Drafting contractual clauses is an endeavour by pessimists to make the future less uncertain. In the case of including a dispute resolution clause in a contract, the very aim is to avoid troubles on the road to an agreed forum when a dispute occurs. This Dossier XII of the ICC Institute of World Business Law shows that this goal is not always easy to achieve and that this road may be a bumpy road. The Dossier regroups significant papers presented at the Spring Conference of the ICC Institute, held on 23 May 2014. The programme was prepared by Georges Affaki and Horacio Grigera Naón, two very active and experienced members of the Institute’s Council. With a comparative approach and in the light of recent case law, this Dossier deals with some of the obstacles that national laws and international conventions may oppose to the efficiency of dispute resolution clauses.

It is a well-established practice, in particular in the banking and financial sectors, to agree on dispute resolutions clauses which offer a one-sided option granting one party the choice of the forum to bring the dispute, while the other party has no such choice. For instance, the borrower may be obliged to sue in a specific jurisdiction whereas the lender remains free to select any court having jurisdiction. Such clauses are described by scholars as optional, unilateral or asymmetrical clauses. Their validity is upheld in many national jurisdictions but disputed in others. This Dossier explores the causes and implications of the resulting legal uncertainty that the parties wanted precisely to avoid. Some decisions which consider such clauses as void are built on general principles of fairness and equality, including the principle of equality of arms. They see them as potestative and arbitrary. Other decisions, specific to arbitration clauses, rely on a combination of the concept of consideration and of the principle of the separability of the arbitration clause to impose a mutual obligation to arbitrate. If one of the parties is bound to arbitrate and the other is not, the arbitration clause, as an agreement distinct from the main contract, would be deprived of any consideration. As shown in this Dossier, none of those justifications is really convincing. What is particularly disturbing is the further suggestion that arbitration clauses which prohibit the arbitrators to grant some specific substantive rights (e.g. deal with counterclaims, allocate treble damages, etc.) to one of the parties only could be unconscionable. Indeed, this has nothing to do with the validity of the arbitration clause but is a matter concerning the efficiency of a waiver of certain rights under the law applicable to the merits of the dispute. This is a matter for the arbitrators, not for the courts.

The issue of the law applicable to an arbitration agreement is also a thorny one. Although it has been detected and resolved decades ago in certain jurisdictions, it gives rise to passionate discussions in others. Is the substantive law applicable to the contract also applicable to the arbitration clause contained therein or may the arbitration clause be governed by a different law or different rules of law? It is interesting to note that in those jurisdictions which do not necessarily submit the arbitration clause to the law applicable to the main contract, the principle of the separability is again used as a justification. This was the position of the Cour de Cassation in France since 19721, confirmed in 19932, when it decided that “[b]y virtue of a substantive rule of international arbitration” the existence, validity and effect of the arbitration agreement in international arbitration need not to be assessed on the basis of a national law, be it the law applicable to the main contract or any other law. In England as well, in the Sulamérica case of 2013, the Court of Appeal referred to the separability of the arbitration clause to find that the law of the place of arbitration might be applicable to the arbitration instead of the law of the main contract3. It is probably asking too much to the principle of separability as explained in this Dossier which deals with many other fascinating issues, such as the problems of arbitrability, subjective and objective, and the efficiency of forum selection clauses.

In this regard, there is a stark contrast between arbitration clauses and those clauses where the parties decide to submit their disputes to the State courts of a national legal system. In international arbitration, the dominating practice is to fix the place of arbitration in a jurisdiction disconnected with the dispute for the sake of neutrality. The validity of this practice has never been disputed. On the contrary, although jurisdictions will enforce the parties’ choice-of-court agreement without the requirement for a link between the chosen court and the dispute, some of them require, with various nuances, a connection between the case and the forum when a State court has been selected. Parties which prefer a neutral forum for their disputes or to take advantage of the special expertise of the judges in a particular court must be aware of the risk of the judge declining jurisdiction in case there is no connection between the forum and significant aspects of the dispute. This Dossier brings very useful information on this issue, as well as on many others.

By publishing this Dossier, the ICC Institute of World Business Law, once again, provides at the same time a very practical tool to practitioners and material of a high scientific quality to scholars.

1
Cass. Civ. 1ere, July 4 1972, Hetch, in Revue de l’Arbitrage, 1974, p.89.

2
Cass. Civ. 1ere, December 12 1993, in Revue de l’Arbitrage, 1994, p.116.

3
Sulamérica CIA Nacional de Seguros SA et al v Enesa Engenharia SA [2013] EWCA Civ 638 , para 25.