Arbitration Clause – The Achilles' Heel of a Contract
Today, more and more often, parties prefer to seek resolution of their disputes in various arbitration institutions. Submitting a dispute to arbitration is possible if there is an arbitration agreement concluded by the parties. The most common way to enter into an arbitration agreement is to include an arbitration clause in the contract.
Through an arbitration clause, the parties can agree on the following issues: the arbitration institution that has jurisdiction over the categories of disputes agreed upon by the parties, the applicable law, the location of the hearings, the language of the proceedings, requirements for arbitrators and their number, etc. However, in practice, when developing contracts, the Parties often formally refer to the content of the arbitration clause. As a result, its ambiguity and inaccuracy can lead to a number of negative consequences for the parties.
Let us give an example of a dispute in which the correctness of the drafting of the arbitration agreement was of key importance.
Thus, in one of the court decisions recently published on the website of the Supreme Court of the Republic of Belarus (resolution of the judicial panel for economic cases of the Supreme Court of the Republic of Belarus on August 16, 2023 (case No. 154EIP23162) the question was raised - about the accuracy of determining in the arbitration clause the category of disputes within the jurisdiction of the arbitration institution, about the importance of correct interpretation of the will of the parties when drawing up an arbitration clause, about the impossibility of an expansive interpretation of the arbitration clause.
Circumstances of the case:
Between LLC D. (Customer) and LLC T. (General Contractor) on September 19, 2019, a construction contract No. 01/09-2019 was signed, the subject of which is the implementation of a set of works and services at the construction site.
The general contractor filed a claim with the economic court of the Grodno region (at the location of the defendant - the customer) to recognize the construction contract No. 01/09-2019 dated 09.19.2019 as not concluded due to the parties’ lack of agreement on the subject of the said contract.
However, the Defendant, before submitting a response to the claim, sent a petition to the court to refer the dispute for resolution to the International Arbitration Court at the BelCCI, since the parties agreed in the agreement that all disputes and disagreements that arise during the execution of the agreement are subject to referral to the International Arbitration Court at the BelCCI.