The Menace Of Inartistic Drafting Of An Arbitration Clause: Things To Keep In Mind

The words of Hon'ble Ms Justice Indu Malhotra in the case of Mahanagar Telephone Nigam Ltd. v. Canara Bank & Ors.,  judgment dated 08.08.2019 in Civil Appeal Nos. 6202-6205 of 2019, "that a valid arbitration agreement is the foundation stone on which the entire edifice of the arbitral process is structured" lay emphasis on the vitality of an Arbitration Clause.

Parties must know "how to draft an arbitration clause" and more importantly know "how not to draft an arbitration clause" as once a dispute arises between parties, the clause significantly impacts the dispute resolution process.

An arbitration agreement should always be meticulously drafted while anticipating different factors of the transaction. It is imperative to include which disputes can be referred to arbitration and the clause also needs to mention the seat of arbitration, venue of arbitration, governing law, a panel of arbitrators, etc. in case of an ad hoc arbitration.