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Chapter Two - The Arbitration Agreement

Published online by Cambridge University Press:  05 June 2012

Margaret L. Moses
Affiliation:
Loyola University, Chicago
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Summary

FUNCTION AND PURPOSE

When parties agree to arbitrate their disputes, they give up the right to have those disputes decided by a national court. Instead, they agree that their disputes will be resolved privately, outside any court system. The arbitration agreement thus constitutes the relinquishment of an important right – to have the dispute resolved judicially – and creates other rights. The rights it creates are the rights to establish the process for resolving the dispute. In their arbitration agreement, the parties can select the rules that will govern the procedure, the location of the arbitration, the language of the arbitration, the law governing the arbitration, and frequently, the decision makers, whom the parties may choose because of their particular expertise in the subject matter of the parties’ dispute. The parties’ arbitration agreement gives the arbitrators the power to decide the dispute and defines the scope of that power. In essence, the parties create their own private system of justice.

Arbitration Clauses and Submission Agreements

The parties’ arbitration agreement is frequently contained in a clause or clauses that are embedded in the parties’ commercial contract. The agreement to arbitrate is thus entered into before any dispute has arisen, and is intended to provide a method of resolution in the event that a dispute does arise. However, if there is no arbitration clause in the parties’ contract, and a dispute arises, at that time the parties can nonetheless enter into an agreement to arbitrate, if both sides agree. Such an agreement is generally referred to as a submission agreement. However, submission agreements are much less common than arbitration clauses in contracts, because once a dispute arises, the parties often cannot agree on anything. For that reason, it is generally better for the parties to agree to arbitrate at the beginning of the relationship, when they are still on good terms.

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Publisher: Cambridge University Press
Print publication year: 2012

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References

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Gillis Wetter, J.Issues of Corruption before International Arbitral Tribunals 10 1994
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Lamm, Carolyn B.Aqua, Jocelyn A.Defining the Party – Who Is a Proper Party in an International Arbitration before the American Arbitration Association and Other International Institutions 34 2003
Hanotiau, Bernard 2005
Hosking, James M.The Third Party Non-Signatory's Ability to Compel International Commercial Arbitration: Doing Justice without Destroying Consent 469 483 2004
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Pinsolle, PhilippeDistinction entre le principe de l'estoppel et le principe de bonne foi dans le droit du commerce international 125 1998
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Bermann, George A.The U.K Supreme Court Speaks to International Arbitration: Learning from the Dallah Case 22 2011

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  • The Arbitration Agreement
  • Margaret L. Moses, Loyola University, Chicago
  • Book: The Principles and Practice of International Commercial Arbitration
  • Online publication: 05 June 2012
  • Chapter DOI: https://doi.org/10.1017/CBO9780511920073.004
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  • The Arbitration Agreement
  • Margaret L. Moses, Loyola University, Chicago
  • Book: The Principles and Practice of International Commercial Arbitration
  • Online publication: 05 June 2012
  • Chapter DOI: https://doi.org/10.1017/CBO9780511920073.004
Available formats
×

Send book to Google Drive

To send content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about sending content to Google Drive.

  • The Arbitration Agreement
  • Margaret L. Moses, Loyola University, Chicago
  • Book: The Principles and Practice of International Commercial Arbitration
  • Online publication: 05 June 2012
  • Chapter DOI: https://doi.org/10.1017/CBO9780511920073.004
Available formats
×