Drafting an Arbitration Clause: A Checklist

A poorly drafted arbitration clause creates a second dispute — about how the first one should be resolved — before the actual disagreement is even addressed.

What the clause should specify

1. That disputes shall be referred to arbitration, stated unambiguously rather than as an option
2. The seat and venue of the arbitration
3. The number of arbitrators and how they are appointed
4. The applicable procedural rules, if any institutional rules are to apply
5. The language of the proceedings, where relevant
6. The governing law of the underlying contract, distinct from the procedural law of the arbitration

Common drafting failures

• Clauses that say disputes “may” be arbitrated rather than “shall” be, creating ambiguity about whether arbitration is mandatory
• No mechanism for appointing an arbitrator if the parties cannot agree
• Silence on the seat, leaving the governing procedural framework unclear
• No provision addressing multi-party or multi-contract disputes where relevant

What to do next

Have any existing arbitration clause reviewed before a dispute arises, since defects are far cheaper to fix at drafting stage than after a dispute is already underway.