the contract for one of the parties was not properly authorized.
However, in these cases, although there are exceptions, national courts and arbitral tribunals are
ordinarily very reluctant to permit companies to deny the authority of their officers, directors or
employees to conclude binding arbitration agreements.
22

Article II of the New York Convention does not make express reference to the lack of
capacity as a ground for challenging an agreement to arbitrate. Instead, article II provides for the
non-recognition of arbitration agreements only if they are null and void, inoperative or incapable of
being performed. Nonetheless, it is clear that the contracting parties capacity is a requirement for a
valid international arbitration agreement. Thus, article V(1)(a) of the New York Convention permits
a national court to deny recognition to an award if the parties to the arbitration agreement were,
under the law applicable to them, under some incapacity. It is widely accepted that article II must
be read to incorporate incapacity in its reference to arbitration agreements, or alternatively to
agreements that are null and void and therefore not to require giving effect to an arbitration
agreement where one of the parties lacked legal capacity.
23

Similarly, most national arbitration laws contain no provisions dealing with the requirement
of capacity. However, they assume that a lack of capacity is grounds for denying recognition of an
arbitration agreement, even though they do not prescribe substantive provisions addressing what
constitutes a lack of capacity. Nevertheless, it is clear that, even in the absence of a specific

21
Ibidem.
22
Ibidem.
23
Ibidem.
1,

provision, the parties capacity is essential to the existence of a valid international arbitration
agreement.
24

The requirement that international commercial arbitration agreements must be made in
writing is well accepted in most countries and has become a uniform practice in international
commercial arbitration law. This is due in large part to the widespread acceptance of the Convention
on Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention"). Article II
(1) provides that "each Contracting State shall recognize an agreement in writing." The term
"agreement in writing" is defined in Article 11 (2) of the Convention as "an arbitral clause in a
contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or
telegrams." Since the New York Convention took effect, the legislatures of most jurisdictions have
accepted the written form requirement, thereby excluding the validity of arbitration agreements
made tacitly or orally. Generally, the international practitioners have followed suit, however, some
reject the necessity of the written form requirement.
25

The 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards requires a
valid arbitral agreement to include an arbitral clause in a contract or an independent arbitration
agreement, signed by the parties or contained in an exchange of letters or telegrams. When the
parties sign an agreement containing arbitral clauses, the written form requirement is satisfied, thus
alleviating the problems associated with oral or tacit arbitral agreements. When an agreement is
made through exchange of letters or telegrams, the proposal and acceptance of arbitration are the
basic elements of arbitration agreements. However, the exchange of letters or telegrams must also
clarify that proposal and acceptance of an arbitral agreement has the effect of proving its existence.
The New York Convention differs from the Model Law of the United Nations International Trade
Law Committee. The Model Law states: The arbitration agreement shall be in writing. An
agreement is in writing if it is contained in a document signed by the parties or in an exchange of
letters, telex, telegrams or other means of telecommunications which provide a record of the
agreement, or in an exchange of statements of claim and defense. However, as the Model Law

24
Ibidem.
25
Jing Wang, International Judicial Practice and the Written Form Requirement for International Arbitration
Agreements, Copyright C 2001 Pacific Rim Law & Policy Journal Association.
1.

precludes the application of other domestic laws, its written form requirement is in fact stricter than
that of the New York Convention.
26

3. Pathological arbitration clauses
Frederic Eisemann who served as Secretary General of the ICC International Court of
Arbitration proposed certain criteria as essential in respect of the functions of an arbitral clause.
27

The first should specify compulsory consequences for the parties with regard to the
procedure for dispute resolution within their agreement. These consequences would include the
obligation to submit the dispute to arbitration, the procedures for so doing and to regard the
arbitrators award as final and binding.
The second criterion excludes the intervention of a states court in the settlement of a
dispute, prior to the decision of the arbitrator. However, it may be useful to provide for a certain
level of state courts intervention where, for example, interlocutory relief is required and its award is
beyond the authority of the arbitrator, or arbitration court.
The third criterion provides to give the arbitrators authority to resolve the disputes under the
agreement. These powers could include the authority to make various procedural and interim orders.
The fourth envisages the putting in place of a system that provides of the optimum
conditions for effective and speedy determination of the arbitration which can be enforced by a
states court.
According to Eisemann, bad clauses are pathological. For example, often the description
of the seat of the arbitration is incorrect. The effect of this clause may result in a collateral dispute
regarding the seat of the arbitration which would need to be resolved by the arbitrator or by a court
all this will certainly add to the costs of the arbitration. Other frequent errors are the failure of the
arbitral clause to specify issues concerning the applicable procedural rules, the number of arbitrators
and the applicable substantive law. The pathologens can be used by a defaulting party to delay the
arbitral process.

26
Ibidem.
27
Dr. Edward Lestrade, Drafting Arbitration Clauses in International Agreements a guide for European
lawyers, November 10, 2006.
&/

Care should be taken in limiting the application or the scope of the arbitration unnecessarily.
For example: issues arising out of the performance of the agreement are to be referred to
arbitration this would have the effect of specifying only performance issues for arbitration,
whereas: all disputes arising in connection with the agreement, would have a wider and more
complete scope.
When an appointing authority (for the arbitration court, or arbitrator), care must be taken to
ensure that the appointing authority is able (and willing) to make the appointment. Again, it is
important to determine whether the appointing authority will require and receive any fees for its
appointment role and in that case how the fees will be met. Such defects would mean that the parties
would need to have the issues decided by a state court again adding unnecessary costs to the
arbitral clause.
Generally, pathogens can be resolved upon application to a state court, however, there are
costs and delays which will normally lessen the efficacy of the choice of dispute resolution via
arbitration.
Finally, it is important for drafters to appreciate that arbitration agreements need to contain
detailed and clear provisions about how the dispute will be resolved. Failure to do so can result in
significant delays where a party is reluctant to cooperate in the dispute-resolution process.
28









28
Ibidem.
&1

CHAPTER III: CLASSIFICATION AND ANALYSIS OF ARBITRATION CLAUSES
Evaluating the validity and effectiveness of arbitration clauses requires an analytical
framework. In our opinion, arbitration clauses may be classified into a trinity of categories: (1) basic
clauses, (2) general clauses and (3) complex clauses. In practice, of course, arbitration clauses do not
fall neatly into such rigid categories. Each provision serves its own separate and unique need, and
the various provisions may be combined in a variety of different ways in any given arbitral clause.
Nevertheless, these categories may prove a useful analytical tool for evaluating arbitration
agreements against a partys needs.
1. Basic clauses
Basic clauses may be defined as those that include only the basic provisions those that are
essential or particularly important to a viable arbitration agreement. Basic clauses encompass
institutional model clauses, but may have additional provisions as well. These provisions may
include essential clauses and important clauses, as shown below.
Basic clauses are often used when routine commercial transactions are involved, when there
is only a brief time period for negotiating or drafting the arbitration clause or when the parties are
unable to agree to anything more. In the energy industry, examples of basic clauses may be found in
oil sales, shipping, joint study and bidding, and oil lifting agreements.
1.1. Essential clauses
a. Adoption of arbitration as a method to resolve disputes
The first requirement for an arbitration clause is that the parties agreement must expressly
state they intend to resolve their disputes by arbitration. While this seems obvious, occasionally
parties have said that controversies would be referred to an institution that administers arbitration
proceedings, but without mentioning arbitration as the method for deciding their issues.
29

Institutions such as the ICC have other methods for determining disputes that do not include
arbitration. These procedures encompass conciliation, expert determination and a pre-arbitral referee
procedure. Thus, if the parties want their disputes decided by arbitration, they should say so
explicitly.

29
Alan Redfern & Martin Hunter, Law & Practice of International Commercial Arbitration (2
nd
Ed. 1991) at
178.
&&

b. Final and binding
It is common for arbitration clauses to provide that any arbitration award rendered will be
final and binding. In this context, binding means the parties intend that the award will resolve
the dispute and be enforceable by national courts against the losing party. It will not result merely in
an advisory opinion that the parties are free to disregard. A reference that any award be final
means the substance of the award will not be reviewed by the courts.
30

Even if the parties do not say explicitly that the award will be final and binding, they may
accomplish the same result by adopting the rules of an arbitral institution. By including the terms
final and binding, or an equivalent phrase any disputes shall be finally settled by binding
arbitration parties express their intent for courts to enforce the award without reviewing the
evidentiary foundations of the award. This is an important provision, and especially so if
institutional rules are not adopted.
c. Scope of arbitration
At the outset, the parties should consider what types of disputes they want arbitrated. If they
desire to restrict arbitration only to contract disputes, they should draft a narrow-form arbitration
clause. This may be accomplished by using the phrase, all disputes arising under this agreement,
to define the scope of the disputes encompassed within the arbitration clause.
31
This phrase may
preclude arbitration of matters that are closely connected to the contract, but do not arise out of it.
If all potential disputes are intended to be encompassed, including tort claims, statutory
claims, fraud-in-the-inducement claims, and any others that may arise from the relationship
established by the parties agreement, then a broad-form clause should be drafted.
Because of this difference in interpreting these phrases, to create a broad clause, it may be
useful to include all of these phrases in series or to state outright the clause is intended to be a broad-
form clause that will encompass all possible claims between the parties. To ensure the breadth of the
clause, some parties include language stating the disputes covered include any relating to the

30
Supra note 2, at 20.

31
Mediterranean Enterprises, Inc. v. Ssangyong Corp., 708 F.2d 1458, 1464-65 (9
th
Cir. 1983); In re
Kinoshita & Co., 287 F.2d 951, 952 (2d Cir. 1961), cited in R. Doak Bishop, A Practical Guide for Drafting
International Arbitration Clauses, King & Spalding, Houston, Texas.
&'

contract, its negotiation, performance, non-performance, interpretation, termination, or the
relationship between the parties established by the contract.
Whatever approach the parties decide to take, they should be clear in their choice of
language so as to avoid any ambiguity or misinterpretation.
d. Ad hoc or Institutional arbitration
One of the more fundamental issues for parties agreeing to arbitrate future disputes is to
determine whether the arbitration will be conducted ad hoc or will be administered by an arbitral
institution.
The advantage of ad hoc arbitration is that the parties avoid administrative fees charged by
arbitral institutions, which can be substantial in some cases. The disadvantages of ad hoc arbitration
are that national courts are more likely to intervene when there is no administering institution and, in
the absence of an administrator, the parties may have to apply to the courts to resolve procedural
problems on which they cannot agree. Ad hoc arbitration also requires that the parties assume the
administrative and planning responsibilities generally undertaken by arbitral institutions. Moreover,
with ad hoc arbitration there is no quality control review by an institution like ICC. There is also
evidence that ad hoc awards do not receive the same deference as institutional awards when they are
presented to courts for enforcement.
32

The advantages of using an institution represent the flip side of ad hoc arbitration. The
institution may handle most of the administrative functions, provide a method of handling most
procedural problems and provide quality control for at least some functions such as the selection of
arbitrators. Cost is the primary disadvantage of institutional arbitration. Institutions such as the ICC
Usually charge an administrative fee that is a percentage of the amount in controversy. In addition,
there may be hidden costs such as first-class airfare for the arbitrators for long flights or the fee for a
secretary to the arbitral tribunal (usually a junior counsel) to take care of administrative details and
take notes. In return for the administrative fee, however, the ICC performs significant services for
the parties, including a review of party-nominated arbitrators for independence, appointing qualified
arbitrators when necessary and scrutinizing proposed awards to insure their enforceability.

32
William W. Park, Arbitration of International Contract Disputes, 39 Bus. Law. 1783, 1784 n.2 (1984) cited
in R. Doak Bishop, A Practical Guide for Drafting International Arbitration Clauses, King & Spalding,
Houston, Texas.
&(

In lieu of the arbitration rules of an institution, the parties may adopt the UNCITRAL
Arbitration Rules. This is a set of arbitral rules drafted by UNCITRAL but not connected to any
administering institution. Some institutions such as the ICC, AAA and LCIA have declared they will
apply the UNCITRAL Rules if the parties agree to their use.
33

The Parties may also adopt the UNCITRAL Rules for use in ad hoc arbitration. If the parties
choose an ad hoc arbitration, but do not adopt ready-made rules, they must frame their own rules
sufficiently for conducting the proceeding. Otherwise, they fall back on the law of the country where
the arbitral proceeding will be held.
1.2. Important clauses
a. Number of arbitrators
Most arbitration rules provide for the number of arbitrators and a method for selecting them
if the parties do not specify the number or a mechanism for their appointment. Nevertheless, it is
generally desirable that the parties express their preference. The custom in international arbitrations
involving significant monetary amounts is to appoint a three-person panel, but when the amount in
dispute does not justify three, a single arbitrator may be preferred.
b. Method of selecting arbitrators
The appointment of a three-person panel usually involves each party appointing one
arbitrator, and these two then agreeing on a third arbitrator to be the chairman of the tribunal. If the
parties simply adopt institutional rules, some provide that the institution will determine the number
of arbitrators and will select the third arbitrator when three are deemed appropriate.
34

In an ad hoc arbitration, it is important that the parties include a back-up provision for
appointment by an independent authority if a party fails to appoint its arbitrator or if the party-
appointed arbitrators cannot agree on the presiding arbitrator.
35
They should also either provide for

33
Stewart Baker & Mark Davis, The UNCITRAL Arbitration Rules in Practice: The Experience of the Iran-
United States Claims Tribunal (Kluwer 1992); Jacomijn J. van Hof, Commentary on the UNCITRAL
Arbitration Rules: The Application by the Iran-U.S. Claims Tribunal (Kluwer 1991), cited in R. Doak
Bishop, A Practical Guide for Drafting International Arbitration Clauses, King & Spalding, Houston, Texas.

34
ICC Rules art. 8(2) & 8(4).
35
ICC Rules art. 8(4); AAA International Rules art. 6(3); LCIA Rules art. 7.2; UNCITRAL Rules art. 7(2).
&-

the replacement of arbitrators who die or resign or authorize the continuance of the proceedings with
a truncated tribunal, or both.
36

Some arbitration clauses provide that the parties shall attempt within a stated period of time
after the commencement of the arbitration to agree on a sole arbitrator, but if they are unable to do
so within the period allowed, the result will be a panel of three arbitrators. This mechanism provides
flexibility the parties are not bound under any and all circumstances exclusively either to a sole
arbitrator or to a panel of three. A similar approach may mandate that the arbitration will be
conducted by a sole arbitrator if the amount in controversy, exclusive of interest and costs, is less
than a threshold amount, but will be conducted by a panel of three arbitrators if the dispute involves
the threshold amount or more.
Occasionally, the contract will provide for a named individual to act as arbitrator. This is
generally not a wise procedure because the unavailability of the person named may render the
arbitration agreement invalid or, even if not, it may cause problems regarding the appointment of a
substitute.
37

Many arbitral rules either require or suggest that the institution appoint a sole or third
arbitrator who is not a national of either parties countries. Parties occasionally provide in their
clause that no national of a party or of its parent company may serve as arbitrator, or more often,
that the sole or third arbitrator may not be a national of the parties countries.
c. Place of arbitration
If the parties fail to agree to the place of the arbitration, some institutions rules allow the
arbitrators to decide the situs based on the circumstances of the parties and the case,
38
while other
rules authorize the institution itself to select the situs.
39
In selecting the situs, perhaps the most
important factor is the legal environment of the forum. Parties should consider the following factors
related to the legal system of the venue:
40


36
A truncated tribunal is one that begins with three arbitrators but is able to continue its work with a lesser
number, if necessary; Stephen Schwebel, The Validity of an Arbitral Award Rendered by a Truncated
Tribunal, 6 ICC Intl Ct. Arb. Bull. 19, 20 (Nov. 1995).
37
Marcus v. Meyerson, 170 N.Y.S.2d 924, 925-26 (1958).
38
AAA International Rules art. 13; UNCITRAL Rules art. 16.
39
ICC Rules art. 14; LCIA Rules art. 16.1
40
Gary B. Born, International Commercial Arbitration in the United States at 73-75 (1994).
&*

It is especially important to select a forum whose arbitral awards will be enforceable in other
countries, as for example, a country that has ratified the New York Convention recognizing arbitral
awards;
The forums law should recognize the agreement to arbitrate as valid. Article V(1)(a) of the
New York Convention contemplates that the validity of an arbitration agreement may be determined
by the law of the country where the award was made, so compliance with local law is important.
Because the arbitral site is usually the country whose courts will hear an action to vacate an
award, it is important to consider the scope of review of awards available in that country.
41

The national courts of the situs should not unnecessarily interfere in ongoing arbitral
proceedings, thereby creating an incentive for dilatory tactics and expensive procedural disputes.
The forums court should, however, assist the proceedings when necessary.
42

The host country should allow non-nationals to appear as counsel in international arbitration
proceedings. This is not always the case; for example, Japan and Singapore have at times required
that parties representatives be lawyers admitted to practice, and reside, in the forum state.
43
Other
countries require that representatives be lawyers (e.g. Indonesia, Israel, Saudi Arabia and Spain),
44

while others require representatives to present a power of attorney to the arbitral panel (e.g.
Argentina, Greece, Austria).
45

The situs should not unduly restrict the choice of arbitrators. In Saudi Arabia arbitrators must
be Muslim and male.
46
In Venezuela, arbitrators must be lawyers licensed to practice law in
Venezuela if Venezuelan law applies.
47
Certain other countries have also required that arbitrators be
nationals of their country.
48

The location of the arbitration may also determine the language of the arbitration if the
parties have not specified the language. Even if the parties do specify a venue, some countries laws

41
Southern Pacific Properties Ltd. V. Arab Republic of Egypt, 2 Intl Arb. Rep., No. 1, at 17 (Cass. Civ. 1re
1987) (French courts reversal of ICC arbitral award rendered in Paris).
42
U.S. Arbitration Act, 9 U.S.C. 4,7.
43
David Rivkin, Keeping Lawyers Out of International Arbitration, 6 Intl Lit. Q. 4-5 (March 1990).
44
Ibidem, at 4.
45
Ibidem, at 3.
46
Supra note 29, at 178.
47
James Rodner, Arbitration in Venezuela, in ICC International Court of Arbitration Bulletin: International
Commercial Arbitration in Latin America Special Supplement at 99 (1997).
48
Piero Bernardini, The Arbitration Clause of an International Contract, 9 J.Intl. Arb. 45,47 (1992) at 54.
&+

require that their language be used. For example, arbitrations in some Arab countries must be
conducted in those countries languages.
49

A location that is inconvenient for the parties or expensive for travel may affect the
availability of witnesses or the cost of proceedings. The tax treatment of the award may also be a
relevant consideration.
50

In some cases, the parties may provide for two different places for the arbitration, depending
on which party initiates the proceeding. This has been referred to as home and home provision.
51

d. Language of arbitration
Absent agreement by the parties, most arbitral rules allow the arbitrators to decide the
language, taking into account the language of the contract and other relevant circumstances.
52
The
AAA International Rules specify that the language of the document containing the arbitration
agreement shall be used unless the arbitrators determine otherwise.
53
Similarly, the LCIA Rules
provide that the initial language shall be that of the document containing the arbitration clause
unless the parties agree otherwise,
54
but after the arbitral tribunal is formed, the arbitrators may
decide the language to be used.
55

Generally, the parties should specify the language to be used in the proceedings if they can
agree. If the language selected is not the native language of the client, counsel may wish to provide
both for simultaneous interpretation and for sharing equally the cost of translating testimony and
documents.
56


49
Ibidem, at 58.
50
Ibidem, at 55.
51
Bomar Oil v. Enterprise Tunisienne dActivites Petrolieres, decision of the French Cour de Cassation, 11
October 1989, Cited in Richard Kreindler, Practical Issues in Drafting International Arbitration Clauses, 63
arbitration 47,51 (1997) at 53.
52
ICC Rules art. 16; UNCITRAL Rules art. 17.
53
AAA International Rules art. 14.
54
LCIA Rules art. 17.1.
55
Ibidem, art. 17.3.
56
Bomar Oil v. Enterprise Tunisienne dActivites Petrolieres, decision of the French Cour de Cassation, 11
October 1989, Cited in Richard Kreindler, Practical Issues in Drafting International Arbitration Clauses, 63
arbitration 47,51 (1997) at 52; Stephen Bond, How to Draft an Arbitration Clause (Revisited), 1 ICC Intl. Ct.
Arb. Bull. 14 (Dec. 1990) at 20.
&,

e. Authorization for a court to enter judgment
The Second Circuit Court of Appeals in the U.S. held, in the early 1970's, that in the absence
of a clause that a court may enter judgment on an arbitral award, courts may not do so.
57
Later courts
have softened the impact of Varley v. Tarrytown by holding that consent to entry of judgment may
be implied by the conduct of the parties. A reference that the award would be final was heavily
relied upon in one case to authorize entry of judgment upon the award.
In the wake of Varley v. Tarrytown, the AAA Commercial Arbitration Rules were amended
to provide that parties adopting such rules were deemed to have agreed that judgment may be
entered on the award.
58
Nevertheless, if enforcement may be required in the U.S., it is important that
parties include an entry-of-judgment provision in their arbitration clause.
2. General clauses
General clauses represent perhaps the most common range of arbitral provisions for
substantial transactions. They are more involved than basic clauses, including the provisions
outlined above and certain optional provisions that are useful, relatively low risk and not
uncommon. Beyond the basic provisions, the optional provisions sometimes inserted in a general
clause include helpful clauses and unusual clauses.
General clauses are typically used in larger commercial transactions such as projects, when a
few provisions beyond the basic clause are necessary (but all potential provisions are not needed),
when the parties are unwilling to risk including provisions that could either derogate from
institutional rules or violate mandatory rules of the applicable law (and they do not have the time or
resources to research the issue), or when an agreement cannot be reached on additional provisions.
Examples of general clauses may be found in the energy industry in joint operating, drilling, natural
gas supply, and power plant construction agreements.
2.1. Helpful clauses
a. Qualifications and conduct of the arbitrators
The Arbitration Rules of the AAA, the LCIA and UNCITRAL require that all arbitrators be
impartial and independent.
59
The ICC Rules only expressly require independence.
60
The ICSID

57
Varley v. Tarrytown Ass., Inc., 477 F.2d 208, 210 (2d Cir. 1973).
58
AAA Commercial Arbitration Rules, art. 47(c) (eff. July 1, 1996).
59
AAA International Rules art. 7.1; LCIA Rules art. 5.2; UNCITRAL Rules art. 10(1).
60
ICC Rules art. 7(1), but an arbitrator may be challenged for "lack of independence or otherwise." Id. art.
&.

Rules require a statement from the arbitrator that he will judge fairly between the parties and will
not accept instruction or compensation from them.
61

In light of these differing tests, a party may wish to insert a clause requiring that all
arbitrators be impartial, which is the key test,
62
and may even wish to require all arbitrators to
declare that they can and shall decide the case impartially. As added insurance, the arbitration clause
may adopt the IBAs Rules of Ethics for International Arbitrators, and require that all arbitrators
comply with these rules of ethics.
Although covered to some extent in the IBA Rules, the parties may wish to insure the
complete independence of the arbitrators by requiring that they not have any financial interest in the
dispute or any financial dependence on the parties, directly or indirectly. This independence may
also take the form of prohibiting the sole or presiding arbitrator or all arbitrators from being of the
same nationality as any of the parties or their parent companies.
In addition, parties may in some cases desire to include a provision requiring certain
expertise in the arbitrators. If this is included, it should be broadly drafted unless the arbitration
clause is limited to certain types of well-defined disputes. Such a clause may require that all
arbitrators be actively involved in the trade, be knowledgeable and experienced in certain type of
business or be knowledgeable of the law relating to that business. A provision that is too specific as
to the qualifications of the arbitrators may fail if arbitrators with those qualifications cannot be
found.
63

b. Interim measures
Granting interim measures can be an important issue if immediate relief is necessary, for
example, to prevent spoilage of perishable goods or to protect intellectual property during the
pendency of a dispute.

11(1) (emphasis added).
61
ICSID Rules of Procedure for Arbitration Proceedings Rule 6(2).
62
English Arbitration Act 1996, Chapters 1(a) and 24(1)(a) (June 17, 1996); Departmental Advisory
Committee on Arbitration Law (Chairman, The Rt. Hon. Lord Justice Saville), Report on the
Arbitration Bill 101-04 (February 1996), cited in R. Doak Bishop, A Practical Guide for Drafting
International Arbitration Clauses, King & Spalding, Houston, Texas.
63
Supra note 32.
'/

Some arbitral rules and some countries laws expressly allow the arbitrators to issue interim
measures (in the nature, for example, of an injunction or an order to preserve property),
64
while
other countries laws do not allow arbitrators to issue such orders.
65
Because of the differing rules
and laws, the parties may wish to empower the arbitral tribunal with such authority, or deny it such
power, in their arbitration clause.
Courts outside the country where the arbitration is to take place will sometimes refuse to
decide issues of interim measures, leaving such questions either to the arbitral panel or to the courts
of the arbitral venue.
66

One method of dealing with this issue, at least in part, is to adopt the ICCs Pre-Arbitral
Referee Procedure, which requires a written agreement.
67
In accordance with these rules, the
Chairman of the ICC International Court of Arbitration will appoint a referee in the shortest time
possible after the time period for filing an answer, which is required within eight days from receipt
of the request.
68
The referee is empowered to issue certain provisional orders such as orders for
conservatory measures, restoration, payments, signing or delivery of documents, and preserving or
establishing evidence.
69
The referees order does not pre-judge the case or bind a later authority, but
it is binding on the parties until changed by the arbitral tribunal or a court.
70
The order is not
enforceable as an arbitral award, but non-compliance may be sanctioned by the arbitral tribunal.
71

c. Waiver of appeal
This topic is related to the issue of the final and binding nature of the award, which is
discussed above. The provisions of the ICC and LCIA Rules deeming a waiver of any form of

64
ICC Rules art. 23; AAA International Rules art. 21; LCIA Rules art. 25; UNCITRAL Rules art. 26;
UNCITRAL Model Law on International Commercial Arbitration art. 17.
65
1996 English Arbitration Act 39(4) (arbitrators have no power to order provisional relief unless
the parties confer such power on them).
66
Channel Tunnel Group, Ltd. v. Balfour Beatty Construction, Ltd., [H.L. 1993] A.C. 334, [1993] 1 All
E.R. 664, [1993] 1 Lloyds Rep. 291, XIX Y.B. Com. Arb. 736, 745 (1994) (English courts may not grant
interim injunction in respect of a foreign arbitration, but may grant pre-arbitration injunction); David
Wagoner, Interim Relief in International Arbitration, 62 Arbitration 131, 134 (1996). Trade Fortune, Inc.
v. Amalgamated Mill Supplies, Ltd., (1994) 89 BCLR (2d) 132; Interbulk (Hong Kong), Ltd. v. Safe Rich
Industries, Ltd., (1992) 2 HKLR 185, cited in R. Doak Bishop, A Practical Guide for Drafting International
Arbitration Clauses, King & Spalding, Houston, Texas, at 42.
67
ICC Pre-Arbitral Referee Procedure Rules art. 3.1.
68
Ibidem, articles 3.4, 4.2.
69
Ibidem, art. 2.1.
70
Ibidem, art. 6.3.
71
Martin Hunter, Jan Paulsson, Nigel Rawding, & Alan Redfern, The Freshfields Guide to
Arbitration & ADR: Clauses in International Contracts at 50 (Kluwer 1993) (Freshfields Guide).
'1

recourse against an award,
72
and an arbitration clause provision waiving the right to appeal the
award, constitute an exclusion agreement,
73
which excludes review of an arbitral award on the
merits by a national court. In England, the incorporation of an institutions arbitral rules, which
provide for the waiver of recourse from an arbitral award, is sufficient to prevent judicial review of
the award,
74
while in other countries such as Switzerland an exclusion agreement must be express.
75

The reason for this difference may be found in the fact that English courts have broad powers to
review an arbitral award for errors of English law, when that law is applicable,
76
while in
Switzerland and other countries, review of an award is limited to the few defenses provided in the
New York Convention.
77
Thus, the scope of the review conducted in Switzerland is much more
limited than that available in England.
2.2. Unusual clauses
a. Costs and attorneys fees
Costs, such as arbitrators fees and expenses and, if applicable, institutional fees and
attorneys fees can be substantial in international arbitration. It is rarely possible to predict how the
arbitral tribunal will allocate these costs and fees, if at all, at the end of the proceedings. Domestic
approaches diverge widely, from no allocation at all to full recovery by the prevailing party, and
arbitrators have wide discretion in this respect.
Given these uncertainties, the parties may wish to address the issue of costs and fees in their
arbitration clause, bearing in mind that such provisions may not be enforceable in certain
jurisdictions. The parties have several options. They may merely confirm that the arbitrators can
allocate costs and fees as they see fit. They may provide that the arbitrators make no allocation of
costs and fees. They may try to insure that costs and fees are allocated to the winner or the

72
ICC Rules art. 28(6); LCIA Rules at. 26.9. AB Gotaverken v. General National Maritime Transport Co.,
6 Y.B. Com. Arb. 237, 240-41 (1981) (Swedish Supreme Court held ICC award binding and
enforceable under ICC Rules art. 24 despite challenge to the award in French courts), cited in R. Doak
Bishop, A Practical Guide for Drafting International Arbitration Clauses, King & Spalding, Houston, Texas,
at 43.
73
Piero Bernardini, The Arbitration Clause of an International Contract, 9 J.Intl. Arb. 45,47 (1992) at 59.
74
Arab-African Energy Corp. v. Olieprodukten Nederland, N.V., [1983] 2 Lloyd's L. R. 419 (Q.B. Com. Ct.);
Marine Contractors, Inc. v. Shell Petroleum Dev. Co. of Nigeria, Ltd., [1984] 2 Lloyds Rep. 27, cited in R.
Doak Bishop, A Practical Guide for Drafting International Arbitration Clauses, King & Spalding, Houston,
Texas, at 43.
75
Swiss Federal Private International Law Act art. 192(1). See also Clear Star, Ltd. v. Centrala Morska
Importowo-Eksportova Centromor and Centromor, S.A., cited in Bernardini, at 59.
76
1996 English Arbitration Act 69.
77
Swiss Federal Private International Law Act art. 190.
'&

prevailing party on the merits, or that the arbitrators are to allocate costs and fees in proportion to
success or failure. The parties should avoid absolute language (shall) in drafting such a clause, as
the identification of the winner or the prevailing party may be difficult and the clause may
needlessly constraint the arbitrators in their allocation of costs and fees.
The parties may also wish to consider whether to allow compensation for the time spent by
management, in-house counsel, experts and witnesses, as this issue is often uncertain in international
arbitration.
78

b. Expert determination
In lieu of arbitration for all controversies, parties may desire to provide for an expert
determination for certain types of disputes that require particular expertise. Historically, an expert
determination typically involved a valuation, such as a certifier in construction contracts
determining the amount of an interim payment to be made to a contractor.
79

The independent expert has the duty of investigation to discover the facts, details of relevant
comparable transactions and all other information relevant to his valuation (though he may receive
information regarding these matters from the parties). The independent expert bases his decision
upon his knowledge and investigations, but he may be required by the lease to receive submissions
from the parties. There is no legislation governing procedure for the independent expert and he must
therefore settle his own contract with the parties. The independent expert has no power to compel
disclosure of documents or the attendance of witnesses. The independent expert has a duty to use his
own knowledge and experience in arriving at his decision. However, during the course of his
investigation the independent expert may seek routine administrative or other assistance from any
other person. This is always provided that he is in a position to vouch for the accuracy with which
such tasks are carried out. Unless required by the lease the independent expert will generally make
his determination without detailed accompanying reasons. An independent expert has no power to
make any order as to his fees, or as to the costs of a party, unless such a power is conferred upon
him by the lease or by agreement between the parties. There is no procedure for formal
determination of an independent experts fees. There is no right of appeal against the determination

78
IBA Guidelines for Drafting International Arbitration Clauses, Adopted by a resolution of the IBA Council,
7 Octoer 2010, International Bar Association, III. Drafting Guidelines for Optional Elements, Option 4:
Allocation of costs and fees.
79
Doug Jones, Is Expert Determination a Final and Binding Alternative?, 63 Arbitration 213, 213-14
(1997).
''

of an independent expert, though in some very limited circumstances the Court may set it aside. The
independent expert is liable in damages for any losses sustained by a party through his negligence.
This is so notwithstanding that the Court will not interfere with a final and binding determination
that he has made.
Unlike the arbitrator who acts like a judge, an independent expert however is simply acting
as a valuer, a recognised professional in his field whether this be shops, offices, factories or indeed
public houses. The independent expert must use his professional expertise in assessing the rental
value of the premises concerned. In doing so the information put forward to him by the parties may
be of assistance, but he is not bound by it in any way, and the rent he decides may bear little or at
least limited relationship to the figures advanced by the parties. Independent expert determination is
generally to be preferred where the parties want a quicker and more cost effective means of
resolving their dispute.
80

c. Interest
The authority of arbitrators to award interest is often addressed only generally, or sometimes not at
all, in governing legislation. The UNCITRAL Model Law, for example, contains no provisions
regarding interest, nor does the US Federal Arbitration Act (FAA), the Swiss Law on Private
International Law, or the French New Code of Civil Procedure. Similarly, the UNCITRAL
Arbitration Rules and The Rules of Arbitration of the International Chamber of Commerce (ICC
Rules) are silent on the subject of interest. The English Arbitration Act of 1996 is a notable
exception.
Although some tribunals have awarded interest on the basis of general principles of law
81
or
principles of reasonableness and fairness,
82
if the parties want an award to bear interest, they should
expressly authorize it in their agreement,
83
especially since some tribunals have refused to award
interest.
84
Arbitrators generally enforce clauses authorizing an award of interest.
85
Interest may be an

80
Paul G Newby Bsc (Hons) Frics Mci.Arb Abii, The Differences Between Independent Expert
Determination And Arbitration And Rents Set By The Court, June 2007.
81
John Gotanda, Supplemental Damages in Private International Law 6.4 at 50 (Kluwer 1998).
82
Ibidem, at 51.
83
Nicholas Ulmer, Drafting the International Arbitration Clause, 20 Intl Law. 1335, 1337 (1986), at 1347.
84
Supra note 69, at 53.
85
Ibidem, at 45.
'(

important part of any award, particularly if there is a significant delay between the event giving rise
to the claim and the arbitration award.
86

The general authority of arbitrators in international arbitration to award interest has long
been well-established. It is also generally well-accepted that arbitrators should look to the
substantive law governing the claims when deciding whether interest should be awarded, for what
period of time, and at what rate. This is because in most jurisdictions interest for the pre-judgment
period is regarded as a matter of substantive law. However, there remains substantial debate over the
methods used by arbitrators in awarding interest, particularly regarding the use of simple or
compound interest and how the rate of interest should be determined.
87

It has also been argued that the power of an arbitral tribunal to award interest, even if
allowed under the substantive law of the contract, may be limited by mandatory laws in effect at the
arbitral seat. That may be the case where the seat is located in certain Middle Eastern countries,
where any award of interest may be forbidden by the law of the forum. While these are important
issues, the focus of this article is the judicial recognition and enforcement (or rejection) of an
arbitrators awards of interest at the enforcement stage.
d. The currency of the award
When damages may be specified in different currencies, there are three issues that may
arise: (1) the currency in which the award should be stated, (2) the date for converting from the
currency in which damages are calculated into the currency in which the award is rendered (in
situations in which such a conversion is necessary) and (3) the exchange rate that should be used for
the conversion, when necessary.
88

The dates that may be selected for conversion include: (1) the date of the breach of the
contract, (2) the date of issuance of the award or (3) the date on which the award is ordered to be
paid.
89
The most common dates are the breach date and the award date.
90


86
Ibidem, at 11.
87
Steven H. Reisberg, Kristin M. Pauley, An Arbitrators Authority to Award Interest on an Award until
Date of Payment: Problems and Limitations, [2013] Int.A.L.R., Issue 1 2013 Thomson Reuters
(Professional) UK Limited and Contributors, at 26.
88
Ibidem, at 127.
89
Ibidem, at 94.
90
Ibidem, at 127.
'-

With respect to the exchange rate, there are also three possibilities that have been used by
arbitral tribunals: (1) the official rate, (2) the market rate and (3) the published rate.
91
The published
rates used include those found in the New York Times, the Wall Street Journal and the International
Financial Statistics of the International Monetary Fund.
92

Instead of leaving the decision entirely to the arbitrators, the parties may decide these issues
in the contract. In fact, an award may be easier to enforce if the arbitrators are required to state it in a
single, specified currency.
93
U.S. dollars are especially popular for this purpose because the
exchange rate is easily ascertainable, institutions like the ICC calculate costs in this currency and
many parties assets are denominated in U.S. dollars, thus reducing the risks of currency
fluctuations.
94

e. Exclusion of punitive and consequential damages
Historically, international arbitral panels have refused to award punitive damages.
95
A few
arbitral panels of the Society of Maritime Arbitrators have recently awarded punitive damages,
however, in the limited situation of a wrongful conversion of a cargo. The author has also recently
seen clauses prohibiting an award of punitive damages, except when one party has been found to
engage in delaying actions or dilatory tactics. Such a clause must be taken to mean that punitive
damages are authorized when the legal basis for punitive damages are proved and delaying tactics
are present since delaying tactics alone cannot constitute a sufficient basis for an award of punitive
damages. Because of the Mastrobuono case, parties may wish to include a provision expressly
prohibiting an award of punitive damages. This may be particularly appropriate when U.S. parties
are involved or when U.S. law governs the contract. Similarly, parties may wish to prohibit the
arbitrators from awarding consequential or incidental damages.
96

3. Complex clauses
Complex clauses are those that are more involved still, including some unusual provisions in
addition to the basics. These clauses must be carefully tailored to prevent inconsistencies and
meticulously researched to prevent provisions that might invalidate the clause in a given

91
Ibidem, at 140
92
Ibidem, at 140.
93
Supra note 71, at 1345-46.
94
Ibidem, at 1346.
95
Supra note 80.
96
R. Doak Bishop, A Practical Guide for Drafting International Arbitration Clauses, King & Spalding,
Houston, Texas, at 74.
'*

jurisdiction. Some of these clauses are often unnecessary or even undesirable in many situations or
to many parties, but in a given case, they may be particularly important. Beyond those included in
basic and general clauses, the provisions that may be included in a complex clause consist of related
clauses and multi-tiered dispute resolution clauses.
Complex clauses may be used in major projects involving large amounts of money, in
transactions with governments or state-owned companies, in transactions in which there is a
significant risk of breach of contract by one party, or when the arbitral clause represents a
particularly important segment of the contract because litigation or other dispute resolution methods
are not viable alternatives and may even be repugnant at least to one of the parties. Complex
clauses are sometimes inserted in major investment agreements with host governments.
3.1. Related clauses
a. Notice
Under the New York and Convention, one of the few defenses to the enforcement of an
award is the failure to receive proper notice of the appointment of an arbitrator or notice of the
arbitration proceedings, or when a party is unable to present his case, perhaps because of a failure to
receive notice of the hearing. It can prove very helpful in the event of an arbitration proceeding to
include in the contract a notice provision, which specifies the name or title of the person to be given
notice in the event of a dispute and the address to which the notice is to be sent. If the notice
provision is not included within the arbitration clause, it may be helpful for the arbitration clause to
state that any notices to be given involving arbitration may be provided to the person at the address
specified in the notice provision of the contract. A notice provision may prevent disputes over
service issues (request for arbitration) and due process concerns (notice of the hearing). The issue of
notice may arise when an award is given by default after a party fails to appear for the arbitration
hearing.
97

b. Confidentiality
Although confidentiality is often cited as one of the primary advantages of arbitration,
98
most
of the best known institutions arbitration rules do not require the parties to maintain the
confidentiality of the arbitral proceedings, the award or any documents exchanged in, or created for,

97
Ibidem, at 59.
98
Jan Paulsson & Nigel Rawding, The Trouble with Confidentiality, 5 ICC Int'l Ct. Arb. Bull. 48 (1994).
'+

the arbitration proceeding.
99
The arbitration rules of some institutions do impose such a
confidentiality requirement upon the administrator and arbitrators.
100
With the notable exception of
England, whose courts have imposed an implied obligation of confidentiality,
101
most countries
laws impose no confidentiality requirements upon the parties to the arbitration.
102

The information that the parties may desire to maintain as confidential may be categorized as
follows:
103
1) The existence of the arbitral proceeding; 2) Contemporaneous or historical documents
produced or exchanged by the parties; 3) Documents prepared for the arbitration (e.g., briefs and
pleadings); and 4) The arbitral award.
Therefore, if the parties desire that their proceedings, documents and award be maintained as
confidential, they should provide for it in their arbitration clause. If a confidentiality obligation is
provided in the clause, it should include an exception for situations in which it is necessary to go to
court either to compel arbitration or to enforce the award. Other exceptions should be provided for
disclosure when required by law or when required to enforce other rights or defend other
proceedings in situations in which the fact of the award is a necessary element of the claim or
defense.
104


99
AMCO Asia Corp. v. Indonesia, ICSID ARB/81/1 (award dated 1 February 1994); LCIA Rules art.
30.1; WIPO Rules arts. 73-75; Center for Public Resources (CPR) Non-Administered Arbitration Rules, Rule
16, cited in R. Doak Bishop, A Practical Guide for Drafting International Arbitration Clauses, King &
Spalding, Houston, Texas, at 45.
100
AAA International Rules art. 34; WIPO Arbitration Rules art. 76.
101
Insurance Co. & Lloyd's Syndicate, 10(1) Mealey's Int'l Arb. R. 9 (Jan. 1995) (U.K. Queen's Bench
Div. (Commercial Court) October 27, 1994); Hassneh Ins. Co. v. Steuart, [1993] 2 Lloyd's Rep. 243 (Q.B.);
Dolling-Baker v. Merrott [1990] 1 W.L.R. 1205, [1991] 2 All ER 890 (U.K. Court of Appeal (Civil Div.)
March 21, 1990), cited in R. Doak Bishop, A Practical Guide for Drafting International Arbitration Clauses,
King & Spalding, Houston, Texas, at 45.
102
Esso Australia Resources Ltd. v. Plowman, FMC. No. 95/014 (High Ct. Austr. 1995);
Commonwealth of Australia v. Cockatoo Dockyard PTY, Ltd., No. CA 40713 of 1994, No. CL 55049 of
1994, 10(7) Mealey's Int'l Arb. R. 3 (July 1995) (Court of Appeal of Supreme Court of New South Wales,
June 27, 1995); U.S. v. Panhandle Eastern Corp., 118 F.R.D. 346, 349-50 (D. Del. 1988); Galleon
Syndicate Corp. v. Pan Atlantic Group, Inc., 6 Mealeys Lit. R.: Reinsurance 73, 74 (N.Y. App. Div., Dept.
(Feb. 13, 1996), cited in R. Doak Bishop, A Practical Guide for Drafting International Arbitration Clauses,
King & Spalding, Houston, Texas, at 45.
103
Supra note 96, at 45.
104
Insurance Co. & Lloyds Syndicate, 10(1) Mealeys Intl Arb. R. 9 (Jan 1995), U.K. Queens Bench Div.
(Commercial Court) Oct. 27. 1994, cited in R. Doak Bishop, A Practical Guide for Drafting International
Arbitration Clauses, King & Spalding, Houston, Texas, at 46.
',

c. Discovery
Litigation in U.S. federal and state courts is characterized by broad, pre-trial discovery
obtained through document production, interrogatories and depositions (usually oral, but
occasionally conducted in writing). In England, document discovery is permitted, but not
depositions.
105

Parties may choose arbitration in part to avoid these procedures, which are often perceived as
time consuming and expensive. Parties from civil law countries, who are often accustomed to little
or no discovery, are likely to hold this perception. There are obvious cost advantages to limiting
discovery, but if parties want to insure they will have access to relevant evidence, they should
provide for it in their clause.
106

The International Bar Association has adopted Supplementary Rules Governing the
Presentation and Reception of Evidence in International Commercial Arbitration. These rules do not
automatically apply to an arbitration proceeding; they must be adopted by either the parties or the
arbitrators. When applicable, they provide for limited production of documents, falling into two
categories: (1) documents to be relied upon by the parties at the arbitral hearing, and (2) documents
that can be identified with specificity and that are exchanged with third parties (e.g.,
correspondence).
107

It is not common for arbitration clauses in international agreements to address whether
discovery will be allowed (and if so, in what form), or how evidence will be received by the
tribunal. Nonetheless, contracts occasionally address these issues, and parties may desire to provide
in the arbitration clause that the tribunal will allow discovery, and may even dictate the discovery
that will be permitted and the procedures to be used. The types of discovery that may be specified in
the arbitral clause include the following: (1) documents and information contractually required to be
provided; (2) audits of books and records; (3) documents to be relied upon by the parties in the
arbitral proceeding; (4) documents exchanged with third parties; (5) documents in the care, custody
or control of the parties; (6) sworn oral depositions or depositions by written questions; (7) written
interrogatories; (8) inspection of premises; and (9) interviews of employees.
108


105
Supra note 96, at 46.
106
Ibidem.
107
Ibidem, at 47.
108
Ibidem.
'.

Some clauses explicitly restrict discovery by providing it shall be limited and handled
expeditiously, and shall not include discovery procedures available in litigation before courts. In at
least one clause drafted by the author, however, a state-owned oil company agreed to a broad
discovery clause that included all of the types of discovery listed above. The discovery provision
was limited though to environmental issues.
109

Parties may also effectively provide for discovery by including contractual provisions
mandating that one party periodically provide the other with certain information or by providing a
right to audit. Provisions such as these are often found in joint operating agreements in the energy
industry.
110

d. Multi-party arbitration
When there are more than two parties to a contract, the arbitration agreement should
anticipate a dispute involving more than two parties. This may arise where the position of the parties
is polarized, e.g. two of the parties are contracting from the same perspective, such as two investors,
or with a genuinely tri-partite or more situation. These situations can give rise to additional
complications, especially with respect to the appointment of arbitrators and ensuring the procedure
to be followed allows all the parties a fair opportunity to present its case. These can be regulated in
the arbitration agreement.
Multiparty arrangements arise typically in joint venture agreements where two or more
parties establish the joint venture, a new and separate party in itself. When a dispute arises,
especially if it involves the actions or rights of the joint venture, or the interpretation of the
corporate instruments of the joint venture, it will often be necessary for the joint venture to be party
to the arbitration. In this way it will be bound by the award. The joint venture will generally need
separate legal representation and may have a different perspective to both parties on the issues in
dispute.
Another example is a consortium agreement, where several parties join together in common
purpose to contract with another party. The consortium agreement, and the arbitration clause that is
in it, binds all of the consortium members equally. This is usual in certain financial transactions. In
such a contract it is necessary to ensure that even though the lead member of the consortium might
alone be party to an arbitration agreement with the other party, all the consortium members are

109
Ibidem, at 48.
110
Ibidem.
(/

bound by the arbitration agreement and the arbitrators award. There may however be situations
where one needs to protect the rights of individual consortium members including allowing
participation in the arbitration.
For the appointment of arbitrators in multiparty situations, the preferred mechanism is for the
multiple claimants or multiple respondents to each nominate one arbitrator, and then for the
chairman to be appointed either by agreement of all the parties or by an independent appointing
authority. The alternative is for all of the arbitrators to be appointed by the appointing authority.
This is the solution adopted by the ICC and the LCIA after the Dutco case.
111
It is impractical for
each party to appoint one arbitrator, even with just three parties to the arbitration, because this may
result in an unwieldy number of arbitrators. More importantly, it could lead to an imbalance in the
tribunal if there were more respondents than claimants. In this type of scenario parties should clearly
provide how the arbitral tribunal is to be appointed. If they are to use an appointing authority, they
should specify the essential qualifications sought in the arbitrators.
The more complicated problem is how to manage the procedure. In a two party arbitration,
there is a sequence of claimant and respondent in written and oral submissions. With three parties, it
may not be appropriate for both claimants or both respondents to make submissions at the same
time. Equally, at the hearing, it will be necessary for each party to have its own representation and
time to present its case. Invariably even the multiple claimants and respondents will not have a
common position and may well be adverse to one another. It is difficult to determine in advance
exactly what the procedure should be. Therefore it is generally appropriate to leave issues for the
tribunal to deal with after the case arises unless the nature of the case is such as to leave the situation
clear.
A typical example is a three sided contract between the supplier of goods, the purchaser of
goods and the bank which provides a trading facility to its client and equally a guarantee to the
clients supplier. If an issue arises concerning liability, the purchaser might well argue that the goods
were defective and therefore payment was not due. The issue is when the bank should become
involved in the arbitration to defend its position in the event that liability is upheld by the tribunal.
This should be regulated in the arbitration agreement, either by allowing the bank to intervene as a

111
ICC Rules, art. 10; LCIA art. 8; Cour de Cassation, 7 January 1992, Siemens AG and BKMI
Industrienlagen GmbH v. Dutco Construction Company (Dubai). Rev. Arb. 470 (1992), cited in Julian D. M.
Lew, Loukas A. Mistelis, Stefan Kroll, Comparative International Commercial Arbitration, Kluwer Law
International, 2003, at 180.
(1

party at any time but to allow full information on the passage of the arbitration, or to provide for a
subsequent arbitration to determine the banks liability separately unless the arbitration award is to
automatically bind the bank or guarantor.
One further issue which may need to be regulated is sub-contractors, especially in
construction contracts. This occurs where the main contractor wishes to involve a sub-contractor in
an arbitration because aspects of the subcontract, e.g. quality of work, prorogation, pricing, are in
issue in the arbitration between employer and contractor. To save time and expense it may well be
appropriate to join the sub-contract, or to consolidate separate proceedings between the contractor
and the sub-contractor. This can only be done if agreed at the time or specifically provided for in the
arbitration agreement. In the latter case the right of the contractor to require the sub-contractor to
join the arbitration with the employer must be clearly stated. In this case, where the subcontractor
has a separate position to the contractor, it I necessary to ensure procedural equality for the
subcontractor including its right to see the submissions, evidence and other documents relied on by
the employer. The contractor may be unwilling to agree this because it can find itself the jam in the
sandwich, squeezed and accused by the employer and sub-contractor.
e. Consolidation of arbitral proceedings
Consolidation is a procedural device which denotes the process whereby two or more claims
are united into a single procedure concerning all parties and all disputes. Consolidation appears in
two different situations, either as de facto consolidation of claims arising under multiple contracts
between the parties, or consolidation of related arbitration proceedings. In the case of related
arbitration proceedings, it may prove beneficial to one or more parties to hear all disputes in one
hearing, where the disputes involve a multiplicity of parties and contracts. This can be contrasted
with de facto consolidation where each individual arbitration is heard by the same panel of
arbitrators or with a similar procedure
112
in which two or more arbitrations are heard simultaneously
by the same panel of arbitrators but an award is rendered separately for each individual proceeding.
In situations when consolidation of claims may be relevant, it must be determined whether
such a course of action is permissible under the relevant legal regime and if so, whether it is
appropriate in the given circumstances. The holistic approach of combining all connected two-
party, one-claim case into one case is based on the assumption that each aspect of an event affects

112
Catherine Yannaca-Small, Consolidation of Claims: A Promising Avenue for Investment Arbitration?,
International Investment Perspectives, 2006 Edition, at 227.
(&

another. Thus, each procedurally separate claim has an effect on every other claim because they are
all connected. Adjudicating one claim at a time does not take into account the remaining claims.
Influences exerted by the other claims will not be perceptible, potentially resulting in the arbitrators
missing crucial details or not grasping the bigger picture. While missing the bigger picture may
result in an unjust result, the alternative of considering every aspect of the whole event for each
claim individually is not only wasteful, but may lead to inconsistent results. Hearing all claims at the
same time in one proceeding appears to be an adequate and efficient solution.
113

Consolidation is not an end itself. It is a tool in the service of efficiency, fairness, and
avoidance of contradictory judgments.
114
There are a number of situations in which cases are begun
separately despite the availability of other procedural tools, allowing for claims and parties to be
added to the traditional two-party, one-claim case. Consolidation is distinguishable from these other
procedural tools because the unification takes place after two separate cases have been filed.
115

Usually consolidation is not a necessity.
116
However, when rights or obligations are
indivisible and the other holder of the right or obligation is not part of the proceeding and
furthermore cannot be added by consolidation or other means, the case will have to be dismissed.
Under such circumstances, consolidation would be necessary for the case to continue. Without
consolidation, both cases would simply be continued as independent and, more importantly, self-
contained matters. Lack of consolidation does not prevent either the individual disputes or the larger
dispute from coming to a conclusion. Each individual case is complete and capable of independent
adjudication. The various concepts of necessary parties, without whom a case cannot be decided due
to substantive or procedural law and must therefore be dismissed, address the question of joinder,
not consolidation. Although it may be possible to use consolidation to affect joinder, this is not the
true nature of consolidation. Ordinarily, joinder would have to be performed and the second case
dismissed for lis pendens reasons. Claims contained in a previously filed case cannot be added to
another case by the use of joinder or other procedural tools due to the prohibition of lis pendens.
117


113
Lara M. Pair, Paul Frankenstein, The New ICC Rule on Consolidation: Progress or Change? Emory
International Law Review, January 2012, at 1063.
114
Ibidem.
115
Roger S. Haydock, Mediation and Arbitration for Now and the Future, The Arbitration Process 1, 2002,
cited in Lara M. Pair, Paul Frankenstein, The New ICC Rule on Consolidation: Progress or Change? Emory
International Law Review, January 2012, at 1064.
116
Ibidem.
117
Ibidem.
('

In situations where consolidations of claims is possible, it remains to be determined whether
such a course of action is appropriate in the circumstances of the case at hand. To make this
determination, a balancing of the advantages and disadvantages of consolidation of claims as
compared to separate proceedings is undertaken.
Arguments in favor of consolidation of claims include: 1) the increase in the efficiency of the
arbitration; and 2) avoidance of conflicting or contradictory awards.
118

On the other hand, the arguments against consolidation made by objecting parties and some
commentators focus on: 1) lack of the parties consent; 2) non-participation in the appointment of
the arbitral tribunal; 3) potential infringement of a partys substantive rights; and 4) apportionment
of arbitral fees and other costs.
Consolidation of claims in investment arbitration and construction arbitration is a more
recent phenomenon. The need for consolidation in investment arbitration arises when there are
multiple arbitration proceedings filed with common questions of law or fact which raise the
possibility of inconsistent or even conflicting awards. In this context, it is often raised when there
are two or more claims arising from the same governmental measure.
As construction disputes often involve more than two parties, it is common for an employer
to enter into a construction contract with a main contractor, who then sub-contracts different parts of
the works to a number of subcontractors. The result is that multiple, interconnected construction
contracts are in place between various different parties on the project. In the event of a dispute, there
may be many potential clauses of action under the various contracts. A single dispute may involve
the employer, the contractor and a number of subcontractors, suppliers and consultants.
119
Where
some or all of the contracts contain an arbitration agreement, the tribunal can consolidate all the
related claims into the same proceedings subject to the parties consent only.
f. Split clauses
Split clauses provide for one party to have the option to have the option to arbitrate or
litigate, while the other can only litigate. Sometimes these clauses can be a good choice, but they are

118
Julie C. Chiu, Consolidation of Arbitral Proceedings and International Commercial Arbitration (1990), 7:2
Journal of International Arbitration at 53.
119
The issues of consolidation in construction arbitration, A LexisPSL document produced in partnership
with Mayer Brown International LLP, October 2012.
((

not legally valid in all jurisdictions, as for example, China. It is recommended for the parties to
previously check where any resulting award may have to be enforced.
The parties may draft a broad-form-clause but then carve out certain types of disputes such
as intellectual property claims that they do not want to be arbitrable, or they may craft a clause
tailored to include only narrowly-specified types of disputes. A variation of this provides for
litigation of a certain category of disputes, but empowers one party to elect to have those disputes
resolved by arbitration.
120
If this variation is chosen, the process for making the election should be
specified.
121
Another variation is to provide that one partys claims must be arbitrated, while the
other party may litigate its claims.
A third variation is referred to in England as Scott v. Avery clauses. These provide either
that no litigation shall be filed on the issues subject to litigation until an award has been issued on
the arbitrable issues, making the completion of arbitration of some issues a condition precedent to
litigation of others, or that the respondents sole obligation will be to pay the pecuniary sum
awarded in arbitration.
122
These provisions are sometimes found in insurance contracts in which
courts may be authorized to decide liability issues, while arbitrators are empowered to rule on the
damage claims.
123

g. Governing law
While the choice of the law to be applied by the arbitrators to determine the substantive
issues before them is not an element necessary for the validity of an arbitration clause, it is certainly
desirable for the parties to agree upon the applicable law in the arbitration clause if at all possible.
Failure to do so is a significant factor in increasing the time and cost of an arbitration. Moreover, the
decision of the arbitral tribunal of the matter, for it is an issue to be decided by the arbitrators, even
if institutional arbitration is used, may bring an unpleasant surprise to one of the parties.
124

In international arbitration it is possible that four different laws govern the contract and the
consequential arbitration in the four levels of the proceedings. The four levels are (1) the proper law
which governs the main contract (2) the proper law which governs the arbitration agreement (3) the

120
Freshfields Guide, supra note 49, at 47.
121
Ibidem.
122
Brian Dewitt & Giles Wingate-Saul, Drafting Arbitration Clauses, 62 Arbitration 39, 44 (1996), at 42.
123
Ibidem.
124
Supra note 2, at 19.
(-

law governing the arbitration proceedings and (4) the law applicable to the reference. In many cases
all the four levels may be governed by either one or two laws.
125

The governing law of a contract can be pivotal not only to its formation and validity, but also
to the question of whether disputes arising under or in connection with the contract can be submitted
to arbitration, and what remedies can be awarded by the arbitrators. It is always advisable, therefore,
to specify the governing law when drafting the contract. Where the parties do not select a governing
law, the choice will be made for them by the arbitrators, often by the applicable conflict of law rules
in the seat of the arbitration.
The procedural law in the arbitration is different from the governing law of the contract: this
is the law by which the arbitration will operate. It is possible, but rare in practice, for parties to
specify in the arbitration clause what the procedural law will be for an arbitration arising out of the
contract. Without this being specified, the procedural law is normally assumed to be the law relating
to arbitration in the seat of the arbitration. Indeed, it is not advisable to specify in the arbitration
clause a different procedural law from the procedural law in the seat of the arbitration, since this
may give rise to conflicts that the local courts will have to resolve.
Under the widely-accepted principle of separability, an arbitration clause in a contract is
considered to be separate from the contract in which it resides. This means that the arbitration clause
survives termination of the contract and allows any claims arising out of that termination to be
referred to arbitration. It also means that, exceptionally, parties may choose a governing law for the
arbitration clause which differs from the law governing the main contract. It will rarely be desirable
to do so, however, and this is rarely done in practice. It is generally assumed that where no separate
choice of law for the arbitration clause is made, the governing law of the contract as a whole is also
the governing law of the arbitration clause.
h. Equitable principles
Rather than deciding a case strictly on the basis of applicable law, under some
circumstances, an arbitral panel may rule based on equitable principles. Generally, the arbitrators
must be authorized to do so. This is usually accomplished by empowering the arbitrators either to
act as amiable compositeurs or to decide the case ex aequo et bono. The difference between the
authority to act as amiable compositeur and to decide the case ex aequo et bono is that an amiable

125
Ravi Shankar, How to Draft an Effective Arbitration Clause & Arbitration Agreement? E-Book, Law
Senate, 2012.
(*

compositeur does not have to apply the law strictly, but must still comply with mandatory rules of
law, while arbitrators with the authority to act ex aequo et bono need not apply even mandatory
legal principles, subject only to international public policy.
126

Given the confusion, parties are well advised to avoid these expressions and to specify
precisely what authority they are conveying on the arbitrators. The possibilities may be categorized
as follows: (1) The arbitrators may decide the case based on principles of equity and good faith. (2)
The arbitrators may decide the case based on principles of equity, but mandatory rules of law must
be applied. (3) The arbitrators may decide the case based on principles of equity, and applicable law
(including mandatory rules of law) need not be applied. (4) The arbitrators are authorized as the
parties agent to settle the parties disputes, with the authority to impose a settlement equitable to the
parties.
127

i. Written procedure (summary disposition)
Summary disposition is a decision on the merits made before a final hearing, much like
summary judgment or dismissal in common law litigation. It involves a decision on the merits
without a complete exploration of all possible evidence. Rather, the arbitrator makes his or her
decision referring to the pleadings and other documents produced at the initial stage.
128

Summary disposition means faster resolution of the dispute and lower costs and related
expenses. If a court can resolve a case through summary judgment within weeks, there is no logic to
enduring years of arbitration without the same remedy for equally meritless cases. Why should a
hopeless claim be allowed to drag on simply because the parties inserted an arbitration clause? The
arbitration clause, possibly adopted to save time in dispute resolution, binds them to arbitrate rather
than litigate.
129

If the resolution process extends unnecessarily over several years, users will be left
unsatisfied and quite possibly penniless. As the mantra goes Justice delayed is justice denied.
Delays and costs brought by failing to use early disposition evidences a serious deficiency in

126
Christine Lecuyer-Thieffry & Patrick Thieffry, Negotiating Settlement of Disputes Provisions in
International Business Contracts: Recent Developments in Arbitration and Other Processes, 45 Bus. Law.
577, 592-93 n.75 (1990) (discussing Swiss law).
127
Supra note 96, at 70.
128
Lauran San Roman Guijarro, Summary Disposition: The Only Way Out is Through? University of Miami
Law Review, Vol. 66:879, 18 April 2012.
129
Ibidem.
(+

arbitration as a dispute resolution mechanism. Inability to achieve speedy resolution signifies for
some the failure of arbitration itself.
130

Of course, summary disposition has shortcomings. The arbitrators authority originates from
parties agreement; the agreement must guide the arbitrators procedural decisions. Summary
disposition in international arbitration is certainly not the norm, but rather the exception. So when
users insert an arbitration clause, they generally expect to be heard in a final hearing as a matter of
custom. The arbitrators must consider this unspoken expectation when determining whether to apply
summary disposition.
131

Parties also expect to work through complex matters fully with the arbitrators, whom they
may have selected for his or her specialized knowledge on the subject. A hearing allows for the
development of evidence, the presentation of legal arguments, an opportunity to discuss those
arguments. If an arbitrator were to halt the process at an early stage, the losing party would naturally
feel dissatisfied and skeptical toward the process. Also, arbitrators may be uncomfortable disposing
of a case without sufficient time to become familiar with it and rightly so. Less time in deliberation
means a higher risk of a poorly reasoned decision.
132

Arbitration laws typically require that each party have an opportunity to present its case.
Award enforcement is problematic if the court concludes that an early decision denied a party the
opportunity to present its case.
Further, arbitral awards are non-appealable so a party left unsatisfied with a summary
disposition has no right to a review, except the limited review of the enforcing court. The finality of
summary disposition may be difficult to handle, especially when dealing with a complex, high-
dollar dispute that requires meticulous consideration. The consequences of summary disposition in
international arbitration are therefore more serious and arbitrators will be more reluctant to apply
it.
133

Common law summary judgment ensures effective management of judicial resources.
National courts must streamline an overwhelming caseload and ensure proper application of
government funds. This justification does not translate to arbitration. Parties pay arbitrators to deal

130
Ibidem.
131
Ibidem.
132
Ibidem.
133
Ibidem.
(,

with their dispute in a personalized way and institutional rules often require that the arbitrators
certify that they have adequate time to dedicate to the case.
134

Lastly, much like its judicial counterpart, summary disposition in arbitration may not always
have the intended effect. Recalcitrant parties can use requests for disposition to delay the process. It
is simply another layer of time and cost to make bringing a claim more troublesome.
135

No institutional rules grant express authority for summary disposition, but many provide that
the arbitrator must to manage the case efficiently, suggesting a duty to dispose of an unmeritorious
case in advance of the final hearing. Most rules also grant broad authority to the arbitrator to decide
procedure, providing power to decide summarily within the bounds of the agreement.
UNCITRAL Model Law jurisdictions apply the UNCITRAL Rules by default if the parties
have not agreed otherwise. The 2010 Rules provide that unless any party requests otherwise, the
arbitrator shall decide whether to hold such hearings or whether the proceedings shall be conducted
on the basis of documents and other materials. However, because the parties must consent to
document-based resolution after the dispute has arisen, this measure unlikely to be applied.
When it comes about using summary disposition in international arbitration, there is a fear
that by granting summary disposition, the award will be set aside for lack of procedural fairness. A
few solutions exist to cure the uncertainty. The easiest solution is party agreement. Parties are free to
dispense with an oral hearing by mutual agreement, without danger of set aside. However, after the
dispute has arisen, the parties will not likely agree on whether summary disposition is appropriate.
As a result, an agreement before the dispute arises, usually in drafting the contract, is the most
effective option.
136

The parties may either specifically draft language in their arbitration clause or they may
adopt institutional rules that recognize summary disposition. Where the parties have agreed on the
procedure, the tribunal may (or indeed shall) determine claims on a summary or expedited basis.
In the absence of evidence of such consent, arbitrators will be unlikely to endorse the remedy.
This is especially true when the arbitrator is from a jurisdiction that does not recognize such

134
Ibidem.
135
Ibidem.
136
Ibidem.
(.

procedures even in court. Yet, when drafting agreements, the parties focus is on the contract and
not what procedures will apply a dispute arises in the distant future.
137

j. Adaptation of contracts and gap filling
The adaptation of contracts and gap filling represent two different situations, both of which
are distinct from the typical powers of an arbitrator.
138
Unless either agreed by the parties or
permitted by applicable law, at least in some countries arbitrators may not possess the power to
adapt contracts (often long-term agreements) to changed circumstances or to fill gaps that exist in a
contract by adding a new term.
139
To the extent they do so, it is likely to be justified as an exercise in
finding and applying the intent of the parties.
140
Emphasizing this distinction, the ICC at one time
adopted Rules for Adaptation of Contracts, however, several years ago, the ICC abrogated its Rules
for Adaption of Contracts because of non-use.
3.2. Multi-tiered dispute resolution
A tiered dispute resolution clause involves a series of steps in the overall dispute resolution
process, each designed to handle the dispute if it has not been resolved by the previous step. These
vary from a single step clause which provides for mediation and then arbitration, to a multi-step
clause which provides for a series of direct negotiations followed by mediation if the negotiations
fail and then arbitration.
141

If drafted properly, the structure can be very effective but if not, can be used tactically to
delay matters. To avoid this the drafting should ensure that it is clear when one stage ends and
another begins. The common approach is to provide for a structured time scale for when the various
steps are to take place and to make it clear when the time period for each stage ends.
142

A tiered clause may be simple and short or may set out a lengthy and detailed process. Short
form ADR Clauses allow the parties to work out and agree the details if and when the dispute arises.
The disadvantage is that the detailed machinery is not settled, and it may be difficult to agree this
later; also the less detailed the form, the less prospect may be of having it enforced by a court. On
the other hand, a long form can contain all the details which will minimize later scope for procedural

137
Ibidem.
138
Supra note 17, at 56.
139
Ibidem, at 182-83
140
Ibidem, at 183.
141
Tiered Dispute Resolution Clauses, Ashurst LLP 2013 Ref: 9093973 January 2013, at 2.
142
Ibidem, at 3.
-/

disagreement and may enhance the possibility of a court treating it as enforceable. The
disadvantages, however, are that the details may not necessarily be appropriate to the actual dispute
when it arises and trying to agree detailed dispute resolution provisions in advance, which may
never arise in practice, may not be considered commercially desirable by the parties when entering
into a contract.
143

Caution should be exercised against making a tiered clause overly complicated. Some tiered
clauses often provide for different forms of ADR depending on the type of dispute. This approach
runs the risk of disputes falling between the gap and can lead to arguments over what constitutes a
legal dispute. This is best avoided by ensuring that there is a catch all provision.
If the parties intentions and the procedure to be followed are clearly spelled out in the
clause, the clause can be enforced. Consequently, the parties need to decide whether they want the
mediation stage to be mandatory and draft accordingly. If the tiered clause provides that ADR is a
pre-condition to the agreement to arbitrate, the effect could be to deprive the tribunal of jurisdiction
until the ADR process has been exhausted. This is because the arbitration tribunal derives its
jurisdiction from the parties agreement to arbitrate. If the parties do not want the obligation to be
binding, make it clear in the contract that the process is not a pre-condition and does not prevent
either party from commencing arbitration.
144

When drafting the ADR clause it is up to the parties to decide whether they wish to specify a
particular ADR procedure or whether they prefer to agree on one as and when a dispute arises. The
reality is that once a dispute has arisen agreement may be difficult to reach so providing for this in
the contract is to be preferred.
It is not recommended that the identity of the neutral or mediator be spelled out in advance,
given the problems it causes if that person becomes unavailable. It is common for tiered clauses to
provide that parties will agree on the choice of mediator and, failing that, for appointment to be
made by an appropriate body. Ensure that the body chosen is capable of appointing a mediator or
expert as, if not, and the parties cannot agree one, recourse may have to be made to the courts at
additional cost.

143
Ibidem.
144
Ibidem, at 3.
-1

Tiered clauses should provide a mechanism for a final, binding and enforceable resolution of
the dispute, typically arbitration. Ensure that the usual principles are applied when drafting the
arbitration clause and that they are consistent in their language with the rest of the clause.
145



















145
Ibidem, at 4.
-&

CONCLUSION
The arbitration clause provides an opportunity to tailor the dispute resolution process in the
manner desired by the contracting parties. This opportunity should not be squandered. The drafter
must be careful to include in the arbitration agreement all provisions that will be needed to ensure its
enforceability, as well as the enforceability of any awards that are issued, while still satisfying the
parties needs. The arbitration clause is an essential element in providing users with the kind of
arbitration they say they want: one that resolves disputes with a minimum of time and business
disruption and at lowest cost.
In order to produce legal effects and afterwards, be enforceable, arbitration clauses must
satisfy the following conditions:
The arbitration agreement must be a result of the consent of the parties. This condition is not
met when the consent is corrupted, vitiated or got fraudulently from the other party. This condition
is imposed by the private nature of the arbitration, as an alternative dispute resolution method.
The parties intention to submit any current or future dispute to arbitration and therefore, to
be bound by a subsequent arbitral award must result clearly from the arbitration clause. If the
arbitration clause is ambiguous, equivocal or calls into question the willingness of the parties to
enter into arbitration, it should not produce legal effects.
The parties entering into an arbitration agreement must have full legal capacity or, if
concluded by representatives, these should be duly authorized and have full powers to conclude an
arbitration agreement which would bound the principals later on. Some legal persons like public
authorities or corporations can conclude an arbitration agreement, commence arbitral proceedings
and proceed with them only by representatives.
The arbitration agreement must be in writing. In order to satisfy the condition of being in
writing, an arbitration clause should not necessarily be printed on paper and signed by the parties.
This condition is also met when the agreement is contained in an exchange of letters, telex,
telegrams, e-mails or other means of telecommunication which provide a record of the agreement, or
arises from an exchange of submissions or statements of claim and defense in which the existence of
the agreement is alleged by one party and not denied by the other.
The arbitration agreement should make reference to a defined legal relationship, which may
be of contractual or non-contractual nature.
-'

The subject matter to the dispute must be arbitrable. It means that the subject matter must not
be prohibited from being submitted to arbitration under the law at the place of arbitration or under
the law at the place where the enforcement of the arbitration award is sought.
If the above-mentioned conditions are met, there is a high prospect that the final purpose of
an arbitration be fulfilled, namely, that the arbitration agreement be enforced.
















-(

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