The essence of arbitration is to ensure an amicable, expeditious, cost effective and confidential out of court resolution of disputes, particularly commercial matters.
Any interruption that forces the arbitration process to linger in the courts, defeats the essence of arbitration, says Michael Gyang Owusu, President of the Ghana ADR Hub.
“The reason people choose arbitration in the first place, is to avoid contact with the courts. Therefore, if you badly draft your arbitration agreement and you need to go through the courts, then you are defeating the purpose for which you signed unto an arbitration agreement,” he said.
In an interview with ADR Daily in Kumasi at the end of a three day course on International Arbitration, organised by the Ghana ADR Hub, Mr Owusu said it remained important that before parties insert an arbitration clause in a contract agreement, “they understand what they are doing.”
He said there are certain vital elements that need to be included in the clause before it becomes a viable arbitration agreement.
These include the scope of issues to be covered by arbitration, the number of arbitrators, qualification and the mode of appointment, replacement of an arbitrator, the venue and seat of arbitration, reference to an arbitration institution, the governing law for the arbitration agreement, arbitration fee payment structure, and language for arbitration.
Without a clear provision for these elements, he says the clause is a potentially pathologic agreement, meaning it may not be able to be enforced.
Although the courts are now pro-arbitration, and therefore try to save a potentially pathologic arbitration clause, amidst attendant costs, risks and delays, he said there is the need for parties to save their arbitration clauses by including all the necessary elements so as to avoid the courts.
In that regard, Mr Owusu urged arbitration practitioners, lawyers and organisations to ensure the objective of arbitration is upheld through the drafting of effective arbitration clauses.
By Edmund Mingle/ adrdaily.com
