2.

The Agreement to Arbitrate

A. Overview

a. Introduction

Foundation Stone of international arbitration

It records the consent of the parties to submit future disputes to arbitration

b. Categories of Arbitration Agreements

Arbitration Clause
o Looks to the future agreement to submit future disputes to
arbitration;
o Most common;
o Usually contained in the principal agreement between the parties;
o Usually short
Submission Agreement
o Looks to the past agreement to submit existing disputes to
arbitration;
o Usually long

c. International Conventions

1923 Geneva Protocol

o Recognition and enforcement of international arbitration agreements
1927 Geneva Convention
o Execution of foreign arbitral awards
Various national Conventions
1958 New York Convention
o Recognition and enforcement of arbitration agreements;
o International enforcement of awards that comply with the specified
criteria
1975 Panama Convention
o Recognition of arbitration as an established method of resolving
disputes in a regional context

d. International Standards

Under the New York Convention each Contracting State undertakes to

recognize and give effect to an arbitration agreement when the following
requirements are fulfilled (4 positive requirements of a valid arbitration):
o The agreement is in writing;
o It deals with existing or future disputes;
o These disputes arise in respect of a defined legal relationship, whether
contractual or not; and
o They concern a subject-matter capable of settlement by arbitration
Additional requirements
o The parties to the arbitration agreement must have legal capacity
under the law applicable to them;
 o The arbitration agreement must be valid under the law to which the
parties have subjected it or, falling any indication thereon, under the
law of the country where the award was made

B. The validity of an Arbitration Agreement

a. Formal validity the needing for writing

A valid agreement to arbitrate excludes the jurisdiction of the national courts

and means that any dispute between the parties must be resolved by a private
method of dispute resolution, named arbitration
In writing
o New York Convention
Arbitral Clause in a contrite or an arbitration agreement,
signed by the parties or contained in an exchange of letter or
telegram
o Model Law
An agreement is writing if its content is recorded in any form,
whether or not the arbitration agreement or contract has
been concluded orally, by conduct, or by other means;
Agreement by the parties to submit to arbitration all or certain
disputes

b. A defined legal relationship

Subject to any provisions of the relevant applicable law, the terms of an

arbitrators jurisdiction and powers in any particular case depends on a proper
construction of the arbitration agreement
o The arbitral tribunal must consider the dispute in question and then
elicit from the arbitration agreement whether or not the parties
intended a dispute of the kind in question to be resolved by arbitration

c. A subject-matter capable of settlement by arbitration

Arbitrability
o Generally, involves determining which types of disputes may be
resolved by arbitration and which belong exclusively to the domain of
the courts
Each State decides which matters may or may not be resolved
by arbitration in accordance with its own political, social and
economic policy

C. The parties to an Arbitration Agreement

a. Capacity

Parties to a contract must have legal capacity to enter into that contract,
otherwise its invalid;
The parties to such agreements include individuals, as well as partnerships,
corporations, States, and States agencies;
 If a party who does not have the capacity to do so enters into an arbitration
agreement, the provisions of the New York Convention, Or the Model Law,
may be brought into operation, either at the beginning or at the end of the
arbitral process.
o Beginning
The request party asks the competent court to stop the
arbitration, on the basis that the arbitration is void,
inoperative or incapable of being performed.
o End
The requesting party asks the competent court to refuse
recognition and enforcement of the award, on the basis that
one of the parties to the arbitration agreement is under some
incapacity under the applicable law
I. Natural persons
The capacity of an individual to enter into a contract within the State
of his place of domicile and residence will depend upon the law of that
State;
In the context of an international contract it may become necessary to
have regard also to the law of the contract
II. Corporations
The capacity to enter into a contract is governed primarily by its
constitution and the law of its place of incorporation
o A corporation is required to act through its directors and
officers in accordance with its constitution and its own
governing law
Ultra vires
o A transaction that goes beyond the power of a corporation
If the transaction goes badly, it would be open to the
corporation to contend that the agreement was not
binding on it and that it was not obliged to arbitrate
any dispute
To guard against this possibility, it is not
unusual for States to have specific rules of law
that restrict or abrogate the doctrine of ultra
viris
The laws of some States may restrict a corporation from initiating
arbitration in certain circumstances relating to the status of the
corporate entity itself
III. States and State Agencies
Before entering into an arbitration agreement with a foreign State or
State entity it is advisible to check that the persons