A vague arbitration clause can turn a dispute costly

The Atameken news channel has pointed out that a single error in a contract can be costly for a business owner. The issue is an imprecisely named arbitration institution. If the document simply says “arbitration”, the parties may have to separately agree on which arbitration body to turn to once a dispute arises.

The trouble is that when a conflict starts, the parties’ interests usually pull in opposite directions. If the venue was not fixed in advance, an argument about the substance can give way to an argument about where the case should even be heard. That means extra time and cost that one precise wording could have avoided. Naming the institution in full settles the question on the day the contract is signed.

Open your standard contracts and find the dispute resolution clause: does it give the full name of the arbitration institution, or just the word “arbitration”? If the wording is loose, fix the template before your next deals and discuss a clarification with counterparties on existing contracts. Routing contracts through approval with a record of every decision is work for 1Cifer agents: the lawyer and the director see the document in one chain, so a missed clause stands out.