There is a divergence of opinion among counsel, arbitrators and arbitral bodies on the detail that should be incorporated in an arbitration clause. Most clauses recommended by arbitral bodies are simple with the primary purpose being to ensure the parties are bound to arbitrate and the secondary purpose being to give the arbitral body and the arbitrators the highest degree of flexibility in the administration of the arbitration. Arbitrators tend to agree with these objectives.
Counsel, while clearly intent on binding the parties to the agreement to arbitrate, have the additional concern that the proceedings meet with the representations made to clients that arbitration is a cost effective and expedient alternative to litigation. In addition, counsel wants, to the extent possible. to assure that the award will be enforceable.
While most countries adhere to the New York Convention regarding enforcement of arbitration awards, there are procedural requirements in the laws of many countries that set requirements on what the award must contain in order to form the basis for an enforcement proceeding.
For instance, the Brazilian Arbitration Law No. 9.307 of Sept. 23, 1996 requires that the award must state the law and facts relied upon, the reasons for the decision, and state the time limit for compliance with the award. The original award or a certified copy of the award authenticated by the Brazilian consulate and a sworn translation into Portuguese must be filed. The Brazilian Code of Civil Procedure only permits enforcement of money awards in Brazilian currency. An award in a foreign currency may only be enforced if the foreign currency is only an index for conversion.
The Romania Law No. 105/1992 requires the award include the structure of the court, the place and time of the award, the names and legal residences of the parties and the names of the legal representative who participated in the hearings, contain the arbitration clause, the subject of the dispute, the grounds for the award, and be signed by all the arbitrators.
In Canada, an authenticated original award or certified copy must be filed in English or French along with the original arbitration agreement. In Ecuador only a certified copy of the award need be submitted.
This sample diversity in the requirements for enforcement of awards requires that counsel drafting an arbitration agreement for an international transaction be familiar with the laws applicable (the arbitration law and code of civil procedure) to enforcement in those jurisdictions where enforcement is most likely to be requested. Where the selected arbitral body exercises oversight of awards before they are issued, a certain level of attention to such requirements is exercised. In other instances, it is unlikely that the arbitrators are paying very much attention to the essential detail. Therefore, if there are esoteric requirements in any such jurisdiction, it is recommended that the arbitration clause make them a required portion of the award. In the alternative, when it comes time in the arbitration to formulate terms of reference those requirements should be addressed and incorporated in the terms of reference.
Since it is more than likely the award will have to be translated and certified for filing in a foreign jurisdiction, it should be made a requirement in the arbitration clause that the cost of translation and certification be awarded to the prevailing party along with that parties attorneys’ fees.