C-3-5- The arbitration and its clause in all international contracts


3-5-1- The notion of arbitration

When companies set up a contract, both parties must choose the applicable jurisdiction. They choose, consequently, to submit their disputes to arbitration. Arbitration is the result from use of the arbitration clause or the arbitration agreement. The first is included in contracts prior to the dispute, while the second is established by both contracting parties after the beginning of the dispute.

3-5-2- The arbitration clause

The arbitration clause is therefore a clause that must be included in all contracts, general terms of sales, sales agent contracts and export distribution agreements. It permits to bringing a case to an arbitration court from the ICC (International Chamber of Commerce) to resolve a dispute between the importer and the exporter. Another solution involves the parties reaching a resolution themselves through an organized and planned process with a chosen arbitration mode.

3-5-3- Instistutional arbitration

Institutional arbitration is a solution for companies inexperienced with international transactions. It's a solution for companies which are looking for simplicity. A multitude of institutions maintain arbitration courts within them. The most common is the arbitration court from the International Chamber of Commerce, ICC. In this case, the least complex, the clause to be stipulated is:

"All disputes arising out of or in connection with the present contract shall be settled under the Rules of Arbitration of International Chamber of Commerce, by one or more arbitrators appointed in accordance with the said rules.".

3-5-4- One solution: the ad hoc arbitration..

There is currently an alternate, more complex solution: the "ad hoc arbitration." It permits both parties to resolve the dispute amongst themselves. It's a good solution for parties with a shared transaction history. Their contract must include all the tenants of arbitration proceedings. When drafting the arbitration clause, we advise included terms for an organized dispute resolution. It must be stipulated within the clause, who appoints the arbitrators, if the proceedings will be conducted orally or in writing, the language and location of the arbitration, and a timeline for a decision.

It can also be stipulated that no recourse is possible once the decision is announced.