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Drafting Clauses for International Arbitration

Typically the parties are little concerned about a dispute resolution clause. Some clause may be picked from another unrelated and dissimilar contract and inserted. Once any dispute occurs this clause can become the most important clause in the contract. In arbitration, the parties have great flexibility at the outset to fashion a process which can be adapted to the situation at hand. However once the clause is drafted and a dispute arises, much of that flexibility is gone. Alternatively, the dispute resolution clause and governing law clause is the last issue to be resolved and it becomes a big issue as each side insists that any disputes be resolved in their national courts and using its law. In an attempt to resolve this, the parties agree to bizarre clauses such as some issues are resolved under some law and courts and other issues are resolved under other law and courts. A well drafted arbitration clause can avoid a lot of problems but a poor clause can cause problems. The following red flags should be kept in mind.

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