An arbitration clause requires that disputes arising under the contract be resolved through arbitration - a private, binding dispute-resolution process - rather than through court litigation. Arbitration is typically faster, more private, and enforceable internationally under the New York Convention.
Key drafting decisions
Institution (ICC, LCIA, AAA, SIAC), seat of arbitration, number of arbitrators, language, and governing procedural rules. Each affects cost, speed, and outcome predictability. Portfolio-level standardization is common in mature contract functions.
Enforceability advantages
The New York Convention makes arbitral awards enforceable in over 170 countries - materially more predictable than cross-border court judgments. This is a significant advantage in international commercial contracts.
