Arbitration Agreement

Arbitration Agreement

The UNCITRAL Model Law defines an arbitration agreement as "an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not." This means that parties agrees to settle their disputes in arbitration process instead of public litigation. Basically, parties can choose which kind of disputes fall under the arbitration. It can mean that all disputes arising out of their legal relationship are to be settled in the arbitration process, or on the other hand, parties can choose that only certain kinds of them falls under it. Also, as the wording of the definition states, the arbitration agreement can be drafted before or after the dispute has arisen.

The arbitration agreement also defines the scope of the arbitral tribunal's jurisdiction. The arbitral tribunal does not have jurisdiction over the matters which are not covered by the arbitration agreement made by the parties. In other words, if the parties have agreed to settle certain kinds of disputes in the arbitration, the tribunal has no jurisdiction over other matters.

There are two types of arbitration agreements: "separate" arbitration agreements and arbitration clauses. Separate arbitration agreements are those which constitute a whole new agreement, where parties agrees to settle their dispute in arbitration. Arbitration clause means a provision, included in the contract between parties, which contains an obligation to settle disputes in arbitration.

National arbitration laws can set out different requirements for the form of the arbitration agreement. The main rule is that the arbitration agreement must be in writing. However, the requirement is pretty loose, because the requirement can be fulfilled by the exchange of letter or telegrams, or in otherwise documented way.

Seat of Arbitration

Basically, the concept of the seat of arbitration determines the procedural rules of the arbitration proceedings. It refers to the geographical and legal jurisdiction to which the arbitration process is tied. In other words, it is the place where the arbitration is held. For example, the arbitration agreement can state that the proceedings are to be held "in London under the rules of the ICC". Parties are free to identify the seat of arbitration. If they fail to do so, the seat is implied from an express choice of law governing the procedure. For example, if the arbitration agreement states that the dispute is settled in accordance with Indian law, the seat is considered to be in India.