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Arbitration agreements

Validity

What are the validity requirements for an arbitration agreement?

Article 4(1) of the Federal Arbitration Law provides that the arbitration agreement shall only be entered into by a natural person who is authorised to conclude the agreement on arbitration.

Article 4(2) of the Federal Arbitration Law provides that an arbitration agreement cannot be made in relation to matters which cannot be settled by arbitration.

Article 7(1) requires that any arbitration agreement must be made in writing. Under Article 7(2), an arbitration agreement will be deemed to have been made in writing if:

  • an arbitration agreement is included in a document signed by the parties or contained in their written communications;
  • the agreement between the parties refers to the provisions of a standard contract or any other document which incorporates an arbitration agreement;
  • the parties agree to refer their dispute to arbitration during the hearing of the case before the court; and
  • a party, in its written memoranda submitted to the court, requests the dispute to be referred to arbitration and the other party does not object.

Enforcement of agreements

How are arbitration agreements enforced in your jurisdiction? What is the attitude of the national courts towards arbitration agreements?

Article 8(1) of the Federal Arbitration Law states that a dispute which is subject to an arbitration agreement will be inadmissible before the court where the defendant raises an objection based on the arbitration agreement before submitting its first defence. However, if the arbitration agreement is found to be null, the court will hear the claim.

The courts have historically given full effect to valid arbitration agreements and it is expected that they will continue to do so under the Federal Arbitration Law.

Consolidation

Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?

The Federal Arbitration Law contains no provisions on the consolidation of separate arbitral proceedings under one or more contracts. Consolidation of separate arbitrations would therefore likely require the parties’ agreement subject to any applicable institutional rules.

Choice of law

How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

Article 37(1) of the Federal Arbitration Law states that the arbitral tribunal shall apply the law agreed by the parties. Article 37(2) further states that the parties may agree to their legal relationship being governed by the provisions of a standard form contract or an international contract. The chosen law must not violate public order and morals.

Where the parties have not agreed on the applicable law, the arbitral tribunal is empowered to  use the law which applies to the subject matter of the dispute, pursuant to Article 38(1). In determining the applicable law, the arbitral tribunal must consider the terms and conditions of the contract, the subject matter of the dispute and any customary practices in transactions of a similar nature (Article 38(2)).

Separability

Are there any provisions on the separability of arbitration agreements?

Article 6(1) of the Federal Arbitration Law states that an arbitration agreement shall be an independent and severable clause from the rest of the contract. The invalidity, expiry or termination of the contract shall not affect the arbitration clause.

Article 6(2) states that a pleading of invalidity, expiry or termination of the contract shall not result in the arbitration procedures automatically terminating. The arbitral tribunal is empowered to determine the validity of the underlying contract.

Multiparty agreements

Are multiparty agreements recognised?

The Federal Arbitration Law does not provide specific provisions relating to multiparty arbitrations. However, Article 22 of the Federal Arbitration Law states that the arbitral tribunal may allow the joinder or intervention of a third party to the arbitration, provided that they are a party to the arbitration agreement.

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