Arbitration Clause
Arbitration directives - arbitration courts
A. Arbitration directives (=arbitration agreement)
B. Arbitration provisions on other arbitration courts
C. Unsuccessful arbitration clauses
________________________________________________________________________
A. Arbitration directives (=arbitration agreement)
Frankfurt am Main Chamber of Commerce and Industry suggests the following arbitration agreement to all parties who wish to make reference to the rules of arbitration of Frankfurt am Main Chamber of Commerce and Industry in their contracts:
"All disputes resulting in connection with the contract .... (designation of the contract) or concerning its validity, shall be finally decided according to the rules of arbitration of Frankfurt am Main Chamber of Commerce and Industry, excluding ordinary courts of law. However, judicial payment order proceedings shall remain admissible".
With a view to form, § 1031 Code of Civil Proceedings must be observed. Important: if a consumer is involved, the arbitration provision must be signed in a separate agreement, which may not contain any further regulations (exception: notarial deeds).
The following supplements are recommendable:
- The venue of the arbitration proceedings is .......
(to the extent that it is not Frankfurt am Main)
- The number of arbiters is .......
(to the extent that a single arbiter is required)
- Applicable substantive law is .......
(in cases with contacts abroad)
- The language of the arbitration proceedings is .....
(in cases with contacts abroad)
_______________________________________________________________________
Frankfurt am Main Chamber of Commerce and Industry suggests the following arbitration agreement to all parties who wish to make reference to the rules of arbitration of Frankfurt am Main Chamber of Commerce and Industry in their contracts:
"All disputes resulting in connection with the contract .... (designation of the contract) or concerning its validity, shall be finally decided according to the rules of arbitration of Frankfurt am Main Chamber of Commerce and Industry, excluding ordinary courts of law. However, judicial payment order proceedings shall remain admissible".
With a view to form, § 1031 Code of Civil Proceedings must be observed. Important: if a consumer is involved, the arbitration provision must be signed in a separate agreement, which may not contain any further regulations (exception: notarial deeds).
The following supplements are recommendable:
- The venue of the arbitration proceedings is .......
(to the extent that it is not Frankfurt am Main)
- The number of arbiters is .......
(to the extent that a single arbiter is required)
- Applicable substantive law is .......
(in cases with contacts abroad)
- The language of the arbitration proceedings is .....
(in cases with contacts abroad)
_______________________________________________________________________
B. Arbitration provisions on other arbitration courts
German Arbitrage Institution Reg. Assoc. (DIS):
“All disputes arising in connection with the contract (...precise designation of the contract with date...) or concerning its validity shall be finally decided according to the rules of arbitration of the German Arbitrage Institution Reg. Assoc. (DIS) excluding ordinary courts of law. The arbitration court can also decide on the validity of this arbitration agreement with a binding effect for state courts.”
International Chamber of Commerce (ICC), Paris:
“All disputes arising from or in connection with present contract shall be finally decided according to the rules of arbitration of the International Chamber of Commerce by one or more arbiter(s) appointed according to these rules.”
Explanation on the various arbitration courts to be considered:
For reasons of clarity, a specimen regulation referring to one of the customary institutional arbitration courts should be applicable, depending on the contractual constellation. This is better in practice than agreeing an arbitration court appointed only for an individual case (ad hoc arbitration court). Thus, later disputes between the parties and the arbiters concerning details of the proceedings are reduced from the outset.
Current information on details (in particular on the rules and specimen clauses, also in foreign languages) can be seen from the Internet page of the institution in question.
Primarily the following arbitration courts are frequently agreed nowadays:
For facts of a regional nature, in which the contracting parties are in one region, use of an arbitration clause of a local Chamber of Commerce and Industry could be possible (example above: arbitration clause of Frankfurt am Main Chamber of Commerce and Industry (http://www.frankfurt-main.ihk.de/recht/themen/streitbeilegung)).
For nationwide affairs, the clause of the German Arbitrage Institution (DIS), Cologne, is sensible (www.dis-arb.de).
Internationally, the International Chamber of Commerce (ICC), Paris, can be considered (www.icc-deutschland.de).
If a decision is to be made in a neutral country, the Chamber of Commerce in Zurich can be considered. If eastern European countries are involved, agreement of the arbitration court of the Vienna Economic Chamber or the Stockholm Chamber of Commerce is sensible.
Internet addresses:
American Arbitration Association (AAA)
London Court of International Arbitration (LCIA)
Zurich Chamber of Commerce:
Austrian Economic Chamber, Vienna:
Arbitration Institute of Stockholm Chamber of Commerce:
Hong Kong International Arbitration Centre (HKIAC):
The following supplements of the arbitration clause in question are always to be recommended:
- The venue of the arbitration proceedings is .......
(to the extent that the arbitration court is not to negotiate at its headquarters)
- The number of arbiters is .......
(to the extent that a single arbiter is required)
- Applicable substantive law is .......
(in cases with contacts abroad)
- The language of the arbitration proceedings is .....
(in cases with contacts abroad)
_______________________________________________________________________
C. Unsuccessful arbitration clauses
copyright: German Arbitrage Institution (DIS), Cologne (www.dis-arb.de)
If you formulate an arbitration clause yourself, there is the risk that it will not be recognised as being effective in later proceedings and that you have to make your claim before a court of law.
This is why we recommend using the rules of arbitration of an existing arbitration court in the arbitration clause!
These examples show that in practice it is not that simple to regulate all the important problems in an effective arbitration agreement.
Examples of unsuccessful, problematic arbitration clauses:
Please do not use any of the following clauses!
Do not use (Frankfurt am Main Regional Court of Appeal of 24.06.1994 – 19 U 110/93):
Each party appoints an arbiter. The party initiating the proceedings serves the appointment of its arbiter on the opposing party by recorded delivery with return slip, notifying its claim, and requests that it appoint its arbiter within three weeks. The period commences on the day of the provision of the recorded delivery at the post office. If the opposing party fails to comply with this request in good time, the Chairman of Munich Regional Court of Appeal or his deputy is to appoint an arbiter for the defective party upon application by the party initiating the proceedings.
If an arbiter is no longer available, the party which appointed him appoints a new arbiter within four weeks. This appointment shall be notified to the opposing party by recorded delivery with return slip. If the party fails to comply with this duty, Section 3) shall apply accordingly.
---
Please do not use this clause (Dresden Regional Court of Appeal of 05.12.1994 – 2 U 1010/94)
1. The law valid at the claimant’s registered office shall govern the contractual relationship.
2. All disputes resulting from the present contract shall be decided according to the Rules of Composition and Arbitration of the International Chamber of Commerce in Vienna.
---
Please do not use this clause (German Supreme Court of 9.2.1995 – III ZR 37/94)
“All disputes resulting from or in connection with the contract shall be subject to arbitration proceedings, ruling out general judicature. The proceedings shall take place before the arbitration court existing for such disputes in the country of the respondent or, following agreement by the parties, before an arbitration court in a third member country of the Council for Mutual Economic Assistance.“
---
Please do not use this clause
“Disputes from the present contract shall be settled amicably, ruling out public courts. If it is not possible to settle disputes amicably, the arbitration proceedings of the International Chamber of Commerce in Paris shall be applied and taken to an arbitration court of the International Chamber of Commerce in Paris. The decision of the arbitration court shall be final.“
---
Please do not use this clause
Agreement on place of jurisdiction.
“In the event of disputes from the present agreement, the parties subject themselves to the arbitral jurisdiction of the Chamber of Commerce and Industry; the arbiter shall be appointed either by the German Arbitral Institution (DIS) or the International Chamber of Commerce in Paris.“
---
Please do not use this clause
"In the event of disputes arising from the present contract, the contracting parties agree aiming for agreement on the level of arbitral jurisdiction before appealing to the ordinary courts of law. A decision shall be achieved there according to the rules of arbitration of the German Committee for Arbitrational Affairs.
Both contracting parties shall be free to appoint an expert third party before an appeal to the arbitration court in order to attempt to bring about a clarification or a compromise in disputes which have occurred. In this context, the party not appointing the expert must declare its agreement with the appointment of the expert by the other appointing party."
---
Please do not use this clause (Dresden Regional Court of Appeal of 20.02.2001 – 11 SchH 02/00)
Arbitration agreement
For disputes from the lease agreement, responsibility of an arbitration court comprising two arbiters and one referee is agreed.
The arbiters must be members of the Chamber of Commerce and Industry.
If the opposing party does not appoint an arbiter within three weeks of request by the party initiating the proceedings, the Chairman of the Chamber of Commerce and Industry in its district is to appoint an arbiter for the defaulting party by application of the party initiating the proceedings.