The Importance of An Arbitration Agreement is in The Details
When writing an arbitration agreement, it is important to ensure that the provisions of the agreement cater for the needs and intentions of the parties.
The parties that are entering into the agreement is the departure point for any arbitration agreement. The industry of the parties, their registered business addresses, and the type of agreement that they have entered are some of the factors that require consideration before an arbitration agreement can be drafted.
If, for instance, the one party’s registered business address is in South Africa and the other party’s registered business address is in Ghana, it would be the obvious choice to consider a facility or forum within these two jurisdictions for the arbitration or alternatively another venue which is situated in the middle of them.
From there onwards, the available forums, their facilities, the expertise of their arbitrators, and the suitability of the arbitrator’s expertise and experience need to be paired with the industry of the parties, as well as the type of agreement.
The international arbitration legislation as well as each country’s relevant local legislation needs to be considered. Applicable conventions and treaties must also be considered.
You must ensure that the rules that you choose to apply will be the set of rules that will benefit your client the most.
The parties need to decide if they will elect their own arbitrator or if they will be given an arbitrator. The parties need to consider if they will only need one arbitrator or whether they will need a panel (3).
The parties must clearly outline the process of selection, how it should be managed if they cannot agree upon an arbitrator and what expertise their arbitrator should have. The parties can even specify their requirements of an arbitrator depending on the dispute.
The parties must agree how the arbitration costs will be covered and consider the consequences if one of the parties should fail to comply therewith.
Timeframes for each step of the process can be mandated to ensure that the process is completed in a timely manner.
The parties should consider whether there are any applicable rules that they would like to exclude, and whether the rules they want to exclude can be excluded.
The more detail your arbitration agreement has, the less likely it is for the process to come to a standstill because the applicable stipulation can be interpreted very differently, or no provision is made for consequences related to the specific stage of the process.
Parties are encouraged to think outside the box and to add onto the standard forms of an arbitration agreement. This can greatly assist to avoid problems that they have previously encountered, and it might even help shape and develop the process of arbitration in their own country to ensure better efficacy.
Written by Corné Broodryk, attorney based in South Africa.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.