Drafting Agreements to Arbitrate - Chapter 2 - Practical Guide to International Arbitration
Originally from Practical Guide to International Arbitration
The cornerstone of arbitration is party consent. That consent is reflected in the arbitration agreement underlying any dispute. An arbitration agreement is defined by the UNCITRAL Model Law as “an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.”
An arbitration agreement may be inserted into a larger contractual agreement, or it may be the subject of a stand-alone agreement. Most arbitration agreements are drawn up before a dispute arises. But parties may also agree to arbitrate their dispute after it arises, in which case the agreement is called a “submission agreement.”
The drafting of the arbitration agreement is arguably one of the most important decisions in connection with an arbitration proceeding, the other critical decision at the outset of a dispute being the choice of arbitrators. In-house lawyers sometimes overlook the importance of a well-drafted dispute-resolution clause in a contract because they are focused on the particulars of the corporate deal in front of them, rather than the distant possibility of a future dispute. Careful attention should be given by corporate counsel to the drafting of the agreement to arbitrate to avoid future disputes related to its meaning, scope, or validity.
The main objective should be to draft a clear and unambiguous arbitration agreement, avoiding the pitfalls of a defective or “pathological” arbitration clause. It is usually unwise to copy and paste an arbitration clause from another contract without checking first that the clause is appropriate in all respects for the specific circumstances of the contract at hand.