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Arbitration Agreement: Free Printable PDF & Word Template

Arbitration agreements are documents that can help you protect your business and prevent it from going to court. Even as a business owner, you may not have realized that you have already signed it without realizing it. If you play around with some of the terms associated with arbitration agreements, however, and check how much arbitration costs, then it will be all too clear for you to identify the best arbitration agreement for the needs of your business.

What is an Arbitration Agreement?

Arbitration Agreement
Arbitration Agreement

Arbitration Agreement refers to the agreement between the parties for the purpose of resolving the disputes that have arisen or may arise between the parties by the arbitrators instead of the ordinary state jurisdiction. In order for the parties to apply for arbitration, there must be an arbitration agreement between them. For this reason, the “indispensable” (condition sine qua non) condition for resorting to arbitration is the existence of an arbitration agreement between the parties.

Arbitration Agreement and Arbitration Clause

An arbitration agreement can be concluded with a contract declaring the will of the parties that the dispute will be resolved through arbitration. The arbitration agreement differs from the arbitration agreement as it expresses the agreement between the parties to the dispute. As a matter of fact, the arbitration agreement refers to the agreement made between the parties and the arbitrators regarding the arbitration fee and other conditions.

Pursuant to Article 4 of the International Arbitration Law, “an arbitration agreement can be concluded with an arbitration clause in the main contract or a separate contract”. For this reason, instead of making an independent arbitration agreement, it is possible for the parties to agree on the settlement of disputes by arbitration by adding a clause to the (main) contract regulating the relationship between them. Arbitration provisions included in the contract are referred to as “arbitration clauses”.

It is possible for the parties to make an agreement to resolve the dispute between them through arbitration even after the lawsuit is filed. According to the provision of Article 5 of the International Arbitration Law, “if the parties agree to resort to arbitration during the trial, the case file is sent by the court to the relevant arbitrator or arbitral tribunal.” Accordingly, in the event that an arbitration agreement is made by the parties at any stage of the proceedings, the court ceases to consider the case and the dispute is resolved through arbitration.

What is International Arbitration?

International arbitration is similar to domestic court cases but takes place in the presence of special arbitrators, known as arbitrators, rather than taking part in domestic court. It is a consensual, neutral, binding, specific and enforceable international dispute resolution procedure, which is typically faster and less expensive than domestic court proceedings.

Unlike domestic court decisions, international arbitration awards can be practiced in almost all countries of the world, making international arbitration the leading mechanism for resolving international disputes. The use of international arbitration, different legal, linguistic, and cultural backgrounds, is typical for resolving disputes in a final and binding manner without the formalities of the procedural rules of their legal systems.

A good arbitration agreement must have the following conditions:

  • Which arbitration rules will be applied in the arbitration proceedings
  • Number and procedure of judges to be appointed
  • The language of the arbitration proceedings
  • The place where the arbitration proceedings will take place
  • The rule of law to be applied in arbitration proceedings.

Binding of Arbitration

The most important feature of the arbitration solution is that the decisions made by the arbitrators as a result of the arbitration are binding just like the traditional solution. However, arbitral awards can only be appealed to traditional courts under exceptional circumstances. The bindingness of arbitration is one of the most important features that distinguish it from other alternative dispute resolution methods.

What are the disadvantages of arbitration?

The most criticized aspect of arbitration is that it is more costly than traditional legal remedies. The high registration fees and arbitrator fees can be said to be the most important disadvantages of arbitration.

Another criticism of arbitration is that some arbitration proceedings take a long time, just like traditional ones. Again, although the actions of some arbitrators against their impartiality are criticized by the practitioners, arbitration maintains its prestige in the international arena with its independence feature.

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