Originally from World Arbitration and Mediation Review (WAMR)

Parties’ consent and autonomy are significant because they provide the basis for a voluntary arbitration system.  Arbitration agreements are the keystone of international arbitration as they enshrine the parties’ consent to arbitrate their disputes, which is indispensable to initiating a dispute settlement process outside the courts. This article critically analyzes various features of arbitration agreements, including the separability doctrine, validity of arbitration agreements, and third-party rights enforcement through a transnational perspective. Additionally, this article pinpoints the role of international law, arbitration institutional rules, and international instruments like the New York Convention and the UNCITRAL Model Law in facilitating transnational arbitration.  It also pinpoints legal and procedural blemishes that impede seamless integration. By focusing on transnational analysis of trends beyond the minimalist approach, this article explains how an arbitration agreement can be tailored to fulfill the demands of an interconnected global marketplace.

When parties to a contract agree to arbitrate, they consent to settle their disputes outside the courtroom.  Hence, they waive their right to have those issues adjudicated by a national court.  The conclusion of an arbitration agreement implies relinquishing the significant right to settle a dispute in court. As a result, the parties commit to another judicious process for settling disputes, therefore adhering to a private justice system.  The parties freely select the rules governing the arbitration process, language, location, and law through an arbitration agreement.  Additionally, the parties can select the arbitrators and fix their number.  The arbitrators are decision-makers, chosen because of their specific qualifications or expertise in the subject matter of the dispute.  The parties to the arbitration agreement delineate the scope of the arbitrators’ role and empower them to decide their dispute.

The arbitration agreement is a prerequisite to commencing arbitral proceedings.  Prior to bringing a legal claim, the parties should have concluded a binding contract to arbitrate the dispute.   The arbitration agreement is generally a clause enshrined in a commercial contract, meaning that it must be concluded before any dispute emerges.   If there is no arbitration agreement between the parties and a dispute arises, the parties may still conclude an arbitration agreement at that time as long as both parties give their consent. This agreement is sometimes called a “submission agreement” and is less likely to occur than an arbitration agreement embedded in the contract because it is more difficult for the parties to agree on anything when a dispute has already arisen.  Therefore, it is best for the parties to conclude their arbitration agreement during their business or commercial relationship formation because they are generally on good terms and more likely to give concessions and find common ground.