In the rush of finalising commercial contracts, an arbitration clause can often be overlooked. They are treated as standard boilerplate and often barely negotiated and discussed. But that single paragraph could one day control how your dispute is heard and come as a surprise down the road.
It’s Not Just “Whether,” It’s “How”
Arbitration is a private, contract-based alternative to court litigation. Many businesses prefer it for its confidentiality, flexibility, and international enforceability. But these advantages come with trade-offs. In England, if you agree to arbitration, you are giving up almost all rights to appeal. Even if the arbitrator makes a factual or legal mistake, courts will not intervene unless there has been a serious procedural error or a fundamental problem with jurisdiction. That is not a theoretical risk. It is a practical reality that many only discover too late.
An arbitration clause does more than decide whether arbitration applies. It can dictate who hears your case, under what rules, in what country, and in what language. A tightly drafted clause might ensure disputes are heard in London under English law before an experienced panel. A vague one might send you to an unfamiliar tribunal in a foreign seat applying unfamiliar rules.
Scope of the arbitration clause is also critical. If a clause says that any dispute “arising out of or in connection with” the agreement must go to arbitration, the arbitration tribunal can interpret that broadly. You may find yourself arbitrating issues tied to other related contracts, even if those contracts had originally said nothing about arbitration. On the other hand, if the scope of a clause is too narrow, you might be pulled into litigation abroad, even when you expected the matter to be arbitrated.
In one case, parties may assume the arbitration clause covered all their dealings. Later they learned that it did not extend to a side agreement, which forced them into fragmented proceedings in different forums. In another, an arbitrator may rule on a claim arguably from outside the contract.
A Clause That Deserves Attention
The lesson is simple. Arbitration clauses are not standard. They are tools of risk management. Treating them as an afterthought is like signing an insurance policy without reading the exclusions, which could actually be some of the most crucial terms.
If your business operates internationally, arbitration clauses can offer great efficiency and protection, but only if drafted clearly and thoughtfully with legal guidance. It is not just about choosing a forum. It is about making sure the dispute process is fair, enforceable, and commercially sound. If something goes wrong, the dispute clause will be the first thing your lawyer reviews.
At Lisa’s Law, we help clients review and tailor contract clauses to ensure they align with your commercial needs, risk management, and long-term strategy. What may seem like boilerplate today could be the most important clause in the contract tomorrow. A well-drafted arbitration clause does not just resolve disputes but will provide certainty when it matters most.
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