Guide to drafting arbitration clauses

Arbitration has long been the dispute resolution method of choice for cross-border transactions. It is also increasingly being selected as the preferred method for resolving domestic disputes, especially where parties desire a confidential and efficient dispute resolution process.

Arbitration is a consensual dispute resolution process. It requires the parties to enter into a valid and enforceable arbitration agreement, which records their agreement to resolve certain disputes by arbitration.

Yet, despite their significance, arbitration clauses are often the last provisions of a commercial contract to be negotiated. Called 'midnight clauses', they are rarely accorded the time and attention required to:

• ensure that they are appropriately scoped,
  
  
• achieve the desired result of keeping disputes out of court and away from the public eye, and
  
  
• provide for an appropriately tailored procedure to meet the parties' and the transaction's needs.

Poorly drafted arbitration clauses can be significant and costly. There are many examples of cases where parties have had to litigate because of an ambiguous clause, resulting in extra delays and expenses.

To provide clarity and avoid unnecessary complications, we have prepared this Guide to help parties negotiate properly drafted arbitration clauses that are enforceable, efficient and fit for purpose.

The Guide can be read as a standalone document or in conjunction with Corrs' Introduction to Arbitration, in which we explain the fundamental tenets of arbitration. Together, these resources help users avoid common pitfalls when selecting arbitration, and successfully navigate an arbitration whenever disputes do arise.

Download a copy of Guide to drafting arbitration clauses.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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