Answer ... Under the Federal Arbitration Act (FAA), an arbitration agreement must be in writing. Apart from this requirement, an arbitration agreement can contain whatever terms the parties wish. However, to ensure the enforceability of the arbitration clause and any award, the agreement should:
- unambiguously designate arbitration as the form of dispute resolution, specifying that any award rendered is binding on the parties;
- clearly define the scope of the arbitration clause – that is, the categories of disputes subject to arbitration – so that it covers any and all such disputes arising under or in connection with, or relating to, the commercial contract;
- designate the procedural rules of the arbitration and any administering institution;
- designate the place of arbitration – that is, where the arbitration is formally located as a matter of law or its juridical seat;
- specify the number of arbitrators, their qualifications and the method of their selection;
- specify the language of the arbitration;
- include a choice of law clause specifying the substantive law applicable to the contract and the resolution of any disputes;
- provide that the FAA governs the arbitration agreement and the arbitration process; and
- provide that judgment may be entered on the arbitral award by any federal or state court having jurisdiction.
Answer ... Federal and state courts have held that an arbitration clause is severable from the underlying contract (Prima Paint Corp v Flood Conklin Mfg Co, 388 US 395, 401 (1967) (“arbitration clauses as a matter of federal law are ‘separable’ from the contracts in which they are embedded”); Rent-A-Center, West, Inc v Jackson, 561 US 63 (2010) (affirming Prima Paint rule); Hamblen v Hatch, 242 Ariz 483 (2017) (separability doctrine applies under Arizona’s Uniform Arbitration Act)). Accordingly, an arbitrator has jurisdiction to hear a contract dispute, without court intervention, when a party challenges the contract but not the arbitration clause itself (Prima Paint, 388 US 395 at 403-04 (contract alleged to have been fraudulently induced)). The separability principle is recognised by the rules of the various arbitral associations (eg, see American Arbitration Association (AAA), Commercial Arbitration Rule R-7(b) (“The arbitrator shall have the power to determine the existence or validity of a contract of which an arbitration clause forms a part. Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract”)).
Answer ... When the parties have not agreed on the seat and/or language of the arbitration, the institutional rules governing arbitrations typically provide default rules. AAA Rule R-11(a), for example, provides that: “When the parties’ arbitration agreement is silent with respect to locale, and if the parties disagree as to the locale, the AAA may initially determine the place of arbitration, subject to the power of the arbitrator after appointment, to make a final determination on the locale.”
Where the parties have not agreed upon the language of the arbitration, the arbitrators will make that determination, unless the applicable institutional rules provide for a default language. Some institutional rules consider the language of the contract to be a particularly relevant factor, while others point to the relevance of the language of the arbitration agreement. For example, Article 20 of the International Chamber of Commerce Arbitration Rules provides that in the absence of agreement by the parties, the arbitrators should give “due regard” to “all relevant circumstances, including the language of the contract”. Similarly, Article 18 of the International Centre for Dispute Resolution Arbitration Rules provides that, absent agreement by the parties, “the language(s) of the arbitration shall be the language(s) of the documents containing the arbitration agreement, subject to the power of the arbitral tribunal to determine otherwise”.