ICC International Chamber of Commerce ➲ Arbitration Clause Generator

Why do we recommend parties consider adding an Arbitration Clause to their Contract?

Arbitral Awards (~170 Countries) are generally more enforceable v. Australian Court Judgments (~30)

It is often assumed that a court judgment made after a dispute arises under a Contract will automatically be enforceable against the other party (even where they reside or are based overseas).

The best way to set the record straight and demonstrate the importance of Arbitral Awards when dealing with parties from particular countries is to provide by way of example a list of the countries where an Australian Judgment has automatic reciprocal recognition versus the recognition an equivalent Australian Arbitral Award might receive under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (the "New York Convention").

Reciprocal Enforcment of (Circa 30) Foreign Court Judgments in Australia and vice-versa

FAQ: What foreign Court judgments have reciprocal recognition for enforcement in Australia?

Enforcement of Foreign Arbitral Awards (170 Countries are parties to the Convention)

Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (the "New York Convention")

Entry into force: The Convention entered into force on 7 June 1959 (Article XII).

Status: This table lists the current status of the signatory countries to the Convention

To help make sense of the status levels please refer to the following defintions which apply to the critical stage of consenting to be bound by the convention

Ratification

Ratification defines the international act whereby a state indicates its consent to be bound to a treaty if the parties intended to show their consent by such an act.

In the case of bilateral treaties, ratification is usually accomplished by exchanging the requisite instruments, while in the case of multilateral treaties the usual procedure is for the depositary to collect the ratifications of all states, keeping all parties informed of the situation.

The institution of ratification grants states the necessary time-frame to seek the required approval for the treaty on the domestic level and to enact the necessary legislation to give domestic effect to that treaty

Accession

"Accession" is the act whereby a state accepts the offer or the opportunity to become a party to a treaty already negotiated and signed by other states.

It has the same legal effect as ratification.

Accession usually occurs after the treaty has entered into force.

For more glossary terms, visit the UN Treaty Website’s Glossary of terms relating to Treaty actions.

What needs to be considered when adding an Arbitration Clause to a Contract?

Especially when dealing with International Commerce (but also in Domestic Commerce) it is critical that the parties to any Contract carefully consider what will occur if a dispute arises, including:

⚖️ The Dispute Resolution Process (and if that is unsuccessful);

⚖️ How the matter can be finally decided and the estimated costs typically involved in the chosen Forum;

⚖️ The seat (location) of the Arbitration;

⚖️ The language or languages to be used in the Arbitral Proceedings;

⚖️ Whether the Abitral Proceedings are to be confidential (and under what circumstances confidential information may be disclosed);

⚖️ Whether the Arbitration Proceedings are to be conducted by way or oral hearings for the presentation of evidence or for oral argument, or whether the proceedings are to be conducted solely via written submissions;

⚖️ Whether a court may determine a preliminary point of law;

⚖️ The applicable Arbitration Rules;

⚖️ The number of Arbitrators, whether a majority or unanimous decision is required, and whether one Arbitrator is to be appointed as a Presiding Arbitrator to solely determine questions of procedure;

⚖️ The procedure for appointing the Arbitrator or Arbitrators;

⚖️ The procedure for challenging the appointment of an Arbitrator;

⚖️ The power of the Arbitral Tribunal to grant interim measures;

⚖️ Whether or not one or more Experts can be appointed to report on specific issues to be determined by the Arbitral Tribunal;

⚖️ Whether the costs of an Arbitration (including the fees and expenses of the Arbitrator or Arbitrators) are to be pre-allocated or to be in the discretion of the Arbitral Tribunal;

⚖️ How to deal with the costs in the event of an aborted or failed Arbitration;

⚖️ Whether interest at a pre-agreed rate or such reasonable rate as the Arbitral Tribunal decides is to apply on an award for the payment of money;

⚖️ Avenues of Appeal (if any);

⚖️ Applicable Law for both the Contract and the Arbitration;

⚖️ Enforcement;

⚖️ Security +/or Personal Guarantees, etc.

The ICC International Chamber of Commerce provides dispute resolution services including Arbitration.

Whilst parties can agree to undertake Arbitration after a dispute arises, it is best practice for the parties to discuss and agree whether or not to include an Arbitation Clause in their Contract before it is executed by the parties.

Many of the above matters may be automatically dealt with by the agreed applicable Arbitration Rules which as general designed to provide for default positions where the parties omit the matter from their Arbitration Clause.

It is important for the parties to understand the default positions imposed by their agreed applicable Arbitration Rules so that they can negotiate changes where necessary.

How does this ICC Arbitration Clause Generator work?

This Self-Service Arbitration Clause generator uses Embedded Lawyer-Logic™ to step you through the below guidelines to automatically generate and email you a draft ICC Arbitration Clause based on your responses. If you need assistance to best understand the implications of each query being asked, we offer Lawyer-Assisted and Full Service depending on the complexity of your circumstances, and requirements.

Guidelines for adding an ICC Arbitration Clause to your Contract

The following text has been extracted from the Standard ICC Arbitration Clause (English Guide).

It is recommended that parties wishing to make reference to ICC Arbitration in their contracts use the standard clause below.

Standard ICC Arbitration Clause

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

Parties are free to adapt the above Standard ICC Arbitration Clause to their particular circumstances.

For instance, they may wish to stipulate the number of arbitrators, given that the ICC Arbitration Rules contain a presumption in favour of a sole arbitrator.

Also, it may be desirable for them to stipulate the place and language of the arbitration and the law applicable to the merits.

The ICC Arbitration Rules do not limit the parties’ free choice of the place and language of the arbitration or the laws governing both the contract and the arbitration.

When adapting the clause, care must be taken to avoid any risk of ambiguity.

Unclear wording in the clause will cause uncertainty and delay and can hinder or even compromise the dispute resolution process.

Parties should also take account of any factors that may affect the enforceability of the clause under applicable law.

These include any mandatory requirements that may exist at the place of arbitration and the expected place or places of enforcement.

ICC Arbitration Without Emergency Arbitrator

If the parties wish to exclude any recourse to the Emergency Arbitrator Provisions, they must expressly opt out by adding the following wording to the clause above: 

The Emergency Arbitrator Provisions shall not apply.

Expedited Arbitration

The ICC Arbitration Rules provide for use of an expedited procedure in lower-value cases.

If parties wish to exclude the application of the Expedited Procedure Provisions, they must expressly opt out by adding the following wording to the clause above:

‍The Expedited Procedure Provisions shall not apply.

‍Parties wishing to avail themselves of the expedited procedure in higher-value cases should expressly opt in by adding the following wording to the clause above:

The parties agree, pursuant to Article 30(2)(b) of the Rules of Arbitration of the International Chamber of Commerce, that the Expedited Procedure Rules shall apply irrespective of the amount in dispute.

‍If parties wish the ceiling for the application of the Expedited Procedure Rules to be higher than that specified in those Rules, the following wording should be added to the clause above:

‍The parties agree, pursuant to Article 30(2)(b) of the Rules of Arbitration of the International Chamber of Commerce, that the Expedited Procedure Rules shall apply, provided the amount in dispute does not exceed US$ [specify amount] at the time of the communication referred to in Article 1(3) of the Expedited Procedure Rules.

Without Publication of Awards

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

No award or procedural order made in the arbitration shall be published.

Multi-Tiered Clauses

ICC Arbitration may be used as the forum for final determination of a dispute following an attempt at settlement by other means such as Mediation.

Parties wishing to include in their contracts a tiered dispute resolution clause combining ICC Arbitration with ICC Mediation should refer to the standard clauses relating to the ICC Mediation Rules.

Other combinations of services are also possible.

For instance, Arbitration may be used as a fallback to expertise or dispute boards.

Also, parties who resort to ICC Arbitration may wish to provide for recourse to the ICC International Centre for ADR for the proposal of an expert if an expert opinion is required in the course of the Arbitration.

Standard clauses for these and other combinationsof services are available in several languages here.

More information

For more information about inserting an ICC Arbitration Clause into your Contract to refer disputes to the ICC International Chamber of Commerce you can download the Standard ICC Arbitration Clause brochure in English (many other languages are available).

Social Sharing Image: Courtesy of Ian Taylor on Unsplash

Relevant Australian legislation:

The International Arbitration Act 1974 of the Commonwealth covers International Commercial Arbitrations and the enforcement of Foreign Arbitral Awards.

For Domestic Commercial Arbitration, each state or territory will generally have their own local laws.

For e.g., see Commercial Arbitration Act 2010 (NSW).

Source: ICC International Chamber of Commerce Website