Wonders & Co SLP

Arbitration agreements

What is an arbitration agreement?

An arbitration agreement is a contract by which two or more parties agree to settle by arbitration all or some of the disputes arising out of a legal relationship—contractual or otherwise—.

The arbitration agreement can be found in the clauses of a contract or be formalized in a separate document. See Art. 9.1 of the Arbitration Act 60/2003, of December 23, and Art. 7 of the UNCITRAL Model Law on International Commercial Arbitration.


What are the effects of an arbitration agreement?

The arbitration agreement obliges the parties to comply with its terms (positive effect) and prevents the ordinary courts from hearing disputes submitted to arbitration (negative effect).

The effectiveness of arbitration agreements is guaranteed at the international level by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, made in New York on June 10, 1958. At present 172 States are parties to this treaty. All these countries recognize the validity of arbitration agreements; their courts are obliged to refer the parties to arbitration and to refrain from hearing the dispute. See Art. II of the New York Convention.

What are the requirements for an arbitration agreement?

An arbitration agreement, like any other contract, is governed by the applicable legal system. It is this legal system that establishes the requirements that an arbitration agreement must meet in order to be valid.

Most legal systems require the agreement to be in writing and to express the unequivocal will of the parties to settle thorugh arbitration any disputes arising out of a specific legal relationship. See Art. 9 of the Arbitration Act 60/2003, of December 23, and Art. 7 of the UNCITRAL Model Law on International Commercial Arbitration.

How to draft a good arbitration agreement?

In addition to meeting certain minimum requirements of validity, it is advisable for the arbitration agreement to address some points that tend to facilitate compliance. These include the following items:

  • arbitration institution
  • the place of arbitration
  • number and method of selection of arbitrators
  • applicable law
  • language of arbitration

Drafting a good arbitration agreement requires specialized knowledge of arbitration law and familiarity with the specific circumstances of each transaction.

Wonders&Co has extensive experience in negotiating, reviewing, and executing arbitration agreements.

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