Arbitration, as an alternative method of conflict resolution, has gained a prominent place in the world of conflict resolution. Its efficiency, flexibility and confidentiality have made it an attractive option for parties involved in commercial disputes, both national and international. However, like any system, arbitration is not without its challenges, and one of the problems that often arise is the so-called “pathological clauses” in arbitration agreements.
Our pathological clauses in arbitration refer to provisions in arbitration agreements that are poorly drafted or ambiguous, which may hinder the effective execution of the arbitration process. These clauses may arise due to a lack of adequate legal advice when drafting the contract. Some common examples of pathological clauses include failure to specify the place of arbitration, absence of a method of selecting arbitrators, or omission of clear procedural rules.
Challenges presented by pathological clauses
Pathological clauses can give rise to a number of challenges in the arbitration process. Some of these challenges include:
Ambiguity: Poorly drafted clauses can lead to conflicting interpretations and disputes between the parties over how the arbitration should be conducted.
Delays: The lack of clear provisions on the arbitration procedure and rules can lead to significant delays, as the parties may not agree on how to proceed.
Additional costs: Resolving ambiguities or disagreements over pathological clauses can increase the costs of arbitration, which is contrary to one of the key objectives of arbitration, efficiency.
Challenge of awards: Pathology clauses can also lead to challenges to arbitration awards, as parties dissatisfied with the process may claim that the agreement was not honored due to ambiguity or lack of clarity in the arbitration clause.
Solutions to address pathological clauses
Although pathology clauses can present challenges, there are solutions to address this issue and ensure effective arbitration. Some of the most effective solutions include:
Appropriate legal advice: Parties should seek legal advice when drafting arbitration agreements. Lawyers with experience in arbitration can help draft clear and effective clauses that avoid future problems.
Incorporation of arbitration rules: The adoption of established arbitration rules from authorized centers provides a clear and well-defined framework for the arbitration process.
Previous conflict resolution mechanisms: The parties may include provisions that require them to attempt to resolve their differences through negotiation or mediation before resorting to arbitration, always detailing their deadlines and processes. This can help avoid unnecessary litigation.
Clear headquarters clauses and applicable legislation: Venue and applicable law clauses should be specific and clear to avoid conflicts over where the arbitration will take place and what law or regulation will apply.
Pathology clauses in arbitration agreements can present challenges, but with proper legal advice and the adoption of established arbitration rules, as well as the inclusion of clear provisions in the agreement, it is possible to prevent most of these problems. Arbitration remains an invaluable tool for resolving commercial disputes, and avoiding problematic clauses ensures the best results in its application.
