Drafters of arbitration clauses have likely heard rumblings
that, in recognition of the extensive changes in international
contract practices and modes of communication, efforts are
underway at the international treaty and convention level to
ease the strict requirement that an arbitration clause or
arbitration agreement be in writing.
Changes are currently being made to the three major
initiatives undertaken by the United Nations that are the
driving force behind the proliferation of international
arbitration as a method for dispute resolution in international
commercial transactions. The first, the United Nations
Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (the 1958 New York Convention), with over
140 signatories, provides for the recognition and enforcement
of foreign arbitral awards, with very limited exceptions. The
second, the 1976 UNCITRAL Arbitration Rules, provides for a
comprehensive set of procedural rules that can be adopted for
arbitral proceedings that cover many aspects of arbitral
procedure and the arbitral process, including rules regarding
the form, effect and interpretation of an award. They are the
most widely used rules in both ad hoc and institutional
international commercial arbitrations. They are also frequently
used in investor-state arbitrations under bilateral investment
treaties and free trade agreements.
The third, the UNCITRAL Model Law on International
Commercial Arbitration (the 1985 Model Law), is designed to
assist states in reforming and modernizing their laws on
arbitral procedure, and is intended to reflect international
practice in international commercial arbitration. It deals with
every step of the arbitral process, from the arbitration
agreement to the recognition and enforcement of arbitral
In 1986, Canada became the first country to ratify the New
York Convention and adopt the Model Law. The provinces
implemented both, either within the same statute or in separate
statutes. For example, Ontario implemented both the New York
Convention and the Model Law through the International
Commercial Arbitration Act, which contains very minor
modifications and additions to the 1985 Model Law.
The 1958 New York Convention, the 1976 UNCITRAL Arbitration
Rules and the 1985 Model Law all provide that an arbitration
agreement must be in writing. As technological advancements in
modes of communication have developed rapidly, many
international commercial transactions have moved to the
electronic realm, making it more difficult to meet the
requirement of an "agreement in writing." In 2006,
Article 7 of the Model Law was amended to provide contracting
states with the option that an arbitration agreement is in
writing "if its content is recorded in any form, whether
the arbitration agreement or contract has been concluded
orally, by conduct, or by other means," in recognition of
the changes in international contract practices and the
difficulties that sometimes arise in meeting the form
requirement of a written document. A second option defines
arbitration agreement in a manner that dispenses altogether
with the requirement for an agreement in writing. At the same
time, UNCITRAL also adopted a recommendation encouraging states
to apply Article II.2 of the New York Convention,
"recognizing that the circumstances described therein are
not exhaustive." Article II.2 provides that an agreement
in writing includes an arbitral clause in a contract or an
arbitration agreement, signed by the parties or contained in an
exchange of letters or telegrams. In addition, the
recommendation encourages states to adopt the revised Article 7
of the Model Law. A proposal is also currently before UNCITRAL
to omit the reference to the writing requirement altogether
from the UNCITRAL Arbitration Rules.
Despite these developments and the increased tendency of
some national courts to be flexible in their interpretation of
what constitutes an agreement in writing, for the time being
drafters should ensure that the arbitration agreement is signed
by the parties or is included as a clause in a contract signed
by the parties in order to meet the requirement of an agreement
in writing. However, drafters should closely watch these
developments both at the international and domestic levels, in
the likely event that the requirement for an agreement in
writing will soon no longer be necessary.
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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