B. Model Clause So, where should a design professional begin? I would recommend that design professionals start with a model clause. The following model clause is based for the most part on the UNCITRAL model clause:
Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be
settled by Arbitration
arbitration Rules as
in accordance with the at present in force.
______________ [The appointing
authority shall be
The number of arbitrators
[The language to be used in the arbitral
proceedings shall be .] [Judgment on the ______________ award may be entered in any court having jurisdiction.]
A design professional seeking to use this type of clause should fill in the blanks in the model clause and deal with the bracketed sentences. In the course of doing this, design professionals will necessarily ask and answer the following important questions:
Should all disputes related to the contract be subject to arbitration? In addition to breach of contract, do you want arbitration of tort claims related to the contract, fraud in the inducement, antitrust or copyright? If a U.S. court were asked to enforce the suggested model arbitration clause, the court would probably hold that the broad language of the first sentence encompasses all such disputes. The courts of some other nations might not read the clause as broadly. Some courts would construe the clause more narrowly if it referred only to disputes “under” the contract. In many jurisdictions outside the United States, disputes that arise from administrative actions or labor relations cannot be arbitrated.
What arbitral rules will apply?
There are several types of arbitral rules that can be applied and contained in your contract. Commonly selected rules include, among others; the International Chamber of Commerce (ICC); the London Court of International Arbitration (LCIA); the rules of the American Arbitration Association’s International Centre for Dispute Resolution (ICDR), Hong Kong International Arbitration Centre (HKIAC), Singapore International Arbitration Centre (SIAC), Swiss Arbitration Rules, and UNCITRAL.
Under Chinese (PRC) law, the only institution that is authorized to conduct arbitrations in China is the China International Economic and Trade Arbitration Commission (CIETAC).
Will the arbitration be administered by an institution? Design professionals must determine up front if the arbitrations should be administered by an institution or by the parties. There are various considerations to take into account. For example, arbitrations under any of the institutional rules stated above are administered by those institutions, which charge fees for their services. Arbitrations under the UNCITRAL rules without institutional administration are managed only by the parties and the arbitrators, and this is known as “ad hoc” arbitration.
How many arbitrators will there be and how are they selected? The contract must specify how many arbitrators will be assigned to handle disputes. If the parties fail to specify, the number will be determined by the administering institution or will be fixed by the terms of the chosen arbitral rules. In international arbitrations the usual number of arbitrators is three.
The governing rules will describe how arbitrators are to be selected. All major rules, however, give the parties the right to vary the rules and to design their own procedures for choosing arbitrators. If there are three arbitrators, it is generally advantageous for each party to be able to name one member of the panel. Thus, under most rules, if there are to be three arbitrators and if the parties have not specified the method of their selection, each party is permitted to appoint one and the two party-appointed arbitrators will confer about the appointment of the third arbitrator, who frequently will chair the tribunal.
If using institutional arbitration, one advantage is that if the two party-appointed arbitrators are unable to agree on the chairperson, then the institution will make the appointment.
Under most rules the arbitrators must be independent and impartial.