The paper discusses the Definition and Purpose of the Arbitration Clause, Two Types of Contracts where the Arbitration Clause is typically found, Legal Basis & Regime, Differences in the use and interpretation of the Contract Clause between common law and civil law jurisdictions. You may use your home jurisdictions as illustrative, and Proper drafting of the Contract Clause and advice to avoid the pitfalls of relying on a “boilerplate” clause.
Table of Contents
1. Introduction of the Arbitration Clause - Definition and Purpose of the Arbitration Clause
2. Two Types of Contracts where the Arbitration Clause is typically found
3. Legal Basis & Regime - Are there any applicable international or national codes or conventions governing or limiting the use of the Contract Clause and are there any requirements for legal validity
4. The requirements for validity of the clause
5. Differences in the use and interpretation of the Contract Clause between common law and civil law jurisdictions
6. Proper drafting of the Contract Clause and advice to avoid the pitfalls of relying on a “boilerplate” clause
7. Example(s) of a well drafted Arbitration Clause and examples of what to avoid
8. What should be avoided in drafting the arbitration clause?
Objectives & Core Themes
The primary objective of this text is to provide a comprehensive guide on the function, legal framework, and drafting best practices for arbitration clauses within international contracts. It explores how these clauses operate independently of main agreements, addresses the complexities of governing laws, and highlights the practical differences between common law and civil law approaches to dispute resolution.
- The legal definition and purpose of arbitration clauses in international business.
- Key validity requirements including mutual consent, legal capacity, and formal writing.
- Comparative analysis of common law adversarial and civil law inquisitorial procedures.
- Technical guidance on avoiding "pathological" or defective arbitration clauses.
Excerpt from the Book
What should be avoided in drafting the arbitration clause?
Pathological arbitration clause, also called defective arbitration clause should be avoided. At times, in the worst case scenario, the clause might be so defective that it cannot be enforced as an arbitration clause at all. Frédéric Eisemann coined the term “pathological clauses” or “clauses pathologiques”, in “La clause d’arbitrage pathologique” in Commercial Arbitration Essays in Memoriam Eugenio Minoli (Torino: Unione Tipografico-editrice Torinese, 1974). According to Eisemann, there are four essential elements of an arbitration clause.
(1) The first, which is common to all agreements, is to produce mandatory consequences for the parties,
(2) The second, is to exclude the intervention of state courts in the settlement of the disputes, at least before the issuance of the award,
(3) The third, is to give powers to the arbitrators to resolve the disputes likely to arise between the parties,
(4) The fourth, is to permit the putting in place of a procedure leading under the best conditions of efficiency and rapidity to the rendering of an award that is susceptible of judicial enforcement”.
An arbitration clause is pathological when it deviates from any one of the above four elements. How defective the clause is depends on the extent of the deviation from those elements.
Summary of Chapters
Introduction of the Arbitration Clause - Definition and Purpose of the Arbitration Clause: Defines arbitration as a flexible, third-party dispute resolution mechanism that allows parties to settle disagreements outside of national courts.
Two Types of Contracts where the Arbitration Clause is typically found: Distinguishes between international and national contracts and categorizes them into commercial and investment agreements.
Legal Basis & Regime - Are there any applicable international or national codes or conventions governing or limiting the use of the Contract Clause and are there any requirements for legal validity: Explores the "layers of law" affecting arbitration, including the autonomy of the clause and the determination of governing law.
The requirements for validity of the clause: Outlines essential validity criteria such as mutual consent, legal capacity, and the necessity of a written agreement.
Differences in the use and interpretation of the Contract Clause between common law and civil law jurisdictions: Compares the adversarial and inquisitorial legal traditions and their respective impacts on evidence, witness testimony, and legal argumentation.
Proper drafting of the Contract Clause and advice to avoid the pitfalls of relying on a “boilerplate” clause: Provides practical guidance on institutional selection, seat of arbitration, and language specification.
Example(s) of a well drafted Arbitration Clause and examples of what to avoid: Offers a model clause for reference.
What should be avoided in drafting the arbitration clause?: Discusses the dangers of "pathological" or defective clauses and provides a framework for essential elements that must be included to ensure enforceability.
Keywords
Arbitration Clause, International Contracts, Dispute Resolution, Pathological Clauses, UNCITRAL, New York Convention, Party Autonomy, Governing Law, Common Law, Civil Law, Legal Capacity, Arbitral Award, Enforceability, Legal Validity, Contract Drafting.
Frequently Asked Questions
What is the fundamental purpose of this work?
This work provides an overview of the role of arbitration clauses in international contracts, offering a guide for legal professionals on how to draft effective, enforceable clauses and avoid common pitfalls.
What are the primary themes discussed?
The text focuses on the legal definition of arbitration, the validity requirements for clauses, the influence of international conventions, and the methodological differences between common law and civil law legal systems.
What is the main objective or research question?
The primary goal is to address how arbitration clauses can be properly drafted to ensure they are binding and efficient, particularly by understanding the governing laws and potential risks of defective (pathological) drafting.
Which scientific method is utilized?
The author employs a comparative legal analysis, evaluating international standards (such as the New York Convention and UNCITRAL Model Law) against national case law and established procedural practices.
What does the main body cover?
The main body examines the legal basis of arbitration, the "seperability" doctrine, the different legal requirements across jurisdictions, and the practical differences between adversarial and inquisitorial dispute resolution processes.
Which keywords characterize this work?
The work is characterized by terms such as International Arbitration, Pathological Clauses, Party Autonomy, Enforceability, and Legal Capacity.
What is a "midnight clause"?
A "midnight clause" refers to an arbitration clause that is drafted hastily at the very end of contract negotiations, often receiving less attention than it requires, which can lead to future legal disputes.
Why is the concept of "seperability" important?
The doctrine of separability allows an arbitration clause to remain valid even if the main contract itself is found to be null or void, ensuring that the tribunal retains jurisdiction to resolve disputes.
- Quote paper
- Joy Mutimba (Author), 2018, Standard Clauses in International Contracts. The Arbitration Clause, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/423989
