Drafting an arbitration clause

Sometimes writing an arbitration clause in an agreement can be such a daunting task.

It gets confusing as to what exactly to put in there or how much detail it should contain. The Arbitration Act, 2010 (Act 798) gives an indication of what should go into the arbitration clause.

According to section 13 of the Act, an arbitration agreement means an agreement to submit to arbitration present or future.

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It is a clause embedded in an agreement that tells how the parties intend to resolve disputes when they arise.

Below are a few considerations when drafting an arbitration clause:

1. The arbitration agreement ought to confer authority on the arbitration tribunal to refer “all or any dispute” to arbitration. The matters to refer to the arbitration should be as clear as possible so that the tribunal can know the scope of its authority.
2. Words that confer authority must be clearly stated and unambiguous. It should not be wide as to be subject to several interpretations and should also not be too narrow as to limit or restrict the scope of the agreement.
3. Parties must unequivocally express their intention to resort to arbitration. Thus, the language should be mandatory and not permissive. Thus words such as “may” and “might” must be avoided. “Shall”, “must” are preferred.
4. The parties must specify the number of arbitrators. This number should be an uneven number.
5. The method of appointment of the arbitrator must be stated.
6. The qualification or expertise of the arbitrators must also be specified.
7. The clause must specify the rules to govern the arbitration. It could be adhoc rules or institutional rules such as Ghana arbitration Center rules.
8. The language to be used for the arbitration must be specified.
9. The clause should also state the place, i.e. where the arbitration would take place, it could be in Ghana, United States, etc.

Below is an example:

Any dispute concerning the construction, validity, interpretation, enforceability or breach of the agreement shall be settled by arbitration administered by the Ghana Arbitration Center under its Rules. The number of arbitrators shall be three (3) who shall be selected by the Ghana Arbitration Center, in accordance with the terms of this agreement. The arbitrators shall have ten (10) years of experience in law and corporate governance and also should have served as arbitrators for at least three times prior to their service as arbitrators in this arbitration. The arbitration shall be conducted in accordance with the laws of Ghana and shall be conducted in Accra, Ghana in the English Language.

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