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Man in Suit Signing

Arbitration Agreement


Signing an agreement for any new venture comes with its share of excitement and anxiety. A primary cause of concern tends to be about what would happen if things do not go as planned resulting in a falling out between parties. If this happens, the all-important dispute resolution clause comes into play.

Unfortunately, whilst parties are frequently concerned about receiving the best deal, they tend to not pay much attention as to what goes into their clause to regulate the procedure to be followed if a dispute arises from their agreement. Failure to consider necessary questions, such as whether the clause is broad enough to cover all disputes connected to and arising from the agreement, may end up causing the parties substantial losses and damages.


Including an arbitration clause is often considered the safeguard in any agreement. It guarantees the right of an effective and efficient alternative dispute mechanism for resolving the matter at hand, be it on a domestic or international playing field.

To invoke arbitration there must be an arbitration agreement between the parties who accept by their consent to resolve their future or existing disputes by the arbitral tribunal who reviews the case. The arbitral agreement could be made either at the time of drafting the contract, which takes the form of an arbitration clause, or agreed sometime thereafter, usually after a dispute has arisen (known as a submission agreement). The agreement to arbitrate will normally establish the method of appointing the arbitral tribunal and its jurisdiction, the place of arbitration, the applicable law to govern the procedures of arbitration and the substantive issues. Parties must comply with the resulting arbitral award as a final and legally binding decision, or otherwise, an award may be enforced with the assistance of the state authorities.

Several legal systems and international conventions provide definitions of the arbitration process, and these generally comprise the same features  as stated above.


For example, Article 7(1) of the Model Law* provides a general description of what may constitute an arbitration agreement:

“"[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. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.”"

Section 6 (1) of the English 1996 Act provides that:

"“In this part an ‘arbitration agreement’ means an agreement to submit to arbitration present or future disputes (whether they are contractual or not).”"

Article 4 (1) of the Egyptian Law No 27 of 1994 provides that:

“For the purpose of this Law, the term ‘arbitration’ means voluntary arbitration agreed upon by the two parties to the dispute according to their own free will, whether or not the chosen body to which the arbitral mission is entrusted by agreement of the two parties is a permanent arbitral organisation or centre.”

The New York Convention on the recognition and enforcement of foreign arbitral awards of 1958 refers to the arbitration agreement in the context of recognition and enforcement of such agreements. Article II (1) of the Convention provides:

“"Each contracting State shall recognise an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration”."

ne should recognise that Article II (1) of the New York Convention requires that an arbitration agreement be made in writing. This requirement is necessary since arbitration is based upon the will of the parties thus both parties have an interest to prove the existence of a valid arbitration agreement. Also, having a valid arbitration agreement obliges the court to refer the parties to arbitration. (This will also depend on a request which should be made by a party not later than when submitting his first statement on the substance of the dispute.)

Therefore, a party cannot claim before the court on the same subject matter unless the court finds that the arbitration agreement is null and void, incapable of being performed or contrary to public policy. A written arbitration agreement is also necessary to guarantee the recognition of such agreement as this is required by some legal systems. Not including an arbitration agreement in a written form could be a reason to invalidate the arbitration agreement in countries which consider such requirement as fundamental. (See, for example, Article 12 of the Egyptian law of 1994: “

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