Arbitration clause – key aspects and application

It is becoming increasingly common for the parties to a dispute to come to the conclusion, in the course of a face-to-face discussion, that they are unable to communicate on their own. They explain that they do not have a good solution to the problem. When each of them has its own opinion and neither of them is willing to compromise, it is worth considering whether the matter should be dealt with by the competent entity. The parties are thus faced with the choice of whether to use the support of the ordinary courts or an arbitral tribunal. In order to take advantage of the latter more optimal solution, an arbitration clause should be made and, ideally, an arbitration clause should be introduced into the contract.

In this article, we explain what an arbitration clause is, what it means, when it can be used and how it differs from a court of general jurisdiction. Below, we look at the types of arbitration clauses, their key aspects and applications in practice.

What is an arbitration clause?

An arbitration clause is a kind of agreement in which the parties to a dispute agree to refer the dispute to arbitration. It is a way to avoid a case in a court of law.

An arbitration proceeding may be conducted if both parties to the dispute agree to it. Compared to court proceedings, arbitration is a quick way to resolve conflicts. It most often lasts from a few to because of the most complicated cases, and lasts from a few to because of the ores (for the most complicated the cases).

Importance of the arbitration clause

An arbitration clause gives the green light for the arbitral tribunal to act. This agreement shows that the parties to the dispute agree to submit it to arbitration

An arbitration clause may also contain the rules under which the arbitration will take place. This includes indicating the mode of selection of arbitrators, the place of arbitration, the language of the proceedings or the procedures.

Application of arbitration clauses in practice

Arbitration clauses are primarily used in commercial transactions. An arbitration clause is possible in the case of a sales, supply, construction and licensing contract. It is also used when corporate disputes arise between partners, shareholders, as well as disputes concerning company bodies. It can provide a solution to labour law disputes, both individual and collective. The arbitration convention is applied to consumer disputes such as those arising from contracts with consumers.

In practice, the use of an arbitration clause generates a number of advantages. These include speed of proceedings, flexibility, confidentiality and enforceability. It also has the advantage that the arbitrators are specialists in specific fields, which increases the chance of resolving the dispute. It should also be noted that the arbitration clause is used in domestic and international trade.

When the mutual agreement procedures undertaken so far are unsuccessful, the use of an arbitration clause can be of great help.

Arbitration clause – key aspects

In summary, an arbitration clause under the law should be in writing. This agreement must include clear and precise provisions such as the subject matter of the dispute, the choice of arbitration, the applicable law, the place of arbitration, the language, the method of appointment of the arbitral tribunal, and the costs. The provisions of the arbitration clause must be drafted in a clear and precise manner. The effect of concluding an arbitration convention is to exclude the jurisdiction of the state court and to bind the parties, which indicates that they undertake to submit to arbitration.

The arbitration clause is a fundamental pillar of arbitration. Its key aspects referred to above have a significant impact on the conduct and effectiveness of arbitration proceedings.