Arbitration vs. State Courts
An arbitral tribunal is a private dispute resolution mechanism. An arbitral award has the same force as a state court judgment (Art. 1212 CPC) and is enforceable in over 160 countries (1958 New York Convention).
Advantages of Arbitration
Speed (6-12 months), confidentiality, specialized arbitrators, procedural flexibility.
Risks of Poorly Drafted Clauses
- Pathological clause — references a non-existent arbitral institution
- No institution specified — invites months of jurisdictional debate
- Asymmetry — giving one party a choice between arbitration and court, but not the other
- No cost regulation — arbitration fees can be significantly higher than court fees
Elements of a Good Arbitration Clause
Arbitral institution (e.g., SA at KIG, ICC, LCIA), seat of arbitration, language, number of arbitrators (1 or 3), governing law.
Limited Right of Appeal
An arbitral award is in principle final. An action to set aside (Art. 1205-1211 CPC) is the only remedy, limited to procedural violations.
When Arbitration Isn't Optimal
In small claims costs may exceed the dispute value; when interim measures are needed, state courts act faster; in multi-party disputes, coordination is more complex.
Negotiating a contract with an arbitration clause? Get in touch — I'll help optimize the provisions in your favor.