Yesterday, the International Swaps and Derivatives Association, Inc. (ISDA) published the ISDA Arbitration Guide, which comprises several model arbitration clauses for use with either the ISDA 2002 Master Agreement or the ISDA 1992 Master Agreement (the widely-used standard form for derivative transactions), as well as guidance on arbitration.

The model clauses provide for several combinations of the governing law of the underlying agreement, seat of arbitration, and applicable arbitral rules:

  • New York law, New York seat, ICC Rules
  • English or New York law, Paris seat, ICC Rules
  • English law, London seat, LCIA Rules
  • New York law, New York seat, AAA-ICDR Rules
  • English or New York law (save for the arbitration agreement, which is governed by Hong Kong law), Hong Kong seat, HKIAC Rules
  • English or New York law (save for the arbitration agreement, which is governed by Singapore law), Singapore seat, SIAC Rules
  • English or New York law, Zurich or Geneva seat, Rules of Arbitration of the Swiss Chambers' Arbitration Institution
  • English law, London seat, PRIME Finance Rules
  • New York law, New York seat, PRIME Finance Rules
  • English or New York law (save for the arbitration agreement, which is governed by Dutch law), The Hague seat, PRIME Finance Rules

The model clauses have been drafted following an extensive consultation process with ISDA members (such as financial institutions, law firms including Hogan Lovells and arbitral institutions), primarily with cross-border transactions in mind. There was significant debate during the consultation process about which arbitral seats and rules to include in the model clauses, and the published clauses reflect the views of the majority of ISDA members as to the most useful combinations. ISDA itself does not endorse any particular arbitral seats or rules and has expressly left open the possibility of adding further options in due course.

ISDA also considered whether to provide for potential "add-ons" to allow for more tailored clauses (for example, an "optional" arbitration clause allowing one or more parties to choose between arbitration and litigation once a dispute has arisen) but ultimately decided to keep the model clauses as simple as possible. Parties are, however, free to modify the model clauses as they wish.

The publication of the ISDA Arbitration Guide is a welcome development, which reflects the growing trend towards the use of arbitration as a means for resolving disputes in the financial services sector. This has been driven by several potential advantages of arbitration, particularly for the resolution of disputes involving parties in emerging markets, including the prospect of a neutral forum, the possibility of choosing specialist arbitrators, and the established mechanism for the enforcement of arbitral awards under the New York Convention, which has been very widely adopted.

The ISDA Arbitration Guide can be downloaded here.