Originally from Handbook on International Commercial Arbitration - Second Edition

Preview Page

Many international commercial contracts contain clauses submitting future disputes to arbitration and by doing so the parties take the resolution of the dispute outside the scope of the national courts and into a private regime of party autonomy in arbitration.

What can be arbitrated depends on the parties' agreement. The original arbitration clause will define those claims that can and cannot be arbitrated, as stated by Lord Hoffmann in Fiona Trust & Holding Corp v. Privalov:1

Arbitration is consensual. It depends upon the intention of the parties as expressed in their agreement. Only the agreement can tell you what kind of disputes they intended to submit to arbitration. But the meaning which parties intended to express by the words which they used will be affected by the commercial background and the reader’s understanding of the purpose for which the agreement was made. Businessmen in particular are assumed to have entered into agreements to achieve some rational commercial purpose and an understanding of this purpose will influence the way in which one interprets their language … If one accepts that [consensual dispute resolution outside of the national courts] is the purpose of an arbitration clause, its construction must be influenced by whether the parties, as rational businessmen, were likely to have intended that only some of the questions arising out of their relationship were to be submitted to arbitration and others were to be decided by national courts … If, as appears to be generally accepted, there is no rational basis upon which businessmen would be likely to wish to have questions of the validity or enforceability of the contract decided by one tribunal and questions about its performance decided by another, one would need to find very clear language before deciding that they must have had such an intention.