This article is based on two studies of arbitration clauses in cases submitted to the ICC's International Court of Arbitration. The earlier (and apparently first systematic) analysis of cases concerned those submitted in 1987.<sup><a href="#footnote1">1</a></sup> Because the results of the first study lead to certain conclusions that could influence not only the practical aspects of drafting an arbitration clause but also certain developments in international arbitration itself, it was decided to conduct the second study (based on cases submitted in 1989) and to compare the results.<sup><a href="#footnote2">2</a></sup> As will be noted, both studies seem to concur.

The subject of "How to draft an arbitration clause" is one about which much has been written.3 Numerous articles analyse the essential ingredients for an arbitral clause and sometimes conclude with the presentation of the "miracle clause" that will solve almost every problem inherent in an arbitration. However, there are several difficulties in putting most of these miraculous clauses into practice.

First, too often, as has been said, the dispute resolution clause is done as an afterthought, and without very much thought. Preparation and study of the matter is essential.

Second, the other party may have very different ideas as to what constitutes an ideal clause. The relative bargaining strength of the parties comes into play and the negotiator must know what is essential to his interests and what can safely be given up.

Third, the all-purpose clause may not, in fact, be suitable for all situations. For example, it is all very well to provide clearly the ideal arbitration clause for payment of interest, but if you ever have to execute upon an award based on such a clause in Saudi Arabia or certain other countries, the mention of interest may render the entire arbitration clause and award invalid. So too, it is generally preferable to indicate in the arbitration clause the place of arbitration. However, if that place is in a particularly unstable country so that there is a chance that when a dispute arises it might not be possible, for political or security reasons, to hold the arbitration in the place designated, the result may be to render the clause unworkable and to forfeit the right to arbitrate.

Still, the fact remains that because of the consensual nature of arbitration and the various requirements for the validity of the arbitral clause, if you desire that arbitration be the method of dispute resolution between yourself and a business partner, you will have to have an arbitral clause. It is also true that many of the difficulties that most often complicate and delay an arbitral proceeding and the possible enforcement of an arbitral award can be removed or diminished by a well-drafted arbitration clause.

Moreover, the more effective the arbitral clause that is negotiated, the less likely it is that it will ever be used. This is because an ineffective dispute resolution clause will be less of a deterrent to a party that is considering a breach of contract. So, even businessmen who wish to deal with lawyers as little as possible have a major interest in involving an attorney in the negotiation of the dispute settlement provision unless those businessmen wish to prove, once again, the old adage that arbitration is a procedure that has too few lawyers in the beginning (when the clause is drafted) and too many in the end (when an arbitration is actually under way).

I would like to present some thoughts as to elements which should be considered in drafting and negotiating an arbitration clause. In addition, to make this presentation as pragmatic as possible, arbitration clauses contained in the 237 arbitration cases submitted to the ICC's International Court of Arbitration in 1987 and in the 215 submitted in 1989 have been analysed. (Note: these cases do not represent the total number of Requests for Arbitration in these two years but only those disputes which were actually submitted to the ICC International Court of Arbitration in order to set in motion the proceedings.) From these clauses, some practical lessons can be learned as to what elements the parties themselves consider important and where improvements in arbitration clauses might most usefully be suggested. [Page15:]

Do you need an arbitration clause?

This is not the place to speak at length of the advantages of arbitration over litigation for international commercial dispute resolution. Suffice it to say that, compared to litigation, as a general matter arbitration continues to be more rapid and less expensive, even if the growing complexity of international commercial transactions and the increasing use of litigation-style tactics in arbitration have had an effect.

Confidentiality of arbitral proceedings, neutrality of the forum and the independence and expertise of the arbitrators attract users to arbitration. Of course, arbitral awards are also generally more enforceable in a foreign country than are national court decisions.

If a party wishes these advantages, must it put an arbitration clause into its contract or can that sometimes difficult and disagreeable negotiation wait until a dispute actually breaks out?

Experience makes clear that if a party wishes to have arbitration, an arbitration clause must be incorporated into the contract or otherwise become part of the written agreement establishing the commercial relationship between that party and its business partner.

Of the cases submitted to the ICC Court, only four in 1987 and six in 1989 resulted from a compromis, that is, an agreement to submit an already existing dispute to arbitration. The other cases arose from clauses compromissoires, that is, an arbitration clause agreeing to submit future disputes to arbitration.4 The reasons are obvious. Once a dispute arises, in most instances the parties can no longer agree on anything, including how to resolve their dispute. Rather, each rushes to the national court where it believes it is most advantaged. Any previous oral agreement to go to arbitration is virtually worthless, if only because to benefit from the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards an arbitration clause must be in writing. Thus, as has sometimes been said, an oral agreement is not worth the paper it is written on.

The arbitration clause in general: the good, the bad and the ugly

An arbitration clause need not be lengthy or complicated, but if it is to be effective it must be clear. Ambiguity is the worst enemy to be imagined, for it may either render an arbitration clause ineffective or, at the least, create complications that cost both time and money and thus defeat some of the very reasons that lead the parties to select arbitration.

Frederic Eisemann, for many years the Secretary General of the ICC Court, called these unfortunate clauses "pathological" and such clauses are found every year at the ICC.5 For example, the ICC Court is continually faced with clauses which misidentify the ICC Court, most often by referring to the ICC "of Zürich" or "Geneva". There were 16 such clauses (7% of the total) in 1987 and 12 such clauses (6% of the total) in 1989. It can be seen as flattering that the ICC is considered to be as neutral, trustworthy and respected as Switzerland, but there is, in fact, only one International Chamber of Commerce in the world and it is headquartered in Paris. This seemingly harmless error can create serious difficulties. In one case the claimant actually commenced an ad hoc arbitration involving the Zurich Chamber of Commerce before agreeing to the defendant's view that the clause in fact was intended to be for ICC arbitration. In another case, the defendant vigorously contested the competence of the ICC, asserting that the clause was intended to mean an arbitration following the Rules of the Zurich Chamber of Commerce.

Yet another of the 1987 clauses referred to "arbitration in Seoul, Republic of Korea, before the Korean Commercial Arbitration Tribunal in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce". The parties could not agree which arbitral institution was meant and after several actions before Korean courts, the arbitral tribunal appointed by the ICC had to issue a partial award on the point. Even a clause mentioning "the official Chamber of Commerce in Paris, France" may create uncertainty as it did in one of last year's [Page16:] cases, the International Chamber of Commerce not being the only "Chamber of Commerce" in Paris.6

One classic arbitral clause illustrates that clarity is far more important than eloquence. It read "English law-arbitration, if any London according ICC Rules". UK courts held this to be a valid arbitration agreement providing for the arbitration of any dispute in London in accordance with ICC Rules with English law governing the contract.7 The court even held that this clause constituted an "exclusion agreement", excluding any appeal to the courts, a subject which will be discussed later. Yet another example along these lines read: "Arbitration-Place Paris, rules according to International Chamber of Commerce".

Elements of an arbitration clause

a. Ad hoc or institutional arbitration

While this question can itself be the subject of entire seminars, it is a fundamental choice which must be made before going any further as the decision on this point affects everything else in the arbitration clause. My own view, which I hope is objective, is that in international arbitration the arbitration clause should provide for institutional arbitration. You pay an administrative charge, but with a good institution you get value for the money. For example, with the ICC you have an arbitration system tested by over 7,000 cases, with an experienced International Secretariat and special features, such as scrutiny of draft arbitral awards by the ICC Court, that result in an overwhelming number of ICC awards being honored voluntarily by the parties and the balance overwhelmingly upheld by national tribunals. For these reasons, the majority of international contracts that provide for arbitration provide for it to be carried out under the auspices of the ICC Rules.8

It appears that to shift from an ad hoc arbitration clause to one specifying an institution is extremely difficult once a dispute has Broken out. Accordingly, wisdom and prudence-two watchwords of good attorneys-mandate an effort to incorporate institutional arbitration into the clause. Then, after a dispute arises, if for any reason it subsequently appears desirable for the parties actually to resort to ad hoc arbitration experience indicates that the parties can often reach agreement to do this.

A note of caution here, however, is raised by ICC Case 3383,9 Here, the parties commenced arbitration based on an ICC clause. They then decided to shift to ad hoc arbitration, using the same arbitral tribunal and drafted a compromis, which, inter alia, required that an award be issued within three months of its date, which term could be extended four times. Defendant then challenged the legality of this arrangement under its domestic law and refused to agree to any extension. The arbitral tribunal declared that its mandate had expired. The claimant thereafter tried to recommence ICC arbitration but the ICC's sole arbitrator held that the compromis had superseded the original ICC clause and that, consequently, there was no longer a valid arbitration clause between the parties giving competence to the ICC.

b. The standard arbitration clause

The choice of an institution naturally presents you with the standard or model arbitration clause advocated by the chosen institution. The ICC, for example, has the following model clause:

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

It is short, simple, but contains what has been called the three "key expressions" to any effective arbitral clauses.10 "All disputes"... "in connection with"... "finally settled". How often is this standard clause actually used? Of 1987's 237 arbitration clauses, the standard clause, word-for-word, was used exactly once. Of 1989's 215 clauses, it was used thrice.

Does this mean that the standard clause is valueless? Not at all. It is a basic clause, intended to create an enforceable agreement to arbitrate. However, many parties wish to add elements to it. In fact, the publication containing the amended ICC Arbitration Rules in force from 1 January 1988 itself notes, following the standard clause, that: [Page17:]

"Parties are reminded that it may be desirable for them to stipulate in the arbitration clause itself the law governing the contract, the number of arbitrators and the place and language of the arbitration".

Thus, the standard ICC clause, with perhaps minor variations of wording, was used in 47 arbitration clauses (20%) in 1987 and in 21 arbitration clauses (10%) in 1989, generally with the addition of the place of arbitration.

Let us return to the standard ICC clause, which has certainly withstood the test of time,11 to examine some of its basic elements.

Scope of the Clause: "in connection with"

The standard ICC clause refers to all disputes "in connection with" the contract. Many of the arbitration clauses submitted to the ICC refer to disputes "arising out of or related" to the contract, disputes "arising under" the contract, disputes "related directly and /or indirectly to the performance" of the contract, etc.

These various phrases may all appear to mean about the same thing. However, a line of legal analysis has developed that draws a sharp distinction between a so-called "narrow" arbitration clause and a"broad" arbitration clause. A "broad" arbitration clause is more clearly "separable" from the contract in which it is contained so that even when there is an allegation that the contract itself is null and void because, for example, it was induced by fraud, the "broad" arbitration clause permits the arbitral tribunal to retain jurisdiction in order to determine its own competence.

In one US case, a Federal District Court found that the phrase "arising hereunder" was "relatively narrow as arbitration clauses go" and the relevant arbitration was considered by this Court to be restricted solely to "disputes and controversies relating to the interpretation of the contract and matters of performance".12 Under such an interpretation, matters relating to fraud in the inducement, for example, could not be examined by the arbitral tribunal.

In a more recent US case, a Federal District Court concluded, relying on the case just cited, that the phrase "in connection with this Agreement" in an ICC clause should be "somewhat narrowly read" and excluded one of the nine categories of disputes between the parties. This was reversed on appeal, with the Court of Appeals stating that "the ICC's recommended clause must be construed to encompass a broad scope of arbitration issues It embraces every dispute between the parties having a significant relationship to the contract regardless of the label attached to the dispute."13

This language and the surrounding reasoning clearly demonstrate the advantages of utilizing the key phrases of the ICC clause as well as referring arbitration to a widely used arbitration institution which is well known by judges in national courts.

Thus, parties should be extremely careful not to narrow inadvertently the scope of the arbitration clause by restricting the clause simply to disputes "arising under" the contract or "related to execution or performance" of the contract.

"Finally settled"

This point is considered below.

"The International Chamber of Commerce"

Difficulties arising from incorrect references to the ICC are discussed below.

Which version of the ICC Rules is applicable?

This question was especially pertinent two years ago because as of 1 January 1988, amended ICC Rules came into force. In a cover letter to the amended Rules I stated that :

"The amended ICC Rules of Arbitration will govern arbitrations which commence on or after 1 January 1988. Parties may also agree to have the amended Rules govern arbitrations initiated prior thereto. Where the parties had provided in an arbitration clause agreed to by them prior to 1 January 1988, to apply the ICC Arbitration Rules then in force, such agreement will be respected regardless of when the arbitration is commenced."

During 1987 some ten arbitration clauses specifically dealt with this question. Two of the clauses referred to the ICC Rules "then in force", presumably meaning at the time of the submission of the dispute to the ICC. The other six clauses provided for the ICC Rules "as modified from time to time" or "as amended", thus also accepting any future version of the Rules. Only three clauses dealt with this question in 1989, two of which referred to the ICC Rules "then in force". [Page18:]

I would note that when the ICC Rules were last modified in 1975, the question of what version of the Rules applied very rarely went to the arbitrators and, so far as I am aware, went before national courts a mere handful of times. This has also been our experience with the 1988 Rules. Indeed, a great many Terms of Reference have specifically stated that the 1988 Rules govern the case even though the arbitration commenced prior to 1 January 1988.

c. The place of arbitration

The importance of the place of arbitration cannot be overestimated. Its legislation determines the likelihood and extent of involvement of national courts in the conduct of the arbitration (either for judicial "assistance" or "interference"), the likelihood of enforceability of the arbitral award (depending on what international conventions the situs State is a party to), and the extent and nature of any mandatory procedural rules that you will have to adhere to in the conduct of the arbitration. (For example, in Saudi Arabia, the arbitrators must be Muslim and male.) Such factors are of far greater importance than the touristic attractions of any particular place that sometimes appear to be the decisive factor in making this decision.

Parties generally appear to be aware of the importance of the situs, at least if one can judge by the fact that in 1987 some 136 arbitration clauses (57%) specified the city or country in which any arbitration held pursuant to the clause would take place. In 1989, the figures were even higher: 146 clauses (68%) This mention of situs is, along with the choice of applicable law, the element most often added to the basic ICC arbitration clause.

The choice of the place of arbitration may literally determine the outcome of the case. In one ICC arbitration14 between a Finnish corporation and an Australian corporation, London was selected as the place of arbitration in the arbitration clause. The case involved royalty payment allegedly not made and the purported cancellation of the relevant agreement in 1976. In 1982 the licensor initiated arbitration. The arbitrator found that because the arbitration was taking place in England, the statute of limitations contained in the English Limitation Act had to be applied. So, even assuming that Finnish law was applicable and Finnish law had no comparable statute of limitations, the arbitrator applied the relevant English 6-year statute of limitations and barred all claims arising prior to 1976, which effectively meant all claims. (A subsequent amendment to the law exempts from the scope of the Limitation Act international arbitrations in England where neither party is English.)

Yet a final example, to show that even this apparently simple choice cannot be made lightly. A case in a United States Federal Court15 involved an arbitration in a contract between American and Iranian parties drafted before the lranian Revolution which had fixed Iran as the site of the arbitration. The US Court refused to accept a request by one of the parties to the contracts to shift the situs of the arbitration to the United States. The Court stated that it had:

"no statutory or equitable mandate that allows us to redraft the agreement premised on the convenience of the parties ex post...There is neither doctrine nor policy that supplies (the Iranian party) a polestar with which to circumnavigate the plain language of its forum selection clause and thereby avoid its initial, unequivocal and contractually chosen course."

I would like to add here a special comment related to the choice of a place of arbitration. In 57 (24%) of the arbitration clauses submitted to the ICC in 1987 (and in 56 (26%) of the arbitration clauses in 1989), reference was made not simply to the ICC, but to the ICC "in" Paris or "of" Paris or "de" Paris. As discussed above, this is, in fact, unnecessary as there is only one "International Chamber of Commerce" in the world. Understandably, however, many parties feel more comfortable with this additional clarification. (Indeed, in one relatively recent ICC case, the arbitrator's award on jurisdiction had to deal with a defendant's allegation that the arbitration clause was not intended to refer to ICC arbitration precisely because it did not specify "in Paris" and because there were, defendant alleged, "a large number of international chambers of commerce in the world". The arbitral tribunal quite correctly dismissed this line of reasoning.)

Parties should be aware, however, that reference to the ICC "of" Paris or "in" Paris will be interpreted by the ICC Court of Arbitration as an indication of the intended place of arbitration, unless another situs is clearly indicated in the clause (as does often happen). A breakdown of the figures for 1989 shows that out of those 56 cases where reference was made to the ICC and "Paris", 33 of the clauses contained in addition a specific mention as to the place of arbitration. [Page19:]

The "rule of interpretation" noted above was thus applied in 11% of cases in 1989. It is equally used when an arbitration clause mistakenly refers to the ICC "of" Geneva, or "in" Zurich or any other place. After all, as there is only one ICC, the reference to another city can, logically, have no other meaning. This position of the ICC Court bas been given solid support in several ICC awards and Court decisions.16

d. Applicable law

While the choice of the law to be applied by the arbitrators to determine the substantive issues before them is not an element necessary for the validity of an arbitration clause, it is certainly desirable for the parties to agree upon the applicable law in the arbitration clause if at all possible. Failure to do so is a significant factor in increasing the time and cost of an arbitration. Moreover, the decision of the arbitral tribunal on the matter (for it is an issue to be decided by the arbitrators, even if institutional arbitration is used) may bring an unpleasant surprise to one of the parties. Finally, where an institution is to select the chairman or sole arbitrator it is, as a practical matter, far easier to appoint the best possible person when it is known in what country's law the arbitrator should be most expert.

For these reasons, the element most often added to the contract, often directly in the arbitration clause itself, is that of the law applicable to the contract. Some 178 contracts (75%) in 1987 and 146 contracts (66%) in 1989 contained reference to a specific applicable law, either by naming the law of a particular country or of the country of one of the parties (e.g. "law of seller's country"). The applicable law was included in the arbitration clause itself some 81 times in 1987 (111 times in 1989). Also of interest is the rarity of clauses which authorize the arbitral tribunal to resolve the dispute on the basis of equity, amiable composition, ex aequo et bono, or with the arbitrators acting as mediators. In 1987, only some 9 clauses (3%) incorporated any such basis for resolving the dispute. (Some other clauses specifically forbade amiable composition, although in ICC arbitration the arbitral tribunal may not act as amiable compositeur unless specifically authorized to do so by the parties). Out of the 8 1989 clauses (4%) providing for amiable composition, some specified that a national law could be applied at the same time.

One contract between Yugoslavian and Kenyan parties in a case submitted before the ICC Court in 1987, provided that any dispute should be settled "on the basis of international law". Another provided that disputes would be settled according to "traditional Rules Covering International Contracts". Yet another contract stated that "General Principles of Law applicable in Western Europe" would apply. No clause in 1987 or in 1989 mentioned lex mercatoria.

While the abject of this article is certainly not to examine the "philosophy" of arbitration, I cannot help but note that the statistics just cited support the view that: arbitration is generally not sought by the parties because they wish an "extra-legal" resolution to their disputes. Rather, the parties appear to desire a resolution based on a specified, predictable legal system. What they clearly do not want is such a legal system being applied by the national court of the other party.

A few points should be borne in mind in deciding upon an applicable law and I will very briefly mention them.

First, it is preferable that the legal system agreed upon is adequately developed in regard to the specific issues likely to arise in any eventual dispute.

Second, you may wish to exclude the conflict of laws principles of the chosen 1aw, either explicitly or by specifying the "substantive law" of the particular country concerned.

Third, be sure that the national law chosen permits the subject matter of the contract to be resolved by arbitration. Copyright or patent law questions, antitrust matters, etc. often may not be resolved by arbitration, but only by the national courts.

e. Composition of the arbitral tribunal

The next element which should be given the most serious attention is that of the composition of the arbitral tribunal. How many arbitrators do you want? How should they be selected? Should they have any particular qualifications? No broad generalities can cover all the situations likely to arise. [Page20:]

Regarding the number of arbitrators, in 1987's arbitration clauses some 58-24%-(in 1989, 62 clauses-29%) specified either one or three arbitrators. Of these, 11 (7 in 1989) specified one arbitrator and 47 clauses (55 in 1989) specified three. It is interesting to note that in some 83 of the 1987 cases where the arbitration clause did not determine the number of the arbitrators, the parties were able to reach agreement between themselves on the point prior to the ICC Court having to make a decision. This would indicate that, as a practical matter, it will often be possible to reach agreement on this element even after a dispute has developed. Consequently, it is less urgent to reach agreement on this point in negotiating the arbitration clause than on certain others.

In 1987, four of the arbitration clauses (2 in 1989) specified one arbitrator if the parties could agree upon him, otherwise there would be three arbitrators. Although the statistics are too meager on this point to draw general conclusions, I do believe that these few clauses provide a key to a major concern of the parties, namely the need to have an arbitral tribunal in which the parties can have confidence. Confidence is engendered either by knowing and agreeing upon an individual or, if this cannot be done, by having a three-person tribunal, one of whom can be proposed by each party. Probably for these reasons the ICC's experience has been that parties from developing countries and Eastern European countries have a strong preference for three-person arbitral tribunals. They seem to believe that even though coarbitrators must be independent of the party proposing them, pursuant to the ICC Rules, a coarbitrator of the same nationality can explain to his fellow arbitrators the legal, economic and business context within which that party operates.

Of course, three-person arbitral tribunals are more expensive and the arbitration tends to take longer, considerations that cannot be ignored when drafting the arbitration clause.

Arbitration clauses tend to include no mention of other elements relating to the arbitral panel. Only three clauses in 1987 specified the nationality of the chairman and each time he had to be Swiss. Only a single clause set out professional qualifications, namely that the chairman should be "fully educated and trained as a lawyer."

In 1989, out of 13 clauses containing special requirements, 10 concerned the nationality either of the Chairman or of all arbitrators. Some gave positive indications such as "the chairman shall be a Swiss professional judge". Others excluded certain nationalities, such as the following mentioned in three different cases, which, confirming the analysis above, did not involve parties from developing countries or Eastern Europe: "none of the arbitrators shall be nationals of either of the parties hereto".

It may well be that ICC clauses arc not typical in this regard because parties know that the quality of ICC arbitrators is excellent and the ICC Rules require that the Chairman or sole arbitrator be from a country other than those of the parties. Thus, with regard to the selection of arbitrators, confidence in the arbitral institution may well have reduced the amount of detail parties would otherwise have put in an ad hoc arbitration clause, for example.

f. Language of the arbitration

Many parties may mistakenly believe that the language in which the contract is written will automatically be the language of any arbitration arising out of that contract. It is true that the ICC Rules, for example, state in Article 15(3) that the arbitrator shall give "due regard ... in particular to the language of the contract" in determining the language of the arbitration. It will, however, be for the arbitral tribunal to decide the question should the parties not have agreed on it.

As can well be imagined, simultaneous interpretation at hearings and translation of all documents into two or more languages are enormously expensive and time-consuming. If it is not possible to agree on a language in the arbitration clause then it would be desirable to try to agree either that costs for interpretation and translation are shared or else borne by the party requiring the interpretation or translation. However, not a single clause in 1987 or in 1989 contained such a provision, although some 32 clauses-13.5%-in 1987 (and 40 clauses-19%-in 1989) did select a language. English was specified in 25 clauses (31 in 1989), French in 6 (4 in 1989) French and/or English in 1 clause. (In 1989, one clause provided for French and Spanish, another for English and German).

g. Waiver of appeal/"exclusion agreement"

A primary advantage of arbitration is that it is, in principle, essentially free from judicial involvement during the arbitration itself and an arbitral award is "final" in the sense that it is intended to be free from judicial examination of its substance. Article 24 of the [Page21:] ICC Rules provides that "the arbitral award shall be final" and the parties are deemed to waive their right to any appeal insofar as such waiver can validly be made. Despite this language, in 1987 some 49 arbitration clauses (21%), and in 1989 56 clauses (26%) specifically provided, in essence, that the award issued is to be "final and binding upon the Parties who agree to waive all right of appeal thereon."

Depending on the nationalities of the parties, the place of arbitration and the location of assets that may need to be used to satisfy the award, a specific waiver of appeal in the arbitration clause could well be useful. For example, in England, the 1979 Arbitration Act that modified the "case stated" system (which permitted arbitral awards to be brought before the English courts if errors in law were alleged) requires an "exclusion agreement" between the parties if they desire to ensure the ouster of court jurisdiction to review the award.

As already noted, the English courts have interpreted an ICC arbitration clause itself as constituting such an exclusion agreement in the light of Article 24 of the Rules.17 However, in Switzerland, while Chapter 12 of the Loi fédérale sur le droit international privé does permit non-Swiss parties to adopt an exclusion agreement, commentators appear to believe that any such agreement must be explicit and that the reference to a set of arbitration rules such as those of the ICC would not constitute a valid exclusion agreement.

h. Entry of judgment stipulation

In the US, arbitration clauses often provide that judgment may be entered upon the award in any court or competent jurisdiction. The model clause of the AAA contains language to this effect and it has been said that it is better to include such a phrase in clauses with US parties or where execution may be sought in the US. Some 31 clauses (13%) in 1987 and 21 clauses (10%) in 1989 had such a stipulation, and not always where US parties were involved. In one instance, the parties relied on a contractual penalty clause to ensure that the arbitral proceedings and the enforcement procedure would run smoothly. The clause provided that any party who refuses to go to arbitration or to enforce an award and by doing so forces the other party to bring the case in front of local courts, shall be bound to pay to the other party a sum of 1,000,000 French Francs.

i. Other matters

Much could be said about the advantages of including various other elements in the arbitration clause where, according to circumstances, they could prove useful in facilitating a less expensive and time-consuming arbitration. However, in 1987 and 1989 these other elements were virtually never mentioned. This does not, of course, detract from their utility, but is probably a reflection of the practical difficulties of negotiating a too detailed arbitration clause and of the fact that it takes the incentive and stimulation of an actual arbitration before mort minds can adequately focus on such matters.

Nevertheless, for the sake of completeness I will list these other elements so that they may be borne in mind should the occasion arise where one or more of them might one day prove to be important in a particular arbitration. (The number of times each element was included in an arbitration clause in 1987 and 1989 is also noted.)

(a) The applicable procedural law (1987: 1; 1989: 1).

(b) Power of the arbitrator to adapt the contract (1987: 1, refusing any such power; none in 1989).

(c) Extent of discovery and cross-examination (1987: 1; 1989: 0).

(d) Waiver of sovereign immunity (1987 and 1989: 0).

(e) Accommodation for multiparty disputes (1987: 4; 1989: 2).

(f) Division of costs of arbitration between parties (1987: 6; 1989: 2).

(g) Partial awards either forbidden or required (1987 and 1989: 0).

(h) Technical expertise (1987: 0 ; 1989: 2).

Finally, three 1989 clauses in construction contracts specified in essence that "the works shall continue pending the arbitral proceedings."

Conclusions

I will not end this presentation by revealing the all-purpose, miraculous arbitration clause because there is no single clause that is appropriate in every case. You cannot escape the need, each time you negotiate an arbitration clause, to engage in a rigorous analysis of the circumstances related to the particular transaction in order to produce an arbitration clause tailored to the situation at hand. In the long run, this work will result in immeasurable savings of time and money.

1
The results of this first study were published in: S.R. Bond, "How to Draft an Arbitration Clause", J. lnt. Arb., 1989, p.66.

2
Special acknowledgement is given to Mr. Fernando Mantilla Serrano, attorney at Law, for his able assistance in the 1989 survey, which was done as part of the international internship program of the International Court of Arbitration.

3
Craig, Park and Paulsson, International Chamber of Commerce Arbitration, 2nd edition (1990); Ulmer," Drafting the International Arbitration Clause", in The International Lawyer, Vol.20, N°4 (1986); Redfern, "Drafting the Arbitration Clause/Forum selection", unpublished speech to ABA National Institute Seminar on Resolution of International Commercial Disputes (1987).

4
A recent and important development in this area is the decision by the Cairo Court of Appeal (Egypt) of Rune 13, 1990, according to which for international arbitrations situated in Egypt, a clause compromissoire is valid even it does not contain the names of arbitrators.

5
See B.G. Davis, "Pathological Clauses: What Frederic Eisemann Still Sees", unpublished speech at the International Bar Association, 23rd Biennial Conference, Sept. 1990.

6
Société Asland v. Société European Energy Corporation, T.G.I. Paris. Rev. arb. 1990. p. 521, note by Pluyette p. 353. The French Court held that the parties had manifestly chosen the ICC which is the recognized arbitration Centre in Paris for resolving international disputes.

7
See Arab-African Energy Corp. Ltd. v. Olieprodukten Nederland B.V. (Q.B. Com. Ct.), (1983) 2 Lloyd's Rep. 419.

8
Ulmer, supra Note 3. p.1336.

9
ICC Case 3383; VII Yearbook Commercial Arbitration, p.119 (1983).

10
Craig, Park and Paulsson. supra Note 2, Part II, section 6.03, p. 111.

11
The ICC's Commission on International Arbitration has created a Working Group to examine whether the clause should be modified. As of this time, it appears unlikely that any significant modifications will be recommended.

12
Mediterranean Enterprises, Inc. v. Sangyong Corp., 708 F 2nd 1958 (9th Circuit, 1983).

13
J.J. Ryan & Sons. Inc. v. Rhône Poulenc Fibers, S.A.; Rhodia A.G.; Sodetal, S.A. Rhône Poulenc, S.A., 863 F 2d (4th Cir. 1988). See also: Tennessee. Imports, Inc. v. Fier Paulo Filippi and Prix Italia S.R.L., US District Court for the Middle District of Tennessee (Aug. 19, 1990), Int. Arb. Report, Vol. 5 #9, 9/90.

14
No. 4491, published in the J. Int. Arb., Vol. 2, No. 1, March 1985.

15
National Iranian Oil Company (NIOC) v. Ashland Oil, 641 F Supp 211, S.D. Miss. 1986. National Iranian Oil Company (NIOC) v. Ashland Oil, Inc., 817 F 20.326, 5th Circuit 1987.

16
See Case No. 3460, and accompanying, comment reported in Journal du Droit International, 1981, p.939. In the Tennessee Imports v. P.P. Filippi case (supra Note 13) a US District Court interpreted a dispute resolution clause referring to "the Arbitration Court of the Chamber or Commerce in Venice (Italy)" as being a reference to the ICC International Court of Arbitration with, implicitly, Venice as place of arbitration.

17
See Arab-African Energy Corp. Ltd v. Olienprodukten Nederland B.V. (1983) 2 Lloyd's Rep. 419.