Originally from Business Disputes In China - 3rd Edition

A valid arbitration agreement is an essential prerequisite for the conduct of any arbitration, and for the enforcement of arbitral awards eventually rendered under the arbitration. Its importance cannot be emphasised more. Practitioners with experience in selecting, drafting and negotiating dispute resolution/arbitration clauses will know, however, that these clauses tend to be found on the final page of an agreement and, rather unfortunately, that seems to correspond to the degree of importance that is attached to these provisions during the negotiation phase of the transaction.

The purpose of this paper is to highlight some of the key issues in drafting arbitration agreements in the context of commercial and M&A transactions. It provides practical advice on the drafting of arbitration clauses and, in doing so, illustrates a few of the more significant and interesting issues arising from the drafting of arbitration clauses/agreements in the context of China related transactions.

Essential Elements

1. Scope

The scope of the arbitration agreement means the range of disputes and claims that will be subject to the arbitration agreement. In order to avoid preliminary disputes about whether certain claims come within the scope of the arbitration agreement, it is generally advisable to draft the arbitration agreement as widely as possible in order to catch all disputes that have any connection with the parties’ dealings. Generally most national courts will endeavour to give effect to an arbitration agreement where possible. In order to avoid any debate about whether certain types of disputes come within the scope of the arbitration agreement, the tried and tested wording "...all disputes, controversies or claims..." has been held to encompass the widest possible scope of disputes.