Arbitration agreement and procedural rules — overviewArbitration agreement — purpose and status

An arbitration can only take place if the parties have agreed to arbitrate. It is therefore important to ensure that this is the case. Arbitration agreements are separate from the substantive agreement between the parties. This is known as the doctrine of separability. It enables a tribunal to determine the status of the main contract/agreement.

It is also important to determine whether the arbitration agreement covers the full scope of the disputes between the parties. The courts have recently taken a fresh stance in this regard, which has made determining the ambit of an arbitration agreement much simpler.

Arbitration agreement — form and content

Arbitration agreements must comply with general contractual requirements and should contain information essential to the arbitration.

Information required for the arbitration includes, for example, the applicable law of the arbitration, confidentiality and costs.

Arbitration agreement — in writing requirement

An arbitration agreement must be in writing; oral arbitration agreements will not be enforced. The requirement for what constitutes a written arbitration agreement varies between countries.

In England, the requirement for writing is found in the Arbitration Act 1996, s 5 and is very broad. Arbitration agreements can be incorporated into an agreement between the parties by reference to another agreement or to trade terms. However, problems can occur when there is an inconsistency between the substantive contract and the incorporated clause.

The requirement for a written arbitration agreement is also important when seeking to have a foreign or international award recognised and enforced.

Types of dispute resolution clauses — domestic and international arbitration

When contracts are drafted they should always contain a dispute resolution clause to assist the parties in the event that a dispute arises. A party considering commencing proceedings to resolve a contractual dispute, or who is notified of the potential of such proceedings, must always check to see if there is a dispute resolution clause in the contract and, if so, its provisions. There is no set wording for an arbitration clause and they vary widely. It is important, before a dispute is raised or responded to, that practitioners appreciate the meaning and effect of the arbitration clause contained in the relevant contract as that clause will determine the procedure and timetable for the dispute. Practitioners also need to be aware of the consequences of a failure to comply with the arbitration clause set out in the contract.

Arbitration seat

The arbitration seat must be a country. It is important because it dictates:

• the applicable procedural law for the arbitration

• the national court that may assist or supervise the tribunal during the arbitration

• the national court that has jurisdiction to determine any challenge or appeal of the arbitral award

• the nationality of the award for the purposes of recognition and enforcement

Institutional rules and UNCITRAL rules

There are a number of arbitration institutes that provide rules to govern arbitrations and, in some instances, provide administration services. UNCITRAL provides a set of ad hoc rules that are not administered. There are differences between the institutional rules and UNCITRAL, eg in relation to the administration, fees, confidentiality and seat of the arbitration.