Crafting Effective International Arbitration Agreements

Crafting Effective International Arbitration Agreements

Crafting Effective International Arbitration Agreements
  International arbitration agreements are agreements that define the terms and conditions of two or more participating parties when engaging in arbitration proceedings on a global scale. A well-crafted arbitration agreement is the foundation of any effective arbitration process and provides the parties with a sense of security and fairness. As the name implies, the parties agree to bring any disputes to an arbitrator – a third party dispute resolution expert – who decides the outcome of the dispute. This paper will discuss the key elements that must be present in an effective international arbitration agreement. Agreement to Arbitrate The most essential element of an international arbitration agreement is the intention of the parties to utilize arbitration. The agreement must be supported by the parties and clearly stipulate that the parties agree to move forward with arbitration should any disputes arise between them. It is essential that the agreement include operative language that details the scope of disputes to be subject to arbitration and the processes governing the arbitration. Scope of Arbitration For any international arbitration agreement to be valid, it must include provisions to define the scope of the arbitral proceedings. This includes a clear description of the issues that can be addressed in the arbitration proceedings. The scope should also limit each party’s agreement to those specific issues set out in the agreement. The scope of the arbitration must also include the parties’ agreement to follow specific rules of evidence and procedure that are applicable to the type of dispute involved. Governing Law The law applicable to the international arbitration agreement must be identified and declared in the agreement. This should include the governing procedural law and governing substantive law. The governing law will determine the enforceability of the agreement as well as the applicable statute of limitations. Enforceability In order to ensure the enforceability of the arbitration award, the agreement should provide that any arbitration decision is binding and enforceable in any court of competent jurisdiction. The parties should also agree that the arbitral award has the same legal effect and sanction as a judgment handed down in a court of law. Delegation Clause The arbitration agreement should also contain a delegation clause, setting out the powers and rights of the arbitrator to make decisions. The delegation clause should also indicate the sanctions that the arbitrator can impose if either party fails to comply with the arbitrator’s decisions. Dispute Resolution The arbitration agreement should lay out a clear process to resolve any disputes that arise during the arbitration proceeding. This includes rules of evidence, if applicable, procedures for discovery, filing of motions, the schedule of hearings, and the timeline for asserting or contesting a claim. Costs It is important that the arbitration agreement set out the costs associated with the arbitration proceedings. These costs can include, among other things, the filing fees, witness fees, expert fees, lawyer’s fees, and any other costs associated with the arbitration process.
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