Duhaime's Law Dictionary


Arbitration Clause Definition:

A clause in a contract which requires a party to refer a dispute to arbitration.

Related Terms: Arbitrator

 In Heyman, Justice MacMillan wrote:

"... the arbitration clause does not impose on one of the parties an obligation in favour of the other. It embodies the agreement of both parties that, if any dispute arises with regard to the obligations which the one party has undertaken to the other, such dispute shall be settled by a tribunal of their own constitution. And there is this very material difference, that whereas in an ordinary contract the obligations of the parties to each other cannot in general be specifically enforced and breach of them results only in damages, the arbitration clause can be specifically enforced by the machinery of the Arbitration Acts. The appropriate remedy for breach of agreement to arbitrate is not damages, but its enforcement."

An example of an arbitration clause was set out in Richardson:

"Any dispute which might arise from or in relation to this contract, if not settled by negotiations, shall be settled by arbitration in accordance with UNCITRAL arbitration rules presently in force."

Many arbitration clauses go much further and set out the choice of arbitrator, the venue of arbitration as well a choice of the the laws of which nation apply.

As Justice Diplock wrote in Compagnie Tunisienne de Navigation:

"... an arbitration clause is generally intended by the parties to operate as a choice of the proper law of the contract as well as the curial law and should be so construed unless there are compelling indications to the contrary in the other terms of the contract."

Where an arbitration clause not only prescribes arbitration but ousts the jurisdiction of the courts until arbitration has occurred, such a clause is called a Scott v Avery clause.

French: clause d’arbitrage and clause compromissoire.

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