Arbitration Agreement Legal Definition:

A contract between two or more parties to refer a dispute to arbitration.

Related Terms: Arbitrator

Persons to a dispute are free to avoid the traditional court system and of a common accord, agree to refer the dispute to arbitration.

The terms arbitration agreement and arbitration clauses are often used interchangeably by judges or others, to generally refer to an arbitration clause. Depending on the financial resources and the size of the contract, some parties have whole, separate agreements on arbitration and more properly, these can be stated as arbitration agreements. Others merely insert a clause related to arbitration in the primary contract; this can be more properly stated to be an arbitration clause.

The Ontario Arbitration Act defines an arbitration agreement as:

"... an agreement by which two or more persons agree to submit to arbitration a dispute that has arisen or may arise between them."

The Model Law on International Commercial Arbitration, at §7, requires that the arbitration agreement be in writing and defines it as:

"... 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."

Under the common law, an arbitration agreement did not have to be in writing, However, with the host of evidentiary problems that could erupt were one party to deny the existence of an agreement to arbitrate, either during the arbitration or after the award has been rendered, many jurisdiction have enacted arbitration acts or statutes which require that arbitration agreement be in writing.

Note, however, the wording of the British statute, the Arbitration Act of 1996, which requires that the arbitration agreement be in writing "whether or not it is signed by the parties".

In the US Code, Title 9, Chapter 1, §2, also requires that the arbitration agreement be in writing:

"A written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract."

§2638 and §2640 of the Quebec Civil Code are as follows:

"An arbitration agreement is a contract by which the parties undertake to submit a present or future dispute to the decision of one or more arbitrators, to the exclusion of the courts.

"An arbitration agreement shall be evidenced in writing; it is deemed to be evidenced in writing if it is contained in an exchange of communications which attest to its existence or in an exchange of proceedings in which its existence is alleged by one party and is not contested by the other party."

But some jurisdictions defer to the common law and do not require the arbitration agreement to be in writing, such as the Ontario statute which states that: "an arbitration agreement need not be in writing". 

The Commercial Arbitration Act of British Columbia defines an arbitration agreement as:

"Arbitration agreement means a written or oral term of an agreement between 2 or more persons to submit present or future disputes between them to arbitration, whether or not an arbitrator is named...."

There is an implied promise in every arbitration agreement, if it is not otherwise provided, that the parties shall act on the terms of the award. For example, if the award calls for specific performance, that act shall occur promptly. In the event of a payment from one party to another (damages), that payment shall occur without delay.

French: convention d'arbitrage

REFERENCES

  • Arbitration Act, Revised Statutes of Alberta 2000, Chapter A-43
  • Arbitration Act, Revised Statutes of Nova Scotia 1989, Chapter 19
  • Arbitration Act 1996, Statutes of 1996, Chapter 23 (England)
  • Arbitration Act, 1991, Statutes of Ontario 1991, Chapter 17
  • Civil Code, Statutes of Quebec 1991, Chapitre 64, §2638-2643 and Code of Civil Procedure, Book VII, "Arbitrations" (§940 to §951.2)
  • Commercial Arbitration Act, Revised Statutes of British Columbia 1996, Chapter 55
  • GMBH v Drewey [1933] 1 KB 753
  • Duhaime, C., BC Commercial Arbitration Act (Vancouver: CLE, 2004), page 6

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