The Arbitration Clause: An Investment In The Future

Most parties to a contract may not appreciate the importance of a properly drafted arbitration clause until they find themselves in a dispute. International arbitration has become a principal method of resolving disputes between states, individuals, and corporations in almost every aspect of international trade, commerce, and investment. This popularity stems from the often flexible and efficient nature of arbitration. However, parties to a contract may lose some, if not all, of this flexibility and efficiency if the arbitration clause is not properly tailored to the contours of the contract and to party needs.

There are two basic types of arbitration agreements: the arbitration clause and the submission agreement. An arbitration clause looks to the future; it usually appears in the principal contract and is an agreement to submit future disputes to arbitration. A submission agreement, on the other hand, looks to the past and is an agreement to submit existing