Pathological Arbitration Clauses and How to Cure Them (BB15-141)
The term “pathological arbitration clauses” was coined in a lecture by Frederic Eisemann in 1974 and relates to arbitration clauses which contain one or more defect. This has been debated by academic ever since, and is or crucial importance to arbitration practitioners. Arguments regarding pathological arbitration clauses often arise in cases where a claimant commences a claim in court and the defendant seeks to stay the claim to arbitration on the basis of an arbitration clause, to which the claimant responds that the arbitration clause is invalid or inoperable. Parties may be put to considerable time and expense in such cases, which can easily be avoided if the arbitration clause is drafted accurately in the first place.
We start with the law relating to arbitration clauses as set out in Federal Law No. 6 of 2018 on Arbitration; by way of comparison, we may also consider the English Arbitration Act 1996. We will examine the essential elements of an effective arbitration clause, and we will consider a well-drafted arbitration clause.
Having explained the basis of the course, we then proceed through a series of arbitration clauses which have arisen in actual cases and are said to be defective or “pathological”. Such a clause may simply be defective it its drafting, it may be equivocal or uncertain, it may be inconsistent or inoperable. The pathology may be curable or it may be incurable. We will examine various examples to clarify exactly why they are said to be pathological.
A clause which is regarded as pathological in one jurisdiction may be regarded as effective, or capable of being made effective, in another jurisdiction. UAE courts take the view that court litigation is the normal venue for settling legal disputes and that arbitration is an exception to that; if the arbitration clause is found to be ineffective, any right to arbitration may be lost. The courts tend to the view that you get one chance at arbitration and if that fails, you must bring your claim in court.
International sale agreements are among the most important means by which international trade is conducted and they have been recognized as ones of the most important and effective pillars in the economic life. Indeed, they have become today an indispensable phenomenon in the economic and commercial spheres as they spread in a stunning and striking way. These contracts are diversified as they govern international sale transactions that are constantly evolving.
Perhaps the most prominent characteristic of these contracts that distinguish them from other contracts is that they are not governed by a specific law, but are rather subject to the rules of international law, especially the rules of international commercial law.
The course of international sale agreements aims at providing the lawyers with an in-depth understanding of the International sale agreement, including the criteria of its qualification, parties thereto and their guarantees. The course will also deal with the conclusion of an International sale agreement, from negotiation to drafting. It will cover as well the topic of choice of law in this type of agreements in addition to the methods of resolving disputes arising out of these contracts.