An arbitration clause is negotiated when parties are cooperative and invoked when they are not. Clauses drafted with that asymmetry in mind avoid a preliminary dispute about process on top of the dispute about substance.

Decide the mechanics while everyone is still agreeable

Number of arbitrators, method of appointment, seat, venue, governing law and language are all easy to settle at the contract stage. Left open, each becomes a contested application before the tribunal is even constituted.

A clause that names an appointing authority, or sets out a workable default, is materially more useful than one that simply refers disputes to arbitration.

Escalation clauses need real timelines

Tiered clauses requiring negotiation or mediation before arbitration are sensible, provided each step has a defined trigger and a fixed period. Without those, the pre-arbitration stage becomes a delaying device.

The clause should also make clear whether completing the earlier steps is a precondition to commencing arbitration, since that question is frequently litigated.

Consider enforcement at the drafting stage

Where counterparties or assets sit in different jurisdictions, the practical value of an award depends on where it can be enforced. Choice of seat should be made with that in mind rather than as a matter of convenience.

Interim protection is often the most urgent need in a commercial dispute, so the clause should not inadvertently restrict access to it.

This note is general information on the law and not advice on any specific matter. Please speak to us before acting on it.