Aug 15, 2023

THE WILL TO RESOLVE THE DISPUTE THROUGH ARBITRATION MUST BE CLEARLY AND UNAMBIGUOUSLY STATED IN THE ARBITRATION CLAUSE – SAMPLE MODEL ARBITRATION CLAUSES

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I. ARBITRATION CLAUSE MUST BE CLEAR AND UNAMBIGUOUS

Arbitration is a form of dispute resolution in which the parties to a contract agree to have their dispute resolved by a third-party decision-maker, rather than through litigation, and agree that this third party’s ruling will be binding on them.

Arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement (International Arbitration Law1, Article 4/1 and Civil Procedure Code2, Article 412/1,2).

In the settled case law of the Supreme Court, there must be a valid arbitration clause or for the arbitration agreement to be valid, it must have decided that the dispute will be resolved definitively by the arbitrator. It is accepted that the records that eliminate or weaken the final will will invalidate the arbitration agreement or condition (See: Assembly of Civil Chambers of Court of Cassation, 2021/15-855 Merit, 2022/129 Decision dated 15.2.2022, Court of Cassation 15th Civil Chamber, 2019/3450 Merit, 2020/1932 Decision dated 29.6.2020, Court of Cassation 13th Civil Chamber, 2018/2348 Merit, 2019/10372 Decision dated 23.10.2019, Court of Cassation 15th Civil Chamber, 2017/776 Merit, 2020/2981 Decision dated 14.9.2017, Court of Cassation 15th Civil Chamber, 2016/1133 Merit, 2016/1495 Decision dated 8.3.2016, Court of Cassation 15th Civil Chamber, 2015/2198 Merit, 2015/2758 Decision dated 22.5.2015, Court of Cassation 23rd Civil Chamber, 2014/887 Merit, 2014/4043 Decision dated 26.5.2014, Court of Cassation 11th Civil Chamber, 2004/6686 Merit, 2005/3600 Decision dated 12.4.2005, Court of Cassation 15th Civil Chamber, 1996/247 Merit, 1996/438 Decision dated 29.1.1996, Court of Cassation 15th Civil Chamber, 1995/1588 Merit, 1995/1903 Decision dated 30.3.1995).

An arbitration clause that authorizes the parties to go to court after the arbitration and does not envisage the arbitrator’s decision as the sole authority in the resolution of the dispute is invalid because it does not have the element of clarity and certainty.

Since the arbitration clause or agreement will be invalid if the will to arbitrate is not clear and unambiguous, sample arbitration clauses are given below in order to be useful to the readers.

II. SAMPLE MODEL ARBITRATION CLAUSES

A. ISTANBUL CHAMBER OF COMMERCE ARBITRATION AND MEDIATION CENTER (İTOTAM) ARBITRATION RULES (2021) MODEL ARBITRATION CLAUSE3

“Any dispute or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be finally settled by arbitration in accordance with the Rules of Arbitration of the Istanbul Chamber of Commerce Arbitration and Mediation Center (ITOTAM)”.

Parties should consider adding the following clauses below:  a.  The language of arbitration shall be …………….. 

b.  The applicable substantive law shall be…………

Arbitration Without Emergency Arbitrator 

If the Parties do not want the Emergency Arbitrator Provisions to apply, may add the clause below:

“The Emergency Arbitration Rules shall not apply”.

B. ISTANBUL ARBITRATION CENTRE (ISTAC) ARBITRATION RULES MODEL ARBITRATION CLAUSE4

“Any disputes arising out of or in connection with the present contract shall be finally settled through arbitration under the Istanbul Arbitration Centre Arbitration Rules”. 

The following provisions may be added to the model arbitration clause: 

• The Emergency Arbitrator Rules shall not apply. 

• The place of the arbitration shall be (City/Country). 

• The language of the arbitration shall be (…). 

• The number of the arbitrators shall be (…). 

• The law applicable to the merits of the dispute shall be (…).

C. INTERNATIONAL CHAMBER OF COMMERCE (ICC) ARBITRATION RULES (2021) MODEL ARBITRATION CLAUSE5

It is recommended that parties wishing to make reference to ICC Arbitration in their contracts use the standard clause below. 

Standard ICC Arbitration Clause 

“All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules”.

Parties are free to adapt the clause to their particular circumstances. For instance, they may wish to stipulate the number of arbitrators, given that the ICC Arbitration Rules contain a presumption in favour of a sole arbitrator. Also, it may be desirable for them to stipulate the place and language of the arbitration and the law applicable to the merits. The ICC Arbitration Rules do not limit the parties’ free choice of the place and language of the arbitration or the law governing the contract. When adapting the clause, care must be taken to avoid any risk of ambiguity. Unclear wording in the clause will cause uncertainty and delay and can hinder or even compromise the dispute resolution process. Parties should also take account of any factors that may affect the enforceability of the clause under applicable law. These include any mandatory requirements that may exist at the place of arbitration and the expected place or places of enforcement. 

ICC Arbitration Without Emergency Arbitrator 

If the parties wish to exclude any recourse to the Emergency Arbitrator Provisions, they must expressly opt out by adding the following wording to the clause above: 

“The Emergency Arbitrator Provisions shall not apply”

D. UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW (UNCITRAL) ARBITRATION RULES (2021) AND EXPEDITED ARBITRATION RULES MODEL ARBITRATION CLAUSE6

1. Arbitration Rules Model Arbitration Clause for Contracts

“Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules. 

Note. Parties should consider adding: 

(a) The appointing authority shall be . . . [name of institution or person]; 

(b) The number of arbitrators shall be . . .. [one or three]; 

(c) The place of arbitration shall be . . . [town and country]; 

(d) The language to be used in the arbitral proceedings shall be . . . .”

2. Expedited Arbitration Rules Model Arbitration Clause for Contracts 

“Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Expedited Arbitration Rules. 

Note: Parties should consider adding: 

(a) The appointing authority shall be . . . [name of institution or person]; 

(b) The place of arbitration shall be . . . [town and country]; 

(c) The language to be used in the arbitral proceedings shall be …;”

  1. Official Gazette of 5 July 2001 No. 24453. ↩︎
  2. Official Gazette of 4 February 2011 No. 27836. ↩︎
  3. The Istanbul Chamber of Commerce (ICOC), Publication No: 2021- 8, Istanbul, 2021 (http://www.itotam.com/).  ↩︎
  4. Istanbul Arbitration Centre, ISTAC (https://istac.org.tr/). Also, the web page has been edited to help you customize your arbitration clause. ↩︎
  5. ICC Publication DRS892 Eng, 2022 (https://iccwbo.org/).  ↩︎
  6. United Nations: United Nations Commission on International Trade Law. Vienna, 2021 (https://tinyurl.com/mtpca78m).  ↩︎