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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
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Parties may enter into agreements on dispute resolution procedures at any time. They may do so when first establishing their commercial relationship, or they may prefer to wait until a dispute arises. The recommended approach is to include a dispute resolution clause when negotiating a contract or, in the case of states, when drafting domestic investment legislation or concluding a bilateral or multilateral investment treaty or trade agreement.1
Drafting a dispute resolution clause
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A dispute resolution clause must above all be operative. Due attention should therefore be given to its drafting. Careless drafting can cause misunderstandings that may undermine the parties' intentions as to jurisdiction or even make the clause inapplicable. A clause often establishes key aspects of the chosen procedure or procedures and, if well drafted, can save parties time and money by helping to avoid disagreements over procedure at the outset of a dispute. However, parties should also consider that certain aspects of the procedure need not be addressed in the clause and in some cases should instead be established once the specificities of a dispute (especially its value and complexity) are known.
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When drafting a dispute resolution clause referring to ICC arbitration, parties should pay particular attention to three essential elements: (i) they should exhibit a clear intent to submit disputes to ICC arbitration; (ii) they should correctly name the institution and its rules ("ICC International Court of Arbitration" and "Rules of Arbitration of the International Chamber of Commerce"); and (iii) they should clearly identify the scope of the clause (e.g. all disputes "arising out of or in connection with" the contract).
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Parties are encouraged to make the clause as simple and clear as may be appropriate. In many cases, the simpler the clause the better, as those aspects of a case that are left undetermined are covered in the Rules and can therefore be quickly determined when a dispute arises. Overly detailed clauses may actually delay proceedings by creating procedural battles and, in extreme cases, may even render a clause invalid.
Standard ICC arbitration clauses
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The ICC provides standard arbitration clauses, which parties may use either as is or with certain modifications based on the parties' preferences or the requirements of applicable law. Recognizing the benefits of simplicity, the ICC has limited its standard clauses to the essential elements of a dispute resolution agreement.2
Standard arbitration clause. The standard clause for arbitration alone has been designed to offer maximum flexibility so as to lend itself to the precise circumstances of any dispute as and when it arises. The clause is as follows:
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If the parties do not wish to have the Emergency Arbitrator Provisions of the 2012 Rules apply (see paragraphs 3-1051 and following), they must expressly opt out. They may use the following arbitration clause:
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The parties may also wish to stipulate in the arbitration clause:
• the law governing the contract;
• the place of the arbitration;
• the language of the arbitration; and/or
• the number of arbitrators.
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The Rules establish mechanisms for determining each of the above elements where the parties fail to agree (see the discussion of Articles 21(1), 18(1), 20 and 12(1) in Chapter 3). It is common for clauses to indicate the governing law, the place of the arbitration and the language of the arbitration. However, parties are encouraged not to specify the number of arbitrators, as it is often better to wait until the value and complexity of a dispute are known before deciding on the suitability of a sole arbitrator or three-member arbitral tribunal (see paragraph 3-431). If the parties cannot agree, the Court will fix the appropriate number of arbitrators pursuant to Article 12(2) (see paragraphs 3-438-3-440).
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Adapting the clauses to particular circumstances. The standard clause can be modified, for example in order to:
• make special arrangements where the contract or transaction involves more than two parties or more than one contract;
• take account of the requirements of national laws and any other special requirements that the parties may have. In particular, parties should always check for any mandatory requirements at the place of the arbitration and potential place(s) of enforcement. For example, it is prudent for parties wishing to have an ICC arbitration in China to include in their arbitration clause an explicit reference to the ICC International Court of Arbitration. The following language is suggested for this purpose:
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There are numerous variations that can be included in arbitration clauses in order to effect special procedures or to accommodate particular contractual arrangements. However, great care must be taken in devising bespoke procedures. Parties should ideally seek expert advice before deviating substantially from the ICC's model clauses
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Multi-tiered clauses. Combined and multi-tiered dispute resolution clauses may help to facilitate dispute management and reduce time and costs. Arbitration can be combined with virtually any other form of alternative dispute resolution, notably amicable dispute resolution and expertise as provided by the ICC International Centre for ADR (see Chapter 4).
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The ICC offers a range of standard clauses for different combinations of procedures, which can be found at www.iccarbitration.org.
1 For guidance, states and state entities are referred to the upcoming booklet by the ICC Commission on Arbitration Task Force on Arbitration Involving States or State Entities. Once issued, the booklet will be available at www.iccwbo.org.
2 All standard and suggested dispute resolution clauses recommended by the ICC can be found at www.iccarbitration.org.