The strength of any commercial contract relies on the clarity of its "dispute resolution clause." If the arbitration clause in the contract is vague or incomplete, your company may be forced to resort to standard courts, thereby losing the advantage of swift arbitration.
Key Elements of a Successful Arbitration Clause
To avoid legal loopholes and protect your company’s rights, the contract must include the following points with absolute clarity:
Scope of the Dispute: It must be clearly defined whether the arbitration covers all disputes arising out of or related to the contract, or only specific clauses.
Seat (Place) of Arbitration: Specifying the country or city is crucial, as this determines the procedural law that will govern the arbitration proceedings.
Number of Arbitrators: It is always preferable to stipulate an odd number (typically one or three arbitrators) to ensure a decisive ruling and avoid tied votes.
Language of Arbitration: Agreeing in advance on the language of the hearings and written submissions (e.g., Arabic or English) to save on translation costs and prevent misunderstandings.
Arbitration Mechanism: Determining whether the arbitration will be ad hoc (independent) or institutional (governed by the rules of a specific local or international arbitration institution).
