Why are arbitration clauses bad

International arbitration dictionary

The International Arbitration Dictionary provided below defines many of the most commonly used terms and expressions in international arbitration.

As in any subject area, specific legal terms are often used in international arbitration, along with often unnecessary jargon. These terms contain legal terms, standard expressions, major international conventions, rules, standard types of contracts, and common acronyms. Our international arbitration dictionary tries to demystify these terms.

The most common terms have been included in the international arbitration dictionary below, in alphabetical order. Please also visit the Arbitration Institutions section of this website, which provides acronyms for dozens of Arbitration Institutions.

AAA - American Arbitration Association.

Ad hoc arbitration - Arbitration proceedings that are not administered by an arbitration board, such as the ICC or the LCIA.

Alternative dispute resolution - Is commonly referred to as ADR; Methods by which disputes are resolved privately by the parties rather than through litigation in public courts, typically through mediation, arbitration, or arbitration.

Amiable composer - Tenure of an arbitration tribunal expressly empowered by the parties to base its decision on just principles such as fairness, rather than just the law.

Amicable agreement - Settlement of a dispute by the parties amicably, end the dispute. An attempt to amicably settle a dispute is often required before a dispute can be arbitrated.

Cancellation of an award - Also known as decommissioning; Decision of a national court to set aside an arbitration award, which is only possible in exceptional cases.

reply - Name for respondent's response to the applicant's arbitration in certain arbitrations and / or in the notification of disputes.

Arbitration order - Order from a national court that one party must terminate the arbitration.

Anti-suit injunction - Ordering arbitration tribunals or national courts requiring a party to terminate litigation brought before a state court.

Appointing authority - Authority elected by the parties or by an arbitration body to appoint arbitrators, such as the PCA.

Arbitration - The question of whether the parties are legally entitled to have their disputes settled by an arbitral tribunal as opposed to a national court.

Arbitration Institution - Institution that provides administrative services for arbitration, such as the LCIA, the ICC or the PCA. The institution does not make a decision on the merits of the dispute, unlike arbitration tribunals.

Court arbitrator - Group of people appointed to resolve a dispute. Arbitral tribunals are empowered to make binding awards that can be enforced like a domestic court judgment.

Arbitration - Alternative dispute resolution method in which parties submit their disputes to one or more private individuals.
Arbitration Clause - A provision that states that the parties agree to arbitrate their dispute. Most arbitration institutions offer model arbitration clauses.

referee - Appointed private individual to resolve a dispute, as opposed to a national judge, typically for his or her competence and expertise.

As built - Inventory documents are created by contractors during a project. They show the deviations between the planned schedule and the actual schedule, as well as changes.

As built versus as planned - Damage analysis, which compares the as-built plan and the planned schedule, typically in construction arbitration proceedings.

As planned - Contractually / originally agreed.
Arbitration Award - Decision of an arbitration tribunal that is final and binding on the parties.

crotch - Split the arbitration into two phases, each dealing with a different topic, such as jurisdiction and liability, or liability and quantum.

Bilateral investment contract - Duration of a treaty between two states that provides protection for investments, such as fair and equitable treatment, the right to immediate and reasonable relief in the event of expropriation, and the consent of states to settle disputes with investors through binding arbitration, often before ICSID .

parts list - Document that describes and quantifies each item required for a construction project.
BIT - Bilateral Investment Agreement.

Build only - Construction contract where the contractor only has to carry out the work designed by the employer.

Calvo Doctrine - In international law, rule according to which the relevant courts for investment disputes are those of the state in which the investment takes place. This principle is confirmed by the constitutions of several Latin American countries.

Chairperson - Also known as the President; Arbitrator, usually appointed by two arbitrators appointed by a party or by an appointing authority.

Challenge the referee - Request for removal of an arbitrator.
Award challenge - petition a national court to review an award. The grounds for contesting arbitral awards are strictly limited by national arbitration laws.

Chess clock arbitration - Arbitration where the parties are given exactly the same amount of time to present their cases. Chess clocks ensure simultaneity, hence the name.

CIETAC - China International and Economic Tribunal Arbitration Commission.

applicant - Party initiating the arbitration.

Co-arbitrator - Arbitrator who is not the chairman and is appointed by a party.

reconciliation - A form of alternative dispute resolution, when a neutral mediator (third party) is appointed to hear both sides of a dispute and then draft a non-binding document suggesting how the dispute can be resolved. Reconciliation is similar to mediation, but more structured.

Confirmation of the referee - In the International Commercial Court (ICC) system, decision to accept an arbitrator elected by one or both parties.

Approval price - Decision on the mutual agreement of the parties.

Conservation measures - Orders of a temporary nature, made by an authority against a party before a final decision is made, e.g. appending assets that may be depleted.

Consolidation - Merging several arbitrations into one arbitration, possibly on the basis of separate contracts, for reasons such as efficiency.

Cost plus contract - Construction contract where the contractor receives the actual price of the work and materials plus a fee.

Arbitration costs - The total amount to be paid for the execution of the arbitration (including arbitration institutions ’fees and costs, arbitrator fees and expenses, legal costs).

Submission of costs - Memorial, usually filed by each party after all other steps of the arbitration have been completed, in relation to the arbitration costs they spent and wish to get back.

Counterclaim - A lawsuit brought by a party who was originally a defendant in international arbitration.

Critical way - Series of phases of a construction project that must be completed on time if the project is to be completed by the date agreed by the parties.

Damage - Amount of money one party owes to compensate for the damage it has done to the other party.

Standard award - Decision of the arbitral tribunal if one party does not participate in the proceedings.

Disclosure / Discovery - Common law legal concept, according to which each party must submit the documents relevant to the dispute. It is generally more limited in international arbitration than in common law jurisdictions.

Discounted cash flow - Formula for determining the value of a project based on the time value of money.

ECT - Energy Charter Treaty.

Emergency umpire - An individual appointed under the rules of certain arbitration institutions to rule on urgent orders prior to the formation of an arbitration tribunal.

Emergency response - Orders from an emergency arbitrator, prior to the formation of an arbitration tribunal.

Escalation clause - Contractual term according to which the parties should endeavor to settle the dispute amicably before submitting a request for arbitration.

Estimated cost method - Formula for calculating the damage taking into account the forecast costs.

Evidence hearing - Hearing where witnesses from both parties present their oral testimony to the court.

just as good - Decision-making based on fair principles such as fairness rather than just strict legal principles.

Exequatur - Latin term for "carry out / stay". Ordering certain state courts, such as French national courts, that a party must obey an arbitration award.

expropriation - The act of taking over private property by a government; often in disputes between the investor and the state.

Fair and just treatment - In international investment disputes, the standard of protection usually required by the host countries for their foreign investors.

FIDIC - Association of Consulting Engineers / International Association of Consulting Engineers, a society of engineers involved in the preparation of standard forms of international construction contracts.

FIDIC - Orange Book - Contractual Terms for Design-Build and Turnkey.

FIDIC - Red Book - Contractual conditions for civil engineering works.

FIDIC - Silver Book - Contractual Terms for EPC (Engineering Procurement Construction) Turnkey Projects.

FIDIC - Yellow Book - Contractual terms for electrical and mechanical work including on-site assembly.
Final Arbitration Award - The final decision of an arbitration tribunal on any dispute. This can be preceded by one or more partial awards, for example an award from the jurisdiction.

Forum - Latin term for a tribunal or a court.

Guaranteed maximum price - Pricing method whereby the contractor cannot receive an amount higher than the amount agreed with the employer.

Listen - Hearing of the parties and / or their witnesses by the arbitral tribunal.

HKIAC - Hong International Arbitration Court.

IBA Conflict of Interest Policy - The International Bar Association (IBA) Conflicts of Interest Guidelines in International Arbitration are non-mandatory rules that practitioners often use to avoid conflicts of interest.

IBA rules of evidence - The International Bar Association (IBA) Rules for Taking Evidence in International Arbitration are non-mandatory rules often used by practitioners to structure the taking of evidence, such as the preparation of documents.

ICANN - International Association for Assigned Names and Numbers.

ICC - International Chamber of Commerce.

ICC rules - The Arbitration Rules of the International Chamber of Commerce, the most recent of which applies to arbitration proceedings initiated after January 1, 2012.

ICDR - International Dispute Settlement Center.

ICSID - International Center for Settlement of Investment Disputes, the most common forum for the settlement of disputes between investors and states.

Institutional Arbitration - Arbitration proceedings administered by an arbitration body such as the ICC.

Provisional measures - Also known as winter garden measures. Orders of a temporary nature, made against a party by an authority prior to a final arbitration award or judgment.

Joinder - The addition of a party to arbitration.

Jurisdiction - The legal right / right of an authority to decide on a matter. In an arbitration, the jurisdiction of the arbitral tribunal depends solely on the consent of the parties.

Place of jurisdiction objection - Declaration by a party that an authority has no right to decide a matter.

Competence-Competence - Legal doctrine, according to which an arbitral tribunal can decide whether it has jurisdiction over a dispute, which is enshrined in many national arbitration laws.

LCIA - London Court of International Arbitration.

LCIA rules - The Arbitration Rules of the London Court of International Arbitration.

the law decision - Latin term referring to the arbitration law applicable to the conduct of arbitration.

the courts - Latin term referring to the law in force at the seat of the arbitral tribunal.

Lex mercatoria - Latin term that refers to legal principles and customs established by business practice.

Flat rate damages - Amount of damage that was agreed in advance in a contract in the event of a breach.

Meditate - The most common type of alternative dispute resolution, mediation is a process whereby a mediator is appointed to help the parties trying to resolve their dispute to improve their communication skills with the aim of negotiating a settlement agreement. Once the settlement agreement is signed, it becomes binding like any other contract.

MFN - Most Favored Nation.

Model law - Arbitration rules elaborated by UNCITRAL, which served as the basis for numerous national arbitration laws.

Most favored nation clause - In bilateral investment contracts, contractual provision according to which countries must be treated equally by the host country. If a host country offers a trading partner more favorable terms, such as lower taxes on a certain type of product, then other trading countries may be able to rely on a most favored nation clause to benefit from the same benefit.

Arbitration with multiple contracts - Arbitration if claims arise from several contracts.

Multi-party arbitration - Arbitration proceedings involving three or more parties, which is common practice.

Multi-level dispute settlement clause - Contract provision including additional phases to be followed by the parties prior to initiating arbitration, such as trying to resolve their dispute amicably before resorting to international arbitration.

Net book value - Original cost of an item minus any depreciation.

New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 - This important international convention enables arbitration awards to be enforced in 148 countries.

Partial award - Decision on one or more specific topics, rendered before the final award, for example on jurisdiction.

Arbitrator appointed by the party - Arbitrator chosen by a party, usually a co-arbitrator.

Pathological arbitration clause - Poorly worded arbitration clause which makes its validity and thus the possibility of recourse to arbitration uncertain.

PCA - Permanent court of arbitration.

privilege - Principle of law whereby a party can refuse to produce evidence, such as documents.

Procedural measures - Actions by an arbitration tribunal to conduct arbitration proceedings.

Order of procedure - Order of the arbitral tribunal to conduct the proceedings.

Quantum - Amount of money to be paid by the losing party.

deserves respect - Latin expression that means "the amount it deserves". It is a method of assessing damage based on what appears appropriate in the circumstances.

Recognition of awards - Confirmation from a state court that an arbitration award is binding.

editorial staff - Deletion of parts of documents according to the legal principle of privilege.

Redfern schedule - Standard schedule often used by parties and arbitration tribunals to manage document requests.

Remission - Return of an award to an arbitration tribunal by a national court for a new decision.

reply - Memorial of the applicant for defense against a counterclaim by an applicant.

Request for arbitration - Also known as an arbitration notice. Written document sent by an applicant to an arbitration tribunal to initiate arbitration.

Respondent - Party against whom the applicant is arbitrating.

SCC - Stockholm Chamber of Commerce.

Examination of awards - Service offered by certain arbitration institutions to review an arbitration award before it is approved for transmission to the parties.

Sealed offer - Offer from one party to another to reach an amicable settlement.

Separability - Legal principle according to which an arbitration clause is independent of the contract in which it is contained. Thus, even if the contract is not valid, the arbitration clause remains in effect.

SIAC - Singapore International Court of Arbitration.

Sole arbitrator - Arbitration tribunal that consists of only one member.

Statement of Claim - First set of applications from an applicant.

Defense statement - First contributions submitted by a respondent in response to an applicant's statement of entitlement.

Rejoinder - Second set of requests from a respondent, in response to an applicant's statement of response.

Answer explanation - Second set of requests from an applicant, in response to a respondent's statement of defense.

Substantive law - The rules that apply to the dispute, such as the relevant contract law or tort law.

Description of services - Document detailing the duties of the arbitral tribunal and the backgrounds and positions of the parties, and a key feature of ICC arbitration.

Total cost method - Formula for calculating the damage. It takes into account all the costs incurred, whether or not they are due to the actions of the applicant.

Trifurcation - Dividing the arbitration into three phases, each dealing with a different issue such as jurisdiction, liability or costs.

Cut off tribunal - Arbitral tribunal where originally appointed members have either been removed, resigned or died.

Complete contract - Construction contract where the owner literally only needs to turn the key after the project is completed, e.g., no additional work is required.

UNCITRAL - United Nations Commission on International Trade Law.

UNCITRAL Model Law on International Commercial Arbitration, 1985 - A model arbitration law drawn up by UNCITRAL, a division of the United Nations. It served as the basis for numerous national arbitration laws. The model law was last amended in 2006.

WIPO - World Intellectual Property Organization.

Testimony - Written statement from a witness, this can replace questioning at a hearing.